740.00119 PW/10–2147
Memorandum of Conversation, by the Director of the Office of Far Eastern Affairs (Butterworth)
In accordance with the Secretary’s instructions, I called on the Chinese Foreign Minister74 at 5:00 p.m. on Saturday, October 18, at Hotel Pierre in New York.
[Here follows paragraph relating to restitution of “Japanese looted property”.]
I explained to Dr. Wang the status of the negotiations between General Kiang of Bosey75 and Mr. Luboshez, Foreign Liquidation Commissioner in Shanghai, and I informed him of the Secretary’s decision to urge the Foreign Liquidation Commissioner76 in Washington to authorize liberal terms of payment. I also explained that as soon as negotiations were concluded for the 8⅓ group program property in the Pacific, negotiations could be instituted either in Shanghai, or preferably in Washington, for supplies in the Zone of the Interior. In this case, I pointed out how valuable were the spare parts, the repair equipment in Honolulu, and that it was General McConnell’s opinion that at this time the Chinese Air Force was much more in need of these supplies and equipment than of new combat aircraft. In this connection, I indicated that the Secretary did not feel that it was desirable at the moment to authorize the release of the 135 remaining combat aircraft to complete the 8⅓ group program. Dr. Wang asked whether credit arrangements could be made to cover the purchases under the 8⅓ group program and I pointed out to him [Page 899] the undesirability of the Chinese Government delaying action in an attempt to effect such arrangements, and I indicated the decision could not be made unilaterally by the Secretary of State but had to go to the National Advisory Council. Dr. Wang referred to the information which the Secret ray had given him regarding the purchase of C–54’s and the arrangements with Olin Industries Incorporated. He did so in a way which indicated that he was both summarizing in his own mind what he could tell the Generalissimo he had achieved by way of concessions and, at the same time, was counting their costs in terms of dollar payments. I also mentioned to Dr. Wang that while the Chinese Government was proceeding with these arrangements it was the Secretary’s intention that we carefully explore whether there lay in our power a means of providing facilities such as ammunition from the stores in the Pacific Islands. I indicated, however, that this was a complicated legal question and that it would probably prove inadvisable to delay unduly taking advantage of such an arrangement as the Olin one in the hope that a more beneficial one would be worked out while, in the meantime, Chinese divisions with American equipment were being handicapped. Dr. Wang appeared to be in agreement and seemed pleased with the purport of our conversation.
I gave him personal messages from the Secretary and told him that the Secretary wished him to feel free to communicate personally with him in the most confidential manner regarding any matter if he considered it necessary or desirable.