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

893.50 Recovery/6–748

Memorandum of Conversation, by the Secretary of State³⁴

[Washington,] June 7, 1948.

Participants:	Mr. Forrestal, Secretary of Defense
	Mr. Royall, Secretary of the Army
	Mr. McNeil, Assistant to Secretary Forrestal
	Mr. Marshall, Secretary of State
	Mr. Sprouse, CA
	Mr. McAfee, CA

Secretary Forrestal opened the conversation by referring to the letter addressed to him by Senator Bridges, Chairman of the Senate Appropriations Committee, asking for information with respect to Chinese military needs and to what extent they would be met by the grants under the China Aid Act of 1948. He continued that he wished to have no conflict in what has already been said on this subject in any statements that may be made by representatives of the National Military Establishment who would testify on aid to China before the Senate Appropriations Committee. Secretary Forrestal stated that the Chinese had indicated that the $125 million grants under the China Aid Act would be used for military purchases under the following allocations among its armed services: Army, $87,500,000; Air Force, $28,000,000; and Navy $9,500,000.

Secretary Royall stated that an ad hoc committee of Army, Navy and Air Force representatives, in which General Wedemeyer³⁵ participated, had estimated that Chinese Government military needs against the Communists for one year totalled $973,000,000 and had supported the $125 million grants provided that Chinese expenditures of these funds were supervised. He pointed out that he saw no justification for piece-meal programs which would fall short of the objective of providing realistic assistance and for that reason he did not agree that the U. S. should give military aid to China. He further said that he had so testified before the House Appropriations Committee.

I then read the text of a note, dated June 2, 1948 which had just been received from the Chinese Ambassador, in which he had listed the names of recently arrived Chinese military officers, had enclosed a list of military items which the Chinese Government planned to purchase from the $125 million grants and had asked that he be informed of the U. S. Government agencies which these Chinese officers could approach with a view to clarifying the technical requirements of China’s armed forces. I also read the text of a letter, dated June 2, 1948 from the President to me in which were set forth the administrative terms to govern the disbursement of the $125 million grants to the Chinese Government. (I handed copies of the Chinese Ambassador’s note and the President’s letter to Secretary Forrestal and Secretary Royall.)

I pointed out that the U. S. Government must not allow itself to become undesirably involved in administering the $125 million grants and that it was necessary to maintain a distinction between advice and assistance lest the U. S. Government be placed in a position of underwriting the entire Chinese military program and running the Chinese Government. I indicated my belief that the U. S. Government should limit its action in this regard to putting the Chinese in contact with the concerned officers of the Department of the Army, Navy and Air Force who could give them help in spending these funds wisely and asked Secretary Forrestal to furnish the names of such officers so that this information could be transmitted to the Chinese Ambassador.

Secretary Forrestal said that the core of the problem seemed to be the degree of guidance which should be extended to the Chinese Government in the spending of the $125 million grants.

I again expressed the opinion that the U. S. Government should not attempt to run the Chinese Government’s war but should point out the channels through which the assistance provided in these grants could best be made available. In reply to Secretary Forrestal’s query whether the U. S. Government should supervise the Chinese Government’s purchasing program under these grants, I stated that there was no objection to giving the Chinese appropriate advice in this regard but that the U. S. should not undertake to run the Chinese Government military effort in China. I then read excerpts from a document prepared in the Division of Chinese Affairs³⁶ which recommended that the concerned officers of the Departments of the Army, Navy and Air Force extend appropriate advice to the Chinese representatives in their expenditures of the $125 million grants. I said that the Chinese should be put in touch with those officers and that it was not necessary to spell out what should be done since the intent of the Congress and the President was sufficiently clear on this point.

Secretary Forrestal indicated that Senator Bridges requested in his letter three types of information: (1) A report on the military situation. (Secretary Royall said that the Department of the Army would have this information prepared for the hearings.) (2) A report on the volume of past aid. (Secretary Royall stated that his Department would provide these figures, much of which had already been submitted to the Congress by the Department of State. I pointed out that additional contracts for the sale of military surplus had been concluded with the Chinese Government since the submission of the previous data.) (3) A statement of the Chinese Government’s dollar requirements for military expenditures.

When Secretary Royall referred to his previous statement that military needs would total $973,000,000, I emphasized that the mere provision of military equipment would not achieve the defeat of the Communists since the U. S. had already transferred considerable quantities of such equipment. I continued that this equipment and the divisions handling it had been misused by Chinese leadership. I further noted that the recent appointments of high military officers, such as the Chief of Staff,³⁷ indicated no improvement in the quality of Chinese military commanders and that to compensate for this lack of leadership it would be necessary to send to China large numbers of U. S. officers, not now available. This would result in the U. S. assuming responsibility for the Chinese Government’s war effort. I added that it was possible, however, to render more direct assistance in the training and equipping of naval forces, since this represented a minimum of involvement compared with that connected with land forces.

