893.50 Recovery/7–2148
Memorandum by the Secretary of State to President Truman
I have just received a copy of a letter dated July 1, 1948 addressed to you jointly by Senator Bridges and Mr. Taber, chairmen of the Senate and House Committees on Appropriations, respectively. In this letter, Senator Bridges and Mr. Taber express the desire that the Administration carefully check the expenditure of the 125 million dollars authorized for grants to China under section 404(b) of the China Aid Act, with a view to assuring that those funds are matched to the military requirements of China.
The legislative history of the China Aid Act indicates a strong desire on the part of the Congress that the United States Government should not be put in the position of appearing to underwrite the military efforts of the Chinese Government. It was rather the intention to make these funds available for such purposes as the Chinese Government, on its own responsibility, might request. It was nevertheless clearly anticipated that the Chinese Government would probably wish to use these funds for the procurement of military supplies. In its report on the Foreign Aid Appropriation Act of 1949, the Senate Committee on Appropriations stated (page 13): “The Committee recommends the appropriation of 125 million dollars with the intent that care shall be exercised to hold expenditures to military purposes.”
There is enclosed a copy of a letter dated July 16, 1948 addressed by the Under Secretary to the Director of the Bureau of the Budget73 [Page 116] requesting that certain changes be made in your letter of June 2, 1948 addressed to me and to the Secretary of the Treasury74 governing the procedure to be followed in making grants under section 404(b) of the China Aid Act of 1948. Among the changes suggested in that letter was one to make it clear that United States Government agency appropriations might be reimbursed from the appropriation authorized by that section. This should permit the Chinese to secure military supplies from stocks on hand or from procurement on its behalf by the National Defense Establishment.
In the light of the foregoing circumstances, I respectfully suggest that in order to comply with the spirit of the China Aid Act of 1948 and with the desires of the chairmen of the Congressional Committees on Appropriations, the Secretary of Defense be requested by you to do everything possible to make available to the Chinese Government, from existing stocks or through supplemental procurement, such military supplies as that Government may request under the provisions of section 404(b) of the China Aid Act of 1948. I have attached a suggested draft of a letter to the Secretary of Defense75 for this purpose.
It is my understanding that the estimates of allocations of funds under this legislation which were presented by the Secretary of the Army and General Wedemeyer in executive sessions of the Congressional Committees on Appropriations are based upon proposals made by the Chinese Ministry of National Defense and concurred in by the United States Military Advisory Group in China. It would, therefore, be appropriate for the National Defense Establishment to continue to assist the Chinese Government in this regard.