893.51/6–2547
Memorandum of Conversation, by the Secretary of State86
| Participants: | Dr. Wellington Koo, Chinese Ambassador |
| Secretary George Marshall | |
| Willard L. Thorp, A–T | |
| John Carter Vincent, FE |
The Chinese Ambassador called on me at his request and presented the attached aide-mémoire.87 I asked Mr. Thorp to comment on it.
As to the first item in the aide-mémoire, Mr. Thorp said there was substantial misunderstanding concerning the significance of the lapsing of the earmarked funds, that the earmarking had been a temporary arrangement established until the time when it could be expected the International Bank would be in operation and that its lapse in no way indicated an unwillingness on the part of the Export-Import Bank to consider sympathetically specific projects which might be presented. I described the origin of the earmarking, pointing out that it was done at my request. I reminded Mr. Koo it was because of certain statements made in China that the proposed exchange of notes was not consummated. I said that the decision with respect to the earmarking had been made and a statement was being worked out which would be made by the Export-Import Bank which would clearly state that this was an automatic development not to be interpreted as indicating an unwillingness to consider specific projects.
Mr. Koo stated there were some sixty projects in his hands, that he had picked out the fifteen which were best documented and which totaled about $240 millions. These projects were also located in areas [Page 1148] not likely to be subject to military operations. Mr. Thorp stated he felt it was important that Mr. Koo consider not only the Export-Import Bank as a source of funds but also the International Bank which was now definitely in operation and should be considered as a possible source of assistance. He then emphasized the fact that it seemed more important to get some projects started than to drive for a large amount at the beginning. He suggested that the very best projects be picked out for submission to both institutions and that once some project had been approved, it would be much easier to move along with the broader program. Mr. Vincent emphasized the importance of limiting the initial approach to the most likely project. I also emphasized the importance of picking out the best projects and proceeding with them. Mr. Thorp suggested that the Chinese representatives go over the projects with Norman Ness (OFD) and his assistants who might be able to be of help in determining which were the most likely of success. He pointed out, however, that the State Department could not act as sponsor for any particular projects but would be glad to assist at this stage in an informal way.
Mr. Koo then reverted to the problem of the earmark pointing out that assistance had been given to both the British and the French in forms other than that of specific projects. Mr. Thorp commented on the fact that these were done prior to the time when the International Bank was in operation, that if at that time the $500 million project for China had been consummated, it might have taken some such general form but that circumstances now have changed and the operations of the Export-Import Bank are limited entirely to specific projects.
With respect to item 2 of the aide-mémoire, Mr. Thorp said that a cotton loan might well receive favorable consideration by the Export-Import Bank although the suggested sum of $200 million was probably much greater than would be made at any one time. He suggested this also be discussed with Mr. Ness.
With respect to point 3 in the aide-mémoire, Mr. Koo urged that some general statement be made to indicate that the U. S. Government is not completely preoccupied with the problems of Europe. Mr. Thorp remarked that statements of concern with the problems of China had been made even prior to statements of concern over Europe and there ought to be no misunderstanding on this score. Mr. Koo said he felt a statement would be very helpful. I pointed out that we had already indicated that a statement would be made with reference to the lapsing of the earmark and I would take under advisement the question of any further general statement.
Mr. Vincent then inquired from Mr. Koo whether the Chinese Government was aware of the feeling in American business circles that they were being discriminated against in China and that the assistance [Page 1149] which could be given through private channels was being discouraged by various acts of the Chinese Government and its administration. Mr. Koo said that the Embassy was quite aware of this situation and had called it to the attention of the government repeatedly. Mr. Vincent reiterated this was a matter of major importance and that the attitude of the business community would have an important bearing on the whole problem.
Mr. Koo then said he had certain non-economic matters to discuss. (These are covered by Mr. Vincent.88)