Memorandum by Major General Donald H. Connolly to the Under Secretary of State for Economic Affairs ( Clayton )

Reference the attached radio37 sent by the War Department to its Pacific commands, Royall38 is urging a speeding up of turnover activity in the Pacific. It has been lagging badly chiefly with respect to the surplus sold to China and largely due to China’s vacillation and awkwardness in getting at the job. We share this impatience and are applying all possible pressures to expedite the turnover. Our contract with China provides for a system of notification of availability of surplus and an allowance of sixty days in which China agrees to take over the property with the understanding that the Army or the Navy may withdraw their custodial care after sixty days.

We have felt that from the State Department’s point of view some consideration was due China in terms of not loading them with notices of availability beyond what is humanly possible to accomplish. As a matter of fact McCabe and Petersen39 when negotiating the deal at Shanghai last August gave oral assurances to China that we would not pass the property to China faster than she could reasonably absorb it. However, the danger is present that our accommodations will be taken unfair advantage of and the movement delayed by the recalcitrance of China.

In his cable Royall is asking Army commands in the Pacific to move with all possible dispatch in the matter of placing notices of availability in our, FLC’s, hands, and is asking us in turn to require our offices to immediately pass these notices of availability to the recipient governments, China and the Philippines, with the understanding that the sixty-day rule will be strictly enforced. We think it a wholesome thing and perhaps one which can be applied with good moral effect to pursue this course. Moreover, if we do not accede to this request by the War Department, we are putting ourselves into a position of possibly causing a delay with resultant expense to the War Department. If this proves to be the case, we shall be asked to support a request to Congress for additional funds for the War Department which will be embarrassing. However, I am reserving with Royall the option of bringing this issue up for further review if it later develops that our exactions on China are unfair and attended with any serious hazard to good relations.40

  1. Telegram No. 93821, March 11, not printed.
  2. Kenneth C. Royall, Under Secretary of War.
  3. Howard C. Petersen, Assistant Secretary of War.
  4. In a memorandum of March 21 to Major General Connolly, the Assistant Secretary of State for Economic Affairs (Thorp) indicated his full concurrence In the policy line being followed by Connolly.