Memorandum by Mr. William E. Vogelback

Memorandum of Agreements Reached at Nanking, China June 15th to June 21st, 194625

For the United States: J. K. Howard, W. E. Vogelback, B. A. Johnson.

For China: Dr. T. V. Soong (Prime Minister), Gen. P. Kiang.26

Concurred in by General Geo. C. Marshall, U. S. Ambassador to China.

Agreements Reached June 15

1. That the agreement involves the sale to China of all property of the United States Government located in the area under the jurisdiction of the Central Field Commissioner for the Pacific and China, which has been or will be declared “Surplus” except (a) property under contract for sale at the time of signing this agreement, (b) property to which the Philippine Government is entitled under the terms of the Tydings Bill, (c) ships and other maritime equipment, (d) fixed installations and (e) aircraft and parts peculiar to aircraft.

2. That prior to the signing of this agreement, the shipment to the United States of excess property will have ceased.

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3. The United States Government will extend sufficient credit to (a) purchase the surplus, (b) pay the cost of transportation to port of destination, (c) purchase such spare parts as are required to rehabilitate the property purchased, (d) engineering and supervisory services.

4. That China will engage the services of some large, reputable engineering and contracting firm, to plan, direct and supervise the transfer of property from the U. S. Government to China.

5. That immediately upon the signing of this agreement, China will send representatives into the field where the property is located for the purpose of monitoring the property.

6. That the care, maintenance, rehabilitation and outloading will be done by China, and that the U. S. Government will arrange with the foreign countries upon whose soil the property is located, for permission to employ Chinese troops or other labor within such countries.

Agreement Reached June 16

7. The overall price of surplus property on the basis of “where is” “as is” is 22% of the procurement cost, subject to certain mutually satisfactory stipulations on the condition of ordnance and engineering equipment.

Agreements Reached June 21

8. That “no self-contained operating unit of ordnance or engineering property shall be paid for under the 22% clause, unless there are actually present in the item the major parts, including the major components thereof, the cost of which aggregate at least 80% of the total cost of such items, provided that they are not available from items determined to be salvage. Such major parts are not to be damaged as that term is hereinafter defined. By ‘damaged’ it is meant that the part has been rendered unusable for its purpose and/or is structurally unsound. The cost of such parts is to be the list cost reduced proportionally so that the aggregate of all parts of an item will equal the list cost of the item.”

9. The items which do not qualify for payment under the 22% clause in accordance with agreement 8 above are to be considered “salvage”. China will construct and operate a salvage depot or yard, and will strip this salvage of its usable parts. These parts will be held for the account of the U. S. Government. All salvaged parts taken by China for use, sale or otherwise are to be paid for on the basis of 15.4% of the procurement cost of such part or parts. All parts not taken by China become the property of the United States for its own disposition.

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10. That “Scrap” is that material, equipment or parts which have no value in use except for the material content thereof. “Scrap” is to be turned over to China in consideration for assumption by China of the obligation to dispose of all residual scrap piles in such manner as will hold the U. S. Government harmless for claims of damage of every description arising out of the storage, movement or disposition of such scrap or other surplus property.

11. That China will set aside a percentage of the net profits arising out of the execution of this agreement for the purpose of establishing an educational fund for exchange scholarships with the United States in accordance with a plan approved by the Cultural Relations Division of the U. S. Department of State.

W. E. Vogelback
  1. A detailed account of the negotiations leading to the Nanking Agreements is included in an undated brief prepared for Mr. McCabe by Mr. Vogelback (893. 24 FLC/8–1146).
  2. Piao Kiang, Director of the Board of Supplies of the Chinese Executive Yuan.