893.51/6631: Telegram

The Ambassador in Japan ( Grew ) to the Secretary of State

389. Under the title “Rumored Large American Loan to China” the editorial in this morning’s Asahi is given to a discussion of the American attitude toward the current conflict. Information from Hong Kong and Shanghai, it states, reports American loans of 25 million on the security of silver deposited with the United States and of 500 million dollars on the security of banking rights, mining, and other collateral. The editorial finds it not unlikely that Chinese negotiations for loans in the United States have made some progress even if these details are inaccurate. It asserts that a business basis for such loans is lacking and that they are possible only as political loans made by the American Government. Discussing the probabilities in accuracy of the report, it deduces that probably the report arises from a new silver purchase agreement. The editorial thereupon [Page 533] goes into the American policy of purchasing Chinese silver, states that the American policy is keeping Chinese currency up in spite of lack of foreign trade, and asserts that the Chiang Kai Shek régime is thereby being sustained. Recent intensification of American opinion against Japan is admitted.

If I am approached with regard to this loan rumor, I shall be guided by the Department’s 338, December 10, 1937.97

Repeated to Shanghai for Hankow.