File No. 893.51/2007
The Chargé in China ( MacMurray) to the Secretary of State
Sir: Referring to my telegram of August 9, 4 p.m.,1 on the subject of a proposed arrangement with certain Japanese banking interests for a credit of 80,000,000 gold yen to be used as a reserve against which to issue a quantity of gold currency notes ultimately redeemable only in Japan, I have the honor to advise you that on the 10th instant the Government by mandate promulgated a set of regulations governing the issue of gold currency notes, and rules governing the Government’s Currency Bureau, of which translations are enclosed herewith (these translations being those published in the Peking Leader of the 11th instant, as corrected by the Chinese Secretary of Legation by comparison with the Chinese text as published in the Government Gazette). Only fragmentary information in regard to the terms of the loan, with a view to which these regulations have undoubtedly been framed, has thus far been obtainable, the effort throughout having been to keep the matter a profound secret—the Acting Minister of Finance, Mr. Ts’ao Ju-lin, having himself informed me, a month ago, that no such project was in contemplation, the only basis for the rumors in regard to it (such as those embodied in the enclosed clipping from the Peking Leader of July 71) being that the Ministry was considering the possibility of issuing perhaps as much as $3,000,000 worth of gold currency notes, independently of any arrangements with foreign banking interests, and merely as an experiment with a view to finding a solution of certain questions of exchange. Some further statements in regard to the contents of the agreement concluded between Mr. [Page 148] Ts’ao and Mr. Nishihara are contained in the enclosed clippings from the Leader of the 9th and 10th instant.1 There is also enclosed clipping from the same newspaper of the 9th instant, giving a translation of a reported interview with Mr. Nishihara on the eve of his departure from Peking.1
I beg to refer to the Legation’s despatch (No. 1667) of October 12 last1 in regard to the proposals for a new currency loan, which were submitted by the Ministry of Finance for the consideration of the banking groups interested in the currency loan agreement of April 15, 1911. In reply to the formal letter of the Chinese Government submitting these proposals, the representatives of the British, French, Japanese, and Russian groups replied under date of December 27 last requesting a more detailed exposition of these proposals, as a necessary preliminary to further negotiations. A copy of this letter is enclosed herewith.1 Although in April last the bankers insisted upon, and received, a further extension of their option under the currency loan agreement, extending to October 14 next, they never received any reply to their inquiry until the 10th instant, when the regulations referred to above were forwarded to them by the Ministry of Finance, with an intentionally flippant note to the effect that “in reply to your inquiry of some time ago” there were enclosed copies of documents which would sufficiently indicate the purposes of the Ministry in regard to currency reform. …