The Ambassador in China (Gauss) to the Secretary of State

No. 729

Sir: I have the honor to enclose for the information of the Department, copy of a confidential memorandum submitted to me by Mr. John S. Service, Third Secretary of the Embassy, reporting observations made during his recent trip to the northwest, on the alleged misuse and misappropriation of lend-lease and relief supplies sent to China.36

Soon after the fall of Burma to the Japanese, it was reported here that in the haste and confusion of evacuating Rangoon and other points in Burma and of endeavoring to move deeper into China the large quantities of lend-lease and relief supplies accumulated at Rangoon and other points—including places inside the Chinese border—quantities of equipment and supplies were abandoned or fell into private hands and were being offered for sale in Kunming and [Page 589] other places in Free China. It was reported, for example, that lend-lease motor cars, trucks and “jeeps” could be had at Rangoon for the asking or taking, and that all manner of supplies were similarly available to those who could or would move them to prevent their falling into the hands of the Japanese.

For a time there was considerable comment and criticism on this subject heard at Chungking; but the Embassy is not in possession of information to confirm that any substantial volume of equipment or supplies came into the possession of private persons. Lend-Lease operations in China at that time were under the supervision of Brigadier General John Magruder, U. S. A., head of the American Military Mission. No information on the subject was communicated to the Embassy by General Magruder.

There have also been reports from time to time that medical supplies provided by the American Red Cross and other American relief organizations have gotten into private hands and were being sold at extortionate prices. The Military Attaché, when he returned recently from a visit to the Chekiang-Kiangsi front, informed me that while there were no medicines or medical supplies for the troops, quinine and such drugs were being sold on the streets of the cities and towns, at very high prices. I know that the American Red Cross and other relief organizations have been alert to the rumors circulating from time to time that medicines intended for relief purposes were being sold privately. I have no doubt that they have taken and will continue to take all possible measures to prevent supplies reaching private hands for sale; and I do not believe that the more responsible Chinese organizations to which supplies are distributed are parties to such misappropriation.

In a country such as China, and with large quantities of supplies being handled, it is not surprising that some supplies may be stolen or misappropriated and sold for private gain.

In transmitting the enclosed memorandum from Secretary Service, I do not wish to suggest that any serious situation exists as to lend-lease and relief supplies; but it is well to record the reports which have reached the Embassy from time to time as well as the observations made by Mr. Service on his trip to the northwest.

In connection with this general subject, I might mention that some months ago the New York Times local correspondent at Chungking, who is somewhat inclined to exaggeration and to a florid type of reporting, filed a message to his paper stating that lend-lease and relief supplies from Burma were being sold privately in Free China, that steps had been taken by the Chinese authorities to detect the unauthorized possession of such goods, and that the measures taken were so drastic that in Chungking persons appearing in “shorts” [Page 590] fashioned of a cloth supplied only for military purposes were being made by the police publicly to remove the garments and hand them over.

This telegram appears to have slipped past the censors and to have been published in New York with a resulting sharp complaint from Dr. T. V. Soong to the Generalissimo. Dr. Hollington Tong, Vice Minister of Information, in charge of press cable censorship, was held accountable for the report having been passed by the censors. Dr. Hollington Tong telephoned to the Embassy and asked that I be informed that he proposed to withdraw the press-telegraph card of the New York Times correspondent. I advised quietly against any such action, pointing out that the New York Times was most friendly and favorable to China in its editorial and news policy, and that the withdrawal of facilities accorded to its correspondent would not serve the best interests of China. I suggested that if the Times correspondent had transmitted a false report and was unwilling to correct it, the matter might appropriately be taken up with the New York Times through this Embassy or the Chinese Embassy in Washington. I heard nothing more of the matter. The Times correspondent did not approach the Embassy in regard to it, nor was he informed of the approach made by Dr. Tong and the advice given.

I cite this incident merely to indicate the supersensitiveness of the Chinese to criticism of misappropriation of lend-lease and relief supplies. Such misappropriation undoubtedly exists, but I am unable to say that it has at any time reached any substantial volume.

Respectfully yours,

C. E. Gauss
  1. Not printed. It reported evidence of Red Cross cloth and quinine being improperly sold, jeeps in use by persons not in military uniform, aviation tools for sale, and lack of care of lend-lease trucks.