Foreign Relations of the United States, 1948, The Far East: China, Volume VIII

893.50 Recovery/11–1248

The Director of the Office of Far Eastern Affairs ( Butterworth ) to Mr. William T. Phillips, Special Assistant to the Coordinator of Foreign Aid and Assistance ( Labouisse )

[ Washington ,] November 12, 1948.

Subject: Check List of Problems for 1949–50 Presentation of ERP⁴⁷ to the Congress

I have the following comments to make on the questions raised regarding Title IV⁴⁸ in your memorandum of October 21, 1948⁴⁹ on the above subject. These comments have been discussed with the other offices and divisions indicated in your memorandum.

a. “What amendments, if any, to Title IV should be made to permit ECA to deal with Chinese problems more effectively.”

At a meeting on September 28, 1948 between Mr. Cleveland (ECA) and Messrs. Labouisse, Butterworth and Dort,⁵⁰ it was agreed that, for planning purposes and without prejudice to future policy decisions, the Department would collaborate with ECA in the formulation of a fiscal 1950 China economic aid program, or alternative programs, consistent with policy considerations which governed presentation of the present aid program. ECA has not as yet made any specific suggestions regarding the content or legislative aspects of a new economic aid program for China.

FE⁵¹ and ED⁵² have been studying the situation carefully, but find that it is extremely difficult to make any definite program or legislative proposals in view of the highly fluid and disintegrating Chinese situation. It does appear, however, that if U. S. economic aid to China could and were to be continued after April 3, 1949, it should be directed with maximum flexibility. Some aspects of Title IV legislation which would have to be considered with this observation in mind are as follows:

• Section 402⁵³ –Redraft to place greater emphasis on assistance to the Chinese people as contrasted with the “Republic of China” might prove desirable.
• Section 403–Present wording provides desirable flexibility.
• Section 405 and 407–Should be drafted so as to make it possible for aid to be extended in the contingency that the presently recognized National Government no longer exists or, if necessary, without reference to the National Government. Any revision should, of course, avoid an implied repudiation of the present National Government so long as that Government retains administrative integrity. While present wording of these sections may not preclude such action, the two sections should be considered in relation to their respective bilateral agreements which appear to tie U. S. aid exclusively to the National Government.

[Here follows review of Far Eastern programs and their relation to policies in Japan.]

47. European Recovery Program.
48. The China Act of 1948.
49. Memorandum by Mr. Labouisse to “Certain Office and Division Chiefs”, not printed.
50. For an account of this meeting, see Mr. Dort’s memorandum to Mr. Knapp, September 28, p. 670.
51. Office of Far Eastern Affairs.
52. Division of Investment and Economic Development.
53. 62 Stat. 158.