Secretary Roy all expressed the opinion that the Department of the Army should stand on the course of action outlined in the President’s letter and the general intent expressed in the China Aid Act of 1948.

Secretary Forrestal asked if it would be desirable to have a more forceful and aggressive head of the Army Advisory Group than General Barr.³⁸

I replied that General Barr had been selected in the belief that he would work well with the Generalissimo and that he had apparently been doing so. I added that I did not think it was necessary to replace General Barr since he was being effective and a more vigorous man might not work so well with the Generalissimo and thus cause difficulty.

Secretary Forrestal said that General Barr would be asked to comment on the military situation and the Chinese military purchases under the $125 million grants.

Discussion at this point turned to the status of the 8⅓ Group Program, as I asked for the latest information on the degree to which it had been completed.

Mr. McAfee stated that although certain spares were not available the remaining combat aircraft were available and contracts covering their transfer were under discussion with the Chinese. He said that this complement included 95 fighters and 37 heavy bombers and that it has been proposed that fighters be substituted for these bombers. He further stated that there had been delay in concluding contracts with the Chinese because of their reluctance to accept the terms offered by the U. S. Army. Mr. McAfee noted that in the meantime the Department of the Air Force has developed and has received the State Department’s approval for a program which will result in the transfer to the Chinese from the Pacific area up to 166 fighters in combat operational condition. He explained that these planes were not being transferred as a part of the 8⅓ Group Program in order to avoid responsibility for the future provision of spares, although approximately 10 percent of the spares were to be made available with these planes.

I pointed out that the transfer of all these planes would then more than fulfill the U. S. Government’s commitments with respect to planes under the 8⅓ Group Program.

Mr. McAfee replied that this was true with regard to planes, according to the U. S. Government’s figures, but that the necessary spares under this program were not sufficient to complete the program. In reply to my query regarding the present status of the 150 C–46 planes sold to the Chinese Government in December 1947, at least 50 of which were said to have been in operational condition, Mr. McAfee said that no information was presently available regarding this matter but that it was his understanding that these planes were not in operational condition required to cross the Pacific and were to be flown to the West Coast for the necessary repairs. He stated that he would endeavor to obtain the necessary information regarding the schedule of their arrival in China.

Secretary Forrestal inquired regarding General Ho Ying-chin, recently appointed Minister of National Defense.

I replied that he was not a competent military commander but rather a politically powerful figure who would be interested in succeeding to power in the event of the collapse of the Generalissimo’s authority. I also pointed out that he had consistently been uncooperative during my mission to China³⁹ and had opposed the things I had tried to accomplish. Mr. Sprouse indicated his concurrence with this description of General Ho.

The conversation then turned to other recent Chinese military appointments which seemed to indicate little promise for effective military action except in the case of General Pai Chung-hsi,⁴⁰ whom I described as an able commander. Favorable comment was also made regarding General Fu Tso-yi⁴¹ and Marshal Wei Li-huang.⁴²

With respect to the China Aid Program I suggested that if the Department of the Army should take the position in its testimony before the Senate Appropriations Committee of not favoring military aid at present it would be in order to recommend that the $125 million be allocated to economic aid, as had been the case in the State Department’s original aid program.

After a general discussion on the effect of recent reductions in the amount to be available, Secretary Royall asked what the Department of the Army should recommend if asked to set a percentage of the; China aid funds to be earmarked for military aid.

I said that we should not commit ourselves on this point but that information on Chinese military aid could be presented to the Committee as set forth in the Chinese Ambassador’s note of June 2.

Mr. Sprouse pointed out that the administrative terms decided upon by the President and set forth in his letter of June 2 had not yet been communicated to the Chinese Embassy since the legal division of the State Department felt it unwise to forward them to the Chinese until final action on the China Aid Act had been taken by the Congress.

Secretary Royall stated that in any event the terms decided upon could be made known to the Senate Appropriations Committee during the hearings.

With respect to the reduction in the over-all aid funds to foreign governments, it was agreed that in answer to any specific questions Department of the Army representatives would indicate that the need existed for the restoration of the total funds previously authorized for these programs.

34. Drafted by the Assistant Chief of the Division of Chinese Affairs (Sprouse) and by William McAfee of the same Division.
35. Lt. Gen. Albert C. Wedemeyer, Director of Plans and Operations of the Army General Staff.
36. Not found in Department files.
37. Gen. Ku Chu-tung.
38. Maj. Gen. David G. Barr.
39. December 1945–January 1947.
40. Former Chinese Minister of National Defense; Commander in Chief of Central China Bandit Suppression Headquarters.
41. Commander in Chief of North China Bandit Suppression Headquarters.
42. Commander in Chief of Northeast Bandit Suppression Headquarters.