Nanking Embassy Files, Lot F73—800 Nationalist-Communist (1948)

The Minister-Counselor of Embassy in China (Clark) to the Director of the Office of Far Eastern Affairs (Butterworth)

Dear Walt: Admiral Badger’s Top Secret message No. 240715Z to the Chief of Naval Operations under date of August 24,2 brings to a milestone my strenuous efforts to assure compliance with the Secretary’s directive to the effect that to make specific recommendations for the use of “other aid” would involve responsibility on our part and possible subsequent involvement which the Secretary was unwilling for us to risk. I have argued with Badger and with the Ambassador until I am blue in the face that we were not authorized to make any specific recommendations on the expenditures of “other aid” and that to importune the Gimo or others to meet the professed requirements of Fu Tso-yi or of the Garrison Commander at Tsingtao would involve a responsibility which might later become embarrassing. I have even gone so far as to reiterate ad nauseum that if Fu Tso-yi received so much support as result of our representations that he felt he could declare his independence and decide to go it alone, we would have to blush with shame and try to make our peace with the Gimo.

I am afraid my arguments which I have tried to keep on an unprejudiced basis have been to no avail. As I have previously intimated, Admiral Badger is desperate at the thought that he might eventually have to evacuate Tsingtao and is moving heaven and earth trying to find some way to avoid that possibility. As you know, the Ambassador’s heart is most deeply involved in Yenching and consequently in the stability of North China, and, as much as I love him and admire him, I am compelled to admit that when he thinks of that situation his judgment is influenced by his desire at almost any cost to avoid Communist dominance of the Peiping–Tientsin area. By the nature of things, therefore, I have had two strikes against me in my efforts to assure strict compliance with the Secretary’s directives.

I had thought that I had been able to convince the Ambassador that we could not assume the responsibility of suggesting to the Gimo any specific allotment to North China and that the most we could do was to point out to him information reaching us regarding the seriousness of the danger to North China, the vast implications of the possibility that we might have to evacuate Tsingtao, and, while at the same time admitting our lack of knowledge of his overall commitments and requirements, express our hope that he would do his utmost to see that those areas were not permitted to fall to the Communists.

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I thought I had convinced the Ambassador and, in fact, his exposition of those ideas to Lapham3 was so sound I was convinced he had grasped the significance of the Secretary’s policy. I knew I had not convinced Admiral Badger and that he was going to continue to try to find some way to make Tsingtao secure. Nevertheless it was a surprise to me, when they both returned from a weekend spent at Ruling as the guests of the Generalissimo and Mme. Chiang, to find that in some way the Gimo had suddenly decided on the expenditure from “other aid” of around $20,000,000 to meet the needs of Fu Tso-yi and those of the Garrison Commander at Tsingtao. Vice Minister of National Defense Cheng Kai-min had been designated by the Gimo as the one who should make known to General Barr the needs in this regard, and after General Barr’s agreement had been secured, the Gimo promised to instruct Wellington Koo to make the necessary requisitions in Washington. Cheng Kai-min did, in fact, present to General Barr a list of requirements of Fu Tso-yi to equip seven armies and of the Tsingtao Garrison Commander to equip three divisions. I understand that the Shangtung division is equivalent to one of Fu’s armies.

Badger then came up to Nanking and after a conference with the Ambassador, Barr and me, it was agreed that such things as 105 mm. howitzers and heavy machine guns on Fu’s request, and flame throwers, would be eliminated and that Fu would be equipped for only four rather than seven armies. Badger undertook to endeavor, through the Navy Department, to secure free transportation of this equipment in Navy bottoms which he said were coming to the Orient empty. Also, although Badger denied that he ever said so, he certainly left with the Chinese the impression that there was a possibility they would be able to acquire this equipment either as surplus or at procurement cost—this in spite of my understanding of the ECA Act and the President’s directive which would require that supplies acquired under 404–b of the Act be paid for at replacement cost.

Barr has all along opposed this idea in principle and has further taken the position that the Chinese Government, with the Gimo’s approval, had already set up its priorities for acquisitions under “other aid” and a couple of months or more ago instituted the procedures to acquire what they needed, all of which would be thrown into a tailspin by any such new priority demands at this late date. Nevertheless, in his desire not to be obstructive and in view of the fact that the Gimo had apparently already taken the decision, he raised no objection and went back to Cheng Kai-min with the revised proposal.

According to Barr, Cheng Kai-min was adamant that Fu Tso-yi’s seven armies should be supplied and that the heavy machine guns [Page 141]should be included and equally adamant that there should be ammunition for an estimated six months’ need. Barr figures these demands as at present formulated as totaling around $41,000,000 if Badger is unable to come through with free transportation or to arrange for making the supplies available at procurement costs. In other words, about $1,000,000 more than remains of the “other aid” for the entire army supply was to be expended solely for Fu Tso-yi and Tsingtao. There would be nothing left for spare parts and matériel needed in the arsenals and for many other vital needs under Barr’s original arrangement. There seemed to be something wrong somewhere, yet the Gimo had given his authorization and there was every reason to believe that the matter would go on through.

At this stage Barr went back to see Cheng Kai-min with Ho Ying-chin and took with him a draft of the cable which the Gimo was to send to Wellington Koo. Covering the draft cable was a memorandum containing a clear statement that the request for seven armies for Fu and three divisions for Tsingtao would completely exhaust the army portion of “other aid”, and a strong recommendation that in view of this fact they agree to only four armies for Fu. It may have been this memorandum, or it may have been something else, but in any event at this stage both General Ho Ying-chin and Cheng Kai-min suddenly took the strong position that they had been led to believe all along that this matériel going to Fu Tso-yi and Tsingtao was not, repeat not, coming out of “other aid”, but was to be acquired on some sort of barter basis in which Fu Tso-yi and Tsingtao would supply the materials, the sale of which would sooner or later provide foreign exchange with which the United States Armed Services could be reimbursed.

I do not know, of course, what transpired in the conversations at Kuling and the Ambassador is most emphatic that he had gone to great lengths explaining to the Gimo that the $125,000,000 would have to be used before any consideration could be given to other sources of money to pay for munitions. Nevertheless, you will recall the efforts earlier this year of Fu to obtain arms and ammunition through barter. At that time, through Barr, we were able to arrange for the Chinese Government to send Central Trust representatives into Fu’s territory to ascertain whether he had materials which could be sold to bring in foreign exchange, but the result was negligible. Fu either did not have the materials he claimed or was unwilling to let the Central Trust representatives see them.

There the matter stands for the moment. Badger is coming back to Nanking next Monday and there will be another meeting with Ho Ying-chin and Cheng Kai-min. I do not know what will come out of that meeting yet I have been convinced all along that the [Page 142]Chinese had no intention of letting Fu Tso-yi have all the arms and ammunition listed, particularly if the money to be used in payment was coming from the National Government till. It may be, however, that Badger can arrange for the shipment of some supplies in Navy bottoms which are coming to the Orient otherwise empty, and if so, I should think such action would come within what the Secretary would call feasible.

I thought you should have this background in view of the telegrams which may be coming in on the subject, and should anything develop in Monday’s meeting I shall write you further.

Very sincerely yours,

Lewis Clark
  1. Post, p. 169.
  2. Roger D. Lapham, Chief of the China Mission of the Economic Cooperation Administration.