893.50 Recovery/7–1448: Telegram

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

1281. Chinese Embassy states contract was to have been signed Shanghai July 12 between Chi Govt, represented by China Petroleum Corporation, and three major oil companies (Standard-Vacuum, Texaco and Shell) covering Chi Govt purchase 5.5 million gallons 92 octane aviation gasoline and corresponding amounts lube oils. [Page 276] Total value purchase stated US$3.7 million to be paid in three installments July and Aug 1948.

Chi Govt has informally requested withdrawal this amount from $125 million grants authorized for “additional aid” under Section 404 (b) China Aid Act.84 Presidential terms require Chi Govt submit supporting documents with each request for withdrawals these funds and Dept examine documentation submitted to determine request not in excess total represented by supporting documents. In view possible delay involved transmission signed contract from China to Washington, however, Chinese Emb has requested arrangement whereby Consulate General will examine signed contract presented by oil companies and telegraph Dept certifying its authenticity, thus enabling immediate payment Chi Emb here.

Chinese Emb informed this procedure acceptable on understanding certified copy original signed contract will be furnished Dept soon as possible thereafter. Chinese Emb notifying Chi Govt accordingly and asking oil companies present such contract to Consulate General for examination its authenticity.

You are requested examine contract submitted by oil companies to ascertain that listed materials, quantities and total purchase price correspond those described para 1 this tel. If contract contains differences, you should report particulars by telegram, including in full any provisions governing contract cancellation. Oil company representatives should furnish you two authenticated copies signed contract one of which should be retained your files for purposes record and other forwarded to Dept via air pouch. Upon receipt telegraphic notification from Consulate General foregoing procedure has been completed, Dept will take appropriate action authorize disbursement to Chi Emb here.

ECA85 informed. Please inform Lapham.86

  1. Approved April 3, 1948; 62 Stat. 158.
  2. Economic Cooperation Administration.
  3. Roger D. Lapham, Chief of the China Mission, Economic Cooperation Administration.