893.51/7434
The Acting Secretary of State to the Secretary of the Treasury (Morgenthau)
My Dear Mr. Secretary: I refer to your letter of March 10 on the subject of the draft of the proposed agreement regarding the extension of financial aid to China.
All parties concerned are in agreement that the purposes of the extension of this financial aid are predominantly political, diplomatic and military.
The draft which you submitted to Dr. T. V. Soong for consideration contains in its four articles provisions which make readily available to the Chinese Government without restrictive commitments the [Page 484] $500,000,000 which the Congress appropriated for the making of a loan, the extending of a credit or the giving of other financial aid to China. It does not in fact impair or restrict the Chinese Government’s freedom of action in the making of disbursements.
In his letter to Mr. Bell of March 3 Dr. Soong suggests, on behalf of Generalissimo Chiang Kai-shek, the making of a number of changes. In my opinion, we can readily accept most of these suggestions and proceed accordingly. With regard, however, to the suggestion that Article II be omitted in its entirety, it seems to me that there is ample warrant for a discussion of the matter and that we should endeavor to cause Dr. Soong and the Generalissimo to realize that provisions such as appear in the draft of that article are desirable from point of view not only of this Government but of the Chinese Government.
With regard to procedure, I would suggest that there first be made a redraft of the proposed Article II and that there then be communicated to Dr. Soong a statement by you that we are in complete concurrence with his comments and the changes which he has suggested except as regards that article, and that, in the light of his comments on that article, there is submitted to him for his consideration a possible alternative form.
Toward facilitating procedure along that line, I submit here attached for your consideration a draft of a possible substitute for Article II.
Another possible line of procedure which might be considered would be that of putting the substance of this suggested alternative draft of Article II into letters which might be exchanged between you and Dr. Soong.
In as much as the only delay which has occurred in connection with the attention which has been given this matter has been delay on the part of the Chinese, I would further suggest that, in whatever communication you make to Dr. Soong, you indicate to him that all officers of this Government who are concerned with the negotiating of this agreement are eager to bring the matter to a mutually satisfactory conclusion with the utmost possible expedition.
Sincerely yours,