Foreign Relations of the United States, 1949, The Far East: China, Volume IX

894A.00/8–449

Memorandum by the Department of State to the Executive Secretary of the National Security Council (Souers)⁹³

Washington, August 4, 1949.

Subject: Current Position of the U.S. With Respect to Formosa

1. Developments in Formosa since our present policy was determined upon make it desirable now to reexamine our situation.

2. To attain our main objective with respect to Formosa and the Pescadores—the denial of the islands to Communist control—current policy directives, as set forth in NSC 37/2⁹⁴ and NSC 37/5,⁹⁵ call for (1) developing and supporting a local non-Communist Chinese regime which will provide at least a modicum of decent government for the islands, (2) discouraging the further influx of mainland Chinese, and (3) maintaining discreet contact with potential native Formosan leaders in the event that some future use of a Formosan autonomous movement should be in the United States national interest.

3. NSC 37/5 further directed that on receipt of assurances from the Governor of Formosa that the local authorities are prepared to implement the United States representations set out in paragraphs 1 and 2 of NSC 37/2, the Department of State officer detailed to Formosa for this purpose should inform the Governor that the United States is prepared to assist in developing and maintaining a viable, self-supporting economy on the island, and the ECA should thereafter proceed with arrangements which will contribute to these objectives. Finally, NSC 37/5 determined that units of the United States fleet should not now be stationed at or off Formosan ports in support of the political and economic measures envisaged above.

4. On April 8 and May 18 the Secretary of State submitted to the National Security Council interim reports on the implementation of NSC 37/2 and NSC 37/5. Since developments on the Island suggested the desirability of reconsidering our policy, the United States official especially detailed to Formosa was recalled for consultation. The major changes which had occurred since approval of NSC 37/5 were: (1) The renewed mass movement to Formosa from the mainland of troops and civilian refugees, with a correspondingly serious inflationary impact on its economy; (2) the breakdown of peace negotiations between the Nationalists and Communists, with fighting renewed on the Yangtze, thereby reducing the possibility of a transfer of Formosa by negotiation to a Communist-controlled coalition government on the mainland; and, (3) a deepening of the feud between the Generalissmo and the Acting President, with the Generalissimo and his immediate supporters firmly in control of Formosa. Under these circumstances, with hope declining for the installation of an effective and liberal administration on the Island and with a drastic inflation in progress, it was decided to confine ECA economic assistance to the importation of consumers’ goods, principally fertilizer and cotton, and to the Joint Commission for Rural Reconstruction activities rather than proceed with a capital reconstruction program which would have further fed the inflation. The Governor of Formosa was informed of the serious view the United States took of the continued influx of refugee civilians and demoralized troops. Recommendations were made to him and his advisers on economic and other matters designed to improve the economic situation. The Governor did not ask for increased economic aid nor were any promises given him that such would be forthcoming.

5. Following the arrival of the Department’s representative in Washington, a further assessment of our position has been made. We face on Formosa today a situation analogous to that which confronted us on the mainland of China a year ago. The government in power is corrupt and incompetent. It lacks the will to take the necessary political and economic steps to modify the deep and growing resentment of the Formosans. The burden of supporting the mass of Nationalist troops and governmental establishments is now so great as to accelerate the economic disintegration of the island. Moreover, economic aid from outside cannot in the absence of a basic change in the government alter or cure this situation, and so long as it endures the ultimate passage of Formosa under Communist control, by external or internal action, appears probable.

6. The Governor of Formosa has reiterated his intention to resist any Communist assault on the island. The forces on the island appear numerically sufficient provided they will fight. It is also believed that the Governor now controls sufficient troops to suppress any native insurrection. The most serious risk of a turnover of the island to the Communists lies in the possibility of widespread mutinies by disaffected Nationalist troops recently landed from the mainland and estimated now to have brought the total to the neighborhood of 300,000, or in deals with the Communists on the part of top military commanders. Such a development could occur at any time and would confront us with a fait accompli which only military force could reverse.

7. In view of the foregoing developments, and since there now appears no certain assurance that these islands can be denied to Communist control by political and economic measures alone, the Joint Chiefs of Staff should be asked to review their memorandum dated February 10, 1949, on the strategic importance of Formosa to the United States. Upon receipt of the current views of the Joint Chiefs of Staff, the NSC would be in a position to review the present policy in Formosa after considering the strategic factor and all political implications arising from our present global foreign policy. It would be helpful if the reexamination of the strategic factor by the Joint Chiefs of Staff would include a reply to the following question: Under conditions short of war and on the assumption that in the absence of military measures Formosa and the Pescadores will sooner or later come under Communist control, do the Joint Chiefs of Staff regard these islands as of sufficient military importance to the United States to commit U. S. forces to their occupation? It would also be of assistance if, in answering this question, the Joint Chiefs of Staff would take into account, among other factors, the following possible variations of the situation as it might be encountered: (a) Occupation in the face of initial opposition from Nationalist forces on the island or later attack from the mainland by the Communists; (b) occupation by agreement with the existing authorities on the island with implicit responsibility for the maintenance of internal security and external defense.

8. Meanwhile, it is intended (1) to continue to exert our diplomatic influence to confirm the Governor in his will to resist and, concurrently, urge the adoption of constructive political and economic measures designed to quiet unrest and reduce Formosan susceptibility to Communist propaganda; (2) to maintain an ECA program of present moderate proportions concentrated on the import of fertilizer and other consumers goods, JCRR activities and engineering advice but not activating the suspended industrial reconstruction program; and (3) to discuss this problem informally with selected governments, particularly the British, with a view to securing their views and laying the ground work for possible future joint or concerted action within or without the framework of the United Nations.

Recommendation

It is requested that the Joint Chiefs of Staff as a matter of priority advise the National Security Council as to the United States military interest in Formosa along the lines set forth in paragraph 7 above.

93. Circulated by the National Security Council as NSC 37/6 on August 5.
94. February 3, p. 281.
95. March 1, p. 290.