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ADDRESS OFFICIAL COMMUNICATIONS TO
THE SECRETARY OF STATE
WASHINGTON 25, D.C.
DEPARTMENT OF STATE
WASHINGTON
Friedbrey
State
December 14, 1949
CONF IDENTIAL
nn 12-22-
File
MEMORANDUM FOR MR. ELSEY
Complential
You may be interested in glancing at the enclosed
transcripts of meetings held recently in the Department
with a number of non-government people on "U.S. Policy
Toward China" and "Strengthening International
Organizations
E TRUMAN
Francis H. Russell
Director
Office of Public Affairs
CONFIDENTIAL
LIST OF CONSULTANTS
CONFERENCE ON problems OF UNITED STATES POLICY Ill CHINA
Joseph W. Ballantine
Owen Lattimore
The Brookings Institution
Director
Washington, D. C.
Walter Enes Pare School W
Internet to: Relations
Bernard Brodie
Johns Hopkins University
Department of International Relations
Baltimore, Varyland
Yale University
New Haven, Connecticut
Ernest 3. Thotaughten
Chairman of the Board
Claude A. Buss
First National Bank
Director of Studies
Portland, Oregon
Army War College
Washington, D. C.
Ceorge C. Marshall
President
Kenneth Colegrove
American Red Cross
Department of Political Science
Washington, D. C.
Northwestern University
Evanston, Illinois
J. Morden Murphy
Assistant Vice President
Arthur G. Coons
Bankers Trust Company
President
New York, Now York
Occidental College
Los Angeles, California
Nathaniel Peffer
Department of Public LAW
John TV Decker
and Government
International Missionary Council
Columbia University
New York, New York
New York, Ten York
John K. Fairbank
Harold S. Quigley
Committee on International and
Department of Political befence
Regional Studies
University of litresote
Harvard University
Mimeapolis, Minnesota
Cambridge, Massachusetis
Edwin O. Reischausr
William P. Hered
Department of Far Eastern
President
Languages
International Nagany
Harvard University
New York, 1317 Ink
Cambridge, Masachusetts
Arthur N. Holcomoo
William B. Robertson
Department of Coversionnt
President
Harvard University
American the Sure gn Company
Cambridge, Massachusetts
Mar York, York
Benjamin Klave
the Provideller ST
Trestient
Spoking,
11;
Liwrence K. Posinger
Hillips Talhot
American Institute of Pacific
University of Chicago
Belations
Chicago, Illinois
New York, New fork
George E. Taylor
Eurone Staley
University of Washington
Executive Director
Beatth Deshington
World Affoire Council 0° Northern
California
Harold M. Vinacke
Sax Francisco, California
Department of Political
Science
Harold Standen
University of Cincinnati
President
Cincinnati, Chic
University of Pennsylvania
Philadelphia, Permsylvania
HARRY ARCHIVES NATIONAL RECORDS AND DIRECT
U.S.
SOVERWING
LIST OF CONSULTANTS
CONFERENCE ON PROBLEMS OF UNITED STATES POLICY IN CHINA
Joseph W. Ballantine
Owen Lattimore
The Brookings Institution
Director
Washington, D. C.
Walter Hines Page School of
International Relations
Bernard Brodie
Johns Hopkins University
Department of International Relations
Baltimore, Maryland
Yale University
New Haven, Connecticut
Ernest B. Maclaughton
Chairman of the Board
Claude A. Buss
First National Bank
Director of Studies
Portland, Oregon
Army War College
Washington, D. C.
HARRY B.S. a. ARCHIVES "NATIONAL RECORDS SERVICE" government TROMAN AND LIBERT
George C. Marshall
President
Kenneth Colegrove
American Red Cross
Department of Political Science
Washington, D. C.
Northwestern University
Evanston, Illinois
J. Morden Murphy
Assistant Vice President
Arthur G. Coons
Bankers Trust Company
President
New York, New York
Occidental College
Los Angeles, California
Nathaniel Peffer
Department of Public Law
John W. Decker
and Government
International Missionary Council
Columbia University
New York, New York
New York, New York
John K. Fairbank
Harold S. Quigley
Committee on International and
Department of Political Science
Regional Studies
University of Minnesota
Harvard University
Minneapolis, Minnesota
Cambridge, Massachusetts
Edwin O. Reischauer
William R. Herod
Department of Far Eastern
President
Languages
International General Electric Company
Harvard University
New York, New York
Cambridge, Massachusetts
Arthur N. Holcombe
William S. Robertson
Department of Government
President
Harvard University
American and Foreign Power Company
Cambridge, Massachusetts
New York, New York
Benjamin H. Kizer
John D. Rockefeller III
Graves, Kizer, and Graves
President
Spokane, Washington
Rockefeller Brothers' Fund
New York, New York
2-
Lawrence K. Rosinger
Phillips Talbot
American Institute of Pacific
University of Chicago
Relations
Chicago, Illinois
New York, New York
George E. Taylor
Eugene Staley
University of Washington
Executive Director
Seattle, Washington
World Affairs Council of Northern
California
Harold M. Vinacke
San Francisco, California
Department of Political
Science
Harold Stassen
University of Cincinnati
President
Cincinnati, Ohio
University of Pennsylvania
Philadelphia, Pennsylvania
BARRY a ARCHIVES NATIONAL RECORDS TRUMAN AND LIBERT
U.S.
SERVICE GOVERNMENT
CONT IDENT IAL
DECLASSIFIED
---
RECORD OF ROUND-TABLE DISCUSSION BY TWENTY-
X
FIVE FAR EAST EXPERTS WITH THE DEPARTMENT
X
OF STATE ON "AMERICAN POLICY TOWARD CHINA"
OCTOBER 6, 7 and 8, 1949
BASH AT ROYERK WENT SERVICE RECORDS ARD
x forum
DECLASSIFIED
CONFIDENTI
On October 6, 7 and 8 a conference was held in the
Department on U. S. problems in the Far East, with par-
ticular reference to China. Twenty-five persons from
various parts of the country, representing different seg-
ments of the public, participated in the discussion and
exchanged views. Participating were leading experts on
U. S. relations with the Far East end other well-informed
citizens having special competence in that area. A list
of the consultants is on the following sheet.
The conference was arranged by PA in consultation
with the interested policy officers of the Department.
There were short briefings by various experts in the De-
partment, including Mr. Kennan of S/P, Mr. Butterworth
of FE, Mr. Sargeant of P, Stephen Brown of CP, Miss Cora
DuBois of DRF and Colonel John McCann of CIA.
The meeting was chaired by Ambassador Jessup and,
when he was absent on other duties, Mr. Raymond Fosdick.
The transcript of the proceedings has been edited
so that, as far as possible, it will include only those
portions of the discussion of particular interest to
Department officers. It is for use strictly within the
Department.
Francis H. Russell
Director
Office of Public Affairs
-1-
MR. FRANCIS RUSSELL: The main purpose of this meet-
ing is to bring to this table the expression of as many
helpful points of view on the subject under discussion as
possible. There will be no effort to arrive at a set of
resolutions or recommendations or even a consensus of
views, or even to try to persuade anyone of anything. It
will be simply to lay on the table and make available to
the policy officers here in the Department that are charged
with the responsibility of formulating the Department's
views with respect to our policies toward China the think-
ing of you gentlemen, who have given this subject a con-
siderable amount of your attention.
In order to make the meetings of as much value as
possible there will be a stenographic record kept of what
is said. That however will not be made available to people
outside of the Department, nor even to those who are here
around the table. It is for the benefit of those in the
Government who will be working on the problem.
Until Mr. Jessup arrives, Mr. Raymond Fosdick, who is
working with Mr. Jessup, will be in charge of the meeting.
CHAIRMAN (IIr. Fosdick): The reason for the concen-
tration of the interests of the Department at the moment
on the Far Eastern situation is that e have come to the
end of an era. The Thite Paper was issued by the Depart-
ment in an attempt to give the public a complete statement
of everything that had happened on the theory that the
public was entitled to all the facts as to the past situa-
tion.
The Secretary said very frankly that he had not yet
formulated a policy and it is the hope and expectation
that with the aid of such groups as this we can get light
in the formulation of a now policy.
We thought that a very helpful approach to this prob-
lem could be made if in the beginning we were briefed by
officers of the Department who have had long and intimate
contact with some of these questions. Mr. George Kennan,
head of the Policy Planning Staff, will start off the
briefing this morning on the general subject of China in
the world picture. He will be followed by Assistant Secre-
tary of State, Mr. Butterworth, head of the Far Eastern
Bureau, on the general policy of the United States in
China. But before that I would like to present the Acting
Secretary, Mr. Tebb.
ACTING
-2-
ACTING SECRETARY WEBB: Thank you very much. Mr.
Acheson regretted very much that he could not be here to
participate with you. 's you know, he is at the sessions
of the United Nations. He has taken, I think, perhaps
more of his own personal time on the subject of China
since he has been Secretary of State than perhaps any other
issue, although he has had such very great problems as the
inauguration of the Atlantic Pact, the working out of the
military assistance program, and many other matters affect-
ing other parts of the world.
We feel here that we have come to a point where we do
need very much to have the kind of discussions that we
have asked you to come here today to participate in and we
do want you to know that the Secretary himself will go very
carefully over the work that you have done and it will have
a very direct bearing and effect on his own thinking as the
big decisions that we have to reach over the next couple
years are brought into focus.
Perhaps no single aspect of our foreign policy has
been subject to so much public conjecture, criticism and
discussion as the policy toward China. We also feel that
how the United States handles the problems involved in
China is of very great importance to the democratic world.
We think here in the Department, very frankly, that too
often people have jumped to conclusions based on emotion
rather than on clear reflective thinking, and that is one
of the reasons that we were particularly anxious at this
time to have this meeting with you.
I also would like to say that we recognize here that
we do not have any monopoly on intelligence about China.
In this group there is perhaps the greatest aggregation of
intelligent thinkers that there is in this country on this
subject, and we feel that in working out the program of
the Department we will undoubtedly be able to derive great
benefit from these discussions. "e hope that your contact
with some of our people who have been working in this field
will bring about perhaps a better result than either group
working and thinking independently could achieve. Certainly
you should know that after you have gone the notes and
minutes and results of these discussions will be important
and will be most carefully considered in everything we do
for an extended period of time.
I would like to add one or two other points. We do
not expect any dramatic announcement that can be out out
to the world at the end of these conferences saying that
our
CORP
-3-
our policy in China has been reversed or changed or per-
haps even slightly altered. The formulation of basic
policy in such a problem as this is a very long and time-
consuming process. Over the next few months we assure you
that everything that is involved in this great question
will be gone over most carefully from not only the polit-
ical but the economic and security standpoints, that within
the Government procedures are being worked out, arrange-
ments are getting reduced to habits of thought and habits
of work between the White House, this Department and the
Defense Department that have a very great significance in
bringing about a perhaps more thoughtful thorough-going
approach from those three standpoints than we have had
since the war.
The last point I would like to make is that we are
not in these sessions going to try to present you or sell
you a China policy, or what we might consider to be a China
policy. Our broad policy in the Department remains the
same for China as for all the rest of the world. Briefly
we are working toward a world in which democracy can ex-
press itself, where human liberties are respected, where
people can enjoy a decent standard of living, and that
means a world of peace.
CHAIRMAN: Mr. George Kennan of the Policy Planning
Staff of the Department of State is the first officer who
will brief us, on the general question of China and the
world picture.
MR. KENNAN: Centlemen, I have not prepared anything
formal for this presentation. I am just going to talk to
you in a very informal way about what seems to us to be
the relationship between the problem of China we are here
to deal with and our general foreign policy.
That term, "general policy" does not signify any paper
that anybody here can take out of a drawer and lay on the
table as the measuring stick against which we have to
stack up the component parts of policies, such as the prob-
lem of China. There can't be any such paner and none of
us here who have this status of planners can attempt to
write anything of that sort. General policy in this coun-
try has to spring basically from the ideas and aspirations,
from the actions of the people and of Congress and of the
Executive branch of the Government. It is a constantly
changing thing. It is not a static thing which you can
fix in any one paper at any one time, and it is not a
finished thing. It is, particularly at present I think,
in a state of high flux, and we only know a part of it.
Naturally
-4-
Naturally we here have to use a certain rule of
thumb, we have to have some guidance ourselves as we go
along, and I can try to give you a picture of what that
rule of thumb is as we see it. I emphasize again it is
not one we make entirely, it is one we have to try to
figure out ourselves from what the country actually does
in foreign affairs and from the aspirations of public and
Congressional opinions we get, as well as from our own
judgment.
As we see it the problem of general foreign policy
breaks down really into two segments. The first of those
is the more narrow and immediate and more concrete question
of the preservation of the security of this country in a
world where there are a great many weapons in other peoples'
hands and where there is a great deal of confusion and mis-
understanding and violence, fanaticism and ill will. It
is not a safe world these days for anybody to live in, and
we have, as I say, the relatively well-defined problem of
how you preserve the national security in these circum-
stances.
The second problem goes far beyond that, is a much
more profound one and one to which none of us is going to
find any definite answer at any early date, and that is
the question of what it is really, assuming that the
national security is taken care of in one way or another,
that this country wants to do, how it views its mission or
its role in world affairs, what it is after in dealing
with its world environment.
The answers to that are by no means as clear as they
might seem when you pose the question, and it is there that
I think our ideas today are in a particularly high state
of flux. I will return to that a little later.
Now from the standpoint of world security, of our
national security in its world terms, that is a subject
which of course is on everyone's mind at this particular
time on account of the news that there had been an atomic
explosion in Russia and the implications which that bears
for many people. ctually I don't think that the pattern
of our world security has been very greatly altered by
that fact. Certainly it is a development which should
have been fully taken into account in our planning to
date, and I think largely has been.
As we see it, we do not feel to this day that the
Russians have the intention or expectation or desire to
launch a great sudden military onslaught on the West.
That
-5-
That is not to say that there is not a basic conflict of
view between themselves and the Western countries, and it
is not to say that for other reasons they might not come
to the conclusion that a war is necessary, but what I am
driving at is that I think there is a distinction between
these Russian leaders and people like Hitler and the
Japanese leaders of the '20's and '30's. I do not think
that in their own minds they have conceded that a great,
aggressive, open war was the way in which their aims were
to be achieved. I think that remains true today even when
they have this bomb.
Remember, they have a theory that capitalism bears
within itself the seeds of its own destruction, that it
must disintegrate. They see an important role for local
Communist parties in hastening that disintegration, in
acting, as they say, as midwives at the birth of a new
order, but that is an entirely different thing from saying
it is the purpose and mission for the Red army to move out
and conquer the rest of the world for the sake of imposing
Communism. That would be actually illogical from the
standpoint of their doctrine and also their national tradi-
tion. Russian expansionism has been a history of gradual,
rather cautious. patient, bit-by-bit expansion, always
directed to what lay immediately beyond their land fron-
tiers in Europe and Asia. "e do not under-rate the
importance of their political expansionist tendencies and
of their embitions to see Communist regimes which would be
more or less subservient to them or take their inspiration
from them established certainly throughout most of Eurasia,
and I think all of Eurasia. They had high hopes that a
lot of that would happen when the recent war came to an end.
That does appear to us to have in it really great
danger, particularly in connection with Europe, because
if you look at the geography of the world from the stand-
point of military and industrial potential, I think it is
fair to say that outside of our own military and industrial
complex here in the United States, there are only four such
aggregations of manpower and skills and industrial strength,
there are only four aggregations which are major ones from
the standpoint of strategic realities in the world. Two
of those lie off the shores of the Eurasian land mass.
Those are Japan and England, and two of them lie on the
Eurasian land mass. One is the Soviet Union and the other
1s that of Central Europe, of Germany and the industrial
areas immediately contiguous to Germany and the Rhine,
France, Belgium, Czechoslovakia and Austria and in Silesia.
Viewed
CONT
{
-6-
Viewed in absolute terms, the greatest danger that
could confront the United States security would be a com-
bination and working together for purposes hostile to us
of the Central European and the Russian military-industrial
potentials. They would really create an entity, the two
of them together, which could overshadow in a strategic
sense even our own power. It is not anything, I think,
which would be as easy of achievement as people often por-
tray it as being. I am not sure the Russians have the
genius for holding all that together. The Germans apparently
didn't, although they tried it. Still, they have the tend-
ency of political thought, of Communist political expansion,
which causes us to concentrate on that problem and do our
best to prevent such a combination in coming about in a
spirit and form which could be hostile to us. That does
create - I would point out - a real distinction, from
our standpoint, between the situation of Europe and the
situation of China and of Asia. It was because of that
distinction that we have done what we have done and had,
I think, the political success that we have had in Europe.
When we talk about helping people to resist pressures,
such as those that come from Moscow, it is not something
we can do by our own policy alone. We can get success
only by inter-action between our policy and what already
exists in the way of natural will and ability to resistance
in other countries. It did happen that in the European
countries there was a strong enough attachment to national
independence as such, a strong enough repugnance to the
sort of thing that was being thrust upon countries by the
Russians, a strong enough will to hold out against that to
enable us with our assistance to be of real political
value there. It was partly because those prerequisites
existed that we have been able to follow a program in
Europe which proved, I think, much more successful and
which looked much more purposeful, much more well-designed
probably than what we have done in Asia, but there is also
the fact that it does seem to us a more serious prospect
that the Russians should get hold of Central Europe from
the sheer military standpoint of national security than
it does that they should get hold of China and Asia.
That does not mean that we underrate the importance
of a Communist advance in Asia. We do not even underrate,
I hope, the military importance of China. We realize that
in some respects the Chinese have formidable military
capabilities, although they seem to us to be ones that
express themselves more in the defensive than anything
that could make up amphibious strength or strength which
could be projected beyond the borders of China.
You
CONFIDENTIAL
-7-
You have to take in, of course, in that respect, and
we hope you will give attention to this, the question of
Chinese resources, Chinese possibilities of becoming an
industrial power, and particularly the possibilities of
doing that in conjunction with Russia. It has been my own
thought that the Russians are perhaps the people least
able to combine with the Chinese in developing the re-
sources of China and producing anything which in a physical
sense would be dangerous to us. The Japanese provide, it
seems to us, far more the natural workshop for the Far East
in general and for China, and whereas China is a competitor
with Soviet Siberia for such things as the Soviet Govern-
ment may have to give -- and I have heard Stalin express
this same thought and I think with complete sincerity --
Japan is not exactly in that position and Japan can supple-
ment the mainland much more.
This problem you will be facing with respect to China
is for that reason, I think, inextricably intertwined with
the problem of Japan, and I hope you won't feel under any
compulsion to exclude Japan from your attention as we go
along here. We have got there what seems to us to be a
terrible dilemma on our hands and we need all the guidance
we can get. The outcome of the recent war and the settle-
ments that were made with respect to Northeast Asia do
seem to have excluded the Japanese for the time being from
any extensive participation on the mainland short of a war
or of some dicker with the Russians which would enable the
Russians to feel they can re-admit at least the Japanese
technological and administrative and business skills into
that area safely for themselves.
On the other hand you have the terrific problem of
how then the Japanese are going to get along unless they
again reopen some sort of empire toward the south. Clearly
we have got, if we are going to retain any hope of having
healthy, stable civilization in Japan in this coming period,
to achieve opening up of trade possibilities, commercial
possibilities for Japan on a scale very far greater than
anything Japan knew before. It is a formidable task.
On the other hand, it seems to me absolutely inevit-
able that we must keep completely the maritime and air
controls as a means of keeping control of the situation
with respect to Japanese in all eventualities. The very
fact that the Japanese face an appalling problem of economic
adjustment in this coming period and are probably destined
to go through a phase of rather intense national frustration,
which will incline them rather to the devices of despair
than toward a good-natured sort of policy, -- all that
makes
-8-
makes it all the more imperative that we retain the
ability to control their situation by controlling the
overseas sources of supply and the naval power and the
air power without challenging which it cannot become
aggressive.
It will be, I think, part of your task here to
assess the possibilities for US policy with respect to
Japan in the light of those factors, the possibilities
for the development of Japan's economic relationships
again with the mainland, the extent to which the Japan-
ese can afford not to trade with the mainland, with North
China, but again the extent to which North China can
afford not to trade with the Japanese, try to strike a
balance between bargaining power and with what it supplies
to us.
For the sake of our own national security, I would
say the relationship of Japan toward China is fully as
important and perhaps more so despite all alarms of the
moment concerning the relationships of Moscow.
Turning now to the other and broader question of
United States foreign policy, the one that goes beyond
the limits of simple national security in the short-term
sense and which addresses itself to what it is really
which we regard as our function in the world, it seems to
me that there we have, rather than in the problem of
security, the root of the causes of all the acrimony and
differences of opinion and anguish of spirit and searching
of souls that is going on over policy in China in the
last two or three years. I believe that it is in that
realm of thought that the confusion must lie, because it
could only have been a great confusion which could have
produced some of the acute differences and acute feelings
among our people here. On that we really are in a state
of flux.
The traditional concepts of Americans, which we knew
from the 19th century, as to what was the role of the
United States in world affairs are beginning to wear thin
in many respects and prove to be inadequate. They were
of course, first of all, I think, looking back, the con-
cept that we should preserve our freedom to go ahead and
develop this continent without any interference or trouble
from other people, and, secondly, that we should achieve
the most favorable possible juridical framework for the
activities of our traders and our citizens abroad. That
was the mercantile-labor concept of foreign policy which
prevailed among ourselves and largely among British and
other great trading countries in the 19th century.
Both
CONFIDENTIAL
-9-
Both of those are proving to be inadequate because
we find that as far as preserving our right to go ahead
and develop our internal life, our ability to do it with-
out outside interference, that that no longer can be
accomplished with coastal batteries, that there is no
security in the purely defensive attitude toward the
world, that security really only lies in a vigorous and
active and flexible offense of some sort. I don't mean
a military one: I mean a political ideology. You are
safest when you are trying to accomplish something in-
stead of waiting for somebody else to come and try to
accomplish something in regard to you. Therefore, even
that concept of keeping ourselves free to pursue our do-
mestic aspirations here brings us out into the rest of
the world and means we have got to want things, we have
got to be trying to do things in other parts of the world.
The whole thing has gone into a realm of depth which it
didn't used to have, and defense in the deepest sense is
a very profound concept which plunges away across the
world.
As far as protecting citizens abroad, I think we are
all beginning to realize that there are national interests
that do rise way above the interests of the individual,
that you cannot fix a foreign policy today on just the
commercial privileges of the individual /merican trader,
that there is need for national policies, need for the
defending of what are the interests of the /merican public
as a whole. The old concept has proved inadequate.
Now there are various ideas current among our people
today as to what really it is that we are trying to
achieve in long-term international affairs. Some of them
see it as a quest for the strengthening of peace through
the achievement of some universal juridical pattern which
will make aggression impossible. That is what many of
them see in the United Nations. I am not sure that that
is a wide enough view, but that is what a lot of people
want, and what they look to Asia for is to see the Asiatic
peoples take their place as good schoolboys on the bench
and vote the right way and pursue as we do a stable world
in which there will be pretty much a preservation of the
status quo through juridical promises not to be violated.
Others look to economic development, to the raising
of the standard of living as the thing which is going to
metamorphose the world, make it a better place to live in,
create a better international climate. They expect that
from material improvement things will flow which will
achieve the deepest objectives of American policy in Europe.
Others
-10-
Others see the thing that needs to be done is the
extension to Asiatic countries of American institutions
and patterns of life and feel that if other people can
only be brought to take the same attitude toward them-
selves and their society that people do in this country,
the things that make them troublesome in world affairs
would be largely removed. I think there has been a good
deal of that type of thinking in our occupational regimes
in Germany and Japan and the feeling that if you could
transplant some of our institutions to these people you
would have achieved something which you could achieve in
no other way.
Finally we have had the missionary concept that in
our Christian ethical concept we had something which
could do the trick in that area of the world and that the
task was to bring that to the peoples there.
I sometimes think perhaps our confusion today and our
feeling of frustration with regard to Asia comes from the
fact that to date none of these things have really been
successfully applied and all of them have produced dis-
appointments to various groups of our people here at home.
I think probably that all of those hopes and aspirations
are placed in too nerrow concepts and that they don't pay
enough attention to the nature of our own society at home
and to our concepts of what it is we are trying to do,
achieve domestically in this country, because I am con-
vinced that those two things are very closely connected,
much more closely than most people think here, that you
cannot have foreign policy which is out of context with
what you might call the national trend domestically, the
things you really want to achieve domestically, and I think
we have got to rethink all these problems from that stand-
point.
This inquiry, as I understand it, was addressed to
China. China of course is not all of Asia, but China
really is 8. tremendous nation. It very often seems to
me that 2/3 of our problems with respect to the rest of
the world today is to determine what is really the
desirable and advisable stance of a "have" nation to
"have-not" nations, because a very large part of the world
is composed of "have-nots", not just in Asia but elsewhere,
and that is a very, very bitter problem. We were talking
about it the other day, with a Congressional Committee
down here. I said it reminds me of the Biblical saying
that, "Easier shall it be for a camel to pass through the
eye of a needle than for a rich man to pass through the
gates of Heaven." Well, I think it is easier for a camel
to
COMP IDENTIAL
-11-
to pass through the eye of a needle than for a country
like our own to find language and approach to people who
have very little, and chance of little more, which will
be useful and satisfactory to both parties involved. In
that problem China has a place of peculiar importance.
It can be regarded as the most "have-not" of all the "have-
not" countries, and if we can find the answer with regard
to China I am sure we have found 3/4 of the answer with
respect to many other areas of the world, not only in
Asia. I don't mean to say that China is like India, that
there are not very significant differences, and that sort
of thing, but embraced in this Chinese problem is one of
the deepest dilemmas of American relationship to her world
environment today, and if you can make any progress in
getting out of that dilemma, you will have performed what
I think will probably be the greatest single service to
the United States foreign policy which you could perform.
MR. COLEGROVE: Mr. Chairman, may I ask Mr. Kennan
about his views regarding potential areas of industrial
development? He named four and three of them were in the
Western world, one in the Asiatic world. What are the
most important potential areas in the future?
MR. KENNAN: You mean as distinct from the existing
ones today?
MR. COLEGROVE: Yes, for instance, India and its re-
lations to China.
MR. KENNAN: Those are problems, of course, not only
of resources that exist -- and it isn't absolutely neces-
sary that resources should exist on a territory for it to
develop military-industrial potential. England, of course,
today has in 20th century terms -- as distinct from 19th
century terms -- relatively little in the sense of resources.
I think the answer to that question lies very largely in
social and political conditions in the Asiatic countries
and in the question of whether they are going to be able
to develop a stable enough society, administratively
stable enough, to provide a framework for world trade.
That is, for overseas trade, plus the moderation of
approach to other nations which seems to be necessary to
have overseas trade. And whether they are going to be
able to develop within themselves the necessary accumulation
of capital to build up what is necessary for a military
industrial potential.
Now
-12-
Now in China I must say that looks to us very far
off. China's resources aren't very great in any of the
things which we regard as the guts of industrial power.
Her coal resources are meager compared to those of the
Soviet Union or the United States or Western Europe.
Her oil resources are almost non-existent compared to the
known reserves in the Soviet Union and the United States.
Iron also does not compare and, as we went down the list
of things, it's my recollection you found China having
anywhere from 15 to 35 percent of the raw material re-
sources of these other areas. Now, as I have said, you
can import these things but then you have got to have
something internally which China has not got and that is
the ability for capital accumulation. In China it takes
four peasant families to nourish one family not on the
land, where here the relationship is just about reversed.
In those circumstances it seems to me the possibilities
for accumulation of capital are tremendously diminished.
I don't know what the mathematical factor would be as
compared with ourselves but it's a tremendous one and it
must proceed very very slowly. And I believe that India
would have the capacity to become a very considerable
agricultural country and probably eventually industrial
too, although apparently the Indian leaders themselves
are beginning to swing rather to the idea that they would
do better to develop their country agriculturally.
Almost everyone else has wanted industries with an
almost childlike absorption with the sort of romance of
having great industrial plants on your territory in an
undeveloped nation. I do think the possibilities are
greater in India than they are in Chine and if India can
create the prerequisites to be a world trading power,
develop her agriculture, handling her demographic prob-
lem, I believe then you could get certainly a fifth world
industrial center of great importance.
MR. COONS: Mr. Chairman, may I ask Mr. Kennan if he
would explore a little further his conclusion that the
relationship of Japan to China is more important poten-
tially from the standpoint of the utilization of resources
and the combination, I suppose, of capital and labor,
than the Soviet Union to China. You mean now in the very
immediate future, or over a long period?
MR. KENNAN: I mean now. There are many factors that
enter in there. One is the existing industrial plants,
skills of Japan, the fact that those are surplus to Japan
itself, and have to find some sphere in both the sources
of
CONFIDENTIAL
-13-
of raw materials and markets. In other words, Japan's
industrial strength has got to operate in a realm much
wider than the Japanese Islands themselves, as does that
of the British Isles. That is not true of the Russian
economy and will not be for a long time. Vast sections
of the Soviet Union today need very much the same sort of
development that China needs. The Soviet Government is
in no great real shortage of manpower, which would be
what China has to offer.
The transportation from the East to West in the
Soviet Union is still in a very primitive state and I
really believe that it would be a very serious problem
there were the Soviet Government ever to attempt to do
much in the way of inter-twining its economy with that of
China. Of course. as highways might be constructed, you
would have something perhaps comparable to what exists on
this country but all that has to run through areas which
are far less developed, and in many ways far more diffi-
cult in operation than areas you have to cross in this
country.
The possibilities for maritime connection are still
very rudimentary and poor. I was thinking primarily to-
day than in terms of the next 10 or 20 years. It will take
that time for Russia to build a modern transportation
system if all goes well and it will take certainly that
time for her to develop her Far East.
I remember Stalin one time snorting rather con-
temptuously and vigorously because one of our people
asked them what they were going to give to China when
this war was over and he said in effect, "What do you
think we can give to China? We have a hundred cities of
our own to build in the Soviet Far East. If anybody is
going to give anything to the Far East I think it's you.'
And I think he was speaking quite sincerely.
Now, that is a very real factor. The Russians are
trying to build cities like Komsomolsk, Yakutsk. They
are trying to develop that whole area and there are a
thousand demands daily on the Soviet Government which it
can't possibly supply. Many of them are for housing and
things which vitally affect the living standards and not
only that but the working efficiency of the people they
have got out there. When similar demands come from China
they have to allot priorities and I believe, from what
Stalin said, those priorities will normally and naturally
be given to the Soviet Far East.
That
-14-
That is not the case with Japan. And Japan has
better communications by far than the Soviet Union to
the most important districts of China.
MR. MURPHY: In contrasting the various power areas
and the possible combinations which would be a threat to
us, you made the point, I think, that the combination of
Russia and Central Turone would be a more effective and
more dangerous threat than the combination of Russia and
China; I think you said because Central Europe was a more
homogeneous group, a more uniform group. Is that right?
MR. KENNAN: It's a very powerful military industrial
unit in its own right, Central Eurone, and that was demon-
strated during the last war. If you think what the Germans
were able to develop and maintain over a series of years
in the way of military forces, it was terrific! And if
you add that to the Russian potential, if Russians and
Germans contrive to combine -- if only for a decade -
those two potentials, you would be faced with the only
combination I think that would give you something in abso-
lute terms considerably more powerful than what we have
here in North America. That was my point.
MR. STALEY: May I ask your comment on this line of
thought: "hat is the Russian view of the importance of
China and Asia in the world political struggle as you
gather it (a) in relation to military nower in the narrower
sense, and (b) in relation to the political infiltration
sort of struggle which I judge from your remarks you might
think would be more important in their view: And may I
preface it further with this observation that 1t would
seem the old arxist doctrine that the countries of most
advanced canitalism would be the first to have their
proletarian revolutions -- that has been a great failure
as a forecast. In no country of really advanced industrial
development has there been a revolution of that type.
The revolutions that have been successful from the
point of view of proletarian dictatorship have occurred
in the so-called backward countries. They still predict
we have our contradictions that will lead us to eventual
revolution but now isn't it true that the emphasis in
this thinking perhans has shifted to the so-called
exploited under-developed countries and they may put more
emphasis on them now realistically in their strategic
planning.
MR. KENNAN: I think that is quite true. I think
militarily they do not look to the Chinese for very much
except
-15-
except on a local scale. That is, I would say that if you
were able to take apart the minds of people in the Kremlin
on this subject you would find that the role they allotted
to the Chinese Communist military forces was one of assur-
ing the exclusion of ourselves and other "imperialist"
elements from those areas contiguous to the borders of the
Soviet Union and that they would be relying still basically
on the Red Army for their security. They would allot a
sort of a role of provincial legionnaires to the Chinese
Communist forces in their minds and not a major role. I
doubt that they would want them to become, even if they
could, a major militery power.
Politically I think you have quite a different pattern
and what you have said is very interesting and very true.
Events are proving the Marxist analysis of what was going
to happen to capitalism and people's reactions to capitalism
to be correct almost everywhere where capitalism is not
very far developed and not correct in the countries where
it is. And I lieve there has been a considerable amount
of soul searching ideologically within the Communist move-
ment to find a rationalization and to find ways of explain-
ing how it is that colonial countries - I'm speaking here
from the standpoint of Marxist ideology -- can step from
the feudal orpre-capitalistic stage into the people's
republic stage.
I think they are rationalizing that in China and I
believe that that is where they are going to have their
great successes in establishing their ideology, on the
foundation of what I described as the have-not psychology
in the world. I think that offers great possibilities to
them. I wouldn't underrate it for a minute.
How that will work out in terms of relationship be-
tween them and regimes like the Chinese Communist regime
I don't know. That will be a problem similar to the
inter-relationships within great religious movements of
the past. But that this Marxist analysis, with all its
over-simplification and what seems to me to be really its
phony qualities, has huge emotional appeal for peoples I
believe is a fact.
Now, there is where I think they place their great
hopes but at the same time they will be extremely cautious
about it in Asia because they are very well aware of the
fact that if you cannot overshadow a country militarily,
ideology is in itself an untrustmorthy means with which to
hold them. It's a good beginning and it's fine to have
them
CONFIDENTIAL
-16-
them inspired your way but it's not a guarantee against
Titoism and I don't think they know of anything really
except the shadow or the reality of military domination.
Again I'd just like to say I'm not predicting a
repetition in China of what happened in Yugoslavia. I'm
only saying that I think the Russians are very alive to
the fact that you can get a lot of people, ideologically,
on your side and still the logic of power compulsions can
cause them to challenge your physical authority at some
stage along the way. For that reason they will be very
careful in hondling this thing in /sia.
MR. LATTIMORE: I should like to ask Mr. Kennan a
question to tie together two things that he made in his
introductory statement. Mr. Kennan, you pointed out
quite likely that Japan already has the industrial set-
up; what it needs is a wider sphere of activity for it.
Then separately you mentioned the defense and security
requirement, of being able to maintain air-seas super-
vision over Japan's strategic position. Japan's industrial
power grew up very largely by the importation of energy
and supplies from the North of China and Manchuria. And
that was done under conditions where the Japanese not only
had the industrial relationship but the strategic control
of the industrial relationship. How, if they are to re-
sume their access to those sources, the operation of which
they are familiar with, the strategic control would remain
with a China which is going to be either Communist or
Communist dominated. And the Chinese would have at least
the option of rationing their supplies to Japan. They
would say, we supply you so much on condition me get back
an import from you of machines and so on, leaving no margin
for you to build up a kind of power that has strategic
power over us. In other words, the Chinese may be in a
position to make an effort to interdict the military side
of this Japanese military industrial potential in such a
way that it would strongly affect this concept of a mili-
tary industrial potential in Japan controlled areas at
long range by the United States.
UR. X HMAN: There are two or three things that I
thin': ought to be taken into consideration on that. Again
I raise the question of whether the Chinese Communists are
going to be economically so much in the driver's seat that
they can sit back with equanimity and grant or decline to
grant favors economically to Japan on how much that is
going to be a two-way proposition. I think what you say
is correct, in both the mainland of Asia - not only, of
course,
CONF IDENT LAD
-17-
course, China but also Korea being under Russian domina-
tion and Manchuria. And we ourselves as the major mari-
time power in the Pacific have holds on Japan which can
amount to perhaps almost a veto power on Japan's again
becoming a great military power.
This makes me think of something I found in a state-
ment of Theodore Roosevelt which seemed to me to have
relevance just to that problem. He said: "Of course, if
Japan were content to abandon all hope and influence unon
the continent of Asia and tried to become a great maritime
power she might ally herself to Russia to menace the
United States. But in any such alliance between Russia
and Japan do not forget what surely the Japanese would
think of, viz. whereas the sea powers could do little
damage to Russia they could do enormous damage to Japan
and might well destroy Russia and blockade the Japanese
Islands."
I think 1t remains today that Japan is a valuable new
power from the standpoint of whoever controls the seas and
the air today in the Pacific region, and there are raw
materials which she cannot get, I'm sure, from North Chine
or Manchuria on which she will be vitally dependent. If
we really in the Western world could work out controls, I
suppose, adept enough and fool-proof enough and wisely
enough exercised really to have power over what Japan im-
ports in the way of oil and such other things as she has
got to get from overseas, we would have a veto power on
what she does need in the military and industrial fields.
MR. HEROD: I'd like to ask Mr. Kennan one query in
regard to the question of China allying to Russia or
Russia being a less likely proposition with Japan as it
pertains to the military industrial potential. In our
observation, from the standpoint of scientists, Russia
has some very good ones. So has Japan. From the stand-
point of engineers they have got very good ones. As far
as industrialization is concerned, Russia was estimated
as having 17 percent of the world's manufactures just be-
fore the world war as against less than 5 percent in Japan.
As far as steel production, as far as power production and
coal production is concerned, Russia exceeds Japan's pro-
duction many times.
And it would seem to me that whether there is a
likelihood of Russia allying with China depends to a
certain extent upon Russia's size-up of her objective and
the degree to which Russia sizes up the indigestability
of
CONF IDENT
-18-
of China, granted there is a great shortage in Russia
against a surplus of these facilities and techniques
and technology 1n Japan. But Japan hasn't a free choice
and Russia has, and Russia has been known to divert her
attention at the expense of her domestic market and at
the expense of her own people into foreign channels when
she had an objective that looked as if it were worthwhile
to do it.
I don't believe we can count upon its being a more
dangerous or a more critical proposition for us to give
consideration to the Japanese relationships with China.
I think we can count upon it for the short term because
I think it's expedient in Russia. I think Russia's idea
is, just leave it and let it stew in its own Juice, with-
out a strain on Russia's resources.
If she felt she could use it as a jumping off point,
I think Russia, having these resources, could divert them
to China as well as Japan could divert them at the expense
of her own people, which I believe the Kremlin would do if
she felt the price were worth 1t.
MR. KENNAN: The whole trend of Russian economy in
the past 40 years has been away from that of a trading
nation which had surpluses to give to the rest of the
world and rather toward one which had a hard enough time
supplying her own needs. While the Russian Government is
canable of allotting priorities of very formidable in-
tensity and therefore achieving given objectives in fields
which it marks out for itself as of great importance, it
does that at the cost of huge sacrifice. Its economy is
conducted the hard way and the wasteful way and I don't
think there is a great margin with which to play except
in cases of tremendous national emergency.
Now, you may say that Asia might become of such
importance to Russia that it would be equivalent to one
of those periods of great national emergency and that
they would say this is the time to do what we did during
the world war, to push living standards ruthlessly down
and free a surplus of the labor of the people to use for
national purposes of this sort. That is possible at a
later date. Right now I think most of us tend to forget
how deep and how raw are still the scars of the last war
in Russia, how little of the damage done really has been
repaired, despite the fact that production has been
brought up.
The
CONF TAL
-19-
The Russian people are no where near the term of that
rhythmic swing which would put them in a frame of mind
again to enter in a contest. I would also add to that:
let's remember that never in Russian history have the
Russians ever, that I can remember, been enthused about
any deliberate aggressive action of their own outside of
Russia. The things which have really caused the Russian
people to get down and work and show this tremendous spirit
of sacrifice and endurance and enthusiasm have been the
attempts of foreign powers to plunge into the heart of the
country and the folly of foreign powers in giving the
Russians the feeling that they regarded them as dumb,
second-rate people who could be pushed around that way.
That really arouses Russian national spirit more than any-
thing else. But whether anybody will ever be able to
arouse the Russian spirit for different sorts of ventures,
I'm just not sure.
MR. BUTTERNORTH: With respect to the question of
recognition, the Chinese Communist authorities have now
announced that they have organized themselves as a gov-
ernment and they have addressed communications in a rather
terse fashion to the other powers. About the time that
the Communist forces crossed the Yangtze we made our first
approach to the other powers about this question of recog-
nition. The unexpected ease with which the Communist
armies swept down from Mukden to the Yangtze upset not
only the plans and concepts of the Nationalist Government
but those of the Communists, political and military
authorities as well. It is quite clear they never ex-
pected the kind of collapse that in fact took place.
So they began revising their own political time-
table and it became clear to us that about this time they
would organize themselves as a government and invite recog-
nition. As a matter of fact, we picked out the arbitrary
date of the Double 10 and that might well have been the
date. I have the feeling myself that the action of the
Chinese in Lake Success in bringing forth this case may
well have had the effect of hastening as much as possible
that timetable.
But about this time when Shanghai was being menaced,
through Ambassador Stuart at Nanking and through our
envoys in the friendly capitals, we broached the question
of recognition with the friendly countries. We pointed
out to them that we did not think this was an immediate
problem and that we did not expect that it would in
practice arise, although the world press and particularly
the
CONT
TAL
-20-
the American press wanted to force this problem onto us
immediately. We expressed our view that we thought it
would be desirable for the powers who were sufficiently
interested in China to have diplomatic representation
there to consult with each other, that we for our part
were quite ready and willing to do SO. Our own view was
that no benefit would be derived by any hasty individual
act, that the first come would not in fact be the better
served, and that we thought that this was a problem of
sufficient complexity and seriousness that it should be
approached with great caution and with no sense of haste.
"e found general agreement with those views with two
possible exceptions. Australia did not share these views
apparently at all and believed that the Chinese Communist
regime, when it was set up, should be recognized at the
earliest moment. And Dr. Evatt made a public statement
subsequently along those lines. The Indian Government
apparently was thinking along the lines at that time of
what it called de facto recognition of the Northern Com-
munist regime.
As we pursued this we found that they had an idea
but it didn't seem very clear in their own minds or ours
exactly what they meant by it. They agreed that some
consultations should take place, but it left us with the
sense that they would be more willing to act readily when
a government was set up than would ourselves or some other
power.
Now, the British not only trade with China, but also,
unlike us, they have large investments in China with firms
like the Jarden Matthewson Firm who not only have agencies
for British manufacturing concerns but own docks and
breweries and textile mills and operate on joint account
with the Chinese interests in a number of concerns, so
that, whether they cut their losses for a period or
whether they fold up for a time and come back, they are
faced with problems which are not the same as ours.
There is no doubt that the British are more anxious
to trade, therefore more anxious to regularize their
situation with a Chinese Communist regime than our in-
terests necessarily persuade us to do. I'll touch on
that a little later, but that is the position today. We
still believe that this problem should not be pursued
with any great haste, that there is no great urgency and,
in fact, the Chinese Communists do not control a sub-
stantial part of China and, furthermore, they have given
no
-21-
no indication of their willingness to undertake the type
of responsibilities which normally devolve upon a govern-
ment.
Their propaganda over many months has contained
references to their desire to abrogate what they call the
Kuomintang treaties. But the Chinese Communist propaganda
veered away a little bit from that and the latest line is
that they are going to look and see what treaties are
justified, what are just treaties. But it's quite clear
and it's significant that in their recent note they made
no reference to this matter and that is a point which of
course we are concerned about and which I suppose would
concern all friendly countries having interests in China.
Concurrently, I might mention this question of trade
which is a contentious issue. Our general analysis of the
export-import situation in China is that, although China
requires imports of a considerable variety of products,
her very size and the agricultural nature of the country
make her relatively self sufficient. Her deficiencies lie
mainly in the importation of machinery and in oil.
China is not one of the countries that you would
select if you were going through the list of countries
that would be particularly vulnerable, we will say, in
time of war, to economic warfare. That is, although the
cutting off of her imports would entail a good deal of
suffering and a good deal of dislocation, it would not
necessarily strike at her vitals.
In February we decided to approach the British Gov-
ernment in anticipation of the onward sweep of the Chinese
Communist armies and discuss with the British, in the
first instance, the question of the imposition of con-
trols on trade with China. It seemed perfectly clear
that we should not let the products which were being
restrained in terms of east-west European trade from
reaching Russia and the satellite countries reach Russia
through the back door. Those are the categories which
fall under the heading of 1A items.
We thought that a selected number of 1B items should
likewise be put under control so that we would have the
option of modifying, restraining or allowing products to
go as determined by the events. Until our position was
clear with the British there was obviously no purpose in
having discussions with other interested nowers.
The
CONFIDENTIAL
-22-
The British have been very reluctant to put under
control 1B items with the exception of oil. They do not
feel that 1B items moving into China can in the present
circumstances do very much harm. They are keenly aware
of the importance to trade of their Tientsin and Shanghai
entrance, and they are acutely sensitive to the fact that
Hongkong future is inextricably bound with its hinter-
land. They are, of course, in agreement about the 1A
items. And these discussions are going on and other
countries will be approached on this same basis.
The blockade port closure has produced a new situa-
tion. Communist propaganda has it that it was an American
idea. I think it was a complete accident myself. An air-
plane, as far as I can gather, flew over the entrance to
the river and saw a ship zigzagging in a queer way and
the pilot, when he got into Shanghai, began talking and
said, "Perhaps this ship was laying mines." This got in-
to the North China Daily News and they published it as a
report and the port of Shanghai suddenly then closed be-
cause everybody then assumed that the Yangtze was being
mined.
The Communists were furious and made an attack on
the Daily News. But, nevertheless, shipping stopped for
several days until small ships could be got out into the
Yangtze and attempts made to find these mines. No mines
were ever found. The idea had obviously had a wider
currency and the Nationalist Government then sought the
possibility of nort closure. The order which they cir-
culated to all friendly shipping countries, particularly
those having shipping companies, very carefully avoids
the word "blockade". It calls it a "port closure." But,
nevertheless, it seems to require of second countries
behavior similar to that which would be entailed if a
blockade had been proclaimed.
Now, our traditional policy has been over the years
to proclaim that a blockede be declared and made effective.
Furthermore, in our present position as the greatest naval
power in the world -- with England practically the only
other naval power in the world -- it would not be in our
strategic interests to see countries with a few ships and
a few airplanes suddenly declaring large parts of the
coastline blockaded. We have to some extent a monopoly
on blockades and we keep that monopoly at rather heavy
expense and are not prepared to give it up rather readily.
At the same time, we obviously do not want to be the means
by which this blockade in Shanghai is broken. That is not
our
COMPIDEN
-23-
our affair. That is the problem which concerns the two
warring elements of China.
The first consulate we decided to withdraw was the
Consulate General at Mukden. For the first three weeks
of the Communist occupation of Mukden our people were
properly treated and were even allowed radio communica-
tion with us but suddenly they were put in their com-
pounds and were held more or less incommunicado since
that date. It was obvious that we had no option but to
withdraw them. They were not being allowed to perform
their functions and were living under circumstances of
hardship and indignity. So we gave instructions to have
them withdrawn. We took the matter up at Peiping with
the Communist authorities and received assurances from
them that our Consul General and his staff would be pro-
vided with American facilities and they would be permitted
to leave. That was some months ago and these assurances
have not yet been implemented.
The next step that we took was to meet with the
business and missionary interests and discuss with them
our decision to close the offices at Chungking, Kunming,
and possibly Canton before those cities were overrun by
the Chinese Communists.
There are not large numbers of American citizens in
those areas and there are comparatively very few American
interests. Communications have been extremely difficult
even with the favorable facilities that we have had in
China from the end of the war until a comparatively recent
date when we had a military and air advisory group which
had airplanes there and we could fly in supplies.
We felt from the point of view of their utility to
us and the facilities that would probably be accorded
them, it would not be worth our while to keep them. We
debated about the question of Canton, because Canton is
a long-established office and we consulted with the
missionary and business interests as to whether they
thought that we could be of particular aid and assistance
to them. Given the presence of Hongkong and its prox-
imity, we decided we would close the office at Canton,
although we still keep there our Chargé d'Affaires until
such time as the capital moves elsewhere.
Likewise, we are going to close out the offices at
Dairen and Tsingtao: In Dairen because our people are
so circumscribed that they are leading a quite impossible
life
CONF IDENT
-24-
life and are of very little or no utility to us, and at
Tsingtao because with the departure of our fleet there
1t is a very dead place and our consulate serves little
or no purpose. There are very few Americans and all
that are there want to leave. Therefore we will keep
the traditional service at Peking, Tientsin, Shanghai,
Nanking and Hongkong. We have no intention of closing
those. Hankow is also being closed on account of the
communications problem.
MR. DECKER: I should like Mr. Butterworth to dis-
cuss with us the question of de jure and de facto recog-
nition, that is, degrees of recognition, what the
implications of those alternative courses would mean,
and another very important question -- what the implica-
tions would be for the existing Nationalist Government.
assuming that that Government stays in possession of at
least a substantial segment of China, as it 1s at the
present time. Would recognition of the Communists as a
regime imply the withdrawal of recognition from the
Nationalists, and what would be the result of that? A
third point, the question of recognition in its relation-
ships to the UN and arrangements in the Security Council.
I think those are all questions we would like to have him
discuss.
MR. BUTTERNORTH: If I could touch on the first two,
I think in a way it is theoretical to discuss the varia-
tions between the de facto and de jure recognition because
1t seems quite clear to us the Chinese Communist authorities
would not be prepared to accept what is commonly called
de facto recognition, and I feel quite sure that a con-
dition precedent to the exchange of envoys and the usual
things that take place on the occasion of recognition
would be in their mind a withdrawal of recognition from
the National Government, so I think in practice the
problem that faces the United States and faces the other
powers is whether or at what time to accord normal de jure
recognition, and I think it is because they have held this
view, that they have been so arbitrary and narrow in their
interpretation during this pre-government period of the
status of all foreign envoys and representatives, consular
and otherwise.
I would like to comment on the third question as an
amateur. One or two broad things seem clear, that the
question of recognition will probably arise in the Security
Council and then possibly move to the General Assembly,
which is the higher court of appeals. The whole is no
greater than the sum of its parts in this instance, because
a large
CONF
-25-
a large part of the territory still lies within the juris-
diction, nominal and otherwise, of the National Government,
and therefore you cannot at this stage of the game get a
repetition of the Czech case, where, you will recall, the
credentials of the outgoing government were withdraw
largely on the initiative of the Secretariat on the basis
of the fact that the United Nations does not recognize
regimes as such. It recognizes states, but here is a state
that at the moment is a divided one, so that would not seem
to apply. That being so, the question would move on the
attitude of the several powers in this question.
MR. DECKER: Are we then to assume that we really
have a take-it-or-leave-it proposition so far as the Com-
munists are concerned in their demanding de jure recogni-
tion, setting limitations? Is there any situation in
which e unilaterally grant one or the other?
MR. BUTTER ORTH: Our recognition is not a unilateral
matter, it is a mutual matter. Their exact terms are by
no means clear from their brief and somewhat tersely,
curtly worded note and it is clear they do not encompass
by any means all of the territory of China yet. It is not
at all clear what their attitude is designed to be towards
aliens' obligations.
MR. COLEGROVE: Did not the State Department throw
away a strategic advantage in withdrawing our consulates?
There are adventuresome young men in the Foreign Service
who are willing to take the risk and there are experienced
consuls who know how to get along in countries like China
even though they have little contact with their Government.
"e know how difficult it is to resume consular relations
with Communist countries. We have had some unpleasant
experiences about that. Would it not have been better to
have left these consulates scattered through China as
listening posts or as posts which we already hold even
during a time when we have little communication with
Communist China? And still again, are we not going to
have a great deal of difficulty in re-opening these con-
sulates after we try to get a modus vivendi for trade with
Communist China some time in the near future?
MR. BUTTERNORTH: I shouldn't imagine that, if it is
the policy of the Chinese Communist Government to have
foreign consulates in these places, and that is not clear
yet, it would be difficult should recognition take place
to obtain the same facilities that other powers have. On
the other hand, your reference to listening posts really
gets
CONFIDENT
-26-
gets to the heart of the problem. The utility of a
listening post is not only that you can listen but also
that you can purvey what you have heard to somebody else,
and our experience does not lead us to believe that would
be possible. Furthermore, we have good reason to believe
that our adventuresome young men would have very great
difficulty in getting into these places, that it would be
a question of maintaining our staff at the places rather
than rotating or sending new ones there.
