Memorandum by the Director of the Office of Far Eastern Affairs (Butterworth) to the Under Secretary of State (Lovett)
Subject: ECA10 Proposals Regarding Formulation of a China Aid Program for Fiscal Year 1950 and thereafter
Apropos of your discussion regarding China on Monday with Mr. Hoffman11 and the Secretaries of the National Defense Establishment, which you described to me this morning, I attach for your information copies of two ECA memoranda12 dealing with the above subject. The memoranda, prepared by Mr. Cleveland13 (ECA) for Messrs. Moore14 and Hoffman, were awaiting me on my return from leave. Mr. Cleveland had sent them to the Department in the hope that they might provide a basis for joint formulation of future China aid policy by ECA, National Defense and the Department. The memoranda may be summarized briefly as follows:
Consideration should be given to formulation of a new program of aid to China along the following lines: (1) Inclusion of direct [Page 669] military as well as economic aid; (2) Coordinated administration, including close field supervision, of both types of aid by a unified mission; (3) Participation by the mission in the development and execution of Chinese Government policies; (4) Legislative designation of the aid as for “China” rather than to the National Government so that the aid administrator would have maximum flexibility to direct aid to those elements in China which give greatest promise of effective resistance against the Chinese Communist program. These proposals are based on the assumption that the National Government is not able to cope with the situation it faces, that the near future will bring increasing disintegration and chaos, and that there are and may develop leaders, such as General Fu Tso-yi in North China, who are more effective than those at Nanking, but who are denied adequate support by the National Government. The implication is present that a new aid program should be of considerably greater magnitude than the current program, and Mr. Cleveland (ECA) has stated to one of my assistants his belief that a new program should be authorized for the achievement of definite objectives over a longer period—say three years.