793.94/16204: Telegram
The Ambassador in China (Johnson) to the Secretary of State
[Received September 28—9:50 a.m.]
489. 1. The Counselor of the Embassy86 on September 26 paid a farewell call on Chang Chun, Secretary General of the National Defense Council and newly organized National Planning Bureau, and asked him for his appraisal of China’s present position internationally and internally.
2. Informant’s views in brief were as follows:
Internationally it is very important for China that the Soviet Union, Great Britain and the United States should draw closer together and coordinate their measures to curb Japanese expansion. Japan cannot embark on a serious program of territorial conquest until the hostilities in China have been successfully concluded. It is true that all three powers named have given aid to China and have thus contributed to the success of China in resisting Japan but this help has to date been indecisive in amount and effect and although China could carry on resistance for another year or two on the past scale without increased aid from the outside, China’s final victory would be [in doubt?].
3. Soviet Russia attaches great importance to consolidation of its influence in the North Pacific which is jeopardized by Japan. Consequently Moscow might be willing to give Japan free rein in China and southward for recognition in the North Pacific. This possibility is feared by China and should be noted by the United States. The United States is, however, Japan’s eternal rival in the Pacific area and he hoped that the American Government would, by friendly consultation with Moscow, ward off a Russian-Japanese deal of the sort described and in coordination with Russia and Great Britain would extend really decisive assistance to China in resisting Japan, this being an immediately available and effective way in which to curb Japan’s expansion southward. He deprecated two views prevalent in the United States as being quite unwarranted, firstly, that the American interests involved in the outcome of the Chinese-Japanese hostilities are negligible and, secondly, that even without American or other assistance China is bound to win in the long run. A Japanese victory would enlarge immeasurably the threat to American interests in the Pacific region and China is at present without the financial resources to stage an effective counter-attack and expel Japanese forces.
4. Internally, China has two ominous difficulties: inadequate Government revenue and a depreciating currency. Obviously each phenomenon accentuates the other. The Chinese Government is obliged to supply deficient revenue by issuing currency and its expenditures [Page 670] are daily increasing with currency depreciation. This depreciation however is largely a matter of popular distrust of the currency and if the American Government were to see its way to granting China some sort of financial aid in support of the note issue the resulting popular feeling of reassurance would have powerful and favorable effect in lessening the Government’s financial difficulties. He did not presume to say what form such assistance might take since he is not a financial expert.
5. It may be added that recently Chiang Kai Shek likewise informed the Counselor during a farewell visit that he earnestly hoped that the United States would help China meet its currency problem since this was fundamental in the whole military and political scheme. He asserted positively that if the Government could finance itself adequately it could be assured ultimate military success.
Sent to the Department. Repeated to Peiping. Air mail Tokyo.
- Willys R. Peck.↩