893.796/262: Telegram

The Chargé in China (Peck) to the Secretary of State

189. Reference my 172, March 13, 3 p.m.42 Kung, Minister of Finance, on March 17, 6 p.m., informed me that through K. P. Chen43 he has been endeavoring to obtain assistance from the American Commercial Credit for the purchase of four airplanes that are badly needed by the China National Aviation Corporation. He said that Chen [Page 744] reported that the American authorities concerned state that the credit cannot be used for this purpose because airplanes are regarded as munitions of war and that especially because of excitement over the sale of military planes to France it would be difficult to assist in financing the sale of these planes to China.

Kung asserted that the China National Aviation Corporation would utilize the four planes for the forces of commercial purposes and he wondered why they should be regarded as war materials. He pointed out that the corporation is a joint American-Chinese enterprise and he urged that it is highly desirable from the American standpoint as well as the Chinese that the corporation shall utilize the opportunity for the expansion of its business that has been opened to it. Consequently he earnestly hoped that the Department would explore the possibility of assisting the Chinese Government to obtain financial assistance for Government from the credit established by the Export-Import Bank in effecting the purchase of these much needed commercial airplanes.

I told Kung that I had not heard of his negotiations but that I supposed a difficulty arose from the fact that the Executive Order44 listing those articles for which export permits are not [now?] required as munitions of war included in this category all types of airplanes. I said I would nevertheless refer his request to the Department. It is reliably reported that the corporation is unable with the planes it now possesses to handle the freight, mail and passenger business falling to its share and that additional planes could be employed with profit to the corporation and with great advantage to the public. The prominence given to American initiative and management in this corporation needs no emphasis. The corporation’s close competitor for business is the Chinese Eurasia Aviation Corporation. The former now holds franchises to operate to Hong Kong, Indochina and Burma. While it is evident that there are other important considerations bearing on the question of the desired credit, I venture the opinion that American prestige and American interests in general derive considerable benefit from the service rendered by the American enterprise and that on this account it merits continued support.

Repeated to Peiping.

  1. Not printed.
  2. Chairman, Foreign Trade Commission, Chinese Ministry of Finance, on mission in the United States.
  3. See Presidential Proclamation of May 1, 1937; 50 Stat. 1834.