893.24/1684
Memorandum of Conversation, by Mr. Alger Hiss, Assistant to the Adviser on Political Relations (Hornbeck)
Mr. E. C. Acheson, who has been lent by the Lend-Lease Administration to the War Department for service in China as General Stilwell’s financial adviser, came to see me yesterday. He plans to leave for China today. He said that he was going without instructions in so far as the main purpose of his assignment was concerned, i. e. to facilitate the working out of appropriate financial arrangements whereby U.S. Army forces in China will obtain Chinese currency at rates better than the arbitrary official rate of exchange. He said that the reason for his lack of instructions on this point was that Secretary Morgenthau in some agitation had called Generals Somervell and Clay to see him as soon as he learned that Mr. Acheson was going out to China on financial matters. Secretary Morgenthau had insisted that the Army should not go forward with financial discussions with the Chinese because of “negotiations” which he (Mr. Morgenthau) is at the moment conducting with the Chinese.
Mr. Acheson indicated that Generals Somervell and Clay are still of the opinion that the most advantageous course of action for the Army to follow is to try to obtain a separate financial agreement having no relation to Lend-Lease or Reverse Lend-Lease. Mr. Acheson indicated that he thought that shortly after he arrived in Chungking it would prove possible for the War Department to instruct him to present the Somervell–Clay proposal to the Chinese. Mr. Acheson is aware of the fact that our own estimate of the situation and that of the Embassy does not agree with the optimism which Generals Somervell and Clay apparently feel on this matter. I urged Mr. Acheson to be sure to call upon Ambassador Gauss promptly and to coordinate his duties as closely as possible with the Ambassador.