Date and number

1936 Dec. 21 (302)

Dec. 21 (369)

Dec. 21 (629)

Dec. 21 (370)

THE FAR EASTERN CRISIS

CHAPTER IV: OCTOBER 16-DECEMBER 31, 1936-Continued

Subject

To the Counselor of Embassy in China (tel.)

Authorization for informal representations regarding
Peitaiho robberies and protection of American interests.
(Footnote: Embassy's report that unmolested shipments
have now been made by the Standard-Vacuum Oil Company
and no American action need be taken.)

From the Ambassador in China (tel.)

Holographic letter to Young Marshal from T. V. Soong demanding Chiang's release and listing of points for such release contained in editorial distributed by plane to Sian forces.

From the Counselor of Embassy in China (tel.)

Indications that the Shensi revolt has served to temporarily suspend student agitation at Peiping and that reorganization of the northwest military is inevitable.

From the Ambassador in China (tel.)

Explanation to the French Ambassador of the British
proposal contemplating safe conduct out of China to Chang
Hsueh-liang and Yang Hu Cheng; information from Foreign
Minister that Soong was still in Sian.

Dec. 22 (371)

From the Ambassador in China (tel.)

Report on return of Soong to Nanking; indication the real power at Sian is Yang Hu Cheng, whose attitude toward Chiang's release is uncertain.

Dec. 22 (372)

Page

443

443

444

445

445

From the Ambassador in China (tel.)

446

To Peiping: Request that the Military Attaché be advised to go or to send another officer to Loyang to consider what may be done for the safety of American citizens in Shensi. From the Counselor of Embassy in China (tel.)

446

From the Ambassador in China (tel.)

Dec. 23 (633)

Dec. 23 (377)

Compliance with Nanking's No. 372 of December 22; and belief that Military Attaché should strongly urge evacuation of Americans from Shensi.

446

Report that Kung hopes for some results from private negotiations within next two or three days during which military operations are suspended.

Dec. 23 (637)

From the Counselor of Embassy in China (tel.)

447

Advice of rebel radio attacks on the National Government with prominence given to anti-Japanese sentiment, and mention made of organization of the Northwest National uprising; also advice of recent troop movements.

From the Counselor of Embassy in China (tel.)

Dec. 24 (379)

Dec. 24 (638)

From the Ambassador in China (tel.)

Advice based on press releases regarding Kung's instructions to provincial and local authorities and conferences between local authorities and the Control Yuan President who is consolidating support of the Government policies in East Shensi.

447

448

Circular telegram issued by Generals Sung Che Yuan and Han Fu Chu suggesting conference of Government leaders and elder statesmen to deal with the Sian trouble.

Dec. 25 (380)

From the Ambassador in China (tel.)

448

Report from Foreign Office that Chiang had reached
Loyang safely.

Date and number

THE FAR EASTERN CRISIS

CHAPTER IV: OCTOBER 16-DECEMBER 31, 1936-Continued

1936 Dec. 25 (90)

To the Ambassador in China (tel.)

449

Instructions to express to the Foreign Office U. S. gratification over Chiang's release.

Dec. 26 (381)

From the Ambassador in China (tel.)

449

Report of arrival of Generalissimo, T. V. Soong, and the
Young Marshal, Chang Hsueh-liang.

Dec. 28 (641)

From the Counselor of Embassy in China (tel.)

449

Dec. 29 (643)

Return from Loyang of Military Attaché, who reports belief that the release of Chiang practically ends the Shensi trouble and need for evacuation of Americans therefore unnecessary.

From the Counselor of Embassy in China (tel.)

From Mukden, December 28: Report that Japanese troops are preparing to resume operations during the first half of January.

Dec. 29 (644)

From the Counselor of Embassy in China (tel.)
Improved conditions in Shensi area.

From the Ambassador in China (tel.)

449

450

450

Dec. 29 (382)

Dec. 30 (646)

Dec. 30 (2203)

Dec. 31 (387) 1937 Jan. 12 (975)

Rejection of Chiang's resignation from all concurrent offices by the Standing Committee of the Central Executive Committee and relegation of Chang Hsueh-liang to the Military Affairs Committee for appropriate discipline.

From the Counselor of Embassy in China (tel.)

Report by an American newspaper correspondent returned from Loyang that Chiang's release is generally attributed to acceptance of most of the points set forth in Chang's circular telegram and that young officers supplanting older men in Chang's army have undergone intensive political and military training and now dominate Chang.

