893.24/1674
Memorandum of Conversation, by Mr. Alger Hiss, Assistant to the Adviser on Political Relations (Hornbeck)
Colonel Foster came in to supply us with a copy of a draft of an agreement which the War Department proposes be suggested to the Chinese Government covering the furnishing of Chinese currency for the use of American military forces in China.
Colonel Foster explained that the draft agreement, a copy of which is attached hereto,58 was designed to be a supplemental agreement to the general reverse Lend-Lease agreement which has already been proposed to the Chinese Government and that the two agreements would, if approved by the Chinese, be signed simultaneously. The special agreement on currency would, in effect, spell out in detail the means by which China would provide the “financial services” provided for in the general agreement along lines which have already been communicated informally to the Chinese first by Mr. Dean Acheson last May and subsequently by our Embassy in Chungking and by Generals Somervell and Clay (most recently during the visit of the two Generals at Chungking in October). Colonel Foster explained that General Somervell obtained the impression while in Chungking that the Chinese are prepared to enter into an agreement along the lines of the draft special agreement. Colonel Foster was aware of the fact that Mr. Gauss has received a less optimistic impression.
The War Department is contemplating sending Mr. Edward C. Acheson to Chungking to represent the War Department and the Lend-Lease Administration for the negotiation, with the cooperation and advice of the Embassy, of the special agreement. In pursuance of this intention the War Department has sent a telegram to General Stilwell asking whether he approves of such a procedure. Colonel Foster said that if the draft agreement is approved by the interested government departments and if General Stilwell approves the assignment of Mr. Edward C. Acheson to this work the War Department will keep in close touch with us so that the Embassy can be notified in advance of Mr. Acheson’s arrival.
There ensued some discussion of the terms of the draft agreement. Colonel Foster was shown a copy of the Department’s telegram No. 1672 of November 20 to Chungking, being a message from the Secretary of the Treasury to Mr. Adler in which Mr. Adler was instructed to ask Dr. Kung whether the Chinese Government will sell to the United States Government for United States currency or gold four [Page 576] hundred million dollars worth of Chinese currency per month. Colonel Foster said that the War Department would await the Chinese reaction to the Treasury proposal before going forward with its proposed special agreement and would coordinate its actions with those of the Treasury. He said that he proposed to take a copy of the draft special agreement to the Treasury and to Lend-Lease in the very near future.
It was pointed out to Colonel Foster that the draft agreement provides for making Chinese currency available to the United States armed forces in China. Colonel Foster in turn pointed out that Clause F would authorize the utilization of the Chinese currency to be received under the agreement for the operations of any U. S. agency in China connected with the war effort and that the U. S. Government has a right to determine for what purposes expenditures will be made. He said that in drafting this clause he had in mind the supplying of currency to the Embassy including all the American governmental civilian establishments in China. He went on to say that it seemed to him this method had two special merits: (1) it was consistent with the general military purpose of Lend-Lease activities and (2) it was not so apt to put the Chinese in the position of automatically having to grant similar facilities to the diplomatic and to the civilian establishments in China maintained by other governments.
- Infra.↩