893.51/2–2246: Telegram
The Secretary of State to the
Embassy in China
Washington, February 28,
1946—8 p.m.
371. Dept communicated Eximbank your comments re cotton credit (Urtel 348,
Feb 22) and has received following statement with which it agrees:
- “1. Compromise suggested by T. V. Soong unsatisfactory because
of Bank’s desire to make credit as well as cotton available to
‘private mills of sound standing and engaged in legitimate
business.’ Bank finds difficulty in understanding Soong’s
concern regarding possible criticism re government monopolies if
its recommendations are followed. Statement by Government of
China that sound private industry could participate in credit
appears likely to silence rather than arouse such criticism.
Paternalism is not involved in Bank’s recommendations which were
result of announced intention by Chinese officials to monopolize
purchases under credit contrary to Bank policy in other cotton
loans.
- “2. Bank is opposed to use of credit for cotton already in
China or en route there because of advantage to large United
States cotton shippers in contrast to small operators who cannot
afford to finance such shipments. Similar decisions were made by
Bank in other cotton credits where identical question was
raised.
- “3. Question of government control of enemy mills has never
been factor in Bank’s consideration of cotton credit or its
negotiation with Chinese. Bank is not concerned with government
operation of these mills and is agreeable to provision of
appropriate amounts of raw cotton for them by Supply Commission
under credit.
- “4. Bank understands difficulties of negotiations, but
believes that its recommendations should prevail not only
because of issue involved in this credit but also because the
question of making funds available in support of sound private
as well as Government projects may be raised in extension of a
major credit for China.”
As to Soong’s concern with character of public announcement China and US,
Dept and Bank agree there is no objection to language that avoids
implication Chinese policy of allocating credit and cotton is due to Bank’s
insistence. Interest here is only in accurate announcement of policy to be
followed.
