893.24/1664: Telegram
The Ambassador in China (Gauss) to the Secretary of State
[Received October 20—12:18 p.m.]
1990. Reference your 1449, October 8. Shortly after receipt your message and return to Chungking of Foreign Minister Soong, General Somervell52 of Army arrived here and, being greatly concerned over fact that due to exchange rate, airfields, et cetera, are costing American Government in China 4 to 5 times what they would cost in the United States, he approached Foreign Minister Soong proposing an arrangement under which China should provide Stilwell for War Department use Chinese currency at a rate 5 times the official exchange rate or in effect 100 to 1. He stated requirements of Army would very soon reach CN dollars 500 million a month. He suggested that this arrangement be outside proposed reverse Lend-Lease agreement which should be confined to services, supplies, et cetera. After making that proposal orally to Soong, Somervell consulted me and was told that if the arrangement could be made at all it likely could only be made as reverse Lend-Lease. Foreign Minister later asked that Major General Clay who has been here with Somervell should see Finance Minister Kung. Atcheson accompanied Clay to see Kung this morning. Kung was opposed to Army proposal but when Atcheson suggested its consideration under reverse Lend-Lease be [he] showed more favorable disposition and promised to give matter early study. I hope to [Page 568] see Foreign Minister soon after Admiral Mountbatten53 and others leave Chungking and shall ask early consideration of proposed reverse Lend-Lease.