893.00/7–147: Telegram
The Ambassador in China (Stuart) to the Secretary of State
[Received July 1—10:20 a.m.]
1435. Following is Mukden’s 189 of June 23 to Embassy which due to cryptographic difficulties at Mukden has just been deciphered here:
“Communist military successes, shrinkage railway mileage in Nationalist hands, depreciation and depletion of Nationalist equipment [Page 210] and supplies, increasing friction between southern military forces and civil administrators on one hand and northern troops and local civil population on other, reports of projected withdrawal Nationalist forces to intramural China and abandonment Manchuria to Communists, rumors of early return Marshal Chang Hsueh-liang to Manchuria and expanding economic stagnation suggest following observations.
Recent Communist drive has met little Nationalist resistance. NECC sources and military observers admit many Nationalist withdrawals premature and without military necessity. Words ‘strategic retreat’ have lost all significance. Result Communists possess almost complete initiative and able maneuver practically at will. If Ssupingkai with its 17,000 garrison falls, Communists should be able to proceed successfully against by-passed Changchun and Kirin and thereupon gain unimpaired control over 90 percent Manchuria. Fall of Yingkow would leave only ports on west coast Liaotung Gulf in Nationalist hands. Only railway any appreciable mileage in Nationalist hands is Peiping–Liaotung main line. Communist drive eastward through Jehol is threatening even these meager holdings and should this drive be successful and contact between these forces and those now vicinity Yingkow be established Manchuria will be effectively cut off from land and water communication with China and Mukden itself will be virtually in state of siege. Nationalist military intelligence has been outstandingly deficient. NECC seemingly in almost complete ignorance of Communist plans and therefore being constantly outwitted. NECC headquarters officers admit they had no intelligence of recent Communist drive on Changchun and then southwards even though it is now known that such plans therefor had been formulated 3 months prior to opening drive.
Rivalry (if not enmity) between General Hsiung Shih-hui, Generalissimo’s representative, and General Tu Li-ming, Commanding NECC, is openly discussed and absence closely integrated military and economic planning Manchuria attributed to it.
By holding initiative Communists able keep Nationalists scurrying over countryside thereby causing depreciation Nationalist motorized mobile equipment and depletion sorely needed supplies. Communist transport on other hand consists almost wholly draft animals. Persons in direct contact with Nationalist troops in rural areas state there are insufficient small arms and ammunition to arm all combatant troops now in field. These reports so consistent some, though not necessarily full, credence must be given them. Communists also under-armed, but by guerrilla tactics and surprise night attacks they are able to cause greater loss weapons and expenditure ammunition by Nationalists than by selves.
Nationalist southern military forces and civil administrators conduct themselves in Manchuria as conquerors, not as fellow countrymen, and have imposed ‘carpet-bag’ regime of unbridled exploitation on areas under control. If military and civil authorities of local origin were in control, they too would probably exploit populace but experience has shown that Chinese authorities of local origin, in general, never quite strangle goose laying golden eggs and, furthermore, it is human trait to be less resentful toward exploitation by one’s own [Page 211] than toward that by outsiders. Result this is that countryside so antagonistic toward outsiders as to affect morale of non-Manchurian troops and at same time arouse vindictiveness in southern military officers and civil administrators.
Nationalist withdrawals toward Mukden have progressively cut off Nationalist-held areas from great food producing regions Manchuria thereby causing potential Nationalist food shortage which already apparent in extensive grain hoarding and speculation. Puerile efforts have been made toward price control and to combat hoarding, but, in general, results these efforts have been largely to enforce requisitioning of grain at bayonet point for controlled prices and enable resale requisitioned grain at black market prices for benefit pockets rapacious military and civil officials. Common man being crushed between rising cost living and depreciating currency (cost living index May, 160 percent compared 100 percent April). Local currency pegged to CNC and has not only fallen with CNC but also because of wholesale exodus families Nationalist officials and resulting flight from local currency incidental to frenzied buying CNC and gold bars. Black market value US dollar at Mukden now TP dollars 3,300 against TP dollars 1,000 March 1.
Little goods move between Mukden and its hinterland. Business rapidly approaching standstill, exports from Manchuria have practically disappeared and imports reduced to trickle of normal. Almost all capital has been expended in long range investment since Nationalists took over Manchuria and no such capital, Government or private, being invested today. All commodity markets purely speculative.
Evidence growing daily that people Manchuria not only prepared for but keenly desirous of change in government. But what change? Most are undecided even though voluble in discontent of present way of living and trend of events. It is safe to state overwhelming majority in nation are as [sic] dissatisfied with, dislike and would welcome freedom from present Nationalist regime. Like majority fear and would therefore not welcome Communist regime. Many talk ‘revolution’ even aloud in public places, but few are able to define their conception revolution other than as change from present way of living and even fewer envisage revolution involving armed resistance. There seems no likelihood that armed uprising would be more than abortive, at least until national morale and military might has suffered devastating deterioration. One platform on which Manchus seem almost unanimous is ‘out with Heilien (outside) Chinese and Manchuria for the Manchus’. The return of Ma Chan-shan (Consulate General despatch No. 4, May 23) lent heart to those who look to restoration of Manchu rule under a ‘native son’, but his relegation to figurehead status in position of impotence has dampened their hopes. Eyes are today turned toward possibility return Young Marshal89 to power in Manchuria. His vices, weaknesses and ‘playboy’ tendencies are known but he is nevertheless associated in minds of people with prosperity and progress which Manchuria enjoyed under Chang Tso-lin90 regime. He or some other pre-Manchu leader could serve as [Page 212] central figure for rallying Manchu people. Such change would in all likelihood herald return warlordism to Manchuria but even so Manchuria would remain Chinese with nominal allegiance at least to China and not ‘Manchu people’s republic’ as it may become if Communists succeed in sweeping Nationalists back into intramural China.
There is every reason to believe that punitive military action against the Communists unless succeeded by overwhelming military occupation will not save Manchuria to China. It is high time for Nanking be realistic and replace its present impotent disliked regime in Manchuria with one which will be supported by local population and would thereby serve to weaken Communist movement. It may be, and some think that it is, too late to accomplish this purpose. Without some such effective measure there [are] many indications that it will be only a matter of some months, perhaps 6 to 9, before Manchuria will be lost. Ward.”
Embassy is in accord with Mukden’s analysis, although there have been some recent indications that pressure of current Communist offensive is being relaxed due to weather and Communist supply difficulties. It is possible that partial Communist withdrawal may be in train. This, however, does not indicate any major change overall situation and it is very probable that as soon as weather and Communist supply situation permit further Communist offensive will be launched against Government forces which will be in weaker position than at time current offensive was launched during first week in May.
Sent Embassy, repeated Changchun and Tientsin.