894A.00/3–249: Telegram

The Secretary of State to the Consul General at Taipei (Krentz)

30. For Merchant. Pursuant Dept request for JCS views re Formosa, latter have stated it would be in interest US natl security if Comm domination Formosa could be denied by appropriate diplo and econ steps. Subsequent this conclusion Formosan problem submitted to NSC, which adopted report Feb 3 approved by Pres governing US position re Formosa. Fol summary report:

[Here follows summary of report printed on page 281.]

Pursuant NSC request Dept submitted memo Feb 18 outlining immediate steps US should take re Formosa, which now under consideration NSC. Fol summary this memo:

[Here follows summary of memorandum printed on page 288.]

Should be emphasized US objective not take over or establish base on island but accordance JCS study take polit and econ steps deny Comm domination. Timing US approach governing authority Formosa obviously great importance since precipitous commitment support might lead repetition pattern developments mainland under which assurances self-help measures were not followed by performance. Question also arises possibility change Governor Formosa as indicated Embtel 417 Feb 1885 (pouched Taipei), which would make undesirable too early approach and commitment support. Taipei’s 51 Feb 25 indicates advantages marking time and deferring major plans time being. On other hand Taipei’s 51 and 52 Feb 25, together with other reports deteriorating conditions Formosa, argue early approach in effort stabilize situation and enable ECA carry out its plans. Consideration must also be given several vital factors: (1) Chi authorities Formosa might go along with deal mainland coalition govt. (2) Comms might infiltrate Chi armed forces Formosa cause revolt and overthrow local Chi regime, e.g. cruiser Chungking. (3) Local Chi milit commanders might swing over to mainland coalition govt. (4) In view transfer Govt financial assets Formosa and econ assets island in terms productivity and source foreign exchange, Comms can be expected make strenuous effort include Formosa by peace arrangements or conquest. (5) Separation Formosa from mainland will inevitably create irredentist movement which would be utilized by Comms rally support and by both Comms and other Chi arouse anti-US sentiment if US involvement too apparent.

ECA considers effectiveness aid requires vigorous program and eventually sizable mission needed. Large mission would make US position [Page 294]more noticeable but general US position Formosa as seen outside should not be particularly affected by size mission. Plans underway request Congressional authorization extend present aid program to June 30, 1949 by use of unexpended balance with suitable provision for ECA administrative expenses beyond that date. In absence further legislation this means ECA personnel would not be available beyond period necessary complete presently planned program but this program if mainland no longer drain on island and with orientation trade toward Japan should produce viable Formosan economy. Pres[ident’s] Four Point Program86 might provide means further US technical aid and advice.

ECA participation also related problem timing and would seem desirable have full understanding with Chi re ECA role prior major commitment for aid. ECA indicates engineering surveys almost completed and estimates could authorize procurement approx $10 million for industrial projects during March if given green light soon. Problem arranging distribution and pricing system for fertilizer cited as possible test Chi ability willingness cooperate. Such arrangement seems desirable initial step in plans aid Formosa.

In light this tel, Dept desires your views re timing and general considerations outlined above. Your reply should indicate no distribution.

  1. Vol. viii, “Political and military situation in China”, chapter I.
  2. Proposed in President Truman’s inaugural address on January 20, 1949, Department of State Bulletin, January 30, 1949, p. 123.