893.24 FLC/9–1748: Telegram

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

2050. Luboshez to Clark. Cite SFLC 3267.

  • Part 1. Views Foreign Office as contained urad 815 (repeated Department 1709) lose sight of fact (a) that negotiations over long period with General Kiang in connection with cut-off date have proved abortive, (b) that procedure suggested is contrary to Washington’s purpose in arranging meeting at diplomatic level to reach agreement, (c) basic problem is primarily establishment cut-off date and in no sense to modify terms bulk sale agreement which would be involved if Bosey were permitted to select and reject among items turned over.
  • Part 2. General Kiang has unilaterally adopted 30 June 1948 as cutoff date. He is using this position as bargaining point in order force renegotiation terms of agreement and to obtain relief from obligations undertaken in good faith by Chinese Government in return for values given by US. Apparently he is trying convey impression to Foreign [Page 719] Office that he is making concession in agreeing to cut-off date and therefore China entitled to concessions in form of gaining relief from Chinese obligation to accept and remove all property turned over under agreement regardless of condition. Kiang has now reverted to arguments on condition of property he advanced during original negotiations of agreement which were rejected by Chinese and US mediators. Our contentions and contentions of Washington are that since agreement provides no cut-off date, cut-off date must be mutually agreed upon without concessions from either side. Thus no question of modification of terms of agreement arises.
  • Part 3. Negotiations on cut-off date of FLC–Bosey level broke down long ago and decision was taken by Department to attempt to reach agreement through diplomatic channels. Luboshez was designated by Department as delegate in negotiations with Foreign Office in order raise discussions above Kiang’s level. Thus further discussion on this subject with Kiang inappropriate.
  • Part 4. [At] September 2 meeting Luboshez emphatically stated position that issue cut-off date was entirely separate matter from condition of property. Further condition property if admissible at all was matter for discussion under disparity clause and discussion disparity cannot be held until all property sold under agreement has been turned over to China.
  • Part 5. Although it is necessary to avoid deadlock, any compromise such as proposed by Foreign Office is untenable because:
    Effect would be to open terms bulk sale agreement to renegotiation.
    If we should agree to consider or change condition classification on property made available after June 30 we would be opening way for re-examination in same light every lot of property made available since beginning operations under agreement large proportion of which Bosey has contested on grounds condition.
    During original negotiation of agreement Chinese insisted on definition of scrap but after it was found no satisfactory definition could be reached Chinese conceded this point in return for concession by US on monetary consideration given by China.
  • Part 6. Urgent that cut-off date be settled earliest to permit operational arrangements with Army and Navy be completed within deadline contemplated by proposed October 31 cut-off. Therefore request new meeting with Foreign Office be scheduled soonest along lines agenda transmitted [by] American Consul, 1551, dated 14 September,34 but primarily for purpose establishment cut-off date.

Sent Nanking 1572, repeated Dept. [Luboshez.]

  1. Telegram No. 1551 from the Consul General at Shanghai to the Ambassador in China, not printed.