Foreign Relations of the United States: Diplomatic Papers, 1945, The Far East, China, Volume VII

893.24/5–345

The Acting Secretary of State to the Secretary of War (Stimson)

Washington, June 19, 1945.

My Dear Mr. Secretary: I refer to the memorandum of May 3, 1945 from Colonel L. J. Lincoln to Mr. John Carter Vincent of this Department on the subject of reverse lend-lease from China. Discussions with the Chinese Government pertaining to reverse lend-lease have been carried on over a period of about three years. The conclusion of the Department of State and other interested agencies of the Government has uniformly been that it was not worth while to seek a reciprocal aid agreement with China. However, as a result of your communication the matter has again received the considered attention of this Department. It is the opinion of this Department and the other interested agencies that the Chinese Government in stating its contribution under a reverse lend-lease agreement would probably insist on a Yuan-Dollar rate of exchange out of line with the purchasing power of the Yuan. Furthermore, there is good reason to believe that the quantity of supplies procured under a reverse lend-lease mechanism would decrease as compared with procurement by direct purchase by the United States Army. For these reasons the Department of State remains of the belief that it would be contrary to the interests of this Government to seek a formal reverse lend-lease agreement with China.

Your memorandum indicates that efforts have been made within the China theater to obtain certified statements of charges pertaining to rations and billets now being supplied by China under an informal reverse lend-lease understanding mentioned in the letter of November 25, 1944 from the Secretary of the Treasury to Dr. H. H. Kung,⁸⁶ the then Minister of Finance of China. It is the opinion of this Department that it is not to the advantage of the United States that China should be encouraged to present detailed statements of reverse lend-lease charges because such statements might well be in terms of a Yuan-Dollar valuation not satisfactory to this Government. It is assumed, of course, that the War Department will keep its own detailed records including estimates of dollar values of items furnished by the Chinese Government and received by the United States forces.⁸⁷

Sincerely yours,

Joseph C. Grew

86. Foreign Relations, 1944, vol. vi, p. 948.
87. In a letter of July 2, the Secretary of War informed the Secretary of State that the War Department agreed and had so informed the Commanding General, United States Forces, China Theater (893.24/7–245).