Memorandum of Conversation, by the Director of the Office of Far Eastern Affairs (Butterworth)

Participants: Dr. V. K. Wellington Koo, Chinese Ambassador
Mr. Tsu-yi Pei, Head of Chinese Technical Mission
The Acting Secretary, Mr. Lovett
Mr. W. Walton Butterworth, Director for Far Eastern Affairs

The Chinese Ambassador, accompanied by Tsu-yi Pei, called at his request this afternoon. He first expressed thanks on behalf of his Government for the China Aid Act and for the action taken by the Department of State in initiating and carrying the measure through the Legislative Branch of the Government. He also indicated that the Generalissimo had telegraphed directly to the President90 his personal thanks.

From there, the Ambassador moved by a series of questions into the matter of how his Government could begin to have their commodity bills paid out of the new legislation and to obtain funds under the $125 million procedure. He wanted all manner of undecided details and it became necessary to emphasize to him that Mr. Hoffman [Page 491] had only taken his oath of office at ten o’clock this morning, and that he did not yet have an organization. I did, however, point out that as regards the $50 million advance, the Department would recommend to the Administrator that it be allocated proportionately as between the $338 million and $125 million categories which would amount to say $36,500,000 and $13,500,000.

Ambassador Koo then referred to the implementing agreement which would have to be made between the Chinese and United States Governments within three months of the passage of the Act and indicated his Government’s desire that it should not contain terms which were not included in the European agreements. Mr. Butterworth referred to the conversation which officials of the Department had recently with Mr. Tsu-yi Pei at which time it was explained that there were decided differences as between China and the European countries and recognition of this would certainly find reflection in the agreement. The Chinese Ambassador also put in a plea for a very brief letter of intention to be operative until the conclusion of the agreement and in answer to this, Mr. Butterworth also referred to the conversation with Mr. Tsu-yi Pei at which he was shown a first draft of the letter; when the draft is further perfected and the Administrator consulted, the Chinese representatives will be further consulted. Ambassador Koo also wished to know whether a separate exchange of letters covering the procedures for the $125 million would have to be made and I informed him that it would seem that a separate exchange of letters would have to be made and although the President wished to center in the Administrator as many of the foreign aid administrative functions as possible, no decision had yet been reached in this particular case and, therefore, no authoritative answer could yet be given.

[Here follows account of conversation in connection with Japanese matters.]

W. W[alton] B[utterworth]
  1. Message not found in Department files.