Mr. T. V. Soong, of the Chinese National Economic Council, to the American Ambassador in the Soviet Union (Bullitt), Temporarily in Washington41

Am taking a hand in currency and financial problems because of the extreme gravity situation. Considered opinion myself is that inevitably economic and especially currency situation heading towards crisis, possibly in March, probably in April certainly before June. When it comes banking system will be smashed, country forced to irredeemable paper money and government finances entirely disrupted, with disastrous effect on Central Government authority.

In other countries and under other circumstances currency collapse while unfortunate need not be so disastrous, but with country not yet well organized and with Japan now pressing for show down (which fact must be well known to you) in order to dominate China, Government would then have to choose between accepting a Japanese loan under onerous political and economic conditions or facing the [Page 533]emergence of provincial governments with different currencies virtually under Japanese protection. Had I not seen this eventuality I confess I would view approaching crisis with comparative calm.

In view of the impending danger to China and world, hopeful that proposal (which is being transmitted by Minister Sze) for an American loan to enable China to firstly link her currency with U. S. dollar and avert coming crisis, secondly spare a part of her silver stocks for American requirements, will be viewed with great sympathy as far more is involved than the fate of the present Chinese Government or even her economic well being.

  1. Copies were given by Mr. Bullitt to President Roosevelt and to the Chief of the Division of Far Eastern Affairs.