Memorandum by the Assistant Secretary of State for Economic Affairs (Clayton) to the Under Secretary of State (Acheson)

Since your approval of my memorandum dated April 24, 1946 to you on the Chinese Lend-Lease Settlement, copy of which is attached, several further lend-lease problems have arisen regarding China.

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If you approve the recommendations I have stated below,34 I shall issue appropriate instructions.

1. Support to Chinese Troops Assisting in the Occupation of Japan, after June 30, 1946.

The Joint Chiefs of Staff, as noted in Mr. Hilldring’s memorandum to the Secretary of State, dated May 27, 1946,35 supported the participation of one Chinese Division (15,000 men) in the occupation of Japan, and further recommended that the Department of State make the necessary arrangements “for aid to China in the transportation of Chinese forces to and from Japan and such assistance as may be required in furnishing equipment, supply and maintenance”.

This program is in accord with the occupation policy approved by the State–War and Navy Coordinating Committee and it has the approval of General Marshall and General MacArthur.36

The only method under existing legislation by which the U. S. Armed Forces can furnish such services and supplies to the Chinese Forces is lend-lease transfers. If such transfers are to be made after June 30, 1946, an agreement under paragraph 3 (c) of the Lend-Lease Act must be concluded with the Chinese Government before the end of this month.

The dollar value of the supplies and services that may be furnished the Chinese occupation forces from June 30, 1946 to July 1, 1949 (the final expiration date of powers under the Lend-Lease Act) is presently unknown. On the basis of informal estimates, it is not expected that they will amount to more than $25 million. This figure is subject to a wide margin of error.

Such supplies would be provided from existing U. S. military stocks and would not necessitate the placement of new procurement contracts by the U. S. Government. Such aid will be limited to supplies and services which the Chinese cannot supply themselves.

It is recommended, therefore, that the Department approve the transfer program and that an agreement be negotiated under Section 3 (c) of the Lend-Lease Act to permit the extension of supplies and services to the Chinese forces participating in the occupation of Japan after June 30, 1946.

It is further recommended that the agreement provide for payment by the Government of China. This would be consistent with the arrangements for payment by the Chinese for military aid after June 30, 1946 for the reoccupation program, i. e., on a cash payment basis.

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2. Training Programs.

Air force Training Program: Arrangements are now being made, whereby Chinese Airforce personnel will continue to be trained by the U. S. Army in the United States in accordance with a program previously approved by the President, on the basis of a lend-lease cash reimbursement requisition which will be accompanied by a deposit of $24 million to cover the estimated cost of the airforce training program. This requisition will serve as a sufficient legal basis for providing these services.
New Training Programs: General Marshall has now recommended two other training programs; (i) for Chinese Medical Officers; and (ii) for Chinese Officer training in the Ground Services.

Under the first program, 132 Chinese Officer Medical students would be trained at U. S. Army Medical installations, beginning August 19, 1946 and extending over a period of approximately 12 months, or longer, if the student-groups have to be staggered. The Chinese National Government has offered to meet any expense involved in this training program.

The second program consists of the training by the U. S. Army of 325 Chinese Officer students in the basic branches of the U. S. Army, e. g., infantry, artillery, etc.

Best available estimates of the cost of both training programs is $1,250,000.

In view of the present disorganized state of Chinese medical units and the problems of reorganization of the Chinese Army, General Marshall’s Office strongly desires that such training be made available.

It is recommended that this training program be approved by the Department. It is further recommended that the program be provided on a cash prepayment basis similar to the Airforce Training Program.37

3. Military Aid After June 30, 1946.

On the basis of your approval of the recommendation contained in paragraph 4 of my note of April 24, 1946, attached hereto, an agreement is being drafted under Section 3 (c) of the Lend-Lease Act providing for the transfer of military aid in an amount not exceeding $25 million by the U. S. Government of military supplies and services to the Chinese Government under the reoccupation program.

We have now been informed by the War Department that owing to unforeseen delays an additional period will be required to complete the program. It is recommended that the period of completion of the reoccupation program be extended to October 31, 1946 without any increase in the total amount of $25 million.

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4. Navy Supplies for U. S. Navy Vessels Transferred by Charter before June 30, 1946.

The U. S. Navy has found that a part of the “on board” supplies and replacement parts intended to be transferred with ships hitherto chartered under lend-lease Navy programs are not in stock and will have to be procured and transferred after June 30, 1946.

The Navy Department has no present appropriation to cover such new procurement after June 30, 1946. The Chinese would therefore have to deposit approximately $4 million to cover the Navy’s cost.

It is recommended that you approve such a transfer on the basis of a cash-in-advance lend-lease requisition from the Chinese before June 30, 1946.38

  1. Approved by Mr. Acheson on June 12.
  2. Not printed.
  3. General of the Army Douglas MacArthur, Supreme Commander, Allied Powers, Japan.
  4. For further correspondence on the Chinese Air Force training program, see pp. 767 ff.
  5. For further correspondence on the subject of ship transfers, see pp. 786 ff.