The Adviser to the Liberated Areas Division (Moffat) to the Acting Chief of the China Division of the Foreign Economic Administration (McCann)

Dear Bob: I want to acknowledge your letter of April 23 with its enclosures relating to the proposed purchase by U.T.C. of used commercial industrial equipment and inquiry as to the State Department’s opinion on the desirability of sponsoring this and similar proposals.

It is the understanding of the State Department that, because of the acute limitation of available cargo space into China under present conditions, and because of the danger of warehouse congestion in India the Foreign Economic Administration will not issue export licenses for any materials destined to China unless they are essential to the war effort or the maintenance of the Chinese economy, and unless it appears that they can actually be transported into China within the reasonably foreseeable future. The State Department thoroughly approves this policy and under the circumstances it agrees that export licenses for the used commercial equipment referred to should not be issued at this time.

Since the equipment in question is not subject to Limitation Order of the War Production Board, no question arises as to the F.EA. acting as claimant for the equipment.

As to the essentiality of this equipment to the United States civilian and war economy, that is a technical matter on which the State Department obviously can give no opinion. It may well be possible, however, for U.T.C. to acquire title to the equipment and so arrange that the equipment will continue to be operated in this country until such essentiality is terminated, thereafter exporting it to China when warehousing space in India or cargo space to China permits.

Putting the matter into terms of policy, the State Department favors the fairest possible conditions of trade between this country and China, desires that capital equipment be made available to China on a basis of full equality with other countries and hopes that subject to necessary limitations imposed by war conditions F.E.A. will give all proper assistance to the Chinese in effecting purchases which they desire to make in this country, whether for immediate or post-war shipment.

Sincerely yours,

Abbot Low Moffat