Office of the Historian

893.515/580: Telegram

The Consul General at Shanghai (Cunningham) to the Secretary of State

Shanghai, May 28, 1935—4 p.m.
[Received May 29—9:20 a.m.]

262. Referring to my telegram No. 255, May 24, 4 p.m.

1.
On May 24th F. J. Raven, President of the American Oriental Banking Corporation, the American Oriental Finance Corporation and the Raven Trust Company Federal Incorporated, U. S. A., which have petitioned United States Court for China for appointment of liquidators gave to press following interview which he has verbally confirmed to member of my staff:

“The reasons stated for the liquidation of the American Oriental Banking Corporation apply as well to the other two companies. In a word the situation can be attributed to the American silver purchasing plan which has drained silver from the country. There is no silver to carry on.”

2.
On May 26, Henchman, Shanghai manager of the Hong Kong and Shanghai Bank, approached Mackay, Shanghai manager of the National City Bank, and Schumaker, Shanghai manager of Chase Bank, and called them to task for not supporting American banking institutions in Shanghai; thus in my opinion Mr. Henchman has put himself on record and nicely set the stage to blame American Government for any banking or financial crisis which may arise in Shanghai.
3.
The Shun Shih News Agency (Chinese) today reports that Minister of Finance Kung yesterday discussed with T. V. Soong, chairman of Bank of China, and other bankers the present financial situation including the closure of the American Oriental Banking Corporation and the Minghwa Commercial and Savings Bank. The Shanghai Press reports that the director of the Minghwa may be detained by the Chinese authorities pending outcome of investigation of bank.
4.
It appears to me that there is danger that any severe collapse in banking and real estate in Shanghai may be laid to the doors of (1) the American and other foreign banks which have in the past year shipped silver from Shanghai and (2) the American silver policy as the primary cause.
5.
News articles and editorials which have thus far appeared in Shanghai have been of quieting nature except for statement quoted in paragraph 1 in regard to the so-called Raven interests.

Repeated to the Legation.

Cunningham