Furthermore, there is the general concept among a
great many Chinese, and particularly strongly held by the
Communist Chinese, and you find it in trade, that the
Western powers in general and the United States in par-
ticular is extraordinarily dependent upon its relationship
with China both in trade and in other things and it 1s an
extremely valuable market to us. These mysterious
foreigners come there, and exactly how they make the money
which allows them to live on the scale of merchant princes
(even though they are clerks) is not wholly clear to the
average Chinese in the street, but he feels obviously
something is being taken out of China and that China is
extremely important. We get the most extraordinary alle-
gations from the Chinese Communists as to what has happened
in the last five or ten years. You would never have thought
that we had imported gratis into China thousands of tons of
foodstuffs and other material. I for one am not at all
sure that psychologically it is a bad thing to have re-
stricted our representation. I think it would be a mistake
if we voluntarily withdrew our consulates in the traditional
cities where we have always been But of course, if our
representatives are treated a certain way in the days to
come, when recognition is not readily forthcoming, we will
have no option but to withdraw them, and I myself would
favor a policy of withdrawing them rather than to allow
them to remain serving no purpose but suffering indignities
which do not reflect well upon any of us.
MR. ROSINGER: I would like to ask two questions.
First of all, what is the importance to Britain of its
economic stake in China in terms of the British home
economy, and, secondly, what particular obligations do
we have in mind in connection with the Communist assumption
of Chinese obligations?
MR. BUTTERWORTH: I might indicate on the most obvious
ones, the treaty obligations which they inherit, that the
idea that we should in effect agree to the abrogation of
treaties or provide terms under which the abrogation
should
CONF IDENTIAL
-27-
should take place, is out of the question. Secondly, on
the question of normal treatment accorded to foreign
residents and officials: ready travel, access, the
operation of courts of justice which are effective, and
so on.
MR. ROSINGER: On question 22, "To what extent is
the upheaval in China and elsewhere in the Far Tast a pre-
dominantly political movement, and to what extent is it
the expression of deep-rooted forces arising out of social
and economic conditions?" I think it is rather clear that
while the political aspect is important, nevertheless we
are facing pretty deep-rooted social and economic con-
ditions in the region; that even given a change in the
existing political movements, you would have the gravest
kind of discontent, the gravest kind of political upset,
because of the general poverty of the area, because of the
unresolved social and economic conditions which have the
character of a long-term revolutionary process which
started a long time back and will not be completed in our
time.
MR. DECKER: When we think back on the constructive
measures which the Nationalist Government took from 1930
to 1937, and then its rejection just a few years later,
I think we must recognize that they have been the victims
of circumstances beyond their control. It was the ill
fate of the Kuomintang to have had the responsibility at
a time when China was passing through a frightful experi-
ence which registered in the food and the clothing or the
lack of them that the great mass of the people had avail-
able and that more than political maneuverings have been
responsible for the outcome.
MR. VINACKE: I don't think anyone can disagree with
the fact that you have your political movements rooted in
the social and economic causes. At the same time, you
also have to recognize, it seems to me, that there is the
political expression at a given moment of these economic
and social causes of concern to us outside of China, and
consequently we might come to an agreement on this
proposition, but I don't see that it adds up to very much
in relation to the position of the United States and the
needs and interest of the United States at the present
moment.
MR. COONS: Probably two-thirds of the people around
this table have probably written in the vein of the deep-
rooted forces, of the total social and economic and
political
IDEN TAL
-28-
political revolution in China, but I should like to throw
my influence in the same line as Mr. Vinacke. After all,
we are facing a political movement and we need to analyze
it - the significance of the deep-rooted forces -- in
terms of whatever it may reveal for us, in terms of the
meaning of the present political movement and what we do
about it. Let us all admit the history and move on to
the question of what we do from now on.
MR. TAYLOR: If this question 22 means anything at
all, it raises in my mind the question of the nature of
the Communist movement in China today and of the Kiit. If
you put it that these are all deep-rooted forces and there-
fore can't be dug up but must be allowed to grow as they
now are, you get into a frame of mind There you say, this
will happen, you can't stop it, here it is and you might
just as well be scholarly and recognize deep-rooted forces
when you see them. It is my impression that the political
form that these deep-rooted forces are taking in China to-
day is a very specific one and one that can be described
and should be. I think it is a political movement. It is
one which is using deep-rooted political forces. The
Communist movement in China today is one which is taking
advantage of a situation which is not ne", which has
existed there for a very long time, and it should be
analyzed as such. It is a political power movement. It
is using propaganda which includes the idea of social re-
form, and so on, but basically the motives behind it I
believe are definitely political, connected with an inter-
national organization although taking place in China.
This is occurring in a country where this sort of thing
fits extremely well. Nothing fits in China quite so well
as a bureaucratic, one-party monopoly government.
You are not dealing with a feudal society. The
Russian position is that this is a feudal country. If I
may refer to Mr. Fairbank's excellent book, I think that
shows very well indeed that the idea that this is feudal
has got to be discarded. It is a society in which this
type of one-party political bureaucratic program fits so
perfectly that very few Chinese "ill have any particular
intellectual difficulty in accepting it.
MR. COLEGROVE: If I may make a remark with reference
to question number 1, I think to a large number of people
in the United States, a large growing public opinion, not
merely experts but opinion of colleges and universities
and press and the forums, that United States foreign policy
should be a global policy and there ought not to be a
sharp
CONF
-29-
sharp difference between our policy in the Orient and our
policy in Furope -- and for Latin America for that matter.
This first question uses the term totalitarian regime.
At the present time our policy toward Europe is a policy
of trying to keep countries like Greece and Italy free so
that they can practice democracy without being submerged
and oppressed by aggressive nations that are trying to
force another system upon them. If that is our policy in
Europe, and I think we agreed that it was, why shouldn't
that be our policy in China? Why shouldn't we have the
same global policy in all parts of the world? It seems to
me that our foreign policy should be made consistent in
that respect.
MR. BRODIE: The question, as I see it, is do we have
to assume now that China is lost to the Communists or do
we not? The tenor of the White Paper, as I see it, is
that it is. I should like to know from the experts who
are around this table whether there is general agreement
on that particular conclusion. It seems to me that is
essential to everything else we have to discuss.
LIR. McNAUGHTON: I'll give you my answer to the first
question. Presently I think we are all washed up in China.
Secondly, I think we ought to do what we can to keep the
rest of the East from going the way China did.
MR. BALLANTINE: Mr. Chairman, I'd like to modify
that point a little bit. I think that even if we assume
that Russian domination of China is an accomplished fact
we shouldn't accept that as final. We must always bear in
mind that there are at least six million overseas Chinese
in the territories of South East Asie and they are bound
to go the same way eventually as their people at home and
they would constitute a tremendous force and influence
toward undermining our efforts to arrest the advance of
Communism, if we didn't try to take care of the situation
in China when and as we have the opportunity.
MR. COLEGROVE: I would not agree at all that we are
"washed up in China" nor that the Nationalist Government
is washed up either. Now, Mr. Kennan said that the
Chinese Communists did not control at the present time a
major part of China. That fact, of course, is a fact and
we might as well operate upon it. Are there other healthy
forces that are still resisting the Chinese Communists?
Well, to name one, there is General Pai, who has according
to our latest information controlled at least three
Nohammedan
CONT
-30-
Mohammedan provinces -- and we know how Mohammedan
countries look at Communism. It seems to me that General
Pai Chung, who still is loyal to the Nationalist Govern-
ment, is one healthy source still remaining which
deserves the assistance of the United States.
I take the position, also, of course that General
Chiang still deserves our support. We have, of course,
General Chennault's plan whereby he thinks that he could
save a large part of China with the expenditure of not
more than $200 million, following tactics which he used
during the world war. I won't agree at all that we are
washed up in China. There are healthy spots which 11
still resist the Chinese Communists and which deserve our
attention. Of course, my assumption is that our policy
in China should be the same sort of policy as in Europe,
viz., to resist totalitarian regimes which carry on
aggressions very much like the aggressions which Hitler
carried on at the beginning of the world war.
MR. DECKER: I would agree that we are by no means
washed up in China. I think 1t's very important for us
to keep that constantly in mind. I do so, however, for a
different set of reasons than those I believe Mr. Colegrove
advanced. I think there is no doubt whatever but that
the leadership, the present political leadership, of the
present regime in China is Communist and certainly for the
time being at least is thoroughly committed to a Russian
line. I think it would be very foolish if we were to
assume anything else. But it's yet to be seen how
effective that group is going to make that control of
China itself.
Those of us who went through the Revolution of 1925
to '27 or '28 know how quickly these enthusiasms can
spread in China and how quickly disillusionment can
follow. And I do not think it is wishful thinking to
point out that the Communist Party has got to navigate
the same waters that wrecked the Kuomintang and if we
have got to look any further than the end of our noses
I'm very sure that we ought not to assume here that it
is going to be able to make China as a whole an effective
cat's paw of Russian policy or that it is going to be
able to set up and to maintain a stable effective govern-
ment over the continent of China.
Then there is another thing. Experience in one of
these revolutions has taught us how quickly an anti-
American or anti-foreign or anti-everything else kind of
a movement
-31-
a movement can change into something that is very different.
And I for one don't for a minute believe that the good will
toward America that has been such a fact in China in past
years has all been dissipated. Some of it has been dissi-
pated. We have suffered seriously. There is no question
about that. But that it has been completely dissipated,
I think is not in accord with the facts.
Then, too, we know what a tremendous place the
American people and American institutions have had in the
training of the only effective Chinese leadership that the
Chinese people have, politically conscious people, people
who have ideas of modern government and who will have to
be depended upon to be the backbone of any government which
is to emerge in China.
The contributions of those who have been trained in
Russia have also got to be reckoned with. But it is going
to take more than a decade of this kind of a regime to
persuade me that the effects of that good work that we
have done in the past has been totally lost and so, if
the first question assumes that the present regime in
China is bound to be a cat's paw of Russian Communist
imperialism I think we are basing our argument on a false
assumption.
MR. MURPHY: On the question of whether we are washed
up in China, if by being washed up in China means that we
have lost the capability to make China completely an
instrument of our own policy, as is the complacent attitude
of a great many Americans, I think we are washed up. But
I don't think basically that is a justifiable assumption.
Just after the question of being washed up was made, some-
body made the remark that we could assume that Russian
influence would automatically predominate in China. I
think that is a very unsound assumption.
Mr. Colegrove raised the point of the three Mohammedan
provinces that were run by General Pai Chung Hsi and the
question of using various other Kuomintang forces in China
as a point against the Communists. I would say that his
newspaper information was probably about two weeks out
of date because the newspapers for the last two weeks
have carried a continuous report of the going-over of all
those provinces into the other camp. And the Foreign
Trade Council just this week put out a memorial reporting
a statement made by the American Chamber of Commerce of
Shanghai which was sent here to the State Department in
which our businessmen in Shanghai stated among other
things
CONFIDENTIAL
-32-
things that the Nationalist Government is finished for
the foreseeable future and please - so their throats
won't be cut -- don't send any more money over there for
the central government, such as the $12 million two or
three months ago, that was sent over for military supplies.
MR. MacNAUGHTON: Doesn't that maintain my point that
at the present they are washed up?
MR. MURPHY: If that meant we had the capability of
using China narrowly as an instrument of our own foreign
policy.
MR. KIZER: Mr. Chairman, in the sense that Mr.
MacNaughton used the word, I agree with him heartily that
we are washed up in China. I take it that Mr. MacNaughton
meant that the policy of pouring lavishly arms and
support in the hands of the Generalissimo has been demon-
strated to be a complete failure, that we ought to think
our policy out in new terms. As to Dr. Colegrove's
suggestion that there are healthy sources of resistance,
I suggest that they only appear healthy in areas where
they have not yet been effectively challenged by the Com-
munist group. Under the Nationalist Government, as far
as I know, there are no healthy sources of resistance,
particularly once the Communists have made such a display
of military force as they have made.
Whenever those are approached I believe they will do
just what the others have done, they will surrender. And
I think we ought not to rely upon it. Anyone, it seems to
me, who has read the report of Major General Barr and the
JUSMAG group in the White Paper, anyone who has read the
report of General Wedemeyer on what Chung Hsi did in
Formosa must, I think, come to the conclusion that the
use of military force. or assistance by us to resisting
groups in China is a tragic mistake, that the quicker we
drop it and move to other resources we have in our hands
the better off we will be. T'e have succeeded to a large
degree in Europe because of the effectiveness of the
Marshall Plan and the use of economic and social forces.
We couldn't use those in China because such as we sent
over under UNRRA and under our assistance simply were
used as instruments of war by the Generalissimo. We
haven't done anything in that sense for China except on
a very small scale.
I'm
IDENT IAL
-33-
I'm in hearty sympathy with what Mr. Decker has said
about the potential sources of support for us that exist
individually in China. I think that United Service to
China, what the missionaries have done, have created many
places of good will. I know now that there are mission-
aries of ours, and I speak as one not interested in the
missionary movement except in an economic and political
sense, operating in China behind the Communist lines that
have established sources of friendship there and are
getting on in a way that is surprising. And I know that
that sort of thing can be continued.
When we come to the economic and social assistance
that we can render in the Far East I should want to speak
again, but just for the present I do want to emphasize
the fact that our military assistance to the Generalissimo
as a policy is completely washed up, as I see it.
MR. BUSS: Mr. Chairman, I should like to observe
that Mr. MacNaughton's remarks and Mr. Murphy's remarks
were not the same. Mr. MacNaughton said "we are washed
up in China". The Foreign Trade Council's report is that
the Nationalist Government is washed up in China. It's
a dangerous identity to put ourselves, "we", as the
Nationalist Government.
MR. VINACKE: I'd just like to make my position clear
by reformulating the first question. It seems to me that
American policy should be directed toward maintaining
normal access to China but not in establishing or seeking
to save China for or against any particular type of regime.
Beyond that, American policy, it seems to me, should be
directed toward trying to insure that any regime in China,
as far as we can, is independent of any external control,
including our own.
MR. RAYMOND FOSDICK (CHAIRMAN): Gentlemen, we agreed
this morning that we would start off this afternoon with a
briefing on the military situation by Col. McCann, who
comes from Central Intelligence Col. McCann, will you
take over.
COL. McCANN: Mr. Chairman and Gentlemen: This map
shows the general military situation in China with China
orientated in relation to the rest of the Far East.
The total opposing forces in this situation are on
the order of 4,000,000 Communists and something less than
one and a half million Nationalists. The Communist forces
are
COME TAL
-34-
are divided approximately equally between irregulars and
regular combat forces. The latter, generally speaking,
are well-led and well-equipped. They enjoy high morale,
high combat effectiveness, and have demonstrated a
particular mobility in their operations.
The Nationalists, which total something under one and
a half million, include a disproportionately large per-
centage of service forces which are not used in combat.
The combat forces include a small Navy and Air Force,
totalling something between 8 and 900,000. The Nationalist
forces are characterized by professional ineffectiveness
and, generally speaking, they lack the will to fight.
The low morale of the Nationalist forces invites Communist
subversive activities.
Added to the numerical and qualitative supremacy of
the Communist forces is the geographical isolation of the
major groups of residual forces. This enhances the Com-
munist capabilities for eliminating those residual forces
successively or simultaneously.
There are a maximum of 100,000 forces in the north-
west which have withdrawn before a Communist advance of
over 700 miles which has over-run most of Chinghai Province
and parts of Ningsia and Kansu Provinces in three months.
The forces apparently available for the defense of
Szechwan and Yunnan Provinces in the West and Southwest
total about 200,000. These are under the nominal
centralized control of Chang Chun. Actually, the great
bulk of these forces are loyal only to their immediate
war-lord commander. Even for a brief defense of Szechwan
Province there are probably not over 50,000 troops.
As to Yunnan Province there are already good indica-
tions that the local authorities there are not to be
depended upon in a showdown. The recent publicity on
Governor Lu Han's coup, or attempted coup, indicates that
on the surface the Generalissimo has settled that problem.
However, it appears to be a temporary settlement of
expediency on the part of Lu. Already there are con-
siderable areas in the provinces which are under control
of the pro-Communists and bandit groups.
In the general area of Canton there are three commands.
The bulk of the forces are under command of General Pai
Chung Hsi and occupy the northern sector in the Kwang Tung
territory.
The
CONFIDENTIAL
-35-
The Communists have been maintaining pressure on the
defenses of Canton as noted by a succession of probing
attacks and advanced operations by irregular forces operat-
ing in front of the regular combat forces. The Communists
are believed to have the necessary preponderance of
military strength in this area to mount an assault at a
time of their own choosing.
It is currently reported that the forces on General
Pai's right flank in this approximate area have been
ordered to withdraw into Canton even prior to the Com-
munist assault on orders of the Generalissimo. If this
withdrawal takes place it will expose Pai's right flank
and expose him to being cut off from the coastal area.
It would appear that he would then have to make an early
decision between holding his position and fighting out a
decisive tion. but losing battle in his present area of occupa-
The alternatives that are available to him appear
to be to withdraw into Kuang-si Province and postpone the
final decision, or secondly, to make a deal with the Com-
munists.
This latest of the Generalissimo's interference in
mainland military operations has followed his refusal to
afford assistance to the mainland commanders since the
fall of Shanghai in May. It is on this point that the
residual commanders frequently tend to blame their re-
verses. None of them seemingly take into account the
fact that in this interim none has attempted to provide
an inspiring leadership or to cooperate among themselves
in a joint effort.
In the East China-Taiwan area we find the region of
the Generalissimo's particular concern. In this area he
has approximately 300,000 troops, including Navy and Air
Force. This area is under his personal command and that
of his most trusted General.
Numerically this force is probably adequate to defend
the island of Taiwan indefinitely. I should say that most
of these forces are in Taiwan itself and numerically the
garrison is probably adequate to defend the island. More-
over, the Nationalists, with their Navy and Air Force, have
a considerable capacity : for resistance to the very
limited Communist amphibious capabilities against Taiwan.
This despite the fact that there is a low percentage of
combat effectives in the Nationalist garrison in Taiwan
and
CONT IDENTIAL
TREATE
-36-
THE
national
Name
FEE
and despite the fact that defense preparations are not
in evidence. The Communist capabilities for taking
Taiwan are greatest in causing the fall of the island
from within.
The discipline and morale of the troops is at a low
ebb. It is the result of pest defeats and inadequate
leadership.
These factors create a situation in which active
Communist subversive activity is effective. The Communists
are already known to be infiltrating the island.
There is another factor on Taiwan. The excesses of
the Nationalist administration in Taiwan since V-J Day
have earned for the Chiang Kai-shek regime the earnest
hatred of the Taiwanese. This has a two-fold effect.
First of all it has a bearing on the probable effective-
ness of the troops in the garrison there. Secondly, it
provides a second fruitful field for Communist subversive
activity on the island.
In the light of all these considerations, it seems
probable that a Communist take-over of Taiwan probably
would not be preceded by a major military assault of the
island.
In summation, the life expectancy of organized
Nationalist military resistance in China is extremely
short. Generally speaking, the Communists will set the
timetable. Not only do they possess the predominant
military power but more importantly they will not rely on
military force alone to achieve their objective of extend-
ing their control over all China.
MR. HEROD: I would like to ask, is there any informa-
tion or intellis ence that leads you to believe any
munitions -- arms -- or military support, if not general-
ship, is coming from Russia?
COL. McCANN: There have been numerous reports to
that effect as the Communists have advanced. It is becoming
increasingly difficult to get exact information. While we
had representatives in North China and Manchuria, U. S.
representatives when confronted with this proposition by
the Nationalists, asked for proof. They were not given
substantial proof of the allegations. At the time the
Communists took over in the Peiping-Tientsin area there
were observed some Russian type trucks and vehicles but
in such small quantities as probably to be insignificant.
IR. COLEGROVE:
CONFIDENTIAL
-37-
MR. COLEGROVE: May I ask Col. McCann, what is the
position of the Red Army in North Korea? Has it with-
drawn and if so, what is the character of the Korean Army?
COL. McCANN: The Soviet Army announced its with-
drawal last December from Northern Korea. As far as I
know it has been substantially carried out. The Northern
Korean forces received a degree of training and secondary
equipment from the Russians prior to their withdrawal.
There might be still an advisory mission there.
MR. HEROD: To what extent have American munitions
and instruments of war found their way into Communist
hands?
COL. McCANN: There again we lack the facilities to
make an accurate survey and come up with current figures.
I can give you indications of it. The Communist forces
that took over Tientsin were so completely equipped with
American equipment that they appeared to be American
equipped units. Certain Nationalist units that had been
US equipped some months back were defeated or surrendered
and something like three quarters of their equipment fell
into the hands of the Communists.
MR. PHILLIPS TALBOT: Is there an available estimate
of the magnitude of American aid that would be required
to extend the indicated life expectancy of Nationalist
resistance, if such a policy were determined upon?
COL. McCANN: Such an estimate would have to be based
on who are we going to support and to what purpose -- what
are the means available for getting the material to them -
how soon can you get it to them -- under what circumstances
will they use it?
MR. TALBOT: Your statement of indicated life
expectancy of the Nationalist forces was based on present
American policy in relation to Nationalist forces. Is
that correct?
COL. McCANN: Yes, necessarily so.
MR. JOHN W. DECKER: I wanted to ask, is there any
evidence the Communists will develop a reconnaissance or
tactical air force?
COL. McCANN: No Communist aircraft have ever appeared
over combat areas. It is known that they have acquired
through
ONFIDENTIAL
-38-
through capture or defection -- captured on the ground or
actual defection -- small numbers of Nationalist aircraft
and they claim some thousands of Nationalist Air Force
personnel have gone over to them but their claims in that
respect may be exaggerated, but so far there have been no
indications that they have any effective air arm at all.
MR. TAYLOR: Could you tell us about the oil supply
of the Communist armies? According to our observers they
are well disciplined, highly mobile and highly mechanized.
Where do they get their oil?
COL. McCANN: I would agree with you on all points
except that they are highly mechanized. While they are
highly mobile, it is by marching rather than by any
mechanization.
MR. STASSEN: To what extent are the commanders of
these 2,000,000 Communist forces decentralized and to
what extent is there an effective centralized command; in
other words, are there a series of units under separate
command or are they very clearly under one centralized
control?
COL. McCANN: In the operations prior to the crossing
of the Yangtze River, the major field commanders apparently
had considerable independence in the conduct of their
operations. Subsequent to that time there are indications
of increasing centralized control of those major field
commanders.
MR. STASSEN: Is there any information as to how that
centralized control is being equipped?
COL. McCANN: As far as I know 1t is being equipped.
MR. STASSEN: Are there any significant Nationalist
Generals who are still in command of troops that have
gone over?
COL. McCANN: None have appeared so far as I know.
I think it is likely that these troops have been taken
and used in the Communist forces but not as units.
MR. STASSEN: At the end of the war with Japan, what
was your estimate of the Nationalist armed forces and of
the Communist armed forces in numbers?
COL. McCANN
IDENTIAL
-39-
COL. McCANN: At that time the Communist forces were
estimated in the neighborhood of 800,000. Of those not
much more than half were considered to be adequately armed
even with rifles. The Nationalist forces at that time
totalled something in the neighborhood of two and three-
quarter millions.
MR. VINACKE: The 300,000 Communist troops -- are
they indoctrinated or are they professional soldiers work-
ing temporarily under Communist Party control?
COL. McCANN: I think it has been a feature of the
Communist program to indoctrinate anybody coming under
their control and going about it rather thoroughly.
MR. VINACKE: And it has been done thoroughly in the
case of Chinese troops?
COL. McCANN: Things have expanded rapidly but the
troops under their control are becoming more thoroughly
indoctrinated every day.
MR. VINACKE: How much use is made of the political
commissar in connection with the command of the Communist
armed forces'
COL. McCANN: I believe they follow that pattern.
MR. STASSEN: What is the nature of the terrain on
the southwestern half roughly of China, compared to the
northeasterly half so far as military operations are con-
cerned?
COL. McCANN: The answer to that is that it would
have been possible to present quite a clear-cut picture
a few months ago. In general it would have been possible
to say that the Manchurian area and not the China area
is fairly level and militarily favorable to operate in
that area.
MR. STASSEN: How does their advance now compare to
the Japanese advance at the high point of the war?
COL. McCANN: The Japanese on an east-west general
line were in about that far. The Communists had moved
into this area and somewhat down into here and in the
East China section there was a considerable area that
the Japanese had moved through but did not hold. That is
generally believed to be under Communist control at this
time.
MR. BRODIE:
-40-
MR. BERNARD BRODIE: To make what is admittedly a
far-fetched assumption, supposing a change in American
policy should somehow enthuse a new spirit in the
Nationalist armies in the South, are there any reserves,
or any men having some amount of training that might be
called upon to fill out those numbers that are indicated
on the map? Do those figures represent existing combat
effectives or do they take into account what might be
considered available reserves?
COL. McCANN: Those figures represent the strength
of the so-called combat units. They are not necessarily
indicative of combat effectives. As to reserves and even
the troops here in question -- I think the problem of
turning them into effective forces would require, among
many other things, starting from scratch with the in--
dividual soldier.
MR. BRODIE: In other words there are no men not
already in the army service who have some military train-
ing in the area still under control of the Nationalist
armies.
COL. McCANN: I would say they have no effective
military training.
CHAIRMAN: A week or two ago Governor Stassen came
down to see us and we had an interesting talk with him.
I suggest at this time that we ask him, if he will, to
talk to us so we can have the benefit of his counsel
before he has to leave us.
MR. STASSEN: In my judgment Asia is No. 1 on Russia's
board. I think that Russia puts Asia up in first place in
her considerations. I say that notwithstanding the
recognized center of industrial powers that Mr. Kennan
discussed this morning. I say that because I feel that
the geography of the situation is such that Asia is the
under belly of this vast country of Russia and that she
has one projection out toward Europe and the other pro-
jection out toward Alaska and that the very vast under
belly is Asia; that the Russians are very security con-
scious as we realize but that I do not agree with Mr.
Kennan that you can consider that their thinking is
different from Hitler's; that is, I do not feel you can
say they are less aggressive in their tendencies than
Hitler was.
While
-41-
While it is true they consider that capitalism has
the seeds of its own destruction, I understand their
doctrine to be that when capitalism sees it is about to
be destroyed by those seeds that capitalism will go into
an imperialist war, and that they have demonstrated be-
fore in the case of Finland they will take aggressive
advance action in an effort, as they see it, to prepare
themselves for an unbalancing capitalistic imperialistic
war. So I would say in our world strategy we should con-
sider aggressive action by the Soviet Union as one of the
definite alternative possibilities.
Looking at the over-all objectives of our country on
a world basis, it seems to me that clearly they are to
advance the standards of living and the freedom of peoples
throughout the world and to do that in a world at peace.
We are going to have peace for a generation at least un-
less Russia commits aggression but in my judgment I see
very little possibility that there would be any war on
this earth of any consequence in the next generation un-
less Russia commits an act of aggression and, therefore,
this great problem of peace in the atomic period focuses
down to our very key consideration of what will affect
the policies of the leaders of the Soviet Union and I
believe that so long as they are uncertain about the
future of Asia and of Asia's attitude, they are not likely
to commit aggression and that they are at this time giving
great concentration to.
After starting with their first advance or infiltra-
tion methods which is so evident throughout Asia - and
not just in China - not from a standpoint of drawing
from it a military potential -- I do not feel that in a
generation anyone will draw from Asia any great forces or
any military potential to play a part in aggressive action
toward some other continent. But I do feel that the
question of whether or not forces in Asia, limited in
their military effectiveness though they may be, need to
be contained by one side or the other -- might be crucial
in a future war and therefore might be crucial in a
decision as to whether or not a war should be attempted
and that is why I feel that from the many indications of
concentration of policy on the part of Russia in the last
two years that Asia is No. 1 and they are now concentrat-
ing in the early stages in their attempts to consolidate
that vast area.
Moving on from that, 1t therefore follows that very
high on the American policy should be to prevent Russian
consolidation
COMPENSIONAL
-42-
consolidation of Asia. I have the strong feeling that we
are spending altogether too much time thinking of a China
policy as a separate matter. I think that is a very un-
fortunate aspect of our thinking in these recent months
and years. I say that only in projection because I do
emphasize that we are not meeting to either approve or con-
done any past act but it is a question of where from here
and it is only in that sense I comment on it.
I think it is of vital importance that our country
adopt an Asiatic policy, of which the Chinese situation
is an important part but definitely a subordinate part of
the whole Asiatic approach and that if you take that
approach it isn't quite so significant as to how far the
Communists advance in China or just exactly what happens
in the Nationalist Government or the Communist Government
of China, or rather, how does this all affect this whole
vast area of China, and of course as we all know, more
than half the peoples of Asia are outside of China, in
Malay, in Siam and Burma and most of all in India, the
Indies and the Philippine Islands, and so forth.
I think, looking at it in that respect, that our
country should at the earliest possible date, which pre-
sumably would be after Congress meets in January, initiate
an economic aid to Asia program. I think that the exact
framework and details of course must be developed as time
goes on but I think some comment could be made on it at
this time.
If we continue for a long period an stmosphere that
the US is waiting to see what happens in Asia, that is
part of the creation of a vacuum and certainly all the
lessons show the Communists thrive on vacuums. They push
in on it and we must not to a greater degree than possible
permit vacuums to be present in Asia. Therefore, my
thinking runs along this line, that we establish an Aid
to Asia Program and that we decide, with all the total
demands upon our resources, what we can afford to spend
in Asia and clearly our own defense forces --- the carrying
through of the Marshall Plan and the Atlentic Pact arms
must be firm commitments and our own internal problems
of security for our own people and conduct of our govern-
ment are demands upon our resources.
There is a limit also to our resources but it seems
to me, when you add all those things up and look at the
world picture, we not only can afford up to one-fortieth
of our national budget in Asia or one billion dollars a
year
CONF IDENTIAL
-43-
year and the one one-hundredth of our annual production,
but that we can not afford not to do it. So I am think-
ing in terms of broad strategy, saying, we are going to
spend a billion dollars a year in Asia for a long time
and then, moving from that, to establish a headquarters
for the program in Asia.
It is my feeling that Bangkok in Siam would be the
best headquarters for an American office for an Ald to
Asia Program and from this headquarters to carry out this
affirmative aid program in whatever area remains not under
Communist domination in China and in the rest of Asia.
In many respects it should be similar to that superb
plan in Europe which is named for the distinguished
American that sits at this table, and that has done so
much for the advancement of the world's peace --- the
Marshall Plan. Of course in other respects it must be
very different because the conditions in Asia are SO dif-
ferent.
I would say it should be a firm rule of that plan
that we do not hand out any aid to or through any govern-
ments in Asia because of the experience and the knowledge
of the questions of corruption and weakness of governments;
that we consult with governments as to what is to be done,
and we have joint committees, but that the aid be handed
out directly through American agents having in mind not
only the corruption but, on the other side, the great need
of evidence of aid that needs to be carried on from the
standpoint of goodwill.
In that positive program to China and to the rest of
Asia, I would try to do such things as the drilling of
wells in those plateaus that have good water -- with good
well-drilling equipment -- the development of land in the
matter, in some instances, of water conservation and fertili-
zation, and things of that kind. Admittedly you would
make a small dent on that vast area and its people but
those are the kinds of constructive things that should go
on and a part should underwrite American private capital
in going in and seeking to develop some of the resources
of Asia, and doing that part with an underwrite action
under the Point 4 or that particular clouse of the Marshall
Plan, and with a special headquarters in Bangkok, selected
for its central approach and stability, and develop an air
service with planes with American flags on them flying
once again throughout Asia, cerrying officials and some
of the minor supplies, and to the physical presence of
American air power, provide some news print and get out
informational
-44-
informational services throughout the whole of the Asiatic
area; develop the support to the informational services in
Asia and of course things having to do with health and
then the educational approach.
In other words the immediate and the long-term to me
are not two things because there is only one kind of pro-
gram you can have in Asia and that is a long-term because
it is a long-term continent as I see it and its position
with reference to Russia.
Now then, that economic thing I would put up first
and carry on regardless of what happens in China and then
from the military side, which clearly should be a separate
program and clearly should be under the direction of our
own military leadership, I would emphasize here that there
may well be intelligence information which I do not have
and do not seek to have, which would vitiate the position
I take.
I do not feel anyone can be certain you can write off
non-Communist China at this time. I think there should be
an encouragement to opposition to the Communist advance
anywhere in Asia and with the rough terrain to the South
you might well find there would be considerable pockets
of opposition that would continue on for a number of years
and that during those years of time the problems of the
Communists in the rest of China will clearly multiply.
Mr. Kennan has correctly said that China is the most
have-not of the have-not nations and this is the first
time that the Communists have taken over a have-not
nation. We all recognize that Russia has tremendous
resources. When the Communists took over Russia with its
great fields of grain and mineral resources and coal mines,
they had within their borders a lot of natural resources.
Now they are taking over what clearly should be charac-
terized, in relation to the numbers of population, a
have-not nation and the likelihood would be that in these
next two or three years while the pockets of resistance
would continue in the non-Communist China that a great
amount of difficulty would arise in those areas under
Communist domination, possibly leading to splits within
the Communist area or riots causing great difficulties
that no one can foresee.
I had a conversation with one of the men most in-
formed about the whole of China and of Asia and when I
asked him at the end of the war what would happen in
China,
COME IDENTIAL
-45-
China, he said: "Governor, if anybody asks you what will
happen in China, don't answer him." There is a lot to
that kind of advice. Nobody can draw a blueprint.
I do know that in some respects the Communist advance
through south China has been slower than it was estimated;
the advance up in northwest China is faster than it was
estimated. We are inclined to think, from our standpoint,
the withdrawal of forces shows weaknesses, but if you are
facing a million men with 250 thousand men and with the
lack of morale, maybe the best thing you can do is try to
keep your men intact and keep on withdrawing until you get
to the very nethermost areas of your country. I mean
China is so different that you shouldn't attempt to change
it, from our standpoint. I think there is every indication
that if we have the basic policy of opposition to the
Communist advance and the Communist consolidation of Asia
that we should play out every card of opposition, and that,
of course, means that it would be unthinkable to recognize
the Communist government in China and to withdraw recog-
nition from the Nationalist government. But even though
the last vestige of military opposition disappears, in my
feeling, very strongly, a number of years should still go
by before we recognize that new government, remembering
that the recognition of the new government would have a
tremendous impact throughout Asia toward placing the new
government with a seat on the Security Counci of the
United Nations, with full veto power, and in my judgment
it would be one of the most tragic moves we could make in
the long-term world strategy. So I feel very strongly
that we should not recognize the Communist government in
China even though they go on and consolidate the remaining
area, and that may still be a long way off in the very
rugged terrain of the south of China, thinking again from
an Asiatic and a world-wide policy.
On the other side of military aspects, I am inclined
to feel that Formosa is an important strategic area for
our own outer perimeter. Here again the military judgment
should carry. There are excellent airfields in Formosa.
If antagonistic air bases exist on Formosa you have quite
effectively severed the Philippine Islands and Japan from
each other. They are immediately astride that airway or
direct seaway. So that having in mind also the psychologi-
cal effect of some firm position, I feel we ought to
evaluate with the fact that Formosa is still not returned
to China as a part of China; Formosa is still in an un-
certain legal position. Then the war ended, China was
given the Nationalist government. Then China was given
the
CONF IDENTIAL
-46-
the right to go on to disarm the Japanese; they were not
handed Formosa, there had been no peace treaty, no de-
cision, so that the legal situation as to Formosa is an
uncertain one and an undecided one. In view of that and
in view of the picture in China, I feel that we ought to
ask the United Nations to take the position that an
attack on Formosa would not be countenanced at this time.
Obviously, the United Nations could not take such action
under the veto of Russia, but that we should then announce
that we consider Formosa a very vital part of our perimeter
and that we would not permit an exterior armed assault on
Formosa. That is a very firm position to take. I think
the whole picture requires some of that kind of firmness.
If Formosa falls by internal infiltration, I feel we
should not and cannot take action to counteract that. We
should not land troops on Formosa, but we should take a
firm position against assault from the mainland of China
upon Formosa. I think if the British take a stand in
Hong Kong we ought to back the British up with everything
they want us to back them up with in Hong Kong. These are
matters of alternative, and if the British, who must be
our close partner in this world picture, decide they are
going to stand and fight, what do we do? Do we appear
before the world as weak and indecisive? Do we back away
from our British friends or do we send ships and give them
some air cover and do that sort of thing and indicate that
we stand with them in a firm position against the Communist
assault in Hong Kong? I grant these are grave decisions,
but I think the whole picture demands that kind of very
firm action and that it will have repercussions to it, and,
of course, this military side leads to the question of
Pacific pact, and I know these statements of Quirino and
Rhee, and so forth. I cannot see that an affirmative
Pacific pact of the nature of the Atlantic Pact can be
solemnly formed at this time because I do not believe that
India could join such a pact now, and I think that India
must be a major consideration in our Pacific policy. And
therefore I think we ought to say to Quirino and Rhee that
we do not think they should take action unless Nehru joins
in it, and that will automatically defer it and cause it
to be a more gradual policy in that area. And it ought
to be our position that as far as association of the non-
Communist area of Asia that it should not move any faster
than Nehru is willing and India is willing to go along
with it, but we should develop that relationship in India
which, I understand, the British have made more open to us
now, by sending in equipment to assist in the development
of hydroelectric power and of dams, engineers and capital
and
IDENT IAL
-47-
and all that that involves. And, of course, with this is
constant pressure, not too great, but with definite under-
standing upon the Dutch and the French to work out their
situations in the Indo-China and in the Indies on a
favorable basis. Perhaps if the Dutch policy now evolves
into fair stability that pattern might be the basis of
pressure on the French to try to move in the same direction.
It will be slow, difficult, there will be setbacks, but I
think it is the unending kind of thing we must do in Asia,
and I do feel strongly that adopting an overall coordinated
policy and putting it under able men who are out there in
the headquarters like Bangkok and who then will give it
body and sinew and detail, much as did General Marshall and
then Paul Hoffman in the Marshall Plan and more recently
the Atlantic Pact, that that kind of a development out of
the beginnings of a broad policy will lead to a honeful
situation. I am perfectly willing to contemplate that the
Communist advance might go a lot farther before it subsides,
and the question of its subsiding is really the question
of our own fundamental future.
That's an outline of my thinking and I state it not
with an attitude that here are the answers, but more to
expose in definite form a set of thinking that has de-
veloped over a period of years so that it might be differed
with, it might be modified, and we might contribute toward
an answer. I have purposely refrained from discussing the
situation publicly since the White Paper was published be-
cause I felt that by direct conferences with Dr. Jessup
and such as this there might be a better chance of develop-
ing governmental policy than by any public debate at this
stage, at least, on the situation.
MR. FAIRBANK: Mr. Chairman, I agreed so much with
the intent and some of the first part of Governor Stassen's
statement and not with the latter part, so that I hope
that he stays here long enough and we can discuss things
back and forth, because I think the intent is part of our
American tradition that we help Asia to help itself and
thereby help ourselves, and yet I think some of the
practical measures that Governor Stassen mentioned are
not the way to operate to reach this intent. Rather than
take them up as incidental items, I would generalize that
we have to approach Asia in such a way that we get the
majority of Asia working with us. That means that we are
working with them. The Communists and the Marxist approach
and the Russian approach are succeeding because they are
getting into a rapport with these revolutionary forces in
Asia,
CONFIDENTIAL
-48-
Asia, which we are not equally in rapport with, and our
problem is to ally ourselves with the forces of the
future in Asia, which I think we can do. The peasant,
for instance, is there to be organized, revolution is
there to be led, and our problem is to relate ourselves
to these movements in Asia, not try to do the job alone,
and that is the specific aspect of Mr. Stassen's remarks
that seemed to me to be difficult. Many things he
mentioned would be things that we would be trying to do
alone. We would be trying to take a leadership which
might not carry people along with us.
MR. STASSEN: In what respect? I didn't mean such
an aspect to it.
MR. FAIRBANK: For example, setting up a headquarters
in Bangkok might be difficult, and a headquarters anywhere
might be a target which the Communists could bedevil us
with and we wouldn't get out of it as much as we would
lose by it. For instance, the suggestion of an air service
with the American Flag might antagonize the nationalist
feeling of countries and make them feel threatened more
than it would impress them and bring them to our side.
And, similarly, the manner of our doing it, it seems to
me, is most important. It has to be done in a way to
conciliate, persuade, and push the Asiatic forward. The
further factor in all of this, I think, is the world view
on which we operate, and I bring that up because we are
up against Marxism. The Marxists have a world view and
they sell it and it is being accepted, and, as Mr. Kennan
pointed out, so much of it is phony and yet it succeeds or
works along at least for a while. The Chinese intel-
lectuals are accepting Marxism; they are accepting the
Russian world view that we are imperialists, and for
certain reasons which we cannot help. This Marxist world
view is an explanation of the world's evils, it is an
explanation of our activity, it is an explanation of how
we can be such good people individually and have the good
intentions which Governor Stassen has mentioned, and yet
be imperialists. It is all consistent in this Marxist
world view. We have to recognize that we are working not
to get control over territory or supplies or anything else,
but to get the allegiance or the alliance and get into our
camp the minds and beliefs of these Asiatics. Well, now,
it seems to me we have not competed on the side that
Marxism is so successful on -- the ideological side. Our
difficulty is that, as has been said, Asia is so different
that the things that seem obvious to us do not seem obvious
to
IDENTIAL
-49-
to them; the things we want perhaps they don't think of.
To take one example: The White Paper, in the letter of
transmittal, referred to the support of democratic in-
dividualism -- the democratic individualism of China.
Well, now, that phrase translated as "democratic in-
dividualism" into Chinese is not a golden word but a
garbage word to the people in Peking, because "individu-
alism" interpreted in their present lingo means the
chaotic, selfish, personal, family-centered, anti-social
activity of individuals rather than what we think it
means -- the development of the individual as we would
like to see it, which is one of our great ideals. So
that the word has turned turtle on us and that phrase
has been picked out of Mr. Acheson's letter and used
against us by the Marxists and the Chinese Communists.
And, therefore, in the realm of operation we have the
mechanics, logistics, supplies, and the know-how and eco-
nomic development potentialities, but to put these things
together it seems to me we must aim primarily at getting
a world view formulated more specifically for Asiatic con-
sumption. And, of course, as a liberal country we have
many world views, many formulations, no party line, yet
it is possible for us, I think, to pay more attention to
our view of how the world is going and be more specific in
offering alternatives to its going in a Marxist direction.
Well, now, this world view applies directly to the way we
operate. You see, we can so easily do something which is
absolutely sound from our point of view, which is oper-
ationally correct, unselfish, which is aiming at an ex-
cellent objective in Asia, yet can be labeled imperialist
and turned against us unless we have this ideological
context properly under control. And it seems to me that
the way we are losing is that the Russians, being closer
to the Asiatic scene as a peasant, undeveloped area, have
at present got the jump on us in the ideological context
on how to interpret our activity, and so this is partly
just ideological warfare, but it is also a vital link in
the whole chain of getting those people on our side or
keeping them out of the other side.
MR. STASSEN: I still don't see how you would differ
in how you move on your economic aid. Would you give
economic aid to the area?
MR. FAIRBANK: I would start off at the other side of
Asia. I would go to Indo-China and I wouldn't hold Formosa
against the Chinese Nationalists. I think we must play a
long game for China. We have got to play it for the long
term.
CONFIDENT
-50-
term. To try to hold Formosa with troops would give so
much ideological ammunition to the Chinese Communists
that it would unite China more readily against us. The
more pressure we bring, the more we can expect hostility
in return. The Chinese Communists are prone to regard
us as imperialists who are threatening them; they are
suspicious of us, they are always talking about spies and
saboteurs coming from us, and they have got to have us as
enemies to hold their system together. The more we play
the role of enemy the more we play into their hands in
that respect. Now if Formosa were an absolute life and
death matter to us, that would perhaps take precedence,
but I think we have got to consider all of Asia as a life
and death proposition. We have got to go into places
like India. To hold Formosa would defeat our ends by a
miscalculation of the response in China, just as our
military support of Chiang Kai Shek defeated our ends
because we couldn't foresee his inefficiency and that
Chiang would have a lack of support, and so on. That's
a specific example on Formosa.
In the case of economic development, it seems to me
we must give these Asiatic peoples the feeling that they
will have a chance to use our resources and aid without
getting too much involved in trade with us nor tied up
with our economic nexus. They have in mind, from the
Communist stuff that has been fed them, that we are
dangerous economically because we go into depressions,
and that's a theory we have got to combat. We have com-
batted 1t because we haven't got into depressions, but
still Marxism feeds them that line. The intellectuals
in Peking are being told now that the United States is in
a depression; it must be, because it is a capitalist
country. And so a certain kind of economic connection
may seem dangerous to them.
MR. STASSEN: We might focus on that economic thing
for a bit. Suppose, as I envisage it, that in various
areas of South Asia American economic aid is coming in
and getting some results in improved crops, in slightly
better living conditions, in improved water and irrigation,
and all that goes with it, whereas up in the Communist
area of China they are going into a really economic tail-
spin. Isn't that the kind of thing that over a period of
a few years would begin to make some sense and give some
answer to the great promises and claims of the Communists
in Asia? I don't see where you have really differed in
your specifics to that kind of an approach, and I do
emphasize
COMP TAL
THE
-------------------------
-51-
emphasize that if we pour in large sums of money in the
hands of governments it is very unlikely that it gets
right out to the peasants. So what I am emphasizing is
that what we do should be in terms of simple farm imple-
ments and of well-drilling equipment and of the simplest
kinds of things put directly in the hands of the people
without charge. Then it would be very hard for them to
label that as imperialistic.
MR. FAIRBANK: My objection is not to the economic
development idea, which I think is absolutely necessary,
but merely by itself I think it is incomplete and might
be disastrous because it wouldn't take account of the
Nationalist political feelings and the nationalism of the
area and might not take account of the ideological ideas
that I have mentioned, and there is also a large social
problem. You would have to see that you didn't step on
the toes of the native peoples and by your economic aid
not throw certain people out of employment who went
Communist against you. In other words, it is a total
operation we must perform in all aspects of society and
it must be in a proportion which does not let it get too
heavily military or economic which might upset the other
aspects of it. So we have to study these things as they
would apply in the Asiatic scene to have a program which
is in proportion -- the economic side must be related to
social changes which will occur because of people changing
their livelihood or because of a certain class being
better off or certain politicians not getting their cut,
and we must take account of national independence, and
those things must be put together. And having been in
the information business in China, I was always very
unhappy -- in 1945 and 1946 -- in the way our information
network wasn't in the game of really trying to out across
our American policies as fully as they could be. It
wasn't being used as an arm as fully as it might have
been used because we stopped psychological warfare when
the war ended. We haven't been carrying that on in China
since. We do not do the things ideologically that we did
before, that we could do.
MR. TALBOT: I would merely like to say that the
economic development of this area would seem to me to be
fundamental if we are going to have a long range counter-
attack to the Communists. However, because of the con-
siderations which you have mentioned, it could very easily
go wrong if there should develop in that area a feeling
that our economic aid is linked to an anti-Communist
strategy.
-52-
strategy. In India, for example, obviously Nehru is one
of the strongest persons in the whole of Asia, from our
point of view and for the future of the type of Asia that
we are interested in, the type of world we are interested
in. In order to get over his internal difficulties --
his internal economic difficulties -- he stands in serious
need of economic help. But the way we could destroy Nehru
most rapidly would be to make him appear to some of his
own people to be an American puppet. It seems to me in
the question of giving economic aid to this part of the
world, we must very carefully consider whether we are
putting up political strings at the same time; whether we
are saying to these people so long as you do not recognize
Chinese Communism, so long as you take a strong anti-
Communist stand, we will help you, but you must do that in
order to qualify for our aid. If, on the other hand, we
could say to them we believe that a generation hence the
world will be better 1f the peoples of South Asia have
more to eat, better places to live, and we are prepared
to support that, then I think there is a chance for that
sort of local cooperation in consonance with national in-
tegrity and national pride and we stand the prospect of
making some progress and having a successful policy in
that area.
MR. STASSEN: I agree that you should not require that
they have an affirmative anti-Communist program politi-
cally as a preroquisite for economic aid; you should simply
require that they be non-Communist dominated and on that
basis move on your economic aid.
MR. TALBOT: I wonder whether you would feel that the
solution of the colonial problem in the area would be a
prerequisite to effective influence of the American point
of view in that area.
MR. STASSEN: To answer that I would say that it is
very important, but I don't say that it is a prerequisite.
In other words, I feel that the whole of Asia is such a
vast problem that you can't say anything is a prerequisite
to the program. Just as in the matter of studying just
how you do these economic things, granted they need con-
tinuing study, but if we wait until we conclude our
studies until we act, we will all be dead before there is
any action. Nobody could have painted out in detail the
Marshall Plan when Secretary Marshall made that great pre-
sentation at Harvard.
MR. VINACKE:
CONFIDENTIAL
-53-
MR. VINACKE: The first problem is insuring that the
governments, whether they are independent governments or
combinations of colonial governments and nationalist
regions where there is conflict going on, themselves have
the feeling that they have worked out the plan that is
suitable for them and that we will support them; that
their efforts are related to our efforts rather than our
just going in, which is what I think Mr. Fairbank also got
from your original statement -- our going in on an American
basis in terms of American conditions. It seems to me in
this whole southeast Asia area one place where we did that
was the Philippines, and it seems to me we might very well
make a very excellent start in re-establishing our position
if we said frankly we made a mistake in the Philippines in
insisting that you people should amend your constitution
so that American businessmen should have a preferential
position as against others. It is that sort of thing
that leads to the charge of imperialism, you see, and if
we could straighten out on an independent basis some as-
pects of our Philippine relationships and say we propose
to go into Siam and some of these other areas on invitation
of the people concerned to enable them to help themselves,
then I think you have met the objections Mr. Fairbank
raised; whereas if you are proposing to do it as an
American operation because we have this power to save these
people in spite of themselves, I think you are going to run
up against the objections.
MR. STASSEN: I, of course, don't mean we go in in
spite of local governments or use American power to force
our way in on the economic program, but that we go in with
the permission and with joint working arrangements with
the local governments, as we have in fact done in some of
the South American countries, but that there should be
this distinction in the actual distribution of material --
that is, that the prerequisite of our reaching agreement
with the local government is that we be on hand in the
distribution so that it doesn't go into the black market
and doesn't get dissipated as so much of that economic aid
did get in Asia.
MR. BALLANTINE: Mr. Chairman, I feel that there is
one approach along which we should move simultaneously
with moving along the economic front. One of the diffi-
culties that we have to overcome in Asia is the idea
among a great many Asian people that our motivation is to
build them up either as a first line of defense against
the Soviet Union or to build them up as a place in which
we
IDENT
-54-
we can have a beachhead for assault and that it wasn't to
be used by us for any such purposes. I think, first of
all, we have to convince the people of Asia that that is
not our motivation; that our motivation is to build a
world in which all people are free from aggression, free
to enjoy the four freedoms and have an opportunity to con-
tribute to creating an era of peace and stability in the
world. And if we can start building that idea among the
Asian people that we are not just trying to use them, I
think we can do a great deal in the economic field. I
have two particular things in mind. There are large areas
in China that today cannot be utilized under the traditional
horticultural methods of the Chinese people but would yield
to tractor cultivation. In Kwang-si Province - I have
traveled all through that province and have seen millions
of acres lying idle because they can't be tilled under
traditional Chinese methods. They could graze tremendous
numbers of cattle and horses if they could get the place
clear of rinderpest, if you could have American veteri-
narians come in and help them. The second line is in-
dustrialization, to reduce that tremendous pressure of
population upon the land that you have in the river valleys
and the plains and coastal areas in these Far Eastern
countries. Now instead of starting on a tremendous hydro-
electric project and shoe factories and a great many
things that are unrelated to their standard of living, why
not make simple beginnings along developing export in-
dustry, such as the British and Americans did a century
ago when they started in trading: redevelop again and
expand these cottage industries, these handicraft in-
dustries, such as the making of embroideries and straw
braids and paper braids and mattings and decorated porce-
lains, and all these things that require the minimum
amount of capital and give employment to the maximum amount
of people, and those industries developed would be export
industries which would export to the United States and
other rich countries and get the foreign exchange with
which to buy the things they need. You have to make small
beginnings before you can go on a very large way.
MR. LATTIMORE: Mr. Chairman, the discussion thus
far seems to show that the theory (why we think certain
peoples and countries are the way they are) and method
(how we do what we intend to do) are very delicately
connected with each other. The recent discussion has
waivered back and forth between certain things which "e
could do and the reasons why we should do them. I would
like to make a few off-the-cuff remarks about that, but
I
CONFIDENTIAL
-55-
I should like to point out that the theory that govern-
ments in Asia are so corrupt that American aid should be
kept in American hands until channeled directly to the
recipient is hardly an adequate answer. There is no such
thing, I believe, as a million dollars that is not politi-
cal, and a billion dollars is a thousand times as political
as a million dollars. In such countries whoever gets that
money becomes politically important in his country. So
you do interfere in the politics, especially of backward
countries, when you undertake to alter their economic con-
ditions by the action of American money.
Another point is that we cannot rely simply on joint
action between American money and American know-how. Know-
how exists on several levels and it isn't an American
monopoly. There may be levels of know-how which are rather
low as compared with American levels but are sufficient to
defeat American purposes. I think one of the very signifi-
cant lessons of recent years is, for instance, that
American equipment intended for use by the Kuomintang for
one purpose was inefficiently used and the same equipment
when it passed into Communist hands was much more ef-
ficiently used -- not efficiently from an American level,
but much more efficiently from a Chinese level -- than the
people into whose hands we had originally given it. In
that connection, a pamphlet has just been published by
the Harvard University Press containing a very interesting
contribution by Mr. Fairbank, who is here today, and also
an extremely important and very short treatment of the
economic problem by Mr. Cleveland, who has been in charge
of the China Branch of the ECA, in which he takes up the
question of the ability to absorb, an aspect that has been
neglected in this discussion so far. It is not only the
American ability to give; it is the ability to absorb.
