893.50 Recovery/7–1648: Telegram

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

1600. ReDeptel 1281, July 14. Central Trust of China signed three contracts July 12 on behalf of Chinese Government for use of Chinese [Page 277] Air Force (job No. 9070) with following companies: China Petroleum Company, Ltd. (sole agents for China, Sterns, Inc., 150 Broadway, New York City), Standard-Vacuum Oil Company, Shanghai, and the Texas Company (China) Ltd. These are believed to be contracts referred to by Chinese Embassy as total value of purchase is practically same as that stated in Department’s cable. China Petroleum Company contract calls for delivery 19,356,000 liters 100 octane avigas,87 US dollar value 2,313,042. Standard-Vacuum contract calls for avigas, mogas, luboil, light diesel for delivery Shanghai and mogas, luboil, kerosene for delivery Canton. Total value Standard-Vacuum contract US $436,204.43. Texas Company contract calls for avigas, mogas, luboil for delivery Shanghai and Tientsin, total value US $951,997.07. Oil companies will furnish Consulate General authenticated copies of contracts by July 20. Shell manager informs Consulate General his company was not in position to bid on job 9070.

For Department’s consideration Central Trust has not yet paid outstanding accounts due Standard-Vacuum, Texas and Shell on contract known as job No. 8100 signed November 4, 1947. Central Trust reports it has been unable secure necessary exchange from Central Bank and has been unable take delivery from oil companies although products have been in storage for some time. Contract 8100 was for account of Chinese Air Force, combined service forces and Chinese Navy. It is estimated amount outstanding due oil companies is in neighborhood of US $1,000,000 plus some sterling. If Department is interested in detailed breakdown by companies, Consulate General can cable this information.

China Petroleum Co. Ltd. is small company which took over Sterns agency, formerly controlled by Carlowitz, large pre-war German firm. It is not yet confirmed but believe China Petroleum Company plans on using terminal facilities of Chinese Petroleum Corporation. World trade directory report on China Petroleum Company will be forwarded in next airmail pouch.88

As of possible interest to Department all three contracts under job 9070 state seller agrees to allow buyer (Central Trust) 1 percent discount on prices set forth in contract, such discount to be computed in same currency in which payment is made buyer and to be deducted at time of payment. Lapham has copy this telegram.

Sent Department, pouched Nanking.

  1. Aviation gasoline.
  2. Despatch No. 664, July 20, not printed.