Memorandum by the Assistant Secretary of State (Berle)68

Re: Draft British Agreement for Financial Assistance to China

I concur with Dr. Hornbeck’s opinion.69 We decided at the time of the five hundred million dollar loan to China that we would not enter into a joint arrangement with the British for financing China, in view of the difference in Chinese attitude towards Britain and towards ourselves. It would follow that there is now no reason for entering deeply into the terms which the British wish to impose on the Chinese in respect of the assistance Britain is herself willing to grant.

It is perfectly true that the British financial position is not the same as our own, and that from their own point of view they are probably warranted in imposing conditions which we should feel unnecessary, or perhaps even unwise. It is also true that sterling probably has less immediate advantages to the Chinese at this time.

It would follow that Dr. Hornbeck’s suggestion, namely, that we do not enter too deeply into the matter except to bring to the attention [Page 523]of the British the feelings of the Chinese, is probably the best policy.

I believe the copies of the relevant documents should be forwarded to the Treasury for their information. If the position outlined is taken, I should not expect that there will be any reason for the Treasury to intervene in the matter. They may, however, wish to express a view to us.

A[dolf] A. B[erle], Jr.
  1. Noted by the Secretary of State.
  2. See footnote 67, above.