Marshall Mission Files, Lot 54–D270: Telegram
Colonel Marshall S. Carter to General Marshall
92655. Your 9697 and my 920498 refers. In response to your directed actions, the following is an interim report:
- 1.
- War and State have been formally requested to continue program beyond 30 June pending conclusion of agreement as to payment therefor. In this connection a Presidential Directive of 20 November in reply to a memorandum from the Generalissimo authorizes continuation of the program, and the formal request was made to insure such action, but the lack of appropriated funds after 30 June makes mandatory a cash payment without delay.
- 2.
- Approximately 20 November the Generalissimo in a message to
the President requested continuation of the program by the
following partial quote:
“It is urgently requested that until post-war training arrangements and methods of settlement are completed between China and the United States that the completion of this training program in the United States and the transportation required be authorized. My Government will expect to bear the expense of this program under agreement to be concluded. Signed Chiang Kai-Shek.”
- The President replied in pertinent part as follows:
“I have made inquiry of my Chiefs of Staff and am informed that arrangements have already been made to continue the training of the Chinese Air Force personnel substantially as outlined in subject message. Signed H. S. Truman.”
- Based on the foregoing the State and War Departments have made continual representation to the local Chinese Representatives to conclude an agreement for method of payment of this program. The [Page 777] program has been continuing under the terms of the Lend-Lease Act9 and the justification for utilizing this Act for a training program for a peacetime Air Force is considered open to criticism unless it is done on a reimbursable basis, as proposed by the Generalissimo. Accordingly, the Secretary of State approved the program subject to payment upon presentation of bill therefor. In response to your query it is definitely the understanding here that costs for December 1945 to June 30, 1946 are reimbursable Lend-Lease.
- 3.
- Presented to the Chinese Supply Commission yesterday was an additional clause to the 3 C agreement discussed in my 92248 and your 980.10 This additional clause will authorize, subject to payment upon presentation of bills, the Air, Naval, Ground and Medical Training Programs up to December 31, 1947, in an amount not exceeding $15,000,000. In addition it provides for payment upon presentation of bills therefor for the costs incurred by the United States in connection with the Air Training Program between November 30, 1945 and July 1, 1946. This is in conformity with the reasoning expressed in my preceding paragraph.
- The terms you proposed in paragraph 3 of 969 are still being considered by War, State and Treasury. War Department appropriation bill for fiscal year 1947 contains neither funds nor legal authority for continuation, and the necessity for obligating money for this program well in advance of delivery of the items, makes the War Department insistent that the funds be made available at the earliest practicable date, and prior to 30 June. Treasury Department feels that Yuan indebtedness can be offset against deliveries of surplus without jeopardizing final settlement, but the use of part of this indebtedness for other purposes would require change of policy already established by National Advisory Council. State Department is prepared to support any reasonable method of payment but feels that the term “firm commitment to pay” is becoming somewhat worn out, and sees no reason why dollar assets should not be made available now for this purpose, particularly in view of the relatively small amount and the Generalissimo’s already expressed commitment. These are all informal views, not policy decisions.
- The problem from War Department views is lack of legal authority and no appropriated funds to expend for this purpose. State and Treasury feel that as a matter of principle, based on background given in this message, the Chinese should make good this obligation in full without further attempts to negotiate. Dr. Wang11 has no doubt already cabled T. V. Soong in regard my paragraph 3 above, but time is rapidly running out.
- To summarize, your action 1 and 2 are answered in the foregoing comments. With regard to your action 3, I respectfully recommend reconsideration of your proposal, and firm representations to T. V. Soong to deposit the cash required for continuation of Air Training Program beyond 30 June, at least in an initial amount of $8,000,000 pending further determination of costs. I am still looking for other funds that can be temporarily used but so far no luck.