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

893.24/12–3147: Telegram

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

Washington, December 31, 1947—8 p.m.

1596. During hearings Senate Appropriations Committee Dec 17¹³ charges made US Govt had failed fulfill commitments ChiGovt. Aside from Yalta¹⁴ and Cairo declarations¹⁵ included in charges as US commitments, only specific case cited was OFLC automotive spare parts contract Dec 1946. Dept representatives at hearings therefore informed Committee not thoroughly conversant with matter but pointed out this contract subject ad referendum Washington and assumed ChiGovt payment $1,800,000 returned when found impossible fulfill contract.

Following hearings OFLC prepared memorandum for submission Committee gist of which follows:

OFLC Field Commissioner Shanghai at request AAG and on understanding material would be made available as declared surplus Army stocks signed contract ChiGovt Dec 23, 1946 for automotive spare parts and received ChiGovt payment $1,800,000. After reference Washington items found not available. SecWar therefore informed SecState Apr 30, 1947¹⁷ War Dept. could not deliver property as Army could not meet own requirements these items and requested ChiGovt be so advised. State Dept. informed OFLC May 16, 1947¹⁷ of foregoing and pointed out no recourse but notify Chinese cancellation contract. Further OFLC efforts find spare parts from Army failing, Central Field Commissioner Pacific and China OFLC notified Commissioner June 23, 1947¹⁸ he had informed Gen Kiang, Bosey, of cancellation contract but that latter objected and refused return [of the] money. Field Commissioner OFLC Shanghai again advised OFLC Oct 25, 1947¹⁹ ChiGovt refused accept cancellation and money not refunded and same date OFLC Shanghai reported AAG had been informed by Dept. [of] Army inability fulfill contract and ChiGovt so advised. ChiGovt said by OFLC Washington still to be unwilling accept cancellation and Field Commissioner continuing efforts return money.

Please discuss matter with FonMin and ask prompt action be taken to bring to conclusion this undesirable impasse by arranging with OFLC Shanghai return ChiGovt payment $1,800,000. Prior to approaching FonMin, inform Field Commissioner Shanghai contents this tel and contemplated action. Report results.

Lovett

13. Third Supplemental Appropriation Bill for 1948: Hearings before the Senate Appropriations Committee, 80th Cong., 1st Sess. (Washington, Government Printing Office, 1947), pp. 126 ff. and 179 ff.
14. For agreement signed at Yalta by the heads of Government of the United States, Soviet Union, and United Kingdom, February 11, 1945, see Foreign Relations, The Conferences at Malta and Yalta, 1945, p. 984.
15. For Cairo declaration by the heads of Government of the United States, United Kingdom, and China, issued December 1, 1943, see Department of State Bulletin, December 4, 1943, p. 393, or Foreign Relations, The Conferences at Cairo and Tehran, 1943, p. 448.
17. Not printed.
17. Not printed.
18. Telegram No. 1509, not printed.
19. Telegram No. 1972, not printed.