893.48/6–2147: Telegram

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

812. In presenting relief needs to Congress it was pointed out that total needs of all countries amounted to $610 million. (Appropriation [Page 1323] Committee has been advised that this has since been increased to $665 million.)

Figure of $60 million re China was cited as representing total 1947 minimum food import requirements exclusive of UNRRA deliveries. This figure taken from CNRRA estimate given Dept Dec 1946. Dept regarded $60 million as maximum relief goal, exact amount to be determined in light China’s ability to provide foreign exchange to meet food needs and pointed out to Congress that program would be undertaken only if needed to assist in meeting emergency famine conditions Reurtels 1370 June 21, 1380 June 24, 1395 June 25. Of $350 million authorized minimum $15 million and possible maximum $40 million will be transferred to International Childrens Fund. Additional $5 million is reserved for ocean shipping cost of private voluntary donations. This means US would be able to meet less than half of estimated needs. It is not yet certain that Congress actually will appropriate even the full $350 million appropriation.

It seems unlikely that more than $30 million could be allocated to China assuming full $350 million. This based on need for meeting proportionate share in European countries where these resources may be sufficient to have marked effect in preventing economic collapse. In case of China it is clear that funds in any case are insufficient to make appreciable effect on Chinese economy. Therefore our objectives can be only (a) to help meet spot hunger conditions in particular areas and (b) to give token of our interest in Chinese. It is unfortunate that Chinese may have assumed they could get program of $60 million but it should be pointed out to them that (a) all countries estimated their needs at much higher levels than our estimates and (b) the appropriations authorized would provide for less than half of our own estimates of relief needs, leaving balance for other contributors.

Since purpose of relief program is to provide foreign exchange to countries which otherwise could not purchase food and other relief supplies, the existence of relief program cannot of itself effect national or international allocations of items in short supply. US representatives on allocating bodies will give sympathetic consideration to Chinese requirements in light of other needs and availability of supplies.

Dept favors sales of supplies to extent they are made available under reasonably controlled price and distribution arrangement to people having local funds. However believe that distribution at interior points could in some cases be most effective if supplies given directly in exchange for work.

Emb is correct in assumption that proceeds of any sales can and should properly be used for relief work in China. Both private [Page 1324] agencies and Chinese program for assistance in interior could benefit from such funds. It was tentative view here that Chinese should themselves agree to finance actual distribution costs of US imported relief supplies. This matter however certainly open to reconsideration if it is not feasible.

Dept is quite willing to give conditional support to controlled distribution plan, re para 7 Embtel 1380, but in view limitations on amount of our relief program for China believe careful consideration should be given to quantity of supplies which should (a) be sent to particular areas in interior (b) be distributed through private agencies (c) be devoted to support of controlled distribution system. In any case we should not get ourselves in a position where Chinese could place blame on us for any breakdown in the controlled distribution system.