Dr. Kan Chieh-hou, Personal Representative of the Acting President of China, to the Secretary of State
Dear Mr. Secretary: Please accept my thanks for your reply dated October 17.69
Since you were good enough to express your readiness to give the most careful consideration to the views of my Government regarding the use of the funds provided in Section 303 of the National [Mutual] Defense Assistance Act of 1949,70 I venture to bring to your attention the following points which have been uppermost in the thinking of my Government recently:
- In order to enable General Pai Chung-hsi to cope with the military situation effectively, it is imperative that he should immediately [Page 726]be provided with a portion of the above-mentioned funds to pay his troops. Arrangements can be made with banks in Hongkong to convert these funds into the locally circulated currency and to remit them to General Pai’s army.
- As to arms and ammunition, it is claimed in certain quarters that the present situation in China makes it difficult for the supplies to reach the troops in need of them. To obviate this difficulty, the Chinese Government is prepared to accept joint control with the United States Government over the island of Hainan and to use it as a base of supply. The military supplies received from your Government will remain under the control of the authorities of your Government to be stationed on the island, who will also decide where, when and how these supplies are to be made use of.
Although the situation in China still appears to be rather discouraging, in one respect at least the picture is much more simplified than heretofore. It seems clear that the Generalissimo will henceforth concentrate his attention on Formosa and that Acting President Li will be in a position to exercise complete control on the mainland.
It is hoped that you will give your favorable consideration to the plans envisaged above and put them into immediate execution.