893.51/6465
The Chargé in Czechoslovakia (Chapin) to the Secretary of State
[Received September 21.]
Sir: In confirmation of press despatches, I have the honor to report that it is officially announced that Dr. Kung, Chinese Minister of Finance on his recent visit to Czechoslovakia, arranged for an industrial credit to the extent of £10,000,000 (1,500,000,000 crowns) between his Government and the Skoda Works, Pilsen.
According to information from a reliable source, it is indicated that this large credit will be used for war material, in particular, and, to a lesser extent, for rolling stock. The shipment of certain orders is to commence at once against cash payments while the balance of the credit transaction is to be secured by special guarantees. It is assumed, furthermore, that other Czechoslovak concerns will participate in, and benefit by, the Chinese contracts, in so far as these concerns supply the necessary by-products. It is estimated that the delivery of these orders will extend over a period of between five to six years.
I have been told that the participation of Czechoslovak industry in the Chinese armament program is due to the fact that British industry has not been able to accept the orders owing to its own preoccupation in the British rearmament program.
In this connection I am enclosing, in translation,5 an article which appeared in the official journal, the Prager Presse, on August 19th.
Respectfully yours,
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