893.51/7225: Telegram
The Ambassador in China (Gauss) to the Secretary of State
[Received 12:45 p.m.]
239. Following from [Fox].1
“We arrived in Chungking Thursday June 12 after 5 busy days in Hong Kong. Many interviews with bankers and others in Hong Kong revealed that even among most conservative, opinion prevailed that stabilization committee’s operations should be along broad lines and tied up with economic problems, particularly of inflation and high prices and of large increase in note issue. Immediately after arrival short conference arranged with Dr. Kung who expressed gratitude for American aid and that the Generalissimo and he strongly in favor of having stabilization operations coordinated with correction of pressing economic conditions. Dr. Kung assures us that the Generalissimo and he ready to exert such pressures as were necessary to effect economic improvements suggested by board.
Also held long conference with [Chairman of Foreign Trade Commission?] K. P. Chen who [was?] obvious[ly apprehensive?] lest we were not prepared to cooperate in having board operate along broad lines. Gather that strongest objections to Rogers’2 appointment were on these grounds. Chen considers food problem first and major one, inflation and note issues other challenging problems handling of which most important consideration of board if confidence in stabilization operations are to ensue.
Find strong opposition to Rogers appointment in Chungking. Conferred in Hong Kong at his urgent request with British Ambassador [Page 664] who came from Chungking to attempt to effect Rogers compromise suggesting temporary appointment to assist in organization of board and then permanent withdrawal. Doubt if promise will be acceptable. Chinese members anxious to organize board at earliest opportunity. Trust that there will be no objection from United States to so doing should delay ensue in appointment of British member.
Have been badly handicapped by lack of confidential secretary. K. P. Chen recognizes need and suggests we obtain one from United States. First choice my personal secretary at Tariff Commission, Mrs. C. M. Garland; second, Charles Herbert Hewlett at present reporter United States Army in Bermuda. Must have confidential assistance immediately.
Already obvious that economic studies must be undertaken soon if stabilization board is to function effectively. Am planning to utilize local talent to greatest extent possible. Plan to suggest at one of the first meetings of the board that a group of about six outstanding economists in Chungking be brought together for early report on pressing economic problems and suggested methods of studying these with a view of establishing earliest moment plausible solutions.
Conference with Generalissimo arranged.”