price stability and not drastic enhancement of silver price. Purchas-
ing power of this country is dependent upon maintenance of exports
and is endangered by rumors silver measure and we trust Your Excel-
lency will avert policy likely to bring calamity upon the millions of
our people.
                                    CHINESE BANKERS AssocIAwoN


893.5151/361: Telegram
The Counselor of Legation in China (Peck) to the Secretary of State
                              NANKING, February 21, 1934-2 p. m.
                                 [Received February 21-10 a. m.]
  19. Following supplements my February 21, 9 a. m. to the Lega-
tion.7 Arnold, Commercial Attache, and I held conversation today
with two Chinese bankers and we present following synopsis of their
remarks:
  (1) Chinese bankers and merchants are almost in a panic because
of their apprehension that the American Government will take some
measure to stabilize silver at a high level. The Chinese believe that if
this were done it would result in draining silver from China causing
restriction in credit, receding of loans, depressing of commodity
prices and in short a financial panic.
  (2) The Chinese Government is already giving serious considera-
tion to a silver export embargo or at least to the imposing of an export
duty on silver sufficient to correct the difference between the silver
price in China and the price as may be determined by the American
Government. Many Chinese fear, however, that such an export duty
could not be made effective for the purpose in view as against all na-
tionalities.
  (3) The fear of the Chinese public opinion that the measures taken
by the American Government may create an artificial value for silver
is based on the belief that commodity values would not correspond-
ingly rise and the net result would be draining of silver from China
for export to the United States and possible investment there, without
any stimulus to export trade and correcting of the present unusually
unfavorable balance of China's trade. The net result would be a gen-
eral depression of commodity prices further accentuating the eco-
nomic crisis.
  (4) Chinese bankers and merchants fear that if this situation arose
the Chinese Government would feel driven to follow the example set
by other countries and attempt to "manage" the currency and com-
merce and they are fearful of disastrous results therefrom.
  (5) The Central Political Council is now giving consideration to
the ratification of the London silver agreement and while public opin-
ion is divided the general consensus seems to be that the Chinese (Gov-
ernment should not ratify this agreement but should retain liberty of

' See telegram No. 96, February 22, 11 a. m., from the Minister in China,
infra.



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