893.24/12–646: Telegram

The Ambassador in China (Stuart) to the Secretary of State

2049. Following official statement released by Board of Supplies of the Executive Yuan on December 4:

“Recently there was an attempt in the newspapers to review and interpret the China–US surplus property transaction, which in our opinion contained errors of fact and conclusion. The Board believes the public will be helped to a correct understanding of the transaction by these facts:

1.
After prolonged negotiations an agreement was reached in Nanking on June 21 this year, after which the American negotiators returned to Washington to obtain final approval. The Government of China based its commitment to sign a formal contract on the obvious premise that the property would be kept intact during the intervening period. The nature of the property ranged from high value articles to scrap.
2.
The price commitment of necessity assumed and required that amount of each type of property would not change. Negotiations were resumed in late August, and up to the time for formal signing there was no suggestion that there had been any change in the property under discussion. In fact convincing evidence of the intent and the effort to keep the property intact is borne out by the fact that only one major variation has so far been identified and both Governments are endeavoring [to adjust this. Plans and policies for transporting]40 and disposing of this property have been carefully worked out which are completely in accord with the letter and spirit of the agreement. Well-known American companies have been employed to assist in reconditioning and transportation. To the maximum extent possible regular channels of distribution will be utilized. The pricing policy is designed to be anti-inflationary and at the same time not unfairly competitive with other distributors. The Board of Supplies hopes for the maximum cooperation of the trade and the public in making this operation one of maximum public benefit.
3.
In the handling of the surplus properties, the Board of Supplies abides loyally by the spirit in which the overall contract was signed. Furthermore all materials are being disposed of through proper channels and without discrimination any party. The accounts of the boards are closely checked by the Ministry of Audit and can be shown to any bona fide organized bodies doubting the sale and distribution methods. Thus, the possibility of any surplus property being used to profit an individual in the Government can be ruled out. The insinuation made in this connection was obviously made by some commercial firms or individuals in the United States who sought to obtain some of [Page 1098]the properties at low prices in order to make huge profits for themselves.”

Stuart
  1. Bracketed insertion based on War Department telegram No. 6741, December 11, 1946, from Nanking.