893.48/8–247: Telegram

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

1642. Par 5. Following points and comments require clarification or consideration by Dept in connection with foreign aid program.

(a)
Staff. Development of U. S. position and negotiation on major points with Chinese have reached a stage where organization of relief advisory staff is most urgent matter. Neither Boehringer nor Adler, Embassy officers presently taking lead in policy formulation this program, can be spared for further active role other than advisory. Gilpatric only officer in Shanghai familiar with relief problems. Because of uncertainty his stay in China after Sept and numerous other responsibilities including continuing UNRRA problems, he may not be readily available this purpose beyond assisting completion of negotiations, helping to organize relief advisory group and participating in working out of controlled distribution program. U. S. Mission in [Page 1332] China, as Butterworth can attest, therefore needs entirely new staff for foreign aid program, and particularly competent one in view of complications involved.
[Here follows discussion of staff recruitment.]
(b)
Embassy desires clarification proposed term of foreign aid operations in China, Rap 1855 indicates shipments may not be made from U. S. during first semester 1948. Believe shipments next year may be useful for China by staggering deliveries when needs are most acute from February on, and in event anticipated food allocations during fall do not fully materialize. Other supplies should be permitted to arrive throughout fiscal year 1948. It is assumed wind-up of local currency expenses and allocations of sales proceeds can continue after June 1948, for reasonable time.
(c)
To provide funds for voluntary agency activities and local operating expenses of IT. S. relief advisory mission, [Central] Bank will make unlimited no-rate and no-interest advances of CIST funds to be repaid from sales proceeds. Does Dept authorize such ad hoc financial arrangements, based upon anticipated delay of supply arrivals during next few months?
(d)
In view UNRRA experience under basic agreement and uncertainty of distribution controls here, would Dept favor title on supplies to China to remain in hands of relief advisory mission at ports of entry? Embassy believes this would have advantages in maximizing allocations to voluntary agencies and would insure regulated U. S. participation in controlled distribution as well, thereby preventing abuse of U. S. supplies. Point has been raised with [Chinese] but should be introduced prior to negotiation of relief agreement if Dept concurs.
(e)
Embassy desires to avoid potential inconsistencies in allocation and delivery procedure as follows:
(1)
Not clear here whether food allocation is flour or wheat equivalent. Rap 18 leaves this point open. Cirairgram from Agriculture of June 20, 8 a.m.,56 indicates quantities available are in long tons of wheat rather than flour (Chinese, incidentally, will probably want at least half their deliveries in wheat to keep local milling industry operating);
(2)
Flour imports presently being returned to normal channels under certain conditions based upon controlled distribution plan objectives (See ConGentel Shanghai 1741, July 18 to Dept; Deptels 785, June 26 and 901, July 22 to Nanking, and Embtel 1591, July 26.57) If Chinese agree this arrangement on flour, Embassy hopes [Page 1333] to have foreign aid program procurement merged with it to extent that flour is involved.

Repeated Shanghai 674 by courier.

Stuart
  1. Telegram No. 904, July 22, 8 p.m., to the Ambassador in China, p. 1326.
  2. Not printed.
  3. None printed.