Office of the Historian

893.51/7–1245

The Secretary of the Treasury (Morgenthau) to Dr. H. H. Kung 89

Washington, June 27, 1945.

Dear Dr. Kung: I am informing the War Department that we have successfully terminated the negotiations with respect to U. S. Army yuan obligations in China for the last quarter of 1944. The terms of the settlement of these negotiations as agreed upon at our conference on last Friday afternoon, June 22, are as follows:

1.
The War Department shall transfer to the account of the National Government of China or the account of such agency of the National Government of China as the National Government of China designates a sum of forty-five million U. S. dollars (US$45 million) in settlement for all U. S. Army obligations in China for the period October 1, 1944 to December 31, 1944 amounting to the sum of eight billion forty-two million eight hundred ten thousand five hundred sixty-three Chinese National dollars (CN$8,042,810,563).
2.
This settlement does not include any yuan expended by the Government of the Republic of China for board and lodging of American armed forces in China. Such sums will be credited to the National Government of China as reciprocal aid under Article VI of the Mutual Aid Agreement of June 2, 194290 at the request of the National Government of China.
3.
It is understood that counterclaims may be made by the U. S. Treasury for reimbursement in U. S. dollars for expenditures by the U. S. Army on behalf of China for which deductions were not made at the time of settlement. Reimbursements for such counterclaims will be made by China at rates corresponding to the rates of settlement covering the periods of time during which the expenditures were actually made.

I am pleased to express to you at this time my appreciation for the fine spirit of cooperation you have always shown in your relations with the Treasury. I am sure that you will continue to do all possible to strengthen the bonds of friendship between our two countries.

Sincerely yours,

H. Morgenthau, Jr.
  1. Copy transmitted to the Department of State and to the War Department by Secretary Morgenthau on July 12. Dr. Kung was former Chinese Minister of Finance, in the United States as personal representative of President Chiang Kai-shek.↩
  2. Department of State Executive Agreement Series No. 251, or 56 Stat. (pt. 2) 1494.↩