Foreign Relations of the United States, 1949, The Far East: China, Volume VIII

893.00/5–1149

The Consul General at Shanghai (Cabot) to the Director of the Office of Far Eastern Affairs (Butterworth)

Shanghai, May 11, 1949.
[Received June 6.]

Dear Walt: My telegram No. 1389 of April 27² seems to have drawn quite a lot of rebuttal. Since I don’t like to argue with the Embassy in official telegrams on policy matters, I think that my comments on Nanking’s No. 921 of May 3³ and Canton’s No. 296 of April 29⁴ can best be forwarded to you in this letter.

Lewis Clark seems to have completely overlooked the real purpose of my message, which was to warn the Commies that they might upset their own applecart if they continued to behave obstreperously, rather than to come around to them hat in hand. Obviously, the warning would be effective only insofar as it indicated the Commies had something to lose by not heeding it. There would, then, be no question of haying an overture rejected.

With regard to Lewis’ point about the Commies’ need for commodities, I have often emphasized this point in my telegrams, as you know; nevertheless, if we have no means of holding up essential imports, such as oil—and that is the purport of the messages which the Department has been sending out—then I foresee here another situation developing much as that in Tientsin has developed. If we cannot take effective measures, there is no use pretending that we can, or threatening that we will; but we certainly will not be in the driver’s seat in this matter according to anything that I have seen.

Lewis also rebuts my introductory remark about non-intervention in the civil war. Here again I do not see that the course I proposed would leave us open to any demands. My suggestion would merely call their attention to what has been happening in recent months and what might happen in the immediate future. I did wonder whether such a statement would be advisable in that it would give the Commies reassurances which they might be only too glad to have. The publication of Acheson’s letter,⁵ though not intended by the Department, pretty well shows our intention to withdraw further aid rather than to intensify it, so I scarcely see how my suggested statement would alter the position.

I do not quite understand Lewis’ point about the withdrawal of Consular personnel, since I did not suggest this. I did, at one time, suggest that there would probably be a substantial falling off of work in this Consulate General when the Commies enter Shanghai, and I asked authority to put some of the staff aboard U.S. warships at the last moment before the Commies took over. Although I still think that there will be a falling off in the work here when the Commies take over, the staff has now been stripped down by a third, and there seems less reason to fear that we will be immobilized here, so that I see no reason for acting on this suggestion any more, even if the Department had approved it and the Navy were still in the Whangpoo.

Much the same comments apply to Nanking’s telegram. With regard to the argument that we can afford to wait, the fact is that, as to recognition, the British have not waited, but have already spoken of establishing “friendly relations”. We ourselves seem to have spoken of “working contacts” which means nothing unless it is a hint that we are planning to move toward some sort of recognition, since clearly under the present circumstances, we would like to establish working contacts and can’t.

As for the united front, I have been advocating that ever since last Fall. Since it now appears that the British will not fully cooperate with us in establishing and utilizing trade controls, it seems to me pretty clear that the united front idea is out the window. Maybe we think we can afford to wait, and maybe it would be to our advantage to wait even if others get in ahead of us, but I do not think that we should be under any illusions that others are going to wait indefinitely for us to climb on the bandwagon they are already fashioning.

I gather from the two above quoted statements which seem to have originated from official sources, there may have been quite a bit of talking between Washington and London, and perhaps Paris, with regard to this whole matter. I hope that information regarding any such talks will be forwarded to us at an early date. I find that when we, in the field, know the precise contingencies which the U.S. is facing, we generally are in close agreement with the Department as to what should be done. Whether we like it or not, it is pretty clear that we will have to face the question of recognition at no distant date, since Lewis’ telegrams make it evident that we cannot anticipate that any real National authority will survive for very long.

I have just received your letter of May 6⁶ about my leave, and I quite agree with your comments, much as I hate to do so. There is an ever persistent rumour that the Commies have announced over their radio that they will not take Shanghai for some time—by latest account, July 1. I should not suggest that I hope it is sooner than that for fear that Styles Bridges⁷ might try to investigate me—and shall hope to survive until then. (At least the picture of my running is different from that of quite a number of Shanghailanders!)

The situation in Shanghai is going from bad to worse. Nationalists still here are carrying on a gigantic and sickening racket to strip the town clean before they hand it over. Tang En-po’s terrorism strips the last pretense of “democracy” from the Nationalists façade. Even in Yugoslavia I never saw anything quite so crude and arbitrary as the recent wave of executions. The currency manipulations and the many extortions which have been leveled against Shanghai are another part of the picture. As a result of these and other factors, Shanghai is rapidly sinking into economic prostration. A good way to gauge this is the precipitous fall in the demand for electric power; until March the Shanghai Power Company was maintaining its maximum potential output of approximately 165,000 KW without satisfying the demand, and it was still 145,000 KW on April 30. Today it has dropped to 120,000 KW. Another example is furnished by the horde of street hawkers selling all sorts of goods along the principal thoroughfare. Factories, unable to pay wages in cash, have given their own employees products to sell, and these pathetic people are trying to get enough cash to buy food. Since everyone else is short of cash and the goods are often not the kind which meet a popular demand, I am afraid they are not having much success. The Nationalist regime is certainly taking pains to assure itself of universal and permanent execration while it is on its way out.

Incidentally, if there is any need for me to uphold the Department’s course before the Congressional Committee when I return to the U.S., I should not in the least mind doing so. With my impeccable, cold roast Boston background and my numerous public attacks on Communism, I scarcely feel that I will be suspected of any leanings in that direction.

The heat is on in Shanghai in more ways than one. Yours for a cool day on the North shore, with every good wish,

Very sincerely,

Jack

2. Vol. ix, p. 1251.
3. Vol. ix, p. 14.
4. Ibid., p. 934.
5. See letter of March 15 to Senator Tom Connally of Texas, ibid., p. 607.
6. Not found in Department of State files.
7. Senator from New Hampshire.