893.00 P. R./34

The Minister in China (Johnson) to the Secretary of State

No. 310

Sir: In accordance with the Department’s instruction No. 78, of October 9, 1925,19 I have the honor to submit the following summary, with index, of events and conditions in China, during June, 1930:

The civil war continued throughout the month with a sufficient lack of preponderant advantage to either side and a sufficient drain on the resources of both to render probable in the comparatively near future a characteristic outcome in the form of a settlement by compromise. The difficulty is that no important issues would be adequately settled by compromise and few personal ambitions satisfactorily gratified. Cessation of hostilities along these lines, to judge by past experience, would mean little more than the advent of a period of armed truce between the so-called Central Government and military leaders exercising temporarily undisputed authority in their own areas.

Military observers reported that during June the strategic area in the civil war remained along the Lung-Hai Railway, where the Nanking Government, at the end of the month, was making a determined effort to break through to Chengchow, Honan. From June 18th to 26th there was severe fighting in Honan and the Nanking forces succeeded in advancing to within a few miles of Kaifeng but were then held in check by Marshal Feng Yu-hsiang. Fighting on the other fronts that is to say in Hunan, in Shantung, and along the Peking-Hankow Railway, was not of the same consequence. Chang Fa-Kwei’s “Ironsides”, a force with Kwangsi adherents of about 95,000 men, captured Changsha, Hunan, on June 5th, with scarcely any resistance. Hankow, where strict martial law was maintained, became uneasy, it being menaced both from the north and the south, when, in addition to Feng Yu-hsiang’s admitted plan to occupy the city, it became apparent that the Kwangsi-Ironside faction advancing from the south might succeed in doing so. The menace did not last very long, however, as Ho Chien, Chairman of the Hunan Provincial Government, reoccupied Changsha on the 17th, the Kwangsi troops withdrawing to the east. On July 2nd military headquarters at Nanking announced that the campaign in Hunan was over.

The Central Government’s success against its opponents in the south was balanced by the loss of Tsinan, the capital of Shantung, to Marshal Yen Hsi-shan on June 25th. Shansi forces also were reported to have occupied Taian and Tsining. General Han Fu-chu, the Nanking adherent who defended Tsinan, withdrew his troops [Page 21]with little loss eastward along the Kiaochow-Tsinan railway and established new headquarters at Weihsien. The Shantung Provincial Government as organized by Nanking was moved to Tsingtao and a new provincial government under General Shih Yu-san was set up by the Shansi faction at Tsinan.

Marshal Yen Hsi-shan was reported during June to have determined upon the establishment of a formal Northern Government in Peiping, under the following leaders: Marshal Yen, Marshal Feng Yu-hsiang, Marshal Chang Hsueh-liang, General Hsü Ch’ung-chih, General Li Tsung-jen, Mr. Wang Ching-wei, and Dr. Tong Shao-yi. It appeared, according to spokesmen of the Northern coalition, that Marshal Chang Hsueh-liang favored such action but was not willing openly to say so as in that event the Nanking Government would be in a position to create difficulties in northern Manchuria and to embarrass Sino-Soviet negotiations taking place in Moscow. As far as the Legation is aware, Chang Hsueh-liang himself made no commitments in the matter. The Nanking Government on its side made a bid for his support during June by gazetting him as “Vice Commander-in-Chief of the Army, Navy, and Air Forces”, an appointment which the young Marshal, maintaining his neutral attitude toward the civil war, did not accept.

There was a further spread, during the month, of banditry and of the communistic activities which are usually difficult to differentiate from it. This was especially true of the Yangtze Valley where disturbances occurred at Shasi and at Hwangshihkang in Hupeh and at Yochow and Nanchow in Hunan, among other places. Kiangsi was almost completely under communistic control, it being only in the eastern part of the province that white districts predominated over pink and red ones.

Early in the month, Lu Hsing-pang, an ex-bandit chief who for some time had been a disruptive force in Fukien affairs attempted to gain control of Foochow. In the resulting two days’ fighting the Government forces prevented Lu’s entry into the city and then drove him up the Min river. His organization appears not to have disintegrated, however, nor his forces to have been dispersed, and to have returned to banditry, and at the end of June the Legation was informed that he had been appointed Governor of Fukien by the Northern coalition.

At Amoy a band of some 70 communists at the end of May had raided the prison and released a number of their associates. As a sequel, a general uprising involving an attack on the international settlement of Kulangsu was feared during June but no serious trouble occurred. The fact that it did not occur may in part at least be attributed to the presence of foreign destroyers in the harbor during the critical period.

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Estimate of the Evils Besetting China

The following is an extract from an address early in June before the Peiping National University by Dr. Hu Shih, a frank young philosopher of prestige and influence. Dr. Hu was born in Shanghai in 1891 and received the degree of Doctor of Philosophy from Columbia University:

“The real enemy of the Chinese national revolution is not Imperialism nor the so-called feudal influence. Our country is tormented by five curses, namely, poverty, disease, ignorance, corruption in high places, and continued civil war. If we can get rid of these five curses, there will be some hope for China. But the most pressing question of the moment is to stop civil warfare, for unless that is done, it is impossible to tackle the other four curses. Let our slogan be ‘Down with further civil war’.”

. . . . . . . . . . . . . .

Depreciated Silver

The ban on the exportation of gold bars from China and on the importation of foreign silver coins remained in force during June without, however, having much effect on the silver market. The Central Political Council decided that a thoroughgoing examination of the situation was necessary in order that more effective measures might be adopted and at the end of June the Departments of Finance and of Industry and Commerce were ordered to report on the following, to be submitted within six weeks:

The amount of gold existing in China.
The amount of silver existing in China.
The amount of gold and silver imported and exported during the last year.
The amount of silver output in the world.
The cost of producing silver at the various mines in the world.
The amount of silver in demand in the world.

The following table of selling rates (United States currency for Chinese currency) of the Peiping branch of the National City Bank of New York, covering a period of six months, gives evidence of the decline in the value of the silver dollar in terms of gold:

Date Chinese currency U. S. currency
January 29th $2.8070 equaled $1.00
February 28th 2.9740 do do
March 31st 2.9850 do do
April 30th 2.9960 do do
May 31st 3.50 do do
June 28th 3.8280 do do

[Page 23]

The table does not show the maximum fluctuation, as during the latter part of May and early in June, the silver dollar dropped to less than U. S. $0.25 in value.

. . . . . . . . . . . . . .

I have [etc.]

For the Minister:
Mahlon F. Perkins

Counselor of Legation
  1. Not printed.