Foreign Relations of the United States, 1947, The Far East: China, Volume VII

893.20 Mission/7–747

The Ambassador in China (Stuart) to the Secretary of State ³³

No. 863

Nanking, July 7, 1947.
[Received July 17.]

Sir: I have the honor to advert to the programs presently being undertaken by the Army Advisory Group and the Naval Advisory Group in China and to enclose a copy of a letter which Embassy addressed to the Chief of the Army Advisory Group, Nanking on June 5, 1947 asking that a brief analysis of the Army Advisory Group program be prepared. An identical letter was addressed on the same day to the Chief of the Naval Advisory Group.

Replies have now been received to the Embassy’s inquiries and are currently being studied by the Executive Office of the Embassy. Meanwhile, since the information is of immediate interest to the Department, copies of the two replies are enclosed.

In addition to eliciting information, the Embassy’s inquiry has also had the immediate effect of causing the Army Advisory Group and the Naval Advisory Group to review their respective programs, needs and objectives.

Respectfully yours,

For the Ambassador:

W. Walton Butterworth

Minister-Counselor of Embassy

[Enclosure 1]

The Ambassador in China (Stuart) to the Chief of the Army Advisory Group in China (Lucas)

Nanking, June 5, 1947.

My Dear General Lucas: The Department of State has expressed a desire that the Embassy prepare a current assessment of the character and extent of the Army (including Air Division) and Navy Advisory Group programs with a view to determining their effect upon overall American policy in China.

In order that the Embassy may take advantage of the best and latest information upon which to base such a broad survey of our military advisory activities, along with other related factors, I would appreciate your assistance in its preparation. I am fully aware of the not inconsiderable amount of additional work that this request will cause you, but it is a matter of some urgency and therefore I would like to receive as soon as possible a brief analysis of your present program covering, but not necessarily limited to, the following points:

1. The type and locality of activities with the numbers of United States personnel involved.

2. The type of training and numbers of the Chinese military affected.

3. The training and other types of United States equipment or materials being supplied for the present program.

4. The estimated annual cost of the present program in (a) Chinese National currency to the Chinese Government (including OMEA^33a), and (b) United States currency to the Chinese Government.

5. If United States Government restrictions now imposed were lifted, what form should the Army Advisory Group program take, having in mind the limitations of enabling legislation as now written?

6. Assuming continuation of the present program only, what amount of funds in your opinion should be earmarked for the Army Advisory Group in the event of future American loans to China of a general nature?

Please feel free to call upon members of my staff for any assistance they may be in position to afford you in the preparation of this study.

Very sincerely yours,

J. Leighton Stuart

[Enclosure 2]

The Chief of the Army Advisory Group in China (Lucas) to the Ambassador in China (Stuart)

[Nanking,] 28 June 1947.

Your Excellency, This letter is submitted in response to your memorandum of 5 June 1947, which requested a report of the current assessment of the character and extent of the Army Advisory Group. As you know, the mission of the Advisory Group may be summed up in the following extract from the Joint Chiefs of Staff memoranda of the 1330 series:³⁴

“To assist and advise the Chinese Government in the development of modern armed forces for the fulfillment of those obligations which may devolve upon China under her international agreements, including the United Nations Organization, for the establishment of adequate control over the liberated areas in China, including Manchuria and Formosa, and for the maintenance of internal peace and security.”

Further recommendations of the Joint Chiefs of Staff, which have been established as policy to date indicate that:

“The contemplated activities of the Military Advisory Group envisage advice to higher staffs on organization and training matters, assistance in the training of general and special staff groups of the Ministry of War and the Supreme Headquarters, and provision of some training in the academies and service schools of the air, ground and naval forces. Sufficient personnel for close tactical or technical training assistance in lower echelons will not be available.…³⁵ This participation in training would not under any circumstances extend to U. S. personnel accompanying Chinese troops in any combat operations; and that the strength of the Army Advisory Group will initially be limited to 750 military (Army) personnel. However, it is also indicated that the ‘ultimate size and organization of the Advisory Group can be re-examined when the pattern of political and military organization of China is more clear.’”

These extracts carry the implication that the scope and size of the Advisory Group may be subject to revision as circumstances require.

In addition to the restrictions as to personnel and scope of activities of the Advisory Group, the current policy which prohibits the transfer or sale of military supplies and equipment to China establishes a severely restrictive limitation upon the effectiveness of the efforts of the group.

