893.51/2–1546: Telegram

The Secretary of State to the Embassy in China

296. For General Marshall. Following message reports Chinese application and Eximbank position relative longterm credit 30–50 million for transportation and telecommunications equipment approved Urtel 2241, Dec. 29.70 No request for telecommunications yet submitted.

Chinese requested Eximbank finance purchase coastwise and river ships including 10 N–3 war built cargo vessels 1900 gross tons each, 16 old ships averaging 3000 tons, 4 old tankers averaging 7700 tons. All ships are oil burners convertible to coal. N–3 ships on West Coast, older ships in Southwest Pacific. Eximbank disapproves tankers because of 5 year life expectancy and because bunker oil will be available in China. After emergency Chinese propose use tankers to import crude for two refineries already contracted. Chinese may buy tankers with own funds. For other ships Eximbank recommends 3½% credit of $6,850,000 15 and 20 years consistent with life of ships and pending Ship Sales Bill.71

Chinese requested and Eximbank willing grant 30 year 3% credit for railway repair materials and 10 power plants. Railway materials include 90,000 tons rails, 1000 tons turnouts, 625 tons spikes, 1,500,000 ties, 50,000 tons bridge steel costing $16,638,000. Power plants are [Page 940]steam units 5000 kw 50 cycle with distribution equipment and materials costing $8,799,000. Since these are replacement units issue of standardization to 60 cycle not directly involved but Bank will recommend plant design permit easy conversion.

Chinese also requested petroleum products of $1,800,000 which Bank rejected as unsuitable basis longterm loan.

Chinese requested coal mining equipment costing $10,407,000 which was designed by Pierce Management Co. as emergency war program for replacement facilities expected to be destroyed by Japanese. Bank has confidence in Pierce who has been retained by Chinese for immediate survey coal mining requirements. For your confidential information Bank has deferred action on Chinese request because Pierce recommends awaiting company’s report.

Materials tentatively approved for credit amount to $32,300,000. Bank believes no undesirable duplication UNRRA program. Final action awaits your comments which desired if possible by Feb. 20.

In view of shortage Chinese management and technical personnel Dept and Bank recommend stressing as general principle desirability Chinese appointment competent foreign advisers. Eximbank particularly suggests able adviser in China Merchants Steam Navigation Co. and competent technical advisers in planning and installation railway repairs and power plants. Bank suggests, and Dept concurs, that you take in your discretion appropriate action to obtain employment such advisers by Chinese.

Byrnes
  1. Foreign Relations, 1945, vol. vii, p. 1198.
  2. H. R. 3603; for act approved March 8, 1946, see 60 Stat. 41.