893.515/776: Telegram
The Counselor of Embassy in China (Peck) to the Secretary of State
29. 1. In the course of conversation with the Minister of Finance, October 8, noon, I asked the Minister whether anything concrete was being evolved through the investigations now being pursued by Leith-Ross in Shanghai. Kung replied that Leith-Ross was showing genuine desire to find some practical way whereby Great Britain might extend assistance to China and had broached the subject of an international loan in which Japan and France would necessarily be partners but probably with nominal participation. Kung observed that such a plan would of course depend for success on the general willingness of the other powers to participate. Kung was vague or purposely reticent about the details but I inferred that the matter had reached the stage of tentative inquiries by the British Government and other powers concerned. This inference may have insufficient basis. Another official of the Ministry of Finance told me that nothing practical had resulted from the studies of Leith-Ross. At any rate Kung again expressed his earnest wish that an American representative of the type of Leith-Ross were present. Replying to my question Kung said that the French Government had definitely selected the former French economic representative in London to come to Shanghai to cooperate with Leith-Ross and that the French representative would probably arrive shortly after November 1st. (See Department’s September 25, 7 p.m., paragraph 2.)
2. I inquired whether Leith-Ross had indicated any willingness on the part of Great Britain to extend individual assistance to China if the international plan failed. Kung replied in the affirmative but was noncommunicative and seemed anxious to center attention to the international project.
[Page 626]3. Kung spoke at length of the urgent necessity for improving the finances of the Chinese Government and the economic and currency situation in China. He said that all these objects could be attained by one large loan secured on customs revenues and that the proceeds of the loan could be utilized (in addition to the purposes already mentioned) for funding the obligations of the Chinese Government including American. He pointed out also that agricultural and other economic rehabilitation in China would greatly increase the market for American [goods].
4. I inquired whether it was true as reported that failing to receive international assistance the Chinese Government would devise means of producing pigiron [inflation?]. Kung replied that some stand would have to be taken and several alternative schemes were being considered suggesting that plan which required government control of silver bullion in the country would be extremely difficult because the Chinese were accustomed to hoard silver. To Peiping and Shanghai by mail.
- Telegram in two sections.↩