893.50 Recovery/4–1349
The Secretary of State to the Chairman of the House Committee on Foreign Affairs (Kee)
My Dear Judge Kee: There have come to my attention certain statements regarding aid to China made in the House Committee on Foreign Affairs Report of Minority Views entitled “Extension of the European Recovery Program”78 which indicate some misunderstanding of the implementation of Section 404(b) of the China Aid Act of 1948 authorizing the extension of aid through grants in the amount of $125 million to the Chinese Government and of the situation in China.
It seemed evident to the Department from Congressional debate on this section of the China Aid Act of 1948 that the $125 million grants were to be expended by the Chinese Government for whatever purpose it desired, although it was clearly indicated that it was expected that the funds would be utilized for the purchase of military supplies and equipment. It was also evident that these funds were to be expended by the Chinese Government on its own option and responsibility. Under the terms decided upon by the President for the disbursement of these funds the Chinese Government has been required to submit to the Department of State requests for payment with respect to commodities or services procured by it, supported by documentation evidencing the transactions. Under these terms, the Department of State has examined “the documentation submitted by the Chinese Government to determine that the request is not in excess of the total represented by the invoices or other supporting data, and will authorize the Treasury to make the appropriate payments”. It is important to emphasize that the initiative in the expenditure of these funds has been wholly with the Chinese Government and that no payments could [Page 514] be made from these funds unless the Chinese Government submitted a request for disbursement.
The first request submitted to the Department of State by the Chinese Government for withdrawals from these funds was dated July 23, 1948, although the Department transmitted the President’s terms to the Chinese Ambassador on June 28, 194879 and the Chinese Ambassador addressed a note to the Secretary of State accepting the terms on July 1, 1948. It should be noted that the Chinese Government has, however, utilized approximately $9.4 million from these funds to pay for military materiel purchased during the months of April, May, June and July prior to the submission of its first request on July 23. It should also be noted that it was not until August 12, 1948, 33 days after the Chinese Government’s acceptance of the President’s terms, that it had presented requests for withdrawals from the grants totalling $13.5 million.
The statement is noted in the Report of Minority Views that “still another month elapsed before the directive was issued, setting in motion the military-aid program”. Presumably this statement refers to the President’s directive of July 28, 194880 authorizing United States Government departments, establishments and agencies to transfer from their own stocks or procure for the Chinese Government military materiel to be paid for from the $125 million grants. It should be noted that the Department of State took the initiative in arranging for this procedure, which was not explicitly set forth in the China Aid Act of 1948, as a means of assisting the Chinese Government in making purchases of materiel from these funds.
The statement is also made in the Report of Minority Views that “no arms or ammunition from the program reached the Chinese forces until December 1948”. It is difficult to reconcile this statement with the Department’s records that the following shipments of military materiel were purchased by the Chinese Government using funds from the $125 million grants. Approximately 10,000 tons of small arms and artillery ammunition purchased by the Chinese Government from the Office of the Foreign Liquidation Commissioner at a fraction of the procurement cost were shipped to China during June, July and August 1948; 51 fighter aircraft purchased from the same agency were delivered to China in September 1948; and finally, aviation gasoline, aircraft spare parts and communications equipment were shipped to China during the same months.
It is understood that Major General David Barr, who served as the Director of the Joint United States Military Advisory Group in [Page 515] China, has recently testified before your Committee. His testimony regarding the recent defeats of the Chinese Government forces and other phases of the military situation in China has undoubtedly served to explain the true facts of the situation and to show that the present military difficulties of the Chinese Government are not the result of actions of the United States Government.
With respect to the statement that the Administration has never permitted our American advisory group in China to give active military advice and training to Chinese forces at all levels, as it has in Greece under precisely similar circumstances, it should be recalled that in consideration by the Congress of an aid program for China in 1948 the House placed China in the same category as Greece with with regard to military aid in both the enabling bill and the appropriation bill. However, the proviso that China be furnished military aid in the same manner as that being extended to Greece was deleted by the Congress itself prior to the passage of the China Aid Act of 1948. For this reason and from a careful review of the debate in the Congress leading up to the elimination of the provision of the Act in question, this Department retains the conviction that it was faithfully interpreting the Bipartisan Policy of the Congress in not placing China in the same category as Greece with respect to military aid.
It would be appreciated if you would bring this letter to the attention of the members of your Committee.
Sincerely yours,
Assistant Secretary
- House Document No. 323, 81st Cong., 1st sess., pt. 2.↩
- Foreign Relations, 1948, vol. viii, p. 100.↩
- Ibid., p. 124.↩