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

893.50 Recovery/4–2348: Telegram

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

Washington , May 21, 1948—5 p.m.

768. Chinese obligations U. S. to be negotiated in war settlements¹³ including 1942 loan provide more than adequate offset to any claims Chinese might make arising surplus property agreement (Embtel 742, April 23¹⁴). Dept believes more appropriate handle matter connection war settlements than through or concurrently with bilateral agreement,¹⁵ since latter would be exception general treatment aid agreements and might be subject criticism as confusing possible claim arising past transactions with present grants authorized Congress. Department believes waiver claims for recovery under Article 5 surprop agreement unlikely to be accepted by Chinese in view China aid bill legislative history. Dept considering advisability Embassy and Luboshez discussing Chinese takeover improvement and underrun discussion with appropriate high level officials. Dept would like Embassy’s comment these views and suggestions on specific points for discussion soonest.

Sent Nanking as 768. Repeated Shanghai as 952. Pass to Luboshez.

Marshall

13. For correspondence on this subject, see pp. 686 ff.
14. Not printed.
15. For correspondence on negotiation of this agreement, see pp. 506 ff.