The general trend in Asia since the end of the war is that
in some way the ability to absorb is very closely related
with domestic political changes in the country concerned,
so great as to amount to revolution, whether the revolution
be military or peaceful in form. I think that that in-
dicates that one of the guiding principles in channeling
American aid is that aid should go in the largest quantities
and most promptly to those countries which by modernization
of their political forms have created the political con-
dition under which economic improvement can be carried for-
ward. That is one of the reasons why India is so important.
Then another thing which has been totally neglected
so far, and something which I think could do great damage
to
-56-
to the (merican interests, is that the have been talking
about isia, the American problem. Since when and by whom
was Asia given to America to solve all its problems' "e
have undertaken very considerable programs with very
heartening results in Eurone. We still have to integrate
our European problem with our problem in Asia. Many parts
of Asia have Puropean roots in then that are much deoper
than our American roots. One of the economic problems,
precisely, is to restore the flom of investment one way
and trade the other way between Europe and Asia as well as
between America and Asia, and this much more comnlex prob-
lem, at least three-way problem, can only be solved if
everybody concerned is convinced that what he is getting
out of it is conditioned by the fact that the other two
partners must get something out of it, too. There must
be a realization that anything that 1s undertaken is for
the joint benefit of Europe, ista, and America and cannot
succeed unless the mutual benefits are reasonably dis-
tributed. And in that connection we come to the final
point I want to make in very strong endorsement of what
Mr. Talbot said just now on the subject of not making some
kind of a condition of political hostility to some other
country or some system. There was a little interchange
and one opinion was: "No, you mustn't make hostility to
Russia a condition but you must make absence of Communists
or Communist threats from government a condition." I
doubt if that is a workable condition in view of the
present world distribution of power. It seems to me that
what we can do above all other countries is to show coun-
tries in isia, as in Europe, that it is possible to do
without Russia to precisely the extent that you are on
good terms and mutually beneficial terms with the United
States. I think that to make the condition, for instance,
everybody in Asia accepting Communist China will not be
admitted to American trade, and so on, would be ideologi-
cally disastrous for our cause. It would look like
punishing the people of China for having a government that
wasn't approved in advance by the United States. It also
goes against the basic human principles of bargaining, if
you say to people you must have this or not have that be-
fore you get /merican aid, it simply enables them to turn
to the Russians with a better bargaining position against
us. It could strengthen their position. Thereas, on the
other hand, If a country like China, in shite of its
Communists in the government, is shown that certain con-
ditions of prosperity go better and faster by friendly
association with the United States, that is something that
automatically weakens the Chinese connection with Russia.
Therefore,
-57-
Therefore, it seems to me that the conditions for American
aid should be ability of the country to absorb the aid,
making the necessary reforms to accomplish the absorption
of the aid, if that is necessary, and the principle of
mutuality -- many-sided mutuality -- not only between in-
dividual countries and the United States, but individual
countries and the European-American-Asian complex, of
which the United States is so important a part.
MR. TAYLOR: It seemed to me two generalizations have
come out of the discussion that we have just listened to:
One is that the major force in Asia that can be used
against Comminism is Nationalism. I don't know whether
you would agree with this, but this generalization came to
me anyway, and we can and should use nationalism against
Communism and separate the two. It seems to me that in
China the Communists are using Chinese nationalism and
riding in for their own purposes, and the Chinese are be-
ginning to find out and will find out in large quantities
during the next few years. I thoroughly agree with Mr.
Fairbank and, I think, with Mr. Lattimore, that there is
no way of dealing with these people except that they are
nationalists, they have national pride, and they have to
be dealt with as independent people. But the other gen-
eralization that came out, particularly out of Fairbank's
talk, is that the Russians are fighting us on a good many
levels, and, as an old frustrated OWI man, I certainly
underline everything he said about the ideological level.
It seems to me we have lost a big propaganda battle in
the Far East. When Russia takes two billion worth of
material out of China and we put two billion in and we
are left with the reputation we have, there is something
missing on the propaganda front. They are fighting us on
the ideological level, institutional level, military
level. We have to meet them on all levels, and it seems
to me what you are feeling for was some way of integrating
all these things together at the same time. I think he
put it very well that in some cases you have to judge
whether your military considerations warrant an ideological
defeat or whether in other cases it may be the other way
around. The map of the world, from a military point of
view, ideological point of view, the institutional point
of view - you don't have one fitting on the other exactly.
So I would endorse very strongly, Mr. Chairman, a feeling
around for and a discussion of the many levels upon which
this conflict is going and a pulling together of our dis-
cussion into a long range and short range. The first
answer to China is outside of China. I think we have come
to
COME IDENT TAL
-58-
to that conclusion. There is not a lot left in China,
from a military view, that we can save. From my view 1t
would be foolish. The second answer would be in China
itself, as what we do inside begins to have its effect
in China.
MR. DECKER: Nothing that I have heard here this
morning has been more reassuring than the very clear
recognition of the fact which came from Mr. Kennan that
our basic problem was the consideration of the "have"
nation -- a great "have" nation -- against all of the
"have-nots". Now I have been devoting my life to an in-
terest that has been assaying the task of adjusting that
balance, and I will tell you that it 1s one of the most
difficult and one of the most discouraging and one of the
most delicate tasks that one can undertake. The next
thing I should like to say is that I do not believe that
our plans for the rest of Asia should be shaped so that
in effect they give up the present Communist-dominated
China; that is to say, if we draw our lines and make our
arrangements so that we throw ourselves over against that
part of China -- the new regime in China -- we shall make
it very much more difficult to achieve what I think can
be achieved, namely, the recovery of a lot of our in-
fluence in that part of the world. Another thing I should
like to note is that this area that we are essaying to
deal with is one that has known colonialism, has been
burned by it, has come into a new freedom in nationalism,
and so whatever plans are made have got to be extremely
carefully laid at that point. We cannot afford to formu-
late any plans which seem to mean an extension of American
imperialism -- the substance of a new imperialism for
others from which they have just fled themselves. Now
that makes this area of the world very different from the
countries that we have been dealing with in Western Europe.
We have been accused in Italy and we have been accused in
France of carrying on a program of American imperialism,
but France and Italy have both been independent enough
countries, stable enough countries so that they need not
be terrified of their fate by that accusation, but that
accusation in Indo-China, in Burma, or in India will carry
a very great deal more weight. Now that fact is a basic
fact which must condition all of our efforts to put up
anything like a Marshall Plan in this section of the world
as successful as that plan has been in Western Europe.
Many of our efforts in assisting in Asia have begun at too
ambitious a level. They need to be carried down to the
level of the people -- in the improvement of the lot of
the
-59-
the individual farmer, the improvement of the health in
the villages -- rather than in great hydroelectric pro-
jects or the importation of American goods or American
services. Those services have got somehow to get down
to the roots of the people. But our basic difficulty is
going to be this one of setting up an American head-
quarters in Bangkok dealing with those sensitive, newly-
liberated peoples in that section of the world without
laying ourselves open to the devastating charge of a new
imperialism.
MR. KIZER: I would like to back up what Mr. Decker
has just said about the inadvisability, however, of moving
into Bangkok. That, I think, would be one of the poorest
places to select, and I would suggest that wherever we go,
as Mr. Lattimore has suggested, we move in where the
government is one that we can come most nearly trading
with. Having dealt somewhat with relief in the Far East.
I realize the extraordinary difficulty there is in building
up a distribution of economic aid or assistance in that
area without dealing almost directly with the government.
If you lean the least bit away from the government it
reflects itself in the minds of the people. You have to
have a government you can work with. Therefore, I would
like to support what Mr. Lattimore has said about working
in India. Now some steps have already been taken with
regard to India in the last five weeks. The first loan
made by the International Bank for Reconstruction and
Development was 34 million dollars, made the last of August,
for the purpose of enabling the Indian people to have loco-
motive parts and boilers. Now that kind of a loan creates
the income from which the loan can be paid itself. A
second loan has been made of 10 million. And while I
sympathize generally with what was said about ambitious
hydroelectric projects, there are in India smaller pro-
jects that irrigate the land and bring new lands under
cultivation, and that type of loan is also submitted to
the Bank. Food will win this thing more than any other
project, and if we can help India to become self-sufficient
in food, that means a greater annual income for her govern-
ment, it means greater education for her people, and
promotes the whole Indian welfare. The Chinese are smart;
they will catch on fast enough to what we are doing there.
There is another thing that I would like Governor Stassen
to reflect upon. He said he would like to see us play
out every card of opposition we can to Communism in the
Far East. I don't want us to be too afraid of Communism
in the Far East. We can overestimate its potentialities
of
CONFIDENTIAL
-60-
of danger if we are not careful. On the other hand, by
playing out every card of opposition we do build up what
Mr. Fairbank laid special emphasis upon, and that is the
thought in the minds of the people in the Far East that
we are an imperialist nation. We are a great asset to
Communism now because they can accuse us of imperialism.
We must strike where we are strongest, in the economic
field, not in the military. No country in the world can
equal the United States in that field, and that, it seems
to me, is what we should do. I agree, too, that we must
not approach this program on too ambitious or too vast a
level; we must work by degrees and to refine some pro-
jects, and in that way we can win that struggle.
MR. STASSEN: I think Mr. Lattimore was under a mis-
apprehension. By what I said regarding American aid, I
didn't mean to indicate that Asia was an exclusive prob-
lem of our country, and I fully realized the inter-relation
of Europe and Asia and the whole world, but what I wish to
emphasize is that when we are the country that has the
most, when we actually with about 1/16 of the world's
people produce one-third of the world's goods and services,
that we do have a very heavy responsibility toward this
great continent and its have-not peoples there.
It has key relevance in the world security aspect
with reference to Russia, and also I do not indicate that
we try to pass upon whether there are any Communist
tendencies in any country before giving economic aid but
I do feel strongly that if there is Communist dominance
of a country, we should not go in with an economic aid pro-
gram.
I feel that it is fool-hardy for us to pour in what
is admittedly a limited resource into the area under
Communist dominance. I not only feel that from a positive
program but I think that in fact it would be quite academic
to argue to the contrary. We must remember the realities.
You will never get through Congress a program that
would grant the permission to give economic aid to the
Communist dominated sectors of China. There are those who
advocate aid to the Communist areas of China in the hope
there would develop a form of economic Titoism there.
That has a false promise. Tito did not move away from
Russia because of any promise of aid on the part of this
country toward him. As a matter of fact, he moved away
at a time when we had been the firmest with him following
the
CONT
-61-
the shooting down of planes, etc., and, as long as he could
follow a position of, in effect, taking direction from
Russia and taking resources from us, that was the role he
played, but that when he had to choose and then came up
against the result of his choice and tightening of the
screws by Russia, then that famous break came,
I actually asked him in March of 1947 whether he was
going to take his economic direction from the Soviet Union
and he got up from the luncheon table and paced up and
down and said, "We are learning much from the socialist
experience of the Soviet but Yugoslavia is a country." He
was agitating on the Nationalist angle, and now that he
has made the break, I think it is right that we should be
able to give some limited aid. I think we should couple
it with some insistence that there be a gradual moving
toward more freedom in Yugoslavia at the same time, even
though very slow and very gradual, but the direction of
movement of a government should be toward the freedom of
its people while receiving American aid, and clearly that
aid should not go in when the direction of the movement or
government is to the contrary.
When it is the over-all aspect of security and the
problem of Russia, then we need to think of the world
strategy that is involved so that I definitely do not
agree that any softness toward the Communists of China
will give a better prospect of Titoism developing. I say
it should be firm and clear. If you are under Communist
dominance, you don't qualify for American generosity and
if you break with Communism, then there will be American
generosity. I think that should be clearly our action in
this economic aid struggle.
As to being accused of imperialism, I think it is
elementary that as long as we are producing more than the
rest of the countries and living at a higher standard of
living, we are going to be accused of imperialism in
every argument that comes up all over the world regardless
of what you do and if you let the accusation of imperialism
stop you from a clearly indicated program of action, then
it would be a sad day.
So you need to move carefully with all possible con-
sideration of utilizing the Nationalism Mr. Taylor
emphasized, but definitely move, and in your movement try
to negate the charge of imperialism, but don't let that
charge stop you from moving.
There
CONFIDENT
-62-
There has been mention made of India as a center of
Asiatic operation. As I indicated before, I agree on
Nehru being a name and India being of great importance
but it is a mistake to put our Asiatic headquarters in
India because on the one hand there is the sensitivity
of India toward the British, just having come out from
under, and a greater sensitivity there toward others com-
ing in than there would be in other areas of Asia.
Then you get into the question of India and Pakistan
and the Hindu and Moslem religious issue which might be
questioned in having our headquarters in India.
Someone suggested that our headquarters should be in
Manila. The atmosphere then would be that we were return-
ing to Manila rather than beginning a new Asiatic program.
There isn't the degree of democracy you would want in Siam.
The strong man's record with reference to the Japanese in
early 1942 is not good but when you consider that Siam
with approximately 17,000,000 people has one of the least
dense populations and best food sources and greatest
element of stability and good location for travel by sea
and air, I think you will come to feel that Bangkok is
the logical center on the mainland of Asia for a long-
term American program. Also, you have the fact that the
terrain is additional security as to both Burma and Malaya,
so in case of the greatest possible Communist onslaught
Bangkok would apparently be the last place to fall either
by attack or infiltration, even if you take a black look
at the future, and that is why I am inclined to feel for
a center of Asiatic economic aid, Bangkok is the place.
I emphasize that it is notto be a unilateral program
and not to be one that we in America will do alone. It
must be an aid to the people in Asia that help themselves,
but let us be sure it will get to the people and not
corrupt elements in the government. It will be a delicate
operation and let us be certain we do not become involved
in a joint operation with the British or French in a way
that would bring to us the onus of their past colonial
position. We do have a more favorable reputation in most
of Asia than they do. While we must work closely with
them in the world picture, let us not give ourselves this
integration in a new aid program by tying ourselves too
closely to them.
MR. EUGENE STALEY: I missed any reference to the
role of the United Nations or United Nations specialized
agencies
-63-
agencies such as the Food and Agricultural Organization,
the "orld Health Organization or the Economic Commission
for Aid in the Far East, which I believe is now located
in Bangkok. I am wondering if you located an American
headquarters in Bangkok, the psychological effect would
not be, here the Americans are, moving in. It is the
Americans in place of the United Nations, and 30 I raise
the question that maybe we haven't more to gain from the
standpoint of American interests in setting up as against
a Marxist internationalism the United Nations type of more
voluntary internationalism and doing everything we can to
boost that.
MR. STASSEN: I would say that clearly there should
be consultation with the United Nations agencies and the
utilization of them at every possible turn but I can not
conceive that you could turn over the substance of American
aid to be decided by United Nations agencies in Asia for
a number of reasons. One is the aspect of the colonial
powers being in there. The other is the amount of aid we
give would fall so far short of what could well be used
that I do not feel you could have the division of alloca-
tion that would parallel the European --the OEEC in Europe.
So that I think we would need to keep a greater area of
detailed control of the funds and of the goods in Asia
than we do in Europe. I do grent and would urge that the
United Nations agencies should be used to every degree
possible.
MR. MURPHY: I would like to support the last remarks
of Mr. Kizer with respect to the hysteria or hysterical
tendency of fear of Russia and the effect it has on our
policy. Governor Stassen referred in his original remarks
to the Soviet under-belly of Russia. There is no doubt
about it, Russia is unvrotected for a great many thousands
of miles in the Asiatic mainland but the theory that be-
cause she is unprotected she has unlimited or strong
canabilities there is somewhat hypothetical, I think.
After the war that Russia went through and after
the devastation the country was subjected to, I doubt
that she has quite the capabilities, aside from the atom
bomb, that are attributed to her. I would like to make
the point that possibly sometimes we rather hysterically
exaggerate her capabilities and in our reactions to them
distort our own true policies.
I would like to make one further remark. It is my
understanding that the expression "Titoism" refers not to
aid
CONF IDENTIAL
-64-
aid to Tito but to a national desire to prevent the dom-
ination by a foreign power and in that respect I would
say that the Chinese have very, very strong capabilities
of Titoism because I think they are very nationalistic
and very much nurture their independence.
With respect to Bangkok and the Government there, I
would say that the present head of the Government had not
only a bad record against the Japanese during the war but
has had a bad record against his own people or against a
substantial segment of his own people in the last years
and that there is a very excellent chance of an upset on
the part of the Free Thai group which might come at any
time. It is not a stable situation in my opinion.
MR. ARTHUR COONS: I wanted to make the remark both
to Mr. Stassen and to the group, with reference to this
question of whether or not any aid should go to a Communist
dominated government, that it seemed to me that in the in-
ception of the Marshall Plan in Europe Secretary Marshall
and the State Department and Government placed our country
on a high level of statesmanship in making that aid, at
least at the beginning, potentially available to any
country of Europe, whether Communist dominated or not,
which might join with the organization of European states
and which might agree to certain standards, with reference
to the distribution of that aid, that we might write down.
Furthermore, it seems to me that with reference to
the Far East, particularly where there is a very sensitive
Nationalism, as we have all remarked, we might be on very
much stronger ground if we should not distribute our aid
until after we should have had a conference of the states
and should have had an inclusive invitation to all states
in the same manner we did to Europe. I think that would
have an appeal to the American public opinion.
It may be that certain states might themselves volun-
tarily withdraw and this in itself may indicate the fact
that they were Soviet dominated. I wonder if we are safe
in assuming every Communist dominated government is
absolutely a tool of Moscow. We all say that commonly in
our speech but a fundamental element of American policy
must be to resist international Communism and resist the
imperial encroachment of the Soviet Union. I should not
wish to make the mistake of assuming that every Communist
labelled Nationalist movement in the Far East were
necessarily so and even if there were a lot of voices that
seemed to sound like Moscow voices.
I
COME
-------------------------
Mrs
am
-65-
I just wanted to remind us of the breadth of the
approach to the European scene and the desirability
perhaps in a policy of following a similar line in the
Far East.
MR. COLEGROVE: Any plan for economic rehabilitation
in Asia should also include a large plan of education -
of bringing large numbers of young men and women from
Asiatic countries to receive their education in the United
States and then go back and try to carry on the democratic
experiment in cooperation with our ideas. Of course,
that is the long-term project. It would be 10, 15 or 20
years before such a group of educated young men and women
could become effective in their own countries.
MR. HEROD: By popular vote apparently my hydro-
electric project has been thrown out the window at this
conference which I object to very much. I think we all
agree with Dr. Stassen that what we want is a positive
policy but I would like to suggest from a businessman's
standpoint, particularly in Asia, that American economic
aid, particularly if free, should be given most sparingly
and most highly selectively.
With the differences in culture and a marginal
civilization as far as economic opportunity is concerned,
I don't think we get the reaction from them for a democracy
and I don't think we get the reaction from them against
Communism that we get in Europe. I personally am opposed
very much to the increase of statism -- of having our
government go into the business of dispensing our resources
other than in certain humanitarian cases except where it
looks like there will be a real return and self-liquidating
venture.
Private capital can take up a great many things if
the people at the other end would be square about letting
it work. I don't believe we will increase the world trade
a great deal in those areas. It is very interesting to
note that world trade in finished goods in 1948 was no
greater than in 1913 and if you compare it with the decade
of 1870, a period of somewhere in the neighborhood of
seven to eight decades, world manufacture increased
seven times as a multiple but world trade in finished
goods only two and a half, and in raw materials less than
four and United States trade in spite of our increase in
population and imports was only running $14 to $18 per
capita as against $12 per capita back 150 years ago in
1790. So I think you have the historic trend against you.
We
CONFIDENT IAL
-66-
We have to work I think for industrialization because
that is the biggest source for wealth and we have to
balance our hydro-electric projects along with cottage
industries but I think we have to be very skeptical in the
dispensing of free aid, particularly to Asiatics who do
not understand it and don't show their gratitude. I be-
lieve in the Hindustan language; there is no word for
"gratitude". They inherently believe there must be some
strings attached to it and I am not keen on dispensing
American resources in the hope that will stave off Com-
munism.
MR. ARTHUR HOLCOMBE: I would like to take off from
the proposition that a policy of containing Communism or
containing Russia offers an excessively narrow basis for
a satisfactory American policy in China. A Communist
regime in China will be supported by all kinds of Chinese
and not merely by Communists. It is not at all certain,
and indeed one might say it is very unlikely, that in the
long run a government at Moscow would find such a govern-
ment an altogether reliable instrument for its own purpose.
I am struck by the many parallels between the revolu-
tion in 1927 or 1928 and what we see going on today.
First, take the most striking parallel in the field
of military operations. I remember one night having a
long talk with an American attaché. He said the northern
Militarists had a large number of soldiers under their
command, they were better armed and equipped, they were
fighting nearer their bases, that their bases had better
facilities for the production of equipment, they enjoyed
the advantages of interior lines of communication. He
went on with all the many advantages which the northern
Militarists possessed, and he predicted that the
Nationalists would not reach Peiping.
Everybody knows that they did reach Peiping even
though the Japanese offered some aid to the northern
Militarists and it is quite evident what was lacking in
the analysis of the situation; there was an improper
appreciation of the intangible and the moral factor. We
have seen that happen all over again in the last year.
The Nationalist Government possessed all those military
advantages but the other side wins. It would seem as if
these intangible and moral factors are more important
than is commonly recognized. However, that is hindsight.
What
-67-
What do we see today? We see the same thing happen-
ing again. We have been turning out Chinese students,
among others, during these years since 1928 -- we didn't
teach them to be Communists -- but they are trying to work
under the Communists in a striking preponderance of cases.
I think we are bound to assume that most Chinese are going
to accept the new regime, as most Chinese twenty years ago
accepted the Nationalists, as a fact, a given condition
in the problem, something they had to reckon on at least
for the near future, and I think most of them are going to
try working with 1t, and that means that the Communists as
they build up their institutions, like the Nationalists 21
years ago, are going to become dependent upon the collabora-
tion of considerable numbers of persons who don't share
their ideology but who feel constrained by circumstances
to try to make a go of the regime. And however difficult
it may be for outsiders like ourselves to deal with such a
regime in its early phases, I believe that in the long run
it offers the prospect of a regime with which we can deal
and that in the long run it is by no means certain that
Moscow will find it a better agent of its purposes than
we found the Nationalist government to be of our purposes.
My feeling is that we ought not to assume a position at
the outset of unchangeable hostility to the new regime; we
should adopt a policy of watchful waiting, if I can use
that expression without getting into trouble, in the hope
that presently it will prove possible not only for our
missionaries and our educators but for our businessmen to
find there some opportunity for resuming their activities.
The new China, like the old, will need certain things from
us. I think we should keep ourselves, if possible, in the
position to give those things.
MR. ROSSINGER: There have been a number of suggestions
this afternoon concerning the possibility of blocking China
off or, to put it differently, writing China off. The
assumption seems to have been that, for one thing, the
Chinese Communists and the Communist-dominated regime
could be allowed to stew in its own juices, get into in-
creasing dilemmas, and finally after the passage of years
be overthrown or come to the United States and ask for the
assistance it must have in order to continue. The second
assumption seems to have been that in the meantime we
could, undisturbed, except perhaps by certain local
phenomena, build up our position and the position of friendly
groups in the countries of southeast Asia and interest
India and Pakistan; therefore, that we would have great
freedom of action, that the Chinese Communists would have
an
-68-
an increasing lack of freedom of action. I would like to
state as a possibility that the Chinese Communists, while
facing extremely serious problems, may solve those prob-
lems in fair degree; that is, that the view that they will
be unable to solve these problems is of the present moment
an assumption. There are several evidences which would
tend to support that assumption; there are others which
would tend to oppose that assumption, and the assumption
itself needs to be analyzed very seriously. With regard
to the second point about our own ability to act relatively
unimpeded in southeast Asia, I think there 1s an assumption
there that the new regime in China will simply accept this
situation of blockade and do nothing to counter 1t. My
reading of the present situation in southeast Asia is that
the Western powers with interests there are extremely
vulnerable; that the British and Dutch are having problems
and the French are having problems in various areas; that
the ability of the United States to influence the situation
in those places decisively cannot be taken for granted at
this moment. I think if we look at the existence of
Chinese populations in a number of the countries of south-
east Asia, if we look at a certain community of economic
condition, a certain community of political outlook -- I
don't mean on the Communist ideological level but on the
ideological level of nationalism and unsolved economic
problems which give rise to certain political attitudes --
that there is a significant community between China as to-
day constituted and various countries of western Asia. I
would go further and say that if the relations between the
United States and this new China are utterly hostile we
would have to expect that every possible instrument would
be used against us in these areas of southeast Asia and
against nations closely associated and allied with us.
Therefore, I think 1t is dangerous to look at this as &
one-sided proposition in which the other side stands still,
is confounded, faces dilemmas, while we act. It is an
interacting situation and we ought to weigh very carefully
the question of whether our power to harass, simply to put
it on that level, is equivalent to the power of others to
herass us. I am not at all sure that the answer is that
our power is greater in this respect. This brings me to
a further point. I don't think we can write China off.
We need to have a constructive policy towards southeast
Asia and India. By all means, we must promote the economic
recovery of those areas, we must promote their alignment
with us, no question about it. I don't think that can be
pursued most constructively if China is imagined as utterly
outside this plain as an area with which we are completely
hostile. I would like to suggest, then, that the
normalization
CONFIDENTIAL
-69-
normalization of our relations with China is an important
prerequisite to effective action on our part in other
sections of Asia. To put it in a slightly different way:
That our ability to be constructive, let's say, in India
1s not something which can be considered independent of
our relationship with China. My own view 1s that the
normalization of relations with China is essential in fair
India. degree to the development of constructive relations with
MR. QUIGLEY: I think that there is a field for
governmental assistance to the peoples of Asia through
direct relationships, though, of course, I agree with
Professor Lattimore that that cannot be arranged except
with the consent of government. But I can't go with my
friend Stassen into India and southeast Asia, and so on,
unless he goes with me into China also. It seems to me
that we cannot conclude that Communism in China will be
the same thing as Communism in Russia, and it seems to
me we must distinguish, therefore, in our national policy
between countries that are Communist of their own choice,
as far as we can tell, and those that are dominated from
outside. And at the present time I would be inclined to
say that the burden of proof that Communism in China is
merely another brand of Russian Communism is on the person
who makes that allegation. I would also like to raise
the question as to whether we may expect that other
countries of Asia will be favorable toward a program which
will not contemplate aid to China as well as to them. I
rather doubt 1t. There has been developing, as all of you
here know, an inter-Asianism, a sort of one-Asiaism sense
of a common interest, common concern which seems to work
against a program that did not take all countries into
account, and I rather think that Nehru would have that
feeling with regard to China. I would like, if I may, Mr.
Chairman, to ask if it is proper that we call upon Dr.
Stuart on this point of the possibilities of resistance
to outside control of Chinese thought that are latent in
Chinese culture.
My question is: Do you think that Chinese culture
contains powerful forces of resistance to domination by
any outside culture?
MR. STUART: Yes, emphatically. We have in China a
fascinating sociological laboratory. Communism is being
tried out in a country very different from anything where
1t has been in control before. I don't think anyone can
prophesy just what will emerge from it, but it will be
something that is distinctively Chinese.
MR. VINACKE:
CONFIDENTIAL
-70-
MR. VINACKE: May I ask if the Ambassador would com-
ment or give his explanation --- from his contacts with
the student class -- of an apparent complete swing of the
student class in China away from the United States, toward
the Soviet Union in the recent years?
MR. STUART: The student class, as I understand it,
has been in revolt against the Kuomintang because it had
failed to carry out the social program that they looked for
and which is all in the three principles of Sun Yat-Sen.
They turned to Communism as highly organized, efficient,
and as promising to make those social reforms, and we were
identified with the corrupt, and not so much corrupt as in-
efficient, Kuomintang government which had swung back to
the old dynastic traditions of self-aggrandizement and
ostentation rather than the reforms for the welfare of the
common people. It wasn't Marxist ideology originally that
took them over; it was this revolutionary movement which
they looked for in the Kuomintang and were disappointed in
not having. Here was a promise of a thorough-going, smash-
ing social revolution. We were identified with what seemed
to them the reactionary forces.
MR. BRODIE: I should like to climb aboard the Stassen
bandwagon. It seems to me one of the issues which we have
completely side-stepped is the issue of the peculiar nature
of Communism today and how it affects the pattern of the
problem we are dealing with. Now, I do not believe that
our experience thus far with Communism in European countries
would argue that the particular cultural pattern of the
people upon whom Communism is imposed has relatively little
to do with the matter. I had assumed that by this time it
was trite that Communism of the Russian-inspired pattern
depends very heavily on coercion, thought control, etc.
That, somehow, seems not to have entered into the thinking
this afternoon. Secondly, it appears to me that we have to
recognize that whether we like it or not we are facing con-
flict with Russian-inspired Communism, and it seems to me
one of the questions we might ask ourselves is what oppor-
tunities, 1f any, will be permitted to us to do the various
good things we want to about China once the Communists take
over.
MR. TAYLOR: I just wanted to say that the question
of whether the hinese-Communists resent outside inter-
ference is one thing, and I agree that they, no more than
any other people, like to be ruled by everybody else, but
that's a very different question from whether Communism --
and I agree with your definition of it very strongly --
whether
-71-
whether Communism of the present sort fits into China. I
argue that 1t fits extremely well. There is certainly
very little cultural basis to 1t. I am still wondering
about Mr. Rossinger's argument that we must ask the Chinese
Communists before we do anything in India. I think they
have some intentions of their own in southeast Asia what-
ever we do, and I would like to put up the counter-
proposition that they are in alliance with - they are not
satellites, they are in alliance with - a very powerful
country which is out, by its own admission, for as much
territory and as many people as it can possibly get; it is
one of the facts of life.
MR. ROSSINGER: The statement that I thought we should
ask the Chinese Communists about their Indian policy be-
fore proceeding on it represents a misunderstanding of what
I said. My point was that I felt that the normalization
of relations with China was an important element in our
carrying on an effective policy in other parts of Asia, not
that we need ask permission.
MR. STUART: I just want to add one sentence to make
it perfectly clear that whatever may develop in China under
Communist control the present Communist leaders are deter-
mined to carry out all the techniques of orthodox Communism
as they have learned it from Russia. The question of
whether they succeed or not is another matter.
MR. BRODIE: It seems to me that so far as our interest
in this problem is concerned, I am certainly sympathetic to
what one might label as the altruistic motives which have
been so generously supported here, but it seems to me also
the question, in 1ts more critical sense, at any rate, is
what are the external alignments of China going to be, and
I say again in that respect whether Communism succeeds or
not in China is comparatively irrelevant. They may fail,
but nevertheless so far as our security interests are con-
cerned the alignment remains very closely Russian and very
definitely hostile.
MR. RUSSELL: Mr. Fosdick, there was a cartoon in the
New Yorker a short time ago, In which a bartender, leaning
toward another bartender, said, "Say, Joe, have you
noticed how 1t takes more drinks than it used to before
they know the answers to the international questions?"
I suppose it is on that theory that the Acting Secretary
has asked this group to join him in the North Room of the
Mayflower at six o'clock.
CHAIRMAN
IDENT
14,
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CHAIRMAN (Mr. Jessup): It might be useful this morning
if we could open up a Southeast Asia picture, introduce
into our conversations the problems of Southeast Asia and
the position of India with reference to the whole Far
Eastern picture and that
discussion might properly lead
us into a consideration of the various proposals for some
kind of regional pact or union in the area. I should hope
that our discussion might then lead us into a consideration
of a problem which has been raised with us by a good many
people who have written in, and that is the relative pos 1-
tion in terms of American policy of three possible centers
of power and influence in the Far East, that is, Japan,
China and India, the extent to which our policy should be
directed toward re-establishing or strengthening or main-
taining close ties with one or more of those countries.
MISS DuBOIS: The countries of Southeast Asia vary so
greatly that it seems to me any estimate of that or any
specific program of action in Southeast Asia which in
phrased for the region as a whole will need reinterpreta-
tion when applied to a particular country. It seems to me
that a single program or estimate for Indonesia and Thai-
land would be as inappropriate as a single estimate or pro-
gram for, let's say, Korea and Japan.
Despite the diversity which does occur, a few general-
izations can be risked. The first and the broadest 1s one
which was discussed at the very beginning of yesterday's
meeting, and agreed upon, namely, that there 18 a revolution
In progress in Southeast Asia and that that revolution is
not coeval with US-USSP tensions. It 18 a revolution cer-
tainly of 50 years duration. It has affected more or less
acutely all functions of the cultural lives of these disparate
peoples. Yet it is A revolution which has not always been
disorderly, and simultaneously one should remember in dealing
with Southeast Asia that not all disorders are necessarily
revolutionary. For the US to interpret the Southeast Asia
scene solely in terms of its own preoccupations with anti-
Communism is to run the risk of seriously misunderstanding
the forces at work in Southeast Asla and thereby of alien-
ating the all-important leadership of the area.
Fortunately the USSR seems to be making this very error
in Southeast Asia. The reasons, we may assume, are the
doctrinaire quality of its Southeast Asian advisers, who
impress one as being either fairly incompetent or too intim-
idated to render an honest judgment on the scene.
Now
CONFIDENCE
- 73 -
Now the revolution which is taking place in Southeast
ASLE uan be subsumed under three major blanket terms:
nationalism in its political thinking, socialism in its
economic & spirations, and hume initarianism in its social
program. These, of course, are direct reflections of
Western Memocratic thought, although certainly their ap-
pearance in contemporary Southeast Asia lags behind their
fulles manifestations in Europe. That these three ma Jor
trends are Western European in origin gives the US a tre-
mendous psychological advantage in dealing with Southeast
Asi/ leaders. However, it would be a mistake to expect
no mutations in these major trends in the course of being
Mansplanted
Thus, the nationalism which is at the moment the major
preocoupation 18 still phrased to a large extent as anti-
imperialism. Furthermore, nationalist leaders have problems
of unifying the nations that they aspire to create which are
as great, certainly, as those our forebagra had in the 18th
century Sovereignty neither in its internal nor external
aspects 1s yet 8 deeply experienced and internal force. I
would expect, therefore, that their nationalism would be
easily directed into international channels as soon as the
threats of imperialism are removed and hypersensitivities
on this score are respected. Once unity in these severely
splintered countries- and I exclude the Philippines and
Thailand is established, international preoccupations will
appear more consistently and frequently. However, until
that time internal problems will seem more urgent than ex-
ternal ones in each of these countries. This complicates
the situation. It means that the US has to deal with five
or six separate entities instead of one. It may retard CO-
operation between the countries of this area, and then of
course there is the danger that splintered nations may more
easily be exploited by those who enjoy fishing irresponsibly
in troubled waters
Socialism to take the second main theme in Southeast
Asia--1s still more an aspiration than a fact. It is closely
associated with the desire, however unrealistic, to industrial-
ize and achieve some degree of autarchy. In part, these de--
sires stem from the realization of how vulnerable the export
economy developed by European nations have made these areas
to fluctuations in the world market I need scarcely say the
depression of the '30's was a very bitter experience in this
part of the world Another contributing factor 18 the knowl-
edge that they lack investment capital and they need such
capital
CONFIDENTIAL
74 s I
capitel from European sources, but that in acquiring it
they do not wish to exchange economic controls for the
political freedom which they have just acquired. On the
whole, therefore, the preference 1s for inter-government
loans and government-controlled enterprises.
The third main strain in the Southeast Asian revolu-
tion, the humanitarian one, is for the moment represented
by a remarkable eagerness for education and for the de-
velopment of literacy in the area. This, of course, was
of value in the European nations where most of the south-
eastern leadership studied. It appears to them a sine qua
non of intelligent and enlightened sovereignty It is a
force which, I believe, most nearly represents a mass
movement in contemporary Southeast Asia. That highly
literate populations like those of Germany and Japan have
been no insurance against political abuse seems to escape
most people's attention.
Associated with this trend is the desire for a higher
standard of living and great admiration for American
technology I feel that our propaganda does not need to
stress our technical competence or our standard of living
anywhere in the world. It has already been sold and resold
It is a revolutionary force, some writers claim, which
makes Communism a pale and reactionary phenomenon by com-
parison Although we do not need to sell the superiority
of our technology it may be wise of us in Southeast Asla
not to rub in the differences in standards, of living, and
above all not to appear niggardly in sharing our greatly
admired know-how It may be unwise to arouse envy and un-
desirable to trade on strength which, though greatly ad-
mired, is admired in Southeast Asia when well encased in
velvet.
If the main elements then of the Southeast Asian revo-
lution have been correctly appraised, the next question
which arises is: "Where are the fulcrums for the effective
exercise of influence by the US?"
In terms of the class structure the major locus of
power is the present leadership. It is predominantly
western-educated and western-oriented in its thinking. The
overt leaders who fell under the leadership of Moscow and
remained there can be counted practically on the fingers of
both hands Furthermore, the peasant masses of Southeast
Asia are still largely politically unawakened, although that
situation
IAL
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situation is changing faster than we may like to realize
in countries like Indochina and Indonesia, which have had
to fight for their independence. In dealing with these
leaders we shall have to appreciate that they, like all
politicians, will be under local pressures from their own
peoples which we here in the United States only vaguely
understand and probably frequently do not appreciate. We
must realize, however, that the greatest danger to us in
Southeast Asia is that the armed and aroused peasants may
escape from the control of leaders essentially friendly to
the West and become the pawns of Communist agitators.
An early and equitable settlement of disorders in
Southeast Asia and every effort to strengthen the present
leadership in its unification of these countries appear
to me to be essential to US interests. It is recognized
that such leadership may not always be to our taste, however.
A second point d'appui open to the US has already
been suggested. It is the generous sharing of our tech-
nology, Here a generous technical assistance program was
conceived. The realization by our economists that on its
present scale it will not fundamentally alter even in a
generation the Southeast Asian standard of living has led
to the suggestion that private capital is needed, but
naturally it must be provided safeguards. Actually, whether
such safeguards will coax American capital into underde-
veloped areas may be worth pondering. The Bell Act, which
has been a thorn in Philippine national pride, has not de-
luged the Philippines with American enterorises. In any
event, the US with its evaluation of private enterprise runs
squarely against the state socialism of Southeast Asian
leadership. Already fears have been expressed in the region
about our intentions on that score. Undoubtedly to secure
our assistance the Southeast Asians will temporize with
their aspirations, but the attendant frustrations and re-
sentments should not be ignored, should be carefully weighed
against the chances of success in getting American private
capital into the area.
A third and closely related lever available to the US
in Southeast Asia 1s the previously-mentioned desire for
education. The Fulbright Act was probably one of the most
constructive long-run measures for Southeast Asia enacted
in postwar years. However, 1t 1s limited to only three
countries in the region, it has been slow in getting under
way, it has been loosely coordinated with other policies
subsequently developed like the technical assistance pro-
gram, and has been nibbled away by other interests, lack of
suitable
iss 76 -
suitable personnel and the innumerable difficulties that
always seem to beset the best of intentions The Fulbright
Act, however, 13 miniscule by comparison to the needs and
aspirations of these areas. I feel that any guidance that
this group could offer in refining and enlarging our US in-
formational and educational program and in enlisting our
private educational groups in a multitude of both advanced
and elementary programs,
might be amply repaid
in terms of long-run national interests.
Now these are some of the assets we possess in South-
east Asia Where, then, are the weak points in our potenti-
alities? Here 1 would like to consider two types or weak-
nesses, those which are inherent in Southeast Asla and those
which are inherently our own.
It seems a justifiable assumption that the Chinese
Communists will continue their push into the neighboring
countries of Southeast Asia. What their reactions will be
will depend upon the nature of the push. Let u8 suppose
that it would be directly military and would be limited to
the land approaches.
Mr. Furnivall, an outstanding British expert sympa-
thetic to the present Burmese Government, is convinced
nowhing would heal the present schisms in Burma more
effectively than an armed Chinese incursion along the
northern Sino-Burmese border.
In Indochina the dislike of the Chinese is traditional
It has been reinforced by the postwar Chinese occupation
of northern Indochina. Any Vietnamese Communist leader-
ship In the Republic of Vietnam which would encourage or
condone Chinese military incursions would be widely dis-
credited and might make more friends for Bao Da1 than the
French or the Emperor himself have yet been able to win.
Thailand's traditional nationalism and anti-Chinese
position is presently more overt than ever under the
authoritarian Premier Phibun In fact, Phibun has re-
cently stated that Thailand would welcome British and
American troops on Thai soil in the event of a Communist
invarion.
All of these factors are not unknown to the Chinese
Communists and it seems improbable, therefore, that they
would take the risks involved in direct military action
even though they might be militarily successful. Also, it
is still far from clear that the USSR trusts the Chinese
Communists
- 77 -
Communists sufficiently to use them BE their "running dogs"
in Southeast Asia.
Obviously, however, direct military incursion is not
the only instrument at the disposal of the Chinese Com-
munists. Chinese governments have traditionally taken a
proprietary attitude toward their six million overseas
Chinese in Southeast Asia. Such attentions have never
been welcomed by the government of any region. Among the
people of the area, justly or unjustly, the Chinese have
always been suspect. This position is intensified at
present, for the Chinese have held aloof from the national-
1st struggle. The increased nationalist sensitivities in
these countries since the war is likely to make Chinese
Communists appeals to their overseas dependents as ob-
noxious 8.8 those of Nationalist China. This, however, is
certainly no adequate discouragement to the Chinese Com-
munists.
If no direct military action is likely, what are the
Chinese Communist potentials? Open propaganda, which has
already been launched from Peiping on Southeast Asia, will
undoubtedly be intensified, but in my estima tion it 18 of
dubious effectiveness. I suspect that shrill propaganda
may be one of those self-defeating techniques whose effec-
tiveness 18 already largely exhausted. However, it may be
unwise to underestimate it too soon, at least in these 80-
called marginal areas of the world, But our own information
services, expanded, more astute, certainly more repetitive
would probably stalemate the line coming out of Moscow and
Pelping
Far more sinister are the possibilities of clandestine
infiltration and activities whose goal will be to intensify
destructively every possible grievance, racial discrimina-
tion, minority frictions, pay differentials, poverty, police
measures, national aspirations and that whole bost of evils
which exists today in Southeast Asia.
These clandestine efforts will certainly be facilitated
if the countries of Southeast Asla will recognize the People's
Republic of China Chinese Communist diplomats will afford
the opportunity to shout at clandestine operators, to bribe
and to terrorize the resident Chinese in Southeast Agia who
have always been noted for their practicality in such matters
rather than for the strength of their moral convictions.
Furthermore, to the extent that the People's Republic of
China
78 $ I
China gains a position on the international forum ite
strident echoes of the USSR on the subject of Anglo-American
imperialism will have the weight of an Asian voice which
has been "successful" in its revolution. I think that we
should not underestimate the fact that the Communist success
in China is seen 88 a successful revolution in many parts
of Asia. It seems to me that in a case of that sort on the
international forum our best defense will be the kind of
diplomatic astuteness which Mr. Henderson has had in India
and above all our actual record, about which, it seems to
me, we insist on being far too modest.
In my opinion this question of the overseas Chinese
and the opportunity they offer Communist China for clan-
destine and diplomatic infiltrations in Southeast Asla 19
one of the greatest hazards to US interests in the area.
Unfortuna tely, in terms of other considerations, recogni-
tion may have to be granted to the People's Republic and
the attendant liabilities reckoned with.
In addition to the difficulties posed by the overseas
Chinese and the recognition of Communist China, which are
immediate, there are long-range difficulties. The popula-
tion problem, particularly in relation to the food supply,
is perhaps one of the major ones. The Far East as a whole
occupies a unique position in world economics by being pre-
dominantly agricultural, and yet being on the whole a food
deficit area. Faced with this gross problem the impulse
is to encourage rice-producing areas like Thailand to pro-
duce as great an exportable surplus as possible. If the
Office of Intelligence Research estimates are correct, there
is little likelihood that any foreseeable amount of encourage-
ment to rice production will result in more rice than the
Far East sellat a good price until 1960. However, by 1970
It is estimated the population and food production may once
more be unbalanced as they are today. It is also estimated
that the Chinese Communists will still be in control in
China in 1970. It is here again that bold new plans seem
as urgent to the US interests as they are urgent to Asian
leadership.
Here, perhaps, modest industrialization and economic
diversification might concern us with equal seriousness and
simulteneously with the food-population equation. Certainly
in an area as large and diversified as Southeast Asia any
simple unilateral approa ch would not be adequate.
It
IDENT LAL
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It may be appropriate now to pass on to inherently
American difficulties when we operate in the region The
first two difficulties seem to me closely related--in-
difference and commitments elsewhere. At the beginning
of World War II China "specialists" were practically a
dime a dozen compared to those on South Asia. Since the
war Japan "specialists" seem to outnumber even those on
China Persons interested in the Far East are termed
"specialists" while every fifth person in the US has no
hesitancy about speaking authoritatively on Europe. He
may do it even in fluent French or German. It is not
astonishing, therefore, that in both our war and peace
strategies our concern has been primarily for Europe It
1.8 undoubtedly both practically and emotionally an area
requiring urgent and vigorous effort If, however, we are
not to go on waiting for crises to develop before we become
aware of them, it will be necessary to act like the USSR
on e global basis In respect to Southeast Asia we are on
the fringes of crisis. The initistive I consider is still
narrowly on our side Specifically, what this may mean
1s: will the US and here I don't mean just the policy
makers be rich enough and above all willing and foresighted
enough to apply preventive measures before South Aelan
opportunities are squandered?
In our preoccupations with Europe and our heavy and
legitimate responsibilities there, the weight of European
arguments may cloud our judgments. For example, the
interests and stability of France and the Netherlanda, close
and familiar as they are, may serve to three cut of per-
spective our very real interests in Indochine and Indonesia.
Traditional British pre-eminence in South Asia may have made
us careless of developments in the region.
To continue with this weighing of Europe versus Asia,
the question of the Pacific versus the Atlantic Pact 18
another case in point. If the Atlantic Pact is obviously
in our immediate interest, is a Pacific Pact less in our
long-range interest? Or, to narrow the matter down, can
we judge whether military support to the Northeast Asian
group--Korea, Formosa, Japan and the Philippines--is more
effective than support to the Southwest Pacific group--
Australia, New Zealand, the Philippines, perhaps plus other
commonwealth nations? or, thirdly, 1a 1t more effective
to support the more nebulous Indian Ocean bloc? Do US
interests lie in consolidating the Indian Ocean bloc with
the two Pecific arcs or do our interests lie in two or more
such aggregations in the Far Eastern periphery? If one or
the other course seems wise to us, what means can be applied
to
CONSI
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to implement them? These are questions which I assume this
group will discuss in the course of the day
In discussing US weaknesses in the Far East I have
raised two related issues, our preponderant interest in
Europe and therefore the degree to which we have as a people
concentrated our eggs in one basket.
The last point I should like to raise in respect to
Southeast Asia has to do with our moral leadership 1n the
area. If we wish to be seriously hard-headed about the
Southeast Asian scene it is necessary to realize that
STRATE
their moral values are still potent and prized factors.
Their leadership was primarily trained in our founding
faith. The streets of Saigon and Batavia were plastered
with slogans from Jefferson, from Lincoln, from the Declar-
ation of Independence, from the Constitution and from the
Atlantic Charter when the Allied troops arrived in Septem-
ber 1945. In our commitments to Europe and our antagonism
to the USSR we may appear in that area to have temporized
with the idealistic and perhaps naive expectations of South-
east Asians, Whether it was avoidable or unavoidable we
certainly lost much of our influence in the area. Whether
or not we personally as individuals prize our traditional
morality or have been won over to real politik 1s not
relevant sociologically. What is relevant is to the extent
that the US temporizes with its own principles it 18 abandon-
ing an instrument of great political force in Southeast Asia
The USSR, were it in a similar position of active responsi-
bility, would undoubtedly be even more gross by contrast,
but so far we are in Southeast Asia, at least to some extent.
We have the initiative. The USSR and Communist China are
still only potential forces, perhaps brighter for being
less manifest.
This much is clear: Whatever our priorities in the
short run, however coldly calculated in power terms, they
must be compensated for by long-range encouragement, re-
assurances and planning with and for the South Asians 1f
we are to counteract Communist intrusions
MR, COLEGROVE: Would Miss DuBois be willing to comment
on Gov. Stassen's proposal for an American propaganda center
at Bangkok?
MISS DuBOIS: Siam has always, of course, been very
sensitive to the fact that it has been the one independent
nation in Southeast Asia that has not fallen directly under
colonial
CONFIDENT IAL
- 81 -
colonial control. India considers Siam today a rather in-
significant and reactionary country. Bangkok is not an
swfully pleasant climate. The port 1s not a very good one,
it has only north-south transportation on land at least.
I should think if one has to have an American capital in
Southeast Asia we might at least find a more aslubrious point.
MR. COLEGROVE: Where would you have the capital if
not at Bangkok, or would you have a capital?
MISS DuBOIS: I would not
MR. DECKER: I would like to ask Miss DuBois to com-
ment briefly on the relationship of the American position
in the Philippines to this Southeast Asia mass. We have
had some experience in the Philippines and I happen to
know that many of those areas do look with considerable
int erest to what is going on in the Philippines. I wonder
if that gives us an advantage or disadvantage.
MISS DuBOIS: I think our record in the Philippines
stands us in very, very good stead in Southeast Asia. I
mean that 18 an honorable record and that is always quoted
and that 18 of great advantage.
I would say the administratively and politically
competent leaders in that area are very, very few. That is
one of the very serious problems, one of the great weak-
nesses, but those who are the leaders by and large, with
some exceptions that can be named, are very strongly on
our side.
MR. VINACKE: How far do they have mass following?
MISS DuBOIS: I think that varies tremendously. I
can't make a generalization for Southeast Asia.
MR. HEROD: Gerald Winfield in his book on China gave
some very plausible arguments for increased food production
by a lot less people by a large distribution of land rather
than smaller ones and certain other changes. Does Dr. DuBois
see the possibilities in Southeast Asia and also in China
of any corresponding increase in food production to change
that equation?
MISS DuBOIS: I think there will be no difficulty, once
political settlements have come, in increasing the rice
production of Southeast Asia.
MR. HEROD:
CONFIDENTIAL
- 82 -
MR. HEROD: Also China?
MISS DuBOIS: I have no judgment on that, I am sorry.
But even with no very elaborate large-scale rice culture,
even using the old techniques with slight improvements in
strains and fertilizers, rice production in Southeast Asia
could be practically doubled. You see, all the surpluses
of Indochina, for instance, aren't available now. That 18
almost a million tons prewar that was exported. That 18
not on the market now. Itwould save India a great deal
if they could buy that Chinese rice.
MR FAIRBANK: In connection with the lack of leaders
in Southeast Asia, don't we have a great danger from the
corresconding lack of American personnel who are able to
maintain real contact with those few leaders that are
there? It seems to me in all of Asia we suffer if we rely
only on our embassies and consulates to maintain contact
with the native leadership because 1f you want contact
with the revoluticnists and you are in diplomatic channels
accredited to the local regime it is difficult. We need
certainly a great many more Americans like Mr. Talbot, if
I may take an example, who has had personal experience in
the field. He is an unusual and almost unique individual
because a particular foundation saw to it that he spent
some time seeing people 23 a private citizen in those coun-
tries.
One thing this conference might consider is the need
of getting more Americans into the Far Eastern scene outside
of diplomatic channels which handicap their contacts, with
more freedom to develop an association or understanding
of the native leadership.
MR. COLEGROVE: May I ask Dr. DuBois one question re-
garding trade between Japan and Southeast Asia? If Japan
revives economically and lessens the burden on the American
taxpayer, Japan must have markets. One market, of course,
would have to be Manchuria and North China, and we hope
Indonesia and possibly a revival of the old trade with
Burma, Stam and other Southeast Asian countries. I believe
the figures before the war were about 15 percent of Japanese
imports came from Southeast Asla. Does Dr. DuBois think
that trade could be revived and expanded?
MISS DUBOIS: I think that the Department will bend
every effort to encourage the development of Japanese-
Southeast Asian trade Japanese consumer goods and things
of that sort in return for Southeast Asian rice.
MR. COLEGROVE:
83 1 I
PR. COLEGROVE: Will Southeast Asia take Japanese
exports?
MISS DuBOIS: I think they would.
MR. VINACKE: I was just wondering whether your last
reference meant that the heat would be put on by the United
States; for instance, until we compel the Philippine Govern-
ment to go further than it has been willing to go under
certain pressures up to the present time in reopening trade
with Japan on a basis that leaves the trade open to Japan
rather than on any other basis. Was that the implication
when you said the Department was going to open up trade?
MISS DUBOIS: I was saying they would do everything
to facilitate the surplus trade rather than our shipping
in costly dollar wheat. It was in the food for consumers
trade.
MR. DECKER: I would like to have Dr. DuBois comment
on the present appalling conflict in Burma-- to what extent
she sees that as an evidence of Communist influence, in-
filtration? To what degree is it domestic to Burma, and
does she see any solution of it?
