893.00/3–1749: Telegram
The Minister-Counselor of Embassy in China ( Clark ) to the Secretary of State
[Received 10 p. m.]
Cantel 142. Wu Tieh-cheng22 just returned from Nanking told me today of his refusal agree become member Ho Ying-chin Cabinet until he had reached satisfactory assurances regarding foreign policy and peace. General Ho had been unable satisfy him on these counts. Wu insisted that foreign policy remain unchanged; that is, friendly toward US, and that peace be conditioned on possibility survival anti-Communist forces.
Wu said principal problems for Cabinet resolution were: (1) Military reorganization and (2) economic reform. Li Tsung-jen had [Page 185] called to Nanking military leaders from various regions China to discuss problem military reorganization and had found all in agreement necessity reduction number military personnel and need for reorientation military effort. On second point there was wide disagreement on approach. Hsu Kan, Finance Minister under Sun Fo,23 had bungled financial reform in that he had extended real hope US Government 100 million ounces silver loan. On basis Hsu Kan’s assurances, Cabinet had approved, Wu said, new financial measures which were obviously doomed to failure if no loan was forthcoming from US. Too late Cabinet realized Hsu Kan was speaking without authority and that silver loan from US could be authorized only by Congressional action.
Wu Tieh-cheng took advantage this opportunity to remark on what he termed inconsistencies between US policy Europe where we were devoting billions toward containing communism, and our policy in respect of China where we seem unwilling to devote any real effort toward curbing Communist expansion. This I refuted, pointing out obvious returns our investment Europe as opposed to obvious lack of returns our investment so far this theater, stressing that before China could expect interest American people in investing further in survival resistance communism China, there must be evidence money thus invested had possibility assisting in attainment ends desired.
In answer to my inquiry as to when peace negotiations might be considered as ended, General Wu said that as result his conversations Nanking he was convinced Communist strategy envisaged lulling Nationalists into sense security until Communists ready to strike. As we [Wu?] saw it, Communists would continue reorganize, re-equip their military forces and re-deploy them until such time as they had occupied north bank Yangtze in Wuhan area, Wuhu and Chikiang and were prepared at moment’s notice cross Yangtze. They would then, he thought, clarify their attitude toward peace negotiations by appointing delegates, stipulating time and place for meeting, and stating conditions under which they would agree to peace under circumstances which would make it obvious that Nationalist Government would accept these terms—an ultimatum—or continue the battle under terms which would obviously be favorable to Communists. General Wu said that, although Communists had so far restrained from crossing Yangtze by military action, their political propaganda was obviously already having its effect on the south bank.
General Ho Ying-chin, according to Wu Tieh-cheng, is having great difficulty forming Cabinet. Many who have been offered office [Page 186] are reluctant to accept responsibility under uncertainties present situation. Wu was offered Deputy Premiership plus Foreign Office under condition that he would be responsible for all administration Executive Yuan, but he refused. Others likewise were having difficulty making up their minds. Generalissimo24 himself, Wu is convinced, would support Li Tsung-jen in any reasonable conditional peace he might negotiate and likewise would support him should Li decide renewal hostilities necessary. Generalissimo, he said, was much worried over situation and wanted to do the right thing, but did not know what the right thing was. Generalissimo, he said, was typical other leaders at this time, each wanting to do that which was in best interests of China, but at loss to know Communist aims. Each felt Communists were bluffing and that in spite of intransigeant attitude assumed over radio broadcast last minute arrangement might be possible. This might be wishful thinking, yet it was a phenomenon to be dealt with nevertheless.
Wu felt he had failed in organizing his supporters in current Legislative Yuan meetings Nanking: Sun Fo had gone and would not return, yet Wu felt change might have been made easier had he had better control Legislative Yuan members. There had, he said, been around 300 members present Nanking when Legislative Yuan convened, most of whom came from Nanking–Shanghai area. Nevertheless, the uncertainties of situation Nanking and of intentions Communists had resulted in gradual diminution number of Legislative Yuan members present Nanking. He anticipates that by next week there will be less than quorum present Nanking despite fact recess should not take place until May. In other words, he anticipates this session Legislative Yuan will die natural death.
General Wu envisages that under new Government, although seat of Government will remain Canton, principal Ministers, such as Finance, Defense and Interior, will spend most, if not all, their time Nanking. Unimportant Ministries still remain full time Canton and others such as Foreign Office will divide their time between Canton and Nanking. Given uncertainties situation, he feels such division of duties and responsibilities is unavoidable and must be put up with until such time as Communists have declared themselves.
All in all, he leaves impression initiative remains with Communists and Government will take no effective counteraction until Communist ultimatum which is expected when their forces are prepared cross Yangtze. Given effectiveness political, or should we say psychological, campaign Communists, we can expect little, if any, military resistance south Yangtze at that time. This seems further evidence of the complete bankruptcy Kmt leadership and of the inevitability that Communist [Page 187] interests will determine timetable of events in foreseeable future.
Repeated Nanking 122, Shanghai 87, pouched Kunming, Peiping, Hankow.