FOREIGN RELATIONS, 1934, VOLUME III



bankers to organize a corporation of their own for the purpose of in-
vesting the large accumulations of Chinese capital to be found in
Shanghai at points in the interior, the trick would have been done. He
said, however, that there were three things which must be done before
China could expect financial assistance from abroad. These things he
had explained to the Chinese.
  In the first place, the Chinese could not expect foreign money to be
got into the interior of China where Chinese money was not willing to
take the lead; it was necessary that Chinese money show the way to
other money by finding proper investments for itself in the interior of
China. Next, China must do something about her debts, even includ-
ing the Nishihara debts to Japan.49 Of course, many of these debts
would have to be shaved down in any settlement that was made; never-
theless they were honest debts and China could not expect to accom-
plish anything until they were paid or an attempt was made to bring
about some settlement of them. And third, it was highly necessary
that something be done to bring about a reorganization of China's
railways.
  Mr. Monnet stated that he found the Chinese generally interested
in doing something along these lines, and appreciative of the fact
that something of the sort must be done before anything could be
accomplished. lHe stated that he had succeeded in bringing together
a number of Chinese bankers at Shanghai,-not simply the Inter-
national Settlement bankers, but Chinese bankers interested in
business outside of the Settlement; and that plans were already made
for the organization of a syndicate made up of these Chinese bankers.
He was now waiting for Chiang Kai-shek and H. H. Kung to indicate
their approval. He thought it probable that something might be
done along these lines in the next few days; at any rate, he was
hopeful. Once the Chinese banking syndicate was organized it could
invite participation on the part of foreign capital in various lines
that might be of interest to China.
  With reference to the Japanese, Mr. Monnet stated that Mr. Suma
had called upon him at Shanghai some two days after the statement
of Japan's policy at home. He stated that Suma appeared to regret
the Japanese statement. He said that he had laid all his cards on the
table in so far as Mr. Suma was concerned, and he felt that he had
won Mr. Suma's good will, although he was not too sure of this.
Mr. Monnet expressed himself as being very much impressed with
Chiang Kai-shek whom he described as "having guts". He thought
that Chiang was an outstanding person in that he thought clearly

49 Contracted in 1918 by Kamezo Nishihara, Japanese banking group representa-
tive at Peking.



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