MISS DUBOIS: Burms is not the field that I watch
from day to day, Mr. Decker. I can here only cuote Mr.
Furnivall's opinions, and Mr. Furnivall is of the opinion
that Communism today in Burma is not a menace; that you
are seeing characteristic interim disorders that have been
traditional in Burmese history. Mr. Furnivall is of the
opinion that the Karens far more than the various splintered
so-celled Trotskyist and Stalinist groups-that the Karen
uprising is more important than the Communists, and cer-
tainly the Karens are not a radical group. In fact, one
of the things they are protesting is the radicalism of
the present Government of Burma. It seems to be simmering
down. I suspect that you are going to have in maybe four
or five years a reasonably stable Burma under a fairly
socialistic government.
TR. DECKER: I agree with you entirely.
IR. TALBOT: At this point I merely wanted to add a
footnote that the South Asian demand for Japanese trade
at the present time has swung over to a different line
than it did before the war. Textiles are no longer the
hig
- 84 -
big demand from Japan, now it is more machinery, machine
tools, and semi-productive equipment. Many of the South
Asian countries are concerned with producing their own
textiles, so that the nature of the trade may be somewhat
different even though the trade itself may come to approxi-
mate what it was before.
MR. STALFY: I would like to ask, with reference to
the possibility that the United States might start, say,
in the fairly near future, a program along the lines of
"Point 4" in this area, what particular countries do you
feel would at present be the best places to start? Some
of them I suppose you just couldn't start very effectively
now, in terms of leadership available, willingness, desire
for this sort of thing, and all the other factors one would
have to take into account.
MISS DUBOIS: As long as a settlement is not reached
in Indonesia, as long as the war continues, as long as the
disorders continue in Burma, these are not profitable places
to start a "Point 4" program. We have put a good deal of
aid into the Philippines already, and we consider our record
there on the "Point 4" level is very good already. Thailand
is one of the places where we can start moving immediately,
let's say, and, in fact, we have in terms of the Internation-
al Bank loans and so on, that sort of thing is moving along.
Indonesia will offer tremendous possibilities if all goes
well, say by mid 1950.
MR. ROSINGER: Could you give us some impression of the
situation in Indochina?
MISS DuBOIS: The March 8 Agreement with Bao Dai has
moved very, very slowly toward a constitution, only beginning
in September with the ten subcommissions set up to begin dis-
cussing further carrying out the March 8 agreement. The first
priority was given to the transfer of the Courts of Justice
in the theater and seems to have led to a good deal of diff-
iculty. Those negotiations promise to drag on, if the Indo-
nesian negotiations are any criterion, for years if the Bao
Dal regime lasts that long. The Republic of Mentnew (?) is
calling Bao Dal a traitor and a puppet of the French. There
are estimates which are very discouraging to the success of
the Bao Dai experiment. I think that most of the Western
European nations, including ourselves, hope that the Bao Dai
experiment will work, that Bao Dai will be able to set up an
effective
- 85 -
effective government and gain considerable popular support,
but I think it is only a hope and far from an assurance.
R. ROSINGER: I was thinking particularly about the
present military situation. The question was raised as to
what effect increased arms from across the border would
have then the Chinese Communists reach that frontier. How
would it effect the Indochinese military situation?
COL. McCANN: I think there would be considerable
political implications which might not be as pronounced
as if the Chinese Communists tried to get into the area
themselves, but I don't quite visualize their just giving
this stuff gratis to the Ho Chi Minh elements in Vietnam.
There would be some quid pro quo involved, I believe.
However, I think, in general, it is = fair assumption that
the arms traffic would increase. Another aspect is, of
course, that as the French might expand =11 their military
resources, and they might become increasingly unable to
cope with the seaborne arms traffic which is going on in
the area, the Ho Chi Minh forces have achieved at least
a stalemate in the area. While there is a continued French
effort to achieve a military solution, it is not a self-
licuidating proposition. In fact, it inherently increases
the opposition that that military strength must encounter.
How for the French can expand their military effort depends
upon n lot of cuestions: their problems in North Africa,
their commitments in Western Europe, and the extent to
which the United States is willing to back a military solu-
tion in Indochina, even indirectly through the Western Euro-
pean organization.
R. ROSINGER: My impression, which I offer very tent-
atively, is that the military situation in Indochina,
granting a number of differences, might be compared roughly
with the position of the Generalissimo's forces in China
itself, let us say in 1947 or possibley early '48. In other
words, I PM wondering whether the French prospect there 1s
of the same general character as Chiang's prospect was a
year or = year and a half ago.
COL. McCAIN: There are aspects of similarity, certainly,
one of which I have mentioned--that seeking a military solu-
tior SOWS the seeds of its own failure. There is snother
similarity in the military situation--that the French are
holding principal cities by military force, and attempting
to keep open certain major lines of communication, which is
& very costly sort of an operation against a determined
opposition. That is one of the things that makes the French
job so costly in military terms.
IN. MORRAY-
NEIDI NTI
E
98 I )
MO
MR. "URPHY: I would like to ask Miss DuBois's opinion
of the political effect in China of the Atlantic Pact arms
turning up there in the hands of the French?
TISS DUBOIS: First of all, the French have had Ameri-
can equipment there, you know, in addition to which there
was left-over stuff; in addition we have already had ECA
materials leaking into Indochina, which has been observed
and criticized. Officially Ho at least has taken an
astoundingly moderate attitude towards FCA and towards
the Atlantic Pact. It has been quite unKremlinish. He has
said: "Tell, sure we understand the United States wants
to help its friend, France. Why not? We don't begrudge
France's sttempt to get back on its feet", and so on. It
is only when the stuff begins to appear in Indochina that
then you get expressions of resentment toward the United
States, and since the stuff has been coming in one form or
another either through FCA or Lend-Lease, and the old war-
time arms and SO on, I don't think it will come as anything
new or shocking.
"R. MURPHY: Except that there will be a good deal of
new reference to it within Indochina. I believe there has
been already, which might make the situation comparable to
this 1947 Chiang Kai-shek episode in China.
MISS DUBOIS: We haven't any increasing love in Indo-
china, but oddly enough We have not been as disliked as we
might have expected, and it is quite astonishing in reading
the extreme right and the extreme left press in China to
find them almost indistinguishable in their anti-American-
1sm. In Indochina, the reactionary forces have been as
bitterly anti-Americen and have thrown around the reaction
of American imperialism as rashly and as frequently as the
extreme left press has.
IR. HPROD: What is the present status of the policy
of FCA aid in the Metherlands East Indies in the light of
the Hague Conference?
TISS DUBOIS: The ECA cancellation of aid to Indonesia
still holds until, presumably, an a reement has been reached
at the Hague. I think our position has been impeccably
neutral. By and large our negotiators have been remarkably
impartial in trying to get a settlement. I mean they pres-
sured both sides, depending on which side at the moment
needed most pressuring in seeking agreement. I have the
greatest respect for "r. Cochran's astuteness and impartiality.
MR. LATTIVORE:
-87-
MR. LATTIMORE: I think that one of the things which
we must face very realistically is that American propaganda
throughout Asia emphasizing the Kremlin sympathies and
Kremlin ties of the new Chinese Communist Regime may be
less effective than the tendencies of nationalist movements
of all colors in Indonesia in proportion as they tend to
become militant to imitate what has been done in China be-
cause it has been successful rather than because of the
source of 1ts origin. One conclusion I would draw is that
Colonel McCann has shown us a military situation in Indo-
ohina which in a general way, allowing for differences
between the two countries, resembles the military situation
in China, say, a year and a half ago, and I would not be
surprised If the military stalemate which Colonel McCann
says Ho Chi Minh has achieved in Indochina might, if it
goes on long enough, cease to be statio and lead to the
beginning of her turn-over movements in Indochina, which
he says have not become manifest yet.
Iou might easily get a situation in which 1f the
French, pressed by their difficulties elsewhere, to which
Colonel MoCann alluded, felt themselves forced to try to
operate in Indochina by arming Bao Dal units rather than
French units, those units might begin to turn over as units.
MR. PEFFER: I agree with Dr. DuBois that you have to
look at all of Asia, now as always. I think from Burma up
to Vladivostok everything will turn on how we act towards
China. The moral effect of the Chinese revolution 1s, of
course, as liquid as the Japanese victory over Russie in
1905. As she also sald, there 18 8 considerable whispering
campaign-- I guess it begins in Bombay and goes to Vladivostok
--about America having grown up and being like all grown-
ups-bad. It 18 a great power, so 1t is a great empire.
That is probably not true, but it is a good talking point.
If we take the position with reference to China that we are
obstructing everything, that we refuse to recognize-- am
using "recognize" not in the technical sense-that we refuse
to acknowledge what has happened in China, 1f we attempt to
sabotage right away or even to oppose, to out off, to ostra-
cise, to expel, I think certainly from India on it will be
said by the Ho Chi Minhs, by the Siamese, by the Burmese,
by the Sukarnos: "Well, you see the Russians are right,
the Americans are just imperialists." We have stood histor-
ically in that part of the world largely on our Philippine
record. We have stood historically 85 anti-imperialists,
as equitable with respect to Asiatic people. That is at
least
CONSIDENTIAL
- 88 -
least in question now in the minds of all these people.
No matter how much USIS, no matter how much propaganda,
you have got, it will do you no good as long as we give at
least the impression that we have changed, that we are no
longer the country that freed the Philippines and which
sent the school teachers instead of the soldiers, and that
we are out (1) to keep the status quo of five years ago,
and (2) to use any power in Asia with regard to our larger
political purposes, that 1s, our opposition to Russia.
If we recognize first that these people are going to
have to get their independence sooner or later and if we
don't blackball them, even if their ideas are different, I
think we can hold them. I mean by that we can keep them
from going to Russia. I think the key will be taken by
what we do in China. The odds are against us now and we
lose part of Asia. I think we can turn the oads. First,
at least neutrality about Communist China. Second, no ob-
struction to either (1) the nationalist movement, which
has got to win sooner or later, and (2) measures for eco--
nomic and social change.
With respect to the danger, the sort of magnetic
danger from China, the Chinese Communists, the fear that
they are going to come in, I am not so sure they won't try
to come 1n. The Chinese have a way of losing their heads
when successful. They proved that in '27 and '29, but
maybe not. As for their pouring arms into Indochina,
Indonesia, Burma, Siam, elsewhere, where are they going to
get the arms now? Not from us any longer, that's true.
They are not going to be operating on a surplus economy,
are they? I don't think there 1s much danger from that.
I think the question 1s largely a moral question. They
will be with us or against us according as they think we
are for the status quo and ante 1939, and they will make
up their mind, I think, in accordance with what we do
about China,
MR. VINACKE: I think the question I was going to
raise has been partially raised in what Mr. Peffer just
said as his conclusion. His conclusion, or apparently
the implication of it, is that the United States should
put all of 1ts efforts directly behind revolutionary
movements wherever they appear, if they are to have any
sort of mass foundation. That 1s, there should be no
neutrality in relation to nationalism in Indonesia as
against the Dutch. No neutrality as against nationalism
in
CONPIDENTI
- 89 -
in Indochina as against the French, No neutrality in re-
lationships in China itself, where there 1s an apparent
possibility in long-run historical terms of a local
nationalist movement's being successful, then our policy
should be directed toward assuring that it will be success-
ful 80 far as possible. Is that the implication?
MR. PEFFER: I wouldn't go that far. I wouldn't go
pell-mell to making revolutions, because even if they are
right they cause embarrassment and we have got enough em-
barrassment.
MR. VINACKE: Where they exist you would support them,
rather than be neutral.
MR. PEFFER: I wouldn't be obstructive. I don't think
I would go looking for Ho Chi Minhs where they didn't
exist. I mean just merely on the principle that the less
trouble there is the less trouble we have got, but I would
not obstruct.
MR. VINACKE: The most stabilization 1s in a status
quo situation, not a revolutionary situation.
CHAIRMAN: Is there a difficulty in determining whether
a Ho Chi Minh is really an indigenous leader of a foreign
revolution or whether he is a foreign agent?
MR. PEFFER: Isn't he generally both?
CHAIRMAN: You have to take that into account.
MR. PEFFER: But if he 1s enough of a local leader, I
would say you might as well swallow with bad grace, if neces-
sary, but swallow the fact that he is also a foreign agent
and by not antagonizing stand as well in with him as the
foreign guy does, he being Joe Stalin.
MR. DECKER: I don't know whether I understood Mr.
Vinacke a moment ago, But he wouldn't suggest that status
quo is stable when a revolution is going on at the same
time in the country.
MR. VINACKE: If we can stabilize conditions you have
more stabilization than if you have a continuing revolution-
ary situation.
MR. LATTIMORE:
IDENTIAL
- 90 ou
MR. LATTIMORE: On this question of the local leader
or some other leader who is also to some extent a foreign
agent don't we have to go a little further into the back-
ground than that? It seems to me that the fundamental
fact is that in our time there has been a basic shift in
all Asia which consists of the fact that before 1918 there
was no really effective way in which the peoples of Asia
could play off the great Western powers against each other.
Since then, growing after the First War, and increasing
very rapidly after the Second World War, there exists a
situation in which nothing that we can do can prevent these
nationalist leaders from profiting by the fact that the USSR
exists, and that they can play the rivalry between the USSR
and the US and make a percentage on it; that that creates a
kind of leverage which they have and which we can't take
away from them.
Now some of those leaders and negotiators may like
and admire the Russians whose existence they are using,
The others may be using them without particularly liking
or admiring them. But the fact is that all of them can
use that existing situation.
MR. MURPHY: With respect to this dual relationship
that we have just been discussing, one thing we have to
consider is which 1s the No. 1 motivation and which the
second. Taking Ho Chi Minh, for instance, some people
consider him a patriot. Some people consider him an agent
of Stalln. There is always the possibility that he is the
patriot, No. 1, and a Stalin agent, No. 2, and that if he
can advance his program and be successful on a national
basis he would prefer it. But if he ends up in a stalemate,
then he takes the ald of Stalin. With respect to this
playing off of one against another I think Dr. DuBois will
agree that in Thailand, for instance, for the last thirty
years, until this post-war period, it was a definite and a
well-recognized technique to play off the British against
the French. Three or four years ago at the end of the war
suddenly the Americans appeared and 80 the Thais all sat
back and said: "Here 1s another element that we can use."
I think with respect to all of Southeast Asia there is
no doubt about it that in almost all the countries, and I
would include Mr. Nehru's Government, there 1s a spiritual
affiliation, though not necessarily a political affiliation,
with the Chinese Communist movement.
MR. LATTIMORE:
CONFIDENTIA
- 91 -
MR. LATTIMORE: A man like Ho Chi Minh 1s inevitably
referred to as Noscow-trained, but if we go back in his
personal history we find that he began as a French Colonial
intellectual who went to France, became affiliated with the
French Socialist Movement and at the end of the First World
War followed the European Left Socialists who took over and
joined the Bolsheviks, Communists. He then went to Russia
and got some Russian training. But 1f we are thinking of
our own problem, which is basically more significant, the
relatively short Moscow training, or the relatively long
French training, which is more significant in colonial
politics- the spiritual affiliation with Moscow, or Peking,
or the spiritual difficulties, affiliation of the progressive
colonial Asian intellectual who takes a try at the best that
the West has to offer, and then goes on down and down the
ladder until he gets off the ladder altogether and starts
up the Moscow ladder? That is a problem which is our prob-
lem and with which our policy can deal.
MR. BRODIE: I would say, and here I have reference
particularly to the implementation of a "Point 4" Program,
it makes a great deal of difference to this country what the
character of the leadership of a revolutionary movement 18.
In that respect I think one might profitably contrast the
situation in India with that in Burma. India is clearly
a country today in which the implementation of the "Point 4"
Program would be meaningful. Burma, so far as I can see,
and, again, I speak with a very large measure of ignorance,
but again it seems to me quite clear that Burma 1s not such
a country, and the difference 1s very largely in respect to
the character of the leadership of the revolution movements
in both countries.
I think Mr. Vinacke had a point which probably he spoke
on too briefly to get across, and that is that in order to
do our utmost and exercise and utilize our resources,
intellectual and moral as well as economic, in those areas
in the manner which helps them and thus indirectly us, we
are very concerned with achieving B situation of genuine
stability, and that in many instances such stability seems
to be better implemented by supporting the regimes which are
presently in control even though they have the bad onus of
being colonial regimes. I wouldn't want to stress that point,
but I would certainly feel that the mere fact that there 18
a revolutionary ferment in the area, the mere fact that
colonialism 1s definitely passe sofar as moral hold 1s con-
cerned, etc., does not by any means argue that it is in the
American interests to go whole-hog for any revolutionary
movement
CONFIDENTIAL
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movement that appears regardless of the character of its
leadership, regardless of the character of its popular
following, and SO on.
MR. KIZER: I recall from the White Paper of the De-
partment that back in 1944 Mr. Davies, who was then asso-
clated with the Theater Commander as an observer, I assume
drawn from the State Department, warned us rather carefully
that the policies we were engaged 1n, supporting whole-
heartedly with various military supplies the Nationalist
Government during the war, and doing nothing with respect
to the Chinese Communists, was bound to drive them into the
hands of Russia. I think we ought to bear in mind that we
have done a good deal in that way in driving potential
movements into the arms of Russia, and for that reason I
tend to go along with what Mr. Peffer has well said, and
I bear in mind what the last speaker, Mr. Brodie, has also
said-not that we should go whole hog. But when it be-
comes apparent, as I think it has become apparent in Indo-
china, that the days of France are numbered, and that the
revolution is on its way toward control, it seems to me
we ought to be quite sensitive and watch for that situation,
and, in the first place, not take sides unless we are com-
pelled to, and see to it that we don't drive the revolu-
tionary movement again into the arms of Moscow.
On that subject I think Miss DuBois put the matter
very well when she said that Russia's "doctrinisms" put
Russia at a great disadvantage in understanding or dealing
with the complex problems of the Far East. We must in our
turn be careful our dogmatisms don't drive that revolu-
tionary ferment away from us and into the arms of Russia.
Careful sensitiveness as to what is going on in the Far East,
on both sides, and when the issue 1s in doubt aloofness from
taking sides, I think 1s pretty desirable in all of this
situation.
We were discussing yesterday what we could do in India
to strengthen that situation. If India becomes, which it
may during this period of confusion, the leader of the Far
East, in any policies that we frame with respect to the
Far East it seems to me we would do well to learn as much
as we can from Indian leadership as to what is going on in
the Far East. A number of their leaders are men very
acutely intelligent and observant and our policies will
have to be made, it seems to me, in the Far East to some
extent as well as in Washington, I, therefore, strongly
support what Mr. Lattimore was saying about the need to have
men like Mr. Talbot, for instance, who are individual ob-
servers and bring back the news of what 18 actually going
on under the smooth, official surface of public life.
MR. TAYLOR:
TAL
- 93 -
MR. TAYLOR: I am speaking right next door to Mr.
Talbot and he can correct me immediately if I am wrong,
but I am under the impression that Mr. Nehru's attitude
toward communists 18 not like the one you refer to in
the White Paper--apparently he puts them in prison and
breaks up conspiracies. Apparently he does not feel they
are for sale, or they can be bought, or influenced by
favor or torn from the loving arms of Russia. So I
wonder how your two basic ideas fit together? Is that
correct about Nehru's attitude?
MR. TALBOT: I would be glad to make a comment on
that. I think they would indeed be grateful for American
advice on what to do about the internal Communist problem.
On the external scene, the problem doesn't appear to them,
it seems to me, in quite the same perspective. They have
felt Russia is a large country and a close neighbor and
they must somehow live with Russia to a degree. My im-
pression is that many of them now feel that the new regime
in China more adequately reflects the social forces and
other forces at work in China than the old regime has done,
and that for that reason India must get along with that
neighbor too, and adjustments must be made with that neigh-
bor, and with that new regime. I would be very surprised
to see the Indian Government pursue the same type of
attitude towards the Chinese Communist regime that it does
toward the local Indian Communists.
MR. FAIRBANK:
STATE
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VR. FAIRBANK: We have to seek personnel to conduct
relations with revolutions, not relations with governments.
The Foreign Service is for the purpose of relations with
governments. We are dealing with revolutionary situations,
as we have all said. That requires, I think, a new approach
to the problem of personnel.
Very briefly, a man who is to deal with a revolution,
to have 1deas about our relations with it, must of course
begin with the local language. That is very difficult to come
by in Southeast Asia. Further, he must know the local culture,
really the people live and think. He must, in other words,
live and think with them as a Cominform agent would do. Third,
he must know the local personalities so he can really look at
the politics in operational terms and he must know local
conditions from contact. To do this, in my view, one must
develop personnel who understand in detail the aspirations of
the people who are trying to remake their countries, so that
this country can get on the same beam with this native leadership.
I would say further that our objective there is to formulate
an alternative to the Marxism which provides them with a world-
view spiritual dynamic, or the like. The United States, it
seems to me, is short on that side, say, of a country not in a
revolutionary ferment. Our ideology is very rich and we are
very much devoted to it, but we do not have it as an export
product, it seems to me, in an organized form for the present
day. We have started a revolution in Asia but we are not now
the guiding force in 1t from the outside.
To carry out this project of persons who can put the Asiatic
revolution in terms that make sense, both in terms of the
Asiatic and to us, these personmel must have nonofficial status
first of all. They must be in these regions not with the
responsibilities of government status, and of course they must
have on-the-spot operational contact, be there not just as
students wandering about, but doing something with the local
people. Further, they must have freedom to think and develop
their ideas in any way that the situation seems to call for.
Continually if we want people in this kind of free contact in
Asia it seems to me we must look to private agencies in this
country and we very practically could ask a number of specific
private agencies what might be proposed as personnel programs.
Fducational institutions. for example, can develop a very
extensive contact. A youth organization, a YMCA -- that sort
of think might be tried and possibly develop personnel programs.
In general this need reflects the fact that in Europe we have
a vast reservoir of personnel. Think of the hundred if not
thousands of young American personnel who have been in Europe
this summer with intimate contact in their cultural background
and people who are now available for programs that we may have
there, and compare that with Asia.
MR. DECKER
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MR. DFCKFR: I am sure everyone around this table knows
a lot about the potentialities of the missionary movement in
this respect. Certainly one would not claim for the missionary
movement that it represents in every case people who are aware
of the wider context and are thinking sufficiently intensively,
exploring sufficiently widely to be of much use. But neverthe-
less there do emerge from time to time a great many individuals
who are located in these countries in very active and very
intimate contact with the people there who know in great detail
and in clear outline what they are thinking, and whose
contributions would be extremely valuable from time to time.
Now it must be said that the missionary movement is very
sensitive about being used as the cat's paw of the American
century or of American colonialism OT imperialism, or what you
will. It is there for its own moral and spiritual purposes
and it cannot be expected to be untrue to its guiding principles.
At the same time I do think that I know that these leaders are
always ready to share what they see to be the truth with people
who are seeking the truth, and I think that better ways could
be devised whereby the Department of State could from time to
time consult with some of these people and get the benefit of
the truth as they see it. They will usually be fully ready
to share it with you.
MR. TAYLOR: I am sure that Mr. Fairbank would agree with
an addition to his list of people who might be used, and that
would be people from the labor unions of this country. The
fact that one dislikes Communism doesn't mean that one doesn't
deal with it. They have done as good a job in dealing with
it as anyone here, and understand it very well indeed. I
would be very happy to live in a world which is three-quarters
Communist if I could live peacefully with 1t. My basic feeling
1s that we have no choice in that matter. that the fight 1s on
and we have to carry it on. Therefore, I would strongly
encourage the labor unions to send as many people over as they
can. They have already taken the initiative, as a matter of
fact, in many countries of the world.
The second short comment, again on Mr. Fairbank's point,
is that ideological one. That is extremely important for an
additional reason that I would add to all of his, and that is
this: that so much of the discussion goes on in categories
which do not belong to us, categories furnished us by other
people. Imperialism, for example - what is your definition?
Is 1t the Leninist definition which you could shoot holes into
at any moment? Colonialism? These categories that we use -
we do need a cleaning up of our own ideology and let it be our
own, and if we use their terminology, let us understand what
they mean by it.
MR. TALBOT
COME IAL
de 96 -
MR. TALBOT: I would like to take the opportunity to
make one or two comments on the experience of the Institute
of Current World Affairs, which is the organization that
sponsored various young men in studies of this kind. First
is the comment that Mr. Taylor made sotto voce a moment ago,
that we not only have to have men who know something about
the area but they have to make a living when they get home.
But it has been the experience of this Institute that it takes
five to six years of fairly concentrated work in a given area
before the first three qualifications Mr. Fairbank mentioned
can begin to be absorbed. The tourist traffic to Furope is a
fine thing because of our cultural connections. To Asia that
same thing rarely holds. The problem is complicated and is
extraordinarily difficult. For 20 odd years this Institute
has been sending out such young Americans, giving them an
opportunity to operate entirely independently. I would merely
say in this connection that the thoughts coming around this
table are the thoughts of that particular organization and
they are now making an effort to expand their very limited
resources and trying to send more people than they have in
the past.
MR. HFROD: I would like again, being a lowly businessman,
merely to refer to the fact that business generally pays these
bills. Business is the one, in addition to the missionary and
the educational fellows, that has permanent men out there, and
I should think with the American shipping companies, the
American air lines, the American oil, the American import
people, the American communications people, who have the
highest investments in China, the biggest permanent personnel
in China, that it would be wise to include some of their
viewpoints.
You can't get men out when you get them 1n. You can't
induce new menito go and you can't get them out. You can't
with Government guarantees as to investments deal with
particular men on that particular basis. These problems have
to be considered as the things that are stifling investment,
stifling trade and economy and they have to be given good,
serious, thorough consideration with government support.
MR. COONS: It seems to me that either before the Far
Eastern policy of this Government shall have been formulated
or subsequent to 1ts formulation and announcement there would
be very real wisdom in drawing up a consultative committee of
representatives of all American business interests that deal
with Indonesia, Southeast Asia, China and Japan and seeing
whether there may not be ways and means whereby we could
utilize some of the resources of American business leadership
to implement and to strengthen whatever foreign policy is
developed. One of the objectives that we have not discussed
here is the exploration of how we can build up the middle
class of the countries where we are dealing. We have been
talking here pretty much in peasant terms, in terms of the
agricultural
CONFIDENTIAL
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agricultural characteristics of the Far East, but as industry
and business grow there will necessarily come an increasingly
middle-class group. On whose side will this group be? Those
contacts that will be established will be with American
business firms, American government representatives, commercial
representatives of other countries. We might ask American
companies operating abroad to increase the number of native
employees and to implement the Point 4 program by something
like our World War II training-within-industry program, to set
up schemes of communication, of the techniques and requirements
of management, sharing with native peoples more of these aspects
of organization and of operation and some of the requisites of
the economic operation in the modern world.
Now this, of course, is a long-run proposition but I think
I see in it some opportunity to build up the strength of an
economic group which may have ultimate political significance
in certain countries.
MR. QUIGLFY: We are developing,as you know. in our
universities the type of program known as area study, and I
think it won't be very long before we will have reached the
point of saturation of the field with our students -- graduates.
I have wondered whether it would be possible for business
firms to give more consideration to the employment of such men
after they have completed their work or while they are, say,
in the period between master's and doctor's degrees and
maintain them for a period of years partly in their employ,
partly for the purpose of continuing their education. They
would be in a sense cultural attaches of business concerns. I
haven't lived in the Orient myself for a good while, but when
I was there the general impression that we had was that
American young men in business in China didn't stay very long.
They went out for the voyage, you might say, and to test the
liquor, and it was the Englishmen and the Dutchmen and
Frenchmen who really stayed on. Indeed, when I was in Peking,
the chairman of our leading American bank in Peking was an
Englishman, a very able man too. But it seems to me that if
that situation still prevails there is an opportunity for
associating graduates of these area study programs with business
concerns.
MR. ROCKFFELLFR: I just wanted to make one comment on
what Mr. Fairbank said. I am sympathetic to the idea of people
going out as suggested, but I was a little concerned by the
indication that he would go out as a specialist in the
revolutionary contacts mentioned. He mentioned that they would
not have contacts with government because government was
already in contact with our government. I just think there
is real danger in going out on too limited a basis and coming
back with a one-sided viewpoint.
MR. FAIRBANK:
SONFIDENTIAL
- 98 -
MR. FAIRBANK: Compression leads to distortion in my
remarks. By "revolutionary" I meant they should look at
society as as whole and have broad c ontacts and not be In
viewpoint. government jobs themselves. I thoroughly agree with your
MR. BUSS: Mr. Chairman, it seems to me that this
thinking all proceeds from a premise that there 1s something
to be gained on our part in combatting the position of the
Communists or the revolutionists or whatever you wish to call
them in this area. I think as far as our policy is concerned
It is quite clear to me that we all feel that there is much
to be gained in some sort of B program, in some sort of
encouragement of young Americans to go on. I should like to
go on from there. Assuming that more activity is in order on
our part, I think it becomes very pertinent now, from the
standpoint of what our policy should be, what 18 the nature
of this enemy that we are contesting with which has already
gained a hold in some of the revolutionary movements in this
country? If I may go back to things in these countries in
Southeast Asia, 1f I may go back to some things that
Mr. Lattimore said a few minutes ago, Mr. Frodie commented on
a little bit later, I assume # is a good thing for us to be
thinking in terms of combatting these movements there. but
I should like to know more about the nature of the hold on
the leadership in these revolutionary movements in these areas
already. I think it is in order to question the assumptions
on which some of our observations are made. My thought is
that I want to go on into the nature of the control of these
revolutionary movements and then our policy should be to get
a better hold.
MR. BRODIF: It seems to me there has been made public a
good deal of investigation of general activities of the
Cominform. I have a colleague who has made an extremely
intensive study of that, among other aspects of the activities
of the Soviet elite, and I was citing what I presumed to be in
the public domain concerning general information as of this
date of how the Cominform operates concerning its local
leadership; that 1s, it is one very largely of control. Again
the Tito spisode, which incidentally, we must remember was
precipitated by Moscow, not by Tito, indicates that freedom
is not one of the major commodities exported by Moseow to its
local leaders. Also, I think we can see from what has happened
to Communist leadership in various countries, including our own,
that Moseow has a good deal to say about who carries the banner
for their movements, I agree with your point that we have to
know a good deal, not only about the areas concerned, but also
about the character of the Moscow operations which are
expressed
CONFIDENTIAN
-99-
expressed in these areas. It does no good to send the person
out to Indonesia, let's say, and to learn all about Indonesian
culture, etc., without knowing something about how Communism
operates with 1ts local revolutionaries in the local area.
MR. REISCHAUER:
TROMAN
ANNUH
"NATIONAL
ARCHIVES AND
LIBRARY
RECORDS
U.S.
SERVICE
BOVERNMENT
- 100 -
MR. REISCHAUER: The discussion so far this morning
has emphasized the intelligence aspect of the problem.
That 1s absolutely essential to a good defense; there is
no doubt about that. As Mr. Fairbank brou up the
problem yesterday, though, he emphasized, let's say, the
offensive a little bit more, the ideological concept there,
which is an entirely different thing, but closely related
to the whole problem, and Mr. Taylor touched on it briefly.
I ht start with reference to Janan where the point is
probably particularly clear. ..e have carried out in reality,
or at least attempted to carry out, a sweeping social
revolution in Japan. ..e e have done things more revolutionary
than anything the Communists have tried in Asia. At the
same time we have not presented an ideology to 80 along
with the practical measures we have taken there. As a
result the Japanese people often grasp for an ideology
and while going throu h our type of transformation are
grasping at the Communist ideology, which really doesn't
fit with the thing. They are asking for an ideology. .e
have in many ways failed to :Ive it to them. There is a
crying need for people to give our iceology. We aren't
in the habit of giving it. We haven't been thinking in
those terms for a long time. Le have the ideology but we
aren't presenting it to other people. The same thing
applies throughout Asia, perhaps not as keenly as in Japan,
where you do have a largely literate populace, and possibly
people that are inclined a little bit more to our Luropean
theoretical approach than you find in the Far East. Still
I think the thing does apply there. They are obviously
grasping for ideolo ies in lack of any other expressed
ideology. They graso at Communism when we have something
I think that would really appeal very much more to them.
As long as they are reaching for the stars they might reach
for the real stars that we represent.
MR. PEPFER: Couldn't you agree, on the basis of
Asiatic history in the last generation, that if there had
never been & Cominform, if there had never been a Lenin,
1f there had never been a Stalin, if Nicholas II were still
in St. Petersburg. there would still be & Ho Chi Minh, 2
U.S. TRUMAN
Sukarno, a Mao Tee-tung, or three fellows with different
names doing exactly the same thing. Do you have to know
those people? You don't. The fact 1s that these movements
would all have come about as they have come about because we
let it 80 by default. They have no doubt got a Russian
inflection by default. Since there would have existed
anyway that Russian inflection, it is not necessarily
fatalistically
- 101 -
fatalistically permanent, but you will never understand
those people and what they stand for if you think of them
only in terms of Cominform. They are what they are by
Asiatic birth, and nothing could have changed them. If
there had never been a Russia they would have had perhaps
other ideologies and would have been just as disagreeable
to us of the Western world. I mean by "disagreeable" they
would have caused us just as much embarrassment. I don't
think that you need to send people out for five or ten or
twenty years to worry about Ho Chi Minh, and the Cominform.
You had better just worry about Ho Chi Minh and Asia.
MR. STALEY: I think we should recognize that the
"Point Four" type of program has considerable potentialities
in helping to make social change in the area evolutionary
and constructive rather than explosive and revolutionary.
MR. VINACKE: One thing that has been introduced by
Mr. Peffer was the question of historical perspective.
But there is one side of the historical picture, it seems
to me, he completely left out, possibly because it isn't
history. It is the present, in relation to these national
movements. It seems to me that we have lost sight of the
fact that there has been a war, and that during the course
of that war these countries were under Japanese occupation,
and that as a result of the conditions at the end of the
war a nationalism in Southeastern Asia that hadn't gone
very far in the maturing of its leadership, in the
establishment of a mass basis for revolution, was put in
a position to temporarily assert itself.
All of these things indicate to me that we are
possibly on & long-run basis exaggerating the extent to
which there has been developed and disseminated throughout
these countries a nationalist exoression that is purely
local and that assumed power because of its local rootings
rather than because of the situation created, partly
deliberately, it seems to me, by Japan; partly inadvertently,
in the course of the war; and that, it seems to me, ought
to be kept in mind when we proceed on the historical
assumption that here you have a constant accelerated
interference of its own forces, the development in these
countries. I think it has been something that has been
created in part as a result of a war situation.
MR. BRODIE: I would like to add two brief points:
One, I am reminded of what Mr. Taylor said yesterday when
the
IDENT
- 102 -
the point was made that we are after all dealing with
very deep-seated social and political movements in the
Far East. His reply was: "To be sure, but also we are
dealing with very specific movements, which are only one
of numerous conceivable realizations of those aspirations'.
Secondly, and related to this, I think we have to
realize that we are in an age when revolution, or at least
one kind of revolution, is reactionary, and it seems to me
we have to distinguish very carefully, again for our own
interests as well as those of the people involved, between
revolutions which are reactionary, and I would say a
revolution which aims at imposing dictatorship 1s
reactionary, and those which are truly liberal.
MR. MURPHY: I wanted to make a brief remark with
reference to Mr. Brodie's cuestion of the degree of control
by the Cominform of these revolutionary leaders in the
various countries. the were talking about Ho Chi Minh.
Mr. Lattimore gave something of his background -- many
years of French socialism, and a short period of Moscow
indoctrination. During the war I was in China in the Army.
we were engaged only in fighting the Japanese. We had
certain people down with Ho Chi Minh who spent at least
two years in contact with him, and at least one of these
people had six months of constant association with him in
the jungle, a few miles from the Japanese all the while,
and for what it is worth, and granted that we are not
naive enough to believe that Ho Chi Minh couldn't have
had private thoughts, nevertheless, six months in the
jungle 1s a long and arduous period, and my friends who
were with him have continuously ever since maintained that
he was at least ninety percent patriot; that they didn't
believe that his ties with Russia were the predominant
USA
motivation in his life.
BOVERNINGS
MR. ROSINGER: I would like to speak briefly on a
question of ideology. We have had some discussion this
morning of the importance of having more American 3 familiar
with Asia and there is certainly no question of that. We
have had some discussion of the importance of how the
United States speaks to Asia, and I think that subject is
also significant, but I would like to suggest that our
ideology in Asia is basically the sum total of our actions
in Asia, and the generalizations that the people of the
various sian countries form about us, our way of operating,
our
- 103 -
our way of thinking and doing things, on the basis of
those actions; that is, that any emphasis on words alone
is misleading and deceiving to ourselves unless, let us
say, in Indonesia, Indonesian nationalists feel that
American policy is really promoting Indonesian independence,
if thathappens to be the kind of appeal we wish to make.
In other words, that we have to think primarily on the
action level, primarily on the level of what policy
actually does. I don't believe for a moment, for example,
that it would be possible to sell to the bulk of the
Chinese people, or the bulk of Chinese intellectuals, or
the Chinese middle class, hostility toward the United
States just on the basis of words. There must have been
something in their own experience which made them receptive
to that kind of approach and, therefore, it is to the
actions and not to the question of words, even though
words can be persuasive for a time, that we must primarily
address ourselves.
I would like to mention one concrete question which
I had hoped to brine up before in connection with Miss
DuBois' presentation. There has been an item in the press
in the past few days to the effect that gold from Japan
is going to be transferred to France in the name of Indo-
china in connection, I believe, with reperations arrangements.
I don't know whether that gold is to be used in Indochina
by the French or whether it is to be used in France. That
would be a significant question. From the news reports,
which were brief, it is to be assigned to the Bank of
Incochina in some form. I would suggest that nothing we
can say is one-hundreth as important as the concrete
question of whether a certain number of millions of dollars
of gold is going to be used in Indochina for French
purposes, and then without considering the further question
of the particular use that is made of that gold.
In other words, I don't think, to sum up, that we can
consider this simply on a verbal level. I defer to Mr.
Reischauer on the question of Japan, and I would certainly
agree that Japan is more ideologically conscious than China
or the areas of South Asia. But taking China, taking the
areas of South Asia, and taking even Japan in the sense,
I believe, that the Japanese people are considered highly
practical as well astheoretical, I think actions come first.
If the actions sppeal, then you have a marvelous talking
point. They can be played up in extremely persuasive ways.
But they are basic.
MR. REISCHAUER:
COMPIDENTIAL
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MR. REISCHAUER: I would certainly agree with
Mr. Rosinger about the importance of deeds. There is no
doubt about that, and it is hard to carry out a wo rd
propaganda without the deeds to go with them. However,
no one can say that the Russian actions toward China have
strengthened their ideological cause, and yet the ideological
cause has gone ahead in spite of the robbing of Manchuria
and all that. There are two levels and they can't get too
far out of step with each other without serious danger.
Mr. Colegrove referred to the excellent "Primer of
Democracy". At the working level in lower education we
have done very good work. It is hardly ideological; it is
more practical. You have to have textbooks in the school,
therefore, we went about doing it. At the same time in
the university level, and that represents a generation
which will be effective a little bit sooner than the
generation in primary school, that is at the purely
ideological level. We have the Japanese university schools
and the recent graduates from higher schools all crying
for ideologies and we have not answered the crassest sort
of Communist argument that is going to the Japanese
intellectual -- economic and political theory of the
Communist sort which is presented as the latest in Western
science. Well, almost any merican intellectual could
argue against that very effectively. All we have been
doing is frowning, though. We have not argued on that
level, even though the arguments are all on our side. I
think that is a better comparison with the situation in
Western Asia than the school book problem is. Ee are in
15
novern
a position, though, to send people over there. I think
the audience would be extremely receptive. If you think
back a decade or two to the time when John Dewey and people
like that went over, a program like that expanded, I am
sure, would have great effect. of course, B reverse program
of bringing Asiatic students here is the same thing done
a different way,
CHAIRMAN: There is one point which has been raised
several times earlier this morning on which we would very
much like your views, and that has to do with this question
of any kind of association of the Southeast Asian states
or of the states of the Pacific or the whole area. The
thesls which is constantly presented is this: that if
the United States should seek to stimulate any such
organization or grouping, that would be self-defeating,
that we would then not have a useful grouping of states,
and that it would be merely thought that the United States
was trying to line up a group of allies that would not in
the
CONF IDENT
- 105 -
the long run be useful either to the people in the area
or to the United States, The corollary to that is that
any such movement should be an indigenous movement. The
question is as to whether there is really in the area the
seed of a consciousness of a regional solidarity and a
mutuality of interests there.
Secondly, in terms of the interests of people and in
the interests of the United States, is there a definite
advantage in their coming closer together in some kind of
pact or union or association of whatever character? Se
could have some more expressions of views on that general
problem that would be extremely helpful.
MR. COLEGROVE: With reference to the Pacific pact
and its connection with the Southeast Asian pact, is it
not true that the Philipoine Government as well as the
Government of South Korea, which are independent
governments, actually expect the United States to promot e
a Pacific pact and would they not be greatly disappointed
if we do not promote that pact? What are the facts on
that point?
CHAIRMAN: The situation on that Is that there are
undoubtedly a number who look for some kind of a Pacific
pact comparable to the Atlantic Pact, which would be a
pact of military guarantees and everything of that kind.
The Secretary of State made a statement, I think it was
in May, indicating that we did not contemplate entering
into any such pact at this time. That is still the
position which we have taken. I think that is fully under-
stood in the Philippine circles, at least, and I think
also in Korean circles. .0 still have an interest in it
there and I think some interest in it in Australia and
New .ealand as a long-term proposition. But, as you know,
after the original Quirino-Chiang talks the Philippine
Government did publish the instructions which they gave
to imbassador Romulo which suggested a less detailed
military pact for the Pacific and a more general cultural-
economic-political association.
MR. COLLGROVE: My impression seems to be that our
so-called sllies, in the Pacific will -- and this will
have repercussions upon Japan too -- feel that we have let
them down, that we are practically abandoning them if we
do not look favorably upon a nact of this sort.
MR. HEROD:
- 106 -
MR. HEROD: I would be inclined to say that the leader-
ship seems to me to have an increasing cognizance of the
mutuality of interests, but, as you drop from the leadership
down to the masses, I would say it is noticeable how the
consciousness decreases and that the masses as a whole have
very, very little recognition or aspirations toward regional
direction.
:R. KIZER: I suggest that if we are to have the region-
al pact in that area, it should be on a rather broad basis
rather than a narrow one, that Australia and New Zealand,
which have a keen interest in Asia, should be included in
it along with India, Pakistan and the Southeastern countries.
I suggest further that it should sheer away as much as possi-
ble from any military assistance and be placed squarely upon
8. study of their economic situation as to what they can do
to help each other and what in turn we can do to help them.
If we follow out pretty much the Marshall Plan in that
ABCRIVES
respect and keep away from the military aspects of the At-
lantic union, I think we will 80 much farther and tend to
rob that sort of association of its unpleasant Yankee im-
BOYERNMENT
perialistic aspects. In that field we must look for leader-
ship. I am not sure that we have yet found the leader, al-
though I have suggested earlier that India at least for the
time night be that leader. But I think Australia has a very
keen interest in that area and would help very greatly. Our
experience with the Australians that came into China with
UNRRA was that they were some of the best people we had, and
they came because of the extreme interest of the Australian
people in the Far East. I know they are eager to work in
that context. With that sort of a broad union, looking to
a solution of the economic problems which press so greatly,
particularly the food problems, I think we might give en-
couragement. I feel there has been such 8 complete bank-
ruptey of military assistance in that area that to the
greatest degree we should sheer away from that.
HR. HOLCOMBE: It seems to me that a regional pact de-
rivcs much of its value from the relations between its mem-
bers and that for the best results those relationships
should be the relationships that can be established among
members who are not too unequal in strength and political
experience. Applying that test, there are very great
differences between the conditions under which the Atlantic
Pact was negotlated and the conditions under which any
Pacific pact might be negotiated. It seems to me that we
would run the risk of being misunderstood if we should
attempt to negotiate a Pacific pact without explaining very
carefully that we had something quite else in mind than we
had when we negotiated the Atlantic Pact. I think Mr. Kizer
has
- 107 -
has stressed some very important factors in the problem
which make it a different one and obviously that is only
the beginning of an analysis of the situation, but my own
view is that the Department has been well advised in
Joing slowly in that direction.
MR. BUSS: Day before yesterday a Filipino official
in the Embassy said: "No Filipino could possibly oppose
the Pact. We have nothing to lose by it, and 1f it is
3 means of getting us closer to the United States, any-
body would be for it."
I would suggest on a pact that there are two regional
groupings, at least, which would have to be taken into con-
sideration if you are going to negotiate for a Pacific pact.
I am thinking of the Southeast pact which stems from the
original Australian-New Zealand agreement. You can't ignore
the existence of the Asian Congresses. I think the two
meetings they have had show those groupings must be had in
mind. A caution which would also be in order would be the
very precarious nature at this point of all three proponents
who have been identified with the Pacific pact to this point.
Either Quirino in the Philippines or Phibun Songgram in
Thailand or Chiang in China would be very wobbly props for
a Pacific pact policy.
IR. DECKER: Mr. Chairman, would not a major obstacle
11.
be the very disturbed condition, to put it mildly, of that
ROVERTMENT
whole peninsula of Burms, Siam--I don't agree that Siam
is a stable situation by any means--Indochina and Indonesia?
It would seem to me until there has been some clarification
in that area, some stabilization, that anything approaching
a political pact might very well leave us holding the bag
for a reactionary régime or a régime which would be shortly
repudiated by the people themselves. It isn't clear yet
what the people of Indochina want or what they are going to
get, nor is it true of Burma or Indonesia. Until those
factors are clear it doesn't seem to me we have a sound
political basis for this kind of move. Some loose cultural
association might be in order, some association of certain
types of mutual assistance, but certainly not something that
would tie us down to governments now existing in a number of
these countries.
MR. FAIRBANK: Along that line of thought shouldn't we
consider that perhaps in China by aiding a régime which
faced & revolution we contributed to its downfall because
we let it rely upon our aid instead of meeting its problem
of revolution? Don't we face the difficulty that if we do support
a
CONF
108 I 1
a régime in any country which is going through rapid changes,
unless our support is in a vory wide and proportionate
manner in all aspects of the society, not just in politics,
we run the danger of supporting it as an alternative to its
solution of its problems and it begins to rely upon us in-
stead of coming to terms with its revolution. So that we
can be the kiss of doeth in a purely political arrangement.
Consequently, our political arrangement must be part of a
much broader approach on economic lines too.
CHAIRM N: Would that lead you to say 1f there were a
continuance of movement in the area for some such grouping
that It would be better for the United States not to be
part of the group, to perhaps encourage them to 50 ahead,
but to keep out?
MR. FAIRBANK: J. should think it would be excellent
for us to keep out 8.3 far as we possibly can, that is,
keep our political connections minimal SC we maintain maxi-
mum flexibility regarding any particular régime. A régime
which we begin to support when it looks excellent, 1f we
support it too strongly, may become reactionary in the
sense of not keeping up with its own situation. We can't
SEAL
afford to tie ourselves, it seems to me, to political régimes
beyond the minimal point to get the result you want.
MR. PEFFER: Don't you first have to ask this question:
"Would there be any chance of such an alliance?" I am 1m-
pressed by what Mr. Herod found by his own observation, the
lack of any mutuality. Is there any mutuality there except
one, a fear of Communism and reliance on America? America
may give the kiss of death but can there be any birth with-
out America? If that is true, is there anything genuine,
aside from Mr. Buss's point, if we let it go? Under certain
auspices we kill it right away. You ask yourself, would
there be such a pact without our encouragement and support?
If there would not be I should say that would fairly well
define It as unnatural and not very likely to survive, in
which case we are associated with something that is going
down. I think we ought to give up. If it goes on its own
momentum, if 1t grows out of its Asian Congress, well and good,
but otherwise not. We ought to keep out until it is
started under its own genius and power.
MR. MURPHY: I would agree with Mr. Peffer and also
with Mr. Docker that the political times are not propitious
for either a Facific pact or for & Southeast Asian group.
I think it is quite clear that Australia, primarily, and
New Zealand behind her have been very, very anxious for a
Pacific pact. They had 8 very narrow squeak during the war
when
fine 109 the
when the Jupanese practically came into Australia, and they
don't want that to happen again. Obviously the Australians
would be the first to oppose an association such as what was
proposed by Chiang Kai-shek recently. I don't think such
an arrangement between Australia and New Zealand and the
three who were recently promoting a pact would be fessible.
In Southeast Asia most of the countries are in 8 great
state of flux and I don't believe would be stable enough
to support such a pact.
CR. TALBOT: The history of the entire people's rela-
Jons since that Congress in Now Delhi in 1947 has suggested
that there is no effective basis for strong political oper-
ation with various countries, but at the same time the
leaderships are groping toward some sort of mutuality, but
in groping they have a very strong psychological feeling
that this is their own groping. The greatest point of
pride in New Delhi in 1947 was the fact, "We are doing it
now". Asians have previously met under the aegis of Euro-
bean countries. This is the first time in 200 years they
have come together. It seems to e the flowering of that
spirit has to procede any effective grouping of these
countries.
MR. COONS: May I conclude that this discussion with
reference to regional association is almost entirely at
the political level and that we really haven't discussed
the question of the economic side, that there is conceivably
much to be said on the aspect of a regional economic approach.
TRUMAN
BRUNY
NATIONAL
RECORDS
INVOICE
MR. S. C. BROWN:
15.
SERVICE"
BOYERNMENT
CONF
OIL 1 $
MR. S. C. BROWN: I understand you would like a few
words said about the economic aspects of the southeast
Asian question. I would like to say that this concept of
a Marshall aid program for Asia is not altogether new to
the Department; 1t has come up indirectly, you might say,
in meetings of the Economic Commission for Asia and the
Far East. That United Nations body has concerned itself
very largely with the industrial needs of Asia, and some-
thing like a year ago they appointed a committee which
summarized the reconstruction and development programs of
Asia and the Far East. based altogether on local and
national programs, and they came up with a figure, I think,
of 13 billion dollars as being the requirements in terms
of United States dollars. Now of that, six billion was
required in foreign exchange and it was perfectly obvious
that they expected that six billion dollars to come from
the United States. It also appeared that these respective
national programs had not been drawn up with much regard
for realism. They were expressions of hope rather than any
blueprints for something useful. We have constantly in
this Economic Commission for Asia and the Far East had to
face just that problem of these countries in a sense try-
ing to put us on the spot. They drew their requests for
the industrial items they needed from the industrial powers -
the Western industrial powers, they say --- but it is quite
evident that by "Western powers" they mean the United
States.
The economies of these areas are not interdependent
in the same way that the economies of Europe are, for in-
stance, and you would not in all probability get in those
areas through the expenditure of aid funds on a large
scale the accumulative and multiplying effect that you
get by expenditure of similar funds in Europe. The third
point, which I think has been overlooked in discussion of
this problem here previously, is the effect internally in
each of the economies of the expenditure of large sums in
a program of that kind because when you are putting some-
thing like, say, six billion dollars of foreign exchange
in goods into an economy it does require a very large ex-
penditure concurrently of local funds. In other words, you
are creating an inflationary situation which might have
very serious effects. The fourth point which has appeared
in our consideration of the matter is this: That even
assuming that you might be able effectively to industrialize,
say, India and southeast Asia and those regions, you can-
not be by any means certain that you will actually make
them
- 111 -
them any better off, because of the population problem.
I am sure by the time your process of industrialization
is completed your population may well have caught up with
it or even gone beyond it.
There is another aspect, and that is this: A tenden-
cy which has appeared in this ECAFE body to regard the
region too much in regional terms. We feel there may be
a tendency for them to think of themselves as a more or
less closed economic unit and we, on the other hand, are
very much interested in integrating that region into the
world trade picture. I am sure it is quite apparent to
all of you that in pre-war days, by and large, the trade
of the United States, particularly with southeast Asia,
was the balancing factor in our trade with Europe. Now if
southeast Asia is to become more or less a self-contained
unit, that is likely, certainly, to have effects elsewhere
which would not be altogether desirable. Now for these
reasons, among others, we have been inclined to go slow
in the concept of an over-all program of the Marshall type
in that part of the world.
I should like to devote the rest of my remarks to the
question of China. The basic fact about the Chinese
economy 1s the fact which has been implicit in all the
discussions at this table, and that is China's poverty.
From 1910 to 1937 China had an average annual deficit on
merchandise balance of trade of 135 million. In normal
times that was, of course, made up by remittances from
emigrants abroad, by expenditures in the country, by foreign
missions and diplomatic, consular and military establish-
ments and things of that kind. Moreover, it is not only
the general trade deficit that is important but it is the
particular commodities in which these deficits occur. For
instance, in the five years from 1933 to 1937 China
averaged annual imports of over half a million tons of
wheat, of nearly 900 thousand tons of rice. In other
words, it is a deficit economy over the years in food-
stuffs as well as in other things.
n
Now another point to keep in mind is that China's
exports as of now are in a relatively weak position in
the world market. There is nothing that China supplies
to the world for which there are not alternative suppliers
or adequate substitutes, and I think that was made quite
clear by the experience during the last war, when we got
practically nothing out of China. Now I have spoken about
China's being a deficit economy even in the sense of
foodstuffs.
