893.51/9–546
The Under Secretary of State for Economic Affairs (Clayton) to the Chairman of the United States Maritime Commission (Smith)
Dear Admiral Smith: I refer to your letter of September 5, 1946, asking the views of the State Department with respect to the extension by the Maritime Commission of a credit to China of $76 million for the purchase of 159 war-built vessels under the Merchant Ship Sales Act of 1946.
The Department of State has no objection to the negotiation and conclusion of a credit for the above purpose. Such an arrangement would be in line with the general policy of this Government to assist in the rehabilitation of essential aspects of the Chinese economy. In accordance with general policy toward credit assistance to China, however, the Department requests that any transfer of war-built commercial type vessels to China on a credit basis be subject to the following proviso:
“It is the desire of the United States Government that these commercial type vessels be destined for a united and democratic China under a coalition Government. It is, therefore, understood by the Chinese Government that, if it appears to be in the best interests of the United States, the latter may discontinue the transfer of these vessels.”
The Department of State will promptly inform the Maritime Commission if at any time it appears to be in the best interests of the United States to terminate or suspend such transfers, and requests that it be kept currently informed of the status of transfers of ships being purchased. The Department is also interested in developments concerning the terms of such credit arrangement as may be negotiated with China.
Sincerely yours,