FURTHER STATEMENT OF MAJ. GEN. GEORGE C. STEWART, DIRECTOR, OFFICE OF MILITARY ASSISTANCE, OFFICE OF THE SECRETARY OF DEFENSE 50. General STEWART. This is chart 51 in your book and this is chart I believe there are a number of members of the committee here today who were not here the first day we displayed these particulartype charts. I will just very briefly say that they are arranged to answer the question posed by the committee in its memorandum to my office as to the arrangement of the information. To start with chart 51, we show in here the value of equipment shipped from funds already appropriated, the value of equipment remaining to be shipped from funds already appropriated, and our proposal for 1954 funds. (Discussion off the record.) Mrs. BOLTON. Mr. Chairman, could the general define "excess equipment"? General STEWART. "Excess equipment" is the military equipment which after due process, as prescribed by regulations, is declared in excess of the needs of the three military departments, including the war reserve. Under the provisions of the MSA Act of 1951, we can ship such excess to friendly countries without charge, other than the cost of placing it in operational condition and the cost of transporting it. In order to show the value of what we have delivered, we show the original cost of this equipment. That is the reason we have to put it up to show the two types of equipment being delivered. Mr. VORYS. In this case, as in Greece and Turkey, the chart does not give the whole picture because it starts with MSA and I think there were probably substantial deliveries prior to that. I wonder if those are available or if our staff could get those so we could see really what we start with. (Discussion off the record.) General STEWART. This is simply the Mutual Assistance Program starting in 1950, sir. There was, of course, considerable equipment made available to the Chinese forces prior to that time. Mr. VORYS. That looks like a very small amount. Only when we see what the earlier amounts were, can we make any comparison. General STEWART. We will get that information, sir. Mr. JUDD. I wish you could. I have been trying for years to find out how much of the $125 million military assistance to China appropriation that was passed here April 3, 1948, was delivered, and where in China. As I recall, something like two ships-I got it in a roundabout way-went into China itself and the rest was diverted to Formosa. Is that right? General STEWART. I do not know, sir, I will make every effort to get you that information. Mr. JUDD. Maybe this is not the time to do it but I would like some time to find out how much of what was delivered to whom in China or Formosa, or elsewhere, at what time, in what condition, and how much was charged for it on the books. I know a lot of plain misrepresentations have been put out regarding the amount of useful aid we have given. The only way to answer it is to get all the facts. I have never been able to get that out of the Pentagon in 5 years. General STEWART. I will attempt to get that. Mr. JUDD. How much of what was delivered to whom, where, when, and in what condition. Also, how much was charged for it. That makes seven things. As I have said before, Congress appropriated money for aid to Greece and we shipped 220 cartridges for $1 to Greece and out of the same pile of ammunition only 12 cartridges for $1 to China because they charged Chinese replacement costs for that ammunition and they charged the Greeks 10 cents on the dollar of original cost. That is the kind of shifty footwork that has gone on that makes it impossible to find out how much actual aid went-not how much in dollars, or how many dollars appear in a table. I hope you can get it out of the Pentagon. (The information requested is as follows:) The following information is furnished in response to Congressman Judd's question regarding dollar value of equipment furnished Nationalist China prior to MDAP: The enclosed summary provides information as to the dollar value of equipment furnished as well as the type of equipment, quantities, to whom it was furnished, when, and where. It is impossible at this time to indicate exactly what happened to it after receipt. However, additional efforts are being made by the Department of the Army to obtain the desired information. In the event definitive information is developed, it will be furnished the House Committee on Foreign Affairs. Statement No. 7 is not included herewith since information incident to the NGRC MDA program is being furnished by separate letter through the Director for Mutual Security in response to question by Mr. Zablocki and Mr. Judd during the House Foreign Affairs Committee hearing on Thursday, April 30, 1953. UNITED STATES ECONOMIC, FINANCIAL, AND MILITARY AID TO CHINA SINCE APRIL 1, 1941 Prepared by Office of the Secretary of Defense, Office of Progress Reports and Statistics United States economic, financial, and military aid to China since Apr. 1, 1941 [In millions of United States dollars] AID TO CHINA FURNISHED IN WHOLE OR IN PART BY THE ARMY, NAVY, May 6, 1941, to Sept. 2, 1945. 2. Military aid under Sino-American Cooperative Organization Agreement (SACO). 3. Transfer of United States naval vessels under Public Law 512, 79th Công 4. Transfers under the China aid program authorized by sec. 404 (b), China Aid Act of 1948. 