893.51/6019: Telegram
The Minister in China (Johnson) to the Secretary of State
[Received July 13—6:45 a.m.]
353. Legation’s 329, July 1, 5 p.m.17 Beginning on July 6 large numbers of Koreans and Chinese for 4 days crowded premises of the “joint treasury of the four banks” (Kincheng, Yien Yieh, Continental, China and South Seas) in Tientsin and demanded silver in exchange for notes. The silver according to report was later exchanged in money shops in the Japanese concession at a premium ranging from 5 to 10%. By July 10 more than $300,000 had been paid out and on July 11 according to today’s press the joint treasury in accordance with a decision reached by the Chinese Bankers Association announced suspension of redemption in silver, the notes of the banks concerned to be redeemed only in notes of the three government banks. An editorial appearing in the Peiping and Tientsin Times states the participants in the bank run have been mainly “minions of some operator who naturally wishes to remain in background and if proof of this is required one has only to watch unkempt coolies at the counter producing bundles of notes of a value of which they can only have dreamed”. It is generally believed that silver smugglers are behind the movement and in considering this question the afore-mentioned newspaper calculated that approximately 44,000,000 yen of silver was smuggled out of China with Japan as its destination in the first 5 months of 1935.
A reliable foreign banker in Tientsin gives the report that Shanghai Chinese [bank?] (name unknown) was recently taken over by the Government whereupon it was discovered that the bank had $20,000,000 in overdrafts most of which had been granted to officials of the bank and other private persons; other scandals mights be expected.
The general government situation is said to be such that the proclamation of a general moratorium on the exchange of silver for bank notes in the near future is a distinct possibility. The British are [Page 605] reported to view the situation with concern by reason of the alleged possibility that the Japanese may endeavor to obtain control of the Chinese currency in the anticipated crisis to further their own program.
Repeated to Nanking, Shanghai and Tientsin by mail.
- Not printed.↩