Executive Secretariat Files
Memorandum by the Secretary of State to the Executive Secretary of the National Security Council (Souers)
Subject: Implementation of NSC 37/256 and NSC 37/5.57
Pursuant to NSC Action No. 123, October 6, 1948, the following progress reports on the implementation of NSC 37/2, “Current Position of the United States with Respect to Formosa”, and NSC 37/5, “Supplementary Measures with Respect to Formosa”, are submitted for the information of the Council:
Mr. Livingston T. Merchant, Counselor of Embassy specially detailed to the Consulate General at Taipei (Formosa) in accordance with paragraph 5 of NSC 37/5, continues to remain of the opinion that it is unwise to approach Governor Chen Cheng at this time. Mr. Merchant believes that any present implication of United States intentions at this stage would be construed as intervention by the United States in the internal conflict for the control of remnant National Government assets, armed forces and authority and that it would thus be unwise to give such an implication at this time.
In the meantime, Mr. Merchant and the United States Treasury Attaché have worked out with ECA a tentative program for the best [Page 336] use of the $17,000,000 of ECA funds allocated for use on Formosa, together with plans for activities of the Joint Commission on Rural Reconstruction and for the use of fertilizer under the ECA program. He reports that at the end of April ECA fertilizer was arriving in Formosa according to schedule and that wheat and cotton of a total value of approximately $500,000 were in Formosa or en route, an amount sufficient to finance the local currency expenditures for the ECA office on Formosa, the engineering survey group and the current program of the Joint Commission on Rural Reconstruction for the next few months.
In accordance with the Department’s instructions, Mr. Merchant has informally and orally indicated to a high ranking Government official on Formosa that a further influx of refugees from the mainland would prove detrimental to the political health of and an economic liability to Formosa.
Pursuant to Mr. Merchant’s recent recommendations, the Department instructed him on May 9 to return to Washington as soon as possible for consultation in regard to the problem of Formosa.