893.24/3–2448
Memorandum of Conversation, by the Secretary of State79
| Participants: | Dr. V. K. Wellington Koo, Chinese Ambassador |
| The Secretary | |
| Mr. W. Walton Butterworth, Director for Far Eastern Affairs |
Ambassador Koo called at his request and made reference to the aide-mémoire80 which he had sent the Department this morning. He said that on instructions from his government he was to renew the request for an arms credit which he had informally broached on January 28, and that in view of the rapidity with which the situation had deteriorated in China, his government believed that the credit should be for $150 million instead of $100 million and for a period of one year beginning April 1, 1948. In this connection, he emphasized the [Page 43] rapidity with which China’s resources were being consumed and the difficulties from a psychological point of view of shipping gold now in China to the United States for sale or hypothecation. In this connection, he mentioned negotiations were now proceeding with the National City Bank for hypothecating certain sums of gold now held in the United States. He also indicated that his government envisaged that programs of military assistance for other governments would decidedly diminish the availability of surpluses for China, and would result in increased purchases by China from American manufacturers at much higher prices. He also mentioned that packing and shipping charges currently ran to between 15 and 17½ percent of the original cost value of surpluses, and that this meant that those charges totaled more than the purchase price under current arrangements.
I reviewed the status of the bills which had been reported out of the Senate and House Foreign Affairs Committees and pointed out that these matters were now for decision by the two legislative bodies. Ambassador Koo asked me whether I supported his government’s request and I replied that such a matter was one which I could not properly pass upon alone and, in any case, the issue was out of the hands of the Executive and in active consideration by the Legislative branch of the Government.