The Ambassador in China ( Hurley ) to the Secretary of State
[Received May 22.]
Sir: I have the honor to transmit a copy of a memorandum by Dr. John D. Sumner of the Embassy staff regarding the economic policies and views of the Chinese Communists. The memorandum has been prepared on the basis of available Communist publications, information in the Embassy’s files (much of it supplied by Mr. John S. Service), and conversations with other Americans who have visited Yenan. I likewise submit, following the summary of the memorandum, certain comment thereon.
Summary: While Chinese Communists generally adhere to Marxian ideology and believe in a socialistic state as an ultimate goal, they have expressed the belief that China will not be ready for socialism for many years to come.
Present policies of the Communist regime include regulation of rent and interest, government ownership along with private enterprise, the use of taxation as an instrument of economic policy, the fostering of cooperatives, some regulation of wages and hours of labor, and similar measures. Currency problems are of less importance due to the extensive use of barter.
Ideas of postwar economic policy have not crystallized. The expressed views of Communist leaders, however, include the gradual transfer of land ownership to peasants, the fostering of private enterprise along with state enterprise, a liberal attitude toward foreign investment and trade, regulation of wages and hours, and a nondiscriminatory policy toward the Japanese. The primary objective of industrialization is said to be that of raising the standard of living of the people, rather than of building a “national defense economy”. End of Summary.
To assist the Department in evaluating the enclosed report, I offer the following comments: In some parts of the memorandum, particularly that section which outlines the views which Communist leaders are reported to have expressed regarding postwar economic policy, it was necessary for Mr. Sumner, in the absence of other materials, to rely chiefly on statements of Mr. John S. Service, a Foreign Service Officer who was in Yenan during several months in 1944 and again in 1945, or on materials transmitted by him. As the Department is aware from Mr. Service’s reports from that post, he has shown himself to be very favorably disposed toward the Communists and also on occasion to be most unfriendly to the Nationalist Government of Generalissimo Chiang Kai-shek. It is my impression, which is amply supported by Mr. Service’s reports and despatches, that he cannot therefore be considered as an impartial observer, and I feel obliged to enter this caveat.[Page 352]
(I refer for example to Mr. Service’s Secret report to General Stilwell dated October 10, 1944,20 the following headings from which appear typical of his point of view.
- “We are in no way dependent on the Kuomintang. We do not need it for military reasons.
- We need not fear Kuomintang surrender or opposition.
- We need not fear the collapse of the Kuomintang Government.
- We need not support the Kuomintang for international political reasons.
- We need not support Chiang in the belief that he represents pro-American or democratic groups…”)
In this connection I presume that Mr. Service’s opposition to the National Government of China is well exemplified by the reports already in the Department. My own directive was to prevent the collapse of the National Government of the Republic of China, whereas, Mr. Service was apparently attempting to bring about the downfall of that Government. The second phase of my directive was to harmonize the relations between the American Embassy and the civil government of China. Mr. Service’s objective appears to have been to establish that type of relationship not with the National Government but with some other institution or party in China, obviously the Communist armed party in China. Consequently, I could not fulfill my mission and at the same time support the position taken by Mr. Service. My directive did not say in effect “prevent the collapse of the National Government of China and harmonize relations between the American and Chinese military establishments and the American and Chinese civil governments if you find the motives of the Kuomintang to be pure”. That would have given me an opportunity to agree with Mr. Service, My directive, however, was unequivocal “to prevent the collapse of the National Government and to harmonize the relations between that government and the American military and civil establishments in China.[”]21
At the same time I wish to emphasize that, despite my own belief in the general partiality of his most frequent source, I regard Mr. Sumner’s memorandum as an objective statement.
