893.50 Recovery/12–148: Telegram

The Consul General at Shanghai (Cabot) to the Secretary of State

2592. I am concerned at prospect there may be substantial quantities of movable assets in Shanghai if and when the Communists take city. In some cases, i.e. Bosey69 and Botra70 items, I doubt anything can be done about it and in others, for example ECA food, I feel [Page 271]that for humanitarian reasons we should not take precautionary measures to reduce supplies. However, that in case of oil supplies it would be advisable I do strongly feel, to maintain stocks at minimum needed for security regular supply. Oil is essential to run local public utilities. One of first problems Communists must face is assurance of adequate oil supplies. I feel that as they must confront this problem immediately on taking city, the greater their need the better their behavior is likely to be both towards local population and towards us.

It would seem undesirable to remove any oil supplies now here. I suggest, however, that Department consider advisability of discussing situation with ECA since ECA is in a position by reducing shipments to implement this policy if it is considered a wise one. However, substantially all of large bonded stocks now here belong to oil companies awaiting settlement of a disagreement with ECA regarding payment.71

I gather that Chinese [China] ECA mission feels we should continue to distribute any ECA supplies which are here even after any turnover of power which may occur. While agreeing with this I do not think it necessarily conflicts with suggestion above.

Since Shell has important operations here, British concurrence would probably be necessary. There is some reason to suppose that British, despite difficulties Communists would presumably have in making payments, are prepared to do business with Communists.

Sent Department, repeated Nanking 1960.

Cabot
  1. Board of Supplies of the Chinese Executive Yuan.
  2. Board of Trustees for Rehabilitation Affairs of the Chinese Government.
  3. For correspondence regarding oil stocks, see pp. 275 ff.