5. Ammunition transferred by the United States 1st Marine Division in the Peiping-Tientsin area. 6. Ammunition transferred by Fleet Marine Force, Western Pacific, at Tsingtao, China 7. Mutual defense assistance program. (See attached secret statement 7.)... 8. U. S. Army sale of excess stocks in West China. AID TO CHINA FURNISHED BY AGENCIES OTHER THAN ARMY, NAVY, AND 9. Office of Foreign Liquidation Commissioner and War Assets Administration: Sale of surplus military equipment. 10. Office of Foreign Liquidation Commissioner: Sale of civilian surplus property (bulk sales agreement). 11. Office of Foreign Liquidation Commissioner: Dockyard facilities sales... 12. Maritime Commission ship sales. 13. Assistance by American Red Cross: Prior to V-J Day. Subsequent to V-J Day. 14. Export-Import bank credits: Prior to V-J Day. Subsequent to V-J Day. 15. Economic Cooperation Administration program. 16. United States foreign relief program (Department of State) 17. United Nations Relief and Rehabilitation Administration-United States contribution. 18. Board of Trustees for Rehabilitation Affairs. 19. Stabilization fund agreement, 1941 (Department of Treasury). 20. 1942 Treasury credit (Public Law 442, 77th Cong.). 21. Chinese student assistance (Department of State). Total. Grand total. DESCRIPTION OF INDIVIDUAL CATEGORIES OF UNITED STATES AID (Paragraph numbers correspond with numbers of items listed in table above) 1. Lend-lease program As of December 31, 1951, Treasury Department records on fiscal operations show aid, both material and services, furnished to the Chinese Government under the lend-lease program amounted to $1,627.6 million, of which $845.3 million had been delivered prior to V-J Day and the remainder of $782.3 million had been delivered subsequent to V-J Day. Of the total aid, $1,627.6 million, the War Department, which included the Army Air Corps, effected transfers amounting to $1,420.7 million, according to records of the Department of the Army. This amount includes: (1) Overseas transfers out of United States theater stocks and services rendered amounting to $1,073.0 million. Approximately 97 percent of all overseas transfers of materials and services are supported by receipted transfer documents listing in detail the nature and extent of the aid furnished. (2) Lend-lease shipments to United States commanding generals earmarked for China amounting to $385.9 million against which credits for diversions to non-Chinese recipients and returns amounting to $308.6 million were applied, leaving for these shipments a net of $77.3 million as the value of actual transfers to the Chinese. (3) All other War Department transfers, amounting to $270.4 million, took place in the continental United States and are supported by transfer documents, of which approximately 98 percent are receipted by either Chinese Government representatives or their authorized agents. The bulk of the lend-lease transfers made by the Department of the Navy were accomplished in China and in most instances are supported by receipts signed by representatives of the Chinese Government. The total lend-lease aid furnished by the Navy, according to Navy Department records, was $71.0 million, of which $66.8 million represents the value of the 96 vessels charged to lend-lease and transferred under Public Law 512 (79th Cong). In addition to the War and Navy Department transfers, there were lend-lease transfers by Treasury Department, Maritime Commission, and other agencies totaling $135.9 million, according to Treasury Department records. Included in the above totals are amounts resulting from transfers under the pipeline credit agreement which authorized the delivery under credit arrangements of lend-lease civilian-type equipment and supplies contracted for but undelivered on V-J Day. The agreement provided for the shipment of $51.7 million of such supplies to be paid for over a period of 30 years beginning July 1, 1947, with interest at 2% percent per year. Goods with a value of $50.3 million were actually delivered and charged to the Chinese under the terms of this agreement. Also included in the above totals are charges in the amount of $25.9 million covering certain transfers made under lend-lease for which the Chinese Government agreed to pay. No other credit arrangements under lendlease are indicated by the December 31, 1951, lend-lease reports of the Treasury Department. The pricing policy for aid furnished under the Lend-Lease Act was United States procurement cost for new items and value based on condition for used items, plus an amount to cover packing, handling, and inland transportation. Charges for transfers out of excess military stocks overseas were United States procurement cost for new items, the value based on condition for used items, plus an amount to cover packing, handling, inland and ocean transportation (statement 1). 2. Sino-American Cooperative Agreement The military transfers under the Sino-American Cooperative Agreement (SACO) consisted primarily of ordnance supplies furnished the Chinese between September 2, 1945, and March 2, 1946, by the United States Navy. These transfers were accomplished in fulfillment of a wartime agreement calling for the exchange of services and supplies for certain specified services provided by the Chinese Government (statement 2). 