893.24/6–2848

The Department of State to the Chinese Embassy

Memorandum

The Department of State acknowledges the receipt of the memorandum from the Embassy of China dated June 28, 1948, in which it is proposed that payment by the Chinese Government of the second installment of principal and interest due on July 1, 1948 under the Lend-Lease “Pipeline” Agreement of June 14, 1946 be postponed pending the outcome of overall lend-lease settlement discussions.

The Department of State is anxious to expedite the conclusion of these discussions, but in fact they are still in their initial stage, and postponement of the present installment would only serve to introduce a new complication into the negotiations. The Chinese Government has already paid one installment due under the agreement in question, and the amount involved in the second installment is only 2.8 million dollars.

The justification for the proposed aid program for China submitted to the United States Congress by the Departmentment of State31 took cognizance of the obligation of the Chinese Government to make this payment at this time. Furthermore, in the discussions in Congress concerning foreign aid programs, including the program for China, specific attention was given to the possibility of relieving the dollar position of the recipient countries through a general moratorium [Page 697]on their obligations to the United States Government; however, proposals of this character were rejected in the Congress.

In these circumstances, the Department of State does not consider that it would be justified in making an exception in this case by acceding to the Embassy’s proposal for the postponement of this 2.8 million dollar installment.

  1. For correspondence on this subject, see pp. 442 ff.