893.5151/969a: Telegram
The Secretary of State to the Ambassador in China (Gauss)
Washington, December 6,
1943—7 p.m.
1751. Reference Embassy’s suggestion that consideration be given to making a formal approach to the Chinese Government in regard to reverse Lend-Lease (Embassy’s 2085, November 5, 2 p.m.).
- 1.
- Pending outcome of proposal made by Treasury to Minister of Finance (Department’s 1672, November 20) in regard to acquisition of Chinese currency, Department does not believe it advisable that a formal approach be made in regard to the conclusion of a reciprocal aid agreement.
- 2.
- Furthermore, War Department has tentatively drafted and informally discussed with Department an agreement by which the Chinese Government would deposit 600,000,000 yuan monthly in the Central Bank of China, Chungking, to the account of U.S. Army disbursing officer, against a monthly deposit in Federal Reserve Bank, New York, of U.S. 6,000,000 dollars to the account of the Republic of China. Other provisions are that there shall be mutual adjustment from time to time of these accounts in New York and Chungking “to approximate actual requirements”; 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 the yuan account established in Chungking will be used to meet the requirements of the U.S. military forces operating in China but that the United States Government reserves the right to determine for what purposes expenditures from this account will be made; that “when in the opinion of the United States Government the operations of any other United States agency in China are connected with the war effort, expenses of such agencies may be paid from the yuan account referred to herein”; and that the provisions of this agreement are not in lieu of but in addition [Page 581] to any other aid which may be mutually agreed upon as a contribution to the common war effort.
- 3.
- If Treasury is unable to reach satisfactory agreement with Kung, War Department tentatively proposes, after further consultation with interested departments here, to see if this agreement which is primarily intended to meet financial requirements of our armed forces but which would also include financial needs of other U.S. agencies in China can be negotiated with the Chinese. It is possible the Chinese Government might agree to conclude simultaneously the War Department’s agreement mentioned above and the comprehensive reciprocal aid agreement, the former being regarded as a subsidiary agreement specifying the financial procedure to be followed in supplying Chinese currency.
Hull