FO371-24687 — Page 37

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BE

WRITTEN

IN

THIS

MARGIN.

Registry

No. F 3239/176/10

A.L.S..

Page 37

OUT FILE

2

F.0.

324

June

1940

2279

Drys

Mr. Hall-Patch,

Treasury.

(From Mr. Ashley

Clarke)

Sin Johan

Der Hill Dis Fall Frit

We have been giving thought to the proposal

contained in Tokyo telegram 992, and the

following considerations occur to us.

It seems to us that while some of the

Japanese may now have genuine economic reasons

for wishing to maintain the value of the

Chinese currency (which their military authorities

are still trying to destroy) one cannot disregard

the possibility that this approach is a political

manoeuvre designed, like so many others, to draw

the democratic Powers into the position of co

operating with Japan for the settlement of

Chinese affairs on the basis of the "new order".

The proposal is in effect that the Japanese,

British, American and French Governments shall

set up a committee to evolve a scheme for the

control of the Chinese national currency. It may

be taken for granted that in such a body the

Japanese member would have the leading voice,

while apparently the Chinese Government are to

have no direct say in the matter.

Any scheme for stabilising the exchange

value of the currency must obviously involve

some control of the foreign exchange reserves

on which the currency is secured. Those foreign

exchange reserves are used by the Chinese

Government not only as a backing for the currency

but also for the purchase of munitions of war,

and it is morally certain that they would not

agree to part with their control to an

O.L

NOTHING

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international

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