893.50 Recovery/4–1048: Telegram
The Acting Secretary of State to the Ambassador in China (Stuart)
528. Fol is text proposed letter to be exchanged Chinese Govt ref Deptel 527 Apr 10:
“The China Aid Act of 1948 (Title IV of the Foreign Assistance Act of 1948) became law on April 3, 1948.
Pending the conclusion of an agreement between China and the United States under Section 405 of the Act and until July 3, 1948, the Government of the United States proposes to arrange for the performance of those functions authorized by the Act which may be determined to be essential to the use of funds authorized under Section 404 (a) of the Act. This action by the Government of the United States is contingent upon certain requirements, as hereinafter set forth, being fulfilled.
I should appreciate your notifying me whether your Government [Page 493] adheres to the purposes and policies set forth in Section 402 of the Act in furtherance of which the Act authorizes assistance to be provided, and also whether your Government intends to conclude an agreement with the United States in accordance with Section 405.
Pending the conclusion of such an agreement, my Government proposes that the extension of aid to China hereunder as authorized by Section 404 (a) of the Act be governed by the agreement between our two Governments dated October 27, 1947, subject to the understandings set forth below.
During the period covered by this letter, assistance may be furnished to your Government under the Act with funds authorized under Section 404 (a) thereof prior to a determination by my Government as to whether the assistance will be furnished on terms of payment or by grant. It is possible that my Government may decide to treat some part of the assistance furnished to your Government pursuant to this letter as a loan or to require other terms of payment as may be authorized under the Act with respect thereto. In such event, the terms of payment will be determined in accordance with the Act at a later time.
I suggest that pending the determination of the terms of the future agreement between our two Governments under Section 405 of the Act, deposits in the currency of your country in respect of any assistance furnished hereunder be made in accordance with the agreement between our two Governments dated October 27, 1947 and may be used for administrative expenses of the Government of the United States in the currency of your country, incident to my Government’s operations within your country under the Economic Cooperation Act of 1948. The provisions of the future agreement between our two governments concerning any deposits in Chinese currency to be made will apply with respect to all of such assistance for your Government which is determined to have been made by grant during the period covered by this letter.
Commodities, the procurement of which for import into China may be financed with United States funds made available pursuant to this letter, will not necessarily be limited to those specified in the agreement of October 27, 1947. The methods of distribution provided for in paragraph (a) of Article II of the Agreement of October 27, 1947, will be subject to such exceptions and modifications as may hereafter be agreed between our two Governments. The word ‘relief’, as used in the agreement of October 27, 1947, should not be taken to indicate the character of United States assistance extended pursuant to this letter or to restrict the application of provisions of the agreement of October 27, 1947 in respect of any assistance furnished hereunder.
I trust that your Government will concur in the understandings expressed above.
The Act authorizes my Government to appoint a special mission for economic cooperation to your country. I should appreciate receiving the assurances of your Government that the fullest cooperation will be extended to the representatives of my Government concerned with operations in implementation of the Act.
I am sure your Government understands that the proposals set forth in this letter cannot be viewed as constituting an obligation on [Page 494] the part of my Government to make assistance available to your country.”
Sent to Nanking as 528; repeated to Shanghai as 635.