894A.00/7–2749
Memorandum by the Director of the Office of Far Eastern
Affairs (Butterworth)90
[Washington,] July 27, 1949.
Taipei’s telegram no. 292 of July 1891 (attached as Tab A) reported a suggestion made to
Consul Edgar at Taipei, Taiwan, by K. C. Wu, one of the Generalissimo’s and
Governor Chen’s closest advisers and former Mayor of Shanghai. Wu said in
effect that those Chinese leaders who are working for internal reform would
be greatly assisted if you would call in the Chinese Ambassador and indicate
those lines of reform which the United States believes would improve the
situation on Taiwan.
I recommend that we act upon this suggestion. It will enable us usefully to
place again on record our concern over the conditions which the Chinese have
permitted to develop on the Island. And, coming from you, it may bring some
constructive results.
Accordingly, I suggest that you call in Ambassador Koo and hand him the aide-mémoire attached as Tab B, preceded by an oral
statement along the following lines:
“In response to a suggestion recently made to the American Consul at
Taipei by one of the Governor’s close advisers, I desire to present to
you certain considerations which have been of concern to the Government
of the United States of America with respect to the administration
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of the Island of Taiwan. It is
unnecessary, I am sure, to remind your Excellency of the special
interest of this Government in that Island arising from the part which
American armed forces played in its liberation, as well as from the fact
that the final determination of the Island’s status necessarily awaits a
peace settlement with Japan. The United States is deeply concerned lest
the chaos on the Mainland spread to Taiwan. The United States hope is
that the inhabitants of the Island should live in peace, security and
prosperity under a regime which reflects their legitimate aspirations.
Unhappily, the history of Chinese administration since VJ Day in Taiwan
has fallen far short of the hopes of its people and of the expectation
of the United States at the time that administrative responsibility was
turned over to the Republic of China.”
In order to assure that contents of the Aide-mémoire
and the gist of your oral statement reach the Generalissimo in accurate
form, I recommend that immediately after you have seen the Ambassador, the
Department telegraph a report of the conversation and the text of the Aide-mémoire to our Consul General in Taipei for
informal transmission to K. C. Wu.
[Annex—“Tab B”]
Draft Aide-Mémoire Prepared in Office of Far Eastern
Affairs
The United States Government has watched with deep concern evidence of
the deteriorating political and economic situation on Taiwan. There
seems, however, much that could be done by resolute, liberal and
far-seeing administration on Taiwan, to improve the people’s livelihood
and to render it secure against attack, either from within or without.
In a spirit of friendly advice, there are listed below certain measures
of self-help which the United States believes are necessary of
achievement for the tranquility of Taiwan.
First, and foremost, it would seem that the numbers of civilian émigrés and mainland troops which have come to
the Island in recent months should be reduced to the maximum extent
possible in order that the self-sufficiency of Taiwan, with respect to
food, should be restored and the Island spared the frictions and
difficulties inherent in the presence of large numbers of idle troops.
Your military authorities will know best the numbers necessary to assure
law and order on the Island and to provide an adequate defense against
any external assault. In the event that these requirements fall short of
the total military personnel now on the Island, then an essential first
step would appear to be the transfer elsewhere of the excess,
accompanied or followed by their families, together with other civilians
who are economically non-productive. This would correspondingly reduce
the burden now placed on the food and other resources of Taiwan.
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Secondly, it would seem that a concerted effort is necessary to stabilize
the value of the Island’s currency and thereby halt the inflation which
by all reports has so drastically disrupted the economy of the Island in
recent months. Such measures should include the increased taxes and
improved tax collections methods to the end that all governmental
expenditures, including those on behalf of the National Government,
would be covered by revenue; a careful control of the extension of
credit to truly productive loans and a conscious draft on the gold or
other foreign exchange assets held on the Island in order to achieve an
import surplus, with particular concentration on the importation of
fertilizer and consumers goods.
Thirdly, an intensive effort should be made to increase and diversify the
Island’s exports in order to restore its position as an important earner
of foreign exchange which should then be applied for the overall benefit
of the Island’s economy. This will require realistic pricing of export
commodities, a drastic removal of restraints on the initiative and
ingenuity of individual exporters and the assurance that the full
foreign exchange value of such exportation will, in fact, accrue to the
benefit of the exporters.
Fourthly, the land reform measures already instituted should be pushed
forward vigorously and expanded to the end that tenancy is reduced and
the net return of the individual producer increased.
Fifthly, steps should be taken to ensure the utilization of competent
administrative personnel in all positions and effective delegation of
authority and responsibility, particularly with respect to those
civilian officials dealing with financial, economic and other matters
requiring specialized knowledge and importantly affecting the economy
and administration of the Island. Military participation or interference
in the civil administration should not be permitted except in matters of
internal and external security.
Finally, if the natives of Taiwan are to enjoy in fact the progressive
achievement of their understandable and legitimate aspirations for an
enlarging measure of self-government, then they must be increasingly and
promptly brought into the political life of the Island and into
positions of responsibility in its administration.
Washington, ______
