793.94/16345: Telegram
The Ambassador in China (Johnson) to the Secretary of State
[Received November 30—8:28 a.m.]
587. The appeal set down in my telegrams Nos. 526,87 568,88 579,89 and 581,90 sent during October and November, seems to me to be the [Page 447] appeal of a man who has lost confidence in his ability to contend longer with a domestic situation which he feels he cannot control. If not, it would seem to be the plea of a man who, feeling the urgent need of help from abroad and seeing the United States preparing to lend assistance to Great Britain whose struggle he feels is linked inseparably with that of China in resisting the efforts of the predatory Axis nations to establish a new world order in their own interests, turns to the United States for concrete assistance at the earliest possible date in order to ameliorate to the greatest possible extent the hardships and sufferings which his people have now endured for 40 months. He has almost from the beginning of the present conflict held up to his people the probability of the United States and Great Britain’s ultimately coming to China’s assistance, he feels that he has now virtually exhausted the strength of his nation and people in a desperate struggle against aggression which he conceives has been fought as much in the interests of Great Britain and the United States as in those of China and, having done all this, he now feels that it is time that the United States came to his assistance in its own interests if not in those of China.
In the military field the Chinese armies while putting up a strong and stubborn resistance have been forced to yield to the invader the coast ports and all communications leading from the interior to those ports. There is but one main outlet left and that is subject to constant bombing. Up until August of this year the Chinese could put a number of planes into the air which could worry the Japanese bombers. Since then they have been unable to compete in the air with the newer and swifter planes which the Japanese have introduced and all Chinese planes are grounded. They have little hope of getting newer and swifter planes, that can meet the Japanese planes on any basis of equality, except from the United States.
In the financial field Chinese reserves of foreign exchange are virtually exhausted. Inflation has started speculation in consumer goods and, locally, in rice, driving prices to a point where the morale of minor government employees on small salaries is hard to maintain. This of course has increased the feeling of discontent with the regime which has been dominated by the Soong family headed by Dr. Kung who, if talk among minor officials and bankers is to be believed, is vacillating and hesitant as to what may be done while numerous proposals are being offered and discussed for dealing with the question of rice hoarding and speculation. No one seems to be willing to [Page 448] assume the responsibility of taking any drastic action and plans proposed run all the way from abandonment of all restrictions on buying and selling of food to seizure of all stocks in the hands of farmers and private speculators.
Unwillingness of the Government to take a stand in this matter and the obvious failure of measures such as have already been taken tend to break down confidence in government leadership, leaving Chiang in a position where he is trying to revive domestic confidence through concrete evidence of continued foreign confidence. For this he feels that he has no place to look except to the United States and Great Britain.
Local price conditions are not due to any lack of food supplies. It is hardly to be expected that the Government can do anything directly to control prices among a people who have never been subjected to the kinds of regimented control that we know and practice in the West. High prices are merely a result of currency inflation and a scarcity of consumer goods ordinarily needed by the farmers in their daily lives, goods that have hitherto been supplied from regions down the Yangtze, such as cotton yarns and cotton goods.
I know of no way in which we can ameliorate this situation. Part of the difficulties will solve themselves when supplies slowly find their way into this area by the ancient methods of distribution over the passes that have existed through the years. The evils of currency inflation cannot be helped from without and it is difficult to see what can be done about them now from within.
China with nothing left but the products of her soil and the labor of her people to exchange for goods needed from other countries faces the unpalatable fact that, if developments continue in the direction which they have been following under Japanese initiative, this exchange can only be effected through Japanese hands in payment for the products of Japanese labor and the cost of Japanese police maintaining Japanese control over trade routes and business.
Under these circumstances I shall not go directly to Chiang with the comments contained in Department’s 196, November 23, 7 p.m.,91 but at some suitable opportunity shall communicate them to the Minister for Foreign Affairs.
Code text by air mail to Hong Kong for transmission to the Department by cable.