CONF
- 112 -
foodstuffs. But we shouldn't forget that during the war
also China got along without imports of food from the
rest of the world. In other words, by taking a lower
standard of living they can survive. Now that is a situa-
tion that the Commies are taking over. Their program,
avowedly, is a program of industrialization. They say
they intend to raise China from an agricultural to an in-
dustrial state rapidly. Some of the more hopeful of the
party leaders speak of 10 to 15 years; others speak of
longer periods. They have not attempted to socialize or
communize the whole economy. What they are doing 1s to
introduce what might be called a mixed economy. They have
taken over all the enterprises which were formerly in the
hands of the National government, and that covered a good
sector of the economy. They are also confiscating what
they call "bureaucratic capital", which accounts for
another substantial part of the economy. But they say
that they intend to protect and encourage private enter-
prise at the same time, and their reason is very logical
because they say production comes first. That is the
emphasis of their whole program.
THE
MR. STALEY: Would you explain at that point what
they mean by "buresucratic capital"?
<<
MR. BROWN: It has never been carefully defined, but
1t appears to mean the enterprises owned by the Chiangs,
the Kungs, the Sungs, and the Chens. They speak of the
four bureaucratic families, and I presume there are some
fringes around that too which they include. In that
connection, they have said that they intend to respect
the private ownership of shares in enterprises which are
jointly operated by government and private capital. In
fact, what they have done up to now has hardly been en-
couraging to private enterprise. That may be because of
circumstances which they couldn't change, but there has
been heavy taxation and, of course, there has been a stag-
nation of business due to the practical cessation of
foreign trade and to the blockade. There have been labor
difficulties affecting both foreign and Chinese firms.
The Communist propaganda, of course, led labor to believe
that it would definitely have the upper hand and there
are indications that even the Communists themselves may
be somewhat disturbed at some of the excesses. But in
any case two very important difficulties, I think, must
be faced by the Communists as a result of the poverty of
the country and of their program as they have expounded
it. The first has to do with their relations with the
industrial
113 $ I
industrial laboring classes. They emphasize production
at all costs. That means, of course, that the workmen
have got to become more efficient and take less perhaps
in the way of wages than their bargaining strength with
Communist support might otherwise enable them to get.
The other problem is the problem of financing the neces-
sary imports of capital goods to proceed with this in-
dustrialization program. At present the Communists have
no foreign exchange reserves to speak of that we know of.
They have no gold reserve. It would appear, therefore,
that they will have to finance these imports almost entirely
by the proceeds of current exports. Now the bulk of current
exports is very likely to be the product of the farms.
They will rely on the Manchurian soy beans, bristles, tung
oil, and things of that kind. It will mean that by one
means or another they will have to acquire from the peasants
sufficient quantities of those goods at a low enough price
to enable them to pay for the necessary imports. Now if
they intend to industrialize at a rapid rate, that means
that they will have to exercise ever greater pressure on
the farming population to get what they need, or else they
will have to seek foreign loans and credits or admit pri-
vate investments into the country, and the last two alterna-
tives seen to be directly contrary to their program and
their party principles. So, as I see it, they are in a
very difficult position. It doesn't mean that they might
not succeed over the long run 1f they are willing to take
a less rapid pace of industrial development. It does not mean
that economic pressure denying them these industrial goods
or even the other imports would necessarily succeed in
overthrowing the government. But with or without that
they are still in a very difficult position. What we want
to do would depend, I think, on our estimate of the effects
of various courses that we might take, and, as we see it,
there are, broadly, three alternatives: We might try to
restrict supplies of goods to China to such an extent that
it would endanger the stability of their government or
compel them to come to us. We might display what I some-
times think of as a judicious disinterest in their prob-
lens -- buy from them what we find useful and sell to them
what they can afford to pay for -- make no loans or invest-
ments; in other words, let them stand on their own feet and
otherwise at most take the necessary precautions to prevent
the Russians from using them as purchasing agents to get
what they can't get directly from us. The third alternative
would be to lond such assistance as we can to them in
stabilizing the economy and rehabilitating them. It would
not necessarily mean helping them to expand it; it would
mean such things as encouraging trade, encouraging long
private
- 114 -
private loans and investments where possible; it might
even include government assistance, say, through resump-
tion of ECA aid or possibly Point 4 assistance. Those,
roughly, are the three alternatives.
Now the first alternative -- that of restriction --
has got to be considered in line with the facts, and the
facts are these: If you really want to restrict China's
trade for the purpose of upsetting the government you
have got to restrict such things as wheat, cotton, the
whole range of commodities. And the second point is that
ever such a policy or a somewhat less restrictive policy
would not be effective unless we could obtain the coopera-
tion of other suppliers to China, which is highly unlikely.
We have been, of course, a large supplier of manufactured
goods and petroleum to China, but we are not the only
supplier, and if we should cut off our trade while the
others permit theirs to go freely, it is likely that we
would not impede in any significant way the progress of
restoration of the economy, while we would at the same time
put our people -- our nationals out there - in a very
difficult position and cut off our businessmen from legiti-
mate trade.
The second alternative would mean merely that we
would stop the back door of Russia, you might say, to the
flow of these strategic commodities, but otherwise we
would not take too great an interest in what the Chinese
obtain. There are sound arguments in favor of that. In
THIS
the first place, the Chinese economy is at such a level
STATE
AND
that it could hardly be developed in any short time in
UNITED
NEW
SERVICE
a way that would be dangerous to us. On the other side,
there is the argument that if we want to detach the Chinese
BUYERKMENT
from the Russians the way to do it is to shut them off
completely and show them what they are missing. But that
could be effective only if they actually do miss it,
which, as I have said, is unlikely.
Now the third alternative -- that of actively assist-
ing them -- it seems to me, proceeds on the assumption
that you can buy the friendship of people who are your
avowed opponents. There are other arguments in favor of
1t, perhaps -- the humanitarian argument and all of that ---
but in the present situation, where we don't know quite
where they stand, it seems perhaps unwise to make a bet
on where they will stand eventually.
There
- 115 -
There is another consideration that I would like to
mention, and that is this: In a situation of uncertainty,
such as this is, and in circumstances apparently where we
cannot affect it directly, it would seem advisable not to
get ourselves into too definite a position until we know
what developments will be, but at the same time to put
ourselves in such a position that we can immediately take
advantage of what developments may occur.
LR. TAYLOR: I wonder if we aren't in danger of under-
estimating to some extent the strength of China's position
in respect to the rest of Asia. It seems to me in relation
to Japan they can put us on the spot, they are in a very
powerful position. The coke and coal, I understand, for
Japanese industries has to come from China. I believe you
said there were alternative supplies or substitutes for all
Chinese exports. I suppose you could get coke and coal
elsewhere but it would have to come a long way. China is
a natural market for Japan. That is another reason why
they would be in an extremely powerful position.
Thirdly, they are in a position to whip up anti-
Japanese feeling in all parts of Asia, and in that way
embarrass any effort we might make toward extension of
Japanese products to other parts of Asia, which of course
is necessary to ever get rid of the $450,000,000 a year
that we pay into Japan now. It seems to me from that point
of view they have a good many bargaining positions on their
side.
MR. BARNETT: I think what George Taylor has pointed
to is certainly an important problem for the United States
and for Japan and for China. We all know that about 40
percent of Japan's pre-war trade was with Manchuria, North
China, China, Korea and Formosa. That trade since the end
of the war has practically dried out for a number of
НАПОНАL
obvious reasons.
MA
It is our conclusion, having made various projects
as
for the development of Japanese trade over the future,
BEIERVMENT
that Japan must trade with North China and Manchuria and
Korea and Formosa if it is to become self-supporting
again. At the present time we are meeting the Japanese
trade deficit to the tune of about 400 million a year.
We are making, in cooperation with the Japanese, con-
structive efforts to enlarge Japanese trade. This spring
and summer, for instance, a mission was sent to South
America and a series of negotiations resulted in the
general
ONE
IDENTIAL
a 116 -
general conclusion that if all goes well there may be a
flow of trade of 100 million each way into South America,
which 1s about 400 per cent more than pre-war. There is
& demand in South America for Japanese goods.
A sterling agreement was worked out by the Japanese
and the British Commonwealth, which ran into, I think,
about 120 million sterling. The difficulty there is that
whereas the Japanese can provide the exports, the sterling
area has not been able to provide the means for payment,
and at the present time Japan is holding a very large
sterling balance.
There is some trade between Japan and India, and in
this connection I wanted to mention this morning that in
India and southeast Asia as a whole there is very little
reluctance, in fact there is no evidence of any reluctance,
to buy Japanese goods, very surprisingly, and with one
exception, which is the Philippine Islands. In India
there is a good doal of interest to get from Japan tech-
nical assistance of the Point 4 variety.
Having added up all these very optimistic prospects
for Japanese imports and exports and bearing in mind the
loss of the silk market in this country, we still feel
Japan cannot balance her trade without substantial re-
sumption of commercial operations with the continent. As
to the risk which Mr. Taylor pointed to, the risk, that
is, of an unwholesome dependence of Japan upon the raw
materials of the continent, some of us feel that an
economy which is 85 percent agricultural is a very sluggish
economy, and benefits from trade with Japan will be bene-
fits realized arithmetically, as 1t were, slowly over a
period of 15 02 20 years, whereas Japan's benefits from
resumption of trade would be instantaneous and geometric,
in a sense.
100VB
Now Japan needs to have a degree of internal sta-
bility and a degree of normalization of her over-all
83.
economic relations abroad in order to develop export
markets which can in the long run be alternative to the
China market and give her an independence in dealing with
China in the long run. Therefore, our feeling in the
short run is that Japan stands probably to gain more from
a continuation or a resumption of trade relations with
China than through attempting at this time to get along
without China and continue to depend exclusively upon
the United States subsidy.
CHAIRMAN:
CONFIDENTIAL
- 117 -
CHAIRMAN: I wonder if we could address ourselves to
the question, which is a very pressing constant policy
question in the Department, what should be the attitude
of the United States toward American trade with Communist
China? Should we discourage it? Should we prevent it?
Should we encourage 1t? Should we tolerate it? There is
a central problem there which I think is obvious to all
of you and which does confront the Department.
MR. BRODIE: Isn't there another question which be-
longs with that, what are our expectations concerning
Communist Chinese willingness to trade with Japan except
on terms which may be from our point of view unacceptable.
MR. COLEGROVE: Touching upon the general subject you
have mentioned, and Mr. Brodie's question, it is rather
interesting to note that within the last three weeks a
leading Japanese columnist by the name of Nosaka, who is
one of the three leaders of the Communist Party in Japan,
made a public announcement to the effect that he person-
ally, representing the Communist Party, would be able to
bring Japanese morchants into touch with Chinese merchants
to establish trade relations. This would indicate that
the Communist Party in Japan was trying to jump the gun
on SCAP or the American Government in establishing such
trade. Now I think It is generally agreed that if Japan
is going to rehabilitate her industrial position, it is
going to be absolutely necessary to have these markets.
Mr. Barnett said 40 percent of the imports of Japan came
from China and Manchuria before the war. I think it is
even a little more than that, about 42 percent, and that
is a market that can't be ignored. Japan will have dif-
ficulty enough in getting new markets or re-finding her
old markets in the United States, now the silk trade has
collapsed, so I think we can 60 on the assumption that
trade must be revived between China and Japan. If that
is the case, it will be better for us to try to get ahead
of the Communists in making these trade agreements, and I
think Nosaka's assurance that he could arrange trade
personally between or officially with the Communist Party
between Japanese merchants and Chinese Communists shows
that there is willingness among Chinese Communists to
enter such trade.
MR. VINACKE: On Chinese Communist terms?
MR. COLEGROVE: Probably.
NE
SIRVICE
MR. VINACKE:
CONF IDENT TAB
- 118 -
MR. VINACKE: That is quite important, I think, to
keep in mind. A broader proposition was, can this trade
be opened or ré-opened from a Chinese Communist side on
terms that would be acceptable to us, the opposite of
which is on terms acceptable to them.
MR. BRODIE: I gather from what Mr. Barnett said
that the Japanese are much more dependent on trade with
China than Chinese are on trade with Japan. It seems to
me that is an exceedingly important part of this problem.
MR. ROSINGER: I don't think we can find out whether
Chinese Communist terms are acceptable until trade is
actually launched as a real possibility, because my 1m-
pression is that in all trade with the United States, be-
tween the U.S. and other countries, and so on, you first
have to have an actual proposition come forward and then
you reach your decision. I think 1t would be very un-
fortunate if on the basis of a possibility that Chinese
Communist's terms might be unacceptable we didn't find
out what those terms actually were. I think another con-
sideration is that in most trade that goes on you will
find some terms acceptable and some not, so that would
seem a day-to-day process of bargaining on the part of
the people, private and official, who are actually ne-
gotiating the trade.
MR. BARNETT: Certain commercial relations are under
consideration now between Communist China and Japan. The
relations are not direct, they are through commercial
agencies, some of them in Hong Kong and some elsewhere,
who have contacts with the Japanese and contacts with
the Chinese Communists in Tientsin. The question, there-
fore, poses itself, not whether there will be contacts
between Communists in Japan, but whether there will be
steps taken to prevent a flow of commerce which makes
sense in terms of private profit for private or govern-
mental agencies acting on behalf of their principals.
As to the bergaining position of Chinese Communists
and the Japanese, I would say the bargaining position of
the Japanese at the present time was much stronger than
that of the Chinese. In the long-term, the considerations
which Mr. Brown has mentioned might make the Chinese Com-
munists' bargaining position stronger, but now the Chinese
Communists' modern economy is practically prostrate. Its
transportation system is worn out, its communications
system is worn out, its factories lack spare parts, its
generators
- 119 -
generators are wearing out, their spare parts for the re-
habilitation of the minimum modern equipment for'a & modern
economy must be found in Japan and the bargaining position
of the Chinese who have not restored their mines into
operation, have not restored transportation system to a
point where they have large stockpiles in the ports, etc.,
is comperatively week, so in the short run the bargaining
position is not in favor of Chinese Communists.
MR. BROWN: In this past year the Chinese Communists
have had some of the most serious natural calamities that
have befallen China in the past 30 years. They have had
one of the most serious droughts in North China and North
Manchuria in 30 years. That was followed by serious floods
both in the north and along the Yangtze and they are in an
extremely difficult position at the moment. We have informa-
tion, for instance, that they are desperate for such things
as raw cotton, rail materials and gasoline and things of
that kind, and they have not got the exchange to buy it.
They want to barter of course.
MR. MacNAUGHTON: A long time ago we were on paper
money in this country and somebody said we ought to resume
specie payment. Cleveland. I think, said the way to
resume is to resume. We will never get this world going
unless we start trade and I would start trade with Com-
munists in China until I found out they were impossible
to do business with.
MR. MURPHY: I feel that if we don't trade with the
Communists in China it is pretty obvious that since they
have a very crying need for goods it simply amounts to
forcing them to trade with Russia on Russia's terms.
Russia, I think, has a very comparatively small surplus
of goods to give China. Therefore, I think she will be
for giving them and sure that she gets the best possible
terms for them.
Secondly, our trade with Communist China in the be-
ginning, so far as we can see, will be fraught with great
difficulty. The Communists seem to be doing all that
they can to insult us, at least verbally. I think we
would be very foolish and lacking in poise if we allowed
that to be a consideration as long as we are not
physically barred out. I think that the Communists in
China are going to have a very hard time establishing
themselves throughout the country and among all the
people. I think that before they do establish themselves
they
CONF
- 120 no
they will have had to modify their program very materially.
Where that will end up in the course of a number of years
nobody here I think can now foresee, but if we disregard
insults and difficulties and are still in there then we
stand to efit from any modification of the Communist
program that is forced on them. If, alternatively, we with-
draw, then when the modification has taken place we will not
be there to benefit by it, and possibly the modification
will not take place because the Russians will be in there a
great deal more securely than they would be had we stayed
in.
MR. HEROD: I have a very definite feeling that we
should not discourage US trade with China because its
political government happens to be Communist except in so
far as those particular war or strategic materials are
concerned which might be used in a military sense against
us. I think it would be most ill-advised to do it.
First, I don't think you could do it effectively to
the disadvantage of the Chinese. I think the absence of
oil would be an inconvenience but I think that the Chinese
standard of living and of life is such that it would be
one more irritation on the part of a few people, but it is
so predominantly agricultural that we would not really
attain any fundamental objective and we want from China
antimony and tungsten and certain other things for our
industrial machine here. I think we should be willing to
supply, let private traders supply, various goods for the
Chinese which may not be in the classification of strategic
materials. I would not extend any government credit. If
the private individuals want to risk their own money and
lose it or make on it, I would more or less let them do
what they pleased, but I certainly would not discourage
ANYL
trade in non-strategic items between the United States and
-
SERVICE
China. I think if the British and other countries which
are lower-margin so far as their economies are concerned
will not follow along, China will get what it wants. When
God and Mammon are on the same side, you can of course make
on awfully good case, When God and Mammon happen to be on
different sides, you sometimes have to capitulate to
expediency. I have a feeling that if we place our
aspirations on a little too high a plane of nobility that
we business fellows will capitulate to expediency and I
think the rest of you will do it too under different sets
of words.
Now, as far as the Japanese trade with China is
concerned, I think you cannot disassociate completely this
question of trade from the question of investments. We
happen
CONT
IDENTIAL
- 121 -
happen to trade in China. At the outbreak of the Japanese
war, my own companies had about 2400 employees in China. We
have never since the war gotten up to more than about 800
employees. Trade is very difficult at the present time, but
we shipped 10 days ago a power plant for Yu Fund, a cotton
mill down on the Yangtze, up to Tientsin. The thing is
there and we have received the dollars and I would be
inclined to think that that would be a legitimate sort of
thing to undertake and do. We likewise received an order
last week with corresponding dollars from Kunming and I
won't tell you the name of the customer because somebody
will tell my competitor, but some trade is going on. It is
a mere trickle and I think it would be highly undesirable to
cut that trade on private account or to discourage it, and
I think it would be ineffective to discourage it as I don't
believe it would obtain a political objective of any greater
security for the US or following any objective of the US
there,
As to Japanese-Chinese trade, I also have some pretty
positive ideas. I had & long talk with General MacArthur
and we have decided we would not take back at the present time
our investments in Japan. A portion of that is due to US
policy. US policy is not sufficiently clear for us to have
any expectancy that we would not be sticking our neck out
under a guillotine if we did that. The companies with
which we were associated in Japan rose to approximately
100,000 employees during the war. When I was there last
year it totaled 34,000 employees and they have now got,
perhaps 25,000. They have been ordered by the new law that
has gone through of de-concentration of industry, to divest
themselves of 27 of their 41 plants. They have been ordered
by the law, which was put through by Americans going around
to the Diet and telling the Diet that it should be put
through, to likewise sell machinery and go out of business
in certain particular lines. They had been ordered in
accordance with the law of Japan, which the Americans have
not been wholly oblivious to and have had some irons in
the fire in putting through, not to have interest in any
other companies, and the new ideas the US Government has
been insisting on in Japan have unfortunately been a
deterrent to many of us to go in.
General MacArthur was kind in inviting me to come
out there, writing a letter asking us to come with our
technology, was very kind in expressing appreciation, and
when I gave an interview indicating I thought the situation
was
(
- 122 -
was not right, 1t was not an hour and a half until the
Prime Minister of Japan sent his automobile asking me to
come to see him, the Governor of the Bank of Japan asked
me to come to see him. They were extremely interested,
but we by our own actions are urging rather deterrent
things to the economic rehabilitation.
We have discussed this with the State Department and
the Department of the Army and I think very constructive
steps are now being taken to try to correct some of them,
but P think we are going to have to let Japan as a low-
margin country trade with China. I think we are going to
have to let Japan develop a merchant marine, because
Japan's shipping has been one of the prominent elements
of her competitive position in the past. She has been
able to buy cotton from India and other places, and bring
it into Japan in her own ships, work it up into textiles
and ship 1t back into India at lower prices than the
British could ship and a lower price than even the Indians
could make in some particular cases, and our own former
associated company in Japan has had a technical mission
out and been requested by the Indians to turn over their
techniques. They have asked us about it. We have said it
is a good thing to go ahead and do 1t. I think you have
got to have the market for Asia open, whether it is going
to be Communist dominated or not as far as political
government is concerned, to the private traders, to let
the Japanese recover, to let the world recover, and I
wouldn't handicap that too much. I would be a little bit
more liberal in permitting Japan to trade with China than
I would United States trade if the necessity arose because
Japan is a lower margin country than the United States.
We can afford to do a lot of things which some of the
other countries can't always afford to do, and I feel very
positively it would be unwise to limit that trade other
than in certain strategic things where an element of
security might be involved.
E
MR. MachAUGHTON: On what Mr. Murphy said about not
being frightened off by Communists, I was reminded of a
case in the bank. We had a customer to whom we had loaned
a good deal of money. He had machinery to sell, tried to
sell it to a mill man. He came to me and said, "I had a
terrible time." He said, "He called me an s.o.b. but he
did it in a nice way, so I sold it to him anyway." You
let trade alone. As long as it makes a deal that is a
deal that will stand up, we will take care of ourselves.
MR. MURPHY
- 123 -
MR. MURPHY: I was just interested in a point Ur.
Herod made when he talked about an installation he had
made recently In Kunming after we were talking about our
consulates in China and which ones we were keeping open
and which ones would close, and among the ones being
closed was the one in Kunming. Mr. Butterworth when he
was discussing it said several times we had not had a
consulate in Kunming in the Years 1920 to 1930 or there-
abouts, and that seemed to be a consideration. I have
just wanted to raise the point that Kunming in the early
'20's and Kunming, I would say, today, were two entirely
different places. In the early '20's Kunming was almost
absolutely isolated. The only approach was by French
railway from Hanoi. Since then, the Burma Road has come
in; the road to Chungking, if it was a road in those days,
has certainly been improved. The road to the east, to the
north-south Hankow-Canton railway, and the railroad into
Guajo Province have been built since then, and I would say
Kunming is a much more open place than it was then.
MR. rockefblier: It seems to me we have two basic
possibilities in China. One is condemning Communism and
the other is to make them look to us instead of Russia.
As I see it, problems that come up under one heading may
be in conflict with the other heading, and I think that is
true with the problem of trade. It seems to me we have to
weigh in our minds as to which it the most important and
then have the courage to act.
On U.S. trade with China, my own reaction is that 1t
should be limited. It seems to me that the fastest way to
contain Communism is to discredit it in the eyes of the
people of China, It seens to me if the economy worsens,
this will arouse opposition to it, and opposition is
essential if net leadership is to develop in China, and I
do feel that this new leadership is tremendously important.
I appreciate that curtailing trade will be a source of
propaganda for the Communists to use. They will say we are
starving the Chinese people by not continuing our trade,
but it seems to me whatever position we take in China, the
Chinese Communists will develop propaganda that will be
against us, and certainly if by trading with China we do
help conditions there, the Communists will be the last to
give us any credit for 1t.
I realize this is a negative approach to the problem
in China and 3 dislike very much negative approaches.
Therefore. it would seem to me this would only be part of a
broader approach which would be of a positive, constructive
character, of the type that has been discussed here in the
last two days, the type of economic aid in the Far Past
generally, educational assistance, information service,
things of that type.
Finally,
CONFIDENTIAL
- 124 -
Finally, I would say I realize this trade matter is
one that is very difficult for us to take a position on by
ourselves. It would seem to me basically important that
we be in touch with the British and work out some kind of
common procedure with them.
MR. PEFFER: If we restrict China trade, there is no
use doing it unless we can do it enough to hurt, and hurt
mortally. There is no use doing it unless thereby we can
materially contribute to the downfall of the Chinese Com-
munist regime. If we do that, if we can -- I don't think
we can -- that fact will be just as evident to the Chinese
people as it is to us, whether the Chinese people are Com-
munists or just ordinary Shanghai traders. If we know we
have been able to hurt them enough to cripple them, they
will know it. If they know, and crippling their economy
is not an abstract matter for a textbook, it means millions
of people don't eat. If millions of people in China know
they don't eat because of America, now tell me which will
that discredit most, the Chinese Communists or Americans?
If it discredits the Americans most, then does that dis-
credit the Russians even more? Undoubtedly, whether we wish
to contain Communism or not, we wish to keep Russia out,
don't we? Shall we as Americans do most to keep Russia out
by making ourselves as disagreeable as possible, by hanging
on us the onus of having starved the Chinese? Is this not,
as Mr. Murphy said before, God's gift to Mr. Stalin? I
think it is.
MR. COLEGROVE: It seems to me that the remarks by
Mr. Herod were extremely realistic. The point that we are
interested in right now is reviving Japanese trade, which
we agree is necessary. Japan needs food from China. On
the other hand, she needs a market in China for her tex-
18311
tiles and other manufactures. Now, if we are going to re-
vive trade in Japan, manufacturing in Japan, we will have
AT
to, it seems to me, relax some of the interior controls
which have been set up under SCAP. One of these controls
unfortunately is the Zaibatsu legislation, to which refer-
ence was made, and another is the unfortunate extent of
the purge under military occupation. We have purged well
over 200,000 of the best brains in politics and the best
brains in industry, and Japanese industry is going to find
it extremely difficult to revive and expand and carry on
an external import policy with the lack of the good brains
which have been purged.
One thing I think is quite clear. At this time under
the Yoshida Government, if the U.S. should withdraw from
Japan
IDENTIAL
- 125 -
Japan at the present time, one of the first things that
government would do would be to repeal the Zaibatsu legis-
lation, and of course to "unpurge" the purgees, especially
the brains of industry which have been purged. This should
be taken into consideration with reference to our Chinese
policy and in respect to reviving trade relations between
Japan and China. One other thing with reference to the
Zaibatsu legislation; that legislation originated, I am
sorry to say, among the trust-busters in our own Department
of Justice. It was a great mistake that this was a policy
forced upon Japen.
I call attention to the fact that Japan was able to
capture a large part of the textile markets in Asia in
1929, 1930, and 1931 by very peaceful invasion of those
markets under the Zaibatsu economy which existed at that
time. That economy eliminated a certain kind of competition,
it introduced a better system of manufacturing, So that the
Japanese were manufacturing cotton goods even below the cost
of the British manufacturing. They had the advantage, of
course, of being nearer the markets in Asia. It seems to
me that the time has come when our Government should direct
SCAP to relax the Zaibatsu legislation and to unpurge a
Large part of the purgees.
MR. KIZER: It seems to me that the time is ripe for
a review of some of the difficulties that face the Chinese
Communists themselves. What is going to be their position?
If they could have moved on, privince by province and
locality by locality, they might have rationalized the
agricultural economy with fair success, but the same dif-
MARRY
ficulty comes to them that came originally to the Kuomintang
E
in that they have all China rather suddenly placed in their
NOVERNATION
lap with very great difficulties indeed. Late reports in-
dicate that unomployment is on the increase, that inflation
is now entering into their currency, as is only natural in
carrying on a war on a great plane, much larger than they
have heretofore been carrying it on. To meet that in-
flation which arises --- of course, they are spending more
than they can possibly raise by taxation --- they must as
quickly as possible begin to discharge men from their armies
and put them back to work, and there will probably not be
farms or land for them to work.
I surmise when that time comes we will see some of
these elements running into the hills and taking up the
ancient and honorable practice of banditry and there will
be confronting the Chinese Communists not only these im-
mediate difficulties but permanent difficulties of trying
to
126 1 1
to solve the problems of a country that has more and deeper
and bigger problems than any other country. The Communists
have certain promises which they must redeem and which they
will have very great difficulty in redeeming. I doubt if
it is necessary for us to try to bring pressure from the
outside to disillusion the Chinese people and their lead-
ers about what Communism can do for them. I think if we
will go on and keep on as reasonably friendly a basis as we
can, along the lines of trade such as Mr. Herod and Mr.
MacNaughton and Mr. Murphy have pictured, I think we then
won't need to take the onus.
Let us be sure that we don't intensify world antagonisms
in what we do. World antagonisms are the climate in which
Russia trades to best advantage. To the extent that we can
bring about world reconciliation, we are doing more than in
any other way to establish our own democratic procedures
and our own welfare and I don't put my trust in any respect
in the increase of antagonisms in this world.
MR. TAYLOR: On just one point about Zaibatsu, I under-
stand the policy has already been relaxed upon that. Cor-
rect me if I am mistaken. As a friend of mine put it, we
are putting the cartel before the hearse! I am not quite
sure where the argument is now, but it seems to me that
there is a link between what we are saying this afternoon
and what we said at the end of this morning, and that is
the possibility of alinement in the Far East. Whether that
should be military or not, I wouldn't like to comment on,
I
because I don't know all the military factors involved.
THE
MARCHAL
ARGUIVES
MI
They are more obvious in Europe, not quite so obvious in
REQUIRE
DISTRAY
the Far East. It does seem to me that this struggle is
us.
SERVICES
going on in so many levels that we might pay attention to
some of them. and in this economic discussion it does seem
to me to be important in that respect. Would it not be best
to conceive of a kind of Zollverein in the Far East, an
economic customs union between as many countries as possible?
India has been mentioned as the pivot of an Asiatic policy,
and I thoroughly agree with that, but Japan has got to be
brought in too, We can anticipate within 6 months a fierce
propaganda move on the part of the Chinese Communists to
whip up anti-Japanese feeling everywhere else in Asia. I
think we have got to face it head-on. We have got to get
Japan back into, I an afraid, the old co-prosperity sphere
and include India in it. If you build up a sort of economic
arrangement between as many countries as possible, I believe
in trade with the Communist China on conditions, certainly
not giving them material for militarization, which will be
one
CONFIDEN
- 127 -
one of their first objectives, in such a way that there
will be a growing contrast between this economic union and
China, always leaving it possible, as we invited countries
in Europe to enter the Marshall Plan, for them to come
into this on proper conditions. Thinking along those lines
and particularly of propaganda lines as the way in which,
of the many levels on which we are struggling with the
Soviet Union, in this particular area we can do it most
effectively.
MR. VINACKE: For the record I am not sure that I want
to be associated with Mr. Colegrove's "we" with respect
to the general agreement that it is indispensable to the
United States to revive completely the Japanese economy.
It depends on the conditions under which it revives, on
the conditions of its relationship with other economies in
the Far East. I just wanted to make that position clear.
When Mr. Colegrove said "We are agreed", I am not in that
area of agreement.
Beyond that I would like to come back to the alterna-
tives suggested to us by Mr. Brown. It seems to me that
in relation to trade with Communist China, his second
alternative is the one certainly which commends itself to
me. That is to say, I don't think for a minute that there
should be on the part of the United States any financing
of the trade with Communist China on a credit basis. Any
trade should be financed along the lines of Mr. Herod's
suggestions, where there is a demand for American products
which are paid for cash-on-the-line and not with any
legacy left over of the problem of collections and can-
cellations, and so on, no restrictions on trade, but no
fostering of trade except in terms of a day-to-day mutual-
ity of interest. It seems to me that is the one way in
which we can move economically without putting ourselves
in a very bad position with respect to the Chinese, and,
it seems to me, at the same time we may keep ourselves in
a position to move as Mr. Brown suggested, flexibly, as
the situation develops.
THE ASCHIVES NATIONAL - TIMET
13.
SERVICE
MR. DECKER
CORP
- 128 -
MR. DECKER: I don't believe it is entirely naive
or a piece of over-rosy idealism to draw a distinction
at times between the Chinese people and the Chinese
government. I do believe that that distinction is a
valid one. I see the Chinese people as still cherish-
ing down in the bottom of their hearts, most of them,
a very high regard for the United States. They have
been caught in 8. maelstrom of tragic circumstances and
they have been faced with impossible dilemmas, and had
we been faced with the dilemmas in the same terms and
with the same influence which they had, I am not at
all certain that our decisions would not have been the
same 88 theirs. Now I know how difficult it is to sup-
port the Chinese people or to assist the Chinese people
without in indirect ways assisting the Communist govern-
ment, but I do believe that we can leave time and the
undoubted difficulties that the Communist regime will
meet in China to deal largely with that question. And
30 I hope very much that not only in the realm of
private trade but in the realm of private relief or
reconstruction work that may be undertaken by private
agencies in China that the door will be left open.
Now, mind you, I am not optimistic about the immediate
prospects for being able to extend a large measure of
that sort of aid or relief to the Chinese. For one
thing, we have got to justify it with the American
people, and the American people simply will not furnish
that relief if it has to be furnished on unreasonable
terms. But let's not in our policy in any way close
the door for that effort.
CHAIRMAN: We want to give you a picture of what
the overseas information policy toward the Far East
has been and is because we need your advice and counsel
ARE
on this, Mr. Sargeant will present the briefing.
ARERIA
NOTWERWENS
KR. SARGEANT: Our immediate objective in the pro-
gram of the United States Information and Educational
Exchange Service are of two kinds. First, we are
attempting to aline public opinion throughout the world
on the side of the United States and it has two aspects
to it: a positive side, In which we are trying to
demonstrate that US policies are in effect to the self-
interest of other nations and other peoples; it is to
their advantage to support these policies. I think there
is a negative side. I think that is the demonstration
of what the USSR and specifically those aspects of
Communism
- 129 -
Communism which are represented by imperialism, aggression,
brutality, etc., really mean in terms of the lives and
futures of entire peoples and nations.
In the Far East I will pose five or six specific
goals that we are striving for. For one thing, we are
trying to drive home to the peoples of the Far East the
fact that there is an inminent danger of Communist pene-
tration and of possible conquest; that this does not mean
what they have been led to believe of a Soviet paradise -
the folklore and myth. We tell them what has been found
to be the case in satellite countries in Europe under Com-
munism. Secondly, we have to let people of the Far East
know what constitutes the fertile growing grounds for Com-
munism. I would hope that our policies are so shaped that
we will be prepared to do things which correct those con-
ditions under which Communism can grow and can spread.
Further we are attempting to encourage certain types of
tendencies to separate and divide among the Chinese Com-
munists and other known Communist parties. In part we
place some emphasis on what has happened in Yugoslavia and
other tendencies in Western Europe. We are hitting at a
myth that is held too widely in the world -- the belief
that the United States in some ways is really the proponent
of reaction, that we are really the people that want to
perpetuate the system of absentee landlordism or the ex-
ploitation of the masses by a small reactionary clique.
We are very much concerned with convincing the peoples
in the Far East that their ultimate salvation does lie in
close cooperation with the countries of the West; that the
Western countries are in fact in sympathy with their
national aspirations.
Although we can't operate in these areas where the
Communists control, we do have at least one officer of
USIE who is retained. They do handle certain reporting
and caretaking functions, but there is no program of the
kind that you people have known in the past. Our
LISBARY
principal effort there at present is radio. We are
carrying 3-3/4 hours a day in English, beamed both
directly by shortwave from Stateside transmitters and
by relays in Honolulu and Manila, which now include
medium-wave relay, which does reach certain areas of
China. Te have, in addition, two hours a day in Mandarin,
we have a half hour a day in Cantonese. Most of those
programs
130 1 8
programs would be heard in the Far East in the evening
hours between six and ten o'clock at night, but we do
have a couple of morning breakfast-time shows. Now this
is a small program that we are able. to retain in China.
We are doing some things to establish ourselves in Hong
Kong, where in addition to a local program we hope to
have a regional center for distribution of materials to
operate as a production and distribution point not only
to China but to other areas that are near by, where very
important elements to reach will be those Chinese elements
in the local population.
To give you some idea of what 1t means to cut the
China program back, in Korea we still have one of the
most extensive country programs that we are operating any-
where in the world. This is a program which, as you know,
we have recently inherited. We have inherited it from the
time of the military occupation. We are spending a little
under two million dollars in the current year in Korea
alone. We operate nine information centers there. We
have special publications, including weekly newsletters,
a world news periodical, a monthly magazine; we carry a
re-broadcast over an 11-station network, the Korean broad-
cast, the Voice of America; we have locally-produced news
commentaries; we have a very large motion picture program,
including mobile units to take it out to local centers of
the population; we have a Fulbright agreement which has
been drawn up but not yet signed, to expand the relatively
small exchange of persons program in Korea. The current
estimates are that these nine information centers are being
patronized by an average of one million Koreans a month.
Now that's the other end of the scale from China, and I
introduce Korea into our thinking so that you can see how
at the present time we have relatively little ability other
than by radio to effect the Chinese people and the Chinese
thinking.
One problem that we in the Department now face and
one on which this group will have views -- given the con-
TRIUM
ditions we now have in China and that we will have in
LIBRART
the foresecable future, is it practical to expect that
any major onslaught can be made in ideological campaigns
SE
by purely open overt means? I am not suggesting any
answer one way or the other, but it is a problem broad
in its dimensions. A number of people who have thought
deeply and who have had profound experience in this
field are inclined to believe that the operation must
shift
CONF TAL
- 131 -
shift from the completely open basis to one that does
operate, at least in part, on a clandestine basis.
There are others who feel deeply and with equal convic-
tion that you cannot fight Communism, whether it be
Russian Communism, Chinese Communism, or any other form
of Communism, by these particular tochniques. They
think this permits the opponent to choose the terrain
and they feel basically that we are not going to succeed
by the use of such strategy. This extends, of course,
beyond China itself; it extends to other areas of south-
east Asia-those areas adjoining Japan. If, for example,
we are able to maintain an effective information program
with the Chinese elements in neighboring countries, to
what extent is this government and the United States
concerned to see that that information and some of those
materials do reach the interior of China--reach thinking
Chinese in the Communist-held areas? I think that is
one of our big problems--how the emphasis should be
placed in the future in developing in this particular
area.
BARRY U.S. ARCHIVES "NATIONAL RECORDS SERVICE" BOVERNMENT TREMAN AND LIBRARY
MR. FAIRBANK
CONF
- 132 a
MR. FAIRBANK: I assume there 1s very little question
about an information program being needed, and, I am afraid
my own mind is fairly closed, that 1t is absolutely essential
and ought to be much larger than it has been. Ithas to grow
slowly, you can't expand over night with personnel and
operations, but that should keep on expanding because it is
lacking largely in all those operations.
As a country we approach Asia, 1t seems to me, with
much more concern for economic and material and military
matters, at which we are good, and much less concern than
we ought to have for intellectual matters. I would like to
raise a question as to the meaning of the term "clandestine".
MR. SARGFANT: Actually my intent was to pose the whole
problem. I didn't mean simply to suggest that you should
put out a type of commentary that you and I might both know
as of the psychological warfare kind. I am thinking
specifically that you may have problems in China in which
no statement made by a Western democracy is going to carry
conviction, yet statements ought to be made. Perhaps the
statements should be actually attributed to a source other
than the one which is preparing 1t. Perhaps the distribution
should not be related to any government, whether Western or
Fastern. Perhaps you would have to have a system of completely
clandestine distribution, clandestine in the sense that the
material is being distributed in areas in which its distri bution
is prohibited and for that reason must be done in ways which
are not open ways. I really meant my question to refer to
the whole gamut of activity.
MR. FAIRBANK: If I may answer that directly, I would be
rather loath to see that started without a good deal of
preparation. It would seem to me most of that black propaganda
during the war was quite ineffective except when it was geared
up with war-time conditions and an army operating along with
MARGY
-
1t, military controls, and so on, and some of that kind of
STRRARY
thing could backfire much more than it would help us.
E
MR. MURPHY: I feel strongly as Mr. Fairbank does that
in peace-time black-gray programs are very dangerous and can
very much boomerang against us. I believe that our programs
should be restricted to what Mr. Sargeant said Gen. Marshall
referred to as truthful information. I agree very much with
what was said this morning, that repetition is necessary,
pounding it 111, but I believe that 1t should be on a dignified
basis; that 1s, we should not take the tone from the Communists,
from either Russian or more recently the Chinese Communists.
I agree with Mr. Sargeant, if clandestine means getting
information
- 133 -
information into places where otherwise we couldn't get the
information in there, that in that sense it can be clandestine
but it should be restricted to straight information.
MR. HFROD: I don't know whether any observations of my
own in this connection would be of any value, but in this
last four months I have been east of the Iron Curtain in
Europe, trying to look out for some things and we likewise
had six of our men who finally got out of Russia within the
last year. My own observation in the countries in which I
have been these last few months, as well as their observation,
has been that in general the programs when they are heard are
heard by a very small percentage of the people. To our true
friends they are a confirmation, but as a proselytizing agency
to make converts they have not been very effective. Secondly,
in so far as facts and information handled with a certain
amount of dignity are concerned, there seems to be a feeling
that they have been constructive; in so far as they tend to
become a propagande instrument particularly identified with
auti-Communist thoughts or showing up what we think 1s the
true situation 1n the Communist countries and in the lies that
they tell about us, they are discounted about one hundred per
cent as being foreign stuff inspired by our own objectives
and the agencies of propaganda within those countries are
sufficient that they take precedence over anything that we can
do.
I haven't had the pleasure of investigating it in Asia,
because I haven't been in Asia now for a matter of almost a
year, but in Eastern Europe those are my observations, and
our fellows that have been in Russia and have come out have
had those observations.
FREE
LAWAY
15.
Hávicas
MR. VINACKE: It seems to me that in this you have to
SPYERNMENT
make a little different breakdown than is represented simply
by the use of the word "information" and then going into the
classical media. You can have two types of information program,
it seems to me, each of which 1s distinguishable from what
might be called a political warfare program. Two types of
information program which may be called a passive information
program or an active information program. It is comparatively
easy to occrate negatively, that is to say, passively an
information program or frequently it is easy to get it set up.
The Dutch, for instance, in Indonesia toward the end of the
war were prepared to view with a good deal of sympathy the
establishment of an information program provided it was to
be understood that it would be passive in the sense that the
United States would assemble materials in libraries, would
make no effort to get any of those materials out of the
libraries
CONF IDENT INL
- 134 -
libraries but would sit there waiting for people to come and
inform themselves as to the United States. That sort of
thing is what I would describe as passive information program.
The active program 1s apt to get you into contact with a
good many more groups in the country, 1t is apt to be a good
deal more difficult to operate, and it is apt to be, if success-
fully operated, a good deal more effective in getting a point
of view from the U.S. into the community, but 1t demands a
different type of set-up, a different type of skill, but
neither the passive nor active program, it seems to me, is
designed to serve the purpose in China at the present time or
in many of the oriental countries. what is required there, it
seems to me, is not information in the sense of giving to them an
understanding or making available to the peoples an understanding
of what is in American libraries or what we are viewing in the
movies, and so on, but something that is pointed up and sharpened
in relation to American political purposes in that area.
If that type of program is going to operate successfully,
it has to be operated in very close coordination with the
political agencies of the American Government. For example,
without wanting to speak too sharply from the standpoint of
propagenda in China, the White Paper was one of the most unfor-
tunate documents, in my opinion, that could have been issued
at this particular time because of the materials that it gives
to the foreign propagendists and because there is no material
in it that I can see that would be useful to the American pro-
mine
pagandists trying to get support for American policy in China.
I am not suggesting that the White Paper should not have been
issued, but I am raising a question as to whether there is a
degree of coordination with respect to publications of that
sort between the information agencies of the Department and the
political agencies of the Department, SO that the question is
raised with respect to every move we make in advance of taking
the move, "Is this move viewable in terms of propaganda value
or propaganda advantage?" The answer may be that it is not,
but it has to he made anyway. Then your propagandist has to
make the best of it, but at least he hasn't been caught off base
he knows what he has got to deal with in terms of preparing the
grounds of accepting policy and that is the basis of psychologi-
cal warfare.
MR. SARGMANT: Actually there is a tremendous problem of
coordinating information policies and programs with what is
generally described as political decisions. I think, frankly,
over the last two years we have made more progress in this
field than I thought we would. It is something our Advisory
Commission on Information--including Mark Etheridge, Canham,
Justin Miller
CONSTDENTAL
- 135 -
Justin Miller, May, and others-- have been interested in, but
we still haven't reached that point-and unless there 1s a
new technique of administration, frankly, we are not going to
reach it--at which each decision, each formulation of policy
is in fact subjected to the 1deal test, to which Mr. Vinacke
suggests it should be. I thoroughly agree that it should be,
but so far as I know no one has yet devised the administrative
machinery for doing it. Dean Rusk and I were talking about
this a couple weeks ago at lunch, and we agreed that although
you might get a climate of understanding and support for it in
an agency, we still weren't quite sure how you could accomplish
it at all levels. We thought at first you had to work on cer-
tain control points. I think on control points we have done
very well.
MR. REISCHAUFH: I think this group would be in general
agreement that a program of some sort 1s needed and should be
expanded. The problem is how to do it most effectively; in
view of the great interest in China in rumors you might say
it would be more effective to go in for underground informa-
tion than above-board information. They might enjoy a rumor
that tells a truth more than they do a straight news story.
The real point I want to bring up is the problem of the
special place of the scholarly classes in the Far East, par-
ticularly in the area of China, Korea, Japan, the area affected
by Chinese civilization. I do not know whether 1t applies to
other areas of the Far Fast as much. If we exploit the special
prestige position of the scholar intellectual group in that
area -- 1t would seem to me that propaganda TO rk. information
aimed primarily at them would be the most effective kind of
information work, It might be advisable to try to put American
professors in every university to the extent that universities
can absorb them. I am sure there are many places in the Far
East where they would like to have good American professors
1f we can get right in there. To what extent have we been
bringing future intellectual leaders of that area to this
country for extensive training? Japan affords an extreme case
probably, but I think the situation there in intellectual
classes, which are the key classes, is that they have asked for
1deas and TO have given them bread. They really would prefer
the ideas in this case instead of the bread.
MR. DALLANTINE: I would like to supplement something that
Mr. Vinacke has said. I feel very strongly that the most
important 1tom of content of our information message should be
to convince the people of Asia that we are not going to use
military strength, force, or our economic force to coerce them
into ideas, into adopting a political, social and economic
pattern to our liking, not through those agencies, we are
going
COME DENTIAL
- 136 -
going to restrict ourselves to moral information, to suggestion
and example. Of course, I don't want to be too unkind about
this thing, but I think it might be rather difficult to do this
in the light of some of the things that we have done in Japan
and also in the light of some of the suggestions that emanate
from this country, but I think we could counteract these sug-
gestions that come from this country by meeting that and saying,
"Of course, some people in America suggest so-and-so, but that
is not the feeling of the American people". I think 1t is to
counteract that Soviet propaganda, that Soviet claim that we
are forcing our imperialism upon those people of Asia--I don't
know of anything that is more important to convince them of
than that. I think we also ought to try to make it clear to
them that when they realize the danger that they are facing
from Communism and feel that they must make sacrifices and must
do something to meet it, to draw up, if and when they draw up
programs of their own, economic and social, we will then see
how we can fit into their programs, the ways that we can help
because those programs involve choices that only they can make
and we cannot make those choices for them. Therefore 1t is
not up to us to initiate these programs for the uplifting of
the Asian people.
MR. TAYLOR: The subject 1s so b1g that it is difficult
.
to know where to begin. I watched the development of the pro-
paganda--the information program in the Department with great
interest during the last two or three years. I think, consid-
ering the difficulties that the Department has had to work
through, that they have done an extremely good job, but having
said that; one can refer very specifically to the difficulties.
They haven't had enough money and they haven't had enough
policy. I know the problems of coordination are terrible but
there has to be some, and it is better to have no information
program at all than have one which is not to some extent linked
with policy. I remember one time when the country was appeal-
ing for everyone to eat not more than two pieces of toast and
the Department of Agriculture put on a pie eating competition.
That sort of lack of coordination is not so very good for a
propagandist, and in thinking of China today obviously there
is not much more you can do at the moment, I would say, than
to hold the fort, than to establish- which I trust is estab-
lished--its credibility. It is said that if you merely give
a straight newscast that can be done. Anybody who is working
in business knows it is extremely difficult to get straight
news in the first place and to make 1t look straight when you
get it out.
The problem of the propagandist is to state his case in
terms of the other fellow's case. I think Mr. Fairbank was
talking about that to some extent yesterday, and it needs a
great deal of work on material that doesn't look to the
uninitiated
CONFIDENTIAL
- 137 -
uninitiated always like propaganda, but if you are in the
business of creating attitudes which lead to action, you have
to decide what kind of action you want, and what kind of
action do you want in China today? I don't know. What is
our policy? You cannot create cleavages with propaganda but
you can exploit them, make them bigger. You have to find out
where they lie first. Do you want to increase any cleavage?
Do you want to make them as unhappy as possible? What sort of
action will make some groups turn away from the government
and other groups to turn to other countries: What do you want?
That has to be decided. I think at the moment that you are on
the spot. You have no Chinese policy to speak of and not until
you get one and decide what sort of action you want to create,
to get moving, can you have a proper information policy. And
so long as you are going on the miserable pittance you are
working on now, I see no chance whatsoever of competing with
our friends from the other side. If I were in the Kremlin.
the first thing I would try to decide is what kind of war is
the United States preparing for, and I would decide immediately
that 1t was preparing for the last one. They are not preparing
for the war of ideas, and I would therefore fight the war of
ideas and leave them with all their guns and B-36's and the
rest of them, and let them get out of date. I would fight it on
the word level. It seems to me we are not fighting it on that
level. I don't think we should disarm--far from it, but for
heaven's sake, let us arm ourselves with the best things we
have. We have the best social science in this world and the
first job for the U.S. outfit, it seems to me, is to study.
What is China today? Nothing like it used to be. What will
it be under the Communists? We don't know how a system like
this breaks down. We don't know how cleavages and lines run,
and the chances of overthrowing it in my mind is almost negli-
gible, but perhaps 1f war should come you can perhaps do things
with 1t. Te have got to do things with it, but the first thing
1s to understand it and not to treat it as if it were a projec-
tion of American middle class, or a mirror of Americans. There
is time to do that. You haven't got much money to do anything
else with anyway, and there is time to study, to find out what
your policy is and to devise the means through propaganda with
which to implement it. Unless it is conceived of as an arm of
policy and used that way 1t merely gets in your way.
MR. FAIRBANK: Could I just support everything Mr. Taylor
has said. I think it is very much on the beam and ought to be
looked at with care. For the record, also, the line of anti-
Communism in Asia 1s not a very good line. It is a subjective
projection of our own view.
GENERAL MARSHALL:
138 i I
GENERAL MARSHALL: The ordinary term, the "complexity"
the problem has been over-used, but I have never known
any problem that had 60 much complexity involved in it be-
cause, you might say, the simplest part of it 1s the Chinese
people themselves and the immediate situation in China. Then
you take the conditions in Japan; you take the situation in
Indonesia; you take the situation in Indochina; you take the
situation in India; then you Introduce Pakistan; and then the
British former economic almost domination in China, and the
efforts of the Labor Government to maintain itself and the
reaction of the Conservatives against it, which affects what
you are getting into; and the French with relation to Indo-
china; and then the Dutch in the Western European pact, and
then over in Indonesia in a sense doing something else; then
Australia. The variety of influences involved in this thing
are just funtastic when you try to arrive at & sound basic
decision.
Then, of course, you have your immediate action and then
the longer view, and 1t 1s much easier to approach the longer
view than the immediate action. One of the great struggles
in conducting the strategy in a large war 16 the political
necessity for action as compared to the military necessity
of making haste slowly. When you have a situation like our
channel crossing, we were over a year and a half getting
ready for that. The great question was what did you do
during the year and a half to keep the public quiet the
political leaders had to have some action. The dangerous
factor was if you started action anywhere you immediately
began with assurances of a minimum and ended up with a maximum,
and something this and something that, and delayed your whole
operation. I have been through all the agonies of that.
Now you have been confronted with that the State Depart-
ment has been with the Chinese problem. People want action
and they want it today. That 1s the way a democracy goes and
you cannot get away from it. There 18 no use 1n wrangling
about it, that is a fact.
Time is of vast importance in this affair; but that, too,
could go to extremes. There 18 great danger of making the
very serious error that I often think Government departments
waiting until the situation built up against you and
you are on the defensive. That 18 fatal. I always want to
move in first. On the other hand, it 1s equally dangerous
that the "first" may get you in before 1t is the proper time
to get in. So timing 16 a vital consideration in this.
Another
CONF
- 139 -
Another thought that occurred to me, listening to your
discussion, is that a good many of the things I have heard
proposed here, in my opinion, could not possibly be handled
by our Congress.
Now, what 16 the idealistic solution to this business?
After you have decided on that, we will trim it down and put
It on a practical basis; there would be many amendments, many
modifications. But you have got to keep the idealistic in
mind. There 18 the spiritual involved in this thing.
I have been tremendously impressed in our dealings with
Turkey with the effects of our missionary efforts and Roberts
College in Turkey. That Just meant everything to us in the
associations we had with them in connection with the Soviet
Union. And I was very much interested in the reestablishment
by the Methodist Mission of schools around Tehran which the
government had taken over, because that was erecting a barrier
of a kind that is acceptable to the world and has great
strength in the roots it establishes. of curse, that takes a
long time; you cannot put it up tomorrow and have it effective
the day after tomorrow, but those considerations must be taken
into account.
You have a situation in China that is closely related to
the current situation in Japan because of the economic factors
involved. I am going to turn to Japan for a minute because
I think 18 18 very much concerned in our relationship to China.
