Foreign Relations of the United States: Diplomatic Papers, 1944, The Near East, South Asia, and Africa, The Far East, Volume V

845.515/545

Memorandum of Conversation, by the Chief of the Division of Middle Eastern Affairs (Allen)

[Washington,] February 11, 1944.

Participants:	Sir Girja Shankar Bajpai, Agent General for India
	Mr. K. C. Mahindra, Chief, India Supply Mission
	Mr. Dean Acheson
	Mr. Wallace Murray
	Mr. Paul H. Alling
	Mr. George V. Allen
	Mr. C. H. Oakes

Mr. Acheson reviewed the considerations involved in the lend-leasing of 100 million ounces of silver to India. He referred to the fact that silver always presents a special case and may not be treated as other commodities or supplies furnished under lend-lease, in view of the special interest of the Senate in any question which concerned silver. He said that the executive branches of the Government felt that special precautions should be taken to provide for the return of the silver, ounce for ounce, at the end of five years, in accordance with the wishes of the Senators concerned.

Sir Girja said that he and Mr. Mahindra would like to present to the Department the attitude of the Government of India in this matter. He said that India had been struggling for some years for fiscal as well as for political autonomy, as evidenced by the emphasis placed on fiscal autonomy at the Sound Table Conference in London in 1931.⁴⁸ At that time India was a debtor nation vis-à-vis Great Britain, and some justification might have existed then for asking Great Britain to underwrite a debt of the Government of India. At the present time, he said, India is a creditor nation, and the people of India would be particularly resentful of a demand by the United States that the British Government underwrite a debt of the Government of India.

Mr. Murray said that the attitude of the American Government that Great Britain should be made responsible for the return of the silver, either separately or jointly with the Government of India, resulted in part from the fact that no one could say at this time what government would be in power in India five years hence.

Sir Girja felt confident that any government in India would wish to maintain its credit and would be careful to avoid repudiation. He pointed out that the silver would be of assistance to all of India and that the obligation for its repayment was quite a different matter from the payment of expenses for the re-conquest of Burma, (which, he admitted, Gandhi and the Congress Party⁴⁹ had objected to being made an obligation of the Indian people).

Mr. Mahindra said that our insistence that Great Britain underwrite the debt would have a most unfortunate effect in India, and he felt that if the British Government is to be obligated in the matter at all, Great Britain should be made solely responsible for repayment.

Mr. Acheson asked whether the Government of India would prefer joint responsibility by the Governments of India and Great Britain, instead of an obligation assumed by the Government of India and underwritten by the Government of Great Britain.

Sir Girja replied that what was preferred was an obligation on the part of the Government of India alone, without involving Great Britain in any way.

Mr. Mahindra suggested the possibility of consummating the transaction without any formal agreement. He thought the matter could be handled, perhaps, in the same manner as all other lend-lease transactions with India; that is, the British authorities in Washington would sign a requisition for the silver, with a notation that it was being requested for retransfer to India. An accompanying exchange of letters might specify that the silver was to be returned ounce for ounce at the end of five years. He said that the American Government’s insistence upon Great Britain’s guarantee might well give the impression in India that the United States was attempting to strengthen and continue British rule in India.

Mr. Acheson said that he agreed with Sir Girja that repudiation on the part of the Government of India was most unlikely and asked how much importance the Government of India attached to the form of guarantee. Sir Girja said that very great importance was attached to the subject, since the Government of India felt that its good faith was involved.

Mr. Acheson stated that the views of Sir Girja and Mr. Mahindra would be taken into consideration by the Department.

48. The three Round Table Conferences on the affairs of India held in London during 1930–1932 represented attempts to find a solution to the constitutional problems of India by direct discussions between the British Government and Indian leaders. The second conference was held September 7–December 1, 1931.
49. The Mahatma Mohandas K. Gandhi, proponent of non-violence in resistance to British rule in India, was also unofficial leader of the Indian National Congress, Hindu nationalist party.