The Secretary of State to the Ambassador in China (Stuart)
1132. Dept appreciated receiving info contained urtel 1426 Aug 3 and will shortly give you benefit of its view on proposals.36
However Dept wishes immediately to advise you that info given you by Wong Wen-hao as set forth in fourth para urtel under reference is not correct. No negotiations are taking place in Wash for loan of $300 million to the ChiGovt for currency stabilization or any other purpose. Dept does not understand how Tsu-yi Pei’s negotiation with Eximbank with view to obtaining postponement of unpaid two-thirds of $33 million cotton loan, payments for which are shortly falling due, and his efforts in connection with the subject matter of Ecato 186, July 27,37 could result in distortion of this extent and nature.[Page 380]
Emb should seek early occasion to clarify this matter in mind of Wong Wen-hao for it is important that no such proposal be looked to by the Chinese as a possible buttress to any currency action which they may choose to take.
When Tsu-yi Pei was informally queried about this matter last evening he stated categorically that he had no instruction to [for?] negotiation any such loan. For Embs own info only, Tsu-yi Pei doubtless pointed out in one of his telegrams that if a sales contract for the 3 metals listed could be arranged with the Bureau of Federal Supply, it might at some future date form the security basis for Eximbank loan similar to prewar commodity credits of Eximbank. However he stated to Dept in strictest confidence that he had never mentioned in his tels any specific amount, time duration or end uses for any new loan.