893.51/5866
The Counselor of Legation in China ( Peck ) to the Secretary of State
[Received March 12.]
Sir: On the afternoon of February 9, 1934, I received a friendly call from Mr. Yakichiro Suma, newly appointed Japanese Consul General and First Secretary of Legation residing in Nanking.
In the course of the conversation I asked Mr. Suma whether he knew how successful the Chinese National Economic Council was proving to be in its work of improving economic conditions in China.
Mr. Suma said he had heard that the Chinese Government has asked the American Government to alter the Cotton-Wheat “Loan” to a loan of money, and he observed that the National Economic Council had been started with the idea that its operations would be financed with the proceeds of this “Loan”. I made the observation that this could hardly be, since the National Economic Council was started in 1931, whereas the Cotton-Wheat Credit was extended in 1933. I said I had not heard of the new scheme he mentioned and I called attention to the fact that Mr. T. V. Soong’s transaction in the United States was not a loan, but was merely a credit extended to the Chinese Government for the purchase of cotton and wheat up to a total value of U. S. Currency $50,000,000; that the Chinese Government was not obliged to utilize the entire credit; and that, as I understood, very little cotton had been purchased and even wheat purchases had not been fully completed, owing to the fact that the resale of American cotton by the Chinese Government at a profit had been found impossible and the low price of wheat prevailing in China made a profit on resold American wheat difficult to obtain.
Mr. Suma amended his statement, by saying that the National Economic Council had been increased in personnel and scope of operations after the American Credit was established, in the hope that profits from that transaction might provide funds for the operations of the Council. He observed that the American cotton could be utilized only by the Japanese owned cotton mills in China and he answered affirmatively my question whether Japanese cotton mills were not refraining [Page 374] from buying American cotton from the Chinese Government, but were making their purchases direct from the United States. Mr. Suma said that this action of the Japanese cotton mills was caused by the tension in Japanese-Chinese relations.
Mr. Suma asked me whether I had met Mr. Monnet,39 whom he described as a French financier who had come to China at the request of Mr. T. V. Soong, just as Sir Arthur Salter had come. I replied that I had not met Mr. Monnet, but that I was anxious to do so, since he had been described to me as a very intelligent man.
Mr. Suma said that Mr. Monnet had told him in Shanghai that Mr. T. V. Soong, when he was in London last summer, had talked with Mr. Thomas W. Lamont, American banker, and with Sir Charles Addis, British banker, and had endeavored to promote a scheme under which foreign capital would be brought to China for purposes of economic development, but without the participation of Japan.
Mr. Suma expressed the opinion, in which, he said, Mr. Monnet had heartily concurred, that no scheme of financing economic development in China could succeed if it excluded Japan. Any such plan, Mr. Suma insisted, was “imaginary” and unreal. It was for this reason, he added, that the National Economic Council could not succeed in its program, even though headed by such capable men as Mr. T. V. Soong and Dr. Ludwik Rajchman. (Doubtless the well known anti-Japanese feelings of Mr. Soong and Dr. Rajchman were in the mind of Mr. Suma. W. R. P.) Mr. Suma said that he was told that Mr. T. V. Soong, ex-Minister of Finance and present member of the Standing Committee of the National Economic Council, would soon return to the Chinese political stage in a more substantial position, such as Minister of Industries, Communications, or Railways.
Mr. Suma said that Mr. Monnet had expressed himself as being extremely discouraged with the state of affairs in China, especially in relation to the prospect of bringing foreign capital in for the purpose of economic development.
The Department is doubtless aware of Mr. Suma’s fame as a practical diplomatist. His remarks to me, which I have summarized above, were a plain caveat against any plan to finance China politically or economically with foreign capital, excluding Japanese participation, whether such objective were sought to be achieved through an American credit, a partial revival of the International Consortium,40 or a project of the League of Nations.
Very respectfully yours,
- Jean Monnet (French), chairman of a consultative committee organized in 1933 by T. V. Soong, the Chinese Minister of Finance.↩
- For the Consortium Agreement of October 15, 1920, see Foreign Relations, 1920, vol. i, p. 576.↩