The present critical military and economic situation in China convinces me that now is the time for re-assessment not only of the scope and character of the activities of the Advisory Group, but also of the policy restrictions which limit our effectiveness. Our efforts to date have been well received by the Chinese, and have met with a high degree of success; but the results have been of a preliminary nature, sited [sighted?] towards long-range results. Pursuant to our advice and instruction, the Ministry of National Defense and the Headquarters of the major elements of the Chinese Armed Forces have been almost completely reorganized and the foundation for an extensive and continuous training-school system for officers has been laid. But the core of the problem—the actual modernized training of the combat echelons; the development of adequate administrative, technical, and logistic services in all echelons, and the elevation of the common soldier from the status of a feudal serf to that of a self-respecting and efficiently trained fighting citizen—remains to date untouched. No effective steps in this direction can be taken until the restrictions as to personnel and equipment necessary for training, can be removed. Without the removal of these restrictions, further effort on our part can hope to achieve only rapidly diminishing results. Aside from these considerations, the tendency toward collapse of the present regime which is inherent in the existing military and economic crisis, if allowed to continue, may leave this Group in a position of complete, and possibly ridiculous, frustration.

The natural development of the program pursued up to now would require participation in the supervision of the permanent Service and Technical schools, advice and assistance in the secondary logistic and administrative elements, and, most important, initiation of closely supervised training of combat troops. This latter feature should be pointed toward the ultimate development of a thoroughly trained force of as many as ten ground divisions, together with the necessary supporting and service troops to complement them. This is obviously a long-range program, whose orderly development assumes a reasonable degree of stability in the military and governmental situation in China. Further, its successful prosecution would require the revision of some of the restrictions now surrounding the activities of this Group. Substantial increases of personnel would be necessary; and the equipment and ammunition needed for training must be made available to China.

But, the present state of events in China demands something more immediate and drastic than this orderly and progressive program. The 39 Chinese divisions sponsored by the United States during the last war, and equipped with U. S. weapons and partially trained in American methods, have lost and are continuing to lose a large part of their effectiveness through defeats, loss and deterioration of men and equipment and lack of continued training. The Chinese Air Force, through lack of maintenance and parts, is rapidly approaching a condition of zero effectiveness. The stocks of American ammunition are approaching exhaustion. The National Government forces are rapidly losing control of Manchuria and their position in North China is not satisfactory. That these conditions have arisen primarily because of excessive dispersion of military effort and of fantastically inept leadership in all echelons, is not to be doubted. The lack of aggressiveness shown by National forces in the field is due not only to this inept leadership, but also to the poor condition of the troops as to morale, training and equipment. It appears evident that commanders often hesitate to commit their troops to definite, aggressive action because of the fear that their units will completely disintegrate when faced by the enemy.

Consideration must therefore be given to some form of emergency assistance to China, and to an intensification of the training program, with the view of checking further deterioration of the military situation and of providing a firm basis for eventually restoring a satisfactory measure of stability. Such emergency assistance should take the form of equipment for training; of ammunition for training and for combat operations; of repair parts for weapons, for vehicles and for aircraft; and of additional transport aircraft to support combat operations. Lest these materials and supplies be ineffectively dissipated as has so often happened in the past, it would be essential that some form of control be established by agreement, as to their disposition and use. Should the exercise of this control be delegated to this Group, together with authority to regulate the flow of these supplies into China, it is felt that sufficient influence can be exerted to improve the strategy of operations and the quality of leadership. This, of course, presupposes that we would be permitted access to operational information in the field, and would be authorized to offer advice on operational matters to the Chinese.

Concerning the question of intensification of training of combat echelons, the Generalissimo has recently decided to initiate re-training of Chinese divisions immediately and has informally asked the assistance of this Group in organizing and supervising this training. As I have already indicated, this is a vitally necessary step either as part of any emergency program of aid or in the development of the long-range program. As an emergency measure, in view of the fact that the Ministry and the Supreme Headquarters are now functioning along re-organized lines, the Advisory Group can assist in the organization and initiation of this program of training, provided that permission to extend our activities in that direction is granted.

These emergency measures are suggested under the presumption that United States’ interests in Manchuria are sufficiently vital to warrant such overt action. If they are taken without delay, it is believed that there is a reasonable chance of maintaining a foothold in that area.

