Memorandum for the Secretary of War s4

#4-259 Memorandum for the Secretary of War February 17, 1944 [Washington, D.C.] Secret

I am attaching references to a rather complicated matter. I should like you to consider our position on the question of rate of exchange and the proposed procedure to force the Generalissimo to a more reasonable demand. The question as to whether or not we should threaten to discontinue the Matterhorn Project (B-29 long-range bomber operations out of China) I hope you will not trouble your mind about at this time because a great deal is involved here which affects the entire Pacific and this particular phase of the proposal will have to be considered on that basis. What I should like to have is your view as to the stand being made as to rate of exchange and the propriety of the proposed method of bringing the Generalissimo to time. Meanwhile I am going into the question of whether or not we should hazard the B-29 project. You will see a statement from General Giles, Chief of the Air Staff, attached to these papers expressing concern regarding this aspect.1 Please don't trouble yourself about this phase of the issue at this time.2

Document Copy Text Source: George C. Marshall Papers, Pentagon Office Collection, Selected Materials, George C. Marshall Research Library, Lexington, Virginia. Document Format: Typed memorandum.

1. Major General Barney M. Giles had written that construction on airfields in China had slowed down because of financial difficulties with the Chinese government. "These financial matters are not within the scope of the Army Air Forces, but it is urged that whatever steps possible be taken to assure a full-scale resumption of work immediately, as continued delays will have a very serious effect on our strategical plans for the VLR aircraft." (Giles Memorandum for General Marshall, February 15, 1944, NA/RG 165 [OPD, Exec. 9, Book 15].) Also attached was Lieutenant General Brehon B. Somervell's letter which discussed the unfavorable exchange rate. Somervell suggested that the U.S. government seek a more favorable exchange rate, and if the Chinese government was not cooperative then consider reducing U.S. military operations based in China. (Somervell Memorandum for the Chief of Staff, February 15, 1944, ibid.)

2. "China's exchange has fallen so low that it presents us with a very difficult problem," Stimson recorded on February 19. "We have offered to go on with the aid to her of our American materiel provided she meets a major portion of the difference in exchange by making us donations of Chinese money. She has refused and there is trouble." (February 19, 1944, Yale/H. L. Stimson Papers [Diary, 46: 63].) Recommended Citation: The Papers of George Catlett Marshall, ed. Larry I. Bland and Sharon Ritenour Stevens (Lexington, Va.: The George C. Marshall Foundation, 1981– ). Electronic version based on The Papers of George Catlett Marshall, vol. 4, “Aggressive and Determined Leadership,” June 1, 1943–December 31, 1944 (Baltimore and London: The Johns Hopkins University Press, 1996), p. 307.