Foreign Relations of the United States Diplomatic Papers, 1936, The Far East, Volume IV

893.48/1044: Telegram

The Consul General at Shanghai (Gauss) to the Secretary of State

Shanghai, February 17, 1936—4 p.m.
[Received February 17—9:25 a.m.]

107. [From the Ambassador.] My October 27 [29], 7 p.m. from Shanghai¹⁰ and subsequent telegrams regarding suggested reinstatement of cotton and wheat loan. While making social call on Kung today accompanied by Gauss, Kung asked C. T. Wang¹¹ to be present and asked Wang to communicate to me the following. Wang stated that while on the ship with the congressional party between Shanghai and Yokohama he discussed with Leslie L. Biffle¹² and possibly others the question of reinstatement of uncompleted part of wheat and cotton loan. He stated that there had since been an exchange of communications on this subject and that he had been referred to Hunt¹³ in the matter. He described the proposal very generally without going into detail and said that he had referred the matter to Dr. Kung. Kung stated that he was interested and that he had instructed the Chinese Ambassador to make inquiry as to whether the proposal would be received favorably by the American Government if application were made by the Chinese Government for reinstatement of loan. He stated that the Chinese Ambassador’s reply was vague as he had been unable to see Jones.¹⁴ He said that they did not wish to apply unless assured that the application would be favorably received and asked me to telegraph you and inquire as to this point stating that this information was urgently needed here. Without other comment I promised to make the inquiry.

2. From the very broad and general statements made by Kung and Wang I infer that the proposal is along lines described in my November 24, 2 p.m. from Shanghai,¹⁵ China proposing to sell cotton to Germany obtaining 25 percent in cash and credits for the balance payable within a year, the Chinese obligation to the American Government to be liquidated in installments over a period of from 2 to 5 years. Kung remarked that credits would aid in plans for stabilizing currency but made no other statement regarding use of funds. I still hold the opinion expressed in the last paragraph of my November 24, 2 p.m.¹⁶ Can Department give me a reply to Kung’s question which either I or Gauss can communicate to Kung. [Johnson.]

Gauss

10. Not printed.
11. Former Chinese Minister for Foreign Affairs.
12. Secretary to the Democratic majority in the Senate.
13. William P. Hunt, American businessman.
14. Jesse H. Jones, Chairman of the Reconstruction Finance Corporation.
15. Not printed.
16. In this telegram the Ambassador concluded: “I think the consummation of such a transaction at this time would have grave repercussions in Japan and I am doubtful whether China can ever repay.” (893.48/1018)