Memorandum of Conversation, by the Assistant Chief of the Division of Chinese Affairs (Sprouse)

Participants: Mr. Dening, Assistant Under Secretary for Foreign Affairs, British Foreign Office
Mr. Graves, Counselor, British Embassy
Mr. Butterworth, Director, Office of Far Eastern Affairs
Mr. Green,28 NA
Mr. Sprouse, CA

(The conversation described hereunder is one of the series of conversations between Mr. Dening and Mr. Butterworth and other officers of the Department regarding various aspects of the situation in the Far East.)

Mr. Dening opened the conversation by referring to the efforts of the British Government to go along with the U. S. Government during parts of 1946 and 1947 in not permitting the sale of munitions to the Chinese Government. He explained that his Government had been somewhat embarrassed since it had publicly announced this policy and now found itself in a difficult position because of the constant criticism of aid to China from Lord Lindsay and other like-minded members of Parliament who continued to look upon the Chinese Communists as agrarian reformers. Consequently, he said, the British Government had not yet made public any change in its previous ban on the sale of munitions to China, although it was now selling military supplies to China from time to time. Prefacing his query with the statement that the British Government was not selling munitions to T. V. Soong29 or other Chinese leaders in southeast China, he asked what the U. S. Government’s attitude would be toward such action by the British Government. He further stated that he was aware that the U. S. Government had long since relaxed its ban on the shipment of munitions to China and expressed an interest in knowing what military supplies were now going forward to China from the United States.

Mr. Butterworth gave a full explanation of the circumstances surrounding the imposition of the ban on the shipment of munitions to China in 1946 and the lifting of this ban in May 1947. He continued with an explanation of the subsequent negotiations involving the sale of various surplus military items to the Chinese Government, the [Page 78] problems involved in disposing of surplus war matériel in the Pacific islands and the Chinese lack of interest in obtaining munitions from commercial sources because of their desire to purchase such matériel from U. S. surplus stocks at prices only a fraction of their procurement cost. With reference to Mr. Dening’s query concerning the possible sale of munitions by the British Government to Chinese leaders in southeast China, Mr. Butterworth made it clear that this Government would not have any objection thereto.

Mr. Butterworth went on to describe the China aid program and the background of the legislative history of the China Aid Act of 1948. In this explanation he emphasized the differences between the thinking of the House and the Senate with respect to the question of military aid to China and the legislative evolution of the section in the Act providing for additional aid of $125 million in grants. He pointed out the desire of the Senate Foreign Relations Committee to avoid having the U. S. Government assume responsibilities and enter into commitments in China similar to those with which it was confronted in Greece and compared the “tea cup” of Greece to the “ocean” of China.

Mr. Butterworth then went on to describe the purposes of the China aid program as it had developed from the Department’s original bill and the part that it was hoped would be played by the rural reconstruction program under the China Aid Act towards bringing about improvement in rural areas of China which were so important to the Government in its present situation. He described the composition of the Economic Cooperation Mission that would shortly proceed to China and the various aspects of the program and expressed the hope that the British Government, because of its own interest in the Canton-Hankow Railway, would do what it could to cooperate in this project envisaged as a possibility under the reconstruction portion of the program.

Referring to the general political situation, Mr. Butterworth stated that the American Ambassador had of late been somewhat pessimistic with regard to the possibility of the Generalissimo’s30 ability to carry out the reforms necessary to restore confidence in and strengthen the Chinese Government in its struggle against the Chinese Communists and that this was a matter of concern to the Department since Dr. Stuart was on such close and intimate terms with the Generalissimo.

Mr. Dening replied that he was not fully up to date on the latest developments in China but that this seemed to confirm in general reports received from British official sources in China.

Mr. Sprouse gave a brief explanation of the background of the most recent developments with respect to the new cabinet and the [Page 79] ranking military appointments and added an explanation of the role of the U. S. Army and Naval Advisory Groups in China.

In reply to a question regarding the British opinion of Marshal Li Chi-shen and his Kuomintang Revolutionary Committee at Hong Kong, Mr. Dening said that it was his understanding that Marshal Li was not being taken seriously as an important factor in the Chinese scene. Mr. Dening went on to express the serious concern of the British Government over the dangers to the regions south of China, including Hong Kong, inherent in the increasing strength of the Chinese Communists in China and the possibility of an eventual Communist-controlled China.

Mr. Butterworth replied that the U. S. Government was equally aware of these dangers.

Mr. Dening expressed a desire that there continue to be consultation between the British and U. S. Governments regarding developments in China and voiced his appreciation of the conversations he liad had on these and related subjects.

Mr. Butterworth agreed on the desirability of continued close contacts with respect to these developments and stated that the Department had only a few days ago instructed the Embassy at Nanking to keep the British and French Missions informed of its plans regarding the evacuation of American nationals from north China after reference of this matter to the Chinese Foreign Office. He explained that if the American Embassy had not yet done so it was probably due to the circumstance that the interchanges with the Foreign Office on this subject had not yet been completed.

The conversation was concluded upon arranging that discussions of Southeast Asia would be held at the next meeting on June 4.

  1. Marshall Green, Division of Northeast Asian Affairs.
  2. Governor of Kwangtung.
  3. President Chiang Kai-shek.