Memorandum by General Marshall to the President of the Chinese Executive Yuan (Soong)

OSE 405

Dear Dr. Soong: Mr. McCabe has just presented to me an outline of his proposal for the sale of an estimated five-hundred million dollars of original cost surplus property in the Western Pacific to China.

The thirty million dollars which has been proposed as an offset to the Yuan account to assist China in defraying costs of shipping, engineering services and other charges appears exceptionally liberal in consideration of the very low return to the U. S. for the property.

In connection with your request for credit assistance in carrying out your spare parts program, I will recommend that the Export–Import Bank extend a line of credit of a maximum of twenty-five million dollars to China for the purchase of spare parts in the United States with the understanding that China will present a documented case to the bank showing:

The quantity of new spare parts required and the need therefore after having carefully surveyed and deducted the total quantity of spare parts available from the surplus which China is about to purchase from the United States.
The plan of sale and distribution in China of the spare parts and evidence that the distributing agencies normally concerned with these spare parts are generally agreeable to the plan.

I am in agreement with the proposed terms of sale of the surplus to China if safeguarded by the employment of a capable firm or firms to supervise the outloading, rehabilitation, shipping, receiving and distribution of the property. Otherwise I fear—I almost feel certain—that there will arise so much confusion that the entire purpose of the transfer of this vast amount of material will be defeated.

I sincerely hope that the negotiations will proceed to a speedy conclusion.

Faithfully yours,

G. C. Marshall