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

No. 2046

Sir: Referring to the Embassy’s despatch No. 2045 of January 20, 1944,29 in regard to efforts to curb Chinese corruption in business relations between Chinese organizations and the United States Army authorities, I have the honor to enclose a copy of despatch no. 95 of January 6, 1944,30 regarding the purchasing office of the Services of Supply at Kweilin.

In his despatch, which contains an adequate summary, Mr. Service refers to the practice of Chinese buyers employed by the purchasing [Page 8] office of the Services of Supply at Kweilin of taking large commissions from merchants with whom they place orders (a practice known to the Army, which is taking up the matter through Army channels), and he requests that the information contained in his despatch not be made available to the United States Army authorities at this time.

In an airgram dated January 9, Mr. Service states that the United States Army authorities at Kweilin are determined to reorganize the purchasing office, but that this reorganization may have to await the possible replacement of the Services of Supply in that area by the Air Service Command, the supply organization of the Air Force.

The Embassy has been reliably informed that, while Chinese organizations have undoubtedly taken advantage of the opportunity offered at Kweilin to obtain exorbitant profits from transactions with the United States Army and the buyers employed by the Army have increased prices by their practice of taking large commissions from Chinese merchants, the situation on the Army side has not been made better by the placing of authority over the purchasing office in the hands of an inexperienced junior officer, new to China, who has control of the purchase of large amounts of materials and services, functions which his inexperience makes it impossible for him to carry out successfully.

Respectfully yours,

C. E. Gauss
  1. Not printed; for its enclosure, despatch No. 94, December 30, 1943, from the Vice Consul at Kweilin, see Foreign Relations, 1943, China, p. 187.
  2. Not printed.