From the Ambassador in Japan

Protocol of agreement signed December 28 (text printed)
extending for one year the Soviet-Japanese Fishery Treaty
of 1928, following Soviet unwillingness to sign a new treaty.
From the Ambassador in China (tel.)

Settlement of the Chengtu and Pakhoi incidents by exchange
of notes between Foreign Office and Japanese Embassy.
From the Ambassador in China

Review of developments in China during the last six months,
including an official statement (summary printed) giving
present position of the Chinese Government relative to sub-
jects which have been under negotiation with Japan.

451

451

452

453

CHINA

PROBLEM OF CHINA'S ECONOMIC RECONSTRUCTION AND THE ATTITUDE OF THE UNITED STATES AND OTHER GOVERNMENTS RESPECTING FINANCIAL ASSISTANCE TO CHINA

Date and number

1936 Jan.

Memorandum by Mr. Raymond C. Mackay of the Division of
Far Eastern Affairs

Discussion between the Chinese Ambassador and the Chief
of the Division of Far Eastern Affairs, concerning recent devel-
opments in negotiations for postponement of payments due on
credits extended to China.

Jan. 3

To the Chinese Embassy

Record of observations made to the Chinese Ambassador relative to the Chinese Government's attitude toward credit payments.

From the Consul General at Shanghai (tel.)

Information that Leith-Ross, Financial Adviser to the British Embassy in China, has advised the Chinese Government to change its silver coinage standard to the alloy used in Great Britain.

From the Consul General at Shanghai (tel.)

459

461

462

462

Surrender of silver to Central Bank by all foreign banks except the Japanese.

463

From the Counselor of Embassy in China (tel.)

Statement of Suma, First Secretary of the Japanese Embassy, to Leith-Ross that in view of the imminent Sino-Japanese rapprochement it would not be fitting for any other nation to intervene in China's currency or fiscal matters.

From the Consul General at Shanghai (tel.)

From the Ambassador: Request for reply to Financial Minister Kung's inquiry whether the American Government would receive favorably an application for reinstatement of the uncompleted part of the cotton and wheat loan.

To the Counselor of Embassy in China (tel.)

For the Ambassador: Instructions to inform Kung orally that the American Government would not be prepared to reinstate the canceled portion of the cotton and wheat credit of 1933.

From the Consul General at Shanghai (tel.)

Press reports that the Central Political Council has approved
Kung's economic policy for China.

Memorandum by the Chief of the Division of Far Eastern Affairs
Conversation with the Chinese Ambassador, who submitted
Kung's inquiry regarding the U. S. attitude toward holding
in abeyance the payment due March 1 on the Reconstruction
Finance Corporation credit.

From the Consul General at Shanghai (tel.)

Information that K. P. Chen, Shanghai banker, will confer in Washington with the Secretary of the Treasury on behalf of the Finance Minister and that the Chinese expect reinstatement of the cotton and wheat credit during the visit. Memorandum by the Chief of the Division of Far Eastern Affairs Telephonic conversation with the Chinese Ambassador who stated that Chen's mission was on the invitation of the Secretary of the Treasury and would include discussions about monetary affairs as well as outstanding credits.

463

464

464

465

466

466

CHINA

PROBLEM OF CHINA'S ECONOMIC RECONSTRUCTION AND THE ATTITUDE OF THE UNITED STATES AND OTHER GOVERNMENTS RESPECTING FINANCIAL ASSISTANCE TO CHINA-Continued

Date and

number

1936 Mar. 4 (18)

Mar. 6 (139)

Mar. 26

Mar. 31

Apr. 1

Apr. 9 (84)

Apr. 13

Apr. 17 (211)

Apr. 22

Subject

To the Counselor of Embassy in China (tel.)

Instructions to inform Kung orally and discreetly that Chinese officialdom including Chen should be discouraged from expectation of reinstatement of canceled portions of cotton and wheat credit.

From the Ambassador in China (tel.)

Compliance with instructions in No. 18 of March 4 and
Kung's apparent disappointment in the U. S. attitude.
(Footnote: Information that Chen and party sailed March
13.)

Memorandum by the Chief of the Division of Far Eastern Affairs

Advantages and disadvantages of a dissolution of the China Consortium, with the suggestion that question be discussed with the interested American banking group, giving intimation that breaking up of Consortium would be regretted.

