The Minister in China (Johnson) to the Secretary of State
[Received May 22.]
Sir: In accordance with the Department’s instruction No. 78, of October 9, 1925,7 I have the honor to submit the following summary, with index, of events and conditions in China during March, 1930.
The civilization of the Chinese people, who comprise one-fourth of the human race, is being shaken by the impact of the radically different machine civilization of the West with resultant disorder and unrest. An ancient civilization is breaking up, and it will be many years before the work of constructive agencies (for example, the Mass Education Movement) can counterbalance the activity of irresponsible persons to whom a time of disorder presents an opportunity for personal gain at the expense of the community. Such persons are the bandits who roam over the countryside in increasing numbers and the horde of minor militarists who, unhampered by guiding principles, combine with and against one another with readiness and who, as a rule, leave in their wake no more tangible evidences of their presence than further impoverishment of the areas under their control.
The above outline, of course, is, if true, as characteristic of other months and years since the establishment of the Republic as it is of March, 1930. In considering exclusively the period under review, I should say that its outstanding development was a clarification of the relationship in which the three chief figures of China, Chiang Kai-shek, Yen Hsi-shan, and Feng Yu-hsiang, stood toward one another. During March the break was clean, with China divided into two camps, North and South, although the leaders were at pains to emphasize that no geographical or political issue was at stake, it being a question of personalities; General Chiang against Marshals Feng and Yen; General Chiang based on the rich port of Shanghai and employing in his capacity of “personal militarist” some forty-two German military [Page 8]advisers; Feng and Yen representing and controlling the North or more accurately the Northwest since Mukden was neutral.
As to the plans and motives of the Northwestern group, the prevailing opinion in Peiping at the beginning of the month seemed to be that Marshal Yen Hsi-shan was unwillingly being driven to action through fear of eventual elimination were he to continue to “sit on the fence” until all of his potential allies were individually disposed of by the central government under General Chiang Kai-shek in pursuance of its asserted endeavor to “unify” the country. On February 28th, Li Fu-ying, Commander of the Peiping Garrison, called at several of the Legations ostensibly with the object of preparing the way for the coming to Peiping of Marshal Yen. He expressed the opinion that war was almost inevitable, stating that the Marshal had come to an understanding with General Chiang’s numerous opponents, including the Kwangsi faction, Wang Ching-wei, and certain of the Kwangtung leaders, as well as with the principal leaders in North China, and that plans had been arranged to synchronize military operations against Nanking. He stated that he did not expect that Mukden would participate actively, partly from a disinclination to become committed before the outcome was certain and partly from apprehension lest Soviet Russia, perhaps with the connivance of Nanking, create disorders in Manchuria.
During the latter part of the month the Northern opposition to the Nanking Government was strengthened by greater cohesion and more active cooperation between Yen and Feng Yu-hsiang. Both in Peiping and in Tientsin, the railway, telegraph, and all revenue-producing administrations were taken over by Yen, Nanking appointees being ejected and their places filled by Shansi men. The Peiping office of the Ministry of Foreign Affairs (the former Peking Waichiaopu building) was also taken over, the Nanking official in charge having already left for the South. These operations resulted in the virtual disappearance of the Nanking party and government administration in the area dominated by Marshals Feng and Yen, except that the Nanking Government retained control over the Maritime Customs.
Feng, with the acquiescence of Yen, went from Shansi to T’ungkuan to take active command of the Kuominchun which was steadily moving eastward along the Lunghai Railway with a diversion toward the Wuhan area. Yen was reported to be supplying Feng with both money and supplies so that the Kuominchun was better equipped than in its campaign of the autumn of 1929. As regards the “variables”, Generals Shih Yu-san and Han Fu-chu, the former was, for the moment, adhering to the Northern combination and the latter to Nanking. There were reports at the end of the month that minor clashes with Han’s troops had already occurred.[Page 9]
In a telegram of April 1st addressed to the diplomatic representatives of the foreign powers in China (and delivered to them by a personal representative) Yen Hsi-shan stated that, on repeated request from members of the Kuomintang, military men, and the people, he was constrained to assume office as Commander-in-Chief of the Army, Navy, and Aeronautic Forces of the Republic of China on April 1st. He stated further that he had taken an oath to lead a punitive campaign against “a certain person” who was illegally occupying the Central Government, who was carrying on illegal transactions and who was neglecting his duties. Marshal Yen stated that the lives and property of foreigners within the territories under his jurisdiction were to be uniformly protected. He added that he desired the several friendly foreign Powers to respect “the true aspirations of the Chinese People” and not to render spiritual and material assistance to whomsoever was “destroying unification and trampling on the masses.”
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Disturbances in Kiangsi
Under the command of Chu Teh and Mao Tze-tung, some ten thousand communist troops were in control, at the end of March, in the northwest of the province of Kiangsi, while bandits held the Kan River region from Kianfu to Kanchow.
According to missionary reports, it was the plan of the communists to attack undefended points only, after obtaining information in regard to them from the local population. When the Government sent troops against them they retired to strike later at another point. There seemed to be no doubt that personal gain was the motive for these operations which, however, also had political significance as the populace was not interfered with, only Government buildings being destroyed. It was stated also that anti-foreign feeling was more intense in the province than at any time since 1927. The Government troops at Nanchang numbered about a thousand of which five hundred left on March 27th to distribute themselves along the Nanchang-Kiukiang railway, thus rendering Nanchang liable to capture.
Gold Standard Currency Recommended for China
The Shanghai Consulate General received, at the end of the month, an advance copy of a report submitted to the Ministry of Finance by the Kemmerer8 Commission of Financial Experts on November 11, 1929, entitled: “Project of Law for the Gradual Introduction of a Gold Standard Currency in China.” The Commission recommended [Page 10]that China should go on a gold standard since her trade was almost entirely with gold standard countries and since her public debt was largely a gold standard debt and likely to be increasingly so for many years to come. Another reason advanced was that gold was likely to be the more stable monetary standard of the future. It was pointed out, however, that the gold supply was prospectively inadequate and that China by adopting the gold standard might help to bring about a world shortage of gold and a consequent fall in world price levels.
The proposed new gold unit, to be called a “Sun”, is to have a value of forty cents, United States currency. The Commission fully realizes the difficulties of introducing this new system into China and recommends that it be introduced slowly and cautiously, province by province. A “Currency Department” is to be established by the Ministry of Finance, charged with the administration of the “Gold Standard Fund” to be created by the projected law.
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I have [etc.]