893.102 Tientsin/399: Telegram
The Chargé in the United Kingdom (Johnson) to the Secretary of State
[Received July 27—2:55 p.m.]
1075. During my conversation this morning with Mr. Butler, Parliamentary Under Secretary of State for Foreign Affairs, on the Anglo-Japanese negotiations at Tokyo,68 I asked him if there were any change under consideration in British policy of support of the Chinese currency. He indicated somewhat evasively that the support would be continued but said that the matter was still before the Cabinet and that he could not go into it further at this time.
The British Treasury has informed Butterworth69 that the suppression demands included (a) surrender of the Chinese silver in the Concession and (b) non-recognition in the Concession of Chinese currency as legal tender. Commenting on this “from the financial point of view” the British Treasury state that the answer to (a) was that the British banks were obligated in the matter of silver and would certainly not take any action which would have the effect of making them pay double; and to (b) that it was “impossible” to refuse to recognize the currency of the legally recognized government as non-legal tender. The British Treasury stated that the Bank of England was awaiting advices from Rogers70 on the outlook for the Chinese dollar.
I was informed at the Foreign Office this afternoon that in view of the difficulties of finding an acceptable compromise over the Chinese currency question the British Ambassador at Washington has been instructed to inform the United States Government of the British attitude and to make it clear that the support of other interested powers is vitally important on this question.
The City Editor of the Times who is, I know, in close touch with the British monetary authorities respecting financial developments in China, stated editorially: [Page 695]
“Even those who are most expert in Chinese financial and economic problems feel the greatest doubt as to what would be the proper course to pursue in the immediate future. For the moment the pressure on the Shanghai dollar has abated, and the market is inclined to think even that some recovery is possible. But the problem remains formidable and there are many who consider that if confidence in the stability of the dollar is to be fully restored, assistance will have to be on a substantially larger scale than was evisaged when the Stabilization Fund was originally established. Some people are inclined to take the view that the task of securing the stability of the dollar is too great for this country to undertake any further in the absence of United States cooperation. It would seem almost self-evident that it must be in the United States’ best interests to cooperate in this matter, for it is only by a reasonable stability of the dollar that American trading interests can be preserved, but so far there has been surprisingly little sign that such cooperation will be forthcoming. If further support is contemplated, whether with United States help or without it, the fullest account must naturally be taken of the fundamental economic forces which are weakening the position of the dollar.”
- See also telegram No. 1074, July 27, 5 p.m., from the Chargé in the United Kingdom, vol. iv, p. 227.↩
- William W. Butterworth, Jr., Second Secretary of Embassy in the United Kingdom.↩
- Cyril Rogers, of the Bank of England, member of the China Stabilization Fund Committee.↩