Marshall Mission Files, Lot 54–D270: Telegram
General Marshall to Lieutenant General Alvan C. Gillem, Jr. 2
82435. Please transmit the following to the Generalissimo:3
“Your Excellency: I have been laboring daily since my return to resolve the various complications regarding transfers of surplus property including ships to China, securing crews for the ships, and in particular carrying through the various government agencies concerned the problem of a new loan to your Government. Briefly, I find, as was to be expected, a difficult political situation to which government officials here must give careful consideration, particularly the Board of Directors of the Exim Bank who will implement such a loan. There is also the important fact to be considered that Congress has not appropriated the $1,250,000,000 for foreign loans which had been requested by the Exim Bank and that there is no prospect of such an appropriation in the near future. Therefore, if there is to be any immediacy in the action toward China it will have to be based on funds now available. I have had to resist, and successfully I think, determined efforts to have included in the charges against any loan, the cost of the ocean-going shipping to be disposed of to China by the Maritime Commission, which might amount to as much as $200,000,000; also, the charge for other surplus property disposed of to China in excess of the offsets against the debt the United States owes China.
I have endeavored to represent your special interest in the character of the public announcement that would be made concerning such a loan and this has had to be balanced against the political necessities here which are a matter of great importance to the bank directorship and to the National Advisory Council headed by the Secretary of the Treasury. At the present moment it would appear probable that negotiations could be started almost immediately with a very favorable probability of securing a credit of $500,000,000. The discussions of the past week have been devoted largely to the character of the public announcement which would be necessary to support the action of the bank and at the same time would not embarrass you as head of the Chinese Government. It has been proposed to meet this complication by the device of supplementing the public announcement by a proposed letter from the Chinese Government to the Exim Bank stating their understanding of the conditions under which the loan would be granted. This letter, of course, would not be made public unless [Page 971] at some later date an investigation by Congress of the general question of loans would impel it. I quote hereafter the two papers:
- A.
- A draft for the press release which will also serve as a letter of
notification from Exim Bank to Chinese Government of granting of
credit:
‘General Marshall in his capacity as Special Representative of the President has reported that China has made substantial advances toward peace and unity and toward the rehabilitation of its economy, and has recommended that the United States now act on specific measures of financial aid in the reconstruction and development of China.
Accordingly, the Export–Import Bank, by action of its Board of Directors, is prepared, until June 30, 1947, to extend to Chinese Government agencies and private enterprises credits aggregating $500,000,000,4 for the purchase in the United States of material, equipment and services to assist in the rehabilitation and development of the Chinese economy.
It is understood that funds will be disbursed against specific projects to be approved by the bank. Credits to finance these new projects will be in addition to the bank’s loans to China now outstanding or authorized, aggregating $127,000,000.’
- B.
- A proposed draft of the letter from the Chinese Government:
‘In your letter of blank date you state that, “the Export–Import Bank is prepared, until June 30, 1947, to extend to Chinese Government agencies and private enterprises credits aggregating $500,000,000, for the purchase in the United States of materials, equipment and services to assist in the rehabilitation and development of the Chinese economy. It is understood that the funds will be disbursed against specific projects to be approved by the Bank.”
My Government wishes to set forth its understanding of the terms under which these individual credits will be considered by the Bank. It is understood that individual projects will be analyzed by the Bank to ascertain whether they are economically sound; whether they would operate to improve the balance-of-payments position of China; and whether adequate personnel to supervise their installation and operation would be available. Credits to finance such projects will have varying maturities and other terms appropriate to their character and purposes.
It is also understood that the financing by the Bank of projects undertaken by private enterprise, as well as governmental projects, will be included within the maximum limitation which the Bank has adopted. Projects advanced by private enterprise must have adequate domestic financing, be sponsored by responsible individuals, and be suitably guaranteed.
My Government appreciates that one of the basic purposes for the extension of these credits is to assist China in its further efforts to achieve stability and to participate effectively in international economic affairs. It is understood that the progress of China in these respects will be considered in connection with the approval of specific projects.’
Will you please advise me or have Doctor Soong advise me of your views in the matter. It is to be understood that presumably from now on this matter would be a subject of direct negotiations between the representative of your Government and the Exim Bank. I am merely giving you, in the light of my discussions of the past 10 days, the probable amount of a loan that can be obtained under present conditions and the probable terms on which it would have to be based. It should also be understood that I have had great difficulty in securing tentative favorable consideration on the basis indicated.”