(Footnote: Advice of authorization to discuss the matter
with Mr. Lamont of J. P. Morgan & Co. representing the
American Group of the China Consortium.)

Memorandum by the Chief of the Division of Far Eastern Affairs
Conversation with the Chinese Ambassador who expressed
the opinion that the disappearance of the China Consortium at
this time would have an upsetting and harmful effect on China's
interests.
Memorandum by the Chief of the Division of Far Eastern Affairs
of a Conversation With Mr. Thomas W. Lamont of New
York
Discussion of possible breakup of the China Consortium,
the matter of the Hukuang Bonds, and the divergence of views
between British and American Groups.

To the Ambassador in China (tel.)

Arrival of K. P. Chen and party and opening of conversa-
tions with Treasury Department officials in regard to "mutual
monetary problems."

Memorandum by the President of the Export-Import Bank of
Washington

Conversation with the Chinese Ambassador who presented
proposals from his Government for modification in payments
due upon loans assigned to the Export-Import Bank by the
Farm Credit Administration and by the Reconstruction Fi-
nance Corporation.

From the Consul General at Shanghai (tel.)

Press report of an interview with an officer of the Finance Committee of the Legislative Yuan who advocates an income tax as the main source of revenue during the extraordinary national emergency and report of a statement by Kung that China is on a managed silver standard.

Memorandum by the Chief of the Division of Far Eastern Affairs

Extract from conversation between Secretary of the Treasury Morgenthau and Japanese Financial Commissioner Yutaro Tomita, who stated that the Japanese banks had not turned in their silver because the monetary reform in China was not succeeding.

Page

467

468

469

472

473

475

475

476

477

CHINA

PROBLEM OF CHINA'S ECONOMIC RECONSTRUCTION AND THE ATTITUDE OF THE UNITED STATES AND OTHER GOVERNMENTS RESPECTING FINANCIAL ASSISTANCE TO CHINA-Continued

Date and

number

1936

Subject

Page

Apr. 25 (231)

From the Consul General at Shanghai (tel.)

Apr. 30

May 14

Advice of extension of time limit for exchanging silver for
legal tender notes and increasing tendency to surrender silver.
Memorandum by Mr. Eugene H. Dooman, of the Division of Far
Eastern Affairs, of a Conversation With the Counselor of the
Japanese Embassy

Remark to the Japanese Counselor that U. S. Government is
not now in position to give information beyond that given
to the press in regard to the negotiations between the Treasury
and the group of Chinese officials and bankers.

From the Chief of the Division of Far Eastern Affairs to the Secre-
tary of State

Approval of Treasury Department's proposed arrangements
with the Chinese bankers, and suggestion that for political
reasons the British and Japanese Governments be taken into
confidence as far as practicably possible.

Memorandum by the Under Secretary of State

479

480

480

May 14

481

Chinese representatives' favorable reception of suggestion that before making official announcement the Chinese Government inform the British and Japanese of arrangements just made with the Treasury Department.

May 18 (270)

From the Consul General at Shanghai (tel.)

481

Press release by Kung outlining supplementary measures of monetary reform.

May 19 (120)

To the Ambassador in China (tel.)

482

Press statement by Morgenthau, May 18 (text printed), announcing completion of the Chinese mission for the improvement of internal stability of national currency and the achievement of greater international stability.

May 20 (121)

To the Ambassador in China (tel.)

Instructions for embassies and consulates to submit reports covering reactions in their respective areas to the monetary reform measures and explanatory statements recently issued. (Footnote: Information of varying reactions.)

483

May 20 (277)

From the Consul General at Shanghai (tel.)

483

Chinese expression of concern that the Nanking Government has no control over the silver accumulation in Canton and that Japan may mint and smuggle in coins similar to Chinese subsidiary silver coins.

May 23 (154)

From the Counselor of Embassy in China (tel.)

484

Favorable and optimistic local reaction to Kung's announcement relative to monetary reform.

May 23 (254)

From the Ambassador in China (tel.)

484

Advice that there has been little reaction in Peiping to the monetary reforms, but that opinion in banking circles is that Kung's statement of May 18 is confusing and disturbing.

May 3 (125)

To the Ambassador in China (tel.)

Instructions to summarize any press comment in regard to measures for monetary reform and statements of May 18.

485