Marshall Mission Files, Lot 54–D270: Telegram

Colonel James C. Davis 50 to General Marshall, at Chungking

90012. During the War FEA51 procured for shipment to China by way of India quantities of miscellaneous civilian type supplies known as “Charlie” type CDS52 supplies. There now remains stranded in India approximately 60,000 tons of an estimated value of $50,000,000. The largest item is 7,500 vehicles and spare parts. Upon termination of civilian Lend Lease assistance in September Mr. Crowley53 of FEA offered to sell these supplies to the Chinese under section 3–c, Lend Lease Act,54 against payment in 30 years [Page 1061]with interest at 2⅜%. According to FEA–FLC55 here China indicated its desire to accept this offer but it was then withdrawn by Crowley56 with the statement that the disposition of supplies was to be considered in connection with surplus disposal policies. However the FLC and FEA felt that some moral obligation to the Chinese may still exist and accordingly the Deputy FLC Commissioner in China, General B. A. Johnson, on behalf of FEA has had discussions with the Chinese on the matter.

2. The present situation follows:

a.
India–Burma Theater has custodial responsibility for these supplies.
b.
The title remains with FEA.
c.
The supplies have not been declared surplus to FLC by FEA pending clarification of any possible obligation to the Chinese as a result of the Crowley offer.
d.
Custody of these supplies is now interfering with evacuation of India–Burma Theater.
e.
General Johnson from Shanghai has notified FLC Washington that he proposes to resume discussions with Chinese on 23 December to obtain a statement of their interests. Results if any of previous discussions not known here.
f.
In light of the situation in India–Burma Theater the War Department is pressing FLC and FEA to make a decision by 1st January. In interests of closing out India–Burma War Department prefers that supplies be declared surplus to FLC in order that disposal may begin promptly. War Department fearful of further prolonged negotiations and delay in connection with any special arrangement to sell to the Chinese.
g.
FLC–FEA not willing to make decision here to declare supplies surplus or to set a deadline for Chinese decision without your coordination. Accordingly FLC has notified General Johnson to keep you fully informed.

3. It is recommended that you:

a.
Notify State Department that discussions should be continued with a deadline date for finalizing the arrangements for purchase and acceptance of custody in India by the Chinese for example 10 January.
b.
If however in view of your mission you consider it undesirable to permit the Chinese to make this purchase at this time, you notify State that these supplies should be declared surplus to FLC. In this event China might still bid for purchase of the supplies subject to right of prior purchase by India Government.
c.
Notify General Johnson in Shanghai of your action.

OPD57 comments follows: The War Department preference stated [Page 1062]by Davis in paragraph 2f above is based on India-Burma Theater’s view that immediate declaration of surplus would result in earliest termination of Theater’s custodial responsibility. From information here obligation if any to Chinese is too vague to justify further delay. While Chinese requirement for vehicles is apparent, prolonged discussions on terms and arrangements are unacceptable and finalizing of all arrangements by 10 January seems very doubtful. Therefore recommend property be declared surplus to FLC.

  1. Representative in Washington of General of the Army George C. Marshall, who was Special Represenative of President Truman in China.
  2. Foreign Economic Administration.
  3. China Defense Supplies.
  4. Leo T. Crowley, Administrator of the Foreign Economic Administration.
  5. The reference is to section 3 (c) of “An Act to Promote the Defense of the United States”, commonly known as the Lend-Lease Act, approved March 11, 1941; 55 Stat. 31.
  6. Office of the Foreign Liquidation Commissioner (OFLC).
  7. In his letter of September 18, 1945, to Army–Navy Liquidation Commissioner Thomas B. McCabe, Mr. Crowley declared these supplies surplus and requested Mr. McCabe to arrange for their disposal.
  8. Operations Division, War Department.