Memorandum of Conversation, by the Secretary of State
The Chinese Ambassador came in on his own request. He referred to the loan arrangement between this Government and that of China [Page 543] in 1933, for cotton and wheat in particular, in the amount of 50 million dollars. He said that some 18 million dollars of this amount had been consumed by these purchases and the matter left in abeyance as to the balance of the 50 million dollars of purchases. The Ambassador said he desired very earnestly to request that this remaining 32 million dollars of credit be further utilized by purchases from this country of cotton cloth and flour for the urgent relief of nearly 100 million of the Chinese population. He made a plea about the distress in his country and the increasing need for this cloth and foodstuff, adding that this full amount of credit was not utilized on account of good crops in 1935 and 1936. He was very earnest in his representations. I replied that I would look into the matter during the next few days and talk with him further; that this would be the best step to pursue before any formal note from his government should be presented to us on the subject. With this he was in accord.
I then inquired of the Ambassador as to when he thought the Japanese would reach Hankow. He replied that it would be some time yet. I inquired as to how long the Chinese would be able to provide themselves with essential military supplies, and he replied that they could go on indefinitely in view of the financial cooperation of this and other countries. He then emphasized that the large Chinese population which came within range of the Japanese invasion would be, however, in urgent need of the cotton cloth and flour for which he was asking.
He asked what we knew about the Japanese-Soviet frontier situation.14 I answered that we knew nothing more than what we saw in the papers.