3. Transfer of United States naval vessels A total of 131 vessels were transferred to the Chinese Nationalist Government as grant aid under Public Law 512 (79th Cong). The procurement cost of these vessels was $141.4 million, of which $74.6 million is reflected in this report as value of aid rendered under Public Law 512, and $66.8 million is reflected in the lend-lease accounts with $27.3 million prior to V-J Day and $39.5 million subsequent to V-J Day (statement 3). 4. China aid program Through December 31, 1951, shipments to the Chinese Government made by United States Government agencies under the China aid program, for which $125 million was appropriated, amounted to $94.2 million. In addition, there was a cash advance of $28.9 million made to the Nationalist Government of China to be utilized in direct procurement of military equipment by the Chinese on the open market. A portion of the cash advance was paid to the War Assets Administration and the Office of Foreign Liquidation Commissioner for certain surplus material obtained from them. Pricing of aid furnished by the Departments of the Army and the Air Force, which amounted to $71.8 million, was in accordance with the pricing policy established by the Department of the Army covering all military aid programs. In accordance with this policy, actual procurement cost was charged for items procured for foreign-aid programs, plus packing, handling, transportation, and administrative costs. Full current replacement cost was charged for transfers out of stock, plus packing, handling, transportation, and administrative costs. Transfers out of excess stocks were priced at 10 percent of prices in effect in 1945, plus rehabilitation costs, packing, handling, transportation, and administrative costs (statements 4 and 4A). 5. and 6. Ammunition transferred by United States Marines Between April and September 1947 the United States Marines in the PeipingTientsin area and the Tsingtao area transferred at no cost to the Chinese Government approximately 6,500 tons of ammunition. Complete listings of the items and quantities transferred, together with dollar values, based on estimated 1947 procurement costs, are attached (statements 5 and 6). 7. Mutual Defense assistance program As of December 31, 1951, certain military material with a value of $24.7 million had been shipped under the mutual defense assistance program. All detailed information concerning this program is classified for security reasons. Pricing of aid furnished under the mutual defense assistance program is in accordance with the provision set forth in section 403 of the Mutual Defense Assistance Act of 1949, as amended. (See attached secret statement 7.) 8. Sale of excess stocks of the United States Army in West China In 1946 the United States Army contracted to transfer to the Chinese Government a broad assortment of United States Army supplies, with a depreciated landed cost value of US$67.24 million, plus CN$5.16 billion and located in west China. In return the Chinese Government agreed to pay $25 million (US) and $5.16 billion (CN) for the property transferred. Certain terms of the agreement follow: "ARTICLE 4. In consideration of the immediate transfer of said property, China hereby agrees to purchase and to pay for the property thus transferred, and further agrees to hold the United States harmless for all claims for rents, damages, breach of contract, or otherwise which may arise from any source whatever. *** "ARTICLE 7. China agrees to pay US$25 million and CN$5,160 million for the property thus transferred in accordance with the following terms and conditions: "a. CN$5,160 million will be deducted from the total of the CN dollar advance made by China to the United States. "b. US$5million will be paid in cash. "c. US$20 million will be payable in accordance with the terms of a contract to be negotiated between China and the United States Treasury Department, which contract will provide for: "(1) Principal to be paid in 30 equal annual installments. “(3) Any surplus of settlement of United States indebtedness to China for military expenditures in excess of China's cash down payments for surplus property of the United States will thereupon be used by China for the purchase of property in the United States or will be applied to the liquidation of the unpaid balance of this contract. "d. If at the completion of the transfer the actual net depreciated value computed as above is greater or less than the estimated net depreciated value stated herein, China's purchase price will be increased or decreased by the same percentage by which the actual net depreciated value varies from the contract referred to in c. above." The cash down payment in United States dollars was later incorporated into the Office of Foreign Liquidation Commissioner bulk sale agreement as part of the considerations received by the United States. The Chinese obligation of $20 million was later included as one of the items presented as a United States claim in negotiations with the Chinese Government on settlement of war accounts. 9. Office of Foreign Liqudation Commissioner and War Assets Administration sale of surplus military equipment The Office of the Foreign Liquidation Commissioner and the War Assets Administration sold material and equipment to the Chinese Nationalist Government with an estimated procurement cost of $102.0 million for $6.7 million, according to the records of the Department of State. The Chinese Government paid the |