893.77/3002
Memorandum by the Minister in China (Johnson)94
| Conversation with: | Mr. W. H. Plant, Shanghai Manager of the United States Steel Products Company, and |
| Mr. John S. Campbell, Vice President of the Wilcox-Hayes Company, Portland, Oregon |
Mr. Plant and Mr. Campbell, the latter a member of the American Economic Mission to China, called and Mr. Atcheson arranged for them to get in touch with the Ministry of Railways as they both wished to make inquiry regarding any concrete proposals which American business might take advantage of in the matter of railway construction in China.
Before keeping their appointment with the Ministry of Railways I had a conversation in the afternoon with these two gentlemen and they told me that they were interested in projects for railway construction. Mr. Campbell stated that Mr. Peek95 of the Export Bank had said to them that if they could bring back any concrete proposal he would like to give it consideration. Both gentlemen stated that they were aware that the Ministry of Railways had recently granted a number of contracts to German and Austrian firms for the supply of railway materials. They wondered if I had any information as to new railway proposals.
I told Mr. Plant and Mr. Campbell that I had no information at the moment but I knew that the Ministry of Railways was engaged in constructing a railway to connect Nanking with Wuhu which I understood would connect eventually with the Province of Fukien and the port of Foochow; I also knew that a railway was under construction from Hangchow which was intended to connect with Nanchang in the Province of Kiangsi and eventually with Changsha in the Province of Hunan. I stated that I was not aware that the Ministry of Railways was actively seeking foreign credits in this connection at the present time although I knew of the German interest in the Hangchow-Nanchang Railway.
I asked Mr. Campbell if he had any information as to the nature of the credits given by the Germans and he stated that it was his information that credit guaranteed by the German Government and secured by the provincial revenues of the provinces crossed and further guaranteed by the Chinese Government for six years were involved.
[Page 584]I stated that at the present time I had considerable doubts as to the further ability of the Chinese Government or the Chinese provincial governments making any effective guarantees for repayments of credits. I pointed out that both Central and Provincial Governments in China appeared to be lacking in funds and that in prospect the situation did not look promising as the present world price of silver threatened to bring about a deflation of prices in China with consequent depression throughout the country that would last for some time and might bring on a collapse of Chinese finances not unlike that which characterized American finances and credit in 1932. I stated that the Chinese Government, unlike the American Government, was not likely to have the power to control the situation as had been done by the Administration when it came into power in 1933 and therefore the future looked extremely uncertain.
I told Mr. Campbell that I had been approached by a responsible Chinese for credits regarding the establishment of a large steel plant near Nanking but I did not believe that responsible persons at home were interested in such an enterprise at this time in view of the failure of similar enterprises in the past. I said that the Chinese seemed to be unwilling or unable to move to Nanking blast furnaces and rolling mills already in China and now inactive for the purpose of making a beginning even on a small scale, thus proving the existence of a market for steel products made in China. Neither Mr. Campbell nor Mr. Plant seemed to be interested in such a proposal.