Office of the Historian

893.51/7766

The British Ambassador (Halifax) to the Secretary of State

No. 225
Ref. 493/25/44

His Majesty’s Ambassador presents his compliments to the Secretary of State and has the honour to inform Mr. Hull that His Majesty’s Principal Secretary of State for Foreign Affairs proposes to make an announcement in the House of Commons on or about April 22nd, 1944, regarding the agreement which is to be signed on that day on the subject of a loan of £50,000,000 by His Majesty’s Government in the United Kingdom to China. A copy of the draft text of this announcement is attached hereto95 and Viscount Halifax would be grateful if Mr. Hull would consider it as confidential until after it has been made public in London.

2.
As Mr. Hull is aware, discussions have been going on for some considerable time between His Majesty’s Government and the Chinese Government regarding this loan, and Viscount Halifax has been instructed to inform Mr. Hull that the agreement now to be signed represents, with minor alterations, the basis on which His Majesty’s Government in the United Kingdom have, since the inception of the negotiations, been ready to offer this credit.
3.
The main points of the loan agreement are as follows:—
(a)
His Majesty’s Government in the United Kingdom agree to provide up to £10,000,000 in the first instance to secure an internal loan. An eventual increase in this amount, if it should be found that more could be effectively used for such a scheme, is not excluded.
(b)
The credit is not to be used for sterling savings certificates.
(c)
His Majesty’s Government in the United Kingdom agree to use, during the war, of £10,000,000 for printing bank-notes in the Sterling Area, and for outstanding and future payments on orders already placed under previous credit arrangements.
(d)
His Majesty’s Government in the United Kingdom agree that the Chinese Government may earmark the sum of £20,000,000 for the purchase of goods in the Sterling Area for war purposes.
The remaining £10,000,000 would then be available for such of the purposes covered by the Agreement as might prove necessary.
(e)
His Majesty’s Government in the United Kingdom agree to make payments which fall due after the end of the war on contracts properly concluded, with their concurrence, for goods which could reasonably be expected to arrive in time to serve “war purposes”.
4.
Viscount Halifax has also been informed that the opportunity presented by the signing of this loan agreement will be taken to sign the Lend Lease agreement between His Majesty’s Government in the United Kingdom and the Chinese Government which was [Page 919] originally proposed in February 1942, and which, although unsigned, has in fact been in operation since April 1942.96
Washington , April 20, 1944.
  1. For text of this announcement, see Morgenthau Diary, p. 1108.↩

  2. A memorandum of May 2 by the Chief of the Division of Chinese Affairs (Vincent) stated:

    “With reference to the British Embassy’s note of April 20, 1944 in regard to the conclusion of a loan agreement between the United Kingdom and China, Sir George Sansom has telephoned me to say that signature to and announcement of the agreement was unavoidably delayed (the note indicated that it would take place on or about April 22) and that the agreement would be signed this evening (May 2) and that statement in Parliament and release of text would take place on May 3. Sir George stated that simultaneous release would be made in Chungking.

    “In as much as we sent a copy of the British note in reference to the Treasury Department, I have telephoned the foregoing information to Dr, Harry White of the Treasury.”

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