I. Formulation of program for aid to China; China Aid Act of 1948

[Discussions on the proposed China Aid Program were begun in the Department in the fall of 1947. On November 28, 1947, Mr. Melville H. Walker, Assistant Chief of the Division of Investment and Economic Development, prepared a memorandum on Economic Aid Program for China “as a basis for reaching preliminary agreement within the Department as to the character and magnitude of the program contemplated.” It called for an aid program of $400,000,000 for the period April 1, 1948, to June 30, 1949. Some $300,000,000 was to cover essential imports, also known as balance-of-payments aid. The remainder was to be allocated for urgently needed reconstruction projects. This program specifically excluded any provision for direct military aid and currency stabilization.

On December 30, 1947, Mr. Clinton T. Wood, Deputy to the Assistant Secretary of State for Economic Affairs (Thorp), sent a memorandum on China aid to the Secretary of State. Appended was a statement which set the amount of funds required for the program at $485,000,000 of which $435,000,000 was to be allocated for essential imports and the remainder for reconstruction projects. The period covered by the program was advanced to the eighteen months beginning January 1, 1948, “because the course of developments in the financial situation of China has resulted in a more rapid disappearance of financial resources than was anticipated.”]

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