893.51/7126
Memorandum of Conversation, by the Adviser on Political Relations (Hornbeck)
Mr. Soong called on me at his request, this morning.
Mr. Soong inquired whether I was in position to give him any information regarding developments in connection with the question of possible financial assistance to China. I replied that I have had little information regarding developments in that field during the period since my departure from Washington on July 25 except that I have been informed that he, Mr. Soong, and Dr. Arthur Young have been holding conversations with the Treasury Department. I added that I was expecting to see the Secretary of the Treasury in the course of the morning and would probably know more about the situation before the day was over. Mr. Soong then gave me an outline of the two or three courses which he considered potentially practicable: some form of support for China’s currency, commodity credits through the Export-Import Bank, an outright loan against future deliveries of wolfram, some arrangement between the United States and the Soviet Union which would encourage the sending by the Soviet Union of supplies to China.76 Mr. Soong said that he understood that the usual procedure here is for such subjects to be considered first by agencies concerned with trade and finance and then to be referred to the Department of State. He inquired whether any definite proposals had reached the Department. I replied that it was my understanding that the President had asked the Secretary of the Treasury to canvass the possibilities and that I did not know how far the consideration of the subject had gone or what conclusions, if any, had been arrived at. I said that there existed a general desire, in principle, to be [Page 664] of assistance, within appropriate lines, to China, but our democratic practice of formulating and executing policies within a framework of law and the necessity for considering carefully, in a world situation such as now exists, the various possible implications and repercussions of every step which may be taken, make for delays. Mr. Soong said that he well realized that such is the situation and that, while feeling that China’s needs are great and urgent, he realized that it was necessary to be patient.
After Mr. Soong left me, I proceeded to the Treasury Department to keep an appointment with the Secretary of the Treasury, and while I was with Mr. Morgenthau Mr. Soong arrived there and was called into conference. (See separate memorandum.77)
- In regard to the latter point, on September 20 the Secretary of the Treasury, the Administrator of the Federal Loan Agency (Jones), and the Soviet Ambassador (Oumansky) reviewed the subject of a possible triangular arrangement; Mr. Morgenthau suggested the possibility of the United States buying strategic materials from the Soviet Union for cash and the Soviet Union in turn giving more assistance to China. Mr. Oumansky said he would let Mr. Morgenthau know if and when he heard from his Government.↩
- Infra.↩