Office of the Historian

893.515/1353½

The Chinese Embassy to the Department of State

Text of a Cablegram Received From His Excellency Dr. H. H. Kung, President of the Executive Yuan, Chungking, China58

The Chinese and Foreign Governments interested in trade and investment in China, have common interest in maintenance of the Chinese Currency in the areas for the time being occupied by the Japanese. This Currency is preferred over the Japanese controlled currency both by the Chinese public and foreigners (other than Japanese) not only because of the position which the Chinese Currency has enjoyed and the dislike of alien currency sought to be foisted upon China, but because a free exchange market exists for trade and legitimate personal operations in the occupied areas.

If the Japanese controlled currency should supplant the Chinese one in these areas, the Japanese could both finance thereby their political, financial and economic enterprises and could exert a strangle hold upon the foreign and Chinese activities to the extent that their control could be maintained. It seems inevitable that they would introduce currency and trade control like that enforced in Japan and China’s northeastern provinces. Under such a regime individual exchange transactions could take place only with the consent of the Japanese authorities or their agents. This would effectively close the door to freedom of economic opportunity and be contrary to the rights and interests of foreign nationals.

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Further Japanese action against the Chinese Currency is expected soon as the Japanese measures of last March contemplated that the Chinese Currency should not circulate in North China after a year. The Chinese Government taking such action as is possible to maintain the position of the Chinese Currency can do little at present to combat the Japanese controlled currency in the occupied area. The Chinese Government therefore earnestly hopes that the American Government will take such action as it may find practicable to oppose (1) further progress of the Japanese controlled currency, for example, acceptance for official use in Concessions and Settlements and (2) measure[s] to force the Chinese Currency from circulation and to prevent its use to pay for export goods.

Washington , December 23, 1938.
  1. Copy handed to the Chief of the Division of Far Eastern Affairs by the Counselor of the Chinese Embassy, December 28.↩