893.48/1034
Memorandum, by Mr. Raymond C. Mackay of the Division of Far Eastern Affairs
| Conversation: | The Chinese Ambassador, Mr. Sao-Ke Sze; |
| Mr. Hornbeck2; | |
| Mr. Mackay. |
The Chinese Ambassador called at the Department and, after referring to recent negotiations in regard to payments due on the wheat credit of 1931 and the cotton and wheat credit of 1933, affirmed that the Chinese Government had been “penalized” by the effecting on December 31, 1935, of payment in full of the sum of $3,000,000 plus then owing the Farm Credit Administration. The Ambassador further stated that the situation had resulted from his having placed “all his cards on the table” and that therefore there devolved on him the “guilt” for China’s loss of the accommodation which had been sought. Mr. Hornbeck said that he could not agree either as to there being any “guilt” (or fault) or as to the contention that the Chinese Government had been “penalized” by the effecting of a payment in full of the amount due on the given due date.
The Ambassador then said that he hoped he might be able to obtain from the Farm Credit Administration a refund of $2,750,000 and from both the Farm Credit Administration and the Reconstruction Finance Corporation more liberal terms covering payments on those portions of the credits under reference which remain outstanding.
The Ambassador asked whether Mr. Hornbeck would, in case the Ambassador should succeed in obtaining by direct approach to the F. C. A. and the R. F. C. the concessions which he had indicated,—whether Mr. Hornbeck would refrain from opposition. Mr. Hornbeck said that he doubted whether it would be possible by any process [Page 460] to effect a refund such as the Ambassador had mentioned; that he personally would not view with favor any procedure to that end, although the Ambassador was of course at liberty to canvass the situation; that neither he nor the Department could in advance give a blanket assurance as to a future position in regard to such a matter; and that, if at some future time there were submitted to the Department a new project or plan for revised schedules of payments on the obligations of the Chinese Government under reference, such projects or plans would be given thoughtful consideration at the time in the light of the then existing circumstances.
There followed a lengthy and detailed discussion of recent developments in the matter under consideration. It was suggested and was agreed that the existing situation called primarily for consideration of possible future action rather than of developments in the past. The Ambassador, however, again referred to “errors” made and faulty tactics employed by representatives of the Chinese Government in their recent negotiations for a postponement of payments due on the credits under reference. Mr. Hornbeck expressed the opinion that in the scale of importance there rested far above such matters as tactics and strategy the all-important question of the attitude of the Chinese Government. Mr. Hornbeck further stated that, expressed in simplest terms, the situation under discussion was one in which the Chinese Government had requested of the American Government material concessions; that the American Government, in indicating to the Chinese Government the extent to which it might be in position to comply with such request, had sought an indication of a definite disposition on the part of the Chinese Government to take appropriate steps toward the liquidation of various of its long outstanding obligations to American private creditors; that the only response which the Chinese Government had made, as contrasted with the eminently satisfactory spirit of cooperation displayed by Ambassador Sze, were indications of dissatisfaction with the concessions which the American Government had indicated that it might be in position to make and a statement emanating from the Chinese Minister of Finance implying that it was the Chinese Government’s view that nothing could or would be done by the Chinese Government to meet the wishes of the American Government; and that in view of such indicated attitude on the part of the Chinese Government there had followed, as a natural consequence, the action of the American Government in accepting on December 31, 1935, payment in full of monies then due to it by the Chinese Government.
- Stanley K. Hornbeck, Chief of the Division of Far Eastern Affairs.↩