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

753. FEA for Fowler.18 State Department and FEA are in complete agreement that under the master agreements title to all lend lease material of whatsoever nature and no matter to what country transferred remains with US Government. US position provides full legal authority for diversion of such China lend lease supplies in India as incapable serving intended end use or no longer urgently required for the war effort. Youngman’s19 statement regarding title to stocks in India is legally untenable.

FEA reiterates previous statements regarding FEA furnished material:

US will endeavor to meet all requirements needs in war effort, for which transportation into China is available, or will be, in foreseeable future.
US will maintain in India a balanced reserve of required materials adequate to meet anticipated-on-shipments-to China but this must be on basis of reasonable turn-over. As situation alters nature of requirements, materials must be diverted which are not needed or for which more urgent need in war effort exists elsewhere.
If, when material is diverted, need for supply of similar material is justified new requisitions will be entertained and your recommendations therefore will command prompt execution subject Washington concurrence. Procedure assures all essential replacement but avoids commitment for automatic replacement.

State Department fully concurs in these statements.

Ambassador’s views on wisdom of taking action desired, especially in view of Vice President’s visit.20 Both State Department and FEA feel that present situation must be settled as promptly as possible. Any temporary unfavorable reaction by Chinese believed preferable to continuing minor source of friction while issue remains unsettled.

It is believed Chinese will recognize the fundamental soundness of US position and recognize its validity as essential to most effective prosecution of the war. We consider it vital, however, that proper exposition be given the Chinese.

Any Chinese apprehensions that there is diminished US desire to aid China are unfounded, but there is a growing aversion in US to idle stockpiles especially in view of spoilage and waste. We believe that best interests of the war effort and of the Chinese lie in active rather than in frozen stocks even if comparatively small. As Chinese [Page 973]needs increase and supplies can be effectively utilized, we are committed to increased volume of aid. We are convinced and Chinese should be assured that US policy is intended to and will result in their receiving more rather than less effective aid in their war effort.

After receipt of Ambassador’s views we will notify him of final decision as to taking action and if affirmative will leave time and method of exposition to his judgment.

  1. Walter W. Fowler, FEA representative in China.
  2. William S. Youngman, Jr., president of China Defense Supplies.
  3. For correspondence regarding the visit of Vice President Wallace, see pp.216 ff.