Foreign Relations of the United States, 1948, The Far East: China, Volume VIII

893.24/6–2848

The Chinese Embassy to the Department of State

Memorandum

1. According to the provisions of the Agreement between the Governments of the Republic of China and United States of America on the Disposition of Lend-Lease Supplies in Inventory or Procurement in the United States of America, entered into on June 14, 1946, the second installment for the repayment of principal and payment of interest will become due and payable on July 1, 1948, which will amount to approximately $2,900,000.00.

2. On account of the adverse economic conditions now obtaining in China coupled with the increasingly unfavorable trade balance and the stringency of foreign exchange reserves, the Chinese Government desires to request for a postponement in the payment of the second installment. It, therefore, proposes to invoke Section C, Paragraph 4, of Schedule 1 of the said Agreement, which provides that the payment of a due installment may be postponed if it is determined by the two Governments that, because of extraordinary and adverse economic conditions arising during the course of payment, the payment of a due installment would not be in the interest of the two countries.

3. Besides, it is to be noted that there is a number of questions concerning the implementation of the said Agreement, which may make the proposed postponement desirable. The following questions, among others, may be mentioned:

a. The circumstances leading to the conclusion of the said Agreement and its implementations are among the several problems currently under discussion between representatives of the two Governments in connection with the Lend-Lease settlement.

b. The Agreement provides that the terms of payment, including the rate of interest, may be altered by mutual agreement at the time of the final settlement contemplated by Article VI of the Agreement.

c. The delivery of goods and transmittal of accounts in dollars for the goods so far delivered have been unexpectedly delayed and are not complete as yet.

4. It will be appreciated if the United States Government would give its most sympathetic consideration to this proposal and agree to the postponement of the forthcoming installment payments until the entire matter will have been thoroughly discussed and arrangements worked out at the current negotiations between the two Governments.

Washington , June 28, 1948.