893.48/1078
Memorandum by the President of the Export-Import Bank of Washington (Pierson)
The Chinese Ambassador, Mr. Sze, accompanied by Messrs. Tswen-ling Tsui30 and T. G. Koo, called at the Export-Import Bank this afternoon.
The Ambassador stated that it was the desire of his Government to arrange a modification in the payments due upon the loans assigned to the Bank by the Farm Credit Administration ($3,070,942.20 plus accrued interest at the rate of 4% per annum) and by the Reconstruction Finance Corporation ($13,537,387.79 plus accrued interest at the rate of 5% per annum).
[Page 476]The Ambassador further stated that his Government hoped that the Bank would consent to the following proposals:
- 1.
- To consolidate the two loans upon a uniform interest basis, presumably at some rate less than 5% per annum;
- 2.
- To secure the consolidated loan by a first charge against the consolidated taxes for which provision is made in the contract between the Government of the Republic of China and the Reconstruction Finance Corporation;
- 3.
- To discontinue the customs surtax against which the Reconstruction Finance Corporation now has a second lien;
- 4.
- To discontinue further payments upon principal until the end of 1940;
- 5.
- To amortise the balance of principal from 1940 to 1950.
When asked what the attitude of the Bank would be to his suggestions, I replied that it would be necessary for me to discuss them with other officers of the Bank and with the Bank’s Policy and Loan Committee. In addition to that I indicated that in my own opinion an extension of the loans and particularly the Farm Credit Administration loan would be difficult to arrange; and that the proposal generally contemplated too extended a period for amortization.
The Ambassador requested that we give the matter our most sympathetic consideration and then advise him as to our conclusions.
Thereafter we conversed in general terms about our trade with China, during the course of which I expressed the hope that American exports to China might be increased.
As he was leaving, Mr. Koo remarked that one of the greatest problems faced in connection with China’s new monetary policy was finding the necessary foreign exchange with which to meet the Government’s requirements, and that the modifications requested in connection with the obligations held by the Export-Import Bank would, if arranged, be of great benefit to China.
I concluded our conversation by assuring the Ambassador and his two companions that we would act on their request within the near future.
- Second Secretary of the Chinese Embassy.↩