- Report No. 40 from Yenan by the Second Secretary of Embassy in China (Service), transmitted to the Department as enclosure to despatch No. 3174, November 22, from the Chargé in China (Atcheson); Foreign Relations, 1944, vol. vi, p. 707.↩
In a memorandum of June 1 to the Director of the Office of Far Eastern Affairs (Ballantine), the Chief of the Division of Chinese Affairs (Vincent), discussing Ambassador Hurley’s comments on Mr. Service in this despatch, concluded:
“Mr. Service has proved to the entire satisfaction of CA that he is an exceptionally competent and useful observer and reporting officer. (Incidentally, Ambassador Gauss has spoken highly of his ability in this respect). Furthermore, a careful comparison of his reports with those of other American and foreign (non-Chinese) observers who have visited Chinese Communist areas reveals substantial agreement with the majority of them, with respect both to facts and to general appraisal thereof.”↩
- Footnotes throughout this document are in the original.↩
- Mr. Service was in Yenan in the summer and autumn of 1944, and for several weeks in the spring of 1945, as a member of the U. S. Army Observer Section.↩
- Oral statement of Mr. Service to the writer.↩
- See Embassy despatch no. 3043, October 9, 1944. [Not printed.]↩
- The Communists stress the catholicity of their intellectual background. Thus, Mao Tse-tung, in an interview with Maurice Votaw (American employee of the Kuomintang Ministry of Information) July 18, 1944, is said to have stated that the Chinese Communist Party has accepted Leninism from Russia, Marxism from Germany, 18th Century French philosophy, Feuerbach’s materialism, and the democracy exemplified by Washington and Lincoln. See Report no. 3, U. S. Army Observer Section, July 30, 1944, enclosure to Embassy’s despatch no. 2923, September 1, 1944. [For despatch No. 2923, see Foreign Relations, 1944, vol. vi, p. 536.]↩
- New Democracy, by Mao Tse-tung, a pamphlet originally appearing as “The Politics and Culture of New Democracy” in the magazine Chinese Culture, Jan. 15, 1940, section IV.↩
- Ibid., section VIII.↩
- Oral statement to the writer, February, 1945.↩
- From notes of an interview of Mrs. Jacoby and Mr. White, with Dr. Sun Fo, Embassy files, Chungking. [Omissions indicated in the original memorandum.]↩
- Section IV.↩
- Ibid., section VI. It may well be, however, that Mao does not realize the degree of state intervention in the European and American economies.↩
- Interview with Maurice Votaw, cited above.↩
- U. S. Army Observer Section, report no. 26, Sept. 10, 1944, enclosed with Embassy’s despatch no. 3022, Sept. 27 , 1944. [For cited documents, see Foreign Relations, 1944, vol. vi, pp. 622 and 623.]↩
- In a Communist pamphlet, The Liberated Regions of China Behind the Enemy Lines, vol. 1, March, 1945, p. 32, it is stated that the meeting of the Congress of the Provisional Peoples Council of the Shensi-Suiyuan Border Region in October, 1942, included 145 councilors of whom only 47 were Communists.↩
- Enclosure to report no. 47, U. S. Army Observer Section, October 17, 1944. [Not found in Department files.]↩
- Lin Tsu-huan, Chairman of the Shensi-Kansu-Ninghsia Border Region, estimates illiteracy at 90 percent. “Report to the Border Region Peoples’ Congress”, Dec. 5, 1944, in Our Task in 1945, p. 23.↩
- Interview with Guenther Stein, July 14, 1944, as reported in U. S. Army Observer Section report no. 3, July 30, 1944, enclosed with Embassy despatch no. 2923, September 1, 1944. [For despatch no. 2923 see Foreign Relations, 1944, vol. vi, p. 536.]↩
- It may be, of course, that Communist leaders have been influenced to some extent by a desire to “make a good impression” on Americans. Certainly, the presence of Americans in Yenan has encouraged them to consider and to express themselves on postwar matters.↩
- Based largely on oral statements of John S. Service to the writer.↩
- Section VI.↩
- Interview with Guenther Stein, July 14, 1944. cited above.↩
- Interview of Guenther Stein with Mao Tse-tung, cited above.↩
- Statement of Mao Tse-tung to John S. Service, reported in U. S. Army Observer Section report no. 15, August 27, 1944; enclosed with Embassy’s despatch no. 3018, September 28, 1944. [For cited documents, see Foreign Relations, 1944, vol. vi, pp. 599 and 602.]↩
- General attitudes of principal Communist leaders as expressed to the writer by John S. Service.↩
- Theodore White, American correspondent who spent two to three weeks in Yenan in 1944, told the writer that in his opinion the Communists would formulate a highly detailed economic plan, and make it work, once they had the necessary technical personnel and information. He advanced no evidence, however, to support his opinion.↩
- The Supreme Nat! Defense Council (Kuomintang) in its recent statement of “General Principles on Economic Enterprises During the First Period of Reconstruction” would control economic development including industry location by formulating a “General Plan for Reconstruction”. See Embassy’s despatch no. 53, Jan. 3, 1945, p. 1332.↩
- Based on statements of John S. Service to the writer.↩
- Compare the position recently taken by the Kuomintang (Supreme National Defense Council) which, in a statement of “General Principles on Economic Enterprises During the First Period of Reconstruction”, has proposed the establishment of joint enterprises of the Government and either domestic or foreign private capital.↩
- Based on statements of John S. Service to the writer.↩
- Interview with Maurice Votaw, cited above.↩
- New Democracy, section VI, “Economy of New Democracy.” The phrase “restriction (or regulation) of capital” is that of Dr. Sun Yat-sen in the San Min Chu I. Dr. Sun advocates extensive state ownership. It is not clear to what extent, in endorsing the teachings of San Min Chu I, Communist leaders would modify its economic doctrines. Problems of interpretation of elastic phrases make it impossible, in the absence of more precise statements, to be at all certain as to just how far it is intended to go in endorsing the use of private ownership in the initial postwar development of China.↩
- Interview with Guenther Stein, cited above.↩
- Based chiefly on statements of John S. Service to the writer.↩
- John S. Service’s memorandum of conversation, Sept. 12, 1944, transmitted with Embassy despatch no. 3092, Oct. 25, 1944. [Despatch not printed: for the memorandum of conversation, see Foreign Relations, 1944, vol. vi, p. 586.]↩
- See U. S. Army Observer Section report no. 24, Sept. 8, 1944, an enclosure to Embassy despatch no. 3021, Sept. 29, 1944. [Neither printed.]↩
- A despatch dated January 5, 1945. Sent to the Department by Emmerson from New Delhi. [Not found in Department files.]↩