811.20 Defense (M)/13088: Telegram

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

683. Your No. 670, May 8, 11 a.m. and 677, May 10, noon.11 BEW much appreciates complete information presented which will make possible better coordination of the various procurement programs in China.

Board appreciates decision China National Tea Company to waive claim for 600 tons West bound cargo space per month per China Transport Corporation and wishes to accept this offer with many thanks. Board understands wish that no West bound space should be wasted and perceives no objection to shipment green tea to fill space otherwise empty. It may be, however, that a minimum quantity of green tea for North Africa will be given a definite priority along with tungsten after the quantities of tungsten urgently required have moved. This subject is now under consideration here and we will advise you of any decision that is reached.

With reference to tungsten, it may be stated that the average cost Chinese wolfram delivered comes to about $27 per unit as against only $24 per unit for South American wolfram delivered. Furthermore, your comparison with 1937 price wolfram is not valid inasmuch as price mentioned by you for 1937 was c. i. f. U. S. A. duty paid, whereas present price is f. o. b. Kunming.

Please consult Army authorities in China and advise whether they can make available the 2,000 tons Eastbound cargo required by CTC. Board is willing to consider increase in the total compensation for wolfram deliveries at Kunming, probably through a bonus for transport charges which would depend upon the quantity ore delivered each month. It is also assumed that the more Eastbound cargo made available by the Army the less the Board would have to pay for increased tungsten shipments. It is assumed we may continue to rely upon deliveries 600 tons monthly at the present price, no matter whether any considerable amount Eastbound cargo materializes. Board would greatly appreciate receiving your estimate of the additional quantities of ore that would be delivered at Kunming and the months in which these deliveries could be expected as follows: if a bonus of 20 cents per pound were paid; if a bonus of 35 cents per pound were paid; or if 50 cents a pound were paid. Board desires to maintain base price $22.60 per unit which is f. o. b. price South American ports. After receipt of your reply, the Board will probably arrange to change base point for deliveries from Kunming to a place nearer the mines. Acceptance of actual deliveries at Kunming would, [Page 653] of course, be continued and the base point would be arbitrarily used for calculation purposes only.

If you perceive no objection, Board suggests that you ask the Chinese Government to enforce priorities on inland transport of cargo purchased in accordance with our wishes. This should be irrespective of various negotiations made for different commodities at varying rates for transport. It seems to the Board that, before consideration is given to any bonus for tungsten transportation, an agreement should probably be had from the Chinese Government with respect to such priority policy.

  1. Neither printed.