Japan is costing us a great deal of money; that cannot go on
indefinitely. We have established this operation in Western
Europe and we have done it on the basis of its reaching a
termination in 1952. It ought to be terminated in 1952. You
have got to stop somewhere. It 18 a very seri ous matter that
this government remain strong, SQ there has to be a definite
limit. You get a man to a certain point and then he has to
go on from there alone, and he has to know he has to do it.
15.
When you come to this Japanese affair, you have a very
serious question of trade between Japan and China. You have
got this much small area into which we have poured many more
Japanese; we have greatly increased the density of population
in Japan. There has been taken away from them Manchuria, with
all of its rich contributions to the economy of the country,
Korea, Formosa, and the general trade with China. We have in-
creased the population very decidedly, and reduced the area.
There has to be some outlet, some import of raw materials and
export of finished goods.
Chinese-Jupanese trade, I certainly think, should be per-
mitted. Mr. Herod commented that if you leave the business-
man alone he probably will promote the business if you don't
get in his way. Something of that kind has to be done.
I
- 140 -
I don't think you can call the Japanese-Chinese trade
exactly a "must" but it comes pretty close to being that.
We are not going to go on forever providing the goods, the
foods, and the money that has been necessary to keep Japan
afloat.
I have sort of indicated my thoughts at the moment, re-
garding the government proclaimed by the Chinese Communists,
in saying there is a great question of timing involved in
this thing on one side or the other--it 1s kind of a fine
balance with the political pressures that are coming on.
Also involved in that 18 the British attitude and the French
attitude. We have got to proceed very carefully and not be
plunged by political momentary pressures into action that we
may find later was highly inadvisable.
I will just interject for a moment some of my reactions
at the time I was in China regarding these fellows that are
at the head of the Chinese Communist Government--Mao Tse-tung
and Chou En-lai. I had officers pretty much all over North
China, along the Yangtze and in Manchuria, and I always felt
that the reports I got were far better than those the Gen-
erallesimo received. He was being fooled time and again be-
causethis fellow was trying to defend himself. If he with-
drew in an ignominious fashion, he always made it a great
battle with Russian tanks and Russian soldiers. The only
thing they did not introduce was the Russian paratroops; they
had everything else. I would find out from my people it was
a patrol encounter, and that went on all the time. Always I
186 trying to find out anything you could put your finger on
that was authentic as to the Soviet influence or Soviet help
in all this; I never got anything except the influence of
what I would call the spiritual, or something akin to that.
The Chinese Communists made no pretense about being
aloof from the Soviet Union, they had Stalin's picture and
Lenin's picture over the theater.
They were Marxist Communists and bitterly resented impli-
cations they were agrarian Communists of the new stripe. They
were Marxist Communists. I remember Chou En-lai startled my
wife. He was telling her just what he was. They did not
make any pretense of not being associated with the Communists
of Russia; that was rather natural, they were Communists,
they were Marxists, and that was the seat of all that develop-
ment.
BARDY
NATIONAL MV
TISTED
When
CONF IAL
- 141 -
When it came to Soviet assistance, I never could get
my hands on 1t. I VHB given all sorts of schedules but, in
the opinion of all my advisers and intelligence, they were
not supporting them. Sometimes there were records of little
conferences, but you could change a single sentence and
change the whole impression. What did worry me more serious-
ly than anything else W&B that 1t seemed apparent to me that
the Soviets were leaning over backwards, except as to Dairen,
in their attitude out there. As far as I could see, what
they were preparing themselves for was a case before the
United Nations, where they could appear 88 clean as the
driven snow and we would have our hands muddied. I would
probably be the particular lump of mud they would throw.
Now, I am not talking about the ravaging of Mukden.
That was e booty transaction under their claim. I am talking
about the procedure that followed that under the treaty. I
WES always concerned, and I think it 16 still going to show
up here when they get to this, that they will make a case
that they sat back and gave the Generalissimo a wide sweep
of opportunity and look at what has happened--the United
States interfered and brought about this catastrophe. They
could accomplish elmost all their purposes by negative action.
All they had to do was to abandon the dumps, leave them to
fall into the hands of the other fellows. All they had to
do was to make st impossible for the Nationalist Government
to use the railroad, and yet not introduce any complications
about the movements of Communist troops that were moving in
and getting set up in Manchuria, we will say, for later
action. But that worried me a great deal, and I think you
will hear from it later.
As to Formosa, I think that 1s a dangerous situation,
in one sense, because Formoss lies in the general direction
from Japan to the Philippines, and 1f 1t were taken over by
infiltration, as it well might be, it might be very serious.
I don't know what we will do about that.
It seemed to me when I was listening to Governor Stassen's
talk about establishing an American center in Bangkok that
the psychological focus for the United States in approa ching
this ares, 1f it did 30 through any such procedure, 18 the
Philippines. I may be entirely wrong about this, but all
of the Far East looks on the Philippines as a manifestation
of the square deal. We certainly went through with it there.
I think there is great significance to our action in the
Philippines which affects all those people. I have talked to
some of the Philippine leaders and they have emphasized that
pretty much to me.
19898
RECEIVED
THE
The
us.
BERVICE"
ADVEDIMENT
IDENTA
- 142
The general picture indicates to me what would seem to
be more desirable is the slow build-up in the actions we take,
not big things but many little things.
It has seemed to me for quite a long time that we are in
the midst of a world revolution and you can not confine it to
what you are thinking about in the Pacific. Someone said
here that the Communistic factor was more or less of an inci-
dent but it was riding on that flood. Well, the actions we
take, I think, have to be adapted somewhat to the fact that that
is the temper of people all over the world. "e can not
ignore that.
I believe in the end it is fairly sensible to figure
out what is your ideal, and then trim that down to its
oractical application Our constitution was so established
and it has done pretty well
R. HEROD: Do you feel that Mao Tre-tung and Chou En-
lai would accept Moscow or Kremlin Dictation when it went
against their own size-up of their advantage or the advantage
of their own group?
GENERAL MARSHALL: I am rather inclined to think there
would not be domination, but I would say that with a great
many qualifications,
Chou En-lai is a very able negotiator. In E. great deal
of his negotiating with me, and I went to about 600 different
meetings, he seemed to be really negotiating There is a
great difference between that and a man who has strict orders
and can only do what he is ordered and nothing else. On the
other hand, you would come to some things when it was quite
evident that he was just speaking a piece. I know he several
times brought me back from Yenan the statement from Mao Tae-
tung that they were determined to establish a Marxist Commun-
1st regime in China but they realized that could not be done
in a minute and felt it would have to pass through the Ameri-
can democratic procedure first on the way to the Marxist con-
ception, but he would say that so often that it was merely
reciting. On the other hand, it got to the point that I
Evints
virtually had to intercede with Mao-Tse-tung to continue him
in his position as negotiator, because it looked for a while
ROVERNMENT
that they would relieve him. They thought he compromised
too much.
Mao Tsetung I could not pehetrate. That is a real
iron curtain there. We had some very frank talking 1st it
was just talk.
They
CONF
143 0 s
They undoubtedly felt that they could win politically
and, therefore, if they could avoid the military effort,
they were very much better off. They had discipline and 8
solid perty; whereas they felt the Kuomintang was just an
icing on the top and all its former foundations of public
support had become non-existent or hostile.
MR. QUIGLEY: General, was there any suggestion on
their part of Russian participation at this stage of media-
tion?
GENERAL MARSHALL: No, no, not at all. I don't recall
they ever made such a proposal.
MR. COLEGROVE: Your view 18 that American aid to Japan
should continue as long as 1t seems necessary to keep the
population from starving and to get on their feet industrially?
GENERAL MARSHALL: I would say so, but the qualification
there 18, "as long as it seems necessary." I would have to
look at that through a magnifying glass because you just can
not continue this thing indefinitely. It just can not be
done. It can not be done politically, for one thing, and it
can not be done economically, I think, for another.
MR. DECKER: It seems to me that one of the very serious
political obstacles that we are going to meet in attempting
a settlement with China--political from the standpoint of
sentiment in the United States is that long period when we
had the support of Chiang Kai-shek and he was the one hope
of continuing China in the war. That was in our dark hour
and we were very dependent on him, and what he represented,
to keep Chins In line. Now, there is a moral situation in-
AND
volved there 63 well. I would like you to, 1f you can and
LIDERRY
if you will, comment on what the abandonment of Chiang Ka1-
shek 18 going to mean-what its significance may mean po-
UNSERRMENT
litically.
GENERAL MARSHALL: Well, I would say we did our best in
spite of action that ruined that best in its application to
the situation. Throughout all of this procedure there was
continuous pressure to eliminate Chiang Kai-shek, but no one
ever suggested anyone could take his place.
You have the great moment of his career, about 1927,
when he was a great inspiration, when the Nationalists came
up from the South, and then you go through a transition when
these young military subordinates of his, that did such a
fine job, had become corroded by long tenure of office with-
out any opposition whatsoever, and the procedure lent itself
to
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to weaknesses more than almost any other country. It has
just got worse and worse and worse, and it was very hard to
realize sometimes that this man that we were dealing with
had been this other fellow when he was a young man not in
civil office.
CHAIRMAN:
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CHAIRMAN: I would like to suggest that we might
have a few minutes taking up the question of the recog-
nition of the Communist Government in China. May I
just mention a few of the factors as they confront the
Department in connection with this, illustrating again
what General Marshall said about the complexities of
the issues that enter int the situation.
I think in some of the discussion of recognition
there is some confusion between the short-term and long-
term aspects. There is the question of whether you
recognize the Communist Government immediately on the
one hand. On the other hand, there is the picture or
the phantom of a duplication of the situation which
existed with respect to the S viet Union over a period
of 15 years practically in which we said it did not
exist when it did exist and you know the complications
which arose from that.
In terms of the short-run picture you have the
complication of the situation in the General Assembly
of the United Nations and a great deal of speculation
at Leke Success as to whether a Communist delegation
will suddenly turn up at Lake Success and get into
Gatu5 early and sit down in the seat of the Chinese
delegate and say, "We are it." There are a lot of
technical problems there as to how the General Assembly
acts in terms of conflicting claimants to representa-
tion of a member state.
We have I think in connection with the recognition
J.
problem also a good many of the elements which we have
SEAL
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discussed in connection with the business of trading
with the Communist areas in terms of immediate action.
You have also I think to weigh, as General Marshall
pointed out, in other connections, the attitudes of
other governments and the effects on other governments
of action by the US. You have the possibility that a
great many other states might recognize the Communist
Government, and what would be the resulting position if
the US is one of a small minority which does not? You
may have many states withholding recognition and the
question of the extension of recognition by the US
Government and its effect on thinking in Southeast Asia,
for instance, where Communism seems to them to present
a serious local problem.
I just want to throw out some of those points and
to ask you to address yourselves for a short time to
this problem of recognition.
Mr. Staley:
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ME STALEY: A point that Mr. Butterworth made the
other day seemed very interesting and important. I think
some of us assumed there might be some difference as
alternatives between de facto and de jure recognition,
but from what he said I gather it comes down to whether
we 80 whole hog or not; that 18, he indicated that the
Chinese Communists would not play ball on any other basis
but full de jure recognition 30 that was really the only
alternative open to us,
CHAIRMAN: I think in terms of what we know about
the Communist position it is true that what we have had
frequently in the pest 18 a situation in which by admit-
ting certain authorities are de facto authorities in the
area you nan do business with them and we have operated
through consular officers. A de facto basis with us
involves a question of de jure recognition. It is indicated
by the current Chinese Communist position that they are
not ready to shift their attitude. They refuse to acknow-
ledge representatives or foreign consular authorities on
a de facto basis in Shanghai in that or any other place--
and until the de jure recognition 13 extended they will
continue their policy of discrimination, The latest is
banning of newspapermen of any country that has not extended
recognition, so I think we may be confronted there with a
situation In which de facto recognition does not enable us
to move forward the way we have in similar situations in
other countries in the past.
MR. COLEGROVE: Mr. Bohlen gave an address in New
York, I believe, on the 19th of January this year, in
which he said that our government had come to the conclu-
sion that Soviet Russia would not keep treaties and our
only recourse was a day-to-day arrangsment with Soviet
Russia which would not be necessarily a long-term legal
agreement but mersly a day-to-day modus vivendi,
Now presumably Russian-trained Communists in
Communist China would follow somewhat the same tactics as
the Kremlin. The point I am asking is this: Is 1t
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possible to have a modus vivendi for trade and communi-
cations with Communist China without giving either
de facto or de jure recognition?
CHAIRMAN: They are not satisfied with half-way
measures. It may be they will become SO. I think the
present Indication is that they want all or nothing.
MR. McNAUGHTON:
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MR. McNAUGHTON: Sitting in this room arguing and
listening, I think I would say we had come to a state of
mind where we would recognize the Communist Government
in China, but a lot of things we are talking about you
can not get the American public to take right now or the
Congress to take. I think the procedure should be to
watch and wait.
CHAIRMAN: Speaking as a representative of the
American public in a particular area of the country, do
you think recognition would go down in your area?
MR. McNAUGHTON: I think they would blow up.
MR. KIZER: As of today, but what they will do to-
morrow 1s another story.
MR. HEROD: I would hazard a suggestion that we
should not recognize today because there is still civil
war going on and the Communists have not got the machinery
of state except in certain areas, but I would be inclined
to think that if they do obtain the machinery of state then
we should be prepared to recognize them.
I think 1t is rather amusing. We recognized Russia
and Yugoslavia. We recognized everybody else. It has not
been a question of Communists as Communists that has pre-
vented our recognition. Much of it has been some of the
despicable things some of the gangsters in some of the
countries have done. I understand it took 26 years for
the Russians to recognize us after our revolution. They
did not recognize those terribly rebellious colonies until
1807. It did not do the Russians any good and it did not
do us any good or any harm.
I would suggest that we watch the situation daily and
1f and when the Nationalists lose control completely and
the Communists attain the position of having machinery of
state that we at that time accord them recognition unless
in the meantime there has been some other factor.
I think you have to take this present situation that
there is a definite rejection by the Chinese people of the
Nationalists independent of any Russian connection whatso-
ever. The military figures cited by Col. McCann the other
day indicated at the end of the war the Nationalists had
the armies, the equipment and they had the facilities. To-
day the preponderance has entirely shifted.
My
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My own experiences in China since the war have indi-
cated that the Chinese people, with whom I have had very
many contacts, even though not Communists, are so fed up
with the former Nationalist regime that they definitely
want that out no matter what happens and I don't think we
should be hitching our wagon to a descending star on any
ideological basis. I think we have to be bright and
practical people.
MR. MURPHY: I strongly second Mr. Herod's remarks
about the attitude of the Chinese people toward the
Nationalist Government and to the present Communist
group.
With regard to the United Nations, the most fre-
quently attributed reason for the failure of the League
of Nations was the interference of Britain and France in
the critical years of the League--the making of the
League an instrument of their private policy. With re-
spect to the United Nations, there is no doubt in my mind
that the Russians have weakened the United Nations by
following in general the procedure that was attributed to
Britain and France with respect to the League of Nations.
Therefore, I think that however inconvenient in the Council
and in the Assembly the presence of Chinese Communist mem-
bers may be, I think we have to take our chances when the
time comes.
MR. VINACKE: I would like to associate myself with
what Mr. Herod said, but I would like to put a further
proposition in there. I think under the present circum-
stances it is very important that if we are going to
follow the policy of recognition whenever the civil war
Jun n YORK
13 over, that should be made very clear at the present
time rather than waiting without any indication as to the
circumstances under which we will or will not recognize.
T think that is very important domestically and in pre-
paring the ground. I think we have to recognize the
Chinese Communist Government on the assumptions just set
forth and I think it is equally important in the attempt
to influence a full movement in the Far East either in
connection with this or other questions that may arise.
We are in a position at the present time where as far as
immediate recognition is concerned, all the advantages of
immediate recognition have been secured by the Soviet
Union. All we can now do is avoid getting ourselves in
the position where whatever we do 1s thrown back at us
as
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149 8 1
as something we have been forced to do rather than some-
thing we attempted to do in terms of principle as we our-
selves established the principle.
The part of the principle, it seems to me, is when
we have recognized or when we are prepared to recognize,
we should expect the Chinese Communist Party to show a
willingness to meet the ordinary tests of government in
the treatment of nationals of other states in territories
they have under their control. I think those things
should be put in a definite statement of policy with re-
spect to recognition when it occurs.
MR. DECKER: I would associate myself with those
favoring recognition, although I want to say something
about timing. That recognition would rest on the funda-
mental fact of the importance of the Chinese people in
the world, our historical relation to them, and the fact--
and this is the central fact--that the Chinese people have
repudiated the Nationalist Government. That repudiation is
a fact that 1s at least five years old at the present time.
We have just begun to see it.
Some questions are raised in my mind about the existing
Nationalist Government, which was our war-time ally and
friend, and the question of what it would mean for that gov-
ernment as long as it holds on to a substantial part of
China. That is a question of timing. I think a rejection
of the present Nationalist Government would make your pres-
ent political problem considerably more difficult.
MR. PEFFER: I would also make it a matter of timing
and I would wait. I would wait four weeks or five or six
weeks. I don't know when the Communists will get to Canton,
but I would guess not over six 07 seven weeks. The only
other Chinese regime will be in Formosa which is, at least
technically, not Chinese territory. It is still Japanese.
TIBRET
Another matter. Tell me, is not the burden of proving
on those who don't want to recognize? The Communists are
there. They are going to be there 20, 30, 40 years. Who
knows? What do you lose by recognizing? What do you gain
by not recognizing? The only really serious thing I sup-
pose is what Ambassador Jessup has said, that sometime soon
Chou En-lai
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Chou En-lai will sneak into Lake Success before Dr. Tsiang
and take a seat in the General Assembly. What about 1t?
What can Chou En-lai do to embarrass Ambassador Jessup
that Vyshinski can not do better? He vetoes on the Council.
What about 1t? One 18 enough, isn't it, for technical pur.
poses? They have one, haven't they, and suppose they do
gang up and by some miracle get a third in their support--
we have one too. Tell me, what is there to be lost?
Now, the argument against 1t. There is a great deal
to be said for General Marshall's very mellow and very
wise recognition that there is an American public opinion.
I think there might be an attendment to that. Suppose it
is true the State of Oregon blows up. Well, it will settle.
Is it not a very dangerous principle now, when the world is
as tense as it 1s, that we are going to surrender by default
to the guy who is the best lobbyist and does the best propa-
genda, even when surrendering by default 18 against the best
judgment of those who know most about 1t? Haven't we a
lesson on that?
This is no secret state. The people professionally
engaged about the Far East, diplomatic, military, journal-
istic, scholarly, commerce--and I think Mr. Herod, the
businessman will bear that out--have all known for two or
three years--cortainly for two years--that what we were
doing in China had not the slightest basis in sense, fact,
or reality--not the slightest. And yet ifethe people in
the building in which we are now sitting had not had their
way in accordance with their best judgment, there would
have been no difference whatever except about a billion
and a half which we would have had which we haven't got.
We gave them what help we could morally and other-
wise--presumably in a moral obligation--and they sank.
If we had not given 1t to them they would have sunk too.
It would have made a difference of four, five, or six
weeks. Are we going to go along against our better judg-
ment because momentarily Portland, Seattle, Chicago, or
some building in Rockefeller Center-will blow up? Let
them blow.
If this country--the most powerful in the world at
the most dangerous time in the world--1s at a stage in
which the Government is hog-tied against its better Judg-
ment because some people are going to blow up, then God
help the Republic.
THE
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MR. HOLCOMB: I go along with those who have spoken
and I guess most of us do--perhaps all--on the question
of recognition and the question of timing, and I take 1t
that most of those who have spoken would also add that
since to get exactly the right time 1s exceedingly dif-
ficult, it is better to be too early than too late. At
any rate, that would be my view. It seems to me the
reluctance to face that issue springs from misgivings
respecting the political situation. My belief is that
those misgivings are exaggerated.
I think we have been very fortunate in the start
that has already been made in preparing the public for
an honest re-appraisal of the situation. The publication
of the White Paper was a shock to many of the public at
the time. At the same time it was an exceedingly wise
and fortunate and well-timed move. Honest confession 1s
good for the soul and that goes for nations as well as
individuals, and I think our people are in a much better
position to understand and to support the next step be-
cause of the candor and courage which the Government
showed in showing its hand at the time when 1t did.
of course there will be a good deal made by critics
of the Government of the opportunity for criticism, but
I believe the public, once convinced that it is being
treated honestly by people in power--and they should be
easily convinced of that--I believe the public would
follow and that the difficulties growing out of domestic
politics will prove to be much less serious than has been
apprehended. The White Paper is a good beginning and if
the administration follows in the same spirit, timing
moves as best it can, I think it will get public support.
I am sure It will in my section of the country.
MR. COONS: I should like to inquire whether it is
thought a matter of practicality to utilize the suggestion
of Mr. Vinacke that our recognition of the Chinese Com-
munist Government should proceed at a time or after there
shall be evidence on their part that they are accepting
the standards of any government that behaves within the
society of nations. To what extent is the question of
recognition a matter of negotiation, or are we so over the
barrel that we either have to do or not do it? I am in-
terested in that angle of the question because it seems to
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me--although I associate myself with the view we shall
recognize them sooner or later--maybe they realize that
and maybe they realize that we will do it sooner or later
and, therefore, they will not be party to any negotiation.
CHAIRMAN: Very briefly, as you know, the whole his-
tory of our recognition policy has been one of fluctuation,
if you take the entire period of the country. The out-
standing position of the Department on recognition ties in
particularly with two things: first, it is a question of
view as to whether it is the government of the country
running it; second, if it is, the government's will to
carry out international obligations. Those are the two
key points, I think, in our standing recognition policy.
MR. COONS: May I ask another question? Yesterday
we were talking about the desirability of allowing trade
to proceed with the Communist areas of China. Let us say
we will, from the standpoint of timing, withhold recog-
nition 05 China's Communist Government for a matter of
weeks or months. In the meanwhile is it possible for us
to have a policy? Is there any practicality in allowing
a laissez-faire relationship with American trade vis-a-vis
those areas under control of the Chinese Communists, or
does that also seem to be tied up with the question of
political recognition?
MR. BALLANTINE: I would like to raise a small voice
toward putting a brake on this bandwagon. I think we need
to recognize facts. We are confronted with a dilemma here.
If we accept the idea that we have to recognize right away
or feel we have to jump before we are forced into jumping,
I think that we lose 2. great deal of bargaining power. We
lose an opportunity to get conditions we want. The Soviet
bloc has blocked the admission into the United Nations of
a number of states.
I think there is a good deal of room for interpreta-
tion as to what constitutes the Communists' having an
effective government in all China. There is room for
interpretation as to our judgment as to their ability to
carry out international obligations and I don't think that
we should make any statement or make any public announce-
ment at this time as a sort of preparatory step toward
getting into this thing, because then we will be open
immediately to the charge we have further prejudiced the
position of the Nationalist Government of China and that
K.TROMAN
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we have contributed to their downfall. I think that the
more that we can keep people guessing, the more we can
still make them believe that there is a possibility there--
the better terms we are going to get.
MR. LATTIMORE: I am encouraged by the trend this
morning that we should proceed from facts rather than from
subjective attitudes. I hope the Department feels its
hand strengthened but if we, representing the different
points of view that we do represent, are to be of any
service to the Department, 1t seems to me that we should
come back once more, more closely to the point raised by
General Narshall that timing is all important in what you
can get through the necessary and basically desirable
process of debate. And I think that while the recent
speakers have all spoken directly to the point of China,
we should look a little more widely and take in the rest
of Asia as well, and the relationship of politics and
prestige in the whole of Asia to the process by which
policy 1c formulated, debated and put into effect in this
country. It seems to me there is a sort of scissors dia-
gram here. On the one side domestically in the United
States, we have a situation in which one of the most 1m-
portant political maneuvering devices is that each of the
two great parties feels continuously under pressure to
demonstrate to the nation as a whole that it is not less
enti-Russian and anti-Communist and anti-appeasement than
the other great party. Therefore, the party which controls
the administration must present any policies they advocate in
in such a manner as to expose itself to the minimum to the
charge of appeasement.
The other blade of the scissors tends to get neglected.
What is likely to be the reaction in other countries in Asia
to American speed or American delay in recognizing what
almost all of us here appear to recognize as the facts of
life in China? I think under the 19th-century standards of
international prestige that the time of your willingness to
recognize a new state was extremely important. I think that
since the two world wars, those standards of prestige have
changed sowewhat. We have to face the fact not only in Asia
but throughout the world that what has happened in China is
regarded as a setback to American policy and the diminution
of American prestige. The question is how to minimize that.
Over-haste in recognizing the new situation might indicate
panic, indicate to people in Asia that we have been panicked
into a big over-all retreat and that would certainly draw in
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with criticism in the Congress and in the press in this
country. On the other hand, too much delay might have a
deteriorating effect on our prestige in As1a that in the
long run would be more damaging to us because there would
be the feeling that while a new situation has developed,
and in spite of the fact that that doesn't really alter
the mechanics of how we handle things in the United
Nations--for instance, the veto ratio is changed but the
veto situation is not changed--in spite of that fact the
Americans appear to be so baffled that they don't know
what to do. We give the impression of being thrown off
balance, flustered, having lost our heads, incapable of
facing a surrogate Vyshinski in addition to the original
Vyshinski, and that, I think, would be a very bad situa-
tion for us to handle.
In this connection I should like to put forward the
suggestion that we have missed one important opportunity
which could have enabled us to ease the general situation
in our favor. Before the recent United Nations meeting
opened, the Secretary General, Trygve Lie, referred to a
list of nations coming up for admission and said that, in
his opinion, this particular list should be admitted. By
and large, that is the list that has brought a division
each time--we reject certain applications and the Russians
reject certain applications. As the list now stands, it
is slightly in our favor. I think that if we had indicated
a. willingness to admit the whole slate if the Russians would
also admit the whole slate, we would have been much better
off. The list would have included completely satellite
Communist-dominated countries like Outer Mongolia (the
Mongolian People's Republic), but there is a Soviet satel-
lite that has been in existence for a long time and has not
particularly changed the balance between Russia and our-
selves in any way, and the willingness to admit such coun-
tries would have been a willingness to recognize existing
facts without any loss of prestige on our part. If we had
taken a list such as this, then we would have been greatly
strengthened in being deliberate about recognition of the
new regime in China because we would then be clearly on
the record that our position was related to changing facts
in the structure of the world as well as to our own par-
ticular ideological preferences.
In view of that, couldn't we consider the desirability
of an American approach to the problem of recognizing the
new regime in China that would throw other things into the
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bargain as well as this particular problem. It is very
much like the old technique of buying curios in Peking.
There is some one thing that you particularly want, the
dealer knows you want it and he puts on it a price higher
than you are willing to pay. The way you get it 1s to
buy not only that thing but a number of other things, then
you make a lump price and he cuts his price somewhat and
you come up scmewhat; eventually you get what you really
want and he gets what he really wants for that main object,
but neither person has lost face.
Couldn't we couple recognizing the new regime in China
with a number of positive steps in Asia as a whole, showing
American initiative and desire to get things done in the
improvement of various situations, such as those in
Indochina and Indonesia, possibly Burma, whatever we can
do in India and Pakistan, to show that the United States
1s not against changes in the status quo as such, but on
the contrary is anxious to get the most progressive and
liberal settlement possible, and that the United States
stops short of wanting to aid or encourage the development
of Communism but is eager to promote alternatives which are
acceptable to the maximum number of people in Asia and
Europe? If we could handle the question of China in that
wider context of an active American policy elsewhere in
Asia, it seems to me that we could do a great deal to
retrieve the prestige situation and consolidate the ac-
tual power situation.
MR. HEROD: The statement was made that, independent
of recognition, trade could go on. That statement is
probably correct. On the other hand, I don't think that
this group wants to minimize that without recognition the
effort which will be exerted by American traders will be
fraught with additional uncertainties as a result of which
trade will not be as great, and certainly there will be
less credit, less investment and more uncertainty from the
trader standpoint as to what the American attitude will be,
what with export licenses and the ability of the American
Government to prevent your shipping for some reason. That
they will pull out due to the political situation domesti-
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MR. ROBERTSON: I'd like to associate myself with
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Mr. Herod in this question of recognition. I agree that
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the question of timing 1s of the utmost importance.
Dr. Fairbank said yesterday that he thought the value of
direct contacts with people who had been in these parts
would be of Interest and value to the committee. We have
in China, as our chief executive, a man named Paul Hopkins,
who is known, I think, to a good many of the people here.
He
- 156 -
He 13 a good, loyal and patriotic American, and he has
no particular reason to like the Communists. If I may,
I would like to read to you, confidentially, from a
letter which I got from him under date of September 21,
which gives something of his experience in dealing with
the Communists in connection with our own business. I
thought 1t might be illuminating if that sort of thing
might be put in the record.
After talking about our own affairs, he says:
"The authorities are all significantly honest, hard-
working individuals, who live on the barest essentials of
food and clothing. They practice austerity tc the point
of not using electric fans or elevators in the buildings
which they occupy as offices or residences. In my opinion,
the extreme privation of those officers will have serious
effect upon their health, particularly those with tuber-
cular tendencies. I have found them all intelligent, very
frank in discussing problems, and most of them with a good
sense of humor.
"There is no question but that 1t is a new type of
people who, if not subject to outside pressure, will
ultimately bring great progress to China.
"To my mind, the pessimistic future stems from the
increasing breach which has developed between China and
America. There are arguments on both sides, but, in my
opinion, the passage of time has seemed to confuse the
issue and eliminate realistic thinking which bodes 111
for everyone. I may be too close to the picture and
have lost perspective. The almost daily bombing ac-
tivity of the KMT, and the increased miseries caused
the Chinese people by those activities against non-
military objectives, constantly irritate an open sore.
Grant 1t be un-Angle-Saxon to dany an ex-war partner,
but evidence would seem adequate that that partner has
for several years served its people so 111 that 1t has
been rejected by its own people. America is now con-
tributing indirectly to the miseries of those people.
Recognition should be withdrawn and the blockade of the
coast broken. 12
I thought that might be useful to the committee as
the evidence from one man who is particularly competent
to judge the Chinese situation due to the fact he was
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born in China, he is the son of a medical missionary
and, as I say, he has no reason to love the Communists.
He applied for an exit visa some time ago to come back
and visit his people--he had been interned during the
Japanese war. It was denied him and it was only after
we arranged to have somebody else take his place as a
hostage that they finally consented to let him go, and
that with the understanding he was going back again
inside of six months. So, as I say, he has no particular
reason to love the Communists and I think this is good
ex parte evidence.
MR. ROSINGER: I'd like to associate myself with
the view frequently expressed around this table that we
should extend recognition. My own personal feeling is
that the recognition should come as early as possible.
At the same time, I recognize that within this country
there are certain practical problems to be faced politi-
cally in this connection. The question of timing has
been referred to frequently; I think that is extremely
important. I think there is a period, it is hard to
define in advance, but a period of perhaps three, six,
maybe nine months, in which recognition by the United
States will have a certain value in terms of Chinese
opinion and will not simply be a reluctant, grudging
following after the facts and after the actions of
other countries which will have recognized before us.
I would not agree with the statement that with recog-
nition of the new Chinese Government by Russia all the
advantages of recognition are lost to other countries.
I think that is not so, and the reason why I state this
opinion is that I think we have to look at the state of
Chinese public opinion. As I see it, the bulk of politi-
cally conscious Chinese opinion is not, to the extent that
it is hostile to the United States, hostile because it is
pro-Russian; its anti-Americanism is not pro-Sovietism,
by and large, regardless of what the situation may be in
connection with particular individuals or leaders.
As I see 1t, Chinese public opinion, politically
conscious public opinion, is not by and large hostile to
individual Americans, regardless of particular incidents,
1t is not by and large hostile to the United States as a
country, but rather hostile on rather pragmatic grounds
to particular phases of American policy as experienced
and perceived in China over the past few years. If that
is so, then there is a stake to be won in considering
this state of Chinese public opinion. If it is not now,
1872013
by
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by and large, pro-Russian in its anti-Americanism, then
there 1s & much more favorable basis for returning it to
some kind of friendly attitude toward the United States
than if, let's say, its anti-Americanism were identical
with a pro-Soviet approach.
I might add as a footnote that I think in a country
of 450 million people such as China, in which only a
small percentage of the population, even the politically
conscious, have a clear-cut, fixed ideology, that this
question of how people feel on grounds of personal reac-
tion to the policy of a foreign power, in this case the
United States, is very important. I, personally, as I
have suggested, would be in favor of recognizing at the
earliest feasible moment. I think, though, that in terms
of preparing American public opinion for recognition,
there is a process of disentanglement from the Chinese
Nationalists which can be carried out in the weeks ahead,
and I think to the extent that we disentangle ourselves
from the Chinese Nationalists, we lay the basis for
recognition. As a matter of fact, if we were to recog-
nize today, assuming that were possible, we would be in
a highly contradictory situation of recognizing at the
time that we were delivering, through ECA, supplies to
Formosa, and 80 on. We have not yet cleared ourselves
from the entanglement with the Nationalists. I'd like
to suggest, although I am not informed on the technical
problems of carrying out some of these actions, that we
end our ECA assistance as soon as possible to the rem-
nants of the Chinese Nationalists. I'd like to suggest
that one important question would be the position we
take at the United Nations in connection with the reso-
lutions or the proposals of the Chinese Nationalists.
I think to the extent that we associate ourselves at
the United Nations with their position, we make it very
difficult to nove toward recognition. I would be in
favor of keeping ourselves 88 clear as possible from
association with the Chinese Nationalist position at the
United Nations. I think the question of the blockade is
extremely important. I was particularly interested in
THE
the phrase from the letter of Mr. Hopkins, just read by
whene
Mr. Robertson, to the effect that we should actively
And
services
AIRBADY
break the blockade. Regardless of the phrase that is
used, I think it 1s rather obvious that the blockade
COVERNMENT
could not continue if the United States and Britain
took an active position against it. The blockade, let's
say, arose independently of our will, but its continuance
is dependent on the assumption of a certain position of
acquiescence on our part.
In
COMP DENTIAL
NBH 159 -
In this connection, I have been struck by the whole
issue of the Isbrandtsen ships, in the stopping and
seizure of two of them by the Chinese Nationalists. It
seems to me that one of the questions that is most easily
understood by the American public--and not just recently
but all the way back--is the question of the right of
American ships to trade freely in various parts of the
world. Had action been taken--again I won't try to
define it, I don't know the technical details--but had
action been taken to defend the right of these American
ships to trade through a blockade (which is not a block-
ade but technically a port closure, a port closure which
we have already asserted we don't recognize as a blockade),
I think it would have been very difficult for any opponents
of the process of moving toward recognition to say this
shall not be done, 11 because this kind of action is highly
intelligible to the broadest kind of American public opin-
ion.
Therefore, I'd like to suggest, as a generalization,
that the process of disentanglement be carried forward as
rapidly as we can carry 1t forward, as a basis for pre-
paring public opinion as a basis for early recognition.
MR. STALEY: It seems to me in this connection that
it might be valuable to get out at some point a statement
that would make the points that our Chairman mentioned
about our traditional policy on recognition, before taking
any final action here. 1 don't know just what the best
technique would be, whether a direct statement or an
inspired statement of some sort, but to get across to the
public that traditionally the United States recognizes the
regime that controls the country and shows indication of
willingness and ability to live up to its international
obligations. Let people kick that around for awhile and
maybe that will prepare the way for the conclusion on the
part of the public that the informed group represented
here seems to be reaching.
One further note on the drift of public opinion in
our area. As you know, Roger Lapham has recently returned
from China where he was head of the ECA mission, and he is
a former Mayor of San Francisco. He gave a speech a couple
WATIONAL
of weeks ago out there before the Commonwealth Club, and
ARGNIVES AND
RECORDS
LIBRARY
everybody knows, of course, that he is completely unsympa-
SERVICES
thetic to the Communists, but he came out rather directly
REVERNMENT
and emphatically for recognition, going a good deal farther
than most people have been going in speaking on the subject.
Subsequently,
CONFIDE TAL
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Subsequently, the World Trade Association of the
San Francisco Chamber of Commerce considered in their
Executive Committee the four points that Roger Lapham
had suggested in his speech, of which the fourth said
that we will have to recognize the Chinese Communists,
and they agreed with his views and passed them on to the
San Francisco Chamber of Commerce which, I am informed,
just recently has taken an official stand as a body sup-
porting that general view. The four points that they
agreed with, that Lapham put forth originally were:
1. To continue American private business with the
Chinese, as far as it may be possible, in such a
way as not to enhance to any dangerous degree the
very limited war potential of the country.
2. To extend all possible help to American pri-
vately endowed enterprises--educational, medical
and missionary--efforts being made to promote the
continuance of the private support which these
enterprises have received in the past.
S. To keep open our Embassy and Consulates in
China, staffing them with the ablest personnel
procurable in order that we may pit our best ca-
pacities against the serious problems still to
be faced.
4. The only practical way to keep the door open,
as well as to listen and observe what goes on be-
hind the bamboo curtain, is acceptance of the fact
that we may soon have to recognize, in such areas
as they control, The Communist government as the
de facto government, and be prepared to recognize
It whether we like it or not.
TRUMAN
They went on to point out that we already recognize
NATIONAL
the Soviet Union and Yugoslavia and other countries whose
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regimes we don't particularly admire.
U.S.
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SOVERNMENT
MR. REISCHAUER: The question has been brought up as
to whether the recognition of China would have any influ-
ence on a peace treaty with Japan. I presume the question
means 1f recognition of China should come before a peace
treaty has been made with Japan, would that have an adverse
influence on the negotiation of such a treaty. I personally
feel 1t would have very little effect on it. Abstention by
the Soviet Union from such a peace treaty would already
break
CONF IDENTI
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break up its international character. The Soviet Union,
1f you had a veto system, would already have a veto; I
cannot see why the addition of a Communist China to such
a peace treaty would have any great influence. On the
other hand, if you negotiated a peace treaty with a rump
Kuomintang Government having membership at the table, I
think it would only have an adverse influence on China.
The Communists would be less likely to accept the results
of that treaty. I don't think there is any reason for
holding up recognition on that score. We seem to be in
very general agreement about the desirability of recog-
nizing the Communist Government in China and recognizing
it fairly soon. I should like to say, however, that I
see no reason for unseemly haste in doing it; there is
nothing dignified in jumping on the bandwagon in its
last lap and I don't think we gain anything psychologi-
cally. In fact, I think we might lose psychologically
by doing 1t in haste. We would be "panicked" as 1t
were; at least that would be the interpretation on the
part of the Chinese.
I'd like to offer one practical suggestion: would
it be possible to act in conjunction with a country like
India? I think that would make it more palatable to our
own people and more palatable in Asia, if we took an
attitude actually giving India a large part in determining
the time, saying "you are a great Asiatic country, we want
to be friendly with Asiatics, your decision on this is
something that really influences our thinking, we would
like to go along with you on the matter."
MR. COLEGROVE: At an early stage of the discussion
on recognition, President Coons and Mr. Ballantine called
attention to the fact that we must not lose the bargaining
opportunity in recognition and I think it 1s very important
to us that we should remember that. We are in a game of
power politics, no matter what we may think we are doing,
and in power politics we should of course play for stakes
THEMAN
ANNUM
NATIONAL
In this connection 1t might be appropriate for the
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AUVOUIT
US Government perhaps, in cooperation with England and
as
SERVICE
India, to make a public statement as to our terms of
GOVERNMENT
recognition, even during negotiations over those terms.
It 1s rather odd in this conference that we have not
mentioned, except on one occasion So far, the traditional
American policy in the Far East and that traditional policy
has
COMP
DENTIAL
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has been the open-door policy enunciated by Secretary
John Hay and repeated again by Secretary of State Cordell
Hull in negotiations with Japan before the second World
War.
Any bargaining with the Communist Government or
recognition 1t seems to me ought to include an attempt to
get complete recognition of our old traditional policy on
the open. door.
While Chiang's government existed, we urged upon the
Nationalist Government the necessity for a real democratic
form of government and not having a government that was
controlled by one party like the Kuomintang. One reason
probably why Chiang failed--one of the main reasons--was
the fact that we tried to make him take Communists into
his government. Why shouldn't we insist, in the new
Communist Government, that democracy 1s not promoted by
a one-party government and that there should be many
parties represented in the new Communist regime?
That of course is a propaganda point that we ought
not to lose and I regret to see the light treatment that
was made of the effects of recognition of the Chinese
Communists within the United Nations. The General As-
sembly has become a great propaganda forum and the words
spoken there are repeated all over the world. Bringing
the Chinese Communists into a seat in the United Nations
would make US listen to a lot more Communist propaganda
which was repeated widely throughout the globe.
MR. KIZER: I should like to second the suggestion
made by Dr. Holcombe about the White Paper. I have taken
occasion to read it over and I find it a fascinating docu-
ment and it contains good material and good sections with
some sandy strips of course in between.
TRUMAR
I should like to follow Mr. Lattimore with the sug
RECORDS AND
SERVICE
LIBRARY
gestion to go on trading before recognition. Incouldn'
go as far as Dr. Holcombe's suggestion that they reform
GOVERNMENT
their government by recognizing various parties. That is
a matter of scuttling recognition and introducing conflict
where we should introduce agreement.
If we long withhold recognition we shall be contrib-
uting to an iron curtain between ourselves and China.
Therefore, I would like to see that recognition come just
as quickly as the facts of life reached by Congress and
the
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the American people permitted. The American people will
rather quickly adapt themselves to 1t.
One thing further, and here I follow Mr. Robertson
closely. I think we should make a public disavowal of
the blockade Chiang Kai-shek is conducting with respect
to China and I would like to see that followed up at an
early date with a withdrawal of recognition. It does
seem to me that the bombing that he is doing is so heed-
less and go sacrificial of human life without any objec-
tive that the blockade is not a real blockade but a
nuisance designed to hurt people he does not like and
accomplishes no purpose for him, and if we withdrew
recognition of him or to a lesser degree, repudiated
the idea that we were associated with it, it would be
to our advantage.
MR. QUIGLEY: I would like to join in the general
support of the policy of recognition in accordance with
the early precedents of the US. I think the departures
from those precedents we have tried have not worked and
if they would not work in this case, I think that recog-
nition is essential to trade because I doubt if the
Chinese will trade without recognition, and in view of
the fact that China is there and there 1s no alternative
to dealing with China through this new government, it
seems to me that we have no alternative.
With reference to the sentiment of the country, I
have been quite surprised in my area of Minnesota at a
shift of sentiment that has taken place within the last
year or two. I think perhaps a vote which I took in my
class in Far Eastern Politics last Monday is somewhat
indicative of that shift. Mind you, there had been no
propaganda from the instructor prior to the vote. A
notice came out in the paper that day and SO before
My
NATIONAL
beginning the day's discussion I said: "How many in
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LIBRARY
this class (of about 36 students) would be in favor of
SERVICE
recognition of the Communist Government?" Nineteen
GOVERNMENT
raised their hands without considering. They just popped
up. I said: "How many opposed?" and I got six hands. We
had to assume the others did not know.
That is an astonishing thing to me and 1t is partly
due to a shift in the sentiment of the missionary people
of this country. We are a great exporting area, as you
know, of missionaries and I suppose the Middle West is
better
CO
INTIAL
164 * 1
better informed on the Far East than it is on any other
phase of our foreign policy; at least, what the conditions
are that condition our foreign policy, 80 I doubt 11 there
would be 8 very serious explosion upon recognition if that
were proposed in this country.
GOVERNOR STASSEN: I stated on Thursday that I was
opposed to recognition of the North Government in China at
this time and at least for a question of a couple of years.
I want to go into that a little more thoroughly because at
that time I stated a position on it.
My first comment 18 on the discussion this morning
that has been advanced along with recognition or steps
we ought to take, which I say, frankly, to me could be
best characterized as steps that would hasten the victory
of the Communists in China and hasten the complete liqui-
dation of the Nationalist Government.
To me that would be a very sad mistake in our world
policy. If we recognize the Communist Government of China
now, clearly that does mean we must at the same time not
only withdraw recognition of the other government--the
Nationalist Government--but that we must then join in
affirmative action to throw the Nationalist Government
out of the United Nations. There are no half-way measures
on this. You cannot be recognizing a government in one
way and then in the United Nations tribunal, in which we
are 2. great leading nation, take a different position to
that, nor should we possibly abstain. That would be a
cowardly and weak position to take. So, we would then be
in the position of going into the United Nations, with
our great prestige, and throw out from the United Nations
the representative of whatever you may wish to call them--
the remants of a former government that still has now, and
I think will for some foreseeable time, the effective juris-
diction over one-third of the area of China and one-third
of its people and that is continuing to put up some form
of resistance to the Communist areas.
Now, to put ourselves in that position in my mind,
THOMAN
"NATIONAL
cannot be countenanced and I might urge, as I go forward,
AND
and respectfully submit that there have been some impli
LIBRARY
cations that perhaps those that oppose recognition are
NOVERNMENT
trying to play the popular tune in America. That might
be their motivation.
The great view of statesmanship is the contrary
and difficult and unpopular course. I will not attempt
to draw
CORF AL
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to draw any cloak of statesmanship about me, but I
would modestly state that the steps that I took in the
early days of opposition to Hitler on lend-lease and
the whole question of isolation and world trade have
not been popular courses at the time they were taken,
particularly in my home part of the country. So to the
greatest degree possible I approach these policies from
the standpoint of what is right in the long view for our
country and our ideals rather than what 1s the current
popular view; in fact, I have such faith in democracy that
1f a policy 1s right then I am certain you can interpret
it to the American people and convince the majority of
them it 1s right and that 1t should be taken.
Going to the specifics of recognition, it seems to
me that taking the affirmative stand of ejecting the
Nationalist Government from the United Nations and
placing in its stead the Communist Government of the
North would be a clear invitation to a disregard of our
fundamental ideals and objectives in the world picture.
Whatever else may be said about the Nationalist Govern-
ment, 1t seems to me that there has been a greater
measure of democracy, a greater measure of individual
freedom, the right of free expression, of a free press,
of the communication of news in that area than there has
been in any of the Communist areas of the world.
I might project my views of the Communist Govern-
ment of North China. I believe that in the early stages
they have brought some of those who are not Communists
Into leadership--some of those we might call moderates.
In the early stages they will say to the American busi-
nessman, 1f your country treats us better and recognizes
us that will facilitate your doing business here. How-
ever, you will find quite rapidly as they consolidate
their control over the country and as they introduce
people into these industries and businesses who learn
something about them, they will proceed to throw out the
moderates from the government and will tighten up and
possibly expropriate and take over the business, and
that process will move forward steadily.
In saying that, I 111 anticipate that the pattern
followed in Communist China will be the same as the
Communist pattern in the Balkan area. I have a vivid
TO
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recollection of a conference with President Benes of
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Czechoslovakia two and a half years ago in which he
11.
SERVICE
stated that Czechoslovakia was cooperating with the
GOVERNMENT
Soviet
CONFIDENTIAL
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Soviet Union. He thought It was the best policy and
that they were seeking to build a bridge between East
and West and had pledged cooperation with Stalin and
he thought It was the right policy for his country
and that Stalin had pledged to him that Czechoslovakia
could work out its solution in the broad democratic
framework.
I think it is quite clear now that approach was
used to Benes and other people of Czechoslovakia as a
means of getting control, first, of the police and of
the Department of Industries and then getting the men
into the various industries and then working on week
after week and month after month to obliterate human
rights and control over the country and bring it under
iron-handed dictatership. The record in Poland has
been similar to that.
If that effort is made In China, I believe you
will find then disaffection of some of the Generals
in the Communist armies of China which will have to be
met by rapid liquidation and new leaders being brought
in, or 1t might involve a real spit up and further
division with that vast area of China in its leader-
ship. This process, as I vision it, while the armies
are in being and still moving about, would take place
within the next few years and I would think it would
be to be regretted 1f we added to the prestige of the
Communist Government of China and than a process of
this kind began to take place and we in fact would be
in the position of always strengthening the hand of the
new Communist Government, which would be successively
wiping out the liberties, freedoms, and opportunities
of the Chinese people and would be putting down the
efforts of those who wanted some Nationalism in China
and who wanted some independence and who were breaking
away from the Communist leadership; in fact, help them
put down that situation.
In my mind the pluses are very large on the side
of saying: Try having it as a reserve policy that we
want to watch this picture for a couple of years before
we recognize the Communist Government of China. We may
THEMAS
well find that just as the experts' anticipations have
"NATIONAL
been unfounded so many times in China, that the antici-
ABCUIVES
AND
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suvency
pation and prediction now that the Communist armies can
8.5.
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consolidate all China on their own timetable may meet
SOVERNMENT
many
TAL
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many a reverse in some of the mountain passes by some of
the troops who begin to defend their own territory as
compared with defending an area far away from home.
Nobody knows the frailties of the human race. Chiang
Kai-shek in more recent months and years has been an un-
fortunate conclusion of what in many respects was a bril-
liant and remarkable career. Who knows but that Chiang
at his age may pass from the picture and others may rise
to the future in the uncertain period of a few years and
that in that we might find grounds, perhaps, first, for
a withdrawal of the full powers of the Nationalist Govern-
ment in the United Nations, and perhaps even a request for
a United Nations Commission to study the situation in China,
that we might thereby gain time and we might serve notice
we are observing what the new government is doing in the
matter of observing the recognized international amities
and how 1t 18 treating American businessmen and others who
are there and missionaries and how 1t is going about the
abrogation of international obligations before we move in
to recognize and to urge their seating in the United Nations.
Certainly the situation as to Tito was no indication
that you move people away from the Soviet Union by being
generous to them. He moved away at a time when we were
being the firmest and clearly classifying him in that
area, and he, on the other hand, was greatly professing
his association with the Soviet Union at a time when he
could do it and still retain full American aid and full
American assistance and that was the time clearly that
there was no reason for him to take any other position,
but when he had to make a choice with the increasing
tightening up of the screws becoming apparent from the
Soviet Union, then he made the choice to move away.
If there are indications of moving away from Moscow
and of a greater recognition of rights of people within
North China, that would be the moment at which we might
decide to recognize and send assistance, but at a time
when all statements being made by the leaders and the
Communist Government are insulting and attacking our
country, when the treatment of nationals is at a low
ebb, clearly that is not a time to think of recognition
the
and I do not agree that our prestige 18 involved in the
AWARD
question of recognition. I think our prestige is in-
volved in all of Asia and all we have done and all we
will do,
I
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I make the further point on this that by all means
we should have a new aid to Asia economic program under
way, functioning before we recognize the Communist Gov-
ernment of the North of China.
If at a stage when the world says, what is America's
Asia policy, if there is such a stage, the one outstanding
fact that we recognized the Communist Government of North
China and joined in throwing out of the United Nations
that nation that stood firm in years of Japanese invasion,
if that would be the one thing we did in Asia, I think the
result would be very sad, but if we start a new affirma-
tive approach of aid to Asia in a positive way and if your
program and policy begins to project itself and be under-
stood--if at that stage we find the intelligence officers'
reports are of complete consolidation and if at that stage
we find there 18 an element of increasing stability and
respect for rights rather than the reverse in the North
of China, then at that stage I think recognition should
be given after a full consideration but not before.
CHAIRMAN: I am going to ask Mr. Russell if he will
read part of a telegram which we received from General
Wedemeyer.
MR. RUSSELL: General Wedemeyer says: "The United
States should not surrender the initiative in any field
of international endeavor, in any area of the world. The
timing, the scope and the character of our efforts in one
area, In this instance, the Far East, should be carefully
coordinated and integrated with our efforts in other areas
of the world, for example, western Europe, central Europe,
Middle East, etc. To insure economy of means and to make
our efforts more purposeful to all nations our efforts
should be integrated and coordinated with those nations
and peoples having objectives comparable with our own.
"Specifically with reference to policies and objec-
tives in China the following ideas appear pertinent:
"1. The pronounced and progressive deterioration
of China's political and economic structures, also the
impotence of government military forces, render it
impractical at this time to provide large-scale material
aid. The remaining Chinese non-Communist forces or ele-
ments, with or without National Government's cognizance,
are not organized or equipped to assimilate or to use
effectively large-scale material aid.
RECHIVER AND
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"2. The
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"2. The Chinese people, individually and collec-
tively, would receive a tremendous uplift in morale and
would derive strength and hope for the future if the
United States, also Great Britain, France, and other
friendly countries publicly affirmed the determination
to support anti-Communists or non-Communist elements in
China throughout the Far East. Such a public pronounce-
ment by the President or the Secretary of State would
provide the moral support SO urgently needed by bewil-
dered millions not only in the Far East but in other
important areas of the world.
"3. Material aid to Chinese leaders, communities,
provinces OZ specific areas, actively resisting or
tangibly striving to generate realistic opposition to
communism, should be given by the United States on an
evaluated scale, carefully supervised by United States
representatives, progressively increased in scope if
developments warrant. In this connection military
equipment, propaganda media, medical equipment, food
and clothing might be distributed at times, in areas,
and in quantities determined by careful evaluation of
the existing and developing situation. Our initial
objectives should be to restrict and harass the mili-
tary and economic activities of the Communists and
concomitantly to refute the ideas, the ideals and the
ideologles of the Communist political and cultural
forces.