The foregoing represents my personal views of the current assessment of the character and extent of the Army Advisory Group program and recommendations for the proposed expanded program in the light of recent political and military events. I have attached reports to answer the specific questions outlined in your letter of 5 June in the following annexes:³⁶

1.	“The type and locality of activities with the numbers of United States personnel involved”	Annex 1
2.	“The type of training and numbers of the Chinese military affected”	Annex 2
3.	“The training and other types of United States equipment or materials being supplied for the present program”	Annex 3
4.	“The estimated annual cost of the present program in (a), Chinese National Currency and (b), United States currency to the Chinese Government”	Annex 4
5.	“Assuming continuation of the present program only, what amount of funds in your opinion should be earmarked for the Army Advisory Group in the event of future loans to China of a general nature?”	Annex 5

Sincerely,

John P. Lucas

Major General, USA

[Enclosure 3]

The Chief of the Naval Advisory Group Survey Board (Murray) to the Ambassador in China (Stuart)

Tsingtao, 19 June 1947.

Serial: 003

Your Excellency: This is in response to the request made in your secret letter of 5 June 1947 for information on the activities of the prospective Naval Advisory Group.

Before answering directly the questions listed in the second paragraph of your letter, I consider it advisable to outline the circumstances under which the Naval Advisory Group Survey Board program is presently operating. As you undoubtedly know, there exists enabling legislation for this program in the form of Public Law 512. Also, there exists the Presidential Executive Order 9843, signed April 25, 1947, which places into effect Public Law 512, subject to certain conditions and limitations as contained therein. For ease of reference, copies are attached. Prior to the passing and implementation of this legislation, ship transfers were effected under authority of lend-lease agreements. All the ships authorized under the lend-lease agreements except two have been transferred to the Chinese Navy. All ships in the future will be turned over to the Chinese Navy as stipulated in Public Law 512 and Executive Order 9843. This law authorizes the transfer of 271 ships and craft to the Chinese Government. Of these, a total of 137 are to go to the Chinese Navy, the remainder to the Chinese Maritime Customs. All transfers to the Chinese Maritime Customs are made through FLC. The figure 137 includes all authorized ship transfers to the Chinese Navy. Transfers of 95 ships and craft to the Chinese Navy has been effected to date.

Transfers of ships to the Chinese Navy under the lend-lease agreement was made the responsibility of Commander in Chief, U. S. Pacific Fleet acting through the Commander, Naval Forces Western Pacific. Accordingly, the Chinese Training Group consisting of prospective Naval Advisory Group personnel was established in Tsingtao and continues to function directly under the Commander, Naval Forces Western Pacific. In anticipation of activation of the Naval Advisory Group, and to provide the necessary assistance to the Chinese Naval Headquarters to enable them to properly operate and maintain the vessels transferred, prospective Naval Advisory Group personnel were assigned to Nanking and Shanghai in addition to Tsingtao. The members of the prospective Naval Advisory Group are all attached to the Staff, Commander Naval Forces Western Pacific and are responsible to him until activation has been effected.

The above explanation of the relationship between the prospective Naval Advisory Group and the Commander, Naval Forces Western Pacific is peculiar to the status of the Naval Advisory Group Survey Board and is considered necessary for amplification of the information to follow. In a directive received 7 June 1947, the Secretary of the Navy ordered this Group to continue to assist with the training of Chinese Naval Personnel in the operation of ships and craft transferred to China under Public Law 512 or through FLC. The Secretary of the Navy also has decided to hold in abeyance the establishment of the Naval Advisory Group under Public Law 512.

The information furnished herein is predicated on the present authorized Chinese Navy program. This program was planned to establish a small Chinese Navy to perform police duties along the Coast and Inland Waterways of China and also to provide a small amphibious lift. Public Law 512 contains a proviso that prior to the transfer of any larger combatant types of ships, the President shall obtain the authority of the Congress in each instance. Should such further authorization be obtained or the presently planned training program be enlarged then there would be necessarily a considerable increase in the expenditures enumerated below.

