033.1193 Nelson, Donald M./6–845

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

No. 467

Sir: With reference to my despatch 460 and previous correspondence concerning the work of the Nelson Mission and Chinese War Production Board I have the honor to quote the following release of the (Chinese Government) Central News Agency, under date of June 4th last.

“Dr. Wong Wen-hao, Chairman of the War Production Board, pointed out today that unstable price has exerted an adverse influence on war production.

“‘We have many problems to contend with in our efforts to expand war production,’ Dr. Wong explained. ‘Among the most serious of [Page 1431]them, perhaps, is that of the rapidly rising costs of production. Producers naturally do not want to accept prices, or contracts, which involve a loss for them. On the other hand, we cannot let prices rise indefinitely, but must hold them in check. At the same time, it is essential that we do our best to increase the production of all materials that we and our Allies must have to make our war against Japan still more effective.

“‘Efforts are now being made to effect price readjustments which will make it possible for producers to work to the limit of their capacity, and I am hopeful that the present trend will reverse itself shortly.’

“Production of nineteen major raw materials, valued in CNC19a of November, 1944 purchasing power, was reported as follows for the first four months of this year:

January $3,693,352,000
February $3,429,929,000
March $4,197,573,000
April $3,648,927,000

“It can be seen from these figures that March production made definite progress being 121 in comparison with 100 last November and 106 January but April production came back to January level because of practical difficulties due to the price fluctuation.”

The Department will observe that Dr. Wong, Chairman of the Chinese WPB has quoted the same figures recently prepared by Mr. A. T. Kearney, head of the Nelson Mission, and that these indicate that whereas production rose substantially in March of this year it declined the following month to the January level, and that Dr. Wong attributes this to “practical difficulties due to the price fluctuation”. Mr. Kearney informs me in confidence that the May figures (not yet available) may show little if any improvement over April.

Respectfully yours,

For the Ambassador:
Ellis O. Briggs
  1. Chinese National Currency.