894A.20/11–549: Telegram
The Consul General at Taipei (Macdonald) to the Secretary of State
[Received November 6—11:50 p. m.
662. During call on Governor Chen with Martin yesterday, took opportunity to refer to my call on Generalissimo and conveyed to Governor [Page 409] contents of message for Generalissimo in Deptel 412, October 28. Commissioner Finance C. K. Yen also present.
Governor’s first statement after hearing gist of aide-mémoire was expression of regret and shame for past failures of government on Is[lan]d and thanks for continued US interest and aid.
Asked if we had time to discuss question at length and indicated anxiousness to express himself.
He said when he first assumed Governorship in January, [he] realized people and Government too far apart. His program has been to bring them together.
His first task was to increase food production and has met with some success. (We noted that despite large influx troops and refugees in spring, according our agricultural people, no shortage basic foodstuffs now exists or anticipated.)
Next problem one of stabilizing currency. This is a question of confidence in Government and stable economy. Took steps (under C. K. Yen’s direction) to bring many industries operated by Central Government under control Provincial Government, in order integrate with Provincial economy. Currency not linked to US dollar but managed in relation US dollar (calculations made on basis dollar) so that pound devaluation has not had serious effect, though some trade necessary with sterling areas and pound devaluation caused some complications.
Another step, which he said made him unpopular, was to limit immigration from mainland in order prevent increase burden Taiwan economy.
On political side, he and committee have just drawn up set of guiding principles to be put into effect by all government organizations. (Copy to be made available to US.) In 1950, will begin to institute self-government and local elections will be held.
This summer over 2,000 persons were placed in lower and middle grades of Provincial Civil Service, of whom 95 percent were Taiwanese, mostly recent graduates local middle schools and colleges. (Comment: This important because on mainland, particularly Peiping, in Consul Martin’s experience, thousands of university and upper middle schools graduates were unable to find any employment whatsoever commensurate with education, which was great source of discontent and anti-government feeling. A very substantial percentage of these unemployed graduates, particularly of the university, went over to the Communists who always made sure to give them a job.)
Chen apparently much impressed with the turnout on Liberation Day October 25 when over 100,000 participated in parades and exercises. No unfavorable demonstrations anywhere.
[Page 410]Militarily, Chen said that first must make sure of internal security, then take care of external defense. When he first came to Taiwan, he was quite concerned with possibility of internal sabotage, etc.; but in view recent public demonstrations he now feels people support him.
Another illustration was fact that when recently Communists succeeded in getting a number of secret agents into Taiwan, they were turned in to the local authorities by the local people. Comment: This is very significant if such actions by local people have been on substantial scale. In Central China General Pai Chung-hsi constantly complained of cooperation local people gave to Communists’ agents in hiding, feeding and warning them. He admitted Nationalist troops could get no such cooperation. Chen said that he had virtually completed reorganization of armed forces here, placing Sun Li-jen at head of all ground forces on Taiwan, Chou Chih-jou head of air forces, General Ho, son of Sir Robert Ho Tung of Hong Kong, as head of Service of Supply, Dr. Lim at head of medical units and trying to get Yu Ta-wei to head political unit. Latter declined for health reasons.
Chen feels he has best men. Reference to Sun, the Governor said he not only very able but also very willing to assume responsibility and carry out plans which is even more rare these days. Sun is handicapped because of longer service and seniority of great many old-line generals. However, Chen says from now on officer’s status will be determined solely by his success on battlefield. Policy already carried out after Kinmen27 battle when number high ranking officers removed from their commands; for example, Tang En-po.28
Chen made a plea for more technical assistance from the US to be supplied by experts in the field of economics, politics and military science. He praised the achievements of the industrial J. G. White and economic ECA and JCRR advisors at present on Isd. He indicated that many of the Isd’s present problems could be solved by competent advice and he promised that he would not disappoint his advisors. (Comment: J. G. White and JCRR officials have both commented on good cooperation received from Governor and generally good cooperation all around on Isd.) Chen mentioned success of land rent reduction program as illustration concrete achievements brought about by cooperation.
On subject of foreign trade, which we had mentioned seemed to be suffering from red tape and confusion, Chen said he was drawing up a new regulation and instructed Mr. Yen to make further studies on how to improve situation.
In closing, Chen said he would like to feel free to consult me at any time and at any time I should feel free to call upon him. It would be [Page 411] hard to ask for a more cooperative attitude from a high official than that displayed by Chen throughout interview.
Interesting sidelight: In asking me for comment, Chen said that I could feel free to tell him things which I might not have felt free to mention to Generalissimo. Except for above statement, Chen at no time mentioned Generalissimo and gave not [no] indication whatsoever that he (Chen) was not in complete charge of affairs on Isd or of military matters under his southeast headquarters command. In discussing military, political, and economic plans, programs, personal appointments, etc., Chen always appeared to be taking for granted that these things he decided on his own authority. The question just how much authority the Generalissimo wields here is one which deserves a great deal of attention.
What are the Department’s criterions by which to measure “improvement in the political and economic well-being of the people of Taiwan?” Certainly some steps have been taken in this direction. According to Chen, others of the type we approve of are about to be put into execution. He also indicates a great willingness to accept advice almost to the point of attempting to do anything we ask. How many steps will have to be taken to show that he acting in good faith? These are questions which will have to be answered sooner or later if Chen carries out his plans, and right now it seems rather a good gamble that he will.
I was impressed with the Governor’s frankness and feel he was sincere. As a matter of fact he has been going up in my estimation steadily since my arrival here.