893.50 Recovery/4–2148: Telegram
The Acting Secretary of State to the Consul General at Shanghai (Cabot)
718. Following summarizes present version draft on use of $50 million RFC advance. This transmitted to ECA and Pei. Intention is that steps to implement this or similar supply programs should be initiated immediately following exchange letters of intent.
[Page 502]“State recommended to Bureau of Budget12 that $50 million RFC advance be divided $36.5 million for assistance under section 404–a and $13.5 million for additional aid under section 404–b. Proposed expenditures under $36.5 million advance as follows: cereals 13.5; cotton 13; petroleum 8; fertilizer 1.5; reserve .5.
“Contemplated payments might be made for arrivals in China after date enactment legislation (April 3) with understanding aid advanced for any commodity listed above would be deducted from total aid for that commodity available during year.
“Assuming appropriation $338 million, of which $60 for reconstruction, $36.5 would provide approximately 1.5 months imports scheduled commodities. Proposed allocation not strictly this basis. Judged desirable take account pipeline and possibility reimbursement for orders already placed. For cotton, petroleum products and possibly fertilizers, ECA financing would probably involve reimbursement for goods in pipeline. For cereals would involve placing orders for shipment April, May and June.
“Cereals: $13.5 made up as follows: Wheat or equivalent, U.S. (April–June order and shipment) 18,000 long tons $2,088,000; rice, Southeast Asia (April–June order and shipment) 57,000 long tons $11,400,000. Program will complete cereals purchases in US projected under Aid Program for April–June period. Allocations for US rice for period being taken up by USFRP. China’s unlifted allocations Southeast Asia rice for period through June 1948 approximately 153,000 tons April 1. Propose to lift 82,000 tons under Aid Program of which 57,000 tons would be procured under EFC advance and 25,000 tons after appropriation available. In addition to amounts procured with US funds, SEA13 allocations amounting to about 71,000 tons will remain available until July 1 for procurement by China with her own funds.
“Cotton: $13 million will finance approx 66,000 bales. Substantially more now on order through established channels for April and May shipment from the US.
“Petroleum: $8 million would cover only imports for civilian purposes for which dollar payments required. Programming should take account fact commercial companies schedule shipment several months advance and normally maintain substantial stocks bonded tanks China. On April 1, after deductions for military and sterling imports, value petroleum products enroute China $3 million and value petroleum products in bonded tanks $5.3. (Figures indicate magnitude pipeline; products to be bought under Aid Program for later determination.)
“Fertilizer: $1.5 million as originally suggested Chinese Technical Mission, with which this proposed breakdown discussed. China has paid some $8 million for imports nitrogenous fertilizer during first half 1948, of which more than $1.5 million understood scheduled for arrival China after April 3. Further information necessary to determine relative desirability using $1.5 million for reimbursement or new orders.
“Reserve: $500,000 for possible use necessary surveys or other purposes reconstruction, projects.”
Comments on Deptel 518 April 8 (repeated Shanghai as 622) and 556 April 14 (repeated Shanghai as 661)14 have been informative and helpful (Shanghai’s 821 April 10; 856, 857, 861 April 16; 864 and 865 April 19; and Nanking’s 705 April 1915). Please comment now on proposed allocation RFC advance. No objection to discussion with Chinese your end also. Sent Shanghai as 718. Repeated Nanking as 598.