893.00/13951: Telegram
The Ambassador in China (Johnson) to the Secretary of State
[Received at midnight.]
44. My 7, January 7, 4 p.m. The developments of the last two weeks may be briefly described as consisting in efforts of the National Government to counteract the rapidly growing influence of the Chinese Communist forces in the northwest especially in and around Sian and to induce the leaders and forces under Yang Hu Cheng and those comprising the “Northeast army” formerly under Chang Hsueh Liang to break off their alliance with the Red forces, to accept the policies of the National Government in Sino-Japanese relations and to obey the Government’s mandates in appointment to official posts. [Page 15] The situation is still extremely obscure with the negotiations mainly in the hands of Chiang Kai-shek who remains at his home in Fenghua and receives representatives. It is generally believed that Yang Hu Cheng and the Northeastern army are both unwilling and so far unable to withdraw from their close association with the Communist forces under the banner of armed resistance to Japanese encroachments. It is reported that in an effort to make easier the acceptance by the Government of the submission of the three allies on the basis of resistance to Japan the Communist forces have renounced their most radical doctrines and that all three insist they do not demand immediate war but only formal adoption of armed resistance as a policy.
It is commonly reported that the Government some months ago sent to Sian a large quantity of silver possibly as much as 18 million dollars and large quantities of war munitions in preparation for possible retirement of the Government to Sian in the event of hostilities with Japan and that it is his physical possession of the silver and munitions which enables Yang Hu Cheng to protract the negotiations with Chiang Kai-shek. Peck was informed by military officers in Sian on January 15 that the allied forces there had plentiful supplies of money and arms sent by the Government for so-called bandit suppression. It is impossible on the basis of conflicting reports to anticipate when the Government’s authority over Shensi and portions of Kansu will be firmly re-established or the way in which the Government will dispose of the Communist forces there.
Sent to the Department, Peiping, Hankow, Shanghai.