894A.50/7–2849: Telegram
The Consul General at Taipei (Macdonald) to the Secretary of State
[Received August 1—6:57 a. m.]
326. During call on Wang Shih-chieh he remarked that economic and political stability difficult on mainland due hostilities but since [Page 368] Taiwan is free from communism every effort must be made to maintain it on stable economic and political basis in order to make it stronghold against communism which is practically negligible among local population but deteriorating economic condition would encourage its growth. Wang said Governor Chen realizing this danger is determined improve Island’s economy.
I pointed out high tariff on textiles, peanut oil, etc., formerly imported from Chinese mainland, placing undue hardships on Island and primary cause rise in prices those commodities now coming from foreign sources. Wang said readjustments tariffs now under consideration. Same information received other sources but no indication when new rates if approved will become effective.
I also referred to presence large number troops as heavy burden Taiwan economy as well as security danger. Wang not concerned re troops’ loyalty but admitted economic problem and said Governor plans reduce military forces on Island including air and navy and something will be done within 1 month. This statement open to question. Secretary-General stated other way Governor decided reduce military units by combining units partially staffed which, however, would not constitute any reduction in number of troops.
It is my impression from conversations with officials during past week that, although a decision has been made to try improve Taiwan administration and economy, a plan has not yet been formulated.
Sent Department, repeated Canton 138.