711.00111 Armament Control/724: Telegram

The Counselor of Embassy in China (Peck) to the Secretary of State

32. 1. Reuter telegram dated Washington, February 6, published here today, states that Department of State has released figures of over 3 million dollars worth of airplanes, bombs and machine guns purchased by representative from the United States in January.

2. Kung, Minister of Finance, this afternoon asked me to ascertain whether it is true that the State Department issued this statement. I inferred that he desires, if possible, to issue some sort of statement minimizing the importance of the report. When speaking to me he was greatly agitated and said the Government was seriously disturbed by this announcement. He observed that if such publicity were to be the settled policy of the Department he would be obliged to give consideration to the advisability of placing future orders outside the United States. He said previous purchases had not been made public by the American Government and pressed me for an explanation of the present action. I suggested that perhaps the munitions control law required that statistics of munitions purchases be published.

3. An Official of the Ministry of Finance informed me confidentially February 4, 4 p.m. that the recent purchase of 80 bombing planes from the Intercontinent Company involved $11,000,000 Chinese currency of which 5,000,000 were to be paid in cash, February 5. He said all details of the transaction were being kept as secret as possible. However, an American businessman told me, January 25, that many persons in Shanghai knew about this aeroplane purchase.

4. Does the Department desire that I convey any comment to the Minister of Finance?

Repeated to Peiping.