"4. Continued observation and evaluation of the
results attained by the above unequivocal moral support
accompanied by evaluated material aid, might justify
later greatly increased material aid in certain locali-
ties as, for example, in support of indigenous movements
that give tangible evidence of momentum and substance in
their struggle against Communist domination."
CHAIRMAN: I am going to ask you now if you would
be willing to discuss for a while the particular problem
which seems to me to emerge in connection with a Japanese
peace treaty.
I think in some of the earlier discussion in which
the question of Japan has been touched on, a number of
people at least have expressed a point of view which
amounts to a suggestion that a termination of occupation
of Japan as soon as practicable would be desirable and
Japan should be started out again free from an occupation.
The
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advice
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The problem which arises in connection with the
conclusion of a peace treaty and on which I hope you
may be willing to express opinions is this: It is
quite within the realm of contemplation that assuming
we get over the procedural difficulties of arranging
a conference to conclude a peace treaty, that 1t might
be fensible to reconcile the points of view of the
Soviet Union and other powers as to the terms of the
treaty. We have had some difficulty in concluding
peace treaties in other parts of the world. The
question is: If such a situation develops, is it
more desirable to continue with our occupation and
with no peace treaty or have those states who can
agree on a peace treaty go ahead and conclude a peace
treaty of their own with Japan, even assuming other
states refrain from ratifying it and therefore remain
technically in a state of war with Japan, or may con-
clude their own peace arrangements with Japan.
That issue of a separate peace treaty if no unani-
mous decision can be reached, or 1f there 18 no peace
treaty, on how the situation should be liquidated is
can which I think requires very carefuly decision and
I hope that we might address ourselves to that for the
next period of our conference.
MR. JOHNSON: I believe that a peace treaty with
Japan should be negotiated as soon as possible. I feel
that the only way that you can free Japan to enable
Japan to take the part that she has to take in the
trade in the Far East, which is necessary to put her
on her economic feet, is to have this peace treaty.
I know the difficulties that Ne have had up to the
present time; we haven't gotten over the procedural
hurdle. I, myself, feel that it is rather sad that we
can't get across that hurdle. My own personal belief
1s that enough of the nations, that have been partici-
pating in the discussions at the Far Eastern Commission,
would go with U.S. on a peace treaty to make it worth while
doing it even 18 Russia was not a party to it. I profess
to no knowledge of Russia and I don't know much about 1t,
but I have a feeling that 1f we could start in on this
thing, Russia probably wouldecome along with us; because
I don't think they could afford, or would feel that they
could afford, to let the majority of the nations of the
Pacific go forward in this matter and not participate in
1t in some way.
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MR. REISCHAUER: I might dwell particularly on the
influence or the China situation on the Japanese situati n.
I think the Communist success in China does make it more
imperative to make a peace treaty with Japan quickly, 1f
a suitable peace treaty cen be made. Of course, a peace
treaty made without the participation of certain great
countries like the USSR would be a blow at international
cooperation. We'd have to recognize It as such - that is
a serious loss. A peace treaty in which we had to sacrifice
certain essential points would be disastrous. That is, if
we made a peace treaty in which Japan could not maintain 8
viable economy, we'd be worse off than we were before.
There has been much reference to the American rec rd
in the Philippines as being our greatest asset. I think,
in 8 sense, the American record in Japan is, or at least
will be, superseding the record in the Philippines. The
record in the Philippines 1s 8 colonial record for the
colonial period. We had very clean skirts in the colonial
period. Asia is moving out of the colonial period into
something else. Wittingly or unwittingly, we have tried to
democratize Japan; there is no doubt about the effort and
there is no doubt in the minds of many people that that is
what we tried. If Japan cannot live economically, of course,
that great experiment will collapse and it will backfire in
8 tremendous way. I think 1t would be accepted as proof-
positive that the American way, the American concept for
Asia, 18 meaningless enough Asiatics probably believe that
already. We put ourselves way out on a 11mb in Japan some-
timeswithout recognizing it, but we are out there just the
same; we almost have to succeed. Unfortunately, I think
we would all agree, our position in Japan 13 definitely
deteriorating. I think it has been deteriorating for some
time. You do not, in the long run, create a strong demo-
cracy through military dictatorship and we must admit to
ourselves that our methods inevitably have been those of
dictatorship: we have told them what to do. There is, in
the long run, a conflict between the ultimate objectives
and immediate methods; that conflict has grown year by
year. At a certain point it became so great, I put it in
the past tense, 1t became so great that we began to lose
ground rather than to gain ground in Japan. Particularly
with the Chinese victory, a Communist victory in China, I
think we will begin to lose ground, we will accelerate in
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our losing of ground. I say this because the area in
which we are losing ground, I think, is the ideological
one primarily. There is, after a period of years, a
growing resentment on the part of the Japanese toward
dictation. In so far as they have imbibed some of the
1deas of democracy, that irritation 1s all the stronger;
it is natural to people with democratic ideas, so far as
those have gone across.
There is an idea in the mind of the Japanese that
they must live with the Chinese. The Russians exert a
negative pull there. Russia is highly unpopular. Com-
munism is popular in certain groups in Japan despite
the Russians not because of them. In the intellectual
vacuum that Japan is, I think the Japanese have quite
successfully put them into two different compartments,
Russia and Communism. It seems incredible to us because
we usually define Communism 1n terms of what exists in
Russia. That is quite different in Japan. They define
Communism as a theory; 1t is on a very high level.
Russia 18 something else. They don't like Russia.
In the case of China, a Communist China exerts a
different pull on the Japanese public, I think. They
are in a state of mind where they have always been great
admirers of China despite all they have done. Today,
after their great defeat, I think they are in a position
of being in greater admiration of China than ever before,
despite the situation in China today. They feel that
they must go along with China to a certain extent.
I think 1t would be a highly disastrous situation
if we seemed to be creating a wall between Japan and
China. Communistic China then would really exert a
strong pull on the Japanese imagination. Communism 18
unquestionably growing in Japan, growing very fast, and
I think we, ourselves, are the chief stimulus to its
growth. The Army of Occupation is the type of thing
that does produce that. Therefore, the Communist vic-
tory in China makes 1t necessary for us to move all the
more rapidly than before.
The matter of trade has been brought up several
times, in terms of whether or not trade is more vital
to Japan or to China. I should say the answer is very
definitely it is more vital to Japan. China is on a
different
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different time schedule, in fact, all our thinking about
China and the rest of Asia is on a different time schedule
from our thinking about Japan and Western Europe. Those
are industrialized countries, as Mr. Kennan pointed out
the other day. Japan is one of the potential areas for
war power, for industrial power. It is in a different
category from the rest of Asia, something that can be put
into power terms within a matter of a year or two. Asia
can only be put in those terms in a matter of decades.
I think in much of our discussion, when we said
"Asia, If we meant Asia minus Japan. Japan is in that
different time schedule. It makes no difference, really,
whether the Chinese Communists succeed in twenty years to
industrialize, or ten years. They are out on a very long-
range program, say fifty years if you want. China is not
going to be a menace to us for decades. Japan has to live
immediately. It is an industrial power. In Communist
hands 1t would be a menace to us. Its economic power can
build up China and can help us greatly in reviving the
economy of the whole Far East. I mean this whole concept
of production of rice in Siam and Indochina is premised
on the supposition it can be exchanged for Japanese in-
dustrial goods, I believe. We have to succeed in Japan
immediately; the Communists don't have to succeed in China
for decades. From their point of view, I think the trade,
in 30 far as 1t is an essential part of the Japanese eco-
nomics, 1s more important to Japan than to China. Any
feeling on the part of Japan that we are stopping that
trade would be disastrous to us on the ideological ground
as well.
CHAIRMAN: How do you envisage the position of Japan,
say, in 1960 in the Far East?
MR. REISCHAUER: Either Japan is going to live eco--
nomically or else 1t is going to be a catastrophe. If
she is living economically that means she is living on
exports, now, not on 80 much of consumer goods as capital
goods. The whole shift of postwar years has been in that
direction and that 1s what the Asiatics want from Japan,
and Japan can provide these capital goods to the rest of
Asia much more cheaply than anyone else can, in most cate-
gories. If it succeeds, I should imagine in 1960 Japan
would be a very important part of the economy of the whole
Far East. It is pump-priming mechanism, actually, that is
the thing that gets the rest of the Far East going.
Politically,
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Politically, you have the question: Does Japan
remain a peaceful nation, a nation attempting to carry
out a democratic program, or swing to something else?
The problem is, what else would it swing to? I think
the history of modern Japan would indicate clearly
there are only two possibilities in Japan, either a
democracy or back to the totalitarian pattern. The
whole try from '90 on is a swing between the two. They
have grown out of the modern Japan--a pull toward demo-
cracy, which many of us underestimate in Japan, and a
pull toward totalitarianism which finally won out--they
are products of the modern age. Japan is going to swing
between the two. The question is what kind of totali-
tarianism; that 1s academic. Totalitarian means pretty
much the same thing. I think in Japan it would have to
be red because that 1s the only line possible; 1t would
be red in the sense it had a Communist ideology and a
great number of old army officers running it. They would
flock into that; it would be the only solution for them.
That would be a rather curious red, but it doesn't make
any difference to them whether 1t is emperor-oriented or
something else. We have that choice. If the thing suc-
ceeded, we have a chance to keep it democratic and we
have to work for that.
MR. COLEGROVE: There 1s, of course, no doubt of the
fact that the longer our military occupation remains in
Japan, the more unpopular the United States becomes with
the Japanese people. We have been extremely popular in
Japan, the military occupation has been very fortunate
under General MacArthur and I think that, from the very
beginning, we had the great bulk of the Japanese people
behind the American experiment in democracy, partly
through the devotion that the Japanese people have to the
emperor, because the emperor asked the Japanese people to
give support to General MacArthur, and because of the
wisdom of the administration that we have carried on in
Japan. But a military government is always unpopular and
no matter how far we go in relaxing the immediate direction
of governmental affairs in Japan to any government like the
Yoshida government, which is very favorable to the United
States, nevertheless, we increase our unpopularity in re-
maining. On the other hand, I think that we might well
keep in mind that the ideal procedure for a peace confer-
ence on the Japanese peace would be a conference of the
eleven nations represented in the Far Eastern Commission,
but if Soviet Russia will not cooperate in negotiating a
peace in a conference of the eleven nations plus Japan,
herself, making twelve, then wisdom would seem to call
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for a conference of the ten remaining nations plus
Japan. But one thing will have to be clear with refer-
ence to the American position and that 1s the problem
of security in this great game of power politics.
In other words, does the United States have the
basis to resist a Communist, or, again, a Russian inva-
sion not merely of Japan but also of South Korea? If
we withdrew without having it clear to the entire world
that we are ready to immediately oppose a Communist in-
vasion of South Korea and again a Communist invasion of
Japan, then, of course, we greatly have weakened our
position and strategy, not only in the Pacific, but I
think even in Europe, itself. In other words, South
Korea today, its independence, is completely dependent
upon the support of the United States; so 1t would be a
great strategic mistake for the United States, even with
an early peace treaty, to withdraw unless we may have
taken a strong position with reference to strategy.
MR. DECKER: I imagine that a good many other people
around this table have had the same experience that I
had in getting it from the horse's mouth, namely, from
General MacArthur, that he considered that continued
military occupation could not be successful. He said
a study of history disclosed it. A study of history
disclosed military occupations could only be successful
for a maximum of from three to five years, and the occu-
pation began in 1945.
The second thing I should like to say is I think it
is very important that we should be prepared to follow
the logic of democracy and to accept its hazards as well
as the benefits that we so profoundly believe in; accept
its points of weakness as well as the strength in which
we have confidence, and that requires that the Japanese
people should, at the earliest possible moment, get on
their own.
The third thing that it seems to me is completely
obvious is that one of the very critical points is going
to be Japan's viable economy and how that can be achieved
without opening up trade between Japan and China. It
seems to me that is a question that can only be answered
in one way.
Then there is a further thing that I think we ought
to constantly keep in mind and that is the traditional
fear which the Japanese have entertained toward the Russians.
Whatever Communism may do in Japan, whatever may be the
result
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result of the Communist success in China, I do not
believe that they will eliminate from the Japanese
mind and heart that rather deep-seated and well-
founded distrust of Russia.
MR. MURPHY: In consideration of a peace treaty
with Japan, I think there are two major considerations,
first, on the political level, the danger of our being
responsible for or underwriting the Japanese political
situation for a prolonged, indefinite, future period,
and on the economic level, whether we can afford the
nearly half billion dollars which we are being forced
to contribute to their economy, when there is no evi-
dence, no good evidence, 1t won't continue indefinitely;
and secondly, the effect on the Japanese effort to make
itself self-sustaining of our continuing to hold it back
in that manner.
With regard to our occupation on the whole, although
there have been numerous mistakes made or claimed to have
been made, on the whole the occupation has on balance
been quite successful, but there is no guarantee that at
some near future time we may not begin to make serious
mistakes; as Mr. Reischauer says, the situation tends to
deteriorate.
When I was in Japan not very long ago, the general
feeling as reported to me there by both Japanese and
Americans was from the very end of the war the Japanese
were waiting to see us get out, much as they had unex-
pectedly liked us in the beginning and up to the present
time. Nevertheless, they were withholding all kinds of
plans for the time when we got out. The question of
reparations is pretty well settled by now, but it was a
great drawback and holdback on Japanese plans for at
least two years. There are other restraints on them
which our continued occupation and the lack of a peace
treaty impose on them.
With regard to the militarily strategic position,
it seems a very, very doubtful thing whether we would
be in a position to hold Japan if we became involved in
war with Russia, and whether we were able to hold Japan
or not in holding 1t be responsible for eighty million
people, I think it is generally conceded that we'd have
almost the same advantages in the islands like Okinawa,
Tinian, and Saipan, that we have in holding the islands
of Japan. For that reason, I'd be strongly in favor of
our moving toward a peace treaty with or without Russia.
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MR. VINACKE: I would like to raise questions rather
than present a point of view. I think we are making
certain assumptions in our approach to this question, one
of which is that a Japan restored in her independence as
a result of a peace treaty, would automatically thereby
have facilitated her access to the position which she must
have economically if she is going to retain her economic
position in Manchuria, in Korea, in North China, and in
her trade relations with the southern Asian countries and
with the Philippines.
Now, it seems to me that a great deal depends on the
circumstances and the nature of the Japan which regains
her freedom of action, as to the attitude or reaction of
the peoples that are governed throughout the area, through
the resumption of trade relations on terms regarded by the
Japanese as suitable, or we would regard as suitable in
terms of the economic objective of restoring Japanese
power. I am afraid that under those circumstances, as well
as under present circumstances, we would find ourselves in
the position of being expected to exert considerable pres-
sure in support of Japan on the states. It is not alto-
gether clear yet whether they are prepared to make a peace
treaty with Japan on the assumption that Japan is going to
be a relatively economically strong Japan and, therefore,
not in an equal trading position with themselves, but really
in a dominant trading position with themselves.
I wonder whether we won't be in a better position to
approach a peace treaty with Japan on a basis of negoti-
ation, if the negotiations were deferred to the time when
we could look at Japan as a factor in Far Eastern politics,
rather than a factor in the American-USSR relationship,
which is obviously, it seems to me, what we are doing now
and what we have to do. I think we are in a much better
position in the present state of our relationships with
the Soviet Union to deal with Russia from Japan as a country
that is not independent than we would be if Japan had re-
gained her freedom of action.
MR. COONS: My remarks are a little bit along the same
vein Mr. Vinacke has just brought forward. Supposing that
we shall have signed a treaty with Japan, we shall still be
having the Japanese on our minds and hearts as a concern
with reference to their economy, and there is still the
real possibility that, if not from governmental sources,
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at least from the capital markets of this country, equal
amounts of money will flow toward Japan. Now, we know a
good many of the countries of the whole Pacific basin
have been concerned about the drift of policy on our part
with reference to the revival of Japanese economic strength,
a policy which we have had to take for various reasons, and
quite legitimately. Would it not be wise for us, before
undertaking the negotiation of the Japanese treaty and
recognizing the concern that they have that we will either
privately or publicly finance the Japanese hegemony and
economy in the Far East, to do these two things we have
talked about before: namely, try to have some greater
regional considerations of the flow of trade, and have a
policy of economic aids such as Mr. Stassen has referred
to, which are already a part of the record, to mollify
that concern that is wholly legitimate on the part of
many of our Pacific confreres.
MR. BALLANTINE: Mr. Chairman, I think that many of
us Americans, in thinking of a peace treaty, have a con-
cept that you conclude a peace treaty and then you settle
everything for the rest of time and Japan will be off our
necks, we no longer have a responsibility toward Japan.
Now, I think that we have to conceive of this problem of
a peace treaty as related to our ultimate objectives in
Japan. I might express our ultimate objectives in these
terms: we want to see emerge in Japan a country that will
play a constructive part in the family of peaceful nations.
In other words, that means we want a Japan that is going
to be on our side. Now, if we want a Japan that is going
to be on our side, we have got to make 1t to the interest
of the Japanese people to be on our side. We want them to
be democratic. Well, if we want them to be democratic, we
want to convince them that that 1s a better way of life
than the kind of life that they have had before.
Now, if we should conclude a peace treaty and Japan
should be left completely defenseless and still have
failed to achieve a viable economy, we will earn recrimi-
nations to the rest of time; if Japan should find herself
defenseless against the Soviet Union, if Japan should find
herself unable to make ends meet, that would certainly turn
her into the hands of the Soviet Union. I think we must
realize that we have a continuing responsibility even
though we don't have any occupation forces, even though we
don't have any tutelage carrying on we do have a moral
position that we must continue to maintain in Japan, con-
tinue to help Japan to arraign herself on our side, to
make it to Japan's interest to remain on our side. I just
wanted to inject that note as an important consideration
that we must keep in mind.
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MR. LATTIMORE: The dilenma of our position in
Japan can be stated in B. way slightly different from
any statement made so far. Either we have a Japan
which before 8. treaty or after a treaty is primarily
dependent on the kind of American economic blood
transfusions which General Marshall this morning said
represented an intolerable drain in the long run--
something that has to be diminished- that kind of
Japan either under continuing occupation or a free
nation which may take on the very deceptive appearance
of a reliable ally but in fact represents 8. dangerous
commitment of enormous American resources in a distant
part of the world which may not be the decisive
theater of power settlement.
The only other possible kind of Japan is one which
does not in fact depend on American subsidies. Such a
Japan is inevitably going to be a bargaining Japan
and inevitably a bargaining Japan must bargain with
the counters it has at its disposal and among the most
important of those counters are its possibilities of
friendly relations with a Communist Russia and & China
under increasingly strong Communist control.
These are unpleasant facts, but we have got to
face them. There is no way of getting a really free
and independent Japan that 1s not also a Japan capable
of bargaining against us at our expense.' There 18 no
way of having a dependent Japan that is not an embar-
rassing drain on us. Those are the two horns of the
dilemma and there is absolutely no other way of stating
the facts.
I think we ought to give a little more attention
to the problem of Horea. Korea appears to be of such
minor importance that it tends to get overlooked, but
Korea may turn out to be a country that has more effect
upon the situation than its apparent weight would
indicate.
I don't know how it can be done, but I should feel
very much casier about the prospects of success of
American policy in the Far East as a whole if we can
proceed to arrange our new relationship with Japan,
whatever it turns out to be, by disengaging ourselves
as far as possible from southern Korea.
It has
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It has been widely stated that Korea is not a
decisive strategic position. Certainly on the polit-
ical side Korea is likely to be an increasing embar-
rassment. Southern Korea unfortunately is an extremely
unsavory police state. The chief power is concentrated
in the hands 05 the people who were the collaborators
of Japan and therefore Korea represents something which
does not exist in Manchuria and North China. If the
Chinese are lling to trade with Japan it is because
they no longet fear that trade with Japan means
Japanese stra egic control. Southern Korea, under
the present regime, could not resume closer economic
relations with Japan without a complete reinfiltration
of the old Japanese control and associations.
Korea is a danger to us in other respects. I think
that throughout Asia the potential democrats--people
who would like to be democratic if they could--are more
numerous and important than the actual democrats. The
kind of regime that exists in southern Korea is a ter-
rible discouragement to would-be democrats throughout
Asia who would like to become democrats by association
with the United States. Korea stands as a terrible
warning of who loan happen.
MR. QUICLEM: I suppose we could say that the pro-
gram of the occupation has two main phases--a police
phase OF military control phase, established in order
that certain settlements might be reached, and the
other, a totality or reformist phase which might or
might not have been undertaken but which we have under-
taken and it seems to me that we leave out the question
of international complications--that probably on both
of these aspects of the occupational program we would
have to say that the time has come to wi thdraw and to
end the occupation.
I agree with Mr. Reischauer's estimate of the
trend in the Japanese attitude toward us and wish there
were time to discuss the reasons for it, but of course
there isn't time. The cost of the occupation is of
course tremendous for us and it is also tremendous for
the Japanese and it is to some extent delaying their
economic recovery. I would think, though, that we are
faced by a situation prompted by the now constitution,
which will require us to set up a condition in the treaty
which
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which the Russians will not accept and I don't know
whether that is the main reason for their apparent
determination to have a veto in the conference but
that perhaps you could tell us, Mr. Chairman. 110 have
in the constitution, as everyone knows, required Japan
to disarm and to remain disarmed permanently and the
Japanese probably don't have the unanimous feeling as
to just what obligations that leaves us under, but I
know some factors of our public opinion would feel if
we withdrew from Japan before this had been changed,
that we would be failing to discharge a moral responsi-
bility for their protection.
Perhaps other sectors of Japanese public opinion
would say, we prefer you to withdraw even so, and how
the majority would go I don't know but we are faced by
E. problem there which I would like to see discussed.
I don't know what the answer to it is myself. Certainly
it will take, if we do desire to have that provision
of the constitution or otherwise, considerable time to
put them back into the military column. So far there
has been no public expression of any desire to see
that constitution changed. of course we know what the
Japanese will do the moment we withdraw. It is more
or less academic RS to what we think about it except
for the matter of the treaty and I don't know the
answer.
CHAIRMAN: There is a great deal of speculation
as to what the future relationship should be between
India and the US. It depends in part I suppose on the
evaluation of the future role of India in the whole
Asian and Fer Eastern scene and if you would give us
your thoughts as to what is the position of India today,
what it is likely to be, what the relationships of the
U.S. to India should be, it would be extremely helpful
and very timely for us now.
I think one of the characteristics of the Indian
situation 19 that because of the recent emergence into
independent life, we approach the problem of India
without the background of the historic context which
is considered in relations with Japan and with China.
MR. TALBOT: In B. very modest way for 8. few years
I have been climbing stairs and walking down halls and
knocking
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knocking on doors and saying, remember there is India
and in this world we have to think about that part
too. Things have happened elsewhere in Asia and we
come to 8. moment when there is recognition of a country
called India and there is a sudden jump and India 1s
the new bastion of democracy and India is the place
where our policy, which had so many difficulties in
eastern Asia, can be retained. I am afraid that I
find myself in the minority in having to suggest that
there are a great many risks in the Indian situation
which have to be considered carefully before we take
such a long leap in the very new political situation
that you speak of.
There is an inherent regime and administration
in that country which was badly fractured by participa-
tion and indepondence. It is too early to judge what
is going on and how effective the new implementation
or new administration measure may be.
In the matter of top personalities, Nehru, the
Prime Minister, 1s the boy of the crowd. He was 20
years younger than Ghandi and younger than practically
every other leader on the first team and yet he is 60
today. Within the next relatively few years we have
to count on a complete turnover and wonder what sort
of change will como after that.
The Indians still have the problem of their rela-
tions with Pakistan, with all the troubling difficulties
existing there and the uncertainties as to what may
develop over Kashmir. Economically, there is the basic
problem of feeding people--the food problem which has
to be met if the country is to be held together politi-
cally, and it is still quite uncertain as to how it
will go on. They have had productive difficulties and
a strike in capital and a strike in labor which has
been plaguing them. They have had many other diffi-
culties. Socially they are going through a period when
the old stabilizing factor, the caste system, is break-
ing around the edges, and while social change is desir-
able, it does not always come at a steady pace and it is
difficult to tell what will happen. Psychologically
there is a great danger.
There is very great danger in putting Nehru in the
position of being an American puppet. There is no better
way to take the ground out from under him than that.
India
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India is a risk, to my way of thinking, that is
worth taking, and in considering the problems we should
think of it from India's point of view. Coming back
to the food question, which is primary, if we were the
Indian Government, where would we 80 to get aid? We,
the Indians, must get food to carry over the next couple
of years. If we don't, the political and economic
integration will be get back, and where do we go? Ther-
ever we can get it. We don't ask for ideology. We 80
to Argentina or Southeast Asia and come to the U.S.
Because of pride we don't ask for grants but we know
the U.S. has a surplus in grains and in some way our
pride could be saved--we could make a borrowing arrange-
ment in surpluses that would help us.
Again, from the Indian point of view, on the longer
terms, therells a great deal to be done in the increase
of food production. Again there are many countries to
whom the Indians might 60 for aid. They will try to
get what they can from Japan and see if they can get
help in materials for wells and fertilizer from this
country or if they can get it cheaper or better from
European countries or Australia.
Then there are a great many other prospects for
economic viability. The Indians are thinking in terms
of how will we stabilize our position, and not, how do
we fit into the American-Russian picture, but how to
get our own problems settled. In line with that think-
ing, there is a great deal of help Americans can give
to the Indian invitation and there are large-scale
utilities that are needed. They require not only
capital goods: if you give them a big machine, you
have to train the people to operate it. There has been
some stocking of the steel mills by the British Common-
wealth, run by Indians, trained by Americans; similarly
with aircraft and similarly with dam projects. They
are small-scale businesses that Indians might invite.
The government people don't like the attitude of
their own capitalists and they would not object to
seeing American or European business on a small scale
there. They are proceeding with village and urban
planning and again at their initiative I think they
might very well derive some help. I don't know how
widely It is known that the Ghandi spinning wheel,
which 1s a symbol of India, has been considerably
developed
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developed and refined by a Pole over the last 15 years.
The contributions of Americans on reconstruction
have been belpful 80 long as they have been at the
Indian initiation. Similarly in training of adminis-
trators, they may want help and there may be a place for
outsidera to help--university projects were mentioned-
scientific training and others.
Returning to my role as an American, it seems to
me that because of the present situation in a country
like India, we don't want an American policy which says
we must line up India on our side. As an American, I
would like to see diversity in the world and people
developing as Indians are developing, in their own way.
l:e take the risk. It 1s a lesser risk than if we try
to people India to our pattern. Let them develop their
own way and if we get that diversity I think we may
some day profit from It! As Mr. Lattimore says, we
run the risk that India will turn against us, but where
don't we run the risk?
In considering the problem of India, we have to
think of Pakistan, which is over-shadowed by India.
It is smaller and it is divided, one might say hope-
lessly, geographically speaking, but confronted with
other countries of Asia, it is a large and important
country and I think in our fascination for a new role
of India, W6 must be very careful in our treatment of
Pakistan.
The Indian Prime Minister is coming to this country
next week. It is very important and it good, but
we can not forget that the Pakistan Prime Minister,
Liaquat Ali Khan, is going to MOSCOW in the next few
weeks and there are suggestions that the Prime Minister's
visit to Moscow is at direct reaction of sensitiveness
and irritation at our having glamorized India and having
ignored to some extent the potentialities of Pakistan.
I think that there is a great deal we can do to
strengthen Indian society. I think we can help them
strengthen it. There is a good case for doing it. India
does represent potential stability and the more stable
it is, the more likely 1t is that it would be nearer to
us than the other side. We don't have to be suckers for
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the ECAFE plans Mr. Brown mentioned so badly organized.
On the other hand, the World Bank and others found it
is possible to get good plans and support those and
give the Indians a feeling they are putting up a busi-
nesslike proposition and we are doing business with
them. That would encourage their morale and give them
a sense of belonging to your world if anything does.
India's importance is growing if it can achieve
internal stability. If all these risks I mentioned can
be surrounted, the role it will play in South Asia will
be very important, and I think that, generally speaking,
it is likely to be nearer our side than the other
although certainly rarely entirely on our side.
As a final comment I might observe that last night
a senior British official in Washington at dinner with
the Indian Ambassador, Mrs. Pandit, was speaking about
Kashmir. He over-simplified the case and said Kashmir
is the central problem in the world and not the stom
bomb, because If India and Pakistan 80 to war over
Kashmir they would bring chaos resulting in communism
in India which would extend to the Middle East, which
would extend to Africa, and then would over-flow Europe.
Later an officer of the Indian Embassy commented
that that presentation had probably done as much to
irritate Mrs. Pandit and presumably the Indian Government
as anything could. He said: "We don't like the Kashmir
problem. It is something that bothers us. We want
Kashmir, but we don't like the way the thing is shaping
up, but if people would only help us--why don't they
say, there is some way to approach the Kashmir problem.
That will help the Indians. Why do they have to say,
you are the spearhead and the end of the weapon for
European communism. If they looked at it from our point
of view we might make progress.
MR. HEROD: From purely a business and industrial
stendpoint a few observations on India may be in order.
I personally have not been in India for a little while.
1.0 have branches there naturally and we do a considerable
amount of business there. As we look around Asia, with
the exception of Japan, India has 5 greater installation
of electric power than any nation. It has a greater
change of stability than most of the other countries and
having inherited an Indian civil service, it offers
Though
tremendous
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tremendous potentialities, and although our observations
indicate the virility or vitality of the individual
Indian is not as Creat as the individual vitality of
the Chinese, the Indians are going some place whereas
the Chinese are going less rapidly, let us say, in a
roundabout direction. They have many plans and the
future of those plans seem to be possible and reliable,
but I don't think we want to E0 over the barrel with
our so-called aid to everybody.
We are getting the psychology that we can expend
our patrimony and they will have gratitude. They will
not, in my opinion, and we will be dispensing our
resources.
There are good prospects in India for credit exten-
sion and likewise for loans self-liquidated which they
can have, and if we approach India on a business propo-
sition and try not to weave it into a division between
MOSCOW and Washington, I think we will get further
along.
Also, I think we should do a little clarification
of our thinking. If our objective in India and Japan
is constructive influence among peace-loving nations--
maybe democracy is only a means to that end--it imposes
on democracy certain standards--something which is a
desire to peace and I think we want to go easy on trying
to jam down the neck of people abroad some conception
we have got--as to the way Hague in Jersey City or Huey
Long in Louisiana or some other one of our politicians
feel--that so-called western democracy 10 necessarily
the best one to use or even democracy as we know it is
the best instrument to use in some countries in different
stages of development.
I think we should approach the Indian situation on
the basis of, here is a tremendous country which at the
present time and for the foreseeable future has the
greatost potentialities in Asia--second only to Japan--
but I don't believe the potentialities are going to be
realized. The realization of those potontialities I
think will be dependent to a maximum extent upon the
Indians themselves.
The present laws and tendencies toward laws are
such 83 to frighten capital--our private investment.
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They are far more Socialistic or Communistic in their
verbiage than in some cases in the Communist countries.
I think you will find a great deal of difficulty in
attracting private capital, but just because private
capital does not flow, I would urge caution on the
part of government to become the instrument which in
defiance of good business prodence says, for some
altruistic reasons we will extond the loans and do
these things to try to help out, because I don't believe
they are appreciated.
MR. MURPHY: In my opinion the Indian people are
not a strong and practical people, in our definition,
and despite Mr. Talbot's clowing presentation of the
opportunities and the resources and the potentialities
in India, nevertheless, within the last few months,
when the International Bank sent a mission out there
to examine all of the loan possibilities and programs
that the Indians were putting forth, after they came
back I was told by the head of the mission that the
Indians had actually put before them no important pro-
posal which was a finished proposal that is, each such
proposal lacked some characteristic either of using the
power that was to be generated in the area in which the
power installation was to be placed, or some other prac-
tical element which made the proposal not a satisfactory
one for the Bank. They ended up by saying we will make
some small loans in order to save face; but there is
that danger that must be faced that the Indians want
& great deel of support from us but there is the ques-
tion of how fast we can EO along in giving that support
in a practical manner.
Mr. Nehru is one of the great spiritual forces of
the world and his government is generally considered
to be a democratic and a humanitarian government, and
yet with respect to the three problems that they now
have at issue with Pakistan, of Kashmir, of the refugee
properties, and of the water rights in West Punjab, in
each of those three preponderantly it soems to me the
Indians are acting in a reactionary and arbitrary manner.
GOVERNOR STASSEN: I just want to say that I asso-
clate myself with Dr. Talbot and others who say that
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the Communists and ourselves. I think we must let that
15
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I also emphasize the view that you should try to get
the greatest amount of the business approach into
the situation, more of the underwriting of the Point
Four and self-respect approach of the Indians. That
1s why, too, the Pacific Pact thing, which might cause
India to be outside of it, would be a very bad move,
in my judgment.
MR. DECKER: I was very much struck with the pos-
sible wisdom of the suggestion made by Dr. Reischauer
that in the recognition of the Chinese Government that
very great care be taken to at least consult with India
beforehand. We may not be able to synchronize any
such recognition or to adopt entirely parallel courses,
but that seems to me a suggestion that is very well
worthy of exploration.
I might add that I have been rather surprised here
in this conference that we have not had more discussion
of the question of the parallel action between ourselves
and Britain on other matters, particularly on the matter
of recognition, and the more specific things we have
discussed which pertain to China. I am very certain
that is in the minds of the officers of the State
Department and that every effort will be made to keep
the great English-speaking peoples in step, which is,
I think, a very important objective to be sought.
MR. VINACKE: One of the comments General Marshall
made with respect to the Philippines was that there 18
to be association in advance of the action. We ought to
keep clearly in mind that the Philippines is an independ-
ent state, through which and in cooperation with which,
we could act very effectively.
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MEMORANDUM OF NELSON T. JOHNSON
ON THE QUESTIONS DISCUSSED AT THE
CONFERENCE ON CHINA
There are some thirty questions listed as for
consideration by the conference. These may be grouped
somewhat roughly by countries. Some can be divided
into two or more questions, numbers in parentheses are
original numbers in conference list.
CHINA
1 (1). To what extent should American Foreign
Policy in the Far East be directed toward saving China
from a totalitarian regime?
I find it difficult to understand whence
America received a mandate to save China from a regime
that is totalitarian, which I assume would be a Chinese
totalitarian regime as the question does not speak of
saving China from an invasion or from an attack from a
non-Chinese totalitarian regime. Totalitarianism, as
a kind of government for human beings, and in its
developed perfection supported by the dogma of infalli-
bility, originated in the Orient. The Chinese concept
of a State was a theocratic totalitarianism headed by
an Emperor bearing the title Son of Heaven to indicate
divine connections. Chinese leaders trained in America,
England and France broke with this kind of a government
in 1911 and attempted to found a new government under a
constitution modeled on that of the United States. By
1923, influenced by Russian advisers, they set up a new
kind of totalitarian one party nationalist state which
ruled China down to yesterday. Apparently, it never
occurred to us to take steps to save China from that
other Russian-inspired totalitarian regime. Instead we
recognized and did business with it as a legitimate
successor to other Chinese governments.
We should not forget that an international
effort to save Russia from totalitarianism in 1918
probably did more to fasten it on Russia than all the
efforts of Lenin and Trotsky. Russian Communists won
adherents as the only element in Russia active in the
defense of the homeland against alien invasion. Attempts
to save France by neighboring states probably did more
than anything else to produce the totalitarian Napoleon.
Perhaps the worst thing that could happen to Mao's new
government
CONFIDENTIAL
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government would be to find itself alone to tackle the
economic problem of the Chinese peasant he and his
friends accused the Nationalists of neglecting. He
needs the United States as an alien sparring partner
or enemy to fight to conceal his own inadequacy.
China has never really known any other kind
of regime although during the past thirty-eight years
Chinese leaders have been struggling with the problem of
training the Chinese people in more democratic ways of
government.
My answer to this question is that it is
really none of our business what kind of regime the
Chinese people set up for themselves and I see no reason
why American Foreign Policy in the Far East should be
directed toward "saving China from a totalitarian regime"
set up for the Chinese by the Chinese.
2 (1). To what extent should American Foreign
Policy in the Far East be directed toward saving China
from being used as an instrument of international
Communist aggression?
It seems to me that this is a question, and
just such a question, as the United Nations under its
charter was organized to meet. China is, and presumably
will continue to be, a member of the United Nations. The
problem covered by the question is not our responsibility
alone. The nations will have to determine what con-
stitutes "international Communist aggression" and whether
OI not China is being used as an instrument of Communist
aggression, and by whom. In any case, I do not see that
this question involves the sole responsibility of the
United States. Once more I say, let us not forget what
international intervention did for Communism in Russia.
3 (2). In view of the shortcomings of the National
Government and its defeats at the hands of the Communist
forces, what should be the United States foreign policy
regarding further assistance to the Nationalist regime?
The implication of this question, as I read
it, is that the United States has been furnishing aid to
the Nationalist Government of China in its fight against
Communism. In the course of the fight there have been
shortcomings on the part of the government we have aided
and it has suffered defeats at the hands of the Communist
forces.
STATE
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forces. Therefore, the question naturally comes up for
an answer: Shall the United States give the Nationalist
regime any further assistance?
The question is a legitimate one if it is
true that we have been aiding the Nationalist Government
of China in its resistance to Communism. But is it true
that we have given the Nationalist Government any aid in
its fight against the enemy, Communism? I have examined
the statement of March 21, 1949 of the United States
assistance to the Nationalist Government of China and I
do not find that any aid was given for that specific
purpose. On the contrary, according to the White Paper,
we appear to have spent a good deal of effort between
1942 and 1946 trying to persuade the Nationalist Govern-
ment of China that it should take the Chinese Communists,
armed and unarmed, into its regime on a coalition basis.
Our aid covered by the above-mentioned statement to
Congress was given or spent for the purpose of "keeping
China in the war with Japan" and to help the Chinese
Government (Nationalist) take the surrender of the Japa-
nese forces in China after V-J Day.
It is well known that the Nationalist Gov-
ernment in China has been fighting Chinese Communism
continuously since 1927, except for a truce during the
fight against Japan. The Chinese Nationalist Government
refused to accept our advice to receive the Communists
into the government on a coalition basis. This question
therefore seems to have no basis in any previous aid to
the Nationalist Government in fighting Communism, and as
a question based on such aid as the United States ex-
tended for war purposes, it lost its validity with V-J
Day and the surrender of Japan.
Let's not act like a child who got mad,
kicked his block-built house all over the nursery floor
and now howls if anyone else touches the blocks.
4 (3). Are there any other healthy forces of
resistance in China capable of exercising effective
leadership and to which the United States support should
be given?
No nationally effective Chinese leadership,
so far as I am aware, among the forces resisting the
spread of Communism existing in China, has emerged to
replace the leadership of the Nationalist Government
which we have opposed. It will take some time before
/
such new leadership can appear. The answer to this
question,
STATE
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question, thus put, and in view of all the circumstances,
is, that United States support would have difficulty
finding such leadership at the present time. We seem to
have lost practically all contact with any forces of
resistance that may still be in being or developing.
5 (4). If so, what form should such assistance take
and how could it be made available?
The answer to the preceding question,
number 4, was in the negative and therefore this question
needs no answer.
I might say, however, that as a government
we might accomplish a great deal by stopping talk about
the shortcomings of the Nationalist regime and listen a
little and see where and in what form resistance to
Communism in China may be developing. There has been so
much recrimination that there has been little opportunity
to discover just what new forces may be emerging. Per-
haps a little silence on our part would be as helpful as
anything else. At least we do not need to encourage
Chinese Communists by attacks upon those whom they are
attacking.
6 (5). If the Chinese Communists unite all of China
under their aegis, what should be the United States
policy towards recognition, including representation in
the United Nations, and toward trade relations?
This question can be made more realistic by
eliminating the word "Communists" after the word "Chinese".
This question then becomes clear to an American who is
conscious of the ancient relations that the United States
has had with the Chinese people and the answer becomes
obvious. Mao Tze-Tung has as of October 1st declared
his Government the sole legal Government of China.
Soviet Russia has recognized as of October 2nd the new
regime and withdrawn recognition from the Nationalist
regime of China.
7 (9). Assuming Communist control of China, to
what extent would the government be dependent upon out-
side trade and financial relations for the internal
development of the country?
The answer to this question depends upon
what is meant by "internal development of the country".
A survey
COMP
A survey conducted by Lossing Buck, with the aid of
funds appropriated by the Nationalist Government of
China and the Rockefeller Foundation, of the condition
of the Chinese farmer and the utilization of cultivated
land in China, published in 1937, indicates that the
poverty of the people and the low standard of living
is due largely to certain causes which can, to a large
extent, be remedied right in China. As the population
increases, this problem increases in urgency and com-
plication. Control of pests, animal diseases, better
seeds, more and better fertilizers, better marketing
facilities for the farmers' products, et cetera, are
reforms that, it is said, will go a long way towards
reising the standard of living by increasing the Chinese
food supply by fifty per cent. These reforms can be
undertaken without adding an acre to the land under
cultivation; without unnecessarily disturbing the life
of the people by shifts in population; and without de-
pendence on outside trade.
Internal developments extending to recon-
ditioning of the railways, roads and river transport,
restoration of factories, power plants, and river con-
servation, et cetera, will be dependent largely upon
outside trade and financial relations for the necessary
machinery, supplies and working capital. Influx of
capital will be dependent on establishment of internal
peace and stability and protection of investments in
addition to a willingness to have it come in.
8 (10). Can it be anticipated that the United States
would be able to influence Chinese government policies
through economic and financial measures?
I think that the answer to this question is
"No" based on previous experience. Chinese government
policies tend to nationalization of industry and secondary
production facilities which are beyond the capacity of
private Chinese enterprise. We are opposed to such a
tendency in domestic and international business, believ-
ing in free enterprise and competition - or have been.
Nationalization distributes the risk which today a few
capitalists are in no position to take unaided.
9 (11). Can it be anticipated that "Titoism" will
develop in Communist China?
If the word "nationalism" is substituted
for this new puzzle-word "Titoism", the answer to the
question
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question is "Yes". The word "nationalism" makes the
question realistic. The growing trend towards national-
1sm will compel Mao Tze-Tung or any other Chinese
political leader to pursue national policies independent
of outside control. "Titoism" is a highly argumentative
word and it is too closely connected with pan Slavism,
Soviet Russia, Stalinism, and conditions in Eastern
Europe. It is not applicable to the situation in China.
10 (12). Under the most favorable circumstances
for those in control of China, how significant a mili-
tary potential would that country develop in the next
five years? The next ten years? The next twenty years?
It will take fifty years for the Chinese
to attain sufficient peace and order and food surplus to
develop a military potential of her own of any significant
import or effectiveness at all. At no time during the
recent war was China's army able to push back enemy
forces or invade enemy country. By that time, Chinese
Communism, if it persists so long, will be as different
from the Communism that Mao Tze-Tung talks about, as
present day Stalinist Communism differs from the Commun-
1sm of Lenin, Trotsky and Karl Marx. Already Soviet
leaders such as Vishinsky in "The Law of the Soviet
State" are busy explaining why government has not
"withered away" in the "Socialist homeland".
NEIGHBORING COUNTRIES
Date MATIONAL - 120 THERE
s
11 (20). If the Communists consolidate their con-
trol over China, should it be assumed that they will
continue their push into neighboring countries in South-
east Asia, that is, Indo-China, Siam, Halaya, the
Philippines, Burma, India, Indonesia?
As I say below, Chinese living overseas
may be expected to take on the political coloring of
their homefolk for the security which the group gives
the individual. They have generally been the under-
privileged minorities in the countries where they dwell,
because of the inability of their homeland to protect
them and give them prestige in their foreign surround-
ings. Any one who watched the phenomenon of the Chinese
communities in Siam, Malaya, and Java become hardened
centers of Kuomintang nationalism for purposes of self-
protection
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protection and agitation for local rights may know what
to expect of the activities of overseas Chinese if their
homeland becomes united and strong under a Communist
regime. Overseas Chinese were represented in the Govern-
ment of Kuomintang China. I understand they continue to
be represented in the New Chinese Peoples Government.
(Note: Here is an interesting phenomenon. Chinese
living abroad, no matter how long, continue to think of
themselves as possessing a home in China even if that
is no more than a grave at the end of a long life abroad.
Even in China a native of one province living in another
considers himself to belong to the province of his
fathers. This may go on for several generations.)
I doubt that the Chinese home regime will
physically push out from the homeland into neighboring
countries. If they do, protection should come from the
United Nations set up to prevent international aggression.
12 (21). To what extent are neighboring countries
in a position to resist Communist pressures?
The answer to this question depends upon
whether the Communist pressure is exerted from within
or without. Communist pressure in China has from the
beginning been "from within". The only part of China
that has been under the direct influence of Communist
Russia is Manchuria, occupied by the Russian army in
1945 for the purpose of ousting the Japanese who had
taken possession of the area after ousting Chinese
Nationalist and Soviet control.
If the Communist pressure in neighboring
countries follows the same pattern that it has followed
in China proper, and comes from within, the struggle will
be between two domestic forces, each seeking to win and
hold the support of the majority of the people. The
result of such a contest will depend upon the ability
of the ruling group to hold the support of its people.
There is another contingency, however,
e
intimately related to this pressure from within which
must be taken into account. If there is a large Chinese
11.
population within the neighboring country such as is
found in Siam, Malaya, the Philippines, Java, Indo-
China, and Borneo, then it may be expected that the
Chinese population will follow any change in the
political outlook of China. Patriotism and a desire
for the protection that comes from membership in a
group
COMPIDENTI
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group, are urges, plus the fact that the families or
clans of these people will be under control of the
Communist regime in China, which will lead Chinese
living abroad to become Communist centers. They will
be Chinese Communists, primarily interested in their
minority rights in the community in which they are
domiciled. It will be recalled that these same over-
seas Chinese constituted centers of difficulty in
Java, Malaya, the Philippines, and Siam when they
joined the Kuomintang to benefit by the prestige of
United China, to present a united front locally for
protection, and to assert and claim rights as Chinese
communities. It may be expected that these same com-
munities as Chinese Communists will be troublesome
groups from the point of view of national security in
the countries concerned. They may be expected to
sympathize and work with "pressure from within" groups
to the extent that the latter welcome their aid.
If the pressure is from without, the
country will have to rely upon such defensive strength
as it may possess, aided by the powerful backing of the
United Nations, which was organized for the purpose of
maintaining world peace and preventing international
aggression.
13 (6). Should the United States take steps to
prevent the Communists from seizing Taiwan (Formosa) ?
If the word "Chinese" is substituted for
the word "Communists", I think that the answer to this
question becomes crystal clear, especially after what
happened with United States participation at Cairo and
Potsdam. The only people other than the Chinese that
might have any colorable right to Formosa would be the
Japanese, whose rights to Formosa might be considered
in a light similar to the rights Russia claimed to
possess in Port Arthur. We could repeat the proceed-
ings at Yalta and give Taiwan back to the Japanese.
After all, Japan's fifty-year clear and unquestioned
ownership of Taiwan was of longer duration and of a more
basic character than was the Russian long-expired-twenty-
five year lease of Port Arthur and Dairen.
14 (7). What should be the attitude of the United
States toward the status of Hongkong?
Perhaps our attitude toward Hongkong
(which for over a hundred years has been & British-owned
crown
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crown colony) might be determined in the light of
precedent established at Yalta in regard to the desire
of Soviet Russia to have restored to it the long
expired lease-hold of Port /rthur captured by and
surrendered to the Japanese in 1905. British posses-
sion of Hongkong stands on firmer ground than did
Russian lease-hold of Port Arthur and Dairen. We
should be consistent in these matters. After all, our
tenure of California is no better than British tenure
in Hongkong. A Chinese attack upon the British crown
colony of Hongkong would be a matter which the United
Nations might well consider as a threat to world peace
by an act of aggression. Just as a Mexican attack
upon California would, I believe, be an act of aggression
within the terms of the United Nations Charter.
As a matter of practical fact, British
occupation of Hongkong would be difficult of maintain-
ing against a determined attack by the Chinese. The
island of Hongkong is dependent upon the mainland for
drinking water.
15 (13). If China falls under Soviet-dominated
Communism how will that affect the free government of
Southern Korea and the prospect for the attainment of
Korean unity?
STATE
One might ask, what has been the effect
upon the free government of Southern Korea of Northern
Korea falling under Soviet-dominated Communism? The
Free Government of Southern Korea is closer economically
and racially to Soviet Communist dominated Manchuria
than it is to China. My personal opinion is that China's
becoming Communist will have little or no effect upon
the future of Southern Korea. It will just make the
situation a little more so.
16 (27). What role should India play in the crisis
arising out of developments in China and the Far East?
I believe that the independent govern-
ment of India will decide this matter for itself and
without reference to us. The crisis is already upon
India and the rest of Asia. The question is, or should
be, what role is India playing? India is already play-
ing it, whatever that role is. India's first interest
is to get her economy and polity organized, and settle
matters that are in dispute with Pakistan.
17 (28). What
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17 (28). What role should Australia and New
Zealand play in the struggle against disruptive
economic forces in China and the Far East?
There is a new assumption involved in
this question namely the assumption that the economic
forces now working in the Far East and China are dis-
ruptive. Disruptive of what?
New Zealand and Australia, the Anzac
countries, are the only countries whose populations are
predominately European and whose political fortunes are
completely involved in the fate of the Pacific area.
Economically, however, they are tied very closely into
the economy of the British Commonwealth and the United
States. The Anzac countries will, in my opinion,
determine their own role. They will not accept advice
or any assignment of a role by us to serve our interest.
18 (8). If the Soviets recognize a separate
political regime in Manchuria, what should be the policy
of the United States regarding that situation?
Recognition by the Soviets of a separate
political regime in Manchuria should be the signal for
us to reconsider the Yalta Agreement with a possible
view to 1ts renunciation. We should bring the whole
business before the United Nations. At Yalta, we
assumed a responsibility for Russian conduct in Man-
churia. At Yalta, we agreed to use our influence to
persuade the Chinese to consent to the return of Port
Arthur and Dairen to Russian control for a period of
years. To the Oriental, our position is that of a
bondsman for Russian good performance in Manchuria.
Therefore, under the Yalta proceedings, we have a right
and a duty to take action in this matter. But we also
S
AMERICAN
have an obligation to act, for we are still party to
the Nine Power Treaty regarding Principles and Policies
to be followed in matters concerning China, signed at
Washington on February 6, 1922, which contains the
following:
"1. To respect the sovereignty,
the independence, and the territorial
and administrative integrity of China;
2. To provide the fullest and most
unembarrassed opportunity to China
to develop and maintain for herself
an effective and stable government;
3. To use
CONFIDENTIAL
-11-
3. To use their influence for the
purpose of effectually establish-
ing and maintaining the principle
of equal opportunity for the commerce
and industry of all nations through-
out the territory of China;
4. To refrain from taking advantage
of conditions in China in order to
seek special rights or privileges
which would abridge the rights of
subject or citizens of friendly
states, and from countenancing
action inimical to the security of
such states."
It could be contended that we violated our
obligations under this Treaty by the executive agreement
and our action at Yalta. We should not carry our viola-
tion any farther.
19 (25). What should be the policy of the United
States toward the conclusion of a Pacific Pact for
mutual security?
We should not participate in such an agree-
ment or pact if it is intended to divide Asia into hostile
camps.
THE
JAPAN
III
S
I
20 (14). If China remains Communist, under Soviet
domination or otherwise, what repercussions may be
anticipated in Japan?
It is possible that a Communist China
might make the Japanese more conservative. It is also
possible that China's Communism might make common cause
with Japanese Communism to unite the Chinese and Japan-
ese peoples and thus bring about something that the
Japanese conservatives sought to accomplish but failed
to achieve. "Asia for the Asiatics" is a powerful
slogan so long as it does not mean Asia for the Japanese
or the Chinese or the Russians. Japan and China comple-
ment one another in trade. Japan possesses the "know-how"
that
COM
-12-
that China needs to rehabilitate her industries.
China has the resources --- food and raw materials -
needed by Japan. Such an outcome should worry the
Russians more than it should us.
21 (17). How should they (repercussions) affect
out policy regarding the conclusion of a peace treaty
affecting Japan?
Such a development should offer no bar
to the establishment of a peace between us and the
Japanese.
22 (19). Can Japan be safeguarded as a barrier
against Soviet Communism?
It seems to me that the United States
and the United Nations ought to be able to safeguard
Japan against aggression by Soviet Russia, if that is
what is meant by the words used in this question. I
suspect, however, that this is not the meaning intended.
I suspect that the meaning is "can Japan be safeguarded
as a barrier against the spread of Communism?" I
answer, it can not, unless there is a strong body of
Japanese prepared to fight Communism at home as a
domestic problem.
Our serious difficulty is that we do not
STATE
have a policy in regard to Communism in our own midst.
BARRY
Hence the inconsistencies in our attempts to be useful
abroad in regard to Communism. It seems to me that
S
AMERICAN
until we in the United States have made up our minds
what we are going to do with our own home problem or
brand of Communism, we can do little to help or safe-
guard the Japanese.
