893.50/9–444

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

No. 2931

Sir: I have the honor to refer to the Department’s telegram 762, June 3, 1 p.m., in regard, inter alia, to American policy concerning postwar projects in China, and to enclose the pertinent sections of a contract47 assertedly concluded between the local office of Jardine, Matheson & Company, Ltd. (British) and the China Woolen & Worsted Company, Ltd. (Chinese) for textile machinery and auxiliary electrical equipment to be delivered after the war.

According to Mr. C. Y. Wu, representative of Andersen, Meyer & Company, Ltd., and Mr. Martin Gold, representative of William Hunt & Company, who supplied the Embassy with copies of the enclosed document, the British firm has already concluded five contracts with the above-mentioned firm for equipment valued at the sterling equivalent of CN$50,000,000 which approximates US$250,000 at the open market rate of about US$1 to CN$200. The local manager of Jardine, [Page 1071]Matheson & Company states that his firm is actively engaged in soliciting orders for postwar delivery of textile machinery and other equipment; that the local representatives of Andersen, Meyer & Company and William Hunt & Company are doing likewise; and that he perceives no reason why foreign concerns should not at present endeavor to obtain contracts for equipment for postwar export.

Mr. Wu informs us that he has not yet concluded any contracts on behalf of his firm but is now negotiating with Chinese companies for the sale of textile machinery manufactured by the Saco-Lowell Shops, Boston, Massachusetts; that one order would involve a 100,000 spindle cotton spinning and weaving plant valued at US$3,000,000 to be supplied to the Sung Sing Cotton Mills, Chungking, and that another order, under negotiation with the Yu Wah Cotton Mills, Chungking, would involve 20,000 spindles at US$600,000. Mr. Wu states that several inquiries for textile machinery, originally made by Chinese firms to the Saco-Lowell Shops through the Universal Trading Corporation, have been referred to him for investigation. He says that he is negotiating for the sale of 1,000 International trucks, delivery to be made in the postwar period. He says he has been advised by Andersen, Meyer & Company that no prohibition existed in the United States against the acceptance of orders now for equipment and goods to be delivered to China in the postwar period.

In contrast with the requirement by Jardine, Matheson & Company that a deposit of 20 percent be made when contracts are signed, the policy followed by Andersen, Meyer & Company, according to Mr. Wu, calls for deposits to be made in American currency in banks in the United States for the full amount of the contracts. All such contracts, he states, would be made subject to manufacturer’s acceptance.

Mr. Gold recently informed the Embassy that he was attempting to conclude a contract with the Sinkiang Provincial Government for the sale of a medium-sized textile plant to be shipped from the United States when transportation facilities are available.

It appears that American and British companies have negotiated and are attempting to negotiate contracts calling for shipment of textile machinery to China as soon as possible after the war. The attention of the Department is invited to its air mail instruction no. 748, July 31, 1944, on the subject of China’s economic development plans, in which it is stated that there would appear to be little surplus of newly-manufactured or second hand textile machinery available for postwar export from the United States or Great Britain.

Respectfully yours,

C. E. Gauss
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