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

894A.00/9–949

Memorandum of Conversation, by the Assistant Chief of the Division of Chinese Affairs (Freeman)

[Washington,] September 9, 1949.

Participants:	Mr. Dening, British Foreign Office, Assistant Under-Secretary for Foreign Affairs in Charge of Far Eastern Matters
	Mr. Meade, Counselor, British Embassy
	Mr. Ford, First Secretary, British Embassy
	Mr. Butterworth, FE; Mr. Merchant, FE; Mr. Freeman, CA

Mr. Dening opened the conversation on Formosa by inquiring whether in our opinion the Nationalists on Formosa were becoming infected through Communist infiltration.

Mr. Merchant in replying gave a brief background statement on recent U.S. policy with regard to Formosa. He stated that the U.S. Government was of the opinion that it was of great importance that Formosa be kept out of Chinese Communist hands and that we had therefore taken certain steps in an effort to strengthen the present government. In this connection Mr. Merchant mentioned the employment of ECA funds in an effort to increase production and to provide economic stability through such projects as the fertilizer program, the J. G. White Engineering Company and the Joint Commission on Rural Reconstruction. Following the fall of Nanking and Shanghai, Mr. Merchant continued, and the consequent large influx of political refugees and Nationalist troops to Formosa, the Department requested the National Military Establishment to review the position of Formosa with particular regard to its strategic importance to the U.S. and any threat to American security which might arise should the island fall into hostile hands. He said that the NME after studying the question replied that Formosa was of considerable strategic importance to the U.S., but that it was beyond the present capabilities of the U.S. to undertake a military defense of the island. It had therefore been determined, Mr. Merchant stated, that the U.S. would concentrate on diplomatic support of the present government on Formosa and economic assistance to the island. He concluded, however, that there was considerable evidence of Communist infiltration on Formosa; that the Department was of the opinion that it could not be held indefinitely by the present government; and that the probabilities were that the island would eventually be taken over by the Communists.

Mr. Dening mentioned that they had received an unconfirmed report from the British Consul in Tamsui to the effect that the Nationalists had repulsed an attempt by Chinese Communist forces to effect a landing on the Formosan coast. The British Consul had stated, in this connection, that there was increasing concern on the part of Admiral Kwei and other high officials on Formosa as to the ability of the Nationalists to combat a determined effort by the Communists to take over the island.

Mr. Butterworth stated that the Department had not received any report of an attempted landing on Formosa by the Communists and indicated that he believed such an eventuality was unlikely in the near future. He said that in his opinion the process of Communist infiltration and working from within would be a gradual one and would require some time and careful preparation before a Communist takeover could be effected. Mr. Merchant took occasion to point out the illogic of the situation: (1) Formosa is completely self-supporting; (2) the Nationalists on Formosa have a well-equipped army, air force and navy; (3) the Communist forces have no air force or navy; (4) the Nationalists on Formosa have an abundance of foreign exchange; (5) it would appear on the surface that the Nationalists under good leadership could establish themselves in an impregnable position for an indefinite period; and yet (6) there is every evidence that the Communists will be able to gain control of the island.

Mr. Dening mentioned the Formosan League for Reemancipation and stated that, although it appeared to be a non-Communist non-Kuomintang organization which was working for Formosan independence, the leaders of the movement were unsavory characters and the only thing that could be said for them was that they appeared to oppose Communism. He also mentioned the possibility of an appeal by the Formosans to the UN with a view to holding a plebescite or establishing a mandate under the UN. Mr. Butterworth agreed with Mr. Dening, however, that the possibility of such an appeal was remote, particularly as long as Chiang Kai-shek remained in control of the Government on Formosa.

In conclusion Mr. Dening read the final paragraph of a brief on Formosa which had been prepared for him by the Foreign Office and in which the following points were made:

1. Both the Communists and the Nationalists will continue to lay claims to Formosa;

2. There is no possibility of the present legal status of Formosa being altered without Four Power agreement;

3. The possibility of the Formosan case being submitted to the UN is unlikely and might even cause more harm than good if done;

4. Consequently the question of who is to control Formosa will be decided by the outcome of the present struggle between the Communists and the Nationalists;

5. There is a strong probability that Formosa will in any event fall into the hands of the Communists and, since this eventuality cannot very well be prevented, all that can be done is to hope that occupation of the island by the Communists will not prove disastrous.