FOREIGN RELATIONS, 1934, VOLUME III



  Mr. Hornbeck again asked what concrete proposals Mr. Monnet
had to offer. Mr. Monnet replied that there must be occasioned a
heavy inflow of silver into China; that the proposed bond issue will
prove helpful but that the new funds thus acquired will not be suffi-
cient to stem the tide; that he therefore wished to know whether the
American Government would grant a loan to China, possibly through
the medium of the Export-Import Bank.
  Dr. Feis stated that the Export-Import Bank is by law prevented
from acquiring foreign securities. Dr. Feis inquired whether the
situation would not be improved materially if it became known that
the price of silver had been pegged at its present level. Mr. Monnet
expressed doubt and stated "The shock has been too great."
  Dr. Feis inquired whether the Chinese Government could force banks
in China to cause the return of their silver exports. Mr. Monnet
replied "what is gone, is gone."
  Dr. Feis inquired whether delayed delivery of silver purchases would
prove helpful. Mr. Monnet replied that it would not as silver so pur-
chased is earmarked and therefore out of circulation.
  Mr. Hornbeck stated that the American Government has repeatedly
indicated its willingness to discuss the situation with representatives of
the Chinese Government; that if any concrete plan is proposed by the
Chinese Government it will receive careful scrutiny; and that statis-
tical data and definite proposals have not been presented. Dr. Feis
added that the silver policy of the United States is largely in the hands
of the Treasury Department and the Federal Reserve Bank.
  Mr. Monnet, in taking his leave, stated that he would call at the
Department next week and that in the meantime he would endeavor to
obtain such additional facts and figures as might prove helpful in an
attempt to clarify the situation.
  Note: Mr. Monnet handed to Mr. Hornbeck a copy of a self-explan-
atory telegram (attached hereto 43) dated December 20, which tele-
gram contains a confidential message addressed to Mr. Monnet by Mr.
T. V. Soong.

893.515/367: Telegram
     The Secretary of State to the Consul General at Shanghai
                        (CUnningham)44

                        WASHINGTON, December 29, 1934-2 p. m.
  272. Your 596, December 19, 9 p. m. Please deliver to Arthur
Young as coming from Hornbeck the following:

4 Not printed.
"Notation by the Economic Adviser: "Read to and approved by Mr.
Coolidge,
Undersecretary of Treas[ury] Dec. 28/1934-H[iaEBERT] F[EIs]."



460