Draft Note From the Secretary of State to the Chinese Minister (Sze)

The Secretary of State presents his compliments to the Chinese Minister and has the honor to acknowledge receipt of the Minister’s two notes of February 5, in one of which the Minister transmits the text of a cablegram from Dr. H. H. Kung, Minister of Finance at Nanking, containing the outline of a plan with regard to silver, and in the other of which the Minister makes certain observations.

In the outline of a plan, the Chinese Minister of Finance suggests that arrangement might be made whereby China would supply the American Government’s requirements under the Silver Purchase Act, the amount, the period of years for effecting delivery, and the sale price of silver to be agreed upon between the United States and China; and that, in view of what China deems the necessity for abandoning the exclusive silver basis maintained by China alone and adopting a new currency system involving use of both silver and gold with a view to linking China’s currency to that of the United States, the United States (a) loan China one hundred million United States dollars and (b) extend to China a credit of one hundred million United States dollars “against future delivery of silver to be drawn upon if and when required”; the above project to be “conditioned upon a final agreement on a feasible currency program.”

In reply, the American Government, taking into consideration the history of projects which have been formulated and proposals which have been made and possible arrangements which have been discussed and tentative agreements which have been entered into, at intervals during the past four decades; and, giving thought to various factors in the field of international relations today, feels that it would not be practicable for the United States to enter into an agreement with China such as is envisaged in the outline of a plan under reference. However, if upon further consideration the Chinese Minister of Finance should deem it advisable to suggest simultaneously to the governments of several of the foreign powers which have in the past shown themselves most interested in projects dealing with Chinese financial problems, and especially in projects for Chinese currency reform, a program of the nature summarized above the American Government would be prepared to cooperate with the other Governments in that manner approached, and with the Chinese Government, in exploration of the possibilities of rendering collectively the assistance sought by China.