893.50 Recovery/11–348

The Secretary of Defense (Forrestal) to the Acting Secretary of State

Dear Mr. Lovett: This will reply to your letter of October 15 concerning Military Aid for General Fu Tso-yi and the Nationalist Forces in North China.

In his recommendation upon which the Joint Chiefs of Staff based their action, Admiral Badger stated that the Generalissimo had agreed to the distribution of supplies to Shantung and North China in first priority. It is considered significant that Admiral Badger made no reference to the amount of supplies to be involved.

[Page 190]

The Joint Chiefs of Staff in their recommendations of 9 September made no reference to either free transportation by the U. S. Navy or the quantity of supplies which should be shipped to Tsingtao for further delivery to the Chinese Armies. They recommended that Admiral Badger’s proposal for delivery of supplies to Tsingtao for supervised delivery to the Chinese Armies be approved provided: That the request for such supplies be made by the Chinese Government through the authorized representative in Washington, specifying shipment of the supplies to Tsingtao rather than Shanghai, and that the proposal be approved by the State Department.

On 20 September 1948 the Chinese Ambassador, Dr. Koo, representing the Chinese Government and the Chinese Military Procurement Technical Group in Washington, delivered to me the list of supplies desired by his government as a result of the agreement made by Admiral Badger. With his request the Chinese Ambassador also delivered to me a copy of a memorandum from General Ho Ying-chin dated 30 August 1948 to Admiral Badger, copy of which is inclosed for your information. The Ambassador’s request was substantiated by the Chief of the Chinese Military Procurement Technical Group on 24 September in a letter to General Wedemeyer.

At the same time, the Chinese representatives initiated a request to transfer to the Department of the Army $37,783,386.68 from funds remaining available to the China Aid Program. The Department of the Army was subsequently informed that the destinations, with the approximate percentages of supplies to be shipped to each port, are as follows: Tientsin—30% (to be shipped via Tsingtao), Tsingtao—10%, Shanghai—60%. In keeping with the agreement, the Chinese requested that the supplies for Tientsin and Tsingtao be shipped in first priority. Thus, in my opinion, the Chinese Government has fulfilled the requirements established by the Joint Chiefs of Staff. The Department of the Army and the Department of the Navy are now in the process of carrying out these requests.

These supplies which the Chinese have requested for delivery to Shanghai represent the only weapons and ammunition being delivered to that port as a result of purchases from the $125,000,000. However, should the total quantity being purchased with the $37,783,386.68 be delivered to Shantung and North China areas, it is believed probable that no such supplies would become available for distribution by the Chinese through the port of Shanghai because it is understood that these latest purchases practically exhaust the China Aid Fund.

If it is the desire of the State Department that all arms and ammunition being purchased by the Chinese Government with the $125,000,000 Aid Fund be delivered to North China and the Shantung Peninsula, [Page 191] it is believed that the Chinese Government should be so informed by the U. S. Ambassador in Nanking. Accordingly, and in view of the restrictions concerning the advice which he is authorized to render, it would appear inadvisable to instruct General Barr to discuss this subject with the Generalissimo urging reconsideration of the requested distribution.

Sincerely yours,

James Forrestal

The Chinese Minister of National Defense (Ho) to the Commander of U. S. Naval Forces in the Western Pacific (Badger)

Subject: Procurement of Weapons and Ammunition for the Chinese Armed Forces

In accordance with the conversation of this morning at Dr. Stuart’s house, between myself and you, Dr. Stuart, Major General David G. Barr and Lt. General K. M. Cheng, I am submitting this memorandum to confirm the various points on which mutual agreement has been reached.
The following points have been mutually agreed upon during the conversation of this morning:
The weapons required in this programme for the Chinese Government are still for seven armies and three re-organized divisions (quantities as per Enclosure I35).
The cost of the aforementioned weapons, ammunition, and spare parts and accessories (which will amount to 10 percent of the total cost of weapons) are figured in accordance with the standard list price of 1945 (as per Enclosure II35) without the addition of 50 percent for price increase.
The U. S. Navy will be requested to assist in the transporting of the aforementioned weapons and ammunition free of transportation charges.
The total cost of US $27,199,581.77 as per Enclosure II will be paid out of the fund of the U. S. Military Aid to China Programme.
The areas of North-China and Shantung will be given first priority in the distribution of the aforementioned weapons and ammunition for the seven armies and three re-organized divisions. I shall visit these areas in order to determine the actual requirements.
Regarding the above, I have recommended to the Chinese Government to cable immediately Dr. Wellington Koo, the Chinese Ambassador to the United States in Washington, to make immediate contact with the United States Government for the release of fund; and [Page 192] therefore, it will be highly appreciated if you will cable the United States Government with regard to the result of this conversation at your earliest convenience so that this programme could be carried out at the earliest possible moment.
Ho Ying-chin

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