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1. A general survey of the reasons för and the reactions to the conditions attached to our offer of financial help to China are set out in the memorandum by Mr. Valey on file F 5662/176/10, next to Flag I.

2. The measures contemplated by Treasury (see telegram to Shanghai 1272 on file F 5205/57/ 10, Flag Alpa) did not evoke favourable reactions from Mr. Rogers (see Hong Kong telegram 139 F 5678/176/10, Flag F, and Hong Kong 140 F 5679/176/10, Flag G), from Mr. Hall-Patch (see Chungking telegram 286 on F 5687/176/10, Flag D), or from Sir A Clark Kerr (see Chungking telegram 287 on F 5692/176/10, Flag I).

3. Treasury explained the difficulty with which it was faced in telegram to Hong Kong No. 803 on F 5679/176/10 p.p. "2", next to Flag G: Mr. Rogers and Mr. Hall-Patch answered this telegram still opposing the scheme in Hong Kong 156 F 5701/230/10 p.p"i"next to Flag E) and Hong Kong telegram 157 (F 5752/176/10, Flag H).

4. The suggestion that some preliminary work could be done by discussions in Washington and London has largely fallen through.

(a) As regards discussions in Washington it is hoped that Rogers will come straight on to London as soon as possible and that T. V. Soong will follow soon after (see telegram to Washington No. 3778 on F 5728/176/10, Flag J, and telegram to Washington No. 380. (copy attached) behind Flag H). Phillips has telegraphed to us that unless he was otherwise instructed, he would not enter into discussions with Soong on any matter except the establishment of necessary machinery to administer the different funds (see Washington telegram No. 3330 on F 5752/176/10 pp "1" next to Flag H). Further telegrams giving some of the background to this subject are telegram to Washington 3413 (F 5464/230/10, Flag B), Washington telegram No. 3026 and 3032 (on F5508/230/10, Flag C).

(b) As regards the preliminary conversations here, the proposal appears to have been shelved owing to Mr, Rogers' and Mr. Hall-Patch's opposition (see Hong Kong telegram 156 F5701/230/10, next to Flag E).

S. Hibblethward

3rd January, 1941.

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