"fit $&*~C
(1020) 25S7W6ia
1.500.000 10/37 ICScSUd
CpW4/229
MINUTE SHEET.
?
Riferenu......626/7/4Q......_
I saw ^r. Green^to-day about the export of arms
to China and credits which might be used in payment for them.
He did not think that any special significance attached to
the issue of licences to the amount of $7»_3 million in the
first three months of 1940 because there is usually a lag
of anything up to 12 months between the issue of licences
and exports.    So far in 1940 the exports have only been
^900,000.   Mr. Green told me that the licences issued in
April amounted to #432,000 and in toy to date ^20,000. (For
comparison, in 1939 licences issued amounted to ^5 million
and exports to $2 million).    It did not seem to have
occurred to Mr.. Green that there is any reason to believe
that China is accelerating her purchases.
Mr. Green reminded me that no exports of arras may
be made to °hina except with the consent of the Chinese
Embassy in Washington, that all exports go via Rangoon, and
that we have given an undertaking that shipments will not
be interfered with en route.
Mr. Green confirmed the fact that the credit
granted to China may not be used for purchase of arms, but
added that in his view little if any significance attaches
to this prohibition since these credits could be substituted
for other funds which in turn could be used for the purchase
of arras.
The details of the loans to China are not the
special concern of Mr. Green, and therefore he sent me to Mr.
Livesey, from whom I got the following information.
The original loan to the Universal Trading Corpora-
tion (which is in fact the agent for the Chinese Government)
was 425 million.   Very widely distributed purchases have
been made by means of this loan, a fact which has been
stressed by Mr. Jesse Jones before the Senate Committee
on Foreign Relations and also before the (? Senate) ^ -
/Committee
-2-
Committee on Banking and Currency,   Up to March 31st, 1940,
i'7j million of the original loan have been disbursed (see
he National Foreign Trade Council Inc. report dated April 19th)
Livesey telephoned Mr. V/hitteraore of the Export-Import
Sank and was told that the original v25 million is not yet
/exhausted,   A second credit of s*20 million was granted (? on
March 7th) which is the maximum that can be granted to any one
country after the date of the enactment which authorised the
additional hundred million total for export credits.    Up to
March 31st about million of the vl7£ million disbursed had
been repaid, this sum representing half the sale proceeds of
tung oil imported from China.
Mr. Livesey pointed out that the credits to China
could not be used for purchasing war materials narrowly define*
but that nothing prevented their being used to purchase trucks
which are essential for supply purposes. Ke added that men
had been sent out with trucks to organise service.
Both Mr. Oreen and Mr. Livesey disclaimed any know-
ledge of loans or projected loans to Universal Trading Corpora-
tion from sources other than the Export-Import Bank.
The net result of the enquiry is:
(1)    an additional credit of v20,000,000 has been granted,
making the total to China ^45,000,000;
(2J    there is no evidence of negotiations for further credits;
Z
although   the total of licences issued for the export
of arms has increased there is no evidence obtainable'from
the State Department that China is negotiating lox> the pur-
chase of $20,000,000.
7th May, 1940.
rr- &Af-
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