The Ambassador in China ( Johnson ) to the Secretary of State
[Received August 5—7 a.m.]
399. My 387, July 30, 10  a.m.15 Following from Hong Kong.
“August 4, 3 p.m. Following from McHugh.16
Buck17 sent secret letter dated July 14th to Kung from Washington via Treasury office here stating he had seen both Secretaries Hull and Morgenthau and assuring Kung that China has excellent friends [Page 544] in the Administration. He quoted both Morgenthau and the latter’s assistant adviser Lockhead as stating that the only chance of China obtaining a loan would be to send K. P. Chen to Washington to negotiate an agricultural commodity loan. He stated that Morgenthau has complete confidence in Chen and said the Secretary feels that because of Chen’s straightforwardness and intimate knowledge of financial problems he could negotiate with him as with no one else.
Buck urged that Chen be sent in September to meet the Secretary when he returns from Europe and that Chen be supplied definite information on the need for and use of a commodity loan. He stated that he thought the loan could be as great as China could possibly use in terms of commodities. He added that there also was a good possibility of obtaining credits on Chinese products if same were stored in the United States. Buck will return here August 10 to continue to act as special agent for Treasury.”