661.9331/10–1246: Telegram

The Ambassador in China ( Stuart ) to the Secretary of State

1649. Upon receipt Deptel 835, October 5, 1 p.m., Embassy sent for Bayne who stated he had no further information but would pursue matter as opportunity offered. As regards question numbered 1, he stated categorically that the proposal was for exclusive concession for entire province.

In course of discussion with Beal,18 Thurston and Butterworth19 regarding problems of world trade charter, Dr. Kan Nai-kuang, Vice Minister Foreign Affairs, cited Soviet initiative re Sinkiang as illustrative of problem as to how and on what terms a country with a [Page 1211] noncontrolled economy would deal with country with totalitarian organized economy. Later Butterworth pursued this matter with Dr. Kan who confirmed that initial approach had been made by Soviet Consul General to Provincial Chinese Governor. He indicated that Central Govt had at first proposed that Soviet emissaries come to Nanking to negotiate but had later acceded to recommendations of Chinese Provincial Govt and had decided to send accredited Chinese negotiators to Sinkiang to conduct these negotiations. Dr. Kan asserted that Soviets had made neither detailed proposal nor demand of an exclusive nature. He regarded proposal as a bona fide approach to increase trade between two contiguous areas and stated that Chinese authorities in Nanking, no less than Provincial Govt in Tihwa, desired such increased trade.

Incidentally, when passing a copy of Bayne’s telegram20 to General Marshall on October 3, when negotiations with the Generalissimo were at a very tense stage, Embassy queried: “Why should this come at this particular moment? Is it chance or is it now leaked to remind us of the large issue?”

Needless to say, we shall continue to pursue this matter and attempt to sift out and confirm the facts.

Situation regarding Ward was described in Embassy’s 1627, October 10.21 In the circumstances Embassy does not believe it can be assumed that codes now at Tihwa are still secure and, therefore, it is seeking other means of communicating with Ward when he returns.

  1. John R. Beal, American adviser to the Chinese Government on foreign press and political relations.
  2. W. Walton Butterworth, Minister-Counselor of Embassy in China.
  3. See telegram No. 1557, October 3, 9 a.m., from the Ambassador in China, p. 1209.
  4. Not printed.