Memorandum by the Assistant Secretary of State for Far Eastern Affairs (Butterworth) to the Secretary of State

The latest Joint Chiefs of Staff recommendation with regard to Formosa83 is understood to call for stepped-up economic and diplomatic aid and, even more important, military advisers and the gift of military equipment and supplies. It parallels with extraordinary [Page 462] fidelity the request for increased assistance from the Chinese National Government received on the same date.84

Dealing with the first two and the least contentious points first, there is in the view of both the Department and ECA comparatively little in the way of an increased economic aid program which could be established beyond that now in existence that would not either assume unjustified responsibility for the entire imports of the Island, thereby reducing the incentive to export, or embark on an industrial and capital goods program which would aggravate the inflation and would not result in any immediate near term increase in the Island’s productivity. In summary FE would not favor as practical a program running appreciably in excess of the contemplated $25 to $30 million ECA estimate of expenditures for the next eighteen months. If Congress extends existing legislation there are ample appropriated funds for this.

It is difficult to see how we could increase our diplomatic support. We have moved our Embassy to Taipei85 and it remains under the Chargé d’Affaires who has represented this Government since last August. Possibly the JCS are considering the appointment of a new Ambassador from the U.S. This would not appear justified coming at a time when the holdings of the Government have shrunk to two islands and other major powers are in the act of recognizing the Communist regime.

With respect to the provision of military advisers, although proposed in different form, this seems to FE in essence to constitute the re-establishment of JUSMAG which was closed out eleven months ago as a sober considered decision. Essentially this proposal flies in the face of all our past experience from Stilwell to Barr. It is the old question of responsibility without authority and it is the even older question of an attempt by the Chinese to involve us directly in the civil war and to capitalize on our military as special pleaders for increased aid.

Before embarking on this new venture it is reasonable to ask what are the chances of success. This proposal flies in the face of the Joint Intelligence estimate quoted in the body of NSC 48/186 and in effect runs counter to the entire analysis and discussion contained in this paper. It can be presumed, therefore, that the chance of permanently or indefinitely denying Formosa by the use of this device is slim.

What then would be the consequences of failure? Essentially U.S. prestige, if not U.S. military forces, would be nailed firmly to the [Page 463] mast of a discredited regime to the dismay of our friends in Asia and to the delight of the Communists who could unite all Mainland China on the issue of U.S. military intervention. It would cancel all our efforts to disengage from the hopeless affiliation and regain our initiative. It would obscure the fact that the failure was a Chinese one despite their possession of resources adequate for their own defenses. It would moreover encourage and enable the Nationalists to carry the war by air and sea to the Mainland and thereby almost inevitably lead to frictions and complications with the British and other friendly powers who will recognize the Communist regime without holding out any real possibility of a re-conquest of China itself.

The British attitude on aid to Formosa is clear. They are justifiably concerned over the possibility of an increased military threat to Hong Kong if Formosa and its military dumps fall into Communist hands.

The sincerity of the Generalissimo in the pledges he is now offering can be judged by K. C. Wu’s statement that he is being given one month in which to obtain increased American aid. It should also be noted that last June and again last November in response to Chinese suggestions that we supply military advisers we informed the Chinese that we had no objection to their employment of former U.S. Army and Naval officers provided they were employed directly by the Chinese Government. The Chinese have shown no interest in such an arrangement.

  1. Supra.
  2. Ante, p. 457.
  3. See telegram Cantel No. 1343, December 27, 1 p. m., from the Chargé in China, vol. viii , “Successive moves of the Embassy office in China …”.
  4. See United States–Vietnam Relations, vol. 8, p. 245.