893.515/559
Memorandum by the Consul at Hankow (Stanton), Temporarily in Washington
Of the many problems confronting us in our relations with China and the Far East, it is believed that our present silver policy constitutes a development charged with serious consequences and that, therefore, it is of immediate and pressing importance.
It is difficult to escape the feeling that the continuation of this policy will set in motion, in the not distant future, a train of events which may prove to be disastrous alike to our trade with and traditional friendship for China and which may jeopardize our position in the Far East. It seems undeniable that this policy is rapidly draining from Shanghai the stocks of silver which have accumulated in that port over a period of years and that it is becoming increasingly difficult for the National Government to raise funds from this heretofore fairly dependable source. The continuation or the fall of the Government being so intimately related to the facilities heretofore available at Shanghai for the financing of government loans, it would seem that the drying up of these facilities would almost inevitably precipitate either the collapse of the Government and economic and political chaos or a speedy acceptance by China of Japanese demands. Developments of the last few months indicate that the latter course is the more likely. In either contingency it may be expected that Chinese official and commercial circles will attribute the plight of the country to the silver policy of the United States. It is also to be anticipated that there will be extensive and carefully prepared publicity, designed to divert attention from the Chinese Government’s acquiescence to Japanese demands, which will attribute all ills and disasters to our silver policy. That such publicity will be anti-American in tenor and that it will conceivably result in an anti-American movement of unpredictable proportions may also be anticipated in the light of the history of similar movements in China. That the Japanese will utilize to the full the advantage which such a situation will give them also may be taken for granted.
In short, it appears highly probable that a continuation of our present silver policy will so weaken China politically and economically that she will become an easy prey to Japanese ambitions or be forced directly and speedily to accept Japanese domination. It is obvious that such developments will seriously affect if not permanently injure our interests in China and perhaps destroy the good will and friendship which we have so carefully cultivated with that country. That our relations with Japan may also enter an atmosphere charged with a dangerous tenseness is by no means inconceivable.
[Page 579]It has been axiomatic with us that our interests and China’s interests can best be served by the maintenance of a stable government in that country. In complete disregard of this axiom are we not rapidly undermining such stability as exists in that country?