893.51/7745: Telegram
The Ambassador in China (Gauss) to the Secretary of State
[Received 11:26 p.m.]
288. (1) Hearn is today sending message to War Department which we have seen and which contains request that copy68 be furnished State Department (this refers to our 189, January 29, and 233, February 3).
(2) In our 233 I mentioned that I had informed Kung that while his counterproposal would be reported to Washington I was certain it would not be regarded as satisfactory or reasonable. We are of opinion that Kung’s counterproposal should be rejected by United States Government and that I be authorized so to inform Kung.
(3) We have had considerable discussion with Edward Acheson and Adler looking to formulation of new proposals designed to achieve our ends and at same time meet Chinese sensibilities on question of change of rate and of reserves. Embassy, Headquarters and Treasury representative have all, however, become convinced that Chinese Government has no intention whatsoever, if it can be avoided, of cooperating with us in seeking and finding a realistic way for us to avoid continuing exploitation and to obtain something like our money’s worth in connection with our military expenditures. All of us accordingly feel that there is little or no purpose to be served at this time by putting forth further proposals in different window dressing unless the United States Government is in position and is prepared to back up such proposals by a slowing down or curtailment [of] our cooperation with Chinese financially, diplomatically and militarily. A frank message from the President to Chiang Kai-shek might be helpful. But the problem essentially resolves itself into the paramount question whether or not military operations planned for this area [are] vital to hasten the attack on Japan. If those plans are a vital part to our general strategy and [Page 872] the Chinese are aware of that, we are at the mercy of Chinese Government financially. If the plans are not absolutely necessary and can be abandoned at least in part without costing delay and lives—a cost in lives which of course cannot be calculated in terms of money—retrenchment would likely bring the Chinese to a realization of their responsibility not only to us as an ally (and their best friend among all the nations) but also to China itself.
Retrenchment would of course cause resentment and perhaps public recrimination. But the Embassy believes that realization by the Chinese that we have come to adopt a realistic attitude in our relations with this country would be of great benefit to those relations in the long run by tending toward putting them up on a sound and reasonably reciprocal basis. Embassy believes that the achievement of such basis is essential both for the war effort and in order that it will be readily possible for the United States and China to cooperate, economically as well as politically, after the war.