The Ambassador has the honor to enclose, for the Department’s information, a
translation of a formal note dated March 24, 1945 from Dr. T. V. Soong,
Minister for Foreign Affairs, stating that the Chinese Government has made
complete settlement of the U. S. Wheat Loan to China of September 193142 and of the U. S. Cotton and Wheat Loan to
China of May 1933.43
[Enclosure—Translation]
The Chinese Minister for Foreign Affairs
(Soong) to the American Chargé (Atcheson)
[Chungking,] March 24, 1945.
Sir: With reference to the Wheat Loan and the
Cotton-and-Wheat Loan granted to the Chinese Government by the American
Government in September 1931 and May 1933 respectively, I have the honor
to state that the entire principals and interests accrued therefrom have
been reimbursed in full by the Chinese Government, as is a matter of
record.
[Page 1077]
As regards these two loans, the Chinese Government in September 1931
entered into an agreement, for flood relief, with the United States
Department of Agriculture for the purchase of American wheat, under the
terms of which 450,000 tons of American wheat or wheat flour were to be
purchased from the American Grain Price Equalization Corporation valued
at US$9,212,826.56, against which sum payment was to be made, with an
annual interest of four per cent, at the end of June and December of
each year, each time refunding one-third of the total amount. This was
known as the American Wheat Loan.
In May 1933, because of the large quantity of raw materials required by
Chinese textile and flour mills in the interior, a Cotton and Wheat Loan
for US$50,000,000 was obtained from the American Reconstruction Finance
Corporation. It was agreed that the rate of interest would be five per
cent per annum, and that payments against the principal were to be made
four times a year and against the interest twice a year; also, that
consolidated taxes were to be set aside as the first security and the
Customs five per cent relief surtax as the second security.
Subsequently, owing to fluctuations in the Chinese cotton market, the
Chinese Ministry of Finance consulted with that Corporation and obtained
its agreement to the reduction of the Cotton and Wheat Loan to
US$10,000,000, thus making a total of US$17,086,282.48 together with the
Wheat Loan.
In addition to the twenty-five percent of the Cotton and Wheat Loan’s
principal, on which payments had been made at the due intervals, its
remaining seventy-five percent, as well as the entire principal of the
Wheat Flour Loan and the two loans’ interests, were repaid from revenues
derived from the Customs five percent relief surtax regularly as they
became due.
In 1936 these two outstanding loans were taken over in their entirety by
the Export-Import Bank at Washington,44 with which an
agreement was reached on May 28 of that year for the flotation of a
consolidated bond loan against the two outstanding accounts amounting to
a total of US$16,608,329.99, at five percent interest per annum, to be
reimbursed in six and a half years’ time. Following the reorganization
of the loan, all the principal and its accrued interests were paid
regularly upon becoming due from the Customs five percent relief surtax
until June 1939 when, as most of this country’s Customs were taken
possession of by the enemy, the approval of the American Government was
obtained for the deferment of the redemption of the principal for two
years and for the reduction of the rate of interest
[Page 1078]
to four percent. Revenues derived from
the Customs surtax were still meager when the period for deferment
expired, and payment was made regularly from the national treasury by
the Chinese Ministry of Finance.
Up to the end of last year, payments on the principal and interest of
this loan were made according to the agreement. In this regard Dr. Wei
Tao-ming, Chinese Ambassador to Washington, reported by telegraph that
he had received confirmation in writing from Mr. Pearson, Chairman of
the Board of Directors of the Export-Import Bank, in which he expressed
full satisfaction with the settlement of the loan in question, as is a
matter of record.
It would be appreciated if you would communicate the foregoing to the
Department of State.
I avail myself [etc.]
