893.51/6869: Telegram
The Chargé in China (Peck) to the Secretary of State
[Received April 20—5:30 a.m.]
275. McHugh27 reports that Rogers, who returned from London while he was in Hong Kong recently, informed him that after Sir John Simon had announced the intention of the British Government to support Chinese currency and before the bill to this effect had been introduced in Parliament, a report had reached London direct from Chungking that the Bank of China and T. V. Soong28 were being charged here with holding out reserves of foreign exchange, sabotaging the currency and pursuing a policy contrary to that of the Central Government. In order to appease the subsequent anger in some circles in London at this apparent split in the Chinese ranks, Rogers had immediately cabled to Young to obtain a specific denial from Kung of this report and an assurance through the Chinese Ambassador of Chinese solidarity and appreciation of the forthcoming British assistance. This was done.
- [2.?]
- Rogers confirmed, however, that antagonism between Kung and Soong is stronger than ever and that both are trying to claim the [Page 666] credit for the British transaction. He stated that Clark Kerr29 had inadvertently pinned the credit on Soong in November by forwarding to London the suggestion for a joint stabilization fund as coming from Soong although Rogers himself had earlier proposed the idea to both Kung and Soong. Rogers said he had purposely brought Tsuyee Pei30 to Chungking in January with Soong’s permission to show Kung the balance sheet and complete position of the Bank of China in order to forestall criticism of the bank. He blamed Kung therefore for permitting the report against the Bank of China to reach London.
- 3.
- He did not, however, in relating all that had transpired in London in obtaining the support of Sir John Simon or of putting the bill through the House indicate that the questions of Soong replacing Kung, of British financial advisers being substituted for Americans in China or of abolishing the Central Bank had ever been suggested in London. The continuance of the Central Bank is in fact essential to the maintenance of the present currency system. He did assert that the charge of any selfish manipulations by the Bank of China was ridiculous in view of the fact that it and the Bank of Communications had had to borow their five million pounds contribution to the fund. Their ability to borrow at the low rate of 2¾% and without security proved belief in their integrity.
- 4.
- Another point of ill feeling between Soong and Kung is the fact that the latter pledged the Bank of China in the recent purchase of American planes without reference to the former.
- 5.
- McHugh requests that substance of the foregoing be made available to the Navy Department. Peiping please similarly convey to Naval Attaché and Shanghai to the Commander-in-Chief.31