Memorandum of Conversation, by the Secretary of State

Participants: Dr. Kan Chieh-hou, Personal Representative of Acting President Li Tsung-jen
Ambassador V. K. Wellington Koo, Chinese Embassy
The Secretary
Fulton Freeman, Asst. Chief, Division of Chinese Affairs

Dr. Kan Chieh-hou, accompanied by the Chinese Ambassador, called by appointment today and handed me a memorandum42 illustrated by maps with regard to Acting President Li’s plans for defending [Page 711] south and west China. I thanked him for the memorandum and assured him that I would read it with interest.

Dr. Kan stated at the outset that he wished to make three requests of the U.S. Government as follows: (1) that the President or I make a statement of sympathy and moral encouragement indicating continued U.S. support of the National Government; (2) that a portion of the $90 million unexpended ECA funds be used for the purchase and minting of silver for the payment of troops and stabilization of the Chinese National currency; and (3) that a top-ranking U.S. military man be sent to China to observe and report developments. In explanation of the second request, Dr. Kan stated that approximately 50 per cent of the total Communist forces consisted of troops which had either defected or been captured from the Nationalists; that there was at present no incentive for those troops to return to the Nationalist side since there was nothing to offer; but that, if the Nationalist troops were to be paid in silver those forces which previously owed allegiance to the National Government would immediately desert the Communists and return to the Nationalist ranks. Dr. Kan added that, if it proved impossible to utilize ECA funds for this purpose, he desired to request a U.S. Government loan for the purchase and minting of silver which would be repaid in full. In this connection, Dr. Kan stated that the Chinese Govt, was anxious for its own sake to assure that any additional aid funds were not misspent and would therefore agree to the establishment of “any method”, such as a Sino-American committee, etc., which would assure proper use of the funds. (Dr. Kan was noticeably vague in his suggestions as to what type of “method” might be successful in this regard.)

I informed Dr. Kan that I had discussed some of these matters with the President and would do so again. With regard to the question of utilizing ECA funds for the purchase of silver, however, I reminded Ambassador Koo that I had discussed the matter with him prior to my departure for Paris at which time I had indicated that such use of ECA funds was not possible. Ambassador Koo pressed the point, stating that there appeared to be no reason within the legislative framework of the ECA Act preventing such use of the funds. I replied that the decision had nevertheless been taken after thorough consideration and that Mr. Lapham43 had so informed the Chinese authorities. I stated, however, that I was not familiar with the technical reasons for the decision and that I would again look into the matter. With regard to the question of a loan to the Chinese Government for the purchase of silver, I stated that I knew of no authority presently existing which would permit such a loan.

[Page 712]

Dr. Kan then returned to his request for a statement which would give moral encouragement to the National Government. He pointed out in this regard that the publication of a White Paper on U.S. relations with China44 might have the effect with some people of indicating that the U.S. no longer supported the National Government. He urged, therefore, as an antidote that a statement of sympathy and support be made prior to the publication of the White Paper which would in effect serve notice that the U.S. Government had no intention of withdrawing support from the Nationalists. In this connection, Dr. Kan made mention of my letter to Senator Connally45 the publication of which, he insisted, although unintended by the Department, had had the effect of lowering morale in Nationalist China. I assured Dr. Kan that his request would again receive the Department’s serious consideration and that I would discuss the matter with the President.

At this point Ambassador Koo indicated that he had one further request to make, namely, that Ambassador Stuart be instructed to proceed to the U.S. via Canton when he returned on consultation to enable him to discuss recent developments with National Government officials there. I recalled that Ambassador Koo had made a similar request prior to my departure for Paris and said that there were certain objections to such a trip including the additional physical burden it would place on our elderly Ambassador. I stated, moreover, that Minister Clark in Canton was extremely conversant with the situation in Canton and was keeping the Department fully informed of developments. I informed Ambassador Koo, however, that I would look into the question once again.

In response to my inquiry with regard to Ambassador Koo’s estimate of the position of the National Government in Canton, he replied that the military situation was much brighter than it had been of late. He stated that the Communist forces had not only been checked in Hunan and Kiangsi some 240 miles from Canton, but that they were suffering from troubles in their rear. These troubles, he stated, consisted of successful counter attacks by Hu Tsung-nan and Ma Hung-kwei’s troops in the Sian area and increased dissatisfaction on the part of peasants within Communist occupied areas. He also indicated that two divisions had recently been transferred to the Canton area and that these troops were being integrated and stationed under General Pai Chung-hsi. As a result, according to Ambassador Koo, it appeared probable that the Nationalists would be able to hold the Canton area for approximately two months although any further period of resistance would be dependent upon the receipt of arms, [Page 713] ammunition and silver, all of which were in short supply. Ambassador Koo further stated that, in view of the fact that the Communist threat to Canton was no longer imminent, plans to move the seat of the Government to Chungking had been postponed for the time being.

I inquired of Dr. Kan as to what progress had been made as a result of Acting President Li’s efforts to secure needed military equipment and specie from Formosa. Dr. Kan avoided a direct reply to my question but spoke at length with regard to the heavy requirements on Formosa for supplying, paying and feeding the large number of troops presently on the island. (Dr. Kan placed the number of troops on Formosa at “about 150,000”; in response to my correction that they numbered more nearly 300,000, however, he indicated that my figure “might be correct”.) I inferred from Dr. Kan’s remarks that Li had so far been unsuccessful in obtaining any significant amount of military equipment or funds from Formosa.

At the conclusion of Dr. Kan’s remarks about Formosa, he stated that he wished to clear up the status of the so-called “high policy committee” which had recently been formed with the Generalissimo as Chairman and Li Tsung-jen as one of the vice chairmen. He said that this committee was not in fact a policy committee of the Government but represented merely a revised version of the Central Political Council of the Kuomintang and was strictly a Party organ. Formerly, he stated, the membership of the Council numbered approximately 200, while the new committee consisted of only 12 members. Presumably in an effort to play down the importance of the Generalissimo within the Government, Dr. Kan emphasized several times that the committee was concerned only with Party affairs and had nothing to do with formulating high Government policy.

At this point Ambassador Koo mentioned the establishment in the U.S. of an informal group consisting of certain Chinese together with their American friends (he did not mention the name of the group but stated that it included such people as Dr. Hu Shih,46 Dr. Kan and himself) which had as its purpose the unification of all anti-Communist factions in China. He stated that telegrams had been sent to the Generalissimo, Acting President Li, Premier Yen Hsi-shan, and others, recommending agreement on the following three points: (1) that all groups in China opposing the Communists join together in carrying on resistance; (2) that a single plan of military action be devised and carried out under a unified leadership; and (3) that “something be done” to recapture the support and confidence of the Chinese people. Ambassador Koo added that replies had been received to their telegrams from all recipients indicating full agreement with the points [Page 714] outlined. He indicated that this was evidence of a continuing desire to resist the Communists and urged that the U.S. should therefore contribute its assistance to counter the spread of Communism in China.

I replied that the group referred to by Ambassador Koo had very laudable and high sounding purposes but that, as indicated by President Truman in his conversation with Dr. Kan, the U.S. was not interested in the establishment of committees or the declaration of principles but in action and deeds. The U.S., too, I stated, was sincerely and vitally concerned in checking the spread of Communism everywhere in the world, but retaining 300,000 troops inactive on Formosa did not appear to be the most effective way of resisting Communism in China. I assured Dr. Kan and Ambassador Koo that the U.S. stood ready to assist China, but that first China would have to give concrete evidence of its desire to help itself.

  1. Infra.
  2. Roger D. Lapham, Chief of the ECA China Mission.
  3. For correspondence on this subject, see pp. 1365 ff.
  4. March 15, p. 607.
  5. Chinese Ambassador in the United States, 1938 to 1942.