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Catalogue Reference:CAB/24/277
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"O
BE
KEPT
UNDER
LOCK
AND
KEY.
It is requested that special care m a y be taken .0
.
ensure the secrecy of this d o c u m e n t ,
(THIS DOCUMENT I S
3^3
- . ­
THE PROPERTY OP HIS BRITANNIC MAJESTY'S GOVERNMENT).
S E C R E T .
CP.
157(36).
COPY
NO.^2
C A B I N E T .
ASSISTANCE TO CHINA.
Note by the Chancellor
The F o r e i g n
Office
of
the
Exchequer.
memorandum on a s s i s t a n c e
c o n t a i n s p a r a g r a p h s which p u t v e r y
forcibly
a t i o n s w h i c h may b e u r g e d i n f a v o u r
assistance,
but
corresponding
i n my v i e w i t
emphasis
the
considerations
supplement
to
taken.
Sir
A.
Majesty's
must
weighed before
therefore
t h e memorandum b y c a l l i n g
the f o l l o w i n g
1,
I
Clark Kerr
originally
should g i v e
credits
o i a l basis
ruled
and h e h i m s e l f
be r e g a r d e d
as
t h e war a g a i n s t
No.
582 o f
position
in
doubtless
with
the
other
so g r a v e
ask l e a v e
specific
urged
for
out
on t h e
Japan
have
S i r R.
0
that
if
the e f f e c t
the Par E a s t ,
c r e d i t s would d e s e r v e
China
a
to
attention
to a
on a commer­
that
on t h e
insuring
of
our
"for
no one c a n g u a r a n t e e
our f u t u r e
were
t o be c o m p l e t e and o v e r w h e l m i n g " .
went
on t o w a r n us t h a t i n h i s
view,
if
if
such
of
a
would
side
commented
granting
t h e most c a r e f u l
this
Chinese
the p r o p o s a l f o r
-1­
His
lie p o s s i b i l i t y
Craigie
the
of
that
ground
throwing our w e i g h t
1 0 t h May)
would r e a l l y
out
their backing
scheme w h i c h w o u l d s e c u r e
loan,
such
points.
Government
political
in
China
consider­
affording
does not b r i n g
d i r e c t i o n w h i c h must b e f u l l y
decision is
of
the
to
in
(telegram
credits
future
commercial
consideration
Japan's
victory
B u t S i r R.
Craigie
we i n t e r v e n e d
to
this
of
extent,
fury
"would l e a d
t o an o v e r w h e l m i n g
against Great B r i t a i n ,
o f which i t
off
this
is
difficult
we s h o u l d
failed,
the u l t i m a t e
to predict,,
earn undying h a t r e d
the f a c t
If
of
outburst
consequences
t h e gamble
these people;
and we s h o u l d m o r e o v e r h a v e s e t
upon our l o s s e s
China".
in
The F o r e i g n O f f i c e
to a modification
have
quoted i t
colleagues
purposes
t h e v i e w h e l d b y S i r R.
1 above.
telegram No.
750 o f
That
it
of
purposes
for
(b)
But I
for
I
qualified
to
show t h a t
t h e new c r e d i t
of
to release
reserves
it.
That
the c r e d i t
for
now k e p t
as r e g a r d s
should not be
the f i r s t
The F o r e i g n O f f i c e
and t h e e f f e c t
not
on
the
the
other
as
backing
currency.
however d e s c r i b e d ,
"too
condition
would be
of
financial
to
extensive".
that
it
is
effectively
memorandum i t s e l f
assistance
s u s t a i n the Chinese
a l s o b e conceded that
admits
to
that
China,
resistance.
t h e Japanese would
so
it?
As r e g a r d s
t h e second c o n d i t i o n ,
a l o a n o f £20 m i l l i o n s
insufficient
i s not
t h e major
political
Craigie s
condition
that
1
the c r e d i t
why g i v e
i n amount,
purpose.
means t h a t we ought n o t t o
chance o f w i n n i n g ,
we c a n n o t p r e t e n d
"extensive"
for
extensive"
Japan's
as
currency
is
t o d e v i s e an a r r a n g e m e n t w h i c h w o u l d
the purpose
S i r R.
9
must r e m i n d my
14th June)
would be d e s i r a b l e
a portion
am a d v i s e d
impossible
regard
seal
says:­
receipt
Must i t
the
Craigie
C h i n e s e Government w o u l d n o t b e e n a b l e d
satisfy
will
conditions.
(a)
I
it
i n paragraph
that h i s acquiescence i n a c r e d i t
b y t w o main
He
of
memorandum r e f e r s
in paragraph
(see
if
t h a t we s h o u l d h a v e made t h e a t t e m p t
never be f o r g o t t e n
2.
came
If,
that
however
however,
should not be
do enough t o
a credit
at
affect
all?
"too
t)
I
is
share
on t h e
to
side of
ethically
of
City of
us as t o
to
think
is
i n the
t h e hope o f
be p r o v i d e d .
This
would be n e c e s s a r i l y
Ho d o u b t
it
the
that,
if
Whether
it
Act of
is
right
measuring t h i s
4.
