14,-ik'. _ W. 16/226 (Received from Mr. Ballantyne, May 8, 1940) copy for C.C. 1 " "Mr. Helm 1 " 11 Chancery - Mr, Pinsent to see, 11/5 PROM TO Lord Lothian Foreign Office d. April 26, 1940 Following for Monnet from Purvis. Wolfram. Referring your Purco No. 37. After consultation with Owatkin and His^Tit was decided to endeavour to obtain Mr. Morgenthau'¦ assistance in influencing a war reserve purchase out of 1940 Chinese production. 2. Mr. Morgenthau is a member of the Army and Navy Munitions Board which dealB with what are known as MStrategic" materials of which Tungsten is one. In addition the Procurement Division which would make such a reserve purchase is n Treasury Department. 3. Therefore I suggested on April 17th that a special purchase be made of 5,000 tons as part of a cooperative effort to remove the 1940 Chinese production from the market. This would be over and above U. £>. Peace time requirements. 4. The proposal was pressed again on April 25th and in the interim at Mr. Morgenthau'a suggestion Bloch-Laind and I saw Mr. Chen, President of Universal Trading Company, in whom he has great confidence, in the hope that Chen would be able to thro.? light on the quantities liable to become available from China in 1940. This he could not do but at the interview it was suggested that the problem is probably one of transport out of China rather than of production. 5. Mr. Morgenthau has expressed himself as definitely unfavourable to the inclusion of Wolfram as security for the new loan for a reason which Pleven, who was present at the April 25th meeting, "111 rxplnin on his return. 6. He is however cympathetic to a direct purchase as a measure of cooperation with the Allies and while it is understood the -rmy is unfavourable to such a purchase he has undertaken to explore the possibilities of changing their 6tand. 7. Any such wsr reserve purchase v/ould be predicated on the understanding that the existing Indo China stock has been removed from the market. Mr. Morgenthau would appreciate information as to / whether PURCO NO. 98. Important - 2 - whether the negotiations for this purchase have been concluded pointing out that it is four months since it was first mooted to him. B» It is too early to predict the result of the effort hut it is auite evident that it will he sympathetically followed up as far as Mr. ¦