The Director of the Office of Far Eastern Affairs (Butterworth) to the Acting Secretary of State
Subject: Comments Regarding Suggested American Control of Shanghai and Tsingtao
It is believed that under present critical conditions, the Chinese Government would be receptive to suggestions that the U. S. assume responsibility for the defense of Shanghai, Tsingtao or other areas of China, and that a cloak of legality could be provided for a move of that kind. However, the Chinese Communists would take full advantage of it to belabor the Chinese Government for selling out to U. S. imperialism and to draw an effective, if inaccurate, parallel between Chiang Kai-shek and the U. S. on one hand and Wang Ching-wei52 and Japan on the other. The intense nationalism of the Chinese would make this line particularly effective with the net internal result further weakening of popular support of the present Chinese Government, increased support of the Chinese Communists and increased ill-will toward the U. S.
Should the U. S. continue to occupy the cities following the collapse of the present Chinese Government, it is doubtful that any cloak of legality derived from that Government would protect the U. S. from charges in the UN and elsewhere of maintaining bases in China solely for reasons of power politics. These charges might seriously weaken the moral leadership of the U. S. in world affairs.
It is believed that it would be impractical from a military and political point of view to restrict U. S. forces to the defense and control of port facilities and key shore installations and that defense and [Page 337] control of substantially the entire municipal areas of Shanghai and Tsingtao would be necessary. However, it is believed that by assuming responsibility for the cities, we would voluntarily place ourselves in a position extremely vulnerable to Communist pressure. The present population of Shanghai is estimated at between 5 and 6 millions; that of Tsingtao at about three-quarters of a million. The number of Chinese refugees in these cities is already large and would increase tremendously as soon as it became known that the U. S. had assumed responsibility for the cities. Should the Communists decide to block the flow of commodities from the hinterland to the cities, the IT. S. would be faced with the alternatives of supporting to a large degree and for an indefinite period these masses of humanity with little evident gain to ourselves or of withdrawing under pressure with serious loss of prestige.
From the standpoint of exerting pressure on the Communists, Shanghai and Tsingtao in Communist hands would probably be more useful to us than in our own hands, for the Communists would then be responsible for the continued functioning of the complex and highly integrated economies of those cities and would probably have to continue the importation of essential commodities and industrial supplies from the U. S. to avoid economic chaos and attendant social unrest.
Finally, the defense of either Tsingtao or Shanghai against external Communist attack and infiltration from within would be a major task which might well draw us into active military operations on an increasing and unpredictable scale. Organized Communist terrorism calculated to create chaos and provoke our forces to indiscriminate retaliatory action would be an ever-present danger.
If there are vital reasons, arising out of the over-all strategic needs of the U. S., for maintaining American bases in China, it is believed that the National Military Establishment should formulate these reasons in order that they may be weighed against the serious objections to such measures outlined above.
A separate memorandum53 is being prepared discussing in more detail the position of U. S. Naval forces at Tsingtao.