The Ambassador in China (Gauss) to the Secretary of State

No. 1692

Sir: I have the honor to enclose a copy of despatch No. 156 of September 13, 1943, together with enclosures,34 from the Secretary at Chengtu35 on the subject of the precarious position of Christian colleges and their importance in Sino-American cultural relations.

Summary of Despatch. The cumulative effects of unchecked inflation in China coupled with the ridiculously low exchange rate for U. S. dollars have placed the twelve Christian colleges which are actively functioning in free China in a precarious financial condition, and if means are not found to alleviate the situation several of these institutions may be forced to discontinue operations after the close of the present scholastic year. While Christian colleges are receiving approximately 35 times as much Chinese currency as they were receiving in 1936–1937, this currency will purchase only 17 per cent of the goods and services which were purchased before the war with their greatly reduced incomes. Mr. Smith is of the opinion that any serious curtailment of the work of the Christian colleges at this time would be of direct concern to the American Government and he suggests that the Division of Cultural Relations reexamine the possibility of utilizing [Page 754] these institutions to a greater extent and consider whether some official action might be taken to prevent the curtailment of their activities. If a more favorable readjustment of the official exchange rate is not possible, he suggests either direct aid through financial support of worthy projects of the colleges or indirect aid through the inclusion of these institutions in any reverse lend-lease arrangement that may be proposed.

Respectfully yours,

C. E. Gauss
  1. None printed.
  2. Horace H. Smith, Second Secretary of Embassy in China.