The Ambassador in China (Stuart) to the Secretary of State
[Received March 14—5:55 a.m.]
557. 1. Embassy is in accord with general position taken by Department before House Committee, and particularly with reservation on earmarking definite amounts for particular countries of post-UNRRA relief for reason stated. (Deptcirtel March 3, repeated Nanking as 255).16 Also believe $60,000,000 is adequate relief target for China, [Page 1300] assuming normal crop and having in mind previously reported Chinese minimum estimate of 1947 food import requirement at $80,000,000. Expectation here is that proposed U. S. expenditure would be restricted to food, fertilizers, seeds and possibly medicine as justified relief items, but not cotton or other materials.
2. Following comments submitted on points of agreement with recipient governments outlined by Department:
- (a) through (c).
- In China questions immediately arise as to extent of direct relief for expected famine areas in interior compared with imported food needs in large coastal cities, and as to methods by which each type of distribution can best be accomplished.
- Very necessary provision for any Chinese agreement. Same approach now recommended for completion basic objectives of UNRRA program, using raw cotton as earning asset. Chinese Government has thus far failed to make available adequate local currency financing for relief or rehabilitation purposes and its budget stringency will be even greater in coming months as inflation continues.
- This suggested condition presents peculiar problem for China. Rationing and price controls have heretofore been resisted by National Government as impractical. Tentative plans now being developed for Shanghai and Nanking under emergency economic regulations promulgated February 16.17 System may later be extended to other important cities. Success of new measures at present problematical, and would have [to be judged] flexibly by U. S. in recommending amount of food for distribution in urban areas if based upon adequacy of rationing or price controls. As protective measure in case of China, therefore believe U. S. should insist, with respect to relief supplies furnished by it, on advance mutual agreement covering (1) amounts of food to cities having price and rationing controls as against amounts allocated to direct relief, and (2) agencies or methods of distribution in both instances.
- On point (2) above we need to know more of Chinese plans for distribution of food under new price and rationing measures, and whether normal or Government controlled outlets will be used to control distribution. In interior, question arises as to possible use voluntary agencies or retaining present CNRRA18 distribution machinery in certain regions. These alternatives being studied and more detailed report will follow, including best available forecast of famine relief areas. Unwise in Embassy’s opinion to make any new program the occasion of extending CNRRA and its past relief activities any longer than necessary. Also appears in U. S. interest to use voluntary agencies for relief distribution wherever possible.
- (g) through (l).
- Agree these points necessary in any agreement with Chinese Government.
3. Question remains to be decided whether we should make even tentative approaches to Chinese Government now on possible arrangement should it be Department’s intention to go through with China [Page 1301] program, and at what time we should commit ourselves to the Chinese in view of broader political ramifications. At same time we should not lose sight of advantages of coordination of distribution of substantial existing undistributed UNRRA food stocks and balance of UNRRA food arriving with what U. S. may later supply, nor of fact that possibility of post-UNRRA relief to China, even in absence of commitments, would be useful leverage in effective utilization of balance of UNRRA supplies. Embassy would appreciate guidance on above.
4. Recognizing unwisdom of Department or its representatives abroad assuming direct administrative responsibilities in country with relief distribution problems such as exist in China, Embassy supports fully proposal to attach relief adviser and staff, including observers, to Embassy in implementation this program. Desirable to make budget provision for extensive internal travel both in following success of relief efforts and in obtaining other relevant economic information. Embassy would appreciate being consulted before appointments of senior officers this connection are confirmed and may have specific suggestions. Possibly, desirable candidates can be found in present UNRRA staff operating in China. Qualifications and experience of some of these employees well known and continuity of their work perhaps desirable if no significant opposition exists in U. S. to utilizing UNRRA-trained Americans for subsequent unilateral aid program. Embassy believes it important, however, to avoid any possibility of selecting relief adviser and assistants on basis of UNRRA or other previous experience who might prove unsatisfactory to Chinese or ineffective in dealing with them in present difficult circumstances.
5. With reference to Department consulting missions concerned about procurement and shipping arrangements, Embassy hopes that all but detailed arrangements can be discussed with Chinese Government here in first instance rather than their representatives in Washington. Chinese coordination and lines of communication between Washington and Nanking have been disappointing in past, and have led to difficulties in dealing with Chinese here when even subsidiary policy questions were raised with Washington representatives.
6. Until further instructions received from the Department, no indication of relief plans under consideration is being given to Chinese.