893.51/5–847: Telegram
The Ambassador in China (Stuart) to the Secretary of State
[Received May 8—5:47 a.m.]
1003. Foreign Affairs Minister asked me to come to see him today and made the following statement:
He spoke of the importance of the stability of China in relation to peace in East Asia and in the world. He then said his Government had recently had long discussions as to the need of an American loan for rehabilitation and for preliminary reconstruction, that this would not be used for reducing the deficit which would be accomplished by gradual reforms and reduction of nonproductive expenditures. The loan would be used for three different purposes:
- 1.
- Restoration of communications with some extensions. This would be primarily for railway and some shipping in inland and coastal waters.
- 2.
- Development of electric power and for mining and certain industries.
- 3.
- Agriculture—primarily conservancy and fertilizers.
The request would be for one billion dollars, one-half of this to be used for purchasing American supplies and equipment, about one-fourth for commodities such as raw cotton, foods, gasoline, etc., and the remaining one-fourth or less for utilizing Japanese reparations, this to include transportation and reconditioning. The commodities would be sold to the public and the proceeds for these sales used for salaries, wages and other domestic needs. This method would ensure repayment of the loan and would improve China’s economic position in the world by restoring the balance between exports and imports.
The cotton now grown in China is one-fifth of the pre-war crop and the foodstuffs now produced are only a fraction of the pre-war volume.
[Page 1117]The timing of the loan might be for a 3-year period. The hope was expressed that China might receive the same treatment as Great Britain in the matters of interest, dates for repayment, etc.
This verbal statement, according to the Foreign Minister, will be followed by a formal communication addressed to the Secretary of State in Washington. Dr. Wang asked me to use my personal influence in this matter, which the Government felt was vital to the national welfare. I assured him of my sympathetic interest in all that concerned the best interests of China but pointed out some of the problems from the American standpoint. I referred to a widespread feeling in United States that the present Government is controlled largely by reactionary elements and that there is much corruption and graft throughout the system. Furthermore, American sentiment is very definitely against aiding one party in the civil war and by so doing lengthening the war, strengthening the influence of reactionary or feudal elements, etc. I also spoke of some purely American issues such as the current emphasis on reducing the budget, especially in aid to foreign countries.