Mr. John B. Stetson, Jr., to the Ambassador in China (Stuart)28
My Dear Mr. Ambassador: As requested by you I am setting down the views I expressed to you during my visit.
The fundamental objective of the overall bulk sale contract was to transfer surplus goods to the Chinese of which they had need, the possession of which would help in their economic restoration, and to relieve the U. S. Army and Navy of the responsibility of guarding the surpluses scattered as they are in the Pacific.
The contract was signed August 30, 1946. Six months have passed and the accomplishment so far by the Chinese has been disappointing. The enclosed memorandum29 from my office summarizes the accomplishment to date. What disturbs me are certain tendencies which seem to be apparent in the work of Bosey.
I do not wish to complain about it because I recognize two great difficulties on their side. First the fact that Bosey was set up without a separate appropriation from the government but is obliged to finance its operations from its sales. Second the vastness of the undertaking, a formidable task no matter what government were to undertake it.
However, it would seem better from stand point of both governments if we could discern on the part of the Chinese a tendency to create a sales plan at wholesale rather than retail. We would prefer to see the Chinese taking delivery of the surplus outside China more rapidly, as they have taken over the surpluses within China, and to sell them at more reasonable prices more rapidly. The Chinese say they wish to prevent speculation and reduce prices but from what we hear Bosey sells at retail for the highest obtainable internal price. To do this they seem to be more interested in creaming off saleable items which lend themselves to this handling.
From our point of view we fear that we shall still be guarding goods throughout the twenty-two months the contract runs. That at the end of the period we shall be held to account for loss by theft and by deterioration.
I take this opportunity to thank you for the generous hospitality shown us in your agreeable house.