893.113/1437
The Vice Consul at Yunnanfu (Reed) to the Secretary of State
[Received January 27, 1933.]
Sir: In continuation of the theme developed in my Confidential Despatch No. 20, “Representation of American Airplane and Automobile Interests in the Yunnanfu Consular District”, dated October 12, 1932,28 I have the honor to outline certain items of interest which have arisen in connection with the recent and present efforts of an American factory representative to sell airplanes to the Yunnan Provincial Government.
Recently Mr. James Fisher, of the American Eastern Aviation Company at Hong Kong, which concern is understood to act as factory representative of a group of American airplane manufacturers, arrived in Yunnanfu, bringing with him complete data and specifications of the planes handled. The Provincial Chairman, General Lung Yun, pleased with the success of the six Arrow Training Planes, delivered to the Yunnan Bureau of Aviation by Mr. Fisher some eight months ago, reiterated his desire to purchase a number of training planes and turned over the negotiations to Commander Chang Chih Kuo of the Aviation Bureau. After a number of conferences, the result was brought to the attention of the Chairman who then rather surprisingly stated that the prices quoted by Mr. Fisher were so much higher than those quoted by French representatives that the purchase of the American planes could not be considered unless the quotations were substantially cut.
Commander Chang communicated to Mr. Fisher the following information which he had received from the Chairman: that the French representatives had offered free transit across Indo-China, that the Indo-China Government was prepared to waive all transit taxes and duties, that no huchao would be required for their planes to enter Yunnan across the Indo-China frontier, and that these representatives, in the presence of and evidently with the consent of the French Consul at Yunnanfu, stated that no American planes would be permitted to make transit through Indo-China.
[Page 594]It was mentioned in my previous despatch, French interests have maintained representatives here for months, utilizing every opportunity to push their manufactures and to urge that in future purchases of French aircraft should be made.… Moreover there is no question but that the inducements, as stated by Commander Chang, of free transit, of exemption from duty and the threat of barring transit of American planes, carry a more than considerable weight. When it is known that the cost of transit and the imposition of duty on the Arrow Training planes amounted to approximately one-third of the cost of the planes, when it is recalled that the securing of a transit permit for these planes was effected only after months of waiting and voluminous correspondence, involving the interested Consulates, the Department of State, the Embassy at Paris, as well as the purchaser and seller, it is more than patent that the Bureau of Aviation at Yunnanfu views with apprehension the higher cost of the American planes and the problem of securing such planes, if purchased, in the face of an already announced determination to prevent their transit across Indo-China. It is also rather noteworthy that the statement that no import huchao will be required clarifies the position of the French Consulate in that it would intimate rather broadly that the French Consul at Yunnanfu is to be the dictator of what may or may not be imported into Yunnan, a position which successive French consuls have worked to establish.
Yet, so remarkable has been the performance of the six Arrow Training planes and so dismal has been the failure of French planes, that a number of influential generals are disposed to purchase the American planes offered by Mr. Fisher regardless of price and opposition on the part of the French. Unfortunately, however, the Provincial Chairman is considering the price rather than the record. Mr. Fisher has submitted new quotations, although considerably lower than his previous prices yet still considerably higher than the French quotations, but no action has been had as to the revised offer. Apropos of the French quotations it may be noted that one of the two French representatives reduced his quotation from 160,000 francs to 90,000 francs, such a large reduction evidencing the determination to secure the market against American planes at all costs, regardless of such items as profit, et cetera.
At the same time, Mr. Fisher was requested to submit quotations on military planes, pursuit and bombers, these evidently for comparison with the prices submitted by French and the British. Although in my previous despatch it was stated that the Yunnan Government was not prepared to purchase military aircraft for some little time, it would now appear that a newly aroused interest in such planes is paramount. This may be a measure of preparedness, such as the [Page 595] negotiation of the arms and munitions deal is supposed to be, stimulated by the strife in the surrounding provinces and by the rumored possibility that Yunnan’s allegiance to Nanking may be switched to Canton. Concerning this latter possibility this office is gathering material for a detailed report.
As the situation develops the Department will be kept informed by prompt despatches and in the meantime this office is assisting Mr. Fisher in his endeavor to sell commercial planes in every way possible.
Respectfully yours,
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