893.51/5–2647
Memorandum by the Director of the Office of Far Eastern Affairs (Vincent)
Following are directions given by the Secretary in regard to economic assistance to China at meeting with him at 10:30 a.m., May 26, 1947:
The Secretary desires that the necessary steps be taken to have the half-billion dollar Eximbank credit re-earmarked. He does not want the amount reduced and feels emphatically that failure to renew earmarking will have a bad psychological effect in China. He is not impressed with argument that funds would be available for credits to China even though not specifically earmarked.
The Secretary desires that we move forward as quickly as possible in getting some credits extended to China from the $500,000,000. He feels that there is much to be said for positive action on specific, although limited, projects; that action along this line would be preferable to consideration of some broad over-all program. He does not feel it would be practicable to go to Congress for funds for China. He desires that we prepare a list of projects for which the Bank might extend loans aggregating $100,000,000. He has in mind projects (1) that would result in the creation of foreign exchange for China; (2) that would result in the production of goods in China and thereby relieve demands upon China’s foreign exchange resources; and (3) that would create an early improvement in general economic conditions in China and thereby promote indirectly a healthy revival of foreign trade relations. Projects mentioned were the Canton–Hankow Railway, coal mining, consumer goods industries in Formosa and China proper, power development at Shanghai and possibly elsewhere, and credits for purchase of cotton and possibly similar commodities in the United States.
On the basis of a project report such as that envisaged in the foregoing paragraph, the Secretary would consider having the President arrange for a conference with the Directors of the Eximbank. The Secretary would attend the conference, and the Directors would be informed that the President and Secretary consider the situation in China as having developed along lines which make it highly advisable to consider favorably credits aggregating $100,000,000.