893.515/818: Telegram
The Ambassador in China (Johnson) to the Secretary of State
[Received November 4—10:55 a.m.]
My October 29, 11 a.m.42 and November 2, 11 p.m. I have just seen Leith-Ross and he has told me that contrary to what might be surmised from resemblance of details of decree of National Government, summarized to Department in Consul General’s telegram of today’s date to suggestions which he had made, reported in my telegram of October 29, 11 a.m. above referred to, he had not instigated Government’s decision; on contrary he had urged Government to delay action until preliminaries had been completed; he stated that Soong and Kung had stated that they could not wait as smuggling of silver from Tientsin was continuing. As he put it, they had jumped the gun. However, he stated that it was something in their favor that they had reached a decision and had announced it, and, in order that British banks might be in a position to cooperate with what was essentially a good scheme, the British Ambassador had issued a King’s regulation (it is not an Order in Council) under his authority to issue such regulations for the control of currency issued by British banks in this extraterritorial jurisdiction and for the peace and good order of British subjects. He expressed the opinion that an order in council would have to be issued later to take care of insurance contracts and rent contracts.
I explained to Sir Frederick that while I was personally sympathetic with any step taken by the Chinese Government to stabilize its financial situation and while I believed that the Government of the United States would be equally sympathetic I was without power to issue any regulations or orders applicable to American nationals under the circumstances that the American banks were private institutions and would have to be guided by their own discretion in the matter. Leith-Ross said that he understood this.
Leith-Ross remarked that he had come out originally for the purpose of obtaining information regarding the local financial situation in the expectation that such information and data as he might collect might be used in discussions with representatives of France, United States and Japan looking to a possible international loan participated in by all. He said that such international cooperation had been laid down as a condition precedent to British participation. For one reason or another France, the United States and Japan had not sent representatives, and such discussions were, therefore impossible, and he was estopped from making any proposal for a loan because of a [Page 632] complete silence on the part of the Japanese as to whether or not they would participate although he had given them every opportunity to indicate their desires. He remarked that he delayed his arrival in China by remaining in Japan with the sole idea of learning what the Japanese had in mind, but that he had been able to learn nothing. He denied categorically that the question of recognition of Manchukuo had been discussed. He agreed with me that apparently Japanese policy dictated by the military was hostile to any measures undertaken in regard to China that might originate with or be participated in by Western nations.
To the local press who have inquired I have refrained from making any statement except to say that I am without power to issue any order or regulation of similar effect to that issued by the British.
Leith-Ross appears to me to be reluctantly coming to the conclusion which I have had for some time, namely, that the Japanese military who now dictate Japan’s policy in regard to China will not permit Japanese cooperation in any financial plan for China originating with and if participated in by Western countries. He proposes to visit Tientsin and North China shortly.
- Not printed.↩