893.51/7463
Memorandum of Conversation, by the Chief of the Division of Far Eastern Affairs (Hamilton)
| Participants: | Mr. Bell | } | of the Treasury Department |
| Mr. Bernstein | |||
| Mr. Viner | |||
| Mr. Fox | |||
| Mr. Southard | |||
| Mr. Friedman | |||
| Mr. Luthringer9 | } | of the State Department | |
| Mr. Alger Hiss | |||
| Mr. Hamilton |
At the request of Under Secretary Bell of the Treasury Department there was held this morning at 10:15 a meeting in Mr. Bell’s office in the Treasury Department attended by those mentioned above to give consideration to the comments made by Dr. Soong in his letter of March 310 on the draft of the proposed loan agreement with China. (Mr. Hornbeck and Mr. Livesey were unable to attend because of prior engagements.)
Mr. Bell opened the meeting by asking whether the State Department had formulated views as to the procedure to follow in the light of the comments made by the Chinese Government. Mr. Hamilton replied that Dr. Soong’s letter had been read and studied only by the three officers present from the State Department and by Mr. Hornbeck; that we had tried to see Mr. Berle and Mr. Welles, but as yet we had not been able to reach either; and that the Treasury Department had done such an excellent piece of work in formulating the original draft that we wondered whether they might not have some ideas as to what the best step would be. Mr. Bell then commented that, while he had not yet consulted the Secretary of the Treasury, it was Treasury’s thought that the best thing to do would be to accept the proposition as put forth by Dr. Soong in his letter of March 3. Mr. Hamilton then said that the responsibility for making the decision was placed by the Joint Resolution upon the Secretary of the Treasury, subject to the approval of the President, and that any opinion expressed by the State Department would of course be simply of an advisory character. Mr. Hamilton repeated that we had as yet been unable to obtain the views of Mr. Berle and Mr. Welles. Mr. Hamilton then gave a brief summary exposition of the views set forth in the memorandum of March 6 on the subject “Proposed Financial Agreement [Page 481] with China” and raised expressly the question of endeavoring to effect an exchange of letters with the Chinese representatives embodying the substance of article two of the original draft of the proposed agreement. (Mr. Hamilton did not exhibit the memorandum of March 6 and he did not leave a copy of it with the Treasury Department.) Mr. Viner, Mr. Bernstein, Mr. Bell, and Mr. Fox each expressed himself definitely as in favor of acceding to the proposal put forth in Dr. Soong’s letter of March 3. Mr. Luthringer and Mr. Hiss raised briefly certain considerations along the lines of the comment made by Mr. Hamilton. However, in view of the very definite indication that the Treasury Department desired to proceed as indicated by Mr. Bell, the representatives from the State Department did not feel that they should press the considerations which they had raised.
After the discussion was rather far advanced, it developed that Mr. Bernstein had in mind the drafting of a letter to Dr. Soong in reply to Dr. Soong’s letter of March 3 thereby taking cognizance (perhaps only by implication) of the statements made in Dr. Soong’s letter, particularly the statement to the effect that China in any case would like to keep the Secretary of the Treasury informed. Mr. Bell said that he thought that Mr. Bernstein’s idea would afford all the safeguard that would be needed and wise to ask for under existing circumstances.
After a telephone conversation with Mr. Hornbeck, Mr. Hamilton said that Mr. Hornbeck had suggested that we reach no definitive decision at the meeting, but that the decision be left open pending reference of the matter in so far as the State Department was concerned to Mr. Welles.
Mr. Bernstein undertook to complete the draft of a letter to Dr. Soong as outlined in the last paragraph on page three of this memorandum and to send it to the State Department today. Mr. Bell expressed the hope that we could refer the matter promptly to Mr. Welles and get word back to the Treasury Department by noon on Monday as to whether this Department would be agreeable to proceeding as outlined by Mr. Bell. Mr. Hamilton said that he thought that we would be able to get Mr. Welles’ views by Monday noon. Mr. Fox mentioned that next Thursday, March 12, was a Chinese holiday, it being one of the anniversaries connected with Sun Yat Sen (the anniversary of Sun Yat Sen’s death), and Mr. Bell expressed a desire to move forward as fast as possible in concluding an agreement. He had previously mentioned the desirability, as he saw it, of concluding the agreement next week.
Mr. Bell said that Mr. Welles might possibly wish to speak directly to Mr. Morgenthau in regard to the matter and he also raised [Page 482] the question whether it might not be helpful possibly for Mr. Welles and Mr. Morgenthau to talk to Dr. Soong and to point out orally to Dr. Soong in the most friendly manner that this Government necessarily had responsibilities in regard to the attitude of Congress, both at present and over the long swing, and in reference to the question of there being established in the case of China a precedent which would affect our relations with other countries.