Office of the Historian

893.51/6368: Telegram

The Ambassador in China (Johnson) to the Secretary of State

Nanking, April 26, 1937—noon.
[Received 1:30 p.m.]

180. Department’s 76, April 22, 7 p.m.60

1.
Pierson held a long conversation April 23 with Chang Kia Ngau, Minister of Railways. He informs me that the Minister went over with him the success China had achieved in obtaining loans and credits for the railways set forth in the letter of December 21, 1936, he wrote to Pierson (see my despatch December 24, 1936).61 Particular mention was made of the Sheklung-Meihsien Road which the British are proposing to finance (see Department’s instruction 340, February 160). Pierson was interested to note that the Minister used language implying that each railway and the region it traversed sets up the “influence” of the country supplying the money and attributed the [Page 585] willingness of the French to finance railway development in southwestern China to a desire to reinstate French prestige in China.
2.
With reference to practical details the Minister stated that China would be very glad if the Export-Import Bank would participate in a 5 million dollar United States currency credit, 2 millions to be used for sleepers, 2 millions for rails and the balance for equipment including machinery for an extensive manufacturing and repair plant. Pierson replied that the tone of popular sentiment in the United States at present is not favorable to any transaction having the nature of a loan to a foreign government and that if the Export-Import Bank assisted in promoting any credit for the purchasing of such materials the transaction would have to be commercial in character. Pierson expressed surprise that the British Government felt able to float approximately 6,000,000 pounds of securities to promote railway building in China since he doubted whether the London market would absorb this issue during the next 2 years. The Minister said that he thought that the Hong Kong bank was authorized to make advances during the next 18 months after which time he was advised the London market would be available.
3.
Pierson carefully avoided any statement indicative of a bias on his part for assisting in extending railway credits to China but said that it was his desire and intention to make a quick tour through China in order to get a personal impression of the actual and potential development and possibilities of the country. The Minister said that irrespective of whether the United States decided for some reason or other [against?] taking a part in the economic development of China through credits the Chinese Government was very anxious that a qualified representative from the United States should acquire first hand knowledge of conditions. The interview ended with a tacit understanding between Pierson and the Minister that the former would talk again with the latter in Shanghai or Nanking after the tour of inspection. Pierson left Nanking for Shanghai April 25.
4.
Sent to the Department, copy by courier to Peiping.
Johnson
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