893.50 Recovery/12–748

The Director of the ECA China Program (Cleveland) to the Chief of the ECA China Mission (Lapham)85

Dear Roger: I have just come back from the first full meeting which the Congressional “Watchdog” Committee86 has had. China is very [Page 659] much in Mr. Hoffman’s mind since he is leaving tonight for his visit with you. So in discussing the ECA Program informally with the Committee, he led off on China. The main point he raised was a continuation of the discussion here during the last few days on your long cable Toeca 499, so I had better start by filling in the background on that.

The general reaction to Toeca 499 was the same as yours—that is, to favor alternative 3 (a) in the cable. I might add that everybody who read the cable, including the people at State, commented on the careful and thorough manner in which the alternatives had been laid out, and on the force of the arguments you presented in favor of 3 (a).

Mr. Hoffman’s reaction being favorable, he told us to draft a memo for the President which he would discuss first with General Marshall. The draft memo for the President is now a dead duck, as you will see from what follows; however, I am attaching a copy of it87 to give you a concrete idea of the various stages through which this matter passed.

The next day, Alec Henderson,88 Charlie Stillman, and I accompanied Mr. Hoffman to a meeting with Messrs. Lovett,89 and Butterworth—General Marshall being sick in the hospital. While Mr. Hoffman did not produce the draft memo to the President, he indicated that his point of view was in agreement with yours. He indicated also, in the meeting, that in his opinion the result of continuing relief assistance in areas over which the Communists might assume control would be that before too long—say thirty to sixty days, the aid program would be shut off because of violations of ECA’s distribution principles (the principles set forth in your alternative 3 (a)).

Mr. Lovett had clearly considered the problem quite carefully with key members of his staff, particularly Walt Butterworth and George Kennan.90 He indicated that in the State Department opinion there was little possibility of “getting away with” direct distribution in Communist areas, given the legislative intent of the Act under which ECA is operating in China. He seemed to see no objection to distributing to end-users the supplies already available in the area that might be taken over, but raised a mild question about transporting to the destination supplies that might be afloat for such areas.

The upshot of the discussion, as I got it, was that (a) supplies already in areas taken over should be distributed anyway, (b) if the recognized Government of China flees to some point other than Nanking but requests continuation of assistance to areas taken over by the Communists or a Communist-dominated coalition, this might well be [Page 660] done; the purpose of doing it would be to convince the Chinese people that the aims of our economic assistance are not imperialistic and to make sure that the onus of stopping relief assistance falls on the Communists rather than us, and (c) if the Communists or a Communist-dominated coalition takes over as a legal successor to the present Government of the Republic of China, aid might likewise be continued under the bilateral agreement (which would still be in force with such a Government) on the assumption that it would probably have to be stopped before long because of violations of the bilateral and that in any case, it would not last beyond the first quarter of 1949.

Discussion with the State Department did not produce what I would call a firm line of policy. The difficulty in considering this question, of course, is compounded by the fact that there has been no determination as to the general policy which this Government will pursue in the changing situation in China created by recent Communist military successes. Many of Mr. Lovett’s comments were in terms of what was feasible or desirable from the standpoint of Congressional and public reaction in this country, rather than what was desirable purely from the standpoint of our relationship with China or the Chinese people.

A meeting of the Congressional “Watchdog” Committee had been scheduled for the following day, Friday 3 December. Mr. Hoffman asked us to draft a new document, stating alternatives but no recommendations, which could be used if necessary in connection with the committee’s discussion. This document is also attached;91 it likewise was not used in the meeting for which it was written, but it gives an indication of the thinking behind Mr. Hoffman’s extemporaneous remarks to the Committee on the subject of China.

In speaking to the Committee, Mr. Hoffman dwelt particularly on points (b) and (c) above, and most of the discussion revolved around the conditions in point (b). Several Committee Members made it clear that they considered it Mr. Hoffman’s decision under the Act. Senator Connally (Texas) and Senator Lodge (Mass.) stated clearly that they thought Hoffman’s general point of policy was correct—i. e., that aid should not be stopped immediately, but continue in order to give the lie to Communist propaganda about the imperialistic aims of our economic assistance. Congressman Tabor (N. Y.) indicated that he didn’t think any advice could be given to Mr. Hoffman on this point at the meeting. Senator H. Alexander Smith (N. J.), who was presiding, did not express an opinion. I got the impression that Representatives Bloom (N. Y.) and Cannon (Mo.) were likewise noncommittal but that Representatives Vorys (Ohio) and Fulton [Page 661] (Penn.) had no objection to the proposed line of policy. I would not swear to these attitudes since the discussions were somewhat diffuse and it was difficult to tie down any specific points of view, except those of Connally, Lodge, and Tabor. In the course of the discussion, Representative Bloom asked how much of the food sent to China by ECA really was properly used. Mr. Hoffman indicated that some’ pretty hard-boiled people, including yourself, were reasonably well satisfied with the way the rationing system worked in the cities of China where ECA food is being distributed. He then passed the ball to me, and at Senator Lodge’s request I gave a general description of the rationing procedures. (Incidentally, it would be very helpful if Al Hurt92 or somebody could prepare a detailed statement of these procedures, with any variations by city, and with exhibits in the form of ration cards, forms, etc., which could be used in connection with Congressional hearings this winter. Every time I have gone up to the Hill on the Program during the last eight months, somebody has asked substantially the same question that was asked by Bloom. It would also be helpful to have the overall percentage of effectiveness of the food distribution program. I have been tempted to use some figure like 80 or 90% as representing the amount of food that actually gets to the people who are supposed to get it. My impression is that it is no lower than that, and some places may be higher. Do you think that we should adopt some such percentage and use it when we are asked this question, as we inevitably will be in each Hearing about China?)

There was considerable interest expressed in the description of the rationing systems; special interest was evidenced in my comment that the people who are getting the food know that it is part of a program in which U. S. aid plays a large part. On this point, mention was made of statements on the ration card referring to U. S. aid,93 and of the publicity given on your recent efforts to increase the emergency food supply of Shanghai.

I am writing this letter as a substitute for a cable on this subject, since Mr. Hoffman wants to discuss the whole problem with you when he arrives in about a week. In concluding this saga I should like to recommend most warmly that you go on sending in cables on policy questions like Toeca 499. For better or worse, most policy questions do not get pointed up and come into focus except in response to some immediate needs for an answer to some particular question. To put it another way, a crisis seldom becomes a crisis until a cable needs to be answered on the subject. Maybe this is one of the unwritten principles of bureaucracy.

[Page 662]

Your cable on the visit of Madame Chiang Kai-shek,94 by the way, was read with considerable interest and agreement by Mr. Hoffman and others around here, including myself. Madame Chiang has so far limited her contacts to the President and the Secretary of State. We are standing by to answer any questions which may be asked about economic assistance in connection with her visit, but so far, we have not been called on the stage. Mr. Hoffman did not see the lady before she departed.

One other vignette on the current policy discussions about China; the National Security Resources Board was much taken with my memo Aid-to-China Policy IV,95 as I think I may have indicated before. National Security Resources Board circulated this memo to the National Security Council consultants, and then proposed that it be adopted as policy recommendation to the full Security Council. This procedure was objected to by the State Department representative, George Kennan, and I am not just sure where the matter stands at the moment. Generally speaking, the idea of a very flexible new Act96 has gained considerable amount of currency in Washington; but what will happen next I would not venture to predict.

Going back to the State and Congressional discussions, in the course of all these discussions Perc Cowan97 suggested that the desired flexibility might be achieved by extending to a large part or all of the remaining uncommitted China Aid funds, the procedure contemplated by Ecato 64198 for handling the $1,000,000 emergency program fund. This possibility is mentioned in the attached memo of 3 December (the one that was prepared for, but not submitted to, the Congressional Committee group.) I would like very much to get your reaction to this proposal; perhaps you will want to include your proposal with the rest of the problem in your discussions with Mr. Hoffman when he arrives.

Sincerely yours,

Harlan Cleveland
  1. Copy given by Mr. Cleveland to Philip D. Sprouse, Chief of the Division of Chinese Affairs. Letter obviously was written on or after December 3.
  2. The Joint Committee on Foreign Economic Cooperation, established under section 124 of the Economic Cooperation Act of 1948, approved April 3, 1948; 62 Stat. 137, 156.
  3. Not printed.
  4. Alexander I. Henderson, General Counsel, ECA.
  5. Robert A. Lovett, Under Secretary of State.
  6. George F. Kennan, Director of the Policy Planning Staff.
  7. Not attached to file copy; it may be the memorandum prepared in the Economic Cooperation Administration, December 3, on “Aid-to-China Polity,” not printed.
  8. Alfred M. Hurt of the ECA China Mission.
  9. Marginal notation: “On which I was way off base”.
  10. For correspondence on Madame Chiang Kai-shek’s visit to the United States at this time, see pp. 296 ff.
  11. Dated November 8, not printed; for summary, see undated memorandum by Messrs. Magill and Johnson, p. 681.
  12. See section entitled “Preparation of Program for Continuation of Aid to China After Expiration of the China Aid Act of 1948,” pp. 668 ff.
  13. Percival E. Cowan, Consultant, Office of the General Counsel, ECA.
  14. November 24, 8 p.m., not printed.