Memorandum of Conversation, by the Adviser to the Liberated Areas Division (Moffat)

Participants: Mr. F. R. Hoyer Millar, Counselor, British Embassy
Mr. John S. Dent, Second Secretary, British Embassy
Mr. Moffat, LA.

Mr. Millar and Mr. Dent called by appointment yesterday at 10 a.m. Mr. Millar stated that London was concerned about Chinese requirements and was anxious to secure U. S. cooperation in ascertaining necessary facts with regard thereto and was pressing for action.

He explained there were three points which troubled them. First, that the Chinese would frequently ask to purchase in the U. K. items which are difficult for them to fill and that London has had no way of learning the actual necessity for the item. On several occasions it has been found that identical requests were made of the U. S. It is embarrassing to London to have to say no, and then find that the U. S. is saying yes. They would like, therefore, a joint screening in Chungking of Chinese requests. The second point is that having screened the actual need of the item requested that there be a U. S–U. K. conference in Washington to agree upon who shall supply the item. At least, it is hoped that from such a conference the same reply be given to the Chinese and the Chinese not be in a position to play one country against the other. The third point, which is in support somewhat of the other two, is that the British should know what civilian supplies are shipped into and withdrawn from India.

On the last point at first there was raised by Mr. Dent the danger that all these goods created to effective military action in Calcutta, for example, if there should be Japanese bombing; but later it was conceded that the civilian as opposed to military supplies was very [Page 958]small, and the condition in India not half so bad as had been painted last summer.

During the course of the conversation they agreed that the amount the British were shipping was almost negligible—probably less than a 100 tons a month; but that when the ports opened up and postwar came there would be a different story and they wanted to be prepared.

They believe that FEA is shipping almost nothing not directly related to the military, but they are filled with curiosity and want to know what is going on. London has the idea, they said, that Universal Trading Corporation is buying quantities for cash and is investing heavily in the U. S. for postwar, and they want to know just where we stand and where they stand.

They stated that the aide-mémoire 7 which they were leaving covered these points quite fully, but that they wanted to suggest that in addition if any arrangement is worked out Canada should be brought in. They pointed out that Canada had sold and sent the Chinese a quantity of armament—some 6,000 tons—which could not possibly be flown into China. From time to time they may want to participate via mutual aid in military supplies wanted by the Chinese, and may have an interest in such civilian supplies as farm machinery.

They also emphasized time and again that they did not contemplate anything formal; no committee or anything of the sort, just an arrangement whereby we will tell them what orders we receive from the Chinese and they will do the same, with mutual notification of orders accepted, shipments, et cetera. They would like to duplicate in regard to China, the situation they state exists as to Russia, whereby the British pass on to U. S. a list of all orders received from the Russians and which ones they intend to fill; and we send them once a, month (British information furnished fortnightly) a list of material shipped.

They suggested that the U. S. might indicate which of the proposed Chinese contracts the U. S. would fill and pass on the balance to the U. K.

They indicated there was no urgency as to a reply, but thought the five months that elapsed before their July aide-mémoire was answered was a little too long. They indicated that if FEA would only tell them how much, or more accurately how little, was actually being shipped and it was established to their satisfactiton that other orders were not really in excessive amounts, London would be inclined to lose interest—it was the unknown that was building up in British minds a tremendous Chinese-American trade.

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