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

890.20/10–2449

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

[Washington,] October 24, 1949.

Subject: Use of $75 Million for “General Area of China” under the Mutual Defense Assistance Act

Problem:

1. To obtain approval of the policy to be used as a planning guide in developing within the Department specific programs and projects under Section 303 (“General Area of China”) of the Mutual Defense Assistance Act of 1949.

2. To obtain approval of certain specific projects which have the highest priority for China, Indonesia, Thailand and Burma preparatory to presentation to the President to obtain his approval thereof and the allocation of funds.

Background:

Pursuant to the authority contained in the Mutual Defense Assistance Act of 1949 Congress has appropriated $75 million to serve as an emergency fund for the President for use in the general area of China in the light of the concern of the United States in the present situation in China.

It is my understanding that the President has indicated his intention of retaining control of this special fund although he will by executive order transfer his authority under the Act to the Secretary of State with respect to the North Atlantic Treaty countries and the other countries specifically mentioned as recipients of military assistance. In view of this determination by the President, this opportunity is being taken to bring to your attention the policy which is proposed as a planning guide in developing specific programs and projects to be presented to the President to obtain his approval and the allocation of funds.

As you know, Section 303 is intended to vest in the President very broad authority to deal with the rapidly changing situation in China and that general area of the world. The President is not required to account for expenditures made under this authority provided that there is certification by him of the amount expended and that it is inadvisable to specify the nature of such expenditures. The official record with respect to the area involved is very clear in expressing the intention that the use of the funds is not confined to China proper. By the same token, in not specifying any country, the discretion appears to remain with the President to use the funds in any country in the general area which is or could be affected by the situation in China or which can affect that situation.

This Act contains no limitation with respect to the form of assistance under Section 303. This contrasts with the fact that the aid to be rendered to the specified nations under the other provisions of the Act is limited to military assistance. Furthermore, the authorization for this fund is not limited to June 30, 1950, as is the case with the other authorizations under the Act. However, in making appropriations to carry out the Act, Congress has made the entire appropriation, including the $75 million, available only through June 30, 1950.

Upon the cessation of effective resistance by the present Chinese Nationalist Government to the Communist forces, the latter will undoubtedly redouble their efforts to wrest control from the legitimate authorities in other countries in the general area of China. The best interests of the United States will be served by encouraging in every way possible in these countries stable governments capable of putting down internal revolt and resisting external Communist pressures and able also to advance the social and economic rehabilitation of their countries. The funds now available under Section 303 afford an extraordinary opportunity for the United States to act quickly in the light of this situation. Accordingly, and based on the proposed policy statement which is attached, there have been prepared detailed statements of projects of the highest priority which are proposed to be undertaken immediately in China, Indonesia, Thailand and Burma. There are also in process of development a number of other projects which it is felt may appropriately be undertaken under Section 303 but which are considered at the moment to be of a secondary priority.

With respect to China, a separate memorandum dated October 21 discussing the possible use of all or a portion of the fund for military aid to China is being forwarded to you. In keeping with the conclusions reached in that memorandum, our plans set forth herein are based on the hypothesis that direct military aid to the Chinese National Government will not be provided. It is expected that our planning on this assumption, however, will take into account the possibility of covert military assistance to provincial leaders in China. The question of covert military assistance is being discussed in an additional memorandum. We are proposing in the attached project statement that approximately $1 million be provided immediately for an expanded information program along specific lines which are designed to align public opinion in China in favor of the United States and to resistance to international Communism.

It is proposed that the highest priority be given under this program to the project for providing police equipment amounting to $10 million to the Indonesian constabulary after independence. It is estimated that this amount will provide for completing the equipping of 100,000 men. The immediate Communist threat to Indonesia is internal in character. Accordingly, the type of assistance which the emerging sovereign Republic of the United States of Indonesia will get is characteristic of police equipment traditionally used in a jungle country. Following the Netherlands police action in December, 1948 large numbers of Communist operatives imprisoned by Indonesian republican authorities regained their freedom and presumably are preparing to resume activities in the near future. The present Indonesian nationalistic leadership has taken a strong anti-Communist line and is regarded as a dangerous enemy by world Communism which will spare no effort to destroy this leadership and to replace it by others who will respond to Communist direction.

It is further proposed that $5 million be made available to Thailand to provide necessary military equipment for five battalions. Although beset both externally and internally, the Thai Government has specifically declared itself in opposition to Communism and has sought to align the Thai nation with those nations opposing the advance of Communism. Externally, Chinese and Vietnamese Communist-led forces are in control of the areas to the north and east of Thailand. In Malaya on the south there are strong Chinese Communist-led guerrilla bands which are presently in revolt against the British authorities and whose principal sphere of action lies along the Malaya-Thailand border. Internally, Thailand is threatened by Chinese Communists who are attempting to gain control of the 3,000,000 Chinese in Thailand. These forces within the nation are strongly armed and are unfriendly to the declared intentions of the Thai Government.

