File No. 893.00/2767
The Minister in China ( Reinsch) to the Secretary of State
There is no change in the situation. The position of President Feng has grown weaker. There are indications of growing desire on the part of Tuan faction to displace Feng in favor of Hsü Shih-ch’ang. Arrival of money borrowed and arms bought from Japanese causes a show of resolution, but the tuchuns’ activity so far confined to demanding more public money. The pardon of Liang Shih-yi and associates gives rise to talk of their early return to power with Tuan and Japanese support. None of these possibilities are acceptable to the South. Governor Li Shun is developing his national policy, being drawn more towards the South. The Southern leaders planning confederate commission for bringing about greater unity in the movement for constitutional government. The attitude of sections is shown by the fact that while diplomatic arbitration was recently suggested to me by influential Northerners the South is willing to arbitrate provided the Parliament is recalled, while Li Shun does not consider the time favorable for arbitration. This would seem to indicate that he hopes to rid China of the militarists. …
It is indispensable that the Allies should give some attention to China in order to avoid surprises and dangers. The South will not accept militarist rule or restoration monarchy. Such steps would permanently divide China. The Allies can strengthen their cause and avoid disastrous consequences which continued inattention would inevitably entail. What has been done so far taken by itself is bad. Postponement of Boxer indemnity no real benefit without doing [Page 84] justice to China in granting 5 per cent effective customs duties … There is no constructive action, no systematic efforts to mobilize the resources of China in shipbuilding, iron, food, military forces. The Allies might appoint a joint commission to assist China in constructive work for the common purpose. The American Government itself can do a great deal. For one thing it is of great importance that the American Government should announce its readiness to support the European military expedition as soon as internal unity in China shall have been restored and national action made possible. Conditions can be so arranged as to give the enterprise an unquestionable national character gained through recruitment of officers and men pro rata from all provinces. It is desirable also that the American Government should encourage other national constructive work such as railways, shipbuilding, not as peace enterprise, but a mobilization for assistance in war and most effective insurance against China becoming a source of danger to Allies. Special attention to the Far Eastern situation is urgently required. …