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1 pointed out that both the Americans and

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ourselves were giving credits to China. The Americans

had taken wood oil as security for their credits, and they

were known to be considering other exports as security.

The Treasury felt that we ought to have as good security as

the Americans for our credits and tin was the most obvious

possibility. The proposal involved the erection or a

smelting works, which would improve the quality of

Chinese tin and control of the marketing of the produce,

but it did not provide for the development of new mines.

It would surely be helpful to get control of the

Chinese production. It probably was impossible to ask the

Chinese Goverment to restrict production, but we might

ask them to undertake not to expand production.

Lord Strathullan said that T.V. Soong had great

influence with the Yunnan Goverment and he believed that

he would use this influence to get an assurance that

Chinese production would not be expanded. Mr. Calder

agreed that the objections of the myire producers would

be largely met if we could assured that the amount of

Chinese tin put on the international markets was not

increased.

It was arranged that Lord Strathallan should

pursue his discussions with Captain Lyttleton and should

siso try and ascertain from Mr. T.V. doeng what prospects

there were of the Chinese Government undertaking not to

expand production. Meanwhile, the question whether

H.^. Government should assist the scheme by means of

export credits or otherwise sãould stand over for further

consideration on ita merit:

(Sgd.) F. W. LEITH-ROSS,

52nd March, 1939.

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