893.51/6957
The Chinese Ambassador (Hu Shih) to the
Secretary of State
Washington, July 29,
1939.
My Dear Mr. Secretary: I beg to enclose
herewith for your information and consideration a copy of telegraphic
message I have just
[Page 696]
received
from His Excellency Dr. H. H. Kung, President of the Executive Yuan and
concurrently Minister of Finance, dated July 28, 1939, in regard to the
critical question of our national currency and foreign exchange.
I am [etc.]
[Enclosure]
Text of a Telegraphic Message From His
Excellency Dr. H. H. Kung, President of Executive Yuan and
Concurrently Minister of Finance, Dated July 28,
1939
The Chinese Government exceedingly regrets that the withdrawal of
support from the Shanghai exchange market was necessary last week
because it had become impossible to allocate for that purpose funds
on the scale that would have been required. The Government has
established a system of import and export control under which
exchange will be provided at favorable rates to supply the people of
the Government-controlled areas with necessary imports and which
will sustain the value of the currency in these areas. Moreover,
steps are being taken to stimulate exports through ordinary channels
of trade, to effect further retrenchment in government expenditures
both for current needs and for capital outlays the benefit of which
will not be realized in the near future, to restrict bank credit for
private enterprises and to increase contributions of the public
through taxes and loans.
The Chinese Government however is anxious that the value of the
national currency be maintained also in the areas subject to
Japanese interference. Should extreme depreciation result there and
the situation get out of hand, the important interests of China and
of the friendly Powers alike would seriously suffer. Such an
unfortunate development would impair confidence in the currency
throughout the entire country; increase the cost of living to the
detriment of all; seriously interfere with raising of necessary
expenditures of the Chinese Government; gravely prejudice the
welfare of the people in the areas subject to Japanese interference
whose loyalty has been so outstanding under most trying
circumstances; facilitate creation of political disturbances by the
Japanese; and make it easier for them to introduce their bogus
currency in a position to finance their puppets and their schemes of
economic and financial monopolies and to exclude all but Japanese
interests.
China has carried on the war for over two years mostly from Chinese
resources, although very valuable aid has been received from credits
obtained from Great Britain, France and the United States and from
American purchase of Chinese silver. China still has substantial
resources for its requirements, but must strictly conserve them in
view of the necessity of continuing the struggle for an indefinite
[Page 697]
time. The Chinese
Government has come to the point where it can no longer devote large
resources to supporting the value of the national currency in the
areas subject to Japanese interference. The Chinese Government
therefore most earnestly requests the friendly foreign governments,
individually or collectively as may be most suitable to them, to aid
in maintaining the value of the Chinese dollar in the common
interest, and most earnestly hopes that they will be in position to
do so. Now that the rate of exchange has fallen to only a little
over half of its value prior to June 7, it should not be so costly
to keep it steady because the lower rate discourages imports and
outward remittances and stimulates exports. Aid is needed without
delay however so that the situation will not further
deteriorate.
If as is hoped this proposal can be considered in principle, the
Chinese Government is prepared to discuss particulars of
arrangements best adapted to actual conditions and on a basis which
would avoid difficulties encountered in the past.
Similar communications are being sent to the British and French
Governments.
