033.1100 Rogers, James H./19: Telegram
The Consul General at Shanghai (Cunningham) to the Secretary of State
Shanghai, April 21,
1934—9 p.m.
[Received April 21—2:35 p.m.]
[Received April 21—2:35 p.m.]
187. For Morgenthau from Rogers. Further careful search for opinion sympathetic with higher silver price yields preliminary conclusions:
- (1)
- At least in Shanghai there is no responsible Chinese opinion favoring further rise in price of silver.
- (2)
- Even among importers the preponderance of opinion is adverse to further rise. Small minority of importers favors small rise as a stimulant to their own businesses.
- (3)
- Banking opinion, Chinese and foreign, virtually unanimous in opposition to further rise and insists upon stability.
- (4)
- Government’s financial advisers as well as most bankers fear that further considerable rise in silver price would precipitate large silver outflows with resulting liquidation especially in Shanghai real estate market in which some banks are heavily involved. Reason is present tendency to convert Chinese holdings into foreign goods would be aggravated.
- (5)
- Should such outflows occur the Government probably would not impose immediate silver embargo but doubtless would increase export tax on silver.
- (6)
- Severe agricultural depression, which would be aggravated by substantial rise in silver price, is creating much internal unrest.
- (7)
- In present tense diplomatic situation [it would be?] unfortunate precipitate further economic difficulties.
Our statistical studies indicate no long-run relationship between silver price and Chinese imports. Short-run relationships very slight.
Prevailing opinion among those who work with balance of international payments is that higher silver price would aggravate adverse balance with resultant increased silver outflows. Our unfinished studies tend to confirm this view. [Rogers.]
Cunningham