893.01/10–2349: Telegram
The Chargé in China ( Strong ) to the Secretary of State
[Received October 26—11:28 a. m.]
Cantel 1227. Measure referred to in Cantel 1225, October 25,22 although represented as response to local governor’s demand for greater powers and responsibility, actually is manifestation of Nationalist Government bankruptcy. Unable support its administrations, it is forced shift burden to local administration. Indicating transferred revenues far below new added expense is statement Szechuan Finance Commissioner October 20 that in past Nationalist Government’s subsidy accounted for 80 percent all Province revenues but that Nationalist tax items transferred constitute subsidy equal only 25 percent Province income. Thus acute financial distress anticipated.
Similar situation obtains Yunnan which is presently asking increased subsidy from central government [on] account heavy military outlay that province recent months. Moreover tax collections will be most difficult since southwest has been unwilling be involved in civil war and its burdens.
- Not printed; it reported inception of a new tax measure by which provincial and municipal governments would be entrusted with collection of national taxes (893.512/10–2549).↩