It is also proposed as a matter of priority that the sum of $1,220,000 be utilized to provide to the Burmese Government 10 vessels suitable for river patrol duties together with the required maintenance facilities and American technicians and instructors to train Burmese personnel in their proper operation and maintenance. Burma’s internal disturbances make it vulnerable to Chinese Communist pressure. An adequate and efficient river patrol service, operated by the Burmese Navy, would enable Government forces to gain control of vital north to south lines of river communication cutting through Communist held areas and other disturbed regions in central Burma. Such a service would also establish government supremacy over the waterways of the southern rice-producing delta region, in large sections of which Communist insurgent activity now seriously interferes with the movement of rice to market and export centers. Firm control of waterways transportation and communication would ultimately be a controlling factor in stabilizing the central government authority, in stimulating economic recovery and in reuniting the country.

Meetings have been held with Mr. Rusk, with Mr. McGhee,³⁰ Mr. Gross,³¹ Mr. Fisher,³² Mr. Davies³³ and other representatives of their respective offices in attendance, at which the proposed policy and the general plan for the priority projects have been discussed.

Recommendations:

1. It is recommended that you approve the attached statement of policy to be used as a guide in planning for the utilization of the appropriation of $75 million.

2. It is further recommended that you approve the specified projects which are attached so that appropriate material may be presented to the President to obtain an allocation of funds for the purposes specified, summarized as follows:

China—Expansion of Information Program	$1,010,000
Indonesia—Police Equipment for Constabulary	10,000,000
Thailand—Military Equipment	5,000,000
Burma—River Patrol Equipment	1,220,000
	$17,230,000

[Annex 1]

Mutual Defense Assistance Act “General Area of China” Planning Policy

It is recommended that the following statement be approved as the policy framework for planning under this program:

A. Plans for expenditures under Section 303 of the Mutual Defense Assistance Act of 1949 shall be based on the hypothesis that direct military aid to the Chinese National Government will not be provided. Planning on this assumption, however, must take into account the possibility of covert military assistance to provincial leaders in China.

B. Plans for expenditures shall be confined to those countries in the general area of China in which it is judged that owing to geographic propinquity or internal weakness, for reasons peculiar to the country or territory in question, the treatment of Communist domination resulting from Communist successes in China is deemed to be relatively the most dangerous in the area for the period between now and June 30, 1950.

C. The form of aid, whether arms, economic assistance, expanded propaganda effort or Point IV type of project, shall be decided on the basis of selecting the most appropriate and effective tools to achieve our objective of preventing, halting or reversing a trend of Communist domination in each particular country.

D. Expenditures under Section 303 in any particular country or for any particular purpose shall not be in substitution of funds otherwise appropriated for such place or purpose. Such expenditures, however, may be supplementary or additional where changed circumstances growing out of the present situation in China make expeditious action of this kind necessary to carry out the purposes and intentions of this Act.

[Annex 2]

Proposed Assistance Projects Mutual Defense Assistance Act “General Area of China”

China

I. Type of Program and Cost:
Expanded Information Program	$1,010,000
II. Description of Projects:
1. Installation of two 50 KW medium-wave transmitters on Navy ships for operation off the coast of China (if determined to be feasible)	350,000
2. Reimbursement to Navy for use of the vessels (estimated)	500,000
3. Pamphlet program for production in the field; these pamphlets can be diverted to Chinese populations in other Asian countries if it proves impossible to distribute in China	50,000
4. Poster program (as above)	50,000
5. Book translations with subsidies to publishers; same conditions as for pamphlets and posters	50,000
6. Reference book shipments to USIE libraries; same conditions as above	10,000
Total	$1,010,000

Note: In the event that it became possible to resume USIE operations within communist China, it is assumed that a portion of appropriate materials being produced for other countries in the area under this program would be made available to USIE–China. These would include: motion pictures, pamphlets produced in the United States, textbooks, English-teaching materials. Also, the expanded exchange of persons program would have to be considered from the China point of view in that event.

III. Need of Assistance:

It is at present impossible to reach most of the people in China with information about the U.S. and democracy, Russia and communism, except through broadcasts. The last relay point for these broadcasts now is at Manila, which gives only spotty reception in China. Relays closer to China are urgently needed.

Pamphlets, posters, and books are needed in both Nationalist and communist China where there is an extreme dearth of information of this type.

IV. Advantage to the United States:

All of the proposed measures would implement the United States Government’s international information program which is designed to align public opinion in favor of the United States and to resistance to international communism. This program will assist in this presentation of the U.S. story both in Nationalist and in communist China. In communist China the most critical need exists since the communists utilize every possible means of disseminating Kremlin-dictated propaganda and employ police-state methods of preventing any other version from being read or heard. Unless the United States can make its voice heard, the communist propaganda is bound to take its slow effect through constant repetition of its vigorous line and the concomitant absence of any other version. Since the Chinese communist line is virtually identical to the Russian line, the ultimate result is likely to be a strongly anti-United States and pro-Russian recipient in China. Such an unfavorable climate of opinion would have a deleterious effect on all United States activities in China—trade, mission work, diplomatic effects—as well as on international situations involving the United States and China.

30. George C. McGhee, Assistant Secretary of State for Near Eastern, South Asian, and African Affairs.
31. Ernest A. Gross, Deputy U.S. Representative at the United Nations.
32. Adrian S. Fisher, Legal Adviser.
33. John P. Davies, Jr., of the Policy Planning Staff.