Marshall Mission Files, Lot 54–D270: Telegram

Colonel Marshall S. Carter to General Marshall

91932. My 88520 of 18 May67 refers. After lengthy and involved negotiations with the Maritime Commission it has been determined that any attempt to amend the Merchant Ship Sales Act at this time could not be favorably considered by the Maritime Commission since it would disrupt the existing satisfactory procedures. Sale of ships under this act is progressing much better than originally expected based on present bids for all types of shipping; the Maritime Commission is unable to support a proposal which would alter the basic principles of the Ship Sales Act. This applies to removal of Cl–MAV1’s and N3’s from the provisions of the Act, as well as an amendment to the pricing formula for these or any other type ship. While it is fully realized that the price of all ships is based on their construction cost and not on their present commercial value, bids to purchase have exceeded availabilities to such an extent that a shift in policy would be insupportable on the Hill.

The Maritime Commission has not yet decided what credit terms will be extended to foreign governments although the minimum acceptable under the Act is stated in paragraph 2 of 88520. In this connection a separate cable will follow shortly relative to sale of the 10 SCALS Liberty ships.

Based on the foregoing it is recommended that the Chinese Government accept the prices and credit terms established by the Ship Sales Act and utilize as an offset in local financial transactions the reduced prices and extensions of credit negotiated in other deals such as surplus property and ExIm Bank loans.

  1. Not printed; it referred to General Marshall’s telegram No. 672, May 10, p. 794, and explained that prices could not be changed without amending the Merchant Ship Sales Act of March 8.