We h a v e
is
this
Government
subject
with
to
do
It
that
first
credit
of public
treated
should
and
it
speeches
difficult
resented
British
London,
she
authorised
even g r e a t e r
these
the
debate.
in indiscreet
and I f i n d
proposi­
China
an A c t o f P a r l i a m e n t ,
guaranteed loan,
decide
acquiring
would
by
resentment.
things,
do them w i t h o u t
it
would
maturely
risk.
just
decided
e x c e p t i o n a l measure
It
for
( w h i c h was a t
that
o r wrong t o
c e r t a i n l y be wrong t o
for
security,
assistance
through the C i t y o f
Parliament,
to
fully
impracticable.
the
to
a serious matter,
up b y d e c i d i n g
to
find
cement o u r
on t h e
the
through
as t o be
Japan w o u l d h a v e
r e g a r d a Government
a special
China
as a c o m m e r c i a l
Opposition,
assistance provided
not
for
forms o f
would be warmly s u p p o r t e d
b y Members o f
to b e l i e v e
consequences
that,
getting
requires
draw
nature o f
c h a n n e l s has been dashed
hands as i m p o s s i b l e )
to
conflict.
s u g g e s t i o n now comes f o r w a r d
Bill
serious
both in connection with proposals
was so u n a t t r a c t i v e
matter
is necessary
the
secure assistance
through non-Governmental
on a l l
in this
L o n d o n on a c o m m e r c i a l b a s i s was
o n l y because
the
to
it
and i n c o n n e c t i o n w i t h o t h e r
it
right
the p o s s i b l e
and t h e c o n c l u s i o n was r e a c h e d
tion,
that
Japanese resentment would he
attention
intervening
investigated,
wolfram
But I
special
The p r o p o s a l
the
C h i n a and t h a t
addressed to
ourselves
3.
the view
unjustified.
my c o l l e a g u e s '
warning
the f u l l
£16 m i l l i o n s
attachments
financial
t o g i v e £20 m i l l i o n s
side,
as
to
to
away i n
an
Turkey.
follow
the
9
fit
tS i) 0
Far East,
u n l e s s we a r e c o n f i d e n t
advantages
of
at l e a s t
equal
even t h i s w h o l l y e x c e p t i o n a l
stead i f
t h e r e b y we s a v e d
and r e s t o r e B r i t i s h
I
do n o t m i n i m i s e
and p r e s t i g e
a Japanese
in
going
are not
5.
fully
that
p r o c e s s w o u l d s t a n d us i n
good
the s e r i o u s
there
t o do i f
consequences
But we must a s k
at
situation
on a s e c u r e b a s i s ,
trade
to f o l l o w
ourselves
from
whether
t h a t £20 m i l l i o n s
to secure
and
to B r i t i s h
the Far East which a r e l i k e l y
twelve
political
realise
on t h e c a l c u l a t i o n
t h e war w i t h i n
I
the whole Far E a s t e r n
now c a n r e a l l y b e e x p e c t e d
are
value.
interests
triumph.
we c a n r e l y
t h a t we s h a l l g a i n
given
t h a t China w i l l
away
win
m o n t h s , and we must c o n s i d e r what we
t h e end o f
twelve
months t h e s e
hopes
realised.
The f i n a n c i a l
and c o m m e r c i a l c o n s i d e r a t i o n s ,
as they a r e ,
do n o t
main a n x i e t y
seems t o me t o b e w h e t h e r t h e a c t i o n now p r o p o s e d
is
constitute
one t o w h i c h we c a n commit
the dangerous s t a t e
w h i c h S i r R.
Japanese
victory
within
hostility
of
twelve
step
and i t
months b u t
6.
There are
of
the matter.
The
spite
of
the
Office
memorandum),
the
the
China's
continuing
greatly
some t i m e i n
increased
the f u t u r e
i n E u r o p e and t h e F a r E a s t ?
urged
our f o r e i g n p o l i c y
thus c o n s i d e r a t i o n s
of
"hint"
give
secure
to
to
safely
incurs
a d v i s e r s have c o n s i s t e n t l y
object
of
does not
t h e J a p a n e s e h a v e we n o t
simultaneous h o s t i l i t i e s
a prime
in
the F o r e i g n
the danger o f being engaged at
military
If,
t h i n k s we c o u l d
(paragraph 9 of
the proposed
crux
our c o u n t r y h a v i n g r e g a r d
o f Europe.
Craigie
we t a k e
the
serious
to
that i t
avoid
Our
should be
that
the utmost
in
possibility.
gravity
and i m p o r t a n c e
circulating
on t h e
this
have the above
same t i m e a s
other
note
and a c t
the p o w e r f u l
as
this matter,
t o make s u r e t h a t
considerations
lead the Foreign O f f i c e
risk
side i n
fully
before
and p e r s u a s i v e
to urge
my
colleagues
them a t
arguments
t h a t we s h o u l d
proposed.
J.S.
T r e a s u r y Chambers,
1st
July,
1938o
S.W.1.
and I am
take
the
which
the