893.24FLC/12–345
Mr. John K. Howard to Mr. Thomas B. McCabe
CFB 16411. This is further answer to your Warx 84913 and supplements our answer of 29 November CFBX 16087. Part 1 answer follows: U. S. Army made agreement for sale of army property in West China on November 29. Contract has been summarized in radio CFB 16314 dated 1 December 194587 to War Department, parcel number 2953 of courier pouch number 43–1086. FLC and Treasury were present during Army’s negotiations up to final stages but had nothing to do with the latter. This matter thoroughly covered by letters Howard to McCabe dated 11, 13, 14, 17 and 30 November.88 Part 2 answer follows: While we still believe our answer to para 2 contained in our CFBX 16087 is correct, we are approaching the Chinese Government to get a direct refusal on certain “arsenal” supplies which might be of peculiar interest to China. However, the big percentage of the supplies involved are to be sold in India. Part 3 answer follows: [Page 1191] Present status of disposal of East China surplus is as follows: (a) Soong has no objection to our mandatory provision for preference to other U. S. Agencies and UNRRA. (b) Soong has agreed to sales for dollars to foreign, that is, non-Chinese, non-profit organizations such as religious, educational and philanthropic organizations, subject to their paying normal customs duties, if any. (c) We are negotiating with China for right to sell for dollars to Amerian Nationals and corporations doing bona fide business in China and Chinese Nationals and corporations, (d) We have discussed with the Chinese Government representative the formation of a Chinese commission to purchase residual surplus property in bulk sales by packages. From your part 3 we understand that authorization given Howard by Mister White on 24 October applies to surplus property located in East China as of approximately V–J Day. Request same authority for disposal of property moved into China since V–J Day since it is impracticable to distinguish between these two groups of property. New and related subject: Now that West China surplus property has been disposed of by Army, we will help Treasury attempt to negotiate offset agreement according to original Treasury Department instructions with China to cover balance of surplus property in China.