Marshall Mission Files, Lot 54–D270: Telegram

Mr. Thomas B. McCabe to Brigadier General Bernhard A. Johnson, at Shanghai

85280. 1. Reference your 28530 April 15, we do not agree to abandonment of offset principle in surplus sales as proposed by Dr. Soong nor to proposed sale at price formula to be set later. Subject to views of General Marshall which you should secure we believe sales should be continued as rapidly as possible at firm dollar prices. Dollar amount Yuan debt for 1945 and estimate for 1946 not yet determined. Moreover until final determination US policy re lendlease settlement it is impossible to estimate proportion Yuan debt that will be available as offset surplus property. Decision expected soon. Until then surplus sales may be made on tentative credit basis up to $150,000,000 sales value with reservation US right finally to settle any part thereof on offset rather than credit terms.

2. If after completion of $150,000,000 sales as authorized paragraph 1 further credits are needed to enable additional surplus purchases by Chinese question should be referred here for consideration.

3. In order to bring Chinese sales in line with other comparable credit transactions the credits should be for 30 years at 2 and ⅜th% interest.