Office of the Historian

893.50 Recovery/4–1648: Telegram

The Acting Secretary of State to the Ambassador in China (Stuart)

Washington, April 17, 1948—7 p.m.

582. Exchange of letters cleared with ECA. Drafts given to Pei today for info Chi Govt prior initiation discussions here and formal exchange letters with Chi Ambassador. It is not anticipated negotiations these letters will present any difficulty in view moderate terms contained therein and early Chinese approval will enable prompt implementation program.

Outgoing letter same as that quoted our 528, April 10, except for second, fifth and sixth paragraphs. New versions these paragraphs quoted below for your info and assistance if Chi Govt should approach you. Believe provision sixth paragraph covers point raised your 688, April 16.97

  • Second: “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 in furtherance of those purposes of the Act which apply to the funds authorized under Section 404(a) thereof. This action by the Government of the United States is contingent upon certain requirements, as hereinafter set forth, being fulfilled.”
  • Fifth: “During the period covered by this letter, it is anticipated that assistance other than that relating to reconstruction projects will be furnished to your Government under the Act with funds authorized under Section 404(a) thereof by grant. Terms of payment, if any, for reconstruction assistance will be reserved for later determination.”
  • Sixth: “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 which is designated by my Government as a grant be made in accordance with the agreement between our two Governments dated October 27, 1947. I further suggest that these deposits 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 China Aid Act of 1948, and for such other purposes as may be agreed upon by our two Governments. 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.”

Draft reply from Chinese Ambassador to Secretary State follows:

[Here follows text of draft reply of the Chinese Ambassador.]98

Repeat to Shanghai as 693.

Lovett
  1. Telegram No. 688 suggested insertion in paragraph 6 between the words “used” and “for” of words, “in accordance with the terms of that agreement or”.↩
  2. Formal exchange of notes between the Secretary of State and the Chinese Ambassador took place April 30; for text, see Department of State Bulletin, May 16, 1948, pp. 647–648.↩