| Abstract |
After the Marco Polo Bridge Incident of July 7, 1937, the Chinese Nationalist government, faced with a lack of foreign exchange reserves and materials, sought assistance from various foreign governments. Unsuccessful in these attempts, it soon had a financial crisis on its hands. Thus, in September 1938, the Shanghai banker Chen Kwang-pu was sent to the United States as head of the Chinese Financial Mission, his charge being to negotiate a loan with the U.S. Treasury Department. The present study, building on the work of earlier scholars, seeks to better understand the Tung Oil Loan, as the arrangement negotiated by Chen came to be called. It examines the economic concerns raised by the American side, as well as the Chinese responses to these concerns. Much use is made of the Morgenthau Diaries, which provide an insider’s view of many of the issues the two sides grappled with: the debt crisis of the Chinese government, the loan program, the creation of the Universal Trading Corporation, and the feasibility of tung oil transportation. This study also examines the implementation of the Tung Oil Loan, which benefited both sides: China was able to obtain much needed foreign currency, with which it was able to purchase wartime materials and petroleum reserves, while the U.S., for its part, was able to acquire the tung oil that was needed by its domestic industries. The Tung Oil Loan, in essence a form of barter, became a paradigm that was used to negotiate additional loans in exchange for resources such as tin, tungsten, and other metals. |
