493.11/968: Telegram

The Minister in China (Schurman) to the Secretary of State

52. Your January 31, 4 p.m. I trust the second paragraph does not preclude my signing the diplomatic body’s reply to Koo’s note of December 2696 in which Koo constructs his entire argument on the assumption that the word “gold” in the protocol and agreement connotes not so much metal of such a fineness but the currency of a country having a gold standard. It will be seen that Koo’s position involves the interpretation of a collective treaty to which the United States is signatory. An effective reply has been drafted and will be submitted for approval to full diplomatic body at meeting tomorrow morning.

[Paraphrase.] At a dinner February 1 which Koo gave for Mrs. Roosevelt I was informed by Yen that the Government wished for a reply as soon as possible from the diplomatic body. The Government would then place before Parliament both the Chinese note of December 26 and the reply of the diplomatic body and with both sides presented leave Parliament to act. Yen expected that the Cabinet and Parliament would ask that the issue be arbitrated. It would be possible, he said, for China and the powers which participated in the Washington Conference, as soon as that disposition of this vexing problem is accepted by the other side, to make arrangements immediately for holding the special conference on surtaxes. [End paraphrase.]

It is very desirable that the gold franc question be speedily settled. It has got entirely beyond the control of the politicians who first raised it. The Chinese press and people, as well as Parliament, have come to espouse the antigold side as a great national issue. The Government know that in the end they must pay in gold and they really desire that the diplomatic body should make a strong reply to Koo’s note so that it will be obvious to everybody that no settlement is possible except by arbitration.

If at this critical juncture the American Minister refused to sign the diplomatic body’s reply, a new situation would be created and further delay become unavoidable.

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