CO129-591-14 Military Administration- liaison with Chinese and American forces 11-4-1945 - 25-7-1945 — Page 66

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required to deal with this branch to any extent except possibly ih respect of supplies for the British Military Mission Training Groups.

b)

Procurement Branch.

This branch is responsible for the Centralised Control of all U.S.A. F. purchases in the China Theatre, for studying existing and potential sources of supply in Free and occupied China and for planning ahead to meet as many as possible of the requirements of the U.S. Forces from local resources. It is concerned with the valuation of local purchases for reverse lend-lease purposes, one of its current major problems being the attempt to segregate as accurately as possible the percentage of Government taxation in the gross price paid per gallon for liquid fuel. Apparently the Chinese Government has agreed that the U.S. Forces should not pay Chinese taxes on liquid fuel, but segregating the tax which is partly indirect (levied on the grain) is difficult. The branch is also indirectly concerned with the result of U.S. local purchases on China's economy and the inflation problem.

Colonel Murphy wants from us information on the following:-

Port Installations,

Transport Facilities,

Buildings suitable for offices and billeting, Raw Materials,

Manufacturing Facilities,

Public Utilities.

This information should be divided into a) British owned facilities, installations and resources; b) Chine sc owned facilities, installations and resources (if known).

General priority to be given to information covering the area South of the Yangtze inclusive, but ultimately a survey of the whole of China is required. Towns specifiod were Chungking, Kweilin, Hankow, Shanghai, Foochow, Wenchow, Canton and Hongkong.

Individual items of economic intelligence will also be welcomed.

I enquired as to the possibility of coordination on salarics paid to all classes of Chinese staff by British and U.S. organisations and Colonel Murphy said he would be glad to cooperate.

c)

Civilian Economy Branch.

Colonel Binsfeld has only recently taken over this branch whose functions are as yet a bit nebulous in consequence. Generally it is responsible for watching in detail inflationary trends, the Black Market in currency and goods, cost of living indices and the causes of day to day fluctuations in the prices of the main staple commodities. Remedial measures, such as the import of cloth, are also its concern. It works closely with the Procurement branch both from this angle and because it is responsible for arranging occasional barter deals.

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