Memorandum by the Chief of the Division of Chinese Affairs (Ringwalt) to the Director of the Office of Far Eastern Affairs (Vincent)

Subject: Status of Turnover of Surplus to the Chinese under Surplus Sale Agreement

The following is the text of a statement on the above subject dictated to me over the telephone by Mr. Murphy41 of OFLC:

“The surplus sale with the Chinese Government was signed on August 30, 1946. In its early stages the turnover of surplus to the Chinese proceeded rather slowly. This was due in a large measure to shipping supply plans of the owning agencies, screening requirements of the owning agencies and more or less normal operational and procedural delays to be expected when a program of this nature is being set up. However, it should be noted that during this period the Chinese would have been unable to handle any appreciable quantities of surplus because they had failed to make timely arrangements to carry out their part of the operation. They were slow in making the necessary preliminary inspection trips and especially dilatory in setting up their organization and chartering ships for taking possession of surplus stocks made available to them.

“Recently the owning agencies and OFLC have resolved most of the procedural and operational obstacles and the Chinese have been notified that large quantities of surplus are available to them. They are unable to handle expeditiously the quantities which are ready and waiting for them to take possession. It is expected that from now on ample surplus will be consistently available to the Chinese. However, unless the Chinese expand and augment their facilities it appears that they will not have the ability to receive and ship surplus in an orderly manner as fast as we can produce it.”

Mr. Murphy informed me that OFLC was having a very difficult time in evaluating reports from the field as those from Colonel Stetson on the one hand and General Kiang on the other hand were almost completely contradictory. Judging from the tenor of recent messages, however, OFLC is becoming convinced that the Chinese authorities are taking advantage of every possible opportunity to procrastinate and complain, probably with a view to developing a case for the reopening of the Surplus Sale Agreement on the basis of Article 5 thereof, which states in part: “… it is understood that if a material disparity is found to exist between the property sold to China hereunder and the consideration given therefor by China hereunder, the two Governments will consult together to fix an appropriate adjustment in the price paid.”

It is generally believed by OFLC that no effort whatsoever will be [Page 1254] made by the Chinese to move surplus stocks from at least six of the smaller Pacific islands involved.42

A[rthur] R. R[ingwalt]
  1. Francis T. Murphy, Area Director, Pacific and China, OFLC.
  2. Marginal comment by James K. Penfield, Deputy Director of the Office of Far Eastern Affairs: “The Chinese side of this story, as related to me by General Ting on Guam, is equally unhappy—on the smaller islands question, for instance, he said that there is 25,000 tons on Majuro where there is no port and no equipment for handling it—they estimated that it would cost 2 or 3 times what the stuff is worth just to remove it from the island.” Maj. Gen. Ting Tien-yung was Commanding Officer, Bosey, Guam.