893.50/12–2045: Telegram

The Consul General at Shanghai ( Josselyn ) to the Secretary of State

396. From Chargé in Shanghai. “Locke promptly established upon arrival most cordial and friendly personal relations with Embassy and maintained them throughout his mission in China (ReDeptel 1936, Dec. 4). He kept us fully informed as to his itineraries and in personal conversations at various times described his activities as consisting of making inspections of industrial installations, discussing existing conditions with various Government officials and industrial managers and gathering statistical and technical information upon which to base his recommendations.

Sent to Department, Shanghai serial No. 396, Dec. 20, 2 p.m.; repeated to Chungking.

His first actual report to Embassy was memorandum dated Nov. 21 prepared in response to Embassy’s request and submitted a few days before his departure. This memorandum was partially quoted Embassy’s telegram 2035, Nov. 25. His recommendations including plan [Page 1378] for establishment of Supreme Economic Council were not discussed with Embassy prior to submission to Chinese. However, such recommendations were read to us immediately prior to public announcement.

For your confidential information we are informed by a prominent American in high position as adviser to Chinese Government that Chinese humored Locke out of respect to President Truman and to please Donald Nelson. From the apparent ‘run around’ given Locke upon his arrival, from the apparent indifference of Soong to his mission and from remarks dropped here and there Embassy gained the impression that Locke’s mission was not considered by Chinese to be qualified either economically or technically to cope with China’s complicated and grimly [serious?] problems.

In opinion of Embassy, the most significant feature of law establishing Supreme Economic Council is provision giving Council full authority and final decision regarding activities of various ministries and agencies of Government, thus making possible overall planning and coordination. Embassy heartily agrees that there is an urgent need for effective planning and coordination and if establishment of Council will bring about such a result Locke’s mission will have made an invaluable contribution to China’s floundering economy. Soong working with same Ministry officials who by this law automatically become members of Council has been working to this end. It remains to be seen to what extent the establishment of Council will aid in the accomplishment of announced objectives. Also of interest and concern will be the extent to which the authority of Council will be used to control and restrict private enterprise.

There has been little public reference to Council in press or otherwise since first publicity planned and initiated by Locke working through Minister of Information. We are informed that no members of the Council other than those provided for by law have yet been appointed, namely President and Vice President [of] Executive Yuan, the heads of Ministries and the Director of UNRRA [CNRRA]. Chiang Mon-lin, Secretary General of the Executive Yuan and concurrently Secretary General, Supreme Economic Council, is reportedly in charge of recruiting Council staff but little progress is understood to have been made. Robertson.”

Josselyn