Memorandum by the Director of the Office of Far Eastern Affairs (Butterworth) to the Under Secretary of State (Lovett)

A Departmental Committee on Grants to China, composed of representatives of the concerned offices and divisions of the Department, was established and held its first meeting on July 7. The terms of reference for the Committee are to decide upon and implement the procedures with respect to disbursements to the Chinese Government authorized under Section 404(b) of the China Aid Act of 1948. The Committee held its second meeting on July 23 immediately after the submission by the Chinese on that day of their first requests for withdrawals from the $125 million grants.

A summary of these requests is attached (Tab A). Request No. 1 covers the purchase of bombs and ammunition from OFLC and shipping and insurance charges thereon. Request No. 2 covers the purchase of aircraft engines from a commercial supplier and shipping and insurance charges thereon. Request No. 3 covers petroleum products and containers for the Chinese Air Force.

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Tab A—First Chinese Requests in Summary

Summary of Chinese Requests for Withdrawals From the $125 Million Grants Under Section 404(b) of the China Aid Act of 1948

Type of Commodities and/or Services Supporting Documents Amount
1. Bombs and ammunition Contract with OFLC $ 464,351.17
Shipping Invoices:
Montreal Shipping Co. 443,532.72
Barry & Powell Co. 2,294.75
Montreal Shipping Co. 39,742.13
Total— $ 949,920.77
2. Aircraft engines Babb Company—Contract $ 287,500.00
Shipping Invoices:
C.J. Hendry Co. 5,182.84
Barry & Powell Co. 20.73
Aircraft Components Corporation 2,512.84
Barry & Powell Co. 10.73
Total— $ 295,227.14
3. Petroleum Products and Containers Contracts:
Standard-Vacuum Oil Co.— $ 436,204.43
minus 1 percent discount 4,362.04
China Petroleum Co., Ltd., 2,313,042.00
agents for Sterns, Inc.
minus 1 percent discount 23,130.42
Texas Company— 951,597.07
minus 1 percent discount 9,515.97
Contract Total— $3,663,835.07
minus 1 percent discount 37,008.43
Net Total $3,663,835.07
Total of the 3 Chinese Requests— $4,908,982.98