893.51/5–847
Memorandum of Conversation, by the Secretary of State56
| Participants: | The Ambassador for China, Dr. Wellington Koo |
| The Secretary | |
| Mr. Vincent, FE |
The Chinese Ambassador called at 11:30 this morning at his request. Dr. Koo expressed appreciation of my work at the Moscow Conference, stating that he felt I had succeeded in making clear to the Russians the position and attitude of the United States and of other nations of similar mind. He asked for my impression of Soviet objectives; that is, whether they were outright expansionist or in a measure defensive.
I gave him my views on the subject which in brief were as follows: There is some lack of clarity both with regard to what Russia wants and with regard to methods employed. There can be little doubt that Russia desires to have a predominant influence in those countries on her borders both in Europe and the Far East. The techniques used to achieve this end, although they assume an ideological form, are not employed necessarily for the purpose of spreading an ideology. They are in fact techniques which might be employed by another ideology or -ism. I went on to explain how these techniques were applied in Austria, for instance; how they might be applied in Manchuria; and how they might be applied by an imperialistic Russia as well as by a socialist Russia, the objective being, and quite a normal one, of extending national power. I pointed out that it was not my intention to minimize the threat of communism as an ideology but simply to show how it served as a potent technique to achieve non-ideological ends.
There was some talk of the work of the press at Moscow. The Ambassador agreed with me that the effect of having in Moscow this large body of men engaged in publicity had been good from the Soviet as well as from the world point of view. I took occasion in this connection to point out to Ambassador Koo how unwise I considered China’s own censorship regulations.
Dr. Koo then stated that he was calling under instructions from his Government to inform me of the Chinese intention to request financial assistance from the United States. He went on to speak at some length of the recent changes in the Chinese Government and of the Government’s need for aid. He said that there would be a request for aid under three headings: (1) for rehabilitation, particularly of Chinese transport and communications; (2) for power projects and [Page 1114] mining, particularly coal; and (3) for agricultural rehabilitation with particular emphasis on fertilizer production and irrigation projects. He said that in making this request the Chinese Government was prepared to undertake (1) that the money would be definitely expended for the purposes stated; (2) that it would not be used to solve Chinese budgetary difficulties; and (3) that the approved project-by-project basis for releasing the money would be followed. He said that the $500 million earmarked in the Export-Import Bank could be used for the purposes stated above. He went on to say, however, that the Chinese Government would want an additional $500 million to be used (1) to finance the transportation and installation of industrial equipment from the United States and from Japan under reparations; (2) to employ technical assistance; and (3) to purchase in the United States commodities for export to China, such as cotton, cereals and gasoline. With regard to the last item Dr. Koo explained that the Chinese Government would utilize the Chinese currency derived from the sale of the imported commodities solely for the purpose of financing the Chinese dollar costs of the various projects.
With regard to Dr. Koo’s reference to reparations I had earlier in the conversation spoken of the situation in Germany and told him how uneconomic the Russians had found it to remove whole plants from eastern Germany. I said that the Chinese Government should give careful consideration to this situation in its approach to the matter of reparations from Japan.
The Ambassador raised the question of the continued earmarking of the $500 million Eximbank credit after June 30. I told him that this was a matter for consideration by the National Advisory Council which was composed of a number of high Government officials and on which the State Department was represented, and that the question would be no doubt raised in the Council.
I informed the Ambassador that I was most earnestly and that I was personally interested in affording assistance to China, and that I had been anxiously awaiting the time when it would be practicable to give aid. I welcomed the recent evidence of progress in the governmental changes in China but at the same time I noted that a Kuomintang political council had been established with Ch’en Li-fu as its Secretary-General. I had not had an opportunity to give a thorough study to this matter, and I did not want to pre-judge the new development, but I did feel that the establishment of this council under Ch’en Li-fu’s direction was discouraging. It seemed to me to be an approach to the problem which in many respects resembled the attitude which I met while I was in China and which had so effectively frustrated my own efforts. I felt that no good could come from a Kuomintang political council as now constituted, but I repeated again that I wished [Page 1115] to give the matter further study and to watch developments with an open mind.
I spoke of my deep discouragement over the course of military events in China and of my very serious concern in this respect. I told Ambassador Koo, as I had told the Generalissimo, that he was the worst advised military commander in history and that I found no satisfaction in the current unhappy developments which proved that advice I had given the Generalissimo was correct and that which his military commanders had given him was not correct. The National armies were overextended and were expending their military strength. All the Communist armies had to do was go where the National armies weren’t—and there was plenty of space for this type of movement.
With regard to the Chinese desire for financial assistance, I suggested to the Ambassador that he prepare an informal memorandum57 for me, setting forth in writing what he had just told me orally. I said that this would be preferable to raising the matter in a formal note to the United States Government and would give me an opportunity personally to study the matter and thereafter discuss it with him again on an informal and exploratory basis. Ambassador Koo agreed to this procedure. (Note: Although this is the procedure which Koo will no doubt follow, I am quite sure that it has been the intention of the Chinese Government to raise the issue formally and openly in order to take advantage of what they feel is public and Congressional sentiment in this country in favor of a large credit to China. J[ohn] C[arter] V[incent])
As the Ambassador was leaving he told me that Foreign Minister Wang had recently had a conversation with the Soviet Ambassador at Nanking58 and had informed the Soviet Ambassador of China’s hope that the Soviet and American representatives could get together soon and agree upon the formation of a Korean government. The Foreign Minister had instructed the Ambassador to inform me that, if the Soviet and American Governments were unable to reach agreement in this matter, the Chinese Government did not feel that it could quietly sit by on the sidelines because there was considerable pressure from all political elements in China for progress in solving the Korean problem. He inferred that the Chinese Government, and presumably the British Government, should be consulted in the event that the United States and Soviet were unable in the near future to make progress.
The conversation ended at 12:40 p.m.
(In a conversation with Mr. Vincent immediately following the discussion with the Secretary, Dr. Koo explained that China wished [Page 1116] to have the additional $500 million set up as a credit outside the Export-Import Bank and assumed that this could only be done by Congressional action. He said, however, that China did not expect a credit as in 1942 with no strings attached. China would expect that the credit would be set up with a clearly defined statement as to its use and that the money would be released to China only for the uses stated. Mr. Vincent explained to Dr. Koo that Export-Import Bank credits for specific projects could and often did provide the funds necessary for transportation of the industrial equipment to its destination and for the technical assistants necessary to establish the plant or set the particular project in operation. JCV)