Saturday, 25 October

In the morning, the doyen of the diplomatic corps, Baron Jules Guillaume, the Belgian Ambassador to China, visited me. Since we took office we decided to change the old method. The Deputy Minister would absolutely not visit ambassadors. We let them visit us and would not return visits. For various Yuans and Ministries inviting foreign guests, we demanded that they should not invite the Minister of Foreign Affairs as accompanying guests, if necessary, they could only ask me to do so. Now we carry out the changes without difficulty.

At noon, Guo Taiji informally treated Sir Frederic William Eggleston, the first Australian Minister to China, to a banquet. He has substantial status in Australia and has been a minister in various ministries and at the same time a cabinet member. This time he came and he would present his credentials several days later. We did not want to treat him too coldly so we invited him to come first. Mr. Li, the Secretary who came with him, was born in China and is a Cantonese native from Taishan. According to our Nationality Law he is still a Chinese. Diplomatically, the most difficult issue was that of a Chinese representing a foreign government back to his own country. But it was the time when we were most friendly to Australia, therefore it was inappropriate to raise such an issue. Furthermore, Chinese expatriates are most patriotic of Chinese. The presence of Mr. Li was more advantageous to the two countries than to be disadvantageous, so I did not raise the issue.

Today the American Naval Secretary, Franklin Knox, gave a speech, saying that if Japan continued its current policy, war between Japan and the United States would be absolutely unavoidable. Given his status, and that he expressed such an opinion, it had a great impact.

In the evening, Wang Chonghui invited me for a meal at the Carlton. The food was just so-so. After the dinner, he told me he had had a private talk with the British financial delegate, Sir Otto Niemeyer. Niemeyer said that China’s finances are an internal problem as for every country it is a problem that their budget is in deficit, but they could not exceed a certain amount, which made paper currency useless. Wang Chonghui asked him if he meant inflation. Sir Otto said “Inflation is an unpleasant word to use, but I mean something like it.” Wang Chonghui thought that there were still many expenditures that could be reduced, but I did not believe that normal frugality would help. In the past, we studied with Sun Fo and others, and we found out that we had to explore more sources to increase revenue, so we had proposed methods such as government monopoly of provisions, and so on. Unfortunately, the resisting forces were quite big so we had no way to proceed. We sighed to each other for being unable to find any way out.