793.94/15589: Telegram

The Consul General at Hankow (Spiker) to the Secretary of State

Central China at the beginning of 1940:

Military. It is unlikely that the Chinese can successfully challenge the present Japanese hold on Central China in the immediate future unless (1) they cut the Yangtze line of communications and employ their best troops and hitherto unused material in a determined and coordinated offensive or (2) developments elsewhere divert a substantial body of Japanese troops from this area. Although Chinese here speak hopefully of the fulfillment during February of the former contingency, this office believes that such expectations are premature, attribute to the Chinese a degree of coordination which they have not yet achieved, and underestimate Japanese tenacity.
Economic. Japanese and Chinese finance, commerce and industry exist and function only under Japanese military franchises. Racketeering and the narcotic traffic flourish either as enterprises conducted by Japanese army personnel or with the tacit consent of the military authorities. The imposition of army fiat notes on the public is forcing Chinese national currency out of circulation and into the hands of the Japanese military. American and other foreign economic activities virtually do not and, unless there is an effective reversal of the army’s policy, will not exist. It now seems evident that Japanese economic policy in Central China is directed at quick and extortionate exploitation of this area for the benefit of (1) the Japanese military forces, (2) Japanese business and, only incidentally, (3) Chinese deserving of Japanese favor.
Political. Chinese politicians working for the Japanese in Central China may be classified as (1) opportunists, (2) respectable nonentities whose financial resources are exhausted and who must secure employment, (3) intelligence agents, (4) senile Buddhist philanthropists, and in rural posts a high percentage of (5) opium addicts. None of them gives real credence to the naive and preposterous Japanese rationalizations of the invasion of China nor to promises of cooperation on a basis of equality under the new order. Only on the foregoing do the puppets agree; they are otherwise split into hostile cliques.
Impasse. The Japanese dilemma is that (1) their military action is inconclusive, (2) the Japanese cannot administer this area without Chinese cooperation, (3) the corrupt rapacity of Japanese economic exploitation discourages genuine Chinese cooperation: all theoretical concept of sovereignty aside, the Chinese themselves want the fruits of their own land. The Japanese are able on the other hand to derive [Page 261] a degree of cold comfort from (1) the Taoist fatalism of the Chinese, (2) their undeveloped patriotism and low standard of living which forces large numbers of Chinese to trade with the enemy and accept his employment, (3) the continuing struggle for power among the various Chinese factions, not one of which is prepared to drain its strength in determined individual action against the Japanese so long as there exists the likelihood of civil war following a hypothetical Chinese victory.

Sent to Chungking, Peiping, Shanghai. Shanghai please mail code text to Tokyo.