The Counselor of Legation in China (Peck) to the Minister in China (Johnson)34

L–31 Diplomatic

Sir: I have the honor to report that on the morning of October 3, 1933, I received a telephone message from Mr. T. V. Soong, Minister [Page 519] of Finance, asking me whether I could come to see him at 4 p.m. that afternoon.

I called on Mr. Soong, as requested, and although I utilized the opportunity to introduce a good many subjects of conversation, the only one which Mr. Soong seemed to desire to discuss with me, was that of the arrival of Dr. Ludvik Rajchman, “Technical Delegate of the Council of the League of Nations with the National Economic Council of China”, to quote the inscription on his card. Mr. Soong remarked that Dr. Rajchman had arrived in Nanking and was anxious to get into touch with me, as also with Mr. Ingram, Counselor of the British Legation. He asked when Dr. Rajchman could call on me. I replied that I should be glad to see Dr. Rajchman at any time. Somewhat to my surprise, Dr. Rajchman sent his card to me this morning by the hand of his secretary, instead of calling in person. I shall endeavor to see him when I return his call.

Apropos of the subject of the League of Nations’ Technical Collaboration with the National Government, as decided upon at the session of the League Council held on July 3, 1933, and in the resolution adopted by the Committee of the Council with regard to technical collaboration with China at its meeting held in Paris, on July 18, 1933, I remarked to Mr. Soong that I hoped to be able to report to the Department of State a series of notable results achieved through this collaboration, as distinguished from the mere making of plans. Although my observation was intended to convey an impression of my optimism in this regard, Mr. Soong replied, with some sharpness, that results had already been achieved through the joint efforts of the National Government and representatives of the League. I hastened to assure him that I knew that this was the case, especially in the field of road building and the field of public health.

Mr. Soong adverted twice on the desire of Dr. Rajchman to meet me and I received the impression that it was to effect this meeting that he had asked me to call upon him, rather than to discuss the other subjects dwelt on in our conversation, which were of greater special interest to the American Legation.

In view of the prominence which has been given to this new plan of collaboration by the opposition thereto manifested by the Japanese Government, it is natural that Mr. Soong should be anxious that the efforts should receive all the assistance possible, including that of favorable, and, if possible, enthusiastic reports by the representatives in Nanking of the different Legations. In line with the sympathetic interest exhibited by the Department of State in these activities, as indicated, for example, by the sending of its representatives to the meeting of the Special Committee held in Paris on [Page 520] July 18, I shall endeavor to keep the Legation and the Department informed of the results achieved by the League’s experts.

The Legation has probably noted that the National Economic Council, in Nanking, has been constituted the agency through which the Chinese Government will utilize the assistance to be afforded by the League. By a Government Mandate issued on September 23, 1933, Messrs. Wang Ching-wei, T. V. Soong and Sun Fo were constituted the Standing Committee of the Council. The public has already gained the impression that the National Economic Council is to become the dominant feature in the political landscape. According to reports, the construction of the new iron and steel works at Ma An Shan, Anhwei Province, with German capital, has already been transferred from the control of the Ministry of Industries to that of the Council.

Mr. Soong informed me that the National Economic Council would undertake a program of “rationalization” of industries. For example, a “Cotton Control Committee” would be organized, with Mr. K. P. Chen, President of the Shanghai Commercial and Savings Bank, at its head. To this Committee would be given the management of the cotton purchased under the recent credit arrangement with the Reconstruction Finance Corporation. The cotton, and money realized from the sale of any portion thereof, would be utilized in an attempt to place Chinese-owned cotton mills on a profitable running basis. Mr. Soong did not state whether all of the cash proceeds realized from the wheat and cotton loan would be utilized in this one direction, but stated that these funds would be given to the National Economic Council “to play with”, leaving it open to be inferred that some of the funds would be utilized in “rationalizing” other industries, such as mines, manufactures, etc.35

Respectfully yours,

Willys R. Peck
  1. Copy forwarded to the Department without covering despatch; received December 2.
  2. The Counselor of Legation, in his despatch No. L-42 Diplomatic, October 26, reporting a conversation on October 24 with Dr. Rajchman, said: “In the course of our conversation I ascertained that it is not true … that the Cotton Control Committee of the National Economic Council would be given the management of the cotton purchased under the recent credit arrangement with the Reconstruction Finance Corporation. Dr. Rajchman informed me that the disposal of this cotton would be managed by a committee organized, as he understood, under the Central Bank of China.” (893.50A/74)