893.00/15326
The Second Secretary of Embassy in China (Drumright) to the Secretary of State
[Received April 5.]
Sir: Referring to my despatch no. 2, March 1, 1944, entitled “Conditions in Chinese Communist Occupied Areas of North Shensi,” I have the honor to submit herewith a further report on this subject. The following subject matter was obtained from a Chinese Christian minister who resides near Yenan (the Communist political center) and who left the Communist-controlled “Border Area” at the beginning of March 1944 for a brief sojourn at Sanyuan, Shensi.
Summary. Economic and living conditions in the Communist-controlled area are very difficult but not insuperably so. Commodity prices are rising steadily and, relatively, are above those in Government-controlled Shensi. The Communist currency has weakened precipitately in recent months. Taxes are heavy. Banditry has been eliminated. Opium is cultivated and sold in Communist-operated stores. The sentiment of the people toward the Communist administration is mixed, some approving and some disapproving of it. All church properties have been occupied by the Communists and religious services are conducted on a restricted scale.
Economic and living conditions. The Communist-controlled “Border Area” is largely mountainous and unproductive. The chief crops are millet and potatoes. The inhabitants subsist chiefly on these two products. Meat is virtually unobtainable. There is no rice and only a small quantity of wheat is grown in one area. Salt is available in considerable quantities and is the chief export to Government-controlled Shensi. Cloth is restricted almost wholly to the native variety. A small and insufficient quantity of cotton is produced within the [Page 379] Communist-controlled area. The Communists are obtaining some crude oil from wells in the Yenchang area and are operating a very small refinery. Consequently, they have some gasoline to operate the few motor vehicles in their possession. Kerosene may be purchased in Yenan at very high prices. Sugar is unobtainable. The Communists manufacture certain necessities such as soap. Some Japanese-manufactured goods reach Yenan.
An average crop was reaped in the Communist-controlled area in 1943. While food and grain are not plentiful or abundant, there is no seemingly acute shortage. The Communists sometimes augment their needs by shipments of grain from northwestern Shansi Province. Thus far in 1944 the Communist-controlled areas of north Shensi have received only a very small amount of snow and the soil is now dry. Rain is needed. The majority of the inhabitants live in caves hollowed from the loess plateaus. But while their standard of living is very low, they continue to be able to eke out an existence.
Commodity prices. In general, commodity prices at Yenan are relatively in excess of those in the Government-controlled areas of Shensi. An exception, however, is millet, the staple grain of the Communist area, which, when calculated at the existing rate of exchange, is slightly below the price asked for millet at Sanyuan. Wheat flour is more than Ch$30 per cattie at Yenan. Ordinary native cotton cloth sells for more than $400 Communist currency per foot in Yenan. In recent weeks commodity prices have risen sharply in the Communist-controlled area.
Rate of exchange. The so-called “Pien Pi” or Communist-emitted currency for a long time was maintained at a rate of Ch$1 equals “Pien Pi” $2.10. However, later the Communist currency weakened and about two months ago was freely exchanged by Yenan merchants at a rate of “Pien Pi” $8 to Ch$1. By the beginning of March the rate had fallen to a point where $12 of the Communist-emitted currency were needed to obtain one dollar of Chinese national currency. This was the rate demanded by merchants and exchange brokers. The Communist authorities at Yenan were still unwilling to effect changes at a rate below five or six dollars of their currency to one dollar of the Chungking issue. The emission of Communist currency seems to have risen markedly in recent months. The Communist currency is printed on inferior paper and in size it is much smaller than that of the Chungking currency.
Taxation. The Communist method of levying taxes is to ascertain the needs of a given farmer and his dependents. They are permitted to retain from the annual crop sufficient produce to maintain themselves for the year; the remainder is taken by the authorities as a “tax”. Farmers with a relatively large production naturally object [Page 380] to this mode of taxation whereas those with little or no production tend to welcome it. No person is permitted to farm more than about 200 mow of land (which is no great quantity when it is remembered that much of the land is mountainous and unproductive). The bulk of the Communists’ revenues is of course derived from the farming populace in kind, there being very little trade or industry in the Communist area.
Opium cultivation and sale. Opium poppy has been grown in the Communist “Border Area” (informant said, however, that he himself had seen none under cultivation). Cultivation is said to have taken place in remote areas far from travelled roads. Opium is sold in Communist-operated or registered stores. To obtain opium from the stores addicts must produce certificates issued by the authorities. The Communists endeavor to promote the export of opium. Travelers crossing into Government-controlled territory at a point about 30 li (about 10 miles) above Lochwan are minutely searched for caches of opium.
Sentiment of people toward Communist administration. (Informant was very reticent and guarded in his comment on this subject presumably because he expects to return to the Yenan area in the near future.) The sentiment of the inhabitants of the “Border Area” toward the Communists and their administration is mixed. A portion of the people may be said to approve of them, and another portion to disapprove of them. In general, the people are grateful to the Communists for one development: the eradication within the “Border Area” of banditry so prevalent from the time of the Chinese revolution and the restoration of peace and order. The Communists have organized the people along lines similar to the “Pao Chia” or mutual-aid system of the Nationalist Government. It is difficult to travel in the Communist-controlled area for any distance without a pass. Householders are required to report to the authorities all transients lodging with them.
The inhabitants also appreciate the attitude and treatment of the Communist soldiery. No Communist soldier may arbitrarily occupy property of the people. It is common to see Communist soldiers encamped in the streets of a town or village rather than moving in on the people. Nor do the Communist soldiers resort to arbitrary requisitioning of the people’s wealth. Payment is made at market prices for goods and commodities obtained from the people. Communist soldiers violating this principle of dealing with the people are severely punished. The problem of taxation has been touched upon above. The Communists resort to conscription to obtain new recruits for their armies, but it appears that the Communists have carried out conscription [Page 381] in such a way as to arouse no noteworthy opposition from the people.
Political conditions. (Informant said that he lived about five miles from the city of Yenan and that he did not follow Communist political developments closely. Since he appeared reluctant to discuss this subject in any detail, I did not press him for information.) It was reported that Mao Tse-tung (the Communists’ political leader) had made it clear that the Communist administration and armies would resist with all the forces at their command any attempt of the Central Government forces to invade the Communist-controlled “Border Area.”
Religious activities in Communist-controlled area. All church properties of the mission in question were long ago occupied by the Communist authorities in the areas under their control (Catholic mission properties have similarly been occupied). The Communist authorities continue to assure the Chinese Christians that they may hold services without official interference or molestation; but the latter dare not hold open services where crowds may gather. Instead the pastors itinerate, going from household to household holding services. Theyhave not been interfered with in this activity. However, about six months ago the Communist authorities detained a Chinese Christian pastor of the English Baptist Mission for reasons as yet unknown to the Christians; he has not since been heard from.
Respectfully yours,