Office of the Historian

Marshall Mission Files, Lot 54–D270: Telegram

Mr. Thomas B. McCabe 74 to Mr. John K. Howard 75

Washington, 23 November 1945.

Warx 84913. Part 1. Treasury advises they have no reply with respect to Chinese willingness to offset Yuan received by U. S. for sales of surplus property against claims of Chinese Government against U. S. It is assumed you are working with Treasury Representative on this matter. Would appreciate any information you can give us as to status of these negotiations together with your suggestions, if any, as to any help we can give.

Part 2. Re FEA procured supplies originally intended for China but now in CBI76 Theater. Records here show that in Aug 1945 these supplies were offered by Crowley to Chinese Govmt on three C terms which are in substance sales on 30 year credit for dollars at 2⅜ percent interest. No value was finally set and negotiations lapsed but there may be at least some moral commitment which requires that Chinese now be given fair opportunity to purchase. FEA representative in China has indicated desire to declare these supplies surplus to FLC77 in which case those in India would go to Schleiter78 for disposal. Army is also pressing for this course. Because of possible commitment to Chinese we have instructed that this course be temporarily deferred but we have also requested Chinese representatives here to advise Chungking Government that surplus route will be followed unless an offer is made promptly for these supplies. Request you follow this up and advise us of potential Chinese Govmt interest. If you find such potential interest you are authorized to negotiate for [Page 1184] sale either on three C terms or on Yuan terms similar to those authorized for negotiations as to surplus located in China. We consider latter terms preferable. Assume you can secure inventory from Stanton, FEA representative in China.

Part 3. Treasury’s proposal to authorize acceptance of Yuan also extends to surplus located in eastern China as of approximately VJ Day and you are authorized to negotiate for sale of such surplus if you so desire. However, any surplus items moved into China since then or in the future are not to be included in general deal except in small amounts for convenience, but when estimates for new imports into China are known this matter is to be referred for consideration.

  1. Foreign Liquidation Commissioner and Special Assistant to the Secretary of State.↩
  2. Special Representative of the Office of the Foreign Liquidation Commissioner for the China Theater.↩
  3. China–Burma–India.↩
  4. Office of the Foreign Liquidation Commissioner (OFLC).↩
  5. Walter B. Schleiter, Central Field Commissioner, India-Burma Theater, OFLC.↩