893.50 Recovery/12–2848
Memorandum by the Director of the Office of Far Eastern Affairs (Butterworth) to the Acting Secretary of State
Subject: Discontinuance of ECA Distribution in Communist-controlled Areas of China
In accordance with my memorandum to you of December 18, 1948 on the above subject, I recommend that ECA be requested immediately [Page 667] to regulate its commodity shipments to Central China so as to ensure that stocks are not accumulated beyond the levels required for distribution during an estimated period of transition from Nationalist to Communist control. Access to Tientsin by sea appears to be effectively cut off by the Communists.
Definition of the stock ceiling to be maintained for particular commodities would require study in consultation with ECA since it probably should be determined, in part, by operational factors. In general, however, I should say that four weeks would seem to be a liberal maximum transition requirement. In the case of petroleum, it may be necessary to allow six weeks or more. Projections of ECA petroleum shipments should, of course, take into account the overall petroleum stock position of the private companies. The Department is currently exploring the possibility of limiting petroleum stocks with the private American companies, ECA and the British Embassy.
If you concur in this recommendation,6 I shall be glad to consult with appropriate ECA officials regarding its implementation with Mr. Labouisse.7