893.516/713: Telegram
The Ambassador in Japan (Grew) to the Secretary of State
[Received December 14—8:35 a.m.]
1320. Our despatch No. 5089, October 28, 1940,50 Central Bank of China. The Foreign Office has today handed to us, as from the Foreign Minister to me, an “oral” statement replying to the representations which I made on October 31 [26] with regard to the establishment of a new Central Bank of China by the Japanese-sponsored Chinese authorities at Nanking. A copy of this statement will go forward in the pouch leaving tomorrow.50
The statement opens with the observation that “The establishment of the said bank is being initiated by the National Government at Nanking and that therefore your communication on the subject should have been addressed to the National Government.” It goes on to state however that “although strictly speaking I am not in a position to reply to your inquiry, I wish to state our views frankly”, et cetera.
Briefly the statement takes the position that the establishment of a central bank is a matter of expedition [necessity?] and that the Japanese Government is firmly convinced that the issuance of new bank notes is the only possible measure to be adopted; that it is obvious that the National Government “can in no way tolerate the attempt to stabilize the currency by means of sustaining the fapi, which would result in bolstering up the financial capacity and, consequently, the military strength of the Chungking regime.
The statement closes as follows:
“Although the question of the establishment of the Central Bank concerns solely the National Government, the Japanese Government are prepared to render all possible cooperation and assistance towards the successful functioning of the bank…51 by cooperating with this new bank, the third powers will contribute in no small degree to the stability of the currency, and consequently the economic rehabilitation and development of Central China…51
In view of the Foreign Minister’s statement to me as reported in paragraph 5 of our 1130, November 11, 9 p.m., to the effect that he recognized the absurdity of unloading on the new régime in China the responsibility for various developments as if the Japanese Government was not concerned, I shall not fail to remind him at an early opportunity of his oral statement of November 10, pointing out that his present statement would appear to support a practice which he had previously deplored.
Sent to the Department via Shanghai.