Memorandum of Conversation, by the Assistant Secretary of State (Berle)

While calling on Mr. Morgenthau today I spoke to him briefly about the question of the Chinese loan.

I pointed out that T. V. Soong had requested the loan, I understood, first from the Treasury; had by direction of the Treasury gone to the Reconstruction Finance Corporation; that the Reconstruction Finance Corporation had consulted us, and by direction of the Secretary who approved in principle a loan of say twenty million dollars I had talked briefly to the President about it; that the President had likewise approved of the idea but had suggested that I talk to Mr. Morgenthau, adding that he (the President) would open the subject with Morgenthau himself.

The Secretary observed that the President had not done so but that he understood the situation perfectly. He was in favor of the loan to China. He was not clear as to the status of T. V. Soong with the Chinese Government, having heard that he had left Shanghai because it was “too hot a spot”. Soong had asked him for a loan from the stabilization fund; this seemed impossible because it too nearly approximated a “gift”; but if the Reconstruction Finance Corporation felt it could do something along this line the Treasury was in favor of it.

I asked whether in that case the Reconstruction Finance Corporation and the State Department might proceed on the theory that it had his blessing without bothering him about it further, to which he cordially assented.

Subsequently I brought this subject up with Mr. Jesse Jones. Jesse said that he had had another visit from Soong. He proposed to give them the loan; the question was whether we should give it to them in driblets or in one solid amount. I said I thought the feeling here was that if the loan was to be made at all, we had better make a loan in a good solid amount; again suggesting the figure of twenty millions which Secretary Hull had mentioned to me.85

A. A. Berle, Jr.
  1. For announcement by the Federal Loan Agency on September 25 of financial arrangement with China, see press release No. 48, Foreign Relations, Japan, 1931–1941, vol. ii, p. 222.