Foreign Relations of the United States, 1955–1957, China, Volume III

72. Telegram From the Ambassador in the Republic of China (Rankin) to the Department of State¹

Taipei, October 10, 1955—8 p.m.

Secun 30. From Hoover.² Our reception on Taiwan has been most cordial and in fact hospitality at times bordered almost upon the overwhelming.

Discussions with Ministers and officials at informal and social affairs have been friendly and frank, and while of considerable value to us from background standpoint have not involved new substantive matters on which the Department is not already fully appraised but major points of interest may be briefly summarized as follows:

1. Chiang’s statements and speeches during Double Ten Day celebrations heavily emphasized return to mainland though no specific time schedules were mentioned. Military parade of 20,000 men made an effective presentation of all branches of service, including armor and artillery. Evaluation of embassy personnel was that discipline and equipment were far advanced over previous years, but response to Chiang’s statements regarding return to mainland seemed more tempered and less exuberant.

2. On several occasions Yu Ta-Wei, Defense Minister, has talked to me at length, pointing out:

a. Greatest confidence and reliance of all branches of government in effectiveness and judgment of Admiral Pride.

b. Danger of ChiCom air build-up to Taiwan and offshore islands. He feels ChiComs would start action possibly in near future by bombing Matsu. ChiNats would then find it “absolutely necessary” retaliate against mainland installations, which would in turn be followed by ChiCom bombing of Taiwan.

c. Necessity undertaking build-up of Kung Quan airbase on Taiwan, costing about $25 million. Incidentally I find unanimity of opinion, both US and ChiNat, for this project which seems bogged down between Department of Defense and ICA by availability of funds. All concerned feel is least US can do to counter ChiCom air build-up on mainland, both for military and psychological reasons.

3. Admiral Pride believes ChiNats only recently have come to realize potential threat of ChiCom air build-up, and have swung too far on negative side. He sees no indication threat will be implemented in near future but does not minimize necessity for ChiNat air readiness as the most effective method of preventing overt action. It is his personal opinion, which he says is not shared by ChiNats, that ChiComs will probably take one or more of small outlying islands close to Matsu in same pattern as employed in Tachens whenever they feel necessity for a victory, or in order to punctuate a development in foreign policy or put pressure on US. He points out that within last few days they have shelled such an island lying close to Matsu, and could probably take it without much expenditure of effort.

4. Hollister and I, accompanied by Ambassador Rankin, Bowden,³ and others of my staff, had 2-hour session October 9 with Prime Minister Yui, Governor Yen,⁴ Acting Foreign Minister Shen, and Finance Minister Hsu, in which Chinese officials outlined fiscal and economic situation and discussed requests currently being presented to ICA mission⁵ for (1) additional aid of $32 million US under FY 1956 non-project assistance program, and (2) proposed surplus agricultural commodity program for FY 1956 of US $54 million. Of this amount US $20 million to be financed under Section 402⁶ and $34 million under PL 480.⁷

Governor Yen also made effective presentation of case for Shihmen multi-purpose dam project. Chinese officials also stressed unwarranted complexity ICA program procedures which had also been emphasized in earlier discussions by US technicians with ICA mission.

Chinese seemed confused as result conversations with Clark of Department of Agriculture regarding PL 480 and inquired what channels should be used in making application for surplus commodity assistance. I replied that usual channels should be followed, i.e., negotiations handled through Embassy here.

I made no commitment, simply complimenting Chinese on the completeness of their economic and financial presentation and said we would of course give the matter careful study.

I also discussed briefly with Governor Yen the importance we attach to the overseas Chinese and said we should be appreciative of any suggestions they might have as to ways in which overseas Chinese could be brought more effectively into whole free China operation.

I am seeing President Chiang later tonight and will report conversation separately.⁸

Rankin

1. Source: Department of State, Central Files, 110.12–HO/10–1055. Secret; Priority.
2. Under Secretary Hoover and the Director of the International Cooperation Administration, John B. Hollister, visited the Republic of China October 8–11 in the course of a trip through several East Asian countries.
3. Thomas R. Bowden, Acting Director of the ICA Mission in the Republic of China.
4. Yen Chia-kan, Governor of Taiwan.
5. In letters dated October 7 from C.C. Shao, Acting Secretary General of the Council for United States Aid, to Bowden, transmitted to the Department in despatch 232 from Taipei, October 18. (Department of State, Central Files, 411.9341/10–1855)
6. Section 402 of the Mutual Security Act of 1954 (approved August 26, 1954; 68 Stat. 832) authorized funds to finance the export and sale for foreign currencies of surplus agricultural commodities.
7. The Agricultural Trade Development and Assistance Act (approved July 10, 1954; 68 Stat. 454).
8. See Secun 36, infra.