893.51/7733a: Telegram

The Secretary of State to the Ambassador in China (Gauss)

79. 1. The Treasury Department on January 14 withdrew its request that conclusion of reverse lend-lease agreement be delayed (Department’s no. 35, January 7, 7 p.m.) and Department and War Department have agreed on procedure to be followed. This procedure has been telegraphed to General Stilwell who has been instructed to inform you fully and to coordinate his actions with you. For your information, the text of General Stilwell’s instructions was approved by officers of the Department and received the personal approval of the President.32 Accordingly, you should regard General Stilwell’s instructions as directed also to you.

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2. Department considers that you might wish to be informed that, as a result of conversations with Chinese officials which Generals Somervell33 and Clay34 had in Chungking last October,35 the War Department believes that the Chinese Government has agreed in principle to a separate financial arrangement on the basis of China’s contribution to the war effort without anticipation of thereby obtaining credit under reverse lend-lease for such contribution. Department did not fail to bring to the attention of the War Department the different impression which the Ambassador and the Counselor derived from such of the conversations held by Generals Somervell and Clay as the Embassy was informed of. Department recognizes that if General Stilwell, after consultation with you, decides to present separate financial agreement to the Chinese without offering to the Chinese a choice as between such an agreement and a supplemental reverse lend-lease agreement containing substantially similar provisions, you might find it awkward to associate yourself directly with such presentation. Department is further aware of the fact that in such an event coordination (a) of the presentation of a separate financial agreement and (b) of indication to the Chinese of our willingness simultaneously to conclude a reverse lend-lease agreement presents some possibilities of embarrassment. Department relies upon you and General Stilwell by close cooperation to avoid such possible embarrassment.

3. To insure that its views are clearly understood by you, Department wishes to emphasize that it has agreed with the War Department that the reverse lend-lease agreement will not be concluded unless there is simultaneously concluded either (a) the separate financial agreement or (b) the supplementary agreement. As indicated above, the separate financial agreement and the supplementary reverse lend-lease agreement are regarded as alternative means to the same end and are practically identical in substance.

  1. For account of President Roosevelt’s message of January 14, 1944, to Generalissimo Chiang Kai-shek, see Charles F. Romanus and Riley Sunderland, United States Army in World War II: China–Burma–India Theater; Stilwell’s Command Problems (Washington, Government Printing Office, 1956), p. 298.
  2. Lt. Gen, Brehon Somervell, Commanding General, Army Service Forces.
  3. Maj. Gen. Lucius Clay, Director of Matériel, Army Service Forces.
  4. See memorandum by Mr. Alger Hiss, November 11, 1943, Foreign Relations, 1943, China, p. 572.