893.00/11098½
Memorandum by the Assistant Secretary of State (Castle)
I took the Department’s telegram No. 27282 to the White House and explained in some detail why it seemed wise to send such a message. The President was thoroughly in agreement, read the message and said he thought it very good.
[Page 171]He then went into some discussion of the Chinese situation. He said that, on the whole, he considered the Nationalist Government the best bet for a peaceful China, that he could see no hope of unifying the country in the Northern Coalition. I told him that a battle seemed to be impending between the two groups, with the chances probably slightly favoring the Northerners, that whatever the outcome of the battle it was clear that both sides were about at the end of their resources and that there would shortly be dumped on the country thousands of probably unpaid and destitute troops, who would become bandits or join the “Communists”. The President said that if the Northerners won he thought we could do little except sit tight and do all in our power to protect American nationals and interests. On the other hand, if the Nationalists won he believed the time for action had come. He felt that the Nationalists, realizing the impossibility of pacifying the country, particularly because their resources were exhausted, might be willing to ask for help. If this were the case, he felt there should be an international reconstruction loan of perhaps $200,000,000 given if the Government would agree to receive a financial commission actually to manage national finances, such a commission to be backed by a reasonable number of troops under French or any other officers. I said this would only be possible if the nations were willing to take a strong stand in the protection of national rights and frankly to state that they were not going any longer to stand for banditry, but would in every way support a government which would put it down and establish a fearless and effective rule of the country. The President agreed with this and said that he wanted to be kept closely informed.
- Supra.↩