The Ambassador in China (Stuart) to the Secretary of State
[Received July 17—8:06 a.m.]
1541. President Chiang asked me to call on afternoon July 15 following my return from Peiping. After discussing General Wedemeyer’s prospective arrival32 and expressing his pleasure, he asked my impressions of conditions in the north. I took occasion to follow suggestion contained in Deptel 850 of July 10, 7 p.m. and my reply in essence was as follows:
Independent Chinese and American reports from Manchuria agree that conditions are extremely serious not merely from military point of view but because of hostility of people alike toward Communists and Central Govt. Military officers of Central Govt of all ranks are exploiting the populace, enriching themselves and consequently there are stirrings of separatist feelings. I said that it was my strong [Page 242] opinion that reliance on trusted local leaders with a large measure of autonomy would strengthen Govt position and neutralize Communist success in using these same methods.
I said I found the north China people somewhat relieved because temporary Govt gains in Manchuria removed immediate threat, but discontent was almost as intense as in the northeast. This discontent seemed generally true throughout the country and was becoming rapidly intensified.
The Generalissimo remarked that economic conditions accounted largely for this, to which I replied that fiscal and economic deterioration was more a symptom and that it was the general feeling of hopelessness and impending disaster that led to increasing military graft, especially in Manchuria. In short, war weariness and increasing forebodings were paralyzing military efforts. I smilingly charged the Generalissimo with having used in his latest statement my own language about a new revolution but without my emphasis on reform and constitutional liberties, restricting his own statement in effect to one of fighting Communists. The Generalissimo agreed somewhat more heartily than usual with my statements and admitted that others could see developments sometimes more clearly than he and asked that I draft specific suggestions. In this latter connection I am taking no action for the time being.