893.51/6943: Telegram
The Ambassador in the United Kingdom (Kennedy) to the Secretary of State
[Received July 19—3:30 p.m.]
1024. British Treasury states that it is today informing the Chinese orally that the Export Credit Guarantees Department is prepared to authorize a credit of £2,500,000, that it has not yet so informed the Chinese but it is in fact prepared to increase the amount to £3,000,000. The Chinese list of requirements totals £3,100,000 and is designed to facilitate the immediate prosecution of the war and industrial expansion in southwest China. It includes such items as steel, tools, wireless telephone and broadcasting equipment, machinery and materials required by the National Resources Commission, industrial material and equipment submitted by the Industrial Mining Adjustment Administration, equipment for a paper mill and woolen textile and airplane factories, military equipment and supplies.
The British Treasury has authorized the Export Credit Guarantees Department to accept capital repayment over a 10-year period which [Page 687] will not begin until 4 years after the conclusion of the credit agreement.57
As regards the recent depreciation of the Chinese dollar the British Treasury states that both it and the Bank of England are somewhat “mystified” as to why Rogers and the Stabilization Committee did not allow the currency to depreciate to present level prior to the institution of the bank withdrawal restrictions but can only assume that demands have lately been unexpectedly heavy. The British Treasury feels that at 5 pence the Chinese dollar is if anything undervalued but the unknown factor is whether there still remains a substantial amount of money which will leave China at almost any price. Referring to the negotiations in Tokyo, the British Treasury again reiterated its attitude reported in my 967, July 10, 8 p.m. and indicated that the head of the Chartered Bank had recently returned to London and was expounding the same point of view.
It would be appreciated if the appropriate part of the foregoing be forwarded to the Treasury.