794A.5 MAP/10–1751: Telegram
The Chargé in the Republic of China (Rankin) to the Secretary of State
504. Joint msg to State Defense ECA from Rankin, Chase, Moyer re Deptel 273, Sept 28. Believe Chi Govt reply Oct 12 (text sent Embtel 495, Oct 13) sets stage for adequate budget control. Fact that complete details on revenues and expenditures must be provided regularly to ESB for joint Chinese and American review and comment furnishes basis for full exchange of info and views. Form and [Page 1835] time of submittal of reports will be worked out and specified in any necessary detail by mutual agreement. Opportunity thus provided for Americans participating in ESB and sub-committees to raise questions on any item and if deemed desirable to have access to records in appropriate Chi auditing and other agencies. No further specific action on latter point seems necessary at present.
Chi reply establishes principles which will enable further development of detailed mechanisms for effective implementation. This under active study and discussion. Will forward short supplementary report on reports re control milit expenditures which are largest and most difficult to handle.
First para Section 5 Chi reply is interpreted to include operating results govt-owned enterprises; ref to “production” in second para 1c refers to productive enterprises owned or operated by Chi Govt which play such large part in econ life of Formosa and hence in any budget making and reporting process.
Unless Washington perceives objections we plan to inform Chi Govt proposals generally acceptable and to confirm our understanding as mentioned in above para.
We believe publicity on above at present moment through statements by Generalissimo would serve no useful purpose. Progress to date is result extensive discussions between Chi and Amers on all points plus detailed consideration within Chi Govt both at top and working levels. Represents notable restriction financial economy of Chi milit and shift to unified civilian economic control with Generalissimo’s full approval on general principles but with details and carrying out to be left to appropriate agencies. Basic facts already widely known and appreciated in Chi Govt circles. Practical implementation now under way involves concrete steps which will make clear to ever increasing number the full implications. Meanwhile, we believe wiser build up position of responsible agencies as instruments of govt and to play down old idea that Generalissimo personally handles all details of state which increasingly not the case. [Rankin, Chase, Moyer.]