893.51/6831: Telegram
The Ambassador in the United Kingdom (Kennedy) to the Secretary of State
[Received March 7—3:10 p.m.]
305. Supplementing the information in the Embassy’s 294, March 3, 7 p.m., Leith-Ross stated that the flight from the Chinese dollar was continuing. The British Government’s announcement has been delayed but will probably be made public tomorrow. Leith-Ross hopes that this action may check the flight and that it may be reversed after the difficult time of the Chinese New Year’s settlement is over. His [Page 653] information is that in the main the flight money is not going abroad as such but is merely seeking safety pending a clarification of the situation. He is hopeful that the British banks may be persuaded to advance the necessary funds before the House of Commons’ consent is obtained.
Leith-Ross also stated that a communication is being despatched to Washington2 outlining the position particularly with respect to North China and suggesting the possibility of further representations being made to the Japanese.
The Chinese have sent a note to the British Government indicating their inability to meet any sinking fund payments on their loans but expressing willingness to discuss interest payments. Leith-Ross said that he did not favor any arrangement on the basis of territory controlled because it would look like the first step in the dismemberment of China. He preferred an arrangement whereby China would pay one interest coupon; the Chinese were considering this suggestion but according to Rogers wished to avoid discrimination against other powers save Japan and such a procedure would require the agreement of other powers; furthermore they did not wish to lay out much foreign exchange.
- Infra. ↩