Foreign Relations of the United States Diplomatic Papers, 1932, The Far East, Volume IV

893.113/1411

Memorandum by the Counselor of Legation in China (Perkins)²¹

undated

Conversation Between Mr. C. E. Schroeder, a Belgian Citizen, Representative of the “Fabrique Nacional des Armes de Guerre” and Mr. Perkins, Counselor of Legation, September 8, 1932, on Board “S. S. Chokomaru” En Route From Kobe to Tientsin

Mr. Schroeder said he had been visiting Japan for the purpose of selling sporting guns but that he was now coming to Peiping with the object of selling munitions to the Chinese. He had previously been some months in Central China on the same mission. He then discussed the subject of the selling of arms and munitions in China, and said that recently competition had become very keen and difficult to meet. This was on account of the very low rates offered by munition manufacturers and arsenals in certain countries in Europe in which these concerns received Government support. In order to keep their personnel permanently employed these concerns receiving Government support were willing to make prices with which purely private firms such as his own found it very difficult to compete.

He then remarked that for some years Chinese credit had been so bad that cash payments had been regularly required, and the only competition had been with respect to the price and quality of goods. Now, however, European firms were again beginning to extend credit in China and he had recently known of a contract in which the final balance of 50% of the price was not to be paid until several months after delivery.

With reference to obtaining permit to import Mr. Schroeder said that in Central and in North China no European firm would undertake to deliver arms and munitions to Chinese provinces until the permission of the Central Government had been previously obtained. Otherwise the ships importing this cargo would be in danger of being confiscated on arrival. In South China, however, there had been a certain amount of selling to the Cantonese authorities without the permission of the Central Government. In Hongkong, the British authorities did not allow arms and munitions to be indiscriminately imported for subsequent sale to Chinese officials, because they were unwilling to have that port used as a base of supplies for the promotion of revolutionary disturbances in South China, but they would allow the importation of arms into Hongkong for transshipment to South China if the permit of the Canton Government was obtained.

With regard to the purchase of arms by Chinese more or less independent of Nanking, he said that there was much reluctance on the part of such military people to apply to the Central Government for permits, since it frequently happened that the Central Government in reply would offer to furnish the applicant with the required arms and munitions rather than issue an import permit. This practice was quite unsatisfactory to the under officers in such cases because it prevented them from obtaining the commissions which they would be able to receive through direct purchase from abroad.

Mr. Schroeder said he expected to have to remain some time in Peiping for the Chinese were very clever in playing against each other the various European competitors and that it was very necessary to have the greatest patience in this kind of trade. He believed that the sale of American airplanes had been very successful in China and that this was due largely to the practice of American aviation firms in taking Chinese to the United States for instruction and training.

He also remarked that, within the last few months, the Japanese Government had been buying very large quantities of artillery and munitions from France.

21. Copy transmitted to the Department by the Minister in China in his despatch No. 1755, September 28; received October 22.