The Ambassador in China (Stuart) to the Secretary of State
[Received July 14.]
Sir: I have the honor to enclose for the information of the Department the ozalid copy of Peiping’s despatch no. 25 of July 1, 1947 with regard to a movement among non-Whampoa generals in the Chinese Army looking toward the establishment of a third party in China.
The Embassy has been aware for some time, and has so reported to the Department, that there is evidence of growing dissatisfaction within the Chinese Army arising from the current accelerated deterioration of the military and economic situation of the Central Government. The Embassy does not consider, however, that the state of morale of the Chinese Army has yet reached a point where large-scale organized disaffection is an immediate danger. Furthermore, the Embassy does not share the confidence placed by the Consul at Peiping in the second source mentioned in the first paragraph of the despatch. Information available to the Embassy reveals that this source is regarded by certain responsible American officials as an unreliable person of dubious character.
The despatch is nonetheless of considerable interest as indicative of growing deterioration of Chinese Army morale and decline in support for the Generalissimo, which is becoming apparent not only in military, but also in political, economic, and financial circles.
The Consul at Peiping appears to place more faith in the ability of the purported organization of dissatisfied generals to head a democratic movement than the background of these generals would ipso facto justify.
Minister-Counselor of Embassy