661.9331/8–549: Telegram

The Consul at Shanghai (McConaughy) to the Secretary of State

3061. Local press has eagerly seized upon Soviet-Manchurian barter agreement and is eulogizing it as evidence Soviet friendship [Page 956] together with strong hints it will help solve Shanghai’s economic problems particularly as offset to allegedly imperialist-inspired blockade by Kmt.

In view probable Soviet inability provide more than mere driblet China’s economic needs, Department may wish consider for propaganda purposes via VOA and otherwise committing [commitments?] Soviets to aid program for China. It might incidentally be pointed out Soviet quid for Chinese quo involves such items as soya beans, vegetable oil, maize and kaoliang, all of which currently in short supply in Shanghai. According Communist press, Soviets will supply industrial equipment, automobiles, kerosene, cloth, newsprint, pharmaceutical supplies, many of which were furnished Chinese people under ECA program without exaction essential goods from Chinese in return.

Sent Department 3061, repeated Nanking 1695.