893.00/7–2646: Telegram

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

1209. Following from the American Consul General at Shanghai [720, July 21, 2 p.m.]:

Uneasiness has increased during last 2 days due to flood of rumors arising from military developments lower Yangtze, measures taken by the local police and military garrison, and propaganda from various elements taking advantage of present tenseness to serve their own purposes. It is believed that basic situation does not warrant increased nervousness and that latter is to some extent being artificially created (Remytel 713, July 20, 3 p.m.3).

General Gillem and I called yesterday on Mayor K. C. Wu, who stated that he saw no cause for alarm, but on the contrary felt that local conditions were improving. He pointed out that the raids in [Page 1415] the Paofeng area on Friday which had given rise to so many wild rumors had been non-political in character, that criminal characters were known to live in that quarter, that in making a roundup resistance had been encountered. He stated categorically that those who resisted the attack were definitely not connected in any way with the Communists.

As to the general situation, he reviewed briefly his activities in connection with student and labor demonstrations, saying that he anticipated no further difficulty in the near future from the former and that he believed the situation with respect to labor was also improving. He pointed out that the anticipated demonstrations this month have not materialized and said the results of examinations at road blocks did not indicate any significant attempt to infiltrate armed persons.

On the other hand there is extreme nervousness among liberal and other circles which have been critical of Kuomintang policies. Some of our Chinese contacts in these groups assert with obvious conviction that revolutionary elements are taking advantage of the present situation to embark on a campaign of intimidation directed against all liberal groups. The Generalissimo’s sojourn at Kuling adds to their state of nerves as they feel that without his restraining influence the extremists will go to greater length in carrying out their policy. They refer to the presence in Shanghai of Chen Li-fu, the recent suspension of the liberal newspaper Wen Hui Pao for one week, and special police activities including certain arrests as supporting their view. They say they anticipate the abduction and possibly the assassination of some prominent opposition leaders and even go so far as to name at least two prospective victims.

In brief interview Friday Pan Kung-chan, local leader of CC clique, was quoted as likening China to man with appendicitis implying that only forceful measures against Communists will be effective. An editorial in Shun Pao, which reportedly reflects CC views, implies Communists responsible recent political murders, saying in sacrifice of few “democratic elements” they had provided themselves with means to revive popular confidence in government. Editorial also accuses Communists of planning other murders.

Liberal circles foresee this as setting stage to blame Communists for any violence which may be committed there during present tense situation.

As confirmed by Mayor and information already reported to Embassy, special precautions are being taken by Chinese authorities to protect water supply and other public utilities. Many special agents have been placed on duty, pill boxes have been erected at strategic [Page 1416] points, and the city is apparently being combed for armed Communists. Davis.

  1. See supra.