893.50 Recovery/11–748

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

In Nanking’s telegram 2127, November 7 (attached)60 Mr. Lapham requests delegation by the Administrator of full discretion to take such steps, with the concurrence of the Ambassador, for drastic revision of the China Aid Program as he may feel necessary during the anticipated disintegration of the Chinese National Government. Ambassador [Page 647] Stuart urges in Nanking’s telegram 2115, November 6 (attached)61 that the Department support Mr. Lapham’s request completely.

It would be undesirable for the Department to be put in the position of opposing Mr. Lapham in this regard. However, Mr. Hoffman may believe that it would be very difficult for ECA to accord such discretionary authority to its field mission. For example, the legislative history of the China Aid Act imposes a strong obligation on ECA to implement the industrial replacement and reconstruction aspects of the China Aid Program, and Mr. Hoffman may consider that reconstruction funds could not be diverted without Congressional consultation. There would also appear to be serious procedural obstacles to major shifts in that portion of the ECA commodity program for which procurement authorization, largely through private trade channels, has already been made.

For our part, I do not see how the Department could possibly delegate responsibility to the Ambassador for concurrence with those actions proposed by Mr. Lapham which would have both domestic and international policy implications of great significance.

W. W[alton] B[utterworth]
  1. Supra.
  2. Ante, p. 645.