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 [Page 543]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 deems it not practicable for the United States to embark upon an undertaking such as is envisaged in this outline and ventures to inquire whether the Chinese Government has given thought to the possibility of presenting this outline or an outline similar in essential features simultaneously to the governments of those foreign powers—of which the United States is one—which have in the past manifested interest in projects relating to Chinese financial problems and especially in projects for Chinese currency reform.