Office of the Historian

893.61321/3–2747

Memorandum by the Director of the Office of Far Eastern Affairs (Vincent) to the Secretary of State

[Washington,] March 27, 1947.

With reference to my memorandum of March 14, I am enclosing a copy of a note of March 17 from Mr. Martin of the Eximbank18 and a copy of my memorandum to Mr. Thorp.19 Yesterday Mr. Clayton went over this matter at some length with me. He is of the opinion that it would be impracticable and inopportune to bring formally before the Directors of the Bank any suggestions for credits to China for long-term construction projects. He was certain that, under present conditions, the response would be unfavorable. He did say, however, that it might be worth discussing with the Directors a short-term commodity credit for cotton of some $40,000,000 or $50,000,000, but he felt that it would be necessary for the Chinese to agree to set aside a certain portion of the manufactured product for export to markets where it would be possible to obtain US dollar exchange for the repayment of the credit. He will explore this matter. In this connection it is interesting to note that Shanghai Consulate General reported in a recent telegram20 that Chang (new head of the Central Bank of China) “would shortly be approaching US Government for at least moderate cotton loan” and that Central Bank would agree to partially servicing loan through increase of textile exports.

The prospects are brighter now than when you left for obtaining some cotton for China from UNRRA, but final decision has not yet been reached.

I have a personal letter21 from Chang Kai-ngau of the Central Bank in China in which he outlines his ideas for rebuilding the confidence of the people and asks for advice but not assistance. Because I have great respect for Chang’s ability, I should like, if it were possible, to strengthen him in his new position by some limited measure of financial assistance.

The SWNCC22 has requested the JCS23 to prepare a study of the military aspects of the China problem. The JCS have been informed that Colonels Caughey24 and Hutchin25 are ready to give background [Page 1094] information on the problem. It is my opinion that we must exercise the utmost care and judgment in reaching a decision with regard to arms for the National Government. I do not think that the time has come for all-out military aid to Chiang, and I feel there is basis for hope that it will not come, although limited assistance of one sort or another may be advisable.26

Mr. Acheson, as you probably know, did a very good job of explaining to Congress how the Greece and China problems, in so far as method of approach is concerned, are not on all fours.27

J[ohn] C[arter] V[incent]
  1. Ante, p. 1092.↩
  2. Supra. ↩
  3. Telegram No. 744, March 25, not printed.↩
  4. Not found in Department files.↩
  5. State-War-Navy Coordinating Committee.↩
  6. Joint Chiefs of Staff.↩
  7. Col. J. Hart Caughey, former Executive Officer of General Marshall’s staff in China.↩
  8. Lt. Col. Claire E. Hutchin, former member of General Marshall’s staff in China.↩
  9. For correspondence on the subject of military aid, see pp. 785 ff.↩
  10. See Assistance to Greece and Turkey: Hearings before the House Committee on Foreign Affairs, March 20, 1947, 80th Cong., 1st sess., pp. 16, 17.↩