If it is Soviet aggression we are talk-
ing about, then we should first build a barrier against
Soviet Communism in Alaska and work with the Canadians
to build such a barrier in Canada. We would at least
be working within the Monroe Doctrine, on American
territory and with American forces.
23 (18). How should they (repercussions) affect
our economic policies toward Japan?
I do not know the answer to this question.
I am not certain of the meaning of the question. Until
the
CONFIDENTIAL
-13-
the Japanese have become self sufficient in their food
production, or until they can obtain regular supplies
from China or Manchuria, we are going to have to make
up their food deficit and as long as we occupy Japan
our economic policies toward Japan will be governed by
Japanese food requirements and Japanese ability to
obtain supplies 1n Asia. Our long range economic policy
in Japan should be to encourage peaceful trade between
Asia and Japan as a means to helping Japan to her economic
feet.
24 (16). How should these repercussions affect our
occupation policy in Japan?
The answer to this question will be found
in the answers to questions 20, 21, 22 and 23.
25 (15). How will they affect the economic rela-
tions between China and Japan?
China and Manchuria, if the latter area
is separated from China, acting together, can starve
Japan, for between them they control the supply of soy
beans which provide the chief source of vegetable pro-
teins demanded by the vegetarian Japanese. The question
1s, will they act together? Should the Chinese Com-
munists dominate the relations with the Japanese to the
exclusion of Russian dominated Manchuria then I would
expect that the Chinese would freely export to Japan
in return for the consumer goods that Japan can make
and the "know-how" that Japan possesses. Certainly every
encouragement should be given by us to peaceful commerce
between Japan and the Chinese.
SOVIET RUSSIA
26 (1). To what extent should American efforts
assume Russian domination of China and therefore be
directed primarily toward the prevention of the spread
of Communist domination over other countries in the Far
East?
In the first place, it is my opinion that
it would be a mistake to assume "Russian domination of
China". I have not seen nor heard of any evidence to
this
CONFIDENTE
-14-
this effect in spite of Mao's recent declaration of
subservience to Soviet Russia's leadership. The
question, as worded, seems to me to be confused. The
question would seem to be: "To what extent should
American efforts be directed primarily toward prevent-
ing the spread of Russian domination over other countries
in the Far East?" As long as this Russian domination,
if domination it is, comes from choices freely and
voluntarily made by the peoples of countries in the
Far East without evidence of force being applied by
the Russians, or agents who are Russian inspired, we
can do little if anything about it. Choices made in
this way can be withdrawn. We have certainly done
nothing about it in China. On the contrary, since
1942, we have opposed the resistance offered to Com-
munism by the established authority in China. Our
attitude has not discouraged the establishment of a
Communist controlled authority in China as a substi-
tute for the established authority we opposed. What
then can we say if the Communist authority that comes
in announces itself to be more friendly to Russia
than it is to us? In other words, voluntarily chooses
Soviet Russie as its closest friend? Are we certain
that native governments seeking to substitute them-
selves for established authority elsewhere in Asia
and the Pacific as in Indo-China and Indonesia will
not choose to be more friendly to Russia than to us?
27 (11). Assuming the conquest of China by the
Communists, what are the presumptions as to the re-
lations between the USSR and China?
With the assumption given, the pre-
sumption must be that the relations between Communist
China and Communist Russia will be closer than they
have been. Communist leader Mao Tze-Tung has already
stated that this is the case. This would seem to be
natural. Just as the principal officials of the
Nationalist regime who were friendly to us were
THE
trained in our ideological environment, so Mao and
his supporters were trained in and find themselves
more at home in the ideological environment of present
day Russia. They may be expected to continue until
the new regime discovers that Communist Russia and
Imperialist Russia are the same, that Communism is
merely a fifth column concealing Russian Imperialism.
Then I believe that these intimacies will cool off. It
must be remembered that Russia and China have boundaries
that
CONT
IDENTIAL
-15-
that coincide for a great distance and that Russia has,
since the downfall of the Mongol Empire, worried about
the East and vice versa. Russian advance into Asia in
the 16th and 17th Centuries followed slowly the break-
up of the Mongol Empire and the retreat of the Mongol
hordes. Moscow now governs great areas once governed
from Peking. Russian foreign policy for Asia has been
formed with this threat from the East always in mind.
Perhaps the over all experience of China with Russia is
greater than Mao's. Certainly China's past experience
with Imperialist Russia 1s well documented. Time will
tell.
UNITED STATES SECURITY
28 (26). How should Communist developments in
China affect our policy regarding naval bases in the
Philippines, Singapore and elsewhere?
I would be surprised if Communist
developments in China had any effect on our policy
regarding naval bases in the Far East. I would assume
that we would strive to establish naval and other bases
wherever we would need them without regard to what the
Chinese thought about it. We fought the Japanese while
the Japanese controlled the whole of the Asiatic coast
from Vladivostok to Singapore, including the Philippines
and the Solomons. I do not know who we are going to
fight that will have a greater advantage.
29 (29). What informational policies with regard
STATE
to the peoples of China and the Far East would be most
BANKY
appropriate with a view to strengthening the forces
aligned against Soviet Communism and economic and
S
O
political disintegration?
I think we should talk less about Communism
and more about Nationalism and its advantages. We should
point the finger at Russian Imperialism. We have no remedy
for the economic disintegration. That is a problem that
the Chinese Communists have come in to solve. The
Chinese people will watch the efforts of the new regime
to solve the problem and will either help or sabotage
them. Let us keep quiet. "e do not know too much about it.
As
CONFIDENTIA
-16-
As to Communists, we have not solved that
problem here in our own country. How then can we offer
solutions to a country and a people that we know so
little about? Remember Communism is a product of the
West. We belong to the West. If we can't meet it at
home, what can we say that will be useful to the peoples
of the East? Russian Imperialism is something that we
can talk about.
Nationalism is a new force in Asia and is
coming as a strong tide throughout that area. Let us
recognize and help it. It is opposed to international
Communism, which is the real enemy. It is also opposed
to political disintegration, for 1t wants to accomplish
political integration and organization on a national
basis of racial and geographical boundaries.
30 (30). What is likely to be the impact of each
of the various possible courses of United States action
toward China upon the majority of thinking Chinese?
The Chinese are realists. Once we are
consistent in our attitude and stop meddling, their
reactions will be friendly and understanding. There
still remains a resevoir of good will towards the United
States among the Chinese.
THE FAR EAST IN GENERAL
31 (22). To what extent is the upheaval in China and
elsewhere in the Far East a predominately political
movement?
32 (22). To what extent is the upheaval in China
and elsewhere in the Far East an expression of deep rooted
forces arising out of social and economic conditions?
These two questions are intimately related.
Politically the trend throughout the Far East and among the
peoples of the Far East is toward nationalism. National
OF
independence is the watch-word of the East. This trend,
already established, got a tremendous push forward during
OF
World War II when the Japanese played upon nationalist
S.
tendencies in an attempt to win the cooperation of the
peoples of the areas from which they were driving the
Americans, the British, and the Dutch. The defeat of the
Japanese
CONF IDENT
-17-
Japanese who had caused the Americans and the British
and the Dutch to lose "face" in the East did not restore
the prestige of the Americans and the British and the
Dutch.
Secondarily the upheaval is due to deep
rooted forces arising out of social and economic
conditions which have been caused by the political
upheaval. Native political regimes that have sought to
substitute themselves for the alien political regimes,
have been having difficulty meeting the necessary social
and economic reforms because of the cost and their
inability to find new sources of capital and mediums
of currency.
33 (23). To what extent can the menace of political
upheaval threatened by the Communist movement in that
area be met by military action?
The political upheaval is nationalist in
origin. It should not be met by external military action.
THE
Remember the effect of military intervention in Russia
in 1918-1919?
12818
S
O
34 (23). To what extent can the menace of political
upheaval threatened by the Communist movement in that
area be met by measures of economic and social improvement?
I see no opportunity for us to meet this up-
heaval by measures of economic and social improvement.
Communism is coming in charging the preceding
government with neglect in these matters and is now offering
the improvements, social and economic. The new regime will
succeed or fail on the program it offers and is deeply
conscious of this fact. I think that the new regime will
in the long run fail. Then perhaps will come a time when
we may offer other measures.
35 (24). What steps should be taken to improve the
economic and social conditions of the Asiatic peoples?
36 (24). How could the "Point Four Program" apply to
that area?
At the present moment, the new regimes,
where they are offering themselves as substitutions for
the regimes that are being displaced by the "upheaval"
mentioned, are offering programs of social and economic
reform
COM TDENTIAL
-18-
reform which would make the use of the "Point Four Program"
difficult, if not impossible, of application. It is my
orinion that the Communist programs will fail just at
this point. Let 118 wait and see. Let us keep contact
with the Chinese people throughout this crisis. I am
sure that the time will come when other and new
opportunities for our help will be opened to us. Let
us hope that we will then be prepared to accept the
MARTY ARCHIVERDS TRUMAN NATIONAL SERVICES ROVERNMENT AND LIBRARY
opportunity with all humility and without any thought of
S.
profit at the expense of the local people.
turn
General George C Marshall May 18, 1954
MEMORANDUM ON CHINA at My request HSV.
The following is a very brief resume of as much of the Chinese situa-
tion as I, personally, was intimately familiar with. The difficulty in preparing
such a resume is the fact that there is so much of background essential to an
understanding (General Hurley's activities, and others of the same nature) that
it presents quite a problem as how to prepare a statement without practically
getting into a repetition of the China. White Paper. While I have sketched below
an outline of my initial experience, I find that pages 136 to the middle of 149 of
the China White Paper present a clear, chronological statement of the events
up to the development of the Manchurian complications. Thereafter, the situa-
tion grew so complicated and there were so many related factors that it is
exceedingly difficult to treat the affair with any degree of brevity.
When I arrived in China, a few days before Christmas in 1946, a
meeting had already been scheduled for January, in which the Communist and
other much smaller political parties were to be participants. The meeting was
to draw-up the principles to be a basis for drafting a constitution to be consid-
ered by the Constitutional Convention scheduled for May 5. The preparatory
work leading up to this meeting had been developed largely by General Patrick
Hurley, then Ambassador to China, and it came to a head, just prior to my
arrival, with the agreement on the actual date for the meeting.
2
I found that it would be impracticable for me to proceed with my
mission to halt the fighting without obtaining a great deal of information, par-
ticularly the opinions of people in all walks of life in China and of the various
political parties. Therefore, my days were a constant succession of meetings
with all manner of people who were then resident at Chunking or came there
for the purpose of seeing me. Many of them, particularly women, endeavored
to come in secret so their contacts with me would not become public.
These people presented a wide variety of views. The majority of
them, other than officials of the Nationalist Government, were bitterly hostile
to that Government, particularly the women, though not necessarily friendly
to the Communist Party.
Chou En-lai, the representative of the Communists, was then present
in Chunking. Just how many of his followers were there, I do not know, but
there was not a sizeable number.
It was essential for me to move with all possible expedition, as the
meeting of all the political parties had been called by Generallissimo Chiang
Kai-Shek for January 10 and he wished to open the meeting with the announcement
that the fighting had ceased.
In order to find a basis for terminating the fighting, the General-
lissimo appointed a so-called Committee of Three, consisting of myself as
Chairman, General Chang Chung representing the Nationalist Government, and
3
Chou En-lai representing the Communist Party. Together, we went over the
factors which would be essential to a preliminary agreement. But it was not
until the morning of January 10 - about one-half hour before the meeting - that
we reached a final agreement. This enabled the Generallissimo to make an
opening speech of a character appealing to the generous sentiments of all con-
cerned.
Following this period, I in a sense cut myself off from this conference,
as it was entirely political and I had been sent to China with instructions to
bring the fighting to an end, if that be possible. The agreement reached by the
Committee of Three and approved by the Generallissimo had now to be imple-
mented and, for this purpose, I immediately dispatched the Executive Officer
of my staff, Colonel Henry A. Byroade, to Peking to organize a headquarters
for developing and directing the procedure to bring the fighting to a halt.
Utilizing the buildings of the Peking Union Hospital, Colonel Byroade (now
Assistant Secretary of State) built up an organization based on the principle of
the Committee of Three; that is, an American representative as Chairman of
each subdivision and a representative of the Nationalist Government and repres-
entative of the Communist Party. Walter H. Robertson, United States Minister
to China, was dispatched to Peking to head the organization. There were to be
many teams in the field organized in the same manner and provided with radio
communication and motor transportation.
4
The measures followed in bringing at least a temporary halt to the
fighting are well-known and are mostly recorded in the China White Paper.
I might say in this connection that we found it very difficult in many cases, and
usually very important cases, to get at the true facts. The two Chinese mem-
bers of the teams were not only antagonistic, one to the other, but held to a
very strict course of action which would avoid anything prejudicial to their side
of the current issue. As a result, it fell more and more to the American
representative and Chairman, and at times to me personally, to ferret out the
true facts of a case or incident.
For example, we had one situation in Shantung involving coal, a very
important issue, where a large number of Nationalist troops were surrounded
by a larger number of Communist troops. At the same time, farther to the
West, we had almost an exactly similar situation, where a large number of
Communist troops were surrounded by a larger number of Chinese Nationalist
troops. The Communist representative on the Committee of Three with me was
urging me to go personally to settle the western dilemma. The Nationalist
representative was opposed to my doing so. On the other hand, the Nationalist
representative was pressing me to go to the scene of the difficulty in Shantung,
and the Communist member was strongly opposed to that action. This was
frequently the case, though not so clearly demarked as in this particular inci-
dent.
5
The information with regard to fighting was very difficult to evaluate
because the reports were, as a rule, grossly exaggerated by the side which had
suffered the reverse or was charged with the renewal of the fighting, and fre-
quently a light patrol encounter was exaggerated into a large operation. Des-
pite these difficulties, we brought the fighting temporarily to an end.
There now followed a serious dispute over the representation of
delegates to the Constitutional Convention scheduled for May 5. This provoked
added bitterness both in the field and among the workers behind the scenes
politically. The Generallissimo then postponed the meeting of the Constitutional
Convention because he stated he could not find a satisfactory basis for the
representation of delegates. This was a very serious blow and, from then on,
matters proceeded from difficult, to bad, to worse.
During most of the period following January 10, I found the Communist
representation and most of their forces in the field to be more responsive to
the dictates of the Committee of Three than the Nationalists. It seemed to me
the Communists felt that they could win their battle on political grounds more
easily than on tactical fighting grounds because they had a more tightly held
organization, whereas on the Nationalist side there were many contentious
elements. The Communists continued on this line quite definitely, in my
opinion, until early in June, after the postponement of the Constitutional Con-
vention. The Nationalist commanders all seemed to be determined to pursue
a policy of force.
6.
During this period, and especially later throughout the summer, I
was making a strong effort to bring all the small political parties together.
These usually represented a rather small number in grand totals, but included
a large number of well-informed men. My thought was that, if they could be
united under one leader, they would constitute a balance wheel between the
Communists and the Nationalists so that, if either broke an agreement, it
would find this center group aligned against them. This would not have been
too difficult of accomplishment had it not been for the fact that both sides,
Nationalist and Communist, endeavored to break down any such grouping by
tempting leaders away by choice appointments or otherwise. This continued
until the end of my stay in China, but it became quite evident in the Fall that
these parties had been broken down to such an extent that I could not hope to
make a union among them and, without that, there was little hope of getting any
organized setup in China that would lead to an enduring. peaceful development.
I received advice from numbers of people in China and elsewhere --
Americans, representatives of our press, British, Chinese, and among the
latter named certain prominent members of the Government who came to me
confidentially and gave me their opinions on the best course to be followed.
As the conditions of temporary peace broke down, the agreed arrangements in
Manchuria broke with them, and the movement of Communists into that country
got underway. The extent of this movement at the start was exaggerated by
7
the Nationalists, in my opinion, but later on there was no question but what
large numbers of Communist adherents and troops were filtering into the
country.
After the setup for implementing the enforcement of the agreement
for bringing the fighting to an end, I next turned to the conference appointed
to prepare the basis for the military reorganization. This was again a Com-
mittee of Three, though I appeared as an advisor, rather than as the Chairman.
Without too much difficulty, an agreement was reached in this matter for the
gradual unification of all the military forces in China, which meant in fact the
Government and Communist forces. This was formally approved by the Gen-
erallissimo and agreed to by Mao Sse Tung. Two provisos in this agreement
are important to understand:
The first was the fact that the Communists agreed that at the end of
eighteen months the Manchurian garrison should consist of fourteen Nationalist
Government divisions and one Communist division (see page 141 of the China
White Paper). The second was the prescribed organization of the country into
eight service areas (see Article 3, Section 2, on page 623 of the China White
Paper).
The attitude of the Communist regime changed later on, decidedly,
in regard to Manchuria, and the garrison proposed by them was greatly
increased with reference to the number of Communist divisions to be located
8
in that region. This action was a direct retaliation of the Communists to what
they held were unjustified actions of the Nationalist Government.
The second proviso mentioned was to be the basis for getting the
Chinese army out of politics, for breaking down the customary use of military
force, which had been wholly unacceptable to a democratic regime.
Following the completion of the military reorganization agreement,
I left Chunking with General Chang Chih-chung of the Nationalist Government
and General Chou En-lai of the Communist Party on an inspection of the situa-
tion in North China and the West to the borders of Mongolia. We endeavored
to settle the various military complications which we found during the trip. We
paused in Peking to visit the Executive Headquarters established there and
endeavored to iron out misunderstandings and various oppositions.
Meanwhile, there had been developing in Manchuria a most serious
situation. In the first place, the delay in the Russian withdrawal and their
scuttling of all the industrial setups, particularly in the Mukden district, had
been a continuing cause of complications. This situation was made the more
difficult because of the misunderstanding at Executive Headquarters in Peking
that the agreements of the Committee of Three for the implementation of the
peace adjustments did not include Manchuria. As early as January 24, 1946,
I proposed that Executive Headquarters send a field team to intervene in the
9
fighting which had developed at Yingkow in Manchuria. The Generallissimo
was unwilling to agree to this proposal. The Chinese Communist Party gave
its approval. Further efforts on my part to establish Executive Headquarters
field teams in Manchuria were declined by the Generallissimo. General Chou
En-lai personally urged me to visit Mukden, but I did not think this wise at
that time. Finally, on March 11, the day of my departure for Washington, the
Generallissimo agreed to the entry of field teams from Executive Headquarters,
but with such limited powers that the teams would be unable to bring about a
cessation of the fighting.
This developing situation in Manchuria became one of the determining
factors in breaking down all hope of negotiating a political basis for unity and
peace in China.
With the Generallissimo's agreement to the entry of Executive Head-
quarters field teams into Manchuria, but unfortunately before his limitations
on their powers became known, I departed for Washington to apprise the
President of the situation and, particularly, to take up the question of the trans-
fer of surplus property and shipping and the problem of loans to China.
In the matter of loans, I had not entered into any detailed discussions
with the Generallissimo up to that time. As to the vast accumulations of
10
surplus property in the Pacific, I felt that here was an opportunity to check
the inflationary developments in China. This property could be used in many
ways to promote trade, to secure for the Government a tremendous cash return,
and to provide labor for many engaged in its modification or repair. I felt
that the handling of this surplus property afforded a reasonably practical method
of combating inflation and I was, therefore, anxious to promote the transfer as
quickly as possible.
Another factor was the question of shipping. If China could obtain
small coastwise and river shipping in these surplus property transfers, it
would provide an effective method of promoting trade relations throughout the
river valleys of China. In Washington, agreements were reached which would
facilitate the surplus property transfers and guaranteed the provision of coast-
wise and river shipping for China. My negotiations with the United States
Government groups concerned led to an agreement for a loan of $500 million
to the Nationalist Government in China. Its conclusion merely lacked the signa-
ture of the Generallissimo's representative in Washington - - the Chinese
Ambassador. The latter came to me with some modifications in the terms of
the loan, which the Generallissimo proposed. I informed the Ambassador that
I had completed my personal efforts in the matter and, if any changes were to
be proposed, they would have to be instituted by the Ambassador. At the same
time, I advised him to sign the agreement for the loan immediately. Just what
11
he would have done, I do not know, because on that day the Generallissimo
made a speech in China regarding the basis of any political settlement, which
caused the Import-Export Bank to withdraw its agreement to the loan.
While I was in Washington, the day after the withdrawal of Russian
troops from Changchung, the Communist forces attacked the city and occupied
it. From this time forward, there developed a series of incidents provoked
in turn by the Chinese Government and by the Communist forces, which led to
a complete rupture of the relationships established to terminate hostilities.
The recital of these incidents and the discussions related to them would neces-
sarily be a lengthy procedure and virtually a reproduction of the story as
recited in the China White Paper. From here on out, the Communists were
completely distrustful, in fact rather scornful, of any proposition I made or
the Nationalist Government put forward toward finding an adjustment of differ-
ences. On the other hand, the Generallissimo, for the Nationalist Government,
represented a varying role. At times his attitude was one of sincere endeavor
to bring about some reasonable basis of adjustment, but invariably, it seemed
to me, behind the scenes, his attitude with his leaders was one provocative of
the role of force. Always in my conversations with him I put forward my
military opinion that the use of force at that time by the Nationalist Government
could not be productive of more success than that of the capture of cities -
that the long lines of communication made military operations for the Nationalist
12
Government far more difficult than they were prepared to meet. So long as
the Communists confined themselves to attacks on the line of communications
and the break down of the influence of the Nationalist Government with the
Chinese people, their eventual success seemed to me to be assured.
After my departure from China and appointment as Secretary of
State, I encountered the China problem in a somewhat different form than
theretofore. It had now become a political issue in this country and the repres-
entations were highly colored by purely political motives. One of the most
difficult political reactions arose out of the fact that the Nationalist Government
of China was not able to procure quickly the military supplies it desired.
These delays were charged to our Government. The facts were that our mili-
tary reserves of modern equipment had been so reduced by allotments to various
countries that the War Department could not afford further to diminish them.
Even so, a direct purchase was rendered difficult because the money received
by the War Department, for example, would have to be turned in to the Treasury
and a new appropriation secured, with the possibility of failure. And then there
would be the delay in the manufacture of the items, since there was no general
market for such supplies. The War Department was loath to enter into the
business of these purchases because of their effect on the national defense.
13
Further, the complications in the matter could not well be made plain to the
public in the midst of a vigorous political discussion, statements or debate.
In an effort to find some course of action that might be taken to
offset the Communist gains in China, General Wedemeyer was sent over to
inquire into the situation. It was on my instigation that he was sent to China,
but it was his desire, and quite a proper one, that he have a Presidential
directive in order that he might have a sound basis for meeting with the
officials in China concerned. You are familiar with the issues which arose
over his visit.
It has been a great misfortune that throughout this period the Gen-
erallissimo has had associated with him individuals who had grown steadily
in power from the time of the Generallissimo's march from Canton to the line
of the Yangtse. Originally, these were young men, presumably animated with
a very fine spirit to free China from the toils and treacheries of the past. But
their steady acquisition of great power with virtually no opposition led naturally
to a changed attitude until they were opposed to any effort along the line indicated
by American policy. Partially discredited in 1946, they steadily regained their
power, and found the development of the China political battle in the United
States greatly to their advantage.
(Most confidentially, it had been hoped by Ambassador Stuart and
me that my statement (page 686 of the China White Paper) following my
14
departure from China, published in Washington on January 7, 1947, would
provoke heavy attacks on me by this particular group of men, who seeing me
leave the Government service would feel perfectly free to direct their attacks
at me without reservation. In this way, we would have had a line-up of the
irreconcilables. Unfortunately, however, because, I was told, of some leak
at Spartansburg, South Carolina, with relation to the announcement of Secretary
of State Byrnes' resignation, it was thought best immediately to publicize my
coming appointment as Secretary of State, instead of delaying this for the ten
days that I had requested. This announcement was made while my plane was
flying homeward over the island of Okinawa. It, of course, resulted immed-
iately in a silence on the part of the irreconcilable group who, in the Chinese
manner, retired to their homes sick(?). They did not again appear on the
scene until the political fight in the United States on the China question developed.
I think that, had the second announcement been delayed the ten days I desired,
we would have had a public line-up of the men and their attitude who surrounded
the Generallissimo and are now, some of them, associated with him in Formosa.)
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"ocrText": "ADDRESS OFFICIAL COMMUNICATIONS TO\nTHE SECRETARY OF STATE\nWASHINGTON 25, D.C.\nDEPARTMENT OF STATE\nWASHINGTON\nFriedbrey\nState\nDecember 14, 1949\nCONF IDENTIAL\nnn 12-22-\nFile\nMEMORANDUM FOR MR. ELSEY\nComplential\nYou may be interested in glancing at the enclosed\ntranscripts of meetings held recently in the Department\nwith a number of non-government people on \"U.S. Policy\nToward China\" and \"Strengthening International\nOrganizations\nE TRUMAN\nFrancis H. Russell\nDirector\nOffice of Public Affairs\nCONFIDENTIAL\nLIST OF CONSULTANTS\nCONFERENCE ON problems OF UNITED STATES POLICY Ill CHINA\nJoseph W. Ballantine\nOwen Lattimore\nThe Brookings Institution\nDirector\nWashington, D. C.\nWalter Enes Pare School W\nInternet to: Relations\nBernard Brodie\nJohns Hopkins University\nDepartment of International Relations\nBaltimore, Varyland\nYale University\nNew Haven, Connecticut\nErnest 3. Thotaughten\nChairman of the Board\nClaude A. Buss\nFirst National Bank\nDirector of Studies\nPortland, Oregon\nArmy War College\nWashington, D. C.\nCeorge C. Marshall\nPresident\nKenneth Colegrove\nAmerican Red Cross\nDepartment of Political Science\nWashington, D. C.\nNorthwestern University\nEvanston, Illinois\nJ. Morden Murphy\nAssistant Vice President\nArthur G. Coons\nBankers Trust Company\nPresident\nNew York, Now York\nOccidental College\nLos Angeles, California\nNathaniel Peffer\nDepartment of Public LAW\nJohn TV Decker\nand Government\nInternational Missionary Council\nColumbia University\nNew York, New York\nNew York, Ten York\nJohn K. Fairbank\nHarold S. Quigley\nCommittee on International and\nDepartment of Political befence\nRegional Studies\nUniversity of litresote\nHarvard University\nMimeapolis, Minnesota\nCambridge, Massachusetis\nEdwin O. Reischausr\nWilliam P. Hered\nDepartment of Far Eastern\nPresident\nLanguages\nInternational Nagany\nHarvard University\nNew York, 1317 Ink\nCambridge, Masachusetts\nArthur N. Holcomoo\nWilliam B. Robertson\nDepartment of Coversionnt\nPresident\nHarvard University\nAmerican the Sure gn Company\nCambridge, Massachusetts\nMar York, York\nBenjamin Klave\nthe Provideller ST\nTrestient\nSpoking,\n11;\nLiwrence K. Posinger\nHillips Talhot\nAmerican Institute of Pacific\nUniversity of Chicago\nBelations\nChicago, Illinois\nNew York, New fork\nGeorge E. Taylor\nEurone Staley\nUniversity of Washington\nExecutive Director\nBeatth Deshington\nWorld Affoire Council 0° Northern\nCalifornia\nHarold M. Vinacke\nSax Francisco, California\nDepartment of Political\nScience\nHarold Standen\nUniversity of Cincinnati\nPresident\nCincinnati, Chic\nUniversity of Pennsylvania\nPhiladelphia, Permsylvania\nHARRY ARCHIVES NATIONAL RECORDS AND DIRECT\nU.S.\nSOVERWING\nLIST OF CONSULTANTS\nCONFERENCE ON PROBLEMS OF UNITED STATES POLICY IN CHINA\nJoseph W. Ballantine\nOwen Lattimore\nThe Brookings Institution\nDirector\nWashington, D. C.\nWalter Hines Page School of\nInternational Relations\nBernard Brodie\nJohns Hopkins University\nDepartment of International Relations\nBaltimore, Maryland\nYale University\nNew Haven, Connecticut\nErnest B. Maclaughton\nChairman of the Board\nClaude A. Buss\nFirst National Bank\nDirector of Studies\nPortland, Oregon\nArmy War College\nWashington, D. C.\nHARRY B.S. a. ARCHIVES \"NATIONAL RECORDS SERVICE\" government TROMAN AND LIBERT\nGeorge C. Marshall\nPresident\nKenneth Colegrove\nAmerican Red Cross\nDepartment of Political Science\nWashington, D. C.\nNorthwestern University\nEvanston, Illinois\nJ. Morden Murphy\nAssistant Vice President\nArthur G. Coons\nBankers Trust Company\nPresident\nNew York, New York\nOccidental College\nLos Angeles, California\nNathaniel Peffer\nDepartment of Public Law\nJohn W. Decker\nand Government\nInternational Missionary Council\nColumbia University\nNew York, New York\nNew York, New York\nJohn K. Fairbank\nHarold S. Quigley\nCommittee on International and\nDepartment of Political Science\nRegional Studies\nUniversity of Minnesota\nHarvard University\nMinneapolis, Minnesota\nCambridge, Massachusetts\nEdwin O. Reischauer\nWilliam R. Herod\nDepartment of Far Eastern\nPresident\nLanguages\nInternational General Electric Company\nHarvard University\nNew York, New York\nCambridge, Massachusetts\nArthur N. Holcombe\nWilliam S. Robertson\nDepartment of Government\nPresident\nHarvard University\nAmerican and Foreign Power Company\nCambridge, Massachusetts\nNew York, New York\nBenjamin H. Kizer\nJohn D. Rockefeller III\nGraves, Kizer, and Graves\nPresident\nSpokane, Washington\nRockefeller Brothers' Fund\nNew York, New York\n2-\nLawrence K. Rosinger\nPhillips Talbot\nAmerican Institute of Pacific\nUniversity of Chicago\nRelations\nChicago, Illinois\nNew York, New York\nGeorge E. Taylor\nEugene Staley\nUniversity of Washington\nExecutive Director\nSeattle, Washington\nWorld Affairs Council of Northern\nCalifornia\nHarold M. Vinacke\nSan Francisco, California\nDepartment of Political\nScience\nHarold Stassen\nUniversity of Cincinnati\nPresident\nCincinnati, Ohio\nUniversity of Pennsylvania\nPhiladelphia, Pennsylvania\nBARRY a ARCHIVES NATIONAL RECORDS TRUMAN AND LIBERT\nU.S.\nSERVICE GOVERNMENT\nCONT IDENT IAL\nDECLASSIFIED\n---\nRECORD OF ROUND-TABLE DISCUSSION BY TWENTY-\nX\nFIVE FAR EAST EXPERTS WITH THE DEPARTMENT\nX\nOF STATE ON \"AMERICAN POLICY TOWARD CHINA\"\nOCTOBER 6, 7 and 8, 1949\nBASH AT ROYERK WENT SERVICE RECORDS ARD\nx forum\nDECLASSIFIED\nCONFIDENTI\nOn October 6, 7 and 8 a conference was held in the\nDepartment on U. S. problems in the Far East, with par-\nticular reference to China. Twenty-five persons from\nvarious parts of the country, representing different seg-\nments of the public, participated in the discussion and\nexchanged views. Participating were leading experts on\nU. S. relations with the Far East end other well-informed\ncitizens having special competence in that area. A list\nof the consultants is on the following sheet.\nThe conference was arranged by PA in consultation\nwith the interested policy officers of the Department.\nThere were short briefings by various experts in the De-\npartment, including Mr. Kennan of S/P, Mr. Butterworth\nof FE, Mr. Sargeant of P, Stephen Brown of CP, Miss Cora\nDuBois of DRF and Colonel John McCann of CIA.\nThe meeting was chaired by Ambassador Jessup and,\nwhen he was absent on other duties, Mr. Raymond Fosdick.\nThe transcript of the proceedings has been edited\nso that, as far as possible, it will include only those\nportions of the discussion of particular interest to\nDepartment officers. It is for use strictly within the\nDepartment.\nFrancis H. Russell\nDirector\nOffice of Public Affairs\n-1-\nMR. FRANCIS RUSSELL: The main purpose of this meet-\ning is to bring to this table the expression of as many\nhelpful points of view on the subject under discussion as\npossible. There will be no effort to arrive at a set of\nresolutions or recommendations or even a consensus of\nviews, or even to try to persuade anyone of anything. It\nwill be simply to lay on the table and make available to\nthe policy officers here in the Department that are charged\nwith the responsibility of formulating the Department's\nviews with respect to our policies toward China the think-\ning of you gentlemen, who have given this subject a con-\nsiderable amount of your attention.\nIn order to make the meetings of as much value as\npossible there will be a stenographic record kept of what\nis said. That however will not be made available to people\noutside of the Department, nor even to those who are here\naround the table. It is for the benefit of those in the\nGovernment who will be working on the problem.\nUntil Mr. Jessup arrives, Mr. Raymond Fosdick, who is\nworking with Mr. Jessup, will be in charge of the meeting.\nCHAIRMAN (IIr. Fosdick): The reason for the concen-\ntration of the interests of the Department at the moment\non the Far Eastern situation is that e have come to the\nend of an era. The Thite Paper was issued by the Depart-\nment in an attempt to give the public a complete statement\nof everything that had happened on the theory that the\npublic was entitled to all the facts as to the past situa-\ntion.\nThe Secretary said very frankly that he had not yet\nformulated a policy and it is the hope and expectation\nthat with the aid of such groups as this we can get light\nin the formulation of a now policy.\nWe thought that a very helpful approach to this prob-\nlem could be made if in the beginning we were briefed by\nofficers of the Department who have had long and intimate\ncontact with some of these questions. Mr. George Kennan,\nhead of the Policy Planning Staff, will start off the\nbriefing this morning on the general subject of China in\nthe world picture. He will be followed by Assistant Secre-\ntary of State, Mr. Butterworth, head of the Far Eastern\nBureau, on the general policy of the United States in\nChina. But before that I would like to present the Acting\nSecretary, Mr. Tebb.\nACTING\n-2-\nACTING SECRETARY WEBB: Thank you very much. Mr.\nAcheson regretted very much that he could not be here to\nparticipate with you. 's you know, he is at the sessions\nof the United Nations. He has taken, I think, perhaps\nmore of his own personal time on the subject of China\nsince he has been Secretary of State than perhaps any other\nissue, although he has had such very great problems as the\ninauguration of the Atlantic Pact, the working out of the\nmilitary assistance program, and many other matters affect-\ning other parts of the world.\nWe feel here that we have come to a point where we do\nneed very much to have the kind of discussions that we\nhave asked you to come here today to participate in and we\ndo want you to know that the Secretary himself will go very\ncarefully over the work that you have done and it will have\na very direct bearing and effect on his own thinking as the\nbig decisions that we have to reach over the next couple\nyears are brought into focus.\nPerhaps no single aspect of our foreign policy has\nbeen subject to so much public conjecture, criticism and\ndiscussion as the policy toward China. We also feel that\nhow the United States handles the problems involved in\nChina is of very great importance to the democratic world.\nWe think here in the Department, very frankly, that too\noften people have jumped to conclusions based on emotion\nrather than on clear reflective thinking, and that is one\nof the reasons that we were particularly anxious at this\ntime to have this meeting with you.\nI also would like to say that we recognize here that\nwe do not have any monopoly on intelligence about China.\nIn this group there is perhaps the greatest aggregation of\nintelligent thinkers that there is in this country on this\nsubject, and we feel that in working out the program of\nthe Department we will undoubtedly be able to derive great\nbenefit from these discussions. \"e hope that your contact\nwith some of our people who have been working in this field\nwill bring about perhaps a better result than either group\nworking and thinking independently could achieve. Certainly\nyou should know that after you have gone the notes and\nminutes and results of these discussions will be important\nand will be most carefully considered in everything we do\nfor an extended period of time.\nI would like to add one or two other points. We do\nnot expect any dramatic announcement that can be out out\nto the world at the end of these conferences saying that\nour\nCORP\n-3-\nour policy in China has been reversed or changed or per-\nhaps even slightly altered. The formulation of basic\npolicy in such a problem as this is a very long and time-\nconsuming process. Over the next few months we assure you\nthat everything that is involved in this great question\nwill be gone over most carefully from not only the polit-\nical but the economic and security standpoints, that within\nthe Government procedures are being worked out, arrange-\nments are getting reduced to habits of thought and habits\nof work between the White House, this Department and the\nDefense Department that have a very great significance in\nbringing about a perhaps more thoughtful thorough-going\napproach from those three standpoints than we have had\nsince the war.\nThe last point I would like to make is that we are\nnot in these sessions going to try to present you or sell\nyou a China policy, or what we might consider to be a China\npolicy. Our broad policy in the Department remains the\nsame for China as for all the rest of the world. Briefly\nwe are working toward a world in which democracy can ex-\npress itself, where human liberties are respected, where\npeople can enjoy a decent standard of living, and that\nmeans a world of peace.\nCHAIRMAN: Mr. George Kennan of the Policy Planning\nStaff of the Department of State is the first officer who\nwill brief us, on the general question of China and the\nworld picture.\nMR. KENNAN: Centlemen, I have not prepared anything\nformal for this presentation. I am just going to talk to\nyou in a very informal way about what seems to us to be\nthe relationship between the problem of China we are here\nto deal with and our general foreign policy.\nThat term, \"general policy\" does not signify any paper\nthat anybody here can take out of a drawer and lay on the\ntable as the measuring stick against which we have to\nstack up the component parts of policies, such as the prob-\nlem of China. There can't be any such paner and none of\nus here who have this status of planners can attempt to\nwrite anything of that sort. General policy in this coun-\ntry has to spring basically from the ideas and aspirations,\nfrom the actions of the people and of Congress and of the\nExecutive branch of the Government. It is a constantly\nchanging thing. It is not a static thing which you can\nfix in any one paper at any one time, and it is not a\nfinished thing. It is, particularly at present I think,\nin a state of high flux, and we only know a part of it.\nNaturally\n-4-\nNaturally we here have to use a certain rule of\nthumb, we have to have some guidance ourselves as we go\nalong, and I can try to give you a picture of what that\nrule of thumb is as we see it. I emphasize again it is\nnot one we make entirely, it is one we have to try to\nfigure out ourselves from what the country actually does\nin foreign affairs and from the aspirations of public and\nCongressional opinions we get, as well as from our own\njudgment.\nAs we see it the problem of general foreign policy\nbreaks down really into two segments. The first of those\nis the more narrow and immediate and more concrete question\nof the preservation of the security of this country in a\nworld where there are a great many weapons in other peoples'\nhands and where there is a great deal of confusion and mis-\nunderstanding and violence, fanaticism and ill will. It\nis not a safe world these days for anybody to live in, and\nwe have, as I say, the relatively well-defined problem of\nhow you preserve the national security in these circum-\nstances.\nThe second problem goes far beyond that, is a much\nmore profound one and one to which none of us is going to\nfind any definite answer at any early date, and that is\nthe question of what it is really, assuming that the\nnational security is taken care of in one way or another,\nthat this country wants to do, how it views its mission or\nits role in world affairs, what it is after in dealing\nwith its world environment.\nThe answers to that are by no means as clear as they\nmight seem when you pose the question, and it is there that\nI think our ideas today are in a particularly high state\nof flux. I will return to that a little later.\nNow from the standpoint of world security, of our\nnational security in its world terms, that is a subject\nwhich of course is on everyone's mind at this particular\ntime on account of the news that there had been an atomic\nexplosion in Russia and the implications which that bears\nfor many people. ctually I don't think that the pattern\nof our world security has been very greatly altered by\nthat fact. Certainly it is a development which should\nhave been fully taken into account in our planning to\ndate, and I think largely has been.\nAs we see it, we do not feel to this day that the\nRussians have the intention or expectation or desire to\nlaunch a great sudden military onslaught on the West.\nThat\n-5-\nThat is not to say that there is not a basic conflict of\nview between themselves and the Western countries, and it\nis not to say that for other reasons they might not come\nto the conclusion that a war is necessary, but what I am\ndriving at is that I think there is a distinction between\nthese Russian leaders and people like Hitler and the\nJapanese leaders of the '20's and '30's. I do not think\nthat in their own minds they have conceded that a great,\naggressive, open war was the way in which their aims were\nto be achieved. I think that remains true today even when\nthey have this bomb.\nRemember, they have a theory that capitalism bears\nwithin itself the seeds of its own destruction, that it\nmust disintegrate. They see an important role for local\nCommunist parties in hastening that disintegration, in\nacting, as they say, as midwives at the birth of a new\norder, but that is an entirely different thing from saying\nit is the purpose and mission for the Red army to move out\nand conquer the rest of the world for the sake of imposing\nCommunism. That would be actually illogical from the\nstandpoint of their doctrine and also their national tradi-\ntion. Russian expansionism has been a history of gradual,\nrather cautious. patient, bit-by-bit expansion, always\ndirected to what lay immediately beyond their land fron-\ntiers in Europe and Asia. \"e do not under-rate the\nimportance of their political expansionist tendencies and\nof their embitions to see Communist regimes which would be\nmore or less subservient to them or take their inspiration\nfrom them established certainly throughout most of Eurasia,\nand I think all of Eurasia. They had high hopes that a\nlot of that would happen when the recent war came to an end.\nThat does appear to us to have in it really great\ndanger, particularly in connection with Europe, because\nif you look at the geography of the world from the stand-\npoint of military and industrial potential, I think it is\nfair to say that outside of our own military and industrial\ncomplex here in the United States, there are only four such\naggregations of manpower and skills and industrial strength,\nthere are only four aggregations which are major ones from\nthe standpoint of strategic realities in the world. Two\nof those lie off the shores of the Eurasian land mass.\nThose are Japan and England, and two of them lie on the\nEurasian land mass. One is the Soviet Union and the other\n1s that of Central Europe, of Germany and the industrial\nareas immediately contiguous to Germany and the Rhine,\nFrance, Belgium, Czechoslovakia and Austria and in Silesia.\nViewed\nCONT\n{\n-6-\nViewed in absolute terms, the greatest danger that\ncould confront the United States security would be a com-\nbination and working together for purposes hostile to us\nof the Central European and the Russian military-industrial\npotentials. They would really create an entity, the two\nof them together, which could overshadow in a strategic\nsense even our own power. It is not anything, I think,\nwhich would be as easy of achievement as people often por-\ntray it as being. I am not sure the Russians have the\ngenius for holding all that together. The Germans apparently\ndidn't, although they tried it. Still, they have the tend-\nency of political thought, of Communist political expansion,\nwhich causes us to concentrate on that problem and do our\nbest to prevent such a combination in coming about in a\nspirit and form which could be hostile to us. That does\ncreate - I would point out - a real distinction, from\nour standpoint, between the situation of Europe and the\nsituation of China and of Asia. It was because of that\ndistinction that we have done what we have done and had,\nI think, the political success that we have had in Europe.\nWhen we talk about helping people to resist pressures,\nsuch as those that come from Moscow, it is not something\nwe can do by our own policy alone. We can get success\nonly by inter-action between our policy and what already\nexists in the way of natural will and ability to resistance\nin other countries. It did happen that in the European\ncountries there was a strong enough attachment to national\nindependence as such, a strong enough repugnance to the\nsort of thing that was being thrust upon countries by the\nRussians, a strong enough will to hold out against that to\nenable us with our assistance to be of real political\nvalue there. It was partly because those prerequisites\nexisted that we have been able to follow a program in\nEurope which proved, I think, much more successful and\nwhich looked much more purposeful, much more well-designed\nprobably than what we have done in Asia, but there is also\nthe fact that it does seem to us a more serious prospect\nthat the Russians should get hold of Central Europe from\nthe sheer military standpoint of national security than\nit does that they should get hold of China and Asia.\nThat does not mean that we underrate the importance\nof a Communist advance in Asia. We do not even underrate,\nI hope, the military importance of China. We realize that\nin some respects the Chinese have formidable military\ncapabilities, although they seem to us to be ones that\nexpress themselves more in the defensive than anything\nthat could make up amphibious strength or strength which\ncould be projected beyond the borders of China.\nYou\nCONFIDENTIAL\n-7-\nYou have to take in, of course, in that respect, and\nwe hope you will give attention to this, the question of\nChinese resources, Chinese possibilities of becoming an\nindustrial power, and particularly the possibilities of\ndoing that in conjunction with Russia. It has been my own\nthought that the Russians are perhaps the people least\nable to combine with the Chinese in developing the re-\nsources of China and producing anything which in a physical\nsense would be dangerous to us. The Japanese provide, it\nseems to us, far more the natural workshop for the Far East\nin general and for China, and whereas China is a competitor\nwith Soviet Siberia for such things as the Soviet Govern-\nment may have to give -- and I have heard Stalin express\nthis same thought and I think with complete sincerity --\nJapan is not exactly in that position and Japan can supple-\nment the mainland much more.\nThis problem you will be facing with respect to China\nis for that reason, I think, inextricably intertwined with\nthe problem of Japan, and I hope you won't feel under any\ncompulsion to exclude Japan from your attention as we go\nalong here. We have got there what seems to us to be a\nterrible dilemma on our hands and we need all the guidance\nwe can get. The outcome of the recent war and the settle-\nments that were made with respect to Northeast Asia do\nseem to have excluded the Japanese for the time being from\nany extensive participation on the mainland short of a war\nor of some dicker with the Russians which would enable the\nRussians to feel they can re-admit at least the Japanese\ntechnological and administrative and business skills into\nthat area safely for themselves.\nOn the other hand you have the terrific problem of\nhow then the Japanese are going to get along unless they\nagain reopen some sort of empire toward the south. Clearly\nwe have got, if we are going to retain any hope of having\nhealthy, stable civilization in Japan in this coming period,\nto achieve opening up of trade possibilities, commercial\npossibilities for Japan on a scale very far greater than\nanything Japan knew before. It is a formidable task.\nOn the other hand, it seems to me absolutely inevit-\nable that we must keep completely the maritime and air\ncontrols as a means of keeping control of the situation\nwith respect to Japanese in all eventualities. The very\nfact that the Japanese face an appalling problem of economic\nadjustment in this coming period and are probably destined\nto go through a phase of rather intense national frustration,\nwhich will incline them rather to the devices of despair\nthan toward a good-natured sort of policy, -- all that\nmakes\n-8-\nmakes it all the more imperative that we retain the\nability to control their situation by controlling the\noverseas sources of supply and the naval power and the\nair power without challenging which it cannot become\naggressive.\nIt will be, I think, part of your task here to\nassess the possibilities for US policy with respect to\nJapan in the light of those factors, the possibilities\nfor the development of Japan's economic relationships\nagain with the mainland, the extent to which the Japan-\nese can afford not to trade with the mainland, with North\nChina, but again the extent to which North China can\nafford not to trade with the Japanese, try to strike a\nbalance between bargaining power and with what it supplies\nto us.\nFor the sake of our own national security, I would\nsay the relationship of Japan toward China is fully as\nimportant and perhaps more so despite all alarms of the\nmoment concerning the relationships of Moscow.\nTurning now to the other and broader question of\nUnited States foreign policy, the one that goes beyond\nthe limits of simple national security in the short-term\nsense and which addresses itself to what it is really\nwhich we regard as our function in the world, it seems to\nme that there we have, rather than in the problem of\nsecurity, the root of the causes of all the acrimony and\ndifferences of opinion and anguish of spirit and searching\nof souls that is going on over policy in China in the\nlast two or three years. I believe that it is in that\nrealm of thought that the confusion must lie, because it\ncould only have been a great confusion which could have\nproduced some of the acute differences and acute feelings\namong our people here. On that we really are in a state\nof flux.\nThe traditional concepts of Americans, which we knew\nfrom the 19th century, as to what was the role of the\nUnited States in world affairs are beginning to wear thin\nin many respects and prove to be inadequate. They were\nof course, first of all, I think, looking back, the con-\ncept that we should preserve our freedom to go ahead and\ndevelop this continent without any interference or trouble\nfrom other people, and, secondly, that we should achieve\nthe most favorable possible juridical framework for the\nactivities of our traders and our citizens abroad. That\nwas the mercantile-labor concept of foreign policy which\nprevailed among ourselves and largely among British and\nother great trading countries in the 19th century.\nBoth\nCONFIDENTIAL\n-9-\nBoth of those are proving to be inadequate because\nwe find that as far as preserving our right to go ahead\nand develop our internal life, our ability to do it with-\nout outside interference, that that no longer can be\naccomplished with coastal batteries, that there is no\nsecurity in the purely defensive attitude toward the\nworld, that security really only lies in a vigorous and\nactive and flexible offense of some sort. I don't mean\na military one: I mean a political ideology. You are\nsafest when you are trying to accomplish something in-\nstead of waiting for somebody else to come and try to\naccomplish something in regard to you. Therefore, even\nthat concept of keeping ourselves free to pursue our do-\nmestic aspirations here brings us out into the rest of\nthe world and means we have got to want things, we have\ngot to be trying to do things in other parts of the world.\nThe whole thing has gone into a realm of depth which it\ndidn't used to have, and defense in the deepest sense is\na very profound concept which plunges away across the\nworld.\nAs far as protecting citizens abroad, I think we are\nall beginning to realize that there are national interests\nthat do rise way above the interests of the individual,\nthat you cannot fix a foreign policy today on just the\ncommercial privileges of the individual /merican trader,\nthat there is need for national policies, need for the\ndefending of what are the interests of the /merican public\nas a whole. The old concept has proved inadequate.\nNow there are various ideas current among our people\ntoday as to what really it is that we are trying to\nachieve in long-term international affairs. Some of them\nsee it as a quest for the strengthening of peace through\nthe achievement of some universal juridical pattern which\nwill make aggression impossible. That is what many of\nthem see in the United Nations. I am not sure that that\nis a wide enough view, but that is what a lot of people\nwant, and what they look to Asia for is to see the Asiatic\npeoples take their place as good schoolboys on the bench\nand vote the right way and pursue as we do a stable world\nin which there will be pretty much a preservation of the\nstatus quo through juridical promises not to be violated.\nOthers look to economic development, to the raising\nof the standard of living as the thing which is going to\nmetamorphose the world, make it a better place to live in,\ncreate a better international climate. They expect that\nfrom material improvement things will flow which will\nachieve the deepest objectives of American policy in Europe.\nOthers\n-10-\nOthers see the thing that needs to be done is the\nextension to Asiatic countries of American institutions\nand patterns of life and feel that if other people can\nonly be brought to take the same attitude toward them-\nselves and their society that people do in this country,\nthe things that make them troublesome in world affairs\nwould be largely removed. I think there has been a good\ndeal of that type of thinking in our occupational regimes\nin Germany and Japan and the feeling that if you could\ntransplant some of our institutions to these people you\nwould have achieved something which you could achieve in\nno other way.\nFinally we have had the missionary concept that in\nour Christian ethical concept we had something which\ncould do the trick in that area of the world and that the\ntask was to bring that to the peoples there.\nI sometimes think perhaps our confusion today and our\nfeeling of frustration with regard to Asia comes from the\nfact that to date none of these things have really been\nsuccessfully applied and all of them have produced dis-\nappointments to various groups of our people here at home.\nI think probably that all of those hopes and aspirations\nare placed in too nerrow concepts and that they don't pay\nenough attention to the nature of our own society at home\nand to our concepts of what it is we are trying to do,\nachieve domestically in this country, because I am con-\nvinced that those two things are very closely connected,\nmuch more closely than most people think here, that you\ncannot have foreign policy which is out of context with\nwhat you might call the national trend domestically, the\nthings you really want to achieve domestically, and I think\nwe have got to rethink all these problems from that stand-\npoint.\nThis inquiry, as I understand it, was addressed to\nChina. China of course is not all of Asia, but China\nreally is 8. tremendous nation. It very often seems to\nme that 2/3 of our problems with respect to the rest of\nthe world today is to determine what is really the\ndesirable and advisable stance of a \"have\" nation to\n\"have-not\" nations, because a very large part of the world\nis composed of \"have-nots\", not just in Asia but elsewhere,\nand that is a very, very bitter problem. We were talking\nabout it the other day, with a Congressional Committee\ndown here. I said it reminds me of the Biblical saying\nthat, \"Easier shall it be for a camel to pass through the\neye of a needle than for a rich man to pass through the\ngates of Heaven.\" Well, I think it is easier for a camel\nto\nCOMP IDENTIAL\n-11-\nto pass through the eye of a needle than for a country\nlike our own to find language and approach to people who\nhave very little, and chance of little more, which will\nbe useful and satisfactory to both parties involved. In\nthat problem China has a place of peculiar importance.\nIt can be regarded as the most \"have-not\" of all the \"have-\nnot\" countries, and if we can find the answer with regard\nto China I am sure we have found 3/4 of the answer with\nrespect to many other areas of the world, not only in\nAsia. I don't mean to say that China is like India, that\nthere are not very significant differences, and that sort\nof thing, but embraced in this Chinese problem is one of\nthe deepest dilemmas of American relationship to her world\nenvironment today, and if you can make any progress in\ngetting out of that dilemma, you will have performed what\nI think will probably be the greatest single service to\nthe United States foreign policy which you could perform.\nMR. COLEGROVE: Mr. Chairman, may I ask Mr. Kennan\nabout his views regarding potential areas of industrial\ndevelopment? He named four and three of them were in the\nWestern world, one in the Asiatic world. What are the\nmost important potential areas in the future?\nMR. KENNAN: You mean as distinct from the existing\nones today?\nMR. COLEGROVE: Yes, for instance, India