The following information is furnished covering the points indicated in your letter:

(1) The type and locality of activities with the numbers of United States personnel involved:

			Number of U.S. Personnel Involved
Locality	Activity	Type	Officers	Men
Nanking	NAGSB Hdqtrs.	(a) Advise the Minister of National Defense, the C/S Chinese Armed Forces (C-in-C Chinese Navy) and the Deputy C-in-C Chinese Navy on organization and functions of the Chinese Naval Establishment.	12	2
		(b) In cooperation with the U.S. Army Advisory Group, make recommendations to the Minister of National Defense and the C/S Chinese Armed Forces on joint matters regarding the functions of the Ministry of National Defense and other matters of joint interest.
		(c) Advise Chinese Navy Headquarters on the organization and functions of the Headquarters and the Naval Establishment.
		(d) Act as screening agency for Chinese Naval Headquarters’ requests for materials chargeable to funds deposited by the Chinese Government against Cash Deposit Lend-Lease Requisitions.
		(e) Maintain necessary liaison with officials of the Chinese Maritime Customs and other Chinese and U.S. government agencies as required.
		(f) Administer personnel and activities of the prospective Naval Advisory Group stationed in Shanghai and Nanking.
		(g) As directed, act on the residual affairs of the SACO37 agreement.
		(h) In conjunction with U.S. Army Advisory Group, provide communication facilities for the U.S. Embassy and U.S. Armed Forces in Nanking.
		(i) Perform liaison and other duties pertaining to the U.S. Navy.
Shanghai	Local NAGSB office	(a) Advise on organization and functions relative to Chinese Naval activities in Shanghai.	2	1
		(b) Advise the Chinese head of the Kiangnan Dockyard on efficient operation of the dockyard and on the overhaul and maintenance of ships of the Chinese Navy.
		(c) Act as directed as local U.S. Navy representative in matters pertaining to contracts of a naval nature between the U.S. and China.
		(d) Advise on the conduct of training of Chinese naval engineers.
		(e) Advise on establishment of a local Chinese Naval Supply System and provide necessary liaison with local U.S. Navy supply agencies.
		(f) As Officer - in-Charge, Shanghai Group, administer personnel and activities of prospective Naval Advisory Group, Shanghai.
		(g) Maintain liaison with local ComNavWes-Pac and U.S. Army representatives on matters relating to the logistic support of prospective Naval Advisory Group in Shanghai.
Tsingtao	Chinese Training Group	(a) Train Chinese Naval personnel in the operation and maintenance of U.S. Navy ships to be transferred to the Chinese Navy.	22	62
		(b) Maintain necessary liaison with other U.S. naval agencies to insure required repair, outfitting of ships and completion of Chinese naval personnel training prior to actual transfer of ships.
		(c) As a Task Group Commander under Com-NavWesPac exercise command responsibilities for U.S. ships which are assigned his group.
		(d) Maintain liaison with local Chinese naval authorities in matters relating to the ship transfer program.
		(e) Advise local Chinese naval officials on repair and maintenance of ships already turned over.
		(f) As Task Group commander administer personnel and activities engaged in the training and transfer program at Tsington.
		(g) Advise on the training of prospective officers for the Chinese Navy.
	Grand Total Personnel, Prospective Naval Advisory Group		36	83

(2) The type and training and numbers of Chinese Navy directly affected:

Type of Training				Numbers of Chinese
(a)	Advice on organization and functions			20,000
(b)	Actual training and advice on conduct of training.
		(1)	Actual training under ships transfer program	2,500
		(2)	Advice on conduct of training	10,000

(3) The training and other types of U.S. equipment and material being supplied for the present program:

Under the present program no training equipment has been transferred to the Chinese Navy, as all such equipment has been provided for the ship transfer program by the U.S. Navy and used by the Chinese Navy under U.S. supervision and custody. Such equipment includes textbooks, instructional machinery and equipment, and all types of training aids, such as charts, films, projectors and models of actual equipment. It is contemplated that such training equipment will eventually be made available to the Chinese through transfer. There has been a small amount of ammunition transferred to the Chinese Navy in connection with the ship transfer program which is chargeable against cash deposit lend-lease requisition. This transfer of ammunition was made on the condition that it be used for training purposes only.

By Executive Order 9843 ships which may be transferred under Public Law 512 will be transferred to the Chinese Navy without compensation. The Chinese Government is to reimburse the U.S. Government in cash for necessary expenses to repair, outfit and equip vessels, craft and floating drydocks and for the material deemed by the Secretary of the Navy to be necessary for their operation and maintenance.

(4) The estimated annual cost of the present program in (a) Chinese national currency to the Chinese Government (including OMEA), and (b) U.S. currency to the Chinese Government.

The estimated annual cost of the present program is divided into two parts: viz., (a) logistic support of U.S. Navy personnel and (b) training and ship maintenance programs. The costs which may be expected upon activation of the Naval Advisory Group are also shown, and are estimated from the terms of the contract previously under consideration for the Military Advisory Group. (See Enclosure (A) for details³⁸). The index of $12,000 CNC to $1 U.S., as of 1 May 1947, has been used in computing costs in Chinese currency.

Present Program

	CNC	U.S.
Logistic Support of U.S. Navy Personnel	$5,032,580,000	20,750
Training and Ship Maintenance Program		2,875,000
	$5,032,580,000	2,895,750

Program on Activation of N. A. G.

Logistic Support of U.S. Navy Personnel	$6,232,580,000	182,290
Training and Ship Maintenance Program		2,875,000
	$6,232,580,000	3,057,290

In addition to these annual costs, there will be a non-recurring charge to the Chinese Government for the repair, outfitting and equipping 42 remaining vessels to be transferred under Public Law 512. This charge will amount to approximately $2,100,000 U.S.

If decision is made to transfer to the Chinese Government certain training aids now being used by the Chinese Navy but remaining in the custody of the U.S. Navy an additional non-recurring charge of approximately $1,000,000 U.S. should be added to the costs shown above.

(5) If United States Government restrictions now imposed were lifted, what form should the Navy Advisory Group program take, having in mind the limitations of enabling legislation as now written?

The program would continue in its present form except for minor changes in U.S. Navy command relationships and in the assumption by the Chinese of certain expenditures now being borne by the U.S. Government.

A small increase in the number of U.S. naval personnel would be required if

(a) The scope of training was broadened to include training at Tsingtao of Chinese naval personnel not specifically assigned to ex-U.S. naval vessels.

(b) The high level advice to Ministry of National Defense and Chinese Naval Headquarters was expanded to include subordinate echelons.

(c) U.S. naval personnel were allowed to accompany on training cruises Chinese naval vessels other than those transferred by the U.S.

(d) The present plan of the Chinese Navy to establish a Marine Corps is carried out.

Any such increase of personnel could be accomplished easily within the allowance now authorized by enabling legislation which authorized a maximum of 100 officers and 200 enlisted personnel of the Navy and Marine Corps.

(6) Assuming continuation of the present program only, what amount of funds in your opinion should be earmarked for the Naval Advisory Group in the event of future American loans to China of a general nature?

Assuming the continuation of the present program only and that the Naval Advisory Group Survey Board is activated under Public Law 512, it is proposed that the sum of U.S. $13,000,000 should be earmarked for the Naval Advisory Group in the event of a future loan to China. The authority under Public Law 512 has four years to run from July 16, 1947. The figure of $13,000,000 U.S. is composed of the sum of the following:

(a) Four times the annual U.S. currency cost for logistic support of U.S. Naval personnel.

(b) Four times the annual U.S. currency cost for training in China and for training in the U.S. program.

(c) Ship maintenance program costs in U.S. currency for four years.

(d) Non-recurring U.S. currency costs of outfitting and equipping 42 vessels yet to be transferred to Chinese Navy.

(e) Non-recurring U.S. currency costs of certain training aids.

(See Enclosure B for details³⁹)

This letter has been shown to the Commander Naval Forces Western Pacific and he concurs in its contents. I trust that the information herein will assist you in the preparation of your assessment of the character and extent of the Prospective Naval Advisory Group.

Respectfully yours,

S. S. Murray

Rear Admiral, USN

33. The Secretary of State requested that General Wedemeyer’s comments be obtained on this despatch; a copy was transmitted to General Wedemeyer on September 22.
34. Officers’ Moral Endeavor Association.
34. See Foreign Relations, 1945, vol. vii, pp. 590–598, and 1946, vol. x, pp. 810 ff.
35. Omission indicated in the original letter.
36. None printed.
37. Sino-American Special [Military] Technical Cooperation Agreement, signed at Washington on April 15, 1943. Regarding its termination, see p. 1004.
38. Not printed.
39. Not printed.