893.24/10–3046: Telegram
The Secretary of State to the Ambassador in China (Stuart)
963. Responsive to Article 7, paragraph d of Surplus Property Agreement of Aug 30,55 matter of opening of negotiations in Washington for final Lend-Lease settlement is under consideration in Dept. At that time action somewhat along the following lines is contemplated:
- 1.
- Cancellation of
- a.
- $500,000,000 1942 political loan, and
- b.
- Estimated $1,500,000,000 military Lend-Lease assistance through June 30, 1946.
- 2.
- Funding of
- a.
- Civilian Lend-Lease inventory in China as of V–J Day, estimated maximum $20,000,000.
- b.
- Surviving commercial type aircraft, estimated maximum $10,000,000.
- c.
- Air training program in US56 for period Dec 1945 through June 1946 for which Chinese Govt is expected to attempt to evade responsibility, and
- d.
- Outstanding claims of miscellaneous character which would tend to balance each other off.
- 3.
- Collection of $5,000,000 advance deposit against services and supplies for Chinese occupation of Japan.57
- 4.
- Payment by China for services and supplies provided after June 30, 1946 for reoccupation program, maximum $25,000,000.
- 5.
- Collection of costs of training programs being supplied under June 28 agreement, not exceeding $15,000,000.
In our consideration of this matter we are cognizant of possible effect of negotiations on current discussions in Nanking. Negotiations would without doubt receive publicity of one kind or another and, although they would be concerned only with reaching agreement for settlement of past commitments and not with making any new commitments for aid to China, possibility of misrepresentation cannot be ignored. Press both here and in China which has been critical of our aid to National Govt could find in these negotiations further criticism and, on the other hand, press which supports the National Govt might readily expand significance of negotiations with psychological effect. It is desired that this matter be brought to attention General Marshall. Pending indication of his and Emb’s views no notification will be made to Chinese Emb. However, economic officers concerned are anxious to enter settlement negotiations as soon as consistent with political picture and would wish to initiate discussions before end of year.
In above connection Dept has been withholding publicity on June 28 Lend-Lease agreement.58 Next quarterly report to Congress due shortly and Emb’s and General Marshall’s clearance would be desirable prior to inclusion in report of info regarding above agreement.