893.51/6947: Telegram
The Ambassador in France (Bullitt) to the Secretary of State
[Received July 26—4:52 p.m.]
1381. I had lunch with Wellington Koo, the Chinese Ambassador, and Sun Fo65 yesterday. They stated that the Chinese Stabilization Fund was now virtually exhausted. They added that the French Government was unwilling to advance the 200,000,000 francs agreed upon in view of the inadequacy of such a sum to support the Chinese dollar. They stated that some indication that further help would be [Page 693] forthcoming from the United States and England might be decisive hi persuading the French to give China this 200,000,000 francs and possibly more.
They added that in a few days the British would sign an agreement to extend £3,000,000 of export credits to China for purchases in Great Britain. The British, however, had refused to introduce a new bill in Parliament for a further advance to the Chinese Stabilization Fund because of the rapidity with which the £5,000,000 advanced in March had been drained.
Wellington Koo said that the Chinese Ambassador in London had been assured categorically that the British had made no promise to the Japanese to refrain from supporting the Chinese dollar.
Both Koo and Sun Fo stated that they considered it vital to reestablish the Stabilization Fund on a basis sufficiently strong to make it immune to further attacks by the Japanese and others. They added that the moral effect of further assistance from China’s friends in view of the recent Anglo-Japanese agreement66 would be enormous.
The Chinese Ambassador then asked me if it might not be possible for the Government of the United States to advance gold immediately to China in payment of purchases of Chinese silver to be delivered by China 6 months or a year hence. I stated that I believed that such action would be illegal and that the question of the desirability or undesirability of such action therefore would not arise.
Later in conversation with Matthews,67 the Chinese Ambassador said that there were now 20,000,000 ounces of silver owned by the Chinese Government in the French and British Concessions at Tientsin deposited in Chinese and foreign banks. He wondered whether the Government of the United States could not purchase this silver and assist in arranging transportation to the United States. In reply to a question he said to Matthews that he understood the British had made no commitment to help the Japanese acquire this silver.
The Chinese Ambassador then suggested to Matthews that it might conceivably be possible for the Export-Import Bank to grant credits to China for the export of another American commodity; namely, gold. Matthews expressed the opinion that such an action would presumably be illegal and that the proposal seemed rather fantastic. Wellington Koo said that he would get in touch with Dr. Kung at once and ask for definite instructions with regard to definite proposals. Meanwhile he would be greatly obliged if the Government of the United States could give thought to this matter and consider ways and means of assisting China to maintain a stable currency.
Since the Chinese Ambassador and Sun Fo are likely to question [Page 694] me further with regard to this matter, I should be obliged if you would give me instructions as to the nature of the reply I should make.
- President of the Chinese Legislative Yuan, on mission in Europe.↩
- For the Arita–Craigie formula, see telegram No. 348, July 21, 6 p.m., from the Chargé in Japan, vol. iv, p. 224.↩
- Harrison Freeman Matthews, First Secretary of Embassy in France.↩