893.5151/358: Telegram
The Consul General at Shanghai (Cunningham) to the Secretary of State
[Received February 17—4:59 a.m.]
59. Private reports received in Shanghai yesterday indicate American action on silver might be taken at once. Arthur Young3 [Page 424] at instance of Minister of Finance Kung called and informally discussed silver situation stating that Minister Kung in view of this report desired American Government to consider how the matter [would be?] regarded here. The following is summary in paraphrase: China entirely sympathetic with purpose of London silver agreement4 on stabilization silver prices and Minister Kung has urged ratification personally which is now pending. Since China’s currency is silver China has vital interest in measures affecting its value and international exchange but of course has no desire to intrude upon questions of purely American internal concern. In view of reports here it may be observed that any action resulting in rise of China’s currency out of relation of other currencies and especially out of relation of world commodities would have deflationary effect in China and further decrease her already reduced exports and so impair her ability to purchase goods from abroad. It would also probably increase present serious tendency toward heavy silver exports as necessary means of settling large adverse balances. In view therefore of China’s vital interest it is hoped Government of China will be consulted in advance if measures concerning silver that might materially affect China’s currency and exchange are in fact being contemplated.5
- Arthur H. Young, American adviser to the Chinese Ministry of Finance.↩
- Foreign Relations, 1933, vol. i, p. 763.↩
- The Department stated in its telegram No. 38, February 17, 4 p.m.: “Treasury informed Minister Kung’s views. Giving them fullest consideration.”↩