organization and effective control over its own activities and those of
enterprises to which it lends its support, will inspire confidence to an
extent which (in the opinion of Mr. Monnet) would render possible,
within the not too distant future, a complete refinancing of China's
railway debts due to the fact that, with any sort of a reliable guarantee
of an efficient, businesslike administration of Chinese railways, at least
half of the required $200,000,000 can be obtained on the Shanghai
market.
  Mr. Mackay asked if Japanese interests are offering any serious
objection to the Corporation. Mr. Monnet replied that at the time of
its inception the project had been definitely and strongly opposed by
the Japanese; that such opposition was due in a large measure to
misunderstanding; that when the matter was explained in detail all
serious opposition ceased; and that the Rengo news service was in-
structed to publish no press items which might react unfavorably on
the Corporation. Mr. Monnet also stated that the Corporation had
informed Japanese interests of the fact that, on "appropriate"
projects,
Japanese capital would be welcome.
  Mr. Hamilton asked if the Corporation would conflict in any way
with the China Consortium. Mr. Monnet replied that it would not;
that the Consortium applied only to "public offerings abroad";
that
the Corporation is "wholly within China"; and that even if, as
is an-
ticipated, foreign financial interests assist, collaborate, and provide
funds for enterprises aimed at the development of China's commerce
and industry for which long-term credits are required, such action
would in no way conflict with the provisions of the Consortium
Agreement.
  Mr. Monnet stated that he would sail for Europe tonight and that
he planned to return to the United States in about six weeks for a
further brief sojourn before proceeding to China.2


EFFECT OF THE SILVER-PURCHASING PROGRAM OF THE UNITED
         STATES GOVERNMENT UPON CHINA'S ECONOMY
893.5151/358: Telegram
The Consul General at Shanghai (Cunningham) to the Secretary
                             of State

                             SHANGHAI, February 17, 1934-10 a. m.
                               [Received February 17-4: 59 a. m.]
  59. Private reports received in Shanghai yesterday indicate
American action on silver might be taken at once. Arthur Young 3

2 For memorandum of conversation on December 28, see p. 459.
8 Arthur H. Young, American adviser to the Chinese Ministry of Finance.



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