893.00/12–1647: Telegram
The Consul General at Mukden (Ward) to the Secretary of State
[Received 11:04 p.m.]
387. Communists evidently maneuvering forces begin winter offensive. Brunt early attacks against Peiping–Mukden rail line. Six Communist Divisions reported astride line at points between Hsinmin and Shanhaikwan. Govt initial resistance again unsuccessful. Troops spread too thinly for adequate rail protection. Groups within area considering advisability abandoning Changchun–Kirin, thus relieving troops maintain corridor from intramural China. Continually increasing Communist pressure south of Mukden may force adoption this strategy.
Market panicky with speculation and hoarding governing. Commodity prices rising hourly. Black market selling US dollar now 22,000 tungpei90 dollars against 14,000 December 8.
[Page 404]Despondency and demoralization populace increasing, Chen Cheng’s presence which initially aroused hope but never enthusiasm of people, now having reverse effect on populace who feel if man important as Chen has failed no other Govt leader can be expected achieve success. As hope and confidence diminish and economy of area deteriorates, people reverting more frequently to their oft-times expressed desire return Chang Hsueh-liang. Feeling growing Government unable stem Communists and only hope is Chang with his ability arouse support of Near [North] East.
Desire separation Near [North] East from China and establishment as independent entity again being expressed openly (mytel 172, paragraph 2 to Nanking, Department as 100, June 18), This attitude certainly not held by majority people and not consolidated, move therefore not serious threat. Furthermore Government secret police sufficiently strong arrest any such organized movement at will.
Sent Embassy, repeated Department as 387, Peiping as 98, Changchun as 373.
- Currency used in the northeast area of Manchuria.↩