FO371-24687 — Page 190

Page 190

Page 190

F

DISTRIBUTION B.

From: CHINA.

Decypher. Sir A. Clark Kerr (Chungking)

F 5692 113

22

1940

20th December, 1940.

D. 4. 30 p.m.

20th December, 1940.

R. 6. 30 a.m.

22nd December, 1940.

No: 287.

111111111

IMPORTANT.

I have just been shown a copy of your telegram No. 1272 to Shanghai.

F5205 157/20 Нада

2. Until I had talk to-day with Mr. Hall Patch and Mr. Rogers, I confess that I had not understood full meaning and scope of your proposals and that I had been under the general impression that it was our intention not only to give immediate support to Chinese currency, but by means of credit to make available at once to China unbounded sterling area. I now understand that some considerable time may be expected to elapse before practical benefit of your present scheme can accrue to China and that for many months to come this scheme will so work out that what we are giving to China with one hand, we are taking away with the other.

3. It may be assumed that Chinese have been as obtuse as myself in this matter and that when they come to understand it they will think that while we have air of giving Chinese substantial help, we are in fact helping ourselves just as much if not more than them.

4. I fully appreciate present difficulties of His Majesty's Government and that generally speaking our interests must come first, but effects of Chinese awakening to facts if I have now understood them aright, would be most unfortunate and I cannot but agree therefore with substance of Hall

Fs6-7

X Patch's message contained in my immediately preceding telegram,

and share views and apprehensions of [? Chiang Kai-shek] as Kogens shown in Hong Kong telegram No,, 139 and No. 140.

HOTE

کیا

5. Political and psychologial effects of our loan cannot be over estimated and I am much concerned to think that at some early date Chinese may discover that our help [2 grps. undec.] and valuable as they have thought.

6. If your proposals as at present outlined be adhered to and some suasion be used upon Soong (as we here foresee may F5 be necessary) I feel some doubt whether he will in fact gain prestige suggested in your telegram No. 281. Indeed I fear Dr. Kung, who is beating about for a means to rob Soong of credit he has won in Washin ton, may by representing your scheme in its worst light succeed in recovering much lost ground. I think therefore that we should be wise to give much more consideration to political values of this question than to its purely technical aspect.

to adu

Repeated to Shanghai telegram No.51, Tokyo telegram No.107, Hong Kong telegram No. 138, all Saving and to Washington Drdirect telegram No. 27.

[Copies sent to Mr. Waley, Treasury].

£.O. REA

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