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COPY

C.R.T. 1799/39.

URGENT IMPORTANT

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Board of Trade,

Great George Street,

S.W.1.

7th September, 1939.

140

Dear Somerville-Smith,

I see the Foreign Office have sent you a copy of their

letter F.9827/1831/10 of 6th September to us about the Chinese

Ambassador's request that priority should be given to Chinese

Government orders under the export credits agreement. The

Ambassador refers only to the export licensing machinery but

his request for priority obviously extends to the control

exercised by M.E.W. and the Supply Departments. There is, of

course, the general question of the degree of priority which

the Foreign Office may, for political reasons, wish the

Departments concerned to extend to the various countries with

whom we have guaranteed agreements; the Roumanian order for

ambulances and lorries was mentioned at yesterday's meeting

of the Export Licensing Committee and Kelf-Cohen agreed to

consider this and the other considerations involved in

consultation with the Foreign Office and the Service and

Supply Departments.

So far as China is concerned, I am inclined to suggest a

reply on the following lines:-

"Lord Halifax appreciates fully that the Chinese Government have urgent need of the steel, tools and miscellaneous materials which they desire to purchase under the credit agreement, and the Departments concerned will gladly expedite their decisions (where these are required) in regard to such orders. At the same time the Chinese Ambassador will doubtless realise that H.M. Government cannot give any undertaking that orders for the Chinese Government shall have priority when considerations of urgent military or civil requirements for the United Kingdom or her allies are involved!

H. Somerville-Smith, Esq., D.S.O., 0.B.E., M.C.,

Export Credits Guarantee Department

9, Clements Lane,

E.C.4.

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