893.00/7–1549: Telegram

The Consul at Tsingtao (Hawthorne) to the Secretary of State 12

340. Establishment local people’s court July 11 and completion takeover various government organs by Communists ushered in period [Page 436] of uncertainty for all but Communist adherents of long standing and many people now fearful their lives. Lot of masses not only unimproved but all classes economically worse off than ever. Shantung Peninsula faced with famine owing lack rain and conscription young men. Taxes in interior even higher than imposed by Nationalist regime, excuse being necessity liberate all China. First hand report indicates economic conditions Tsinan deplorable.

Consequently people rapidly being disillusioned and anticipated underground resistance, so far unimportant, will grow. In fact believed only by Gestapo methods, to which Communists do not appear averse, can CCP hope retain power in Shantung.

Sent Department; repeated Nanking 227, Shanghai 139.

  1. Text printed from corrected copy received July 17, 6 a. m.