Foreign Relations of the United States, 1949, The Far East: China, Volume IX

893.50 Recovery/8–1249

The Acting Assistant Administrator for Program of the Economic Cooperation Administration (Cleveland) to the Director of the Office of Far Eastern Affairs (Butterworth)

Washington, August 12, 1949.

Dear Walt: This will acknowledge receipt of your letter of August 4, 1949, outlining the views of the Department on current ECA operations on Formosa.

The activities described in your letter include the principal current ECA activities on Formosa. In the past, ECA has also financed a supply of crude petroleum for the Kaohsiung refinery and other petroleum products in small quantities. We now have under consideration financing a reduced supply of crude petroleum in an amount only sufficient to enable the refinery to supply the needs of the Formosan economy for petroleum products.

Approval has also been given to use Hong Kong dollars derived from the sale of yarn manufactured from ECA-financed cotton to complete the calcium cyanamid plant of the Taiwan Fertilizer Company (already 90% completed) under the supervision of the staff of the J. G. White Engineering Corporation, and similar assistance may be given in connection with the erection of another small fertilizer plant.

The program of the Joint Commission on Rural Reconstruction on Formosa has been on a relatively minor scale. Dr. Raymond T. Moyer, who is concurrently the Administrator’s representative with respect to JCRR matters and one of the American commissioners appointed by the President, has recently been advised that it would be appropriate to enlarge JCRR operations on Taiwan to a scale comparable to that of operations now being carried on or planned for the mainland.

ECA has under consideration the procurement of additional tonnages of fertilizer for delivery in time for the 1950 rice crops, as you suggest. However, previous arrangements for the distribution of fertilizer on Formosa have not been completed in a manner wholly satisfactory to ECA. If a satisfactory program governing the use of additional fertilizer cannot be agreed upon soon, it may be necessary to consider whether the desirability of providing such additional quantities of fertilizer to Formosa outweighs the danger that such fertilizer may be allocated in a manner which we believe undesirable and not in the interest of the Formosan economy. Before reaching a final decision on this matter, we will consult with the Department.

We shall appreciate it if you will advise us if any of the activities described above deviate from the policy which the Department believes should guide ECA operations on Formosa for the present.⁹⁹

Sincerely yours,

Harlan Cleveland

99. In a letter of August 26, the Deputy Director of the Office of Far Eastern Affairs (Allison) replied that these activities were in accord with the present policy regarding Taiwan.