Foreign Relations of the United States: Diplomatic Papers, 1943, China

893.24/1674

The War Department to the Department of State ⁵⁹

undated

Draft Text of Agreement With China for the Furnishing of a Special Chinese Account

1. In the United Nations declaration of January 1, 1942, the contracting governments pledged themselves to employ their full resources, military and economic, against those nations with which they are at war, and in the agreement of June 2, 1942, each contracting government undertook to provide the other with such articles, services, facilities or information useful in the prosecution of their common war undertaking as each might be in a position to supply.

2. In furtherance of that agreement of June 2, 1942, the Government of the United States and the Government of the Republic of China agree to the following plan for making available to the U.S. Armed Forces in China Chinese currency in such amounts as may be mutually agreed upon to assist in meeting the requirements of such U.S. Forces there.

a. Initially the Government of the United States will deposit in the Federal Reserve Bank of New York to the credit of the Central Bank of China to the account of the Government of the Republic of China the sum of $6,000,000.

b. That upon receipt of advice by the Government of the Republic of China that the $6,000,000 have been so deposited the Government of the Republic of China will have placed in the Central Bank of China, Chungking, China to the credit of such U.S. army disbursing officer as the Commanding General, U. S. Armed Forces in China may designate in writing the sum of 600,000,000 yuan.

c. That monthly thereafter and until such time as otherwise agreed upon, the U.S. Government shall replenish the dollar account in New York by such amount as the Commanding General, U.S. Forces in China requests in order to maintain sufficient balance in the yuan account in China for his needs and the Government of the Republic of China will deposit in the yuan account, yuan equal to the dollars deposited on the basis set forth in sub-paragraph b, above.

d. That at any time mutually agreed upon by the Government of the Republic of China and the U.S. Government, the latter represented by the Commanding General, U.S. Armed Forces in China, the working fund dollar account in New York may be reduced or increased to approximate actual requirements and the yuan account in China will be proportionately adjusted.

e. That four-fifths of the monthly total placed in the yuan account by the Government of the Republic of China shall be recorded as a part of China’s contribution to the common war effort of the two Governments. That any balances remaining in the yuan account upon termination of the agreement will be returned to the Government of the Republic of China upon payment by that Government in New York of the dollar value of such yuan on the basis on which the yuan account is then being operated in accordance with this agreement.

f. That the Government of the U.S. agrees that the yuan account established in China will be used to meet the requirements of the U. S. Government military forces operating in China, but the U.S. Government reserves the right to determine for itself for what purposes expenditures from this account will be made and basis of settlement of such expenditures. It is further understood that when in the opinion of the U.S. Government the operations of any other U.S. agency in China are connected with the war effort, expenses of such agencies may be paid from the yuan account referred to herein.

g. That the Commanding General, U.S. Armed Forces in China or such officer as he may designate will represent the U.S. Government in completing with any representative designated by the Government of the Republic of China any operating details necessary to make this agreement mutually effective.

h. That the provisions of the agreement are not in lieu of, but are in addition to any other aid which may be mutually agreed upon as a contribution to the common war effort by either party.

i. That any part or all of this agreement may be amended at any time by mutual agreement between the contracting parties.

59. Handed to Alger Hiss on November 24 by Col. Eugene M. Foster.