893.00/7–2746: Airgram
The Ambassador in China ( Stuart ) to the Secretary of State
[Received August 7—10:35 a.m.]
A–79. Embassy does not share optimism expressed by Mayor K. C. Wu to Gillem and Davis (Embtel 1209, July 26) with regard situation Shanghai. Although Embassy does not believe there is any immediate military threat to Nanking–Shanghai area (Embtel 1208, July 26), widespread tension is indicative of general deterioration of political situation during recent weeks. Recent events, notably decided spread of hostilities, departure of Generalissimo for Kuling, assassinations at Kunming, and continued worsening economic situation, have increased tension throughout country and general feeling of hopelessness with regard to peaceful outcome.
Although it seems unlikely that either Kuomintang or Communists are willing bear internal and international onus for overt commitment settlement political differences by military means, it is probable that there will be gradual spread and intensification hostilities which may eventually amount to full scale civil war. At the same time it may be expected that urban unrest and disturbances accompanied by assassinations and suppressions will be intensified.
Most probable course development will be spread of hostilities in four critical areas—north Hupei, north Kiangsu, south Shansi, and Shantung—where Government forces will probably endeavor obtain immediate limited military objectives. If successful—and decided success is subject to doubt—Kuomintang undoubtedly expects Communists would agree to more onerous terms than they are now prepared to accept. Such a settlement, however, would give little promise of permanence.
[Page 1417]Since mid-April (Embtel 655, April 104) no concrete and abiding steps have been taken to implement agreements reached by Political Consultative Conference and unless some means can be found to bring about an overall political settlement with reorganized and broadened government as first step, Embassy does not anticipate any improvement in general situation.
Rightist elements Kuomintang, aware of deterioration of party’s situation and angered by extent of Communist attacks, have recently been more outspoken in advocating that political issues China can be settled only by military extermination Communist opposition. In connection with Kunming assassinations, member local Communist delegation recently expressed to officer of Embassy futility of discussing reduction and integration Communist armies when force was only means by which those in political opposition to Government could protect their adherents, and mentioned possibility of need to withdraw Communist delegation from Nanking in order to protect its members.