Foreign Relations of the United States, Diplomatic Papers, 1942, China

893.00/14900: Telegram

The Ambassador in China (Gauss) to the Secretary of State

Chungking, November 16, 1942—10 a.m.
[Received November 17—10:51 a.m.]

1334. Central Executive Committee of the Kuomintang began its annual session on November 12. Due to the unusual amount of business on the agenda sessions are expected to continue for 2 weeks (to November 26) rather than for the customary week or 10 days. Reports are being submitted regarding party, political, military, economic and educational affairs. The Embassy has obtained the following information in confidence from CEC members:

1. Economic situation will apparently occupy first place in the Committee’s considerations. The Generalissimo is not satisfied with the progress being made under the National Mobilization Law. He is reportedly impressed with organization and activity in the United States to meet wartime economic problems. It is probable that a Ministry (or super Ministry) of Economic Warfare (or economic control or mobilization) will be organized. Many of the functions now performed by the Ministries of Economics, Finance, Food and Social Affairs would become centralized in new Ministry. The names of several officials are mentioned as possible heads of new Ministry: T. V. Soong and Chang Chun for instance, but Soong it appears will continue as Foreign Minister and the Generalissimo does not want Chang Chun to leave his present key post as Chairman of Szechuan Provincial Government. General Chen Cheng, Chairman of Hupeh Provincial Government and Commander of sixth war zone, is most likely candidate. His position as a long time close confidant of Generalissimo rather than any special qualifications in field of economic organization and management recommends him for job. The Generalissimo is no doubt sincerely anxious to strengthen economic structure of country or at least to prevent further deterioration. The past however is marked by so many ineffectual measures to meet economic problems that one cannot but be skeptical regarding success of new Ministry. When new Ministry comes into being, present Ministry of Economic Affairs under Dr. Wong Wen-hao will be changed to Ministry of Industry and Mining.

2. With regard to military affairs, it is understood that there is agitation for a reduction in the size and an improvement in the quality of the Chinese army. It is argued that such a move would measurably reduce the budget (military expenditures represent about 70 percent of total expenditures) thereby retarding currency inflation; would release men to meet shortage of agricultural workers; and would not adversely affect Chinese military effort. General Chen Cheng is the advocate of such reorganization. General Ho Ying-chin agrees in theory and recognizes immense “practical” difficulties. It is doubtful that the issue will become an open one at the CEC or that anything will be done along the lines suggested although it is possible that Chen Cheng as head of the new Ministry might be able to accomplish something.

3. H. H. Kung is reporting on political affairs, and Chu Cheng, president of the Judicial Yuan, on party affairs. No significant changes in high government or party posts are anticipated.

Gauss