893.24/1–1546
Memorandum by Mr. H. Wendell Endicott 73 to Colonel Dave H. Morris, Jr. 74
Washington
, 15 January
1946.
- 1.
- As long ago as last September, Rear Admiral P. T. Mar of the Chinese Navy, who was Chief of the Chinese Naval Construction Mission then visiting the United States, was discussing with the Navy the possibilities and the hope of purchasing such equipment as would reestablish the Kiangnan Dockyard. During the last war this dockyard built four 10,000-ton deadweight cargo vessels for the United States Shipping Board and six river gunboats after that, in addition to considerable amount of annual repair work for the U. S. Asiatic Fleet and merchant vessels. It is generally reported that this dockyard worked efficiently, effectively and was very reliable.
- 2.
- The Navy Department recommended to Admiral Mar certain types of equipment that they believed were essential and which they felt could be supplied from surplus. The question of payment in [on?] terms was discussed with the FLC but nothing definite was attempted at the time because Admiral Mar was to return to China, recheck on the dockyard requirements and then come back to the U. S. for final hoped-for conclusions.
- 3.
- Admiral Mar is at present in Washington and he finds that the dockyards are in better condition than he had at first believed, so that his requirements now would probably total in the neighborhood of five million dollars. Preliminary investigation on the part of the Navy in the Pacific would indicate that practically all of Admiral Mar’s requirements can be filled from materials that can be declared surplus.
- 4.
- Admiral Mar reports that even at the present time the dockyards are working on U. S. Naval craft. There is every reason to believe that looking into the future these dockyards would continue to work on Naval craft as well as U. S. commercial crafts that may be in that vicinity. So, it is reasonable to assume that these repair works will play an important and needed part in future shipping.
- 5.
- In discussing the terms of payment, Admiral Mar has stated that he has discussed the matter with T. V. Soong75 and T. V. Soong [Page 1070] has refused to allow Admiral Mar to consider or negotiate on the basis of his purchase being credited against the money that the U. S. owes the Chinese Government, on the basis that Soong has more important uses for that advantage. Admiral Mar would like to negotiate a loan of five million dollars with interest at 2%% over a period of twenty-five years, paying back $200,000 a year. This he would pay in cash or in such services as may be rendered Naval vessels or American commercial ships.
- 6.
- The credit risk in this particular case would appear to be a fair risk as compared to other credits our Treasury has offered or is negotiating to offer. However, if the Treasury stands adamant that any loan to this dockyard must be credited against the money the U. S. owes China, then it would appear that the Liquidation Commission could not make this sale of five million dollars and Admiral Mar would have to operate his dockyards less effectively. Admiral Mar states that while the loan would be strictly a governmental transaction, it would be handled, nevertheless, by the Kiangnan Dockyard Division under the approval of the Chinese Government which would make the Chinese Government responsible for the payment of the $200,000 each year, if for any reason the dockyard could not meet its obligations.
- 7.
- There always remains the great problem still to be solved as to whether or not there are sufficient customers in the Pacific that will be able to take all of the Pacific Army and Navy surpluses. What will happen to the remaining surpluses is anyone’s guess. Under reasonable conditions FLC would regret to lose the opportunity of selling five million dollars’ worth of surplus material.
- 8.
- Final determination as to whether or not negotiations can be consummated with Admiral Mar must be determined within a very short period, as otherwise it is believed the opportunity will be lost after Admiral Mar returns to China.