893.00/13485: Telegram

The Second Secretary of Embassy in China ( Atcheson ) to the Secretary of State

122. 1. In spite of the efforts during April of Wang Chung Hui as mediator and of various emissaries going between Canton and Nanking, relations between the National Government and the Southwest remain obscure. According to Japanese sources one question discussed recently was a Southern proposal, designed to obviate question of increased subsidies, that the Government purchase Kwangtung dollars 30,000,000 at par, the purpose being to provide Kwangtung 10,000,000 dollars profit arising from the higher value of National Government bank notes in relation to foreign exchange. Another Southern proposal was that the Government liquidate 14,000,000 dollars worth of 1925 Northern Expedition bonds. (Japanese interests are reported to have purchased at 15% some of these bonds and “military promises to pay” issued by the expeditionary forces for supplies, and to have asked through the Japanese Embassy for their repurchase by the National Government at 30%).

2. To Department. By mail to Peiping.

3. While ostensibly the general issues between Nanking and the Southwest have continued to center upon question of policy toward Japan and thus symbolized by the persisting failure of Hu Han Min [Page 140] (virtually the prisoner of Chen Chi Tang) to come to Nanking and assume office, Southwestern opposition to Nanking is believed actually to be more military than political and to express the traditional dissatisfaction of Southwestern militarists with Chiang Kai-Shek’s tendency to dictatorship. Concretely the immediate issues seem to have resolved themselves into questions of (1) financial assistance to Southwestern military leaders; (2) allotment of National Government offices to members of the military and civilian groups of the Southwestern faction; (3) powers to be vested by the draft constitution in the future president who presumably will be Chiang Kai-Shek; (4) the extent to which the National Government recommended a show of resistance to Japan.

4. On the Southern side these questions have been overshadowed by the ambition of Chen Chi-Tang and Li Tsung Jen to perpetuate their authority in Kwangtung and Kwangsi; they have been overshadowed on Nanking’s side by Chiang’s determination to continue his domination of the Government and expand his personal control. Thus doubt exists (1) whether Chiang sincerely desires Hu to assume office as chairman of the standing committee of the Central Executive Committee (of which Chiang is Vice and Acting Chairman); or (2) whether Hu, if he should enter the Government, could do more than a minor civilian group which is not a determining factor so long as the regional dictatorship of Chen and local government exist. With May 5 set for promulgation of the draft constitution and November 12 as date for its adoption by the party in control, Chiang is thought to prefer the status quo in respect to important National Government posts until he is safely elected president.

5. To Department. By mail Peiping.

  1. Telegram in two sections.