The Counselor of Embassy in China (Smyth) to the Secretary of State
[Received January 31—3:12 a.m.]
189. From Harriman. Supplementing my message No. 188,13 General Marshall and I had another long talk with the Generalissimo Tuesday evening, most of which can await my return to report. The Generalissimo, however, again brought up the question of the Soviet demand for an interest in Manchurian industry previously owned by the Japanese. (Sent to the Department as No. 189; repeated to Moscow for Kennan as No. 23.) He said he wanted us to know that he was unwilling to negotiate with the Russians while their troops were in Manchuria as he considered that any other course would affect Chinese sovereignty and would be a violation of the Sino-Soviet treaty.14 He plans to prolong the negotiations until after the first of February at which date the Soviets are obligated to withdraw their troops. He believes that it is not the Soviet Government’s present intention to withdraw its troops unless an agreement is reached on the industrial properties. However, he prefers to face this situation rather than make an agreement under duress. He said he was not yet ready to state how far he would be prepared to go in granting the Soviet Government minority interests in some of these industries as his economic advisors were studying the question. He agreed that the negotiations for political unification of China should be completed before bringing this question to an issue between China and the Soviet Union.
General Marshall and I believe that if the United States Government still maintains the position that Manchurian Japanese industrial properties are not war booty but should be available for reparations and that it is in our interest to resist the Soviet demands, we should do so promptly and independent of the Chinese-Soviet discussions. [Harriman.]