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National Government of the Republic of China with the understand-
ing that its major purpose was to assure the stability of the price
of silver which was thought menaced by the large surplus stocks held
by the Government of India and Spain. The preamble of the agree-
ment states in part that it is to the advantage of China that sales
from monetary stocks of silver be offset by purchases as herein pro-
vided, with a view to its effective stabilization.
  It now appears that under the Silver Purchase Act of 1934 24 the
stability of the price of silver and the interests of China are as much
menaced as by the previous situation of potential sellers. China
would therefore appreciate an indication of the probable policy of the
United States in the future purchase of silver in order that China
may properly safeguard her currency, which has recently been flow-
ing out of the country to a degree that is potentially alarming.

                                                     CUNNINGHAM

811.515 Silver/21: Telegram
    The Secretary of State to the Consul General at Shanghai
                          (Cunningham)

                          WASHINGTON, September 22, 1934-noon.
  227. Your 372, August 20, 5 p. in.
  1. In letter of August 21 Department conveyed to the Secretary
of the Treasury a paraphrase of Minister Kung's message as contained
in your telegram under reference. In letter of September 19 the
Secretary of the Treasury suggests that the reply to Minister Kung's
message should read as follows: 25
  &quot;The United States Government welcomes the opportunity to state
its policy with respect to silver to the Government of China. It
considers the request to be within the contemplation of Paragraph 6
of the Memorandum of Agreement, signed at London on July 22, 1933,
by delegates of China and the United States, among others.
  The Policy of the United States in the Purchase of Silver will be
guided by the following considerations: The Silver Purchase Act of
1934 declares it to be the policy of the United States that 'the propor-
tion of silver to gold in the monetary stocks of the United States
should be increased, with the ultimate objective of having and main-
taining, one-fourth of the monetary value of such stocks in silver'.
The Secretary of the Treasury is directed to purchase silver to that
end at such times and upon such terms and conditions as he may deem
reasonable and most advantageous to the public interest. By such
an increase in the monetary use of silver, the Government of the
United States believes that it is furthering the purposes of the Resolu-
tion unanimously adopted on Thursday, July 20, 1933 at the meeting

24 Approved June 19, 1934; 48 Stat. 1178.
25 The Consul General in his telegram No. 462, October 1, 5 p. m., explained
that due to garbles in transmission the reply was not delivered to Finance
Minister Kung until the morning of October 1. (811.515 Silver/23)


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CHINA


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