103.9169[/2–2645]: Telegram

The Chargé in China ( Atcheson ) to the Secretary of State

302. To Crowley for Cox23 and Willauer from Stanton and Joyner. Following facts are called to attention in connection with China urgent need for counter-inflationary purposes of large quantity cotton textiles with delivery commencing immediately. Our 174, February 6; your 274, February 17.24

1.
Inflation during 1945 has dangerously increased. Comparative index for December 640, now probably over 1,000.
2.
Increased Chinese Army pay and improved rations imposing great increase in Government’s monthly deficit.
3.
United States Army expenditures in China also obviously increase this deficit in national currency.
4.
No substantial increase possible Government’s income and Dr. Soong assures Government’s non-war expenditures now drastically curtailed.
5.
Unless successful anti-inflationary measures very soon made effective, China’s price structure will deteriorate so as to prejudice United States Army 1945 program in China.
6.
Two thousand tons monthly of cotton textiles to be bartered by United States Army for supplies and/or sold by Chinese Government to absorb currency can prove effective assistance this regard. Only cotton cloth can receive necessary wide distribution to prove effective.

We ask your assistance to secure highest possible priority to obtain and ship cotton textiles as follows:

a.
For cash purchase 15,000 tons delivery in United States 1,500 tons monthly commencing March.
b.
Under Lend-Lease 7,000 tons for military requirements with delivery 1,000 tons monthly commencing April.

[Page 1063]

Headquarters here is cabling War Department and Treasury Attaché25 here [is] calling [cabling] Treasury26 supporting this program. Dr. Soong advises Ambassador Hurley carries letter27 thereon from Generalissimo28 to President.

Reference your 274, February 17,29 used garments not suited market requirements here while raw cotton because of transport difficulties only suitable as and if Indian spindles available which seems unlikely but Dr. Soong enquiring.

Headquarters here particularly requests no publicity. [Stanton and Joyner.]

Atcheson
  1. Oscar Cox, Deputy Administrator of the Foreign Economic Administration.
  2. Latter not printed.
  3. Solomon Adler.
  4. Embassy’s telegram No. 303, February 27, 8 a.m., not printed.
  5. Dated February 17, not printed.
  6. Chiang Kai-shek, President of the National Government of the Republic of China.
  7. Not printed; it suggested shipment of 15,000 tons of raw cotton and large quantities of used clothing to help meet China’s textile requirements (103.9169[/2–1745]).