Office of the Historian

893.50 Recovery/7–248: Telegram

The Ambasasdor in China (Stuart) to the Secretary of State

Nanking, July 2, 1948—noon.
[Received July 2—5:24 a.m.]

1202. To Department and ECA. Reference Embtel 1197, July 1.

1.
Having agreed with Foreign Minister to report Chinese Government’s continued refusal, as reported reftel, to accept second sentence paragraph 1, article IV, it was agreed by Lapham and Embassy to allow Chinese to ponder impasse overnight. Agreed further that in absence Foreign Office capitulation this morning, Embassy [Page 595] should inform Foreign Office that US Government reluctantly accepted deletion. This has been done and arrangements now under way to sign agreement Saturday, July 3, Nanking time.
2.
Aide-mémoire confirming our acceptance of deletion critical sentence stresses 3 points. After stating that decision was left to Embassy in consultation Lapham (reference Deptel 962, June 30), Embassy bases its actions on undertaking in disputed sentence being implicit in preceding sentence, which position it has adhered to throughout negotiations. Embassy emphasizes that overriding consideration was strength of representations by Chinese repeatedly made to Embassy and Ambassador regarding political reasons for non-acceptability this sentence. Lapham is quoted as associating himself with Embassy position in behalf ECA and in belief that importance ECA attached to specific understanding of ECA intent of procedure under this article in event jointly agreed distribution plans not carried out had been made clear by Lapham to President Executive Yuan and to Foreign Minister by Embassy even though it was not being set forth in bilateral agreement. Gist foregoing communicated Cleveland by Merchant in phone call for Lapham taken by him.

Sent Department 1202; repeated Shanghai 564.

Stuart