893.50 Recovery/11–748: Telegram

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

2127. [For] Hoffman and Cleveland from Lapham. Arrived Shanghai evening 4th, conferred with Admiral Badger56 Shanghai morning 5th and flew Nanking afternoon 5th with Griffin, Sumner,57 Grant58 accompanying. Full discussion with Ambassador and his key staff late same day and today, 6th, with Badger participating. Ambassador wired State Department,59 information copy to you, on desperate [Page 646] military situation. Ambassador agrees that food, fuel, and supply situation major cities at crisis stage resulting from virtual standstill internal Chinese distribution. Most goodwill and political benefits from previous American Aid China would be lost by failure to contribute within our means to food and fuel shipments when Chinese most in need. Ambassador’s report under reference is basis for following request for delegation of authority you possess under statute to ECA Mission, as change of government is not only possible but probable at any time and no certainty what form it may take. We may also face a situation in one or more areas where there will be for a period no central authority and it will be necessary to deal with the ad hoc local government. No steps will be taken under requested delegation without complete concurrence Ambassador on policy aspects to insure that each decision serves the best interests of US.

Freedom of action in reallocating unexpended funds including 70,000,000 previously earmarked for replacement and reconstruction exclusive of rural rehabilitation. We realize this is extraordinary request but is imperative due to rapidly moving situation.
Authority to distribute ECA commodities in any area and under such terms as are deemed necessary and to divert ship movements to the extent feasible.
Authority to draw upon local currency proceeds attributable to ECA commodities for purposes other than those originally planned so as to meet, for example, emergency food and coal shortages by local procurement.

Granting of above requests for delegation of authority must be kept secret from Chinese in Washington and here. I will, of course, keep you informed of all developments and only exercise requested delegation if time element makes prior reference to you impracticable. Ambassador concurs this cable and emphasizes necessity of complete secrecy. [Lapham.]

  1. Vice Adm. Oscar C. Badger, Commander, U. S. Naval Forces, Western Pacific.
  2. John D. Sumner, Chief Economic Adviser, ECA China Mission.
  3. James P. Grant, Special Assistant to the Chief, ECA China Mission.
  4. Telegram No. 2117, November 6, 1 p.m., vol. vii, p. 542.