893.50 Recovery/5–449: Telegram
The Consul at Taipei (Edgar) to the Secretary of State
[Received May 7—4:57 a. m.]
142. From Merchant. There is an alternative to policy relative inaction Formosa which is result of acceptance reasoning Taipei’s 141, May 4. In brief outline alternative would involve:
- 1.
- Proceed with reconstruction program submitted by J. G. White. Cost, say 20 million US.
- 2.
- Step up JCRR program reaching into every hsien and under imaginative director. Cost, say 5 million US advanced by fertilizer imports.
- 3.
- Commodity import program concentrated on cotton cloth, additional fertilizer, POL,41 etc. Cost, say 10 to 20 million US.
- 4.
- Grant for purchase munitions and military supplies to remedy probable shortages and misfits in present stockpile. Cost, say 20 million US.
Total cost above circ 60 million US.
[Page 327]Above with proper management could support military establishment of size necessary for efficient service and lift standard living average Formosan, say 10 to 20 percent.
Quid for above quo would be:
- 1.
- Long-term lease to US Navy and to US Air Force, such bases as JCS determined of value.
- 2.
- Placement Sun Li-jen in command all forces, all services Chinese military on Formosa personnel to be screened by him with intent return to mainland one-half to two-thirds of total now here.
- 3.
- Employment by Govt of firm J. G. White as engineering advisors and industrial operations supervisors.
- 4.
- Employment by Bank of Taiwan first class financial economist such as Cyril Rogers42 now of Central Bank.
- 5.
- Understanding that all US economic aid would cease forthwith if after due consideration of facts US Govt decided advice of advisors described above was wilfully disregarded.
I realize above would require reversal basic policies (1) unwillingness commit US military forces Formosa and (2) unwillingness accept onus in Chinese and Asian eyes fact as well appearance unilateral governing responsibility Formosa. Furthermore any such negotiation must be carried out with Generalissimo or Li, not at Govt level. It would coincide with President’s self-interest. It would, I believe, reassure Formosans and could by aggressive, frank presentation to world opinion be defended as no more invasion sovereignty than grant by US, for example, of B–29 bases. Finally this policy appears only form assistance or participation US can offer which would have any basic appeal in current psychological climate of Chinese Govt leaders and at same time lead toward US desired objectives. [Merchant.]