893.515/674
Memorandum by the Chief of the Division of Far Eastern Affairs (Hornbeck)12
I. It is clear that there has been and is a difference between the views of the Secretary of the Treasury and those of the Secretary of State with regard to the problem and with regard to procedure for dealing with the question of relations with China wherein there are involved the subjects of silver and of possible assistance by the United States to China.
The Secretary of the Treasury evidently conceives that the subject or subjects to be dealt with in this connection are either primarily political or primarily monetary; and that if they are the former, discussion of them with China falls within the province of the Department of State, whereas if they are the latter, discussion of them with China falls within the province of the Treasury Department. He says, “In view of the position of the Department of State that the subject now under discussion is primarily political and within its province rather than monetary and, therefore, within the province of the Treasury Department, my Department has refrained from commenting upon the British suggestion (for the appointment of financial attachés to the diplomatic missions in China)”.
The Secretary of State naturally has not this conception. Whether or not this subject or these subjects be regarded as primarily political or as primarily monetary, the simple and noncontroversial fact is that consideration of it or them involves consideration of relations between the United States and China, and discussion of them between the Governments of the United States and of China is and must be a political act and, if engaged in, cannot be disassociated from consideration and discussion of political relations between the two countries. The matter therefore cannot, under any conception, be regarded as of no concern to the Department of State and of exclusive concern to the Treasury Department. Moreover, the Secretary of State is the President’s principal aide in and for the conducting of foreign relations; and the question of relations between the United States and China is a question which is primarily his concern and for which he is primarily responsible. Relations of the United States with China involve a great many factors of a character and a variety which are not involved in relations of the United States with most other countries. Discussion between the American Government and, say, the [Page 600] British Government, of a question which may be and is regarded as primarily monetary, can be held without much consideration of or discussion of political factors. Such discussion may, therefore, conveniently and appropriately be carried on between the finance departments of the two Governments (each of the finance departments consulting the respective foreign offices when and as appropriate). But discussion between governments is normally and for the most part conducted between secretaries of state for foreign affairs. In the case of relations between the United States and China the factors involved are such that the political aspects of the subjects which come up for discussion are almost always primary and can never safely be disregarded. Relations with China, for the most part, cannot be disassociated from relations with Japan and, more often than otherwise, relations with a number of other countries. The Secretary of State therefore naturally feels that correspondence, discussions and negotiations with China should regularly be conducted by or through the Department of State.
The “subject now under discussion” certainly involves not alone relations between the United States and China but relations between the United States and China and Japan and Great Britain and France and, in fact, all the powers which have interests in and with regard to China, especially the powers signatory to the Nine Power Treaty of Washington of 192213 (principally, however, the five powers first named). The handling of such a matter surely falls primarily within the province of the Department of State, regardless whether the subject is primarily political or primarily monetary.
Such handling, however, need not be and should not be exclusive to the Department of State. That Department should consult fully with the Treasury Department and the Department of Commerce and any other department or departments which have an interest in the question under discussion or which can contribute advantageously toward the solving of the problems which may be involved or the administering of procedures which may be agreed upon.
II. The Secretary of the Treasury suggests that a question or questions be put to the British Government “along the following lines:
“The American Government, after considering carefully the British suggestion that a financial expert be attached to the American Legation at Peiping, has concluded that such a step would be advisable only if there were grounds for believing that prompt and effective action would result from such an appointment. The American Government would, therefore, welcome an expression of the views of the British Government as to the possibilities of such action and, if the British Government is of the opinion that effective action will be taken, the American Government would appreciate an indication of the specific [Page 601] measures comprising the program envisaged by the British Government. The American Government would further appreciate an indication whether the problems to be considered by the financial expert to the British Legation are of a political or of an economic and monetary nature, and, if of the latter, whether it is the desire of the British Government that the expert to its Legation should discuss monetary matters of a character other than those peculiar to China.”
He states that, “With the way opened for prompt and effective action from the economic and monetary point of view, the Treasury Department will take such action and send to China, when such a step, in its opinion, is calculated to produce constructive results, the ablest financial expert which it can find.”
The Secretary of the Treasury indicates a desire that “the State Department …14 receive from the British Government a clear-cut response” to the question or questions suggested.
It is clear that, in this connection also, there is a difference between the Secretary of State’s conception of the matter involved and the Secretary of the Treasury’s conception of the matter.
The Secretary of the Treasury evidently believes that the appointing by the American Government of a financial attaché to be attached to the American Legation at Peiping, in parallel to the appointment by the British and the French Governments of similar financial attachés to their missions in China, and at the suggestion of the British Government, “would be advisable only if there were grounds for believing that prompt and effective action would result from such an appointment.” The Secretary of State, however, believes that such an appointment would be advisable whether or not there be grounds for believing that prompt and effective action would result therefrom. The Secretary of State looks at the matter not alone from point of view of possible effect as regards the present monetary question but from point of view of relations (long swing and in general) between, on the one hand, the United States and China, and, on the other hand, the United States and several other powers, especially Great Britain, interested in China’s monetary problems and China’s financial relations with other powers. The Secretary of State does not conceive it essential that there be definite prospect that “effective action will be taken”; he considers it desirable that the American Government give evidence of the desire to cooperate with the British and other governments and to be helpful, if possible, to a neighboring country with which we have friendly relations and which is in difficulties, China. The Secretary of State is of the view that the financial attachés, if and when appointed, will study the problems in China as they find them and will report to their respective governments, [Page 602] acting independently of each other but with the objective of collaboration and cooperation when and where possible. He is of the view that it would be more useful, by and large, to discuss objectives and possibilities informally with agents of the British Government than to put the suggested questions categorically to the British Government and expect or demand from the British Government a clear-cut response to the questions—which response would not be likely to be forthcoming. He takes stock of the British habit and method of indefiniteness, and he doubts whether the British Government would be inclined to define or limit exactly the functions of the financial attaché which it is sending to its mission in China. He believes it desirable that we have a financial attaché at our mission, in part because the British and the French Governments are going to have such attachés, in part because the mere fact of attempting to cooperate will be in line with our declared and intended Far Eastern policy and in part because the work and the findings and the recommendations of such an attaché ought in and of themselves to be of value to this Government. He therefore does not consider it essential to lay down or to wait upon the condition that “the way first be opened for prompt and effective action from the economic and monetary point of view”; he conceives that it should lie at least as much with the Department of State as with the Treasury to say whether and when a financial attaché shall be sent; he regards the matter as one of concern to the whole American Government, as one of concern primarily from point of view of foreign relations; and he feels that the broad interests of the United States can, under the circumstances, better be served by appointing a financial attaché to the Peiping Legation than by refusing to appoint one.
- Comment occasioned by the Secretary of the Treasury’s draft reply to a letter, dated June 10, from the Secretary of State, transmitting the British Embassy’s aide-mémoire of June 7. This memorandum was handed to the Secretary of the Treasury, July 9; see supra.↩
- Signed February 6, 1922, Foreign Relations, 1922, vol. i, p. 276.↩
- Omission indicated in the original.↩