The Director of the Office of Far Eastern Affairs (Vincent) to the Secretary of State

There is attached a memorandum in regard to a final Lend-Lease settlement for China.

I have discussed this matter with Mr. Clayton,69 who concurs in my recommendation that we proceed with the negotiations. Public knowledge that we are proceeding with these negotiations, which will result in the cancellation of the 1942 ½ billion dollar credit and of the 1½ billion of Lend-Lease will, I believe, have a psychological effect beneficial to us in pursuing China policy. The public will be made graphically aware of the assistance we have given China and those elements which advocate the release to China of the ½ billion dollar Export-Import Bank credit may be given pause for thought [Page 1065] when they inquire into the utilization made of the 1942 ½ billion dollar credit.70

J[ohn] C[arter] V[incent]

Memorandum by the Chief of the Division of Chinese Affairs (Ringwalt) to the Director of the Office of Far Eastern Affairs (Vincent)

In its telegram no. 963 of October 30, 1946,71 the Department informed the Embassy at Nanking that consideration was being given to the matter of opening negotiations in Washington for final Lend-Lease settlement for China, but that pending the receipt of an indication of General Marshall’s and the Embassy’s views as to timing of these negotiations no notification would be made to the Chinese Embassy.
In its reply (telegram no. 1817 of November 6, 1946)72 the Embassy stated that General Marshall and the Embassy were in agreement that it would be preferable to delay negotiations on the final Lend-Lease settlement.
It is suggested that consideration might now be given as to the desirability of entering into negotiations in the near future for a final settlement of Lend-Lease problems with China.
For your ready reference, there are listed below the various items which would be included in a final settlement:
Cancellation of:
$500,000,000 1942 political loan, and
Estimated $1,500,000,000 military Lend-Lease assistance through June 30, 1946.
Funding of:
Civilian Lend-Lease inventory in China as of V–J Day of an estimated maximum of $20,000,000;
Inventory of surviving commercial type aircraft of an estimated maximum of $10,000,000;
Air training program in the United States73 for the period [Page 1066] beginning December 1945 and ending June 1946 (estimated at $12,500,000); and
Outstanding claims of a miscellaneous character which tend to balance each other off.
Collection from China of $5,000,000 advance deposit against program for Chinese occupation of Japan.
Payment by China for services and supplies provided after June 30, 1946 for reoccupation program of a maximum of $25,000,000.
Collection of costs of military training programs supplied under June 28, 1946 agreement74 estimated at $15,000,000.
A[rthur] E. R[ingwalt]
  1. William L. Clayton, Under Secretary of State for Economic Affairs.
  2. Marginal notation by the Under Secretary of State (Acheson): “I concur. D. A.” The Secretary of State’s approval of proceeding with these negotiations was set forth in an undated note sent to Mr. Vincent by Brig. Gen. Marshall S. Carter, Special Assistant to the Secretary of State (893.24/2–1447).
  3. Foreign Relations, 1946, vol. x, page 1016.
  4. Ibid., p. 1019.
  5. For correspondence on this subject, see ibid., pp. 767 ff.
  6. Agreement on mutual aid signed at Washington; Department of State Treaties and Other International Acts Series 1746, or 61 Stat. (pt. 4) 3895.