893.515/866: Telegram
The Ambassador in China (Johnson) to the Secretary of State
[Received 12:30 p.m.]
78. Suma came to see me last evening and while discussing Sino-Japanese situation stated that Japanese were very disturbed about decision of Chinese Government to nationalize silver. His statement to me convinced me that he was convinced that National Government’s decision was made upon some understanding apparently with the British and United States that a loan, probably not participated in by the Japanese, would be forthcoming from the British and/or United States to furnish the basis for contemplated currency stabilization. I told Suma that I had not participated in any discussions of a loan; that the only prior information I had of the National Government’s intention was that received on November 2, communicated to the Department in my November 2, 11 p.m. from Shanghai, and that I then understood that a similar communication had been simultaneously made to the British, French and to the Japanese.
Suma stated that he got the impression that the United States on November 2nd had given its consent to a loan. I told Suma that no mention of a loan was made to me on November 2nd nor had I discussed with any one any specific loan nor had specific proposal for a loan been laid before the American Government other than the general suggestion made by the British Government last spring, which 1 understood had been simultaneously communicated to the French and to his Government. I inferred from Suma’s attitude and statements that all along he has been laboring under the conviction that the United States and Great Britain were committed to a loan to China to assist in currency stabilization.
Suma stated that on November 2nd, when information was communicated to Ariyoshi by Chang Chia-ao,50 the Chinese were told that [Page 643] Japan opposed the Chinese plan for silver nationalization; that Ariyoshi asked Chang point-blank whether a foreign loan had been arranged and that Chang said that a loan was being considered. Suma said that British Ambassador, when asked whether a loan had been made, denied the existence of a loan. Suma stated that he had a conversation with Leith-Ross on the 13th and that he asked Leith-Ross whether a loan had been made and that Leith-Ross stated that he had been discussing with the Chinese the possibility of a loan, but that no concrete proposal had been arrived at. He said that he asked Leith-Ross what England would do if the United States and Japan refused to participate in a loan and financial chaos followed. (Suma believes that the Chinese will be unable to carry out stabilization and that financial chaos will result in the course of a few months; that nationalization decree has already resulted in independence movement in Canton, North China and Shantung where independent currency control banks have been set up.) He said that Leith-Ross replied that he did not know; that such chaos would result in great harm to British business and all business and that he hoped that the banks would do what they could to help. Suma stated that he told Leith-Ross that the present situation was due to a misunderstanding of Chinese psychology, as the Chinese apparently had acted on the assumption that an international loan would be made. Suma stated that he told Leith-Ross that a loan for Chinese currency stabilization was a very difficult matter; that stabilization depended on restoration of confidence and that confidence could only be restored if the Government could be stabilized. Suma expressed to Leith-Ross doubt as to possible stabilization of Chinese Government, as there were quarrels at home and abroad Sino-Japanese relations were very bad indeed.
From above conversation, I carried away the impression that the Japanese are very angry over alleged British support of steps to stabilize currency taken by the Chinese without Japanese consent. Suma stated that Japan would be very cautious in its statements and attitudes, but I must confess that Suma gave me the impression that Japan would do nothing, by way of cooperation, in making Chinese stabilization plans a success.
Repeated to Peiping, to Tokyo by mail.
- Also known as Chang Kia-ngau, managing director and general manager, Bank of China.↩