Foreign Relations of the United States, 1950, East Asia and the Pacific, Volume VI

611.93231/12–1650: Circular telegram

The Secretary of State to All Diplomatic Offices ¹ confidential

priority

Washington, December 16, 1950—2 p. m.

278. At midnight Dec 16 US Govt placed under control all Chi Communist assets within US jurisdiction. IMF was appropriately notified.

US Govt also prohibiting all vessels US registry from calling at Chi Communist ports.

We recognize that many countries which are disturbed at situation in FE may tend to interpret these moves as leading to full econ warfare and increasing risk of drawing us into full scale war with Chi Communists. We wish to avoid this interpreation and to this end it is our intention to play down these steps to the fullest possible extent.²

Fol for ur use in answering questions:

1. US considered this step necessary to accomplish effective control econ relationships between US and Communist China envisaged by institution Dec 3 of requirement that no export wld be permitted to Communist China from US without validated export licenses.

2. Re new prohibition US shipping, make point that merely intended tighten previously existing restrictions which had largely eliminated US registry ships from Communist Chi ports of call.

3. Action was forced upon US by Chi Communist milit aggression.

4. Not our desire these restrictions become permanent, but they are necessary so long as willful groups Chi Communist leaders subvert China’s best interests and welfare Chi people to serve purposes of internatl communism.

5. US continues hope China will abandon action which runs counter to interests and objectives UN in present Far Eastern crisis.

6. In admin of the controls over the econ relationships between US and Communist China, proper regard will be given to interests of areas in FE under jurisdiction of friendly countries.

See wireless bulletin for text Dept press release this subj.³

Acheson

1. This message was also sent to the Offices of the United States High Commissioner for Germany and the United States Political Adviser in Japan, the United States Mission at the United Nations, and the Consulates General at Hong Kong and Singapore.

2. On December 21, Mr. Lay forwarded to the National Security Council a Progress Report on NSC 92, prepared by the Department of State, which contained the following paragraph:

   “The Commerce Department continues to place under control all exports from the United States to Chinese Communist destinations, Hong Kong, and Macao under requirement of a validated export license. Although no license applications are being approved for Communist China, the Department of State has advised the Department of Commerce that it should not, for the time being, announce that all license applications will be denied.” (NSC 92/1)

3. For the text of the press release, see the Department of State Bulletin, December 25, 1950, p. 1004. It indicated that the same financial controls were being applied to North Korean assets, purely as an administrative measure since North Korean assets in the United States were negligible.