FOREIGN RELATIONS, 1934, VOLUME III



  I said that I, also, had received Mr. Suma's information regarding
recent dangerous Communist inroads into Hunan and had asked Dr.
Wang Ching-wei 41 for confirmation, whereon Dr. Wang had denied
the reports in toto and had immediately told me that he thought they
emanated from a Japanese source, since the Japanese were continu-
ally exaggerating the Communist menace in China.
  I recalled to Dr. Trautmann recently published official statements
by Japanese in high positions to the effect that peace in the Orient
necessarily rested on Japan as a foundation and I remarked that there
is a pretty general belief that Japan would be delighted to receive an
international "mandate" to reduce China to order and protect general
international interests in this region. Dr. Trautmann was aware of
this general belief.
  Respectfully yours,                           WILLYS R. PECK


893.00/12712: Telegram
The Consul General at Shanghai (Cunningham) to the Secretary
                             of State

                               SHANGHAI, March 27, 193-4 p. m.
                                 [Received March 28-5: 40 p. mi.]
  130. First plenary meeting National Economic Council held Nan-
king March 27th Kuomin reports that among proposals adopted most
significant related to distribution of proceeds of American wheat and
cotton loan, increase of prices of foodstuffs, exploitation of mineral
resources in Yunnan, control of match and coal industries and transi-
tional measure towards adoption of the gold standard. It is esti-
mated that $40,000,000 national currency proceeds of cotton and wheat
loan will be available for reconstruction purposes. According to a
resolution adopted 40 percent or $16,000,000 will be earmarked for
readjustment of national currency and finances and improvement of
monetary system. Six million will be allocated for development of
aviation and about three million for relief and rehabilitation in
Kiangsu. The remaining fifteen million are to be used for develop-
ment of highways, reconstruction enterprises in the northwest, cotton
control, improvement of sericulture, tea, et cetera, and reserve funds.
  2. Another proposal adopted called for increase of prices [of] home-
produced foodstuffs. This was referred to Executive Yuan for imme-
diate execution. Proposal provides inter alia for prevention of
further influx of foreign flour, rice and wheat, reduction of railway

41 President of the Chinese Executive Yuan (Premier) and Acting Minister
for
Foreign Affairs.



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