The Ambassador in China ( Hurley ) to the Secretary of State
[Received June 1.]
Sir: I have the honor to enclose a copy of a communication prepared at my request by the Chungking office of the Foreign Economic Administration, describing certain services performed by the FEA [Page 1092] on behalf of the Soviet Government in providing transportation for such important commodities as tin, tungsten, bristles, mercury, silk, tung oil and bismuth, from South China to Assam via Kunming.
It appears from the FEA statement that its work on behalf of the U. S. S. R. has been confined to movement of commodities from China to Assam by air, but that such movement has amounted to upwards of one-third of the total transported westbound in the past two years. It appears further that commodities moving by ATC69 are paid on the basis of U. S. one dollar per ton mile and that “payment is effected through Lend-Lease to the U. S. S. R.”. Freight moving on the other hand under the Services of Supply—Chinese National Aviation Company contract, is said to be carried free.
I have inquired further of Mr. Stanton70 regarding the foregoing and he has given me orally the following additional information:
- Most of the Soviet freight has moved by CNAC (free) rather than by ATC.
- The statement relative to ATC movement that “payment is effected through Lend-Lease” in fact means that the amount involved is merely “added to the account”; insofar as Mr. Stanton is aware, this account is not being currently paid.
- With regard to the SOS–CNAC contract, it appears that all the space westbound is being paid for by our Government, the argument reportedly being that since the American Government has little westbound freight, our Government incurs no additional expense by giving the space gratis to the U. S. S. R.
Mr. Stanton had no answer to the question why our Government has contracted for and is paying for the entire westbound space which we ourselves do not need, or why—if we are paying for it but not using it for ourselves—we are not charging the U. S. S. R. as at least a partial reimbursement to our Government. Mr. Stanton’s only comment on this was to the effect that the decision had been made in Washington.
While I note the statement in Mr. Stanton’s enclosed letter that “at no time during the movement of these commodities has there been a shortage of westbound hump space” and that “consequently the movement of U. S. A. materials has in no way been delayed thereby”, I wish to point out that insofar as I am aware this Embassy has not participated in any way whatsoever in the making of these arrangements for the transportation of Soviet Government freight. The Embassy has not been consulted to my knowledge in regard to the policies involved or to the accountability for the services rendered.
In these circumstances, which apparently involve transportation of Soviet Government freight from China to Assam at the expense of [Page 1093] the American taxpayer, I wish to make clear that the Embassy is obviously not in a position to accept any responsibility arising from the execution of this program, and to suggest that an immediate investigation be undertaken, at the instance of the State Department, by the agencies concerned. I should be pleased to be informed of the results of such an investigation.