Office of the Historian

893.00/1–2849: Telegram

The Consul General at Shanghai (Cabot) to the Secretary of State

Shanghai, January 28, 1949—9 a. m.
[Received 10:22 a. m.]

280. In conference today with Admiral Badger,72 Mayor Lapham,73 General Barr74 and Admiral Crawford,75 Wu76 made following major points:

(1)
He would turn over to us any official files in Shanghai for removal or photostating. I expressed interest in intelligence files. I would appreciate most urgent instructions re this.
(2)
Wu asked Barr to discuss with SCAP77 possibility of reestablishing trade between Japan and Taiwan, stating that Taiwan was planned as a last National bastion.
(3)
Wu asked that Lapham divert as much ECA aid as possible to Taiwan.
(4)
He said that 2,000,000 ounces of gold had already been shipped to Taiwan and that he was asking transfer of 500,000 more ounces of 800,000 remaining in Shanghai.
(5)
He indicated that Chinese Air Force and Navy would withdraw to Taiwan to prevent a Commie invasion.
(6)
He estimated that the Commies would take Shanghai in from 4 weeks to 3 months.
(7)
In answer to questions, he said he did not expect serious unrest in Shanghai on flight of Li Tsung-jen or fall of Nanking. He felt unrest would start when Commies were at Soochow. He pointed out that police had received double pay last month and that he was arranging another large bonus this month. He added that with 150,000 Nationalist soldiers in Shanghai no one division would dare to mutiny for fear of being crushed by local divisions. General Barr expressed serious doubts: (1) that Shanghai could be held for more than 2 weeks if Commies really tried to take it in that time; (2) that Taiwan could be held with Air Force and Navy in present state of inefficiency.

In answer to Barr’s question, Wu stated they felt reasonably confident of the loyalty of Air Force and Navy. He admitted that there was considerable Commie agitation among crews of merchant ships and agreed that disparities between Army and Air Force pay must be lessened. He felt that use of gold reserves would mitigate discontent in Taiwan resulting from inflation.

Mayor Wu asked what our plans were re protection of Americans in Shanghai. We explained our emergency evacuation plan briefly and asked whether he would agree to stationing of small Marine contingents at points specified in plan. Wu readily assented and suggested that undated letters be now exchanged in order that authority might exist if confusion should prevent us from obtaining it later. Unless Department instructs to contrary, I shall exchange such letters next week. Badger and I were careful to make it very clear that we could act only with scrupulous respect for Chinese sovereignty and for wishes of Nationalist authorities.

Sent Department 280, repeated Nanking 217.

Cabot
  1. Adm. Oscar C. Badger, Commander, U.S. Naval Forces in Western Pacific.↩
  2. Roger D. Lapham, Chief of China Mission, Economic Cooperation Administration (ECA); formerly Mayor of San Francisco.↩
  3. Maj. Gen. David G. Barr, Director of the Joint united States Military Advisory Group (JUSMAG).↩
  4. Rear Adm. George C. Crawford, Commander, Amphibious Group Three.↩
  5. K. C. Wu, Mayor of Shanghai.↩
  6. Supreme Commander, Allied Powers in Japan (Gen. Douglas MacArthur).↩