Foreign Relations of the United States: Diplomatic Papers, 1942, China

811.20 Defense (M)/6437: Telegram

The Secretary of State to the Ambassador in China ( Gauss )

Washington , May 15, 1942—3 p.m.

391. Paragraphs refer to the corresponding numbers in your No. 488 of May 1, 11 A.M.

1. (a) Inasmuch as the British are leaving to us purchase of Chinese bristles, it is suggested that you may wish to consult with the Soviet Embassy with a view to an understanding whereby Russians would not enter bristles market beyond the possible purchase of a certain stipulated quantity. It would also be desirable to effect an arrangement for the coordination of prices. Defense Supplies Corporation is specifying “assortment No. 27” for which $3 per pound is regarded as fair price. Please report as to feasibility of effecting any understanding as above described.

(b) Negotiations are proceeding here between Defense Supplies and Universal Trading Corporation for purchase of bristles, but prices asked are regarded as too high. Defense Supplies has also discussed bristles purchase here with a Vice President of Jardine Matheson, who has agreed to submit offers. Pending further developments, purchasing agent in China is not regarded as necessary, but the Department would be glad to be informed of any American suitable for this purpose in case such agency should later be found desirable.

2. We shall leave purchase of silk to the British, who, we understand, are interested only in high grades suitable for parachutes. However, please reply more specifically, if possible, to the questions asked in the Department’s 258. What the Department desires to know in brief is whether there are stocks of silk which, although not of the high grade being bought by the British as suitable for parachutes, might nevertheless be purchased by the American Government for powder bags.

3. Proposed modification of tungsten contract (Department’s No. 349 of May 2, 10 P.M.) would result in title passing to American Government agency alongside planes. It is also our understanding that an arrangement is being made where title of British purchased silk would be transferred to Defense Supplies and retransferred to the British upon arrival of silk in India.

4. Proposed modification of tungsten contract also contemplates Chinese bearing transportation costs from point of origin to delivery alongside planes.

5. With reference to your recommendation for a joint purchasing agency in China, the existing situation, as known to the Department, is as follows: Metals Reserve Company already has 5-year contracts covering purchase of tungsten, tin, and antimony, c.i.f. USA. Combined Raw Materials Board has already decided to divert direct to Russia 5000–6000 tons of Chinese tin, and it is possible entire Chinese tin production will be thus diverted. See Department’s no. 349, Paragraph 2. There is at present no intention to make new arrangements regarding antimony although the question is being studied. No contract has been made covering wood oil and difficulties of transport and other considerations rule out this commodity at present. Silk is to be purchased by the British and bristles are to be bought as described in Paragraph 1 above. Thus it appears that all of the commodities in which we are interested are being purchased either by the British or ourselves. In these circumstances, we feel that a joint purchasing agency is hardly necessary, but will be glad to consider any further observations on your part. However, it is recognized that some sort of organization of our own is necessary in order to supervise reception and transportation of materials as well as to pass upon technical matters. It is for this reason that the Department is interested in the possible employment of McKay and Lavrov, as outlined in our no. 349 Paragraph 4.

6. The Department heartily agrees with your conclusion in regard to the acquisition and storage of materials; for it is obvious that we must endeavor at this time, not only to give all reasonable material assistance to the Chinese, but also every moral encouragement to their war effort.

Hull