893.24/1598: Telegram

The Chargé in China (Atcheson) to the Secretary of State

768. Embassy’s 754, March [May] 22, 9 a.m.

In the course of a conversation on various subjects with Dr. Kung late on May 22, he described at some length but in vague terms the reasons including appreciation of the American loan which had motivated [Page 546] the Chinese Government in devising the new special exchange regulations. While I did not obtain from him a very precise clarification of article 3 of the regulations, he stated that it concerned the Central Bank and his Ministry and that there was no intention to create any debt on the part of foreign governments. (A more specific clarification was given an officer of the Embassy by Mr. K. K. Kwok, general manager of the Central Bank of China, who stated that the foreign Embassies definitely incur no responsibilities whatsoever under article 3; that the article simply covers a matter of mechanics between the Central Bank and the Ministry; that the “settlement” referred to is to be only between the Bank and the Ministry; and that he was somewhat surprised that the text of the article had been transmitted to the Embassy by the Foreign Office.)
Dr. Kung made no reference during my conversation with him to any question relating to reverse Lend-Lease and I, of course, did not mention the subject. As regards the special exchange regulations, I said that we appreciated his active interest in the question of resolving our problems in connection with the exchange situation and that we were informing the Department in regard to the matter.