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The Ambassador in China (Stuart) to the Secretary of State
[Received about June 9.]
Sir: I have the honor to report the latest developments in China in their bearing on possible renewal of peace discussions.
The recent student and labor strikes have various explanations. The Government believes that it has discovered a Communist Party organization with headquarters in Shanghai known as the “Activities Committee”, the function of which is to foment such disturbances. Rumors circulate that Dr. Chen Li-fu has been inciting the student agitations in order to embarrass the present Minister of Education,11 or possibly the new Premier and Cabinet. President Chiang K’ai-shek cites this rumor as part of Communist Party machinations to discredit and divide the Kuomintang. The student demonstrations are largely due to unsatisfactory living conditions and to deepening discouragement, all exploited by trained agents among them. But the food riots and labor strikes could easily be spontaneous outbreaks. In any case, they are all symptomatic of economic distress and of political grievances. It is significant that all of these are directed against the Government which gives ground for the suspicion that they are at least being utilized for subversive ends. The authorities for the first time are beginning [Page 138] to admit that the situation may get out of their control. There is throughout an undertone of anti-American feeling, the radicals blaming us for enabling the Government to continue the civil war, the loyalists for our apparent indifference to the national danger.
Meanwhile, groups are forming in Shanghai, in Peiping, and quite possibly elsewhere, organized for making an appeal to both sides to stop the fighting and renew the efforts for peace by negotiation. The time seems ripe for some such assertion of the popular will and any such movements will probably gain wide-spread support. These are to be distinguished from the more or less violent and self-centered or instigated protests referred to in the preceding paragraph.
The People’s Political Council meets here on May 20. The Democratic League delegates have promised to attend. Almost certainly there will be a motion passed looking toward ending hostilities and securing a negotiated peace.
President Chiang and the Premier are both extremely worried and with ample reason. The former always begins an interview with me by asking eagerly if there is any word from you. I am leaving tomorrow for Hankow to be gone only three days, but each has asked me to hurry back and even raised the question as to whether the trip could be postponed. This suggests the tension.
Dr. S. C. Wang12 has been called back from Washington for consultation as to an overall request for loans and credits. He will return as soon as details are completed. He seems to me to have a sane and balanced understanding of the China problem as well as of American perplexities in our effort to be really helpful.
Respectfully yours,