Memorandum by the Adviser on Political Relations (Hornbeck)

Proposed Loan to China

Mr. Gray62 informed me this morning that the Secretary had expressed in terms of a query the thought that it would be desirable for this Government to inform the Chinese at an early date that we are prepared to make them a substantial loan and to discuss with them such points as may need to be discussed in relation thereto.

Having in mind the conversation which was held in Mr. Berle’s office on January 26 between officers of this Department and officers of the Treasury Department on the subject of the proposed loan to China, I called Mr. Southard of the Treasury Department on the telephone and informed him of the above mentioned expression of the views of the Secretary of State. I inquired whether Mr. Southard had seen information which came yesterday from Mr. Fox to the effect that Mr. Fox has been delayed at Calcutta. Mr. Southard replied that the Treasury had received Fox’s message and had already replied to it. I pointed out that Mr. Fox obviously will not reach Washington at the end of this week. Mr. Southard replied that Fox could not reach here before February 5 at best. I expressed a hope that the Treasury was finding it possible to make progress with consideration of the question of a loan. Mr. Southard replied that Mr. White has now arrived back from South America and is again “on the job”, and that the question of a loan is being given the Treasury’s active consideration. I thanked Mr. Southard and expressed a hope that they would keep us constantly informed of developments. Mr. Southard indicated that he would try to do so.

S[tanley] K. H[ornbeck]
  1. Cecil W. Gray, Assistant to the Secretary of State.