893.50 Recovery/2–249: Telegram
The Consul General at Shanghai (Cabot) to the Secretary of State
[Received 10:14 p. m.]
346. For Butterworth. Consulate General suggests ECA and Department may wish reexamine Ecato 94463 in light Canton’s 15, January 25, JCRR M–9,64 from Baker, Moyer and Dawson65 for ECA which apparently crossed reftel. Dawson urges Department and ECA give earnest consideration weight reasons continuance certain limited JCRR activities even in Communist-dominated areas contingent on agreement to specified conditions, on assumption that high level policy decision did not specifically cover such activities. Believe we should be particularly reluctant curtail irrigation project and three-prefecture projects in Szechwan and Tung Ting dike repair in Hunan. Other obviously meritorious projects in South China deserving high priority in view of commission, if funds available, include drainage projects Kwangtung, Chekiang extension program; Fukien-Lungyen integrated program (land reform project), seed multiplication and distribution and animal disease control in South China provinces and other miscellaneous projects of great value originating through local initiative totalling only some US $90,000.
On basis Dawson’s recent review entire program with commission, Canton, foregoing projects totalling some US $4,000,000 are considered highest priority.
If local funds not available as implied Ecato 944, use appropriate ECA funds would appear justifiable.
Re paragraph 4 Canton’s 15, Dawson strongly supports opinion Baker arid Moyer that decision now withdraw from such project as foregoing would have unfortunate consequences, enabling Communists make propaganda capital from our refusal to continue, while at same time they would have advantage utilizing our plans which would then be in their possession. We could obtain entering wedge Communists’ areas through such projects. If we withdraw, our present favorable position could be regained only with greatest difficulty if at all.
Rural reconstruction program appears most worthwhile experimental program designed ascertain if we can hold our position Communist territory. Since Communists give preferred status to rural reforms, above JCRR projects might well prove acceptable to them. [Page 620]It should be effective means of holding our longstanding friends in China and keeping nominal Communists now on fence out of Moscow camp. Carrying out agreed measures with appropriate safeguards would hold out promise benefits which would be more than proportionate to risks entailed.
Recommend thoroughgoing consideration be given approval modified program along lines indicated.
Dawson has good reason believe Chiang Mon-lin and Dr. Shen of JCRR would not be persona non grata to Communists since former well acquainted with Mao Tse-tung66 and other Communist leaders and Dr. Shen favorably known among certain Communist technical agricultural elements. They should have some prospects securing Communist acceptance modified program outlined.
There are grounds for believing extreme pro-Soviet elements of Communist Party would be highly disconcerted if our Government accepted sound program agreeable to coalition or non-Soviet dominated regime.
Sent Department, repeated Canton 4, pouched Nanking 262.