893.00/3–1347: Telegram
The Ambassador in China (Stuart) to the Secretary of State
[Received March 13—6:40 a.m.]
545. Colonel Sells14 who has just returned to Nanking after spending almost 5 months in Yenan as Chief of Executive Headquarters liaison group there, confirms in general the observations of American correspondents reported in Embtel 535, March 12, 4 p.m. He particularly emphasizes the extent of the confidence of the Communist leaders in all three spheres of action against the Govt: (1) on the military front, (2) in their ability ultimately to bring about economic chaos, (3) in the irresistible attraction of their economic and social program particularly to the peasantry. Sells’ considered opinion is that Communists in their present mood are “completely [Page 63] irreconcilable” and, though they are still talking the PCC line,15 he has the impression that they will eventually increase their demands if, as they anticipate, the Govt progressively weakens. Sells does not believe that a threat of fulsome American assistance to Govt would deter Communists under present circumstances, and that their present state of confidence can only be shaken by substantial military defeats.
Sells has the impression that Communists’ tactics will be to encourage Govt to extend its forces to the utmost, to harass them and to concentrate their own forces to hit at selected vulnerable points. Communists are well aware of Govt’s concern over ammunition situation and will attempt to force Govt troops to expend material as much as possible. As with other observers, Sells confirmed no possible sign of Russian personnel or equipment. He did obtain apparently reliable info from Swiss missionaries to the effect that considerable rail traffic was evident in Manchuria between Tsitsihar and Soviet territory, westward in agricultural products and eastward in “sizable wooden boxes”.
Sent to Department 545, repeat to Moscow.