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To combat inflation for the duration of our Three Year Plan, to curb speculators against the Chinese dollar and to maintain China's international balance of payments, another fund will be required.... All use of such a fund should require the countersignature of a representative of the U.S. Government and it should not be set up until certain corrupt practices are stopped. Let us assume that the Chinese Government will act rapidly and effectively against the speculators and budget a $150 million exchange-stabilization fund for our total Three Year Plan.
Let us now turn to the military side of the problem, remembering that it is absolutely essential that the President should release immediately certain stocks of munition and have them rushed. . . to the Government troops in Manchuria . . . or by next spring we shall find Manchuria a Soviet satellite. . . .
According to the estimates of the ablest American and Chinese military men, to drive out of Manchuria the 350,000 Communists will require the training and equipment in the American manner of ten new divisions. Furthermore, an efficient service of supply from the point of origin of the supplies to the front is essential. . . . American military men can and should run the service of supply in Manchuria.
In North China, where the Communists hold no large cities and are essentially raiders, the problem is one of cornering and capturing guerrillas. For this purpose light-armed, fast-moving troops are needed, equipped with jeeps, half-tracks, light trucks, small arms, machine guns and 75s. The estimates of the ablest American and Chinese officers indicate that 20 divisions of such troops should be able to clean up North China.
An air force, even of the smallest dimensions, would greatly facilitate operations. We have thousands of planes and millions of spare parts which are obsolete in terms of our air force but first-rate material for the Chinese air force. To release this material and turn it over to the Chinese would cost us nothing but a bookkeeping entry.... If we release the necessary munitions it seems unlikely that the costs could be more than $200 million a year—$600 million for the whole Three Year Plan.
If we add to that figure the $600 million envisaged for credits, and the $150 million for a monetary fund, we reach a total for the Three Year Plan of $1,350,000,000—$450 million a year for the next three years. As a price for preventing Stalin from taking over China and organizing its resources and man power for war against us, the figure is not high. . . .
What American has the military knowledge, political skill and personal magnitude to organize such cooperation?
We have in the Far East today a general of supreme stature who possesses all those qualities. If President Truman were to ask General MacArthur to add to his present duties and powers the title of Personal Representative of the President with the rank of Ambassador, and to fly to China to organize with the Generalissimo a joint plan to prevent subjugation of China by the Soviet Union, the whole Far Eastern horizon would brighten with hope. His military, economic and political proposals might well be those outlined in this report. He could establish rapidly with the Generalissimo the relations of two comrades in a front line trench. They would work together as brothers for their common cause.