Executive Secretariat Files

Note by the Executive Secretary of the National Security Council (Souers) to the Council

NSC 22/3

The Current Position of the United States Respecting Aid to China

At the request of the Secretary of Defense,22 the attached memorandum on the subject and its enclosed telegrams are submitted herewith for consideration by the National Security Council as Item 3 on the Revised Agenda for its 33rd Meeting on Thursday, February 3, 1949.

It is recommended that, if the Council adopts one of the courses of action in regard to the Military Aid Program for China, as recommended by the Secretary of Defense in paragraph 5 of the attached memorandum, the course of action adopted be submitted to the President with the recommendation that he approve it and direct that it be implemented by all appropriate Executive Departments and Agencies of the United States Government under the coordination of the Secretary of State.

Sidney W. Souers

Memorandum by the Secretary of Defense (Forrestal) to the Executive Secretary of the National Security Council (Souers)

Subject: Current Position of the United States Respecting Delivery of Aid to China

References: [Here follows list of various reference documents.]
Although the National Military Establishment is continuing the implementation of the Military Aid Program for China in accordance with the Governmental decision of 31 December 1948 (Reference d),23 I believe the recent recommendations from the Director, U.S. Military Advisory Group, should be brought to the attention of the National Security Council for consideration and whatever action is deemed appropriate.
Because of the continued deterioration of the military and political position of the Nationalist Government in China, the Director of the Joint U. S. Military Advisory Group, in his message of January 26, [Page 480]1949,24 (Reference e) has recommended that the Chinese Aid-ship U.S.S. Seminole be held in Bangor, Washington, to await further developments. Additionally, the U.S. Consul General, Shanghai, China, in a message of January 26, 1949,25 (Reference f), quotes the Director of the Joint U.S. Military Advisory Group as recommending that, pending clarification of the situation in China, no military aid supplies be shipped.
The U.S.S. Warrick with a partial cargo of naval supplies for the Military Aid Program is departing from San Francisco on February 2, 1949. The U.S.S. Seminole, now loading at Bangor, Washington, will depart on February 11, 1949, with a complete cargo of Army supplies for the program. The Military Aid supplies remaining to be delivered following the departure of these two vessels are from excess military stocks and are in the process of rehabilitation, or are new supplies in the process of manufacture expressly for this program. Approximately 50% of the $125,000,000 worth of supplies have already reached China. An estimated additional 15% will be delivered on the two vessels mentioned above. The remaining 35% of the supplies will be delivered as they become available. A current estimate of funds, including those obligated through contracts but for which manufacture of supplies is not complete, and which remain unexpended is in the neighborhood of $15–20 million. However, with the delivery dates of the bulk of the remaining supplies scheduled before April 30, 1949, these funds are diminishing rapidly.
In view of the recommendations from the Director of the Joint U.S. Military Advisory Group, and in view of the sizeable quantity of supplies scheduled for early delivery to China, I recommend that this subject be placed on the agenda for the meeting of the National Security Council for consideration on February 3, 1949. Specifically, I recommend that the National Security Council approve one of the following courses of action in regard to the Military Aid Program for China:
Confirm the present course of action for continuation of the Military Aid Program to completion.
Immediately suspend all procurement to the extent feasible, and suspend further delivery of supplies, including those now en route, to await further developments, or
Terminate the Military Aid Program for China, with undelivered supplies being applied, where possible, against other U.S. Government requirements, and the remaining funds reverting to the Miscellaneous Receipts of the Treasury Department.

James Forrestal
[Page 481]

The Director of the Joint United States Military Advisory Group in China (Barr) to Major General Ray T. Maddocks, Director, Plans and Operations, General Staff, United States Army

CYF 771 OAGA. Although removed now from the best sources of information, I feel that such facts that I have been able to obtain on the present political and military situation and my conclusions and recommendations will be of value and interest to you.

Peace negotiations are making little progress and those most interested hold no hope for better peace terms than the eight conditions26 specified by Mao Tse-Tung.27 In a 1 hour conference with Li Tsung-Jen28 on 23rd January at Nanking, he told me that if he could not obtain a reasonable and honorable peace with the Communists, he would take the Government south and continue to resist. I pointed out that if he lost the troops now in the Nanking-Shanghai area, the Government would have little chance of resisting effectively in the south if the Communists pursued in force. Their inherent mobility and effectiveness of their methods of transportation would enable them to quickly reach and crush any Nationalist effort to assemble, reorganize and train troops to meet them. In my opinion, if Li Tsung-Jen’s peace efforts fall [fail], he will lose all his influence. In this case, I believe there will be a demand for the return of the Generalissimo to head the Government. I am convinced that the Generalissimo foresaw an eventuality, that he did not believe peace could be obtained when he resigned and that in his astuteness he deliberately played it the way he did. This conclusion was drawn from a conversation immediately preceding the Generalissimo’s departure.

Undoubtedly the present “Peace Party” had hoped that the Communists would agree to peace talks and perhaps issue a cease-fire order prior to a real military threat against Nanking. It is apparent, however, that the Communists have no idea of talking peace until Nanking, and perhaps Shanghai, is in their hands. They are deliberately delaying such talks and even adding to terms originally stated. The fact that Nationalist troops are being sent south out of Nanking and that no resistance is being offered north of the Yangtze leads me to believe that the Government will not fight to hold Nanking. The point [Page 482]has been reached where Li Tsung-jen must either accede to all Communist demands or evacuate the remainder of the Government south. I am inclined to believe that he will follow the latter course, if physically possible, which is doubtful at this moment.

In an interview on 25th Jan. with General Tang En-Po, Defense Commander of the Nanking-Shanghai area, he stated that he was not going to obey the orders of Li Tsung-jen to discontinue work on defense installations in the Shanghai area, nor was he going to lift martial law as directed. He said he would also refuse to obey the instructions from any Communist-influenced Government. He further stated that he will fight for Shanghai until driven out when he plans to remove his troops to East coast points in Fukien Province. Tang En-Po has about 8 divisions under his control in the Shanghai area. He understands that he will not have the support of the people if he offers resistance there. He is a strong Generalissimo man obviously not in sympathy with the policy being pursued by the present Peace Party in Nanking but he cannot hope to hold Shanghai under the circumstances.

The Communists are reported in strength just north Pukow across the Yangtze River from Nanking. If the city is not already within artillery range it probably will be within 24 hours. The Reds have also reached the Yangtze East of Nanking at the Grand Canal and are approaching the river west of the city in the Wuhu area.

In view of the foregoing, it is recommended that the Chinese aidship Seminole, AKA–104, be held in Bangor or returned to that port to await developments.

As regards continuance of United States military aid to China, consideration should be given at this time to the policy to be pursued by the United States Government in the following 2 cases:

The present government rejects the Communist peace terms and is successful in establishing itself in Canton.
The Generalissimo reinstates himself as President and establishes an exile government in Taiwan.

Should the Chinese Air Force and Navy remain loyal to the Generalissimo, which is doubtful, and should they really fight, which they have not done in the past, he should be able to hold Taiwan for some time.

It is requested that reply reference decision made on disposition of Seminole be made through CinCFE.

  1. James Forrestal.
  2. Not found in Department of State files.
  3. Printed as enclosure to this document.
  4. Ante, p. 478.
  5. See telegram No. 41, January 14, from the Consul General at Peiping, vol. viii, “Political and military situation in China”, chapter I.
  6. Chairman of the Central Committee of the Chinese Communist Party.
  7. Acting President of the Republic of China; Generalissimo Chiang Kai-shek had retired on January 21 as President of China.