Marshall Mission Files, Lot 54–D270: Telegram
The Commander of the Seventh Fleet (Cooke) to the Chief of Naval Operations (Nimitz)
090522. 1. Subject is arrangement for furnishing Chinese with ship repair equipment. Rear Admiral Mar of Chinese Navy is understood to have recently approached Navy Department for purchase of about 5 million dollars worth of equipment Kiangnan Dockyard at Shanghai.
2. I have recently conferred with General Marshall at Chungking on this problem. General Marshall has under discussion with the Chinese Government the matter of adjusting advance in funds made by Chinese Government to pay for US purchases in China (taking the position of treating such advances as reverse lend-lease) to the much larger lend-lease advances made by the US to China. General Marshall does not desire to compromise these negotiations by exceptions in regard methods of payment for specific projects. He does fully concur however that transfer of equipment to fit out dockyards to be paid by services to the United States can be handled as a special case advantageous both to the United States and to China.
3. Specifically it is proposed, and preliminary exploration by FLC representative General Johnson, the Chinese representative and US Navy representative is underway, that ship repair equipment which has become available by becoming surplus be furnished the Chinese Government in the amount of 5 million dollars; that payment for this equipment be made in the form of services to the United States [Page 1073] for ship repair of US Government vessels; agreement would provide that normal furnishing of such services by Chinese shipyard would not exceed an agreed percentage of shipyard capacity or an agreed percentage per year of the total value of the equipment furnished; emergency needs in excess of the normal maximum would be arranged for.
4. Advantages of this proposed arrangement are:
- (a)
- Fits in with other arrangements being made by General Marshall with the Chinese Government.
- (b)
- Provides United States with continuing overhaul and repair facilities in this area without any expenditure in funds or personnel other than delivery of surplus equipment. Inasmuch as it is anticipated US Naval units must continue in the China area, at a great distance from the nearest base at Guam or Samar, this arrangement provides continuing base facilities and provides them in a manner which obviates possibility of criticism by foreign power. In this connection General Marshall considers and I concur that an increase in the amount of equipment furnished with the corresponding increase in the number of years of payment is advantageous to the United States.
- (c)
- This fits in with the United States policy to build up the Chinese Navy, including improvement of its repair facilities.
5. Further request can be made for equipment for the establishment of repair facilities in Tsingtao and other areas. If equipment is available it will be advantageous to make similar arrangements, preferably for material in Tsingtao.
6. This matter is subject also of dispatch 22655 from FLC Shanghai to State Department for McCabe which I am requesting be furnished Navy Department.