893.00/10–946: Telegram

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

1619. Following received from Dairen by courier October 8:

“Part 1. Communications remain our most serious problem, with no courier between June 11 and October 2 and telecommunications practically non-existent. However, Soviet Consul recently accepted code message for Moscow and one was received from there, possibly indicating a changed attitude.

Part 2. Protection U. S. property unchanged. Inspection not permitted but U. S. ownership acknowledged. Bank deposits frozen, and otherwise status quo being maintained until arrival owners or agents.

Part 3. Soviet position here remains basically unchanged since despatch to Nanking No. 4 of May 10 and Mytels 1 and 2, June 6, 7.40 Port still unopened with excuse Japanese war still exists but real reason probably desire to gain control all resources of Manchuria after political situation clears up. Once pre-eminence established and monopolistic controls obtained, other countries may be permitted participate on Soviet terms. Meantime shipments on reduced scale continue to Vladivostok and at least two ships went to Black Sea ports in spring. Small scale coastal junk traffic permitted for importation food, but Dairen as port for Manchuria is dead. Food, fuel problems acute. Early reopening railway and arrival Nanking officials deemed essential for opening of port. Otherwise American business will be unable compete if Soviet domination allowed to obtain firm foothold. In this connection, Soviet colonization proceeding apace. Several thousand civilians, mostly demobilized troops with families, now here and elsewhere in area. This program will probably spread to Manchuria when feasible. Obvious purpose complete domination economic, political life Manchuria. Soviets continue abstain from direct political action, but have permitted creation Chinese labor association which is actually single party on communistic lines. Chinese Communist and Eighth Route Army influence increasing although people mostly pro-Kmt.41 Soviet attitude toward this office “correct” but largely uncooperative. Little contact except on formal basis, and Soviet officials and citizens obviously instructed to avoid Americans. Soviet Consul more friendly but states knows nothing regarding high policy.

Part 4. Local administration left largely to Chinese with Russians in background dictating policy. Area divided into four districts: Viz., Dairen city and counties of Dairen, Port Arthur, and Chinchow. Eventual free port area probably limited to city itself rather than to whole territory as under Japanese. City government and police reportedly increasing efficiency by Communist and Eighth Route Army control and influence likewise increasing. Uniforms of latter [Page 1186] recently seen in streets and posters on V–J Day for first time omitted picture Chiang Kai-shek. Chinese officials were at first cordial to this office but cooled off recently, probably because of Russian instructions and pressure from Communists. Japanese collaborators treated mildly although people given chance to denounce employees Japanese police.

Part 5. Economic and trade conditions remain static with no improvement in transportation or communications. Shipping limited to few Soviet vessels and local junks. Planned reopening rail service part way to Mukden delayed by cholera quarantine. Prices continue to rise and goods being rapidly exhausted. Growing unemployment and food shortages have increased and labor unrest exists. Taxes high and merchants abandoning enterprise. Soviet occupation currency weak with U. S. dollars at high rates and Manchukuo and Chosen currency at premium. Withdrawal of occupation currency and substitution of Chinese Communist money rumored. Press announced under Harbin date line August 20 that Soviets have issued 10 billion occupation kuopi in Manchuria.

Part 6. Removal of capital goods an open secret in Dairen but details difficult to obtain without jeopardizing lives of informants. Would appreciate instructions and details of type of information desired.

Part 7. Japanese still without news of repatriation, although rumors state that recent agreement at Harbin with Communists includes Japanese here. Their condition here deteriorating rapidly as funds are depleted and unemployment increases. Food and fuel are becoming more scarce and expensive. Continued presence here of one third city’s population resented by Chinese. Soviets state they have no instructions. Benninghoff”

Stuart
  1. Telegram No. 2, June 7, from the Consul General at Dairen, not printed.
  2. Kuomintang.