Office of the Historian

893.5151/984: Telegram

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

Chungking, January 26, 1944—3 p.m.
[Received January 26—2:49 p.m.]

166. To Secretary of Treasury from Adler: Dr. Kung has asked me to transmit the following message:

“Your candidly communicating with me about the reports reaching you concerning the building of air bases in China is appreciated and I shall answer in the same spirit. I specifically know there has never been any deliberate delay in such building as my Government’s policy [Page 864] is to cooperate fully with the American war effort in China. However, it is necessary to realize the tremendous difficulties in pushing these projects, as we have scarcely any power machinery for this work, almost all of which must be performed by laborious manual labor of tens of thousands of men gathered for this purpose. Moreover, rock has to be cut and broken and moved some distance by this means and consequently progress is slower than we should like.

Reference your 75 of January 15. The legal procedure pursued by us with respect to the national Treasury disbursements is that all orders issued by the Government for making authorized payments must be checked and countersigned by the Comptroller General and the Government’s auditing department, respectively, before money can be withdrawn from the bank. While first choice is given to military requirements within this legal pattern and my Ministry tries to effect prompt payment, it is not so easy to furnish actual cash. 1944 estimates show that only about half of our large war expenditures will be met by nonborrowed receipts, and the consequent sizable deficits covered by Central Bank loans bringing about expansion of note issue. Therefore, with higher American Army disbursements in China, there is a greater need for a further rise in note issue. The 80 million notes of 50 fapi and 200 million of 20 fapi which are equivalent to the currently estimated costs of CN dollars 4 billion of the airfields and related work in the Chengtu area alone respectively entail approximately 60 and 150 plane loads from India.

China has so far appropriated the sum of 9278 million fapi for airports and other war outlays on behalf of the American Army, of which 5454 million has already been paid out, including 3725 for building airfields, 532 million for subsistence, 507 million for roads, 3 million for housing, and 334 million for transportation. 2808 million yuan of the remainder is for air bases. The overall cost of work done and now in hand probably exceed 10 billion fapi as the Chengtu area projects are likely to be higher than originally estimated. This sum, which does not include roughly CN 2 billion spent directly by American Army acquisition of Chinese currency for U. S. currency, already equals U. S. half billion on the basis of the existing official rate which the Stabilization Board set with participation of U. S. and British members.[”]63

  • [Adler]
  • Gauss
  1. For remainder of message, see telegram No. 180, infra. ↩