893.00/13573: Telegram
The Counselor of Embassy in China (Peck) to the Secretary of State
[Received 5:20 p.m.]
203. 1. The Second Secretary was informed this morning by a responsible official of the Foreign Office that the Government’s spirit of optimism in respect to the Southwestern situation has changed to one of considerable pessimism, due partly to the assumption by Chen Chi Tang on June 23 of the office of “Commander-in-Chief of the First Group Army of the Anti-Japanese National Salvation Forces” (see Canton’s June 24, 9 p.m.37) and partly because of difficulties encountered in negotiations with Kwangsi. Another official of the Foreign Office told the Secretary that the Government’s attempt to cause a split between Chen and the Kwangsi leaders which had been meeting success as evidenced by the adoption by Kwangtung of legal tender notes (see Canton’s June 20, noon, and paragraph 2 of our 193, June 19, noon38) has now apparently failed and General Chiang, [Page 219] who has been planning to attack Kwangsi, has therefore deemed it advisable to alter his plan and is attempting to avert a clash and look for a solution of the crisis in the forthcoming plenary session. The first mentioned informant confirmed reports (see paragraph 4 of our 200, June 24, 1 p.m.39) that Kwangsi troops are between Kiyang and Hengyang and between Kwangsi and Paolang Shaoyang). He added his denial to previous official denials of Domei reports of June 21 and 22 of an exchange of ultimatums between Chiang and the Southwestern leaders (see paragraph 1 of our 200, June 24, 1 p.m.) and when the Secretary mentioned hearing a report that the Government controlled press in Canton had published the text of a telegram allegedly sent by Chen and Li to Chiang along the lines of the Domei report (see paragraph 3 of Canton’s June 23, noon), he stated that he had access to all the telegrams exchanged and no such message had been received. He added that by means of anti-Japanese propaganda the Southwesterners were creating a Frankenstein’s monster because the students and the people in the Southwest took this propaganda seriously and he wondered how they would be able to retreat from their position if and when a settlement with the National Government should be arranged.
2. According to the second mentioned informant, the Kwangsi leaders have now let their requirements for a settlement be known in general and of primary importance among them are (1) subsidies to meet the military and civil government expenses of the provinces and (2) the replacement of officials of the neighboring provinces with officials friendly to Kwangsi.
3. The Government appears to be undertaking a definite campaign in the press to place the Kwangsi leaders in an unpopular position both with a view to assisting its present negotiations and to strengthening itself politically if hostilities occur. The semiofficial Central News Agency reports that an association professedly “representing the vote of 30 million Kwangtungese” yesterday telegraphed to the Central Party Headquarters, the National Government and the Military Affairs Commission a demand for drastic action against the “rebellious Kwangtung and Kwangsi generals”. The Central Daily News, official organ of the Kuomintang, editorially asked the Government to clarify the situation created by the Liang-Kwang,40 which it described as tantamount to rebellion, and urged the Government to take punitive action against the Southwestern leaders.
The Secretary was informed by a source close to high military officials that all of the Canton officers attending the Army War College [Page 220] of Nanking have within the last few days returned to Canton. These officers are of the grade of colonel or higher.
5. To the Department and Peiping. Repeated to Canton, Hankow.