893.50 Recovery/11–948: Telegram

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

2141. Prior his departure for Washington, Cleveland, ECA, discussed at length with us memorandum he was preparing for Hoffman dealing with general nature and possible legislation any successor economic aid program to China. While Cleveland’s final draft was not available prior his departure, we found ourselves in general agreement on his main points.34

Crux in our judgment is need for maximum flexibility of administering any future aid program and consequent requirement that legislation so provide. Authority to set up special corporation35 has obvious merit and we endorse. We also agree on desirability fullest coordination between any economic and military assistance. Lastly legislation should authorize continuation rural reconstruction program.36 Sine qua non, however, is that any legislation this subject should afford authority for highly flexible and even unorthodox economic operations in support of US policy as it develops in face of unfolding events.

  1. Mr. Cleveland’s early draft, dated October 25, was sent to Livingston T. Merchant, Counselor of Embassy in China, on October 29. The final version, in memorandum form for Mr. Hoffman and Howard Bruce, Deputy ECA Administrator, was dated November 8; it was summarized in an undated memorandum by Messrs. Magill and Johnson, p. 681.
  2. The draft of October 25 suggested consideration be given to the creation of a special corporation to conduct economic operations on a more flexible basis than would be possible for a regular agency of the U. S. Government.
  3. Administered by the Joint Commission on Rural Reconstruction in China, established under an exchange of notes by the United States and China on August 5; Treaties and Other International Acts Series No. 1848, or 62 Stat, (pt. 3) 3139. For correspondence on negotiations preceding the exchange of notes, see pp. 601 ff.