893.50 Recovery/7–2148: Telegram

The Ambassador in China (Stuart) to the Secretary of State

1335. To Department, ECA and Agriculture. ReEmbtel 1332, July 21, 3 p.m., repeated Shanghai 642, on Rural Reconstruction Commission.

[Page 622]

Herewith Foreign Office comments as stated in its July 19 aide-mémoire:

Re suggested note from Ambassador to Foreign Minister:

Introductory paragraph accepted.
Paragraph (1) accepted.
Paragraph (2) accepted but with reservation re subparagraph (e). Foreign Office states while it does not insist upon expressing provision that Commission shall have a Chinese citizen serving as its executive director suggestion made that this understanding be recorded in separate agreed minutes to be signed by Chinese and American negotiators or other representative of two governments.
Re paragraph (3), Foreign Office agreeable substance thereof except sub-paragraph (b). Following from aide-mémoire: “However, in view of comparatively limited time available to commission, it might not be possible for Commission to execute all items of program as contemplated in paragraph (3). In order to avoid possible disappointment, Ministry suggests that details enumerated paragraph (3) be put in above-mentioned agreed minutes rather than in exchange of notes. Subparagraph (b) of paragraph (3) should, however, be deleted since insertion in the notes of this clause which concerns the enforcement of laws and regulations by local authorities may give rise to impression that Commission’s interference with domestic administration in China is purported.”
Re paragraph (4), Foreign Office proposes that words “or its chairman” be inserted immediately after words “if the Commission”. Following explanation therefor given in aide-mémoire: “In view of relationship between Commission [and ECA] of US as provided in China Aid Act, Ministry considers that Chairman of Commission as distinct from Commission itself should not be deprived of discretionary power to submit decision of commission to the approval of Chinese Government prior to their execution in order to provide necessary safeguard for administrative integrity of China.”
Foreign Office recommends deletion paragraph (5) reference being made to phrase in penultimate paragraph suggested Foreign Minister’s note to Ambassador to effect “the Government of China undertakes to afford to the execution of the program the full weight of its support and to direct cooperating agencies of the Government of China to give such assistance et cetera”. In view foregoing Foreign Office states paragraph (5) “seems to be superfluous and should be deleted.”
Paragraph (6) accepted.
Re paragraph (7), Foreign Office states: “While Chinese Government has no objection to the enjoyment of diplomatic privileges and immunities by the American members and personnel of the Commission, it is proposed that following sentences be added to paragraph (7):

‘It is understood that the Ambassador of the United States of America in China in making the notification will bear in mind the desirability of restricting, so far as practicable, the number of officials for whom full diplomatic privileges and immunities would be requested. It is also understood that the detailed application of this paragraph would, when necessary, be a subject of intergovernmental discussion.’”

Foreign Office concludes by noting that wording of two proposed sentences follows closely that of paragraph 3 of Annex to Aid Agreement signed July 3, 1948.
Re paragraph (8), Foreign Office states “on account of the constitutional limitations on the power of taxation of the Central Government China” proposed that words “fiscal charges, including” in first sentence be deleted. Foreign Office also proposed deletion last sentence this paragraph, point being made by Tung when he handed aide-mémoire to Embassy officer that language appeared to be critical of Chinese customs and that, should any difficulties arise in this regard, Embassy and Commission could call upon Foreign Office with confident expectation that prompt corrective action would be taken.
Paragraph (9) accepted.
Re paragraph (10), Foreign Office recommends deletion clause “and also reserves the right to withdraw the US members of the Commission” at end first sentence. Foreign Office also recommends deletion entire second sentence this paragraph, both recommendations made on grounds that provision included in this paragraph for US Government to terminate or suspend its assistance at any time.

No change suggested in text of note from Foreign Minister to Ambassador.

Tung has informally suggested inclusion of following in agreed minutes: “It is understood that the decisions of the Commission shall be reached by majority vote of the members thereof”.

Moyer, now in Taiwan with Stillman mission, expected Nanking July 23 for consultation re our recommendations on Foreign Office proposals cited above.

Sent Dept 1335, repeated Shanghai 645.