893.51/7626
Memorandum by the Assistant Chief of the Financial Division (Luthringer) to the Assistant Secretary of State (Berle)
Mr. Berle: I mentioned to Mr. Harry White67a this morning Chiang Kai-shek’s proposal for a $500,000,000 loan. We were discussing the contemplated reply to Irigoyen that the Argentine suggestion of a credit to ease internal finance in the Argentine did not appear to be an appropriate matter for use of our Stabilization Fund. Mr. White [Page 771] replied that the Chinese proposal does relate to an effort to prevent depreciation of the Chinese currency by price inflation in China and was thus more appropriate for the Stabilization Fund but that the Chinese problem had not yet been given much consideration.
Attached is Mr. Luthringer’s memorandum on the China problem68 No doubt some reply, suspensive if not definitive in nature, should be made promptly to Chiang’s proposal. Mr. Luthringer’s memorandum may afford a basis for taking the matter up with the Treasury and possibly with Mr. Currie, as well as, of course, Mr. Hornbeck and FE, with a view to determining the lines of prompt and reasonably responsive acknowledgment of Chiang’s proposal.; The drafted telegram prepared by Mr. Luthringer before this proposal was received is rendered somewhat inappropriate by the receipt of a direct proposal which subordinates the importance of dealing independently with Mr. [Sir Otto] Niemeyer’s suggestion.
We have not yet received the comment Ambassador Gauss is sending on the proposal. At some early stage we should also speak with the British, presumably Sir Frederick Phillips, regarding the whole matter.