893.01/956: Airgram
The Chargé in China (Atcheson) to the Secretary of State
[Received August 20—5 p.m.]
A–28. Embassy’s 1270, July 23, 8 p.m., paragraph 1.
1. A new and curious development along those lines, of which we have been informed by Admiral Yang, is that recently several of Yang’s agents and several of those of General Tai Li in the Shanghai-Nanking area were tracked down and seized by the Japanese but, instead of executing these agents, the Japanese lectured them on political philosophy from the puppet point of view and sent them back to Free China to persuade their colleagues and superiors here that Japanese intentions toward Chinese were benevolent and that there was no use in continuing the state of hostilities between Chungking and Japanese-Nanking troops. Whether this incident is merely symptomatic of Japanese opportunism in attempting to further Japan’s “soft policy” toward China or whether it has more far-reaching implications is an interesting matter for speculation.
Another instance of interest is the case of Wu K’ai-hsien, member of the CEC53 and former head of the Chinese Secret Police in Shanghai who was seized by the Japanese in March 1942 and who arrived in Chungking May 7, 1943 (section A, 1, (l), Embassy’s May political review—despatch no. 1255, June 1254) with, according to some rumors, Japanese peace proposals. A number of sources state that Wu was flown from Shanghai to Hong Kong in a Japanese military or naval plane; it is generally accepted that he made his way from Hong Kong to Kweilin in unoccupied China; he flew from Kweilin to Chungking by CNAC plane and was met at the airfield by a number of Government officials. Subsequently he was feted to some extent but the welter of rumors about him reportedly soon caused him to go into retirement. He is now reported by several fairly reliable sources to have returned to Shanghai or Nanking.
2. With reference to paragraph 3 of our 1270 and to Adler’s report for Treasury contained in our 1354, August 2, the Consul at Kweilin states that his informant in regard to the counterfeit notes was a Mr. [Page 442] C. C. Chen, Kweilin manager of the Bank of China. While the latter does not have a good reputation, there would seem to be little point to his inventing such a story and telling it to the American Consul. Mr. Adler suggests that his own informant, general manager of the Central Bank, might, by stating that the counterfeit or mutilated notes in question are those of the Bank of Communications, be seeking to protect the employees of his bank and of the Bank of China at Hong Kong at the time of its capture who had responsibility for the Chung Hua Book Company’s plates.
3. We concur in Mr. Adler’s opinions as expressed in the 3d paragraph of his message contained in our 1354, August 2, referred to above.