Office of the Historian

893.24/1–2346: Telegram

Mr. Thomas B. McCabe 76 to Mr. John K. Howard 77

Washington, 23 January 1946.

94268. This dispatch concerns Admiral Mar’s $5,000,000 requirements for his dockyards. Original offer $200,000 payment per year for 25 years with 2 and ⅜ per cent interest[.] on [An] offer submitted today divides order into $3,000,000 for equipment on 30-year terms [Page 1071] 2 and ⅜ per cent interest and $2,000,000 credit for materials on short terms with cash payment. Either offer acceptable to him. Although contract requires approval of Chinese Govt and the dockyards are technically a Govt operation, nevertheless in practice it amounts to a commercial operation and is an individually operated division. As a matter of fact they are repairing today 6 American naval vessels. It is to be expected they will continue to repair naval vessels as well as U. S. commercial vessels in the future. On a business basis, it would appear to me to be one of the best credits that we can give under NAC terms.78 However, Treasury up to date refuses to grant this credit unless the $5,000,000 will be credited against the sum we owe China. Soong refuses this benefit to Mar and it looks as if this $5,000,000 order which I understand could be supplied from Pacific surplus will be lost. There is one possible channel to separate this $5,000,000 credit from the whole China picture if Marshall79 believes the efficient operation of this dockyard is important. Under these conditions, we believe Treasury Dept. will consent to this credit as desired by Mar. We believe an effective operating dockyard in Shanghai is a happy and advantageous relationship with the U. S. I hope this entire situation has been called to the attention of Gen. Marshall. Admiral Mar leaving for China on Friday. Will call on Gen. Johnson80 in Shanghai for situation to date.

  1. Foreign Liquidation Commissioner and Special Assistant to the Secretary of State.↩
  2. Central Field Commissioner, Pacific and China, OFLC, Manila.↩
  3. Reference is to National Advisory Council policy adopted on January 15 concerning conditions for the extension of financial assistance to China. This policy was clarified in Department’s telegram No. 103, January 17, p. 920.↩
  4. General of the Army George C. Marshall, Special Representative of President Truman in China.↩
  5. Brig. Gen. Bernhard A. Johnson, Field Commissioner, China and Eastern Area, OFLC.↩