033.1100 Rogers, James H./70: Telegram
The Minister in China ( Johnson ) to the Secretary of State
[Received June 28—1:10 p.m.]
275. For Morgenthau from Rogers. Gradual rise in silver price is causing some alarm in Chinese banking and governmental circles. Fear is expressed that exports of silver which were tending to decline may become greater, hence dangerous. While reserves of Shanghai banks are large any great or prolonged outflow would reduce their lending power and affect seriously Government credit as the banks are taking a very large portion of the Government issues.
Rising silver is also bringing hesitation in the apparently recovering import trade as the prospect of still higher silver prices leads buyers of foreign products to delay purchases.
Nanking Government is apparently considering protective measures as Finance Minister Kung yesterday asked my advice regarding raising export tax on silver.
Several influential bankers have come to me to express the hope that any silver price-raising program undertaken in America would be very gradual. [Rogers.]