Memorandum by the Assistant Chief of the Division of Chinese Affairs ( Meyer ) to the Deputy Director of the Office of Far Eastern Affairs ( Stanton )

Mr. Stanton: The request of Foreign Minister Soong addressed to the Secretary under cover of a letter dated April 20, 1945 for assistance in solving certain Chinese economic difficulties, particularly inflation, has been examined by officers of CA, FE and FN51 and by Messrs. Collado,52 McGuire53 and myself with Messrs. Cole,54 Adler and Friedman of the Treasury Department.

The critical inflation problem in China has two well defined aspects: (1) political, and (2) financial. From the political point of view inflation is a threat to the stability of the Chinese Government and to the success of the Chinese American war effort in China. It is to American interest to maintain the Chungking Government in power at this juncture and to prevent any interference with Chinese American military operations in China. Should inflation seriously endanger either of these then political factors should overrule financial and [Page 1081] technical considerations. It is generally agreed by the State and Treasury officials who have examined this matter that the State Department is best qualified to pass upon the political considerations involved while the Treasury Department is best qualified to pass upon the relevant financial and technical questions. Although the Treasury officials are of course interested in decisions reached as to the supplying of textiles and trucks as a means of combatting the Chinese inflation they are primarily interested in the matter of supplying the gold requested by Soong. The Treasury has expressed extreme reluctance to ship any gold out of the country if it can possibly be avoided. The War Department is understood to have expressed no particular interest in the question of gold shipments but is interested in the question of textiles and trucks requested by Soong.

The matter of assistance to be given by this Government in response to Soong’s request will of course involve all factors but there appear to be well defined areas of interest concerning which there does not appear to be any conflict between the agencies of the United States Government concerned. Future developments will presumably determine which factors predominate at the time when a decision will have to be made.

  1. Division of Chinese Affairs, Office of Far Eastern Affairs, and Division of Financial Affairs, respectively.
  2. Emilio G. Collado, Director of the Office of Financial and Development Policy.
  3. Paul F. McGuire of the Division of Financial Affairs.
  4. Frank Coe, Director of Monetary Research, Treasury Department.