811.20 Defense (M)/6827: Telegram
The Ambassador in China ( Gauss ) to the Secretary of State
Chungking
, May 23,
1942—11 a.m.
[Received 11:45 a.m.]
[Received 11:45 a.m.]
590. Department’s 402, May 18, 4 p.m.
- 1.
- Embassy does not foresee at this time a Japanese offensive in Yunnan that would endanger tin mines and stocks there. In any event reliance must be placed in Chinese military defense.
- 2.
- Embassy’s object in suggesting that we purchase tin alongside plane in China was to prevent reduction in production because of Chinese inability to deliver for purchase outside of China due to transport interruption. It would seem reasonable, if tin is to be delivered to Russia, for Russians to arrange purchase in China, we placing at their disposal such transport facilities out of China through India as we may have available if transport via that route is contemplated. However, if existing contracts and understanding with Russia render purchase by United States preferable, Embassy recommends purchase in China. Metals Reserve is no doubt aware that, due to artificially high rate at which Chinese dollar is pegged to the United States dollar and to very low internal value of Chinese dollar, price of tin in Kunming is about three times higher than New York quotations.
- 3.
- American military transport planes in limited numbers have commenced arriving Kunming with defense supplies for China. [Page 655] Amount of strategic supplies (tungsten and tin) that they can carry out is not large—maximum 15 tons a week for present—but opportunity to remove ever [very?] limited quantities should Under no circumstances be lost. National Resources Commission is not prepared to deliver tungsten to the planes now but expects to make arrangement soon. It is prepared to deliver tin and, at Embassy’s request, has agreed to instruct its representative in Kunming immediately to deliver tin stocks to planes against receipt of American military officer in charge at Kunming. However, NRC desires to have as soon as possible an understanding with regard to terms—price, risk, etc.—under which tin is delivered. It is requested that Embassy be authorized at once to assure Chinese that pending definitive arrangements stocks of tin (and tungsten) turned over to our planes at Kunming will be subject to reasonable credit arrangements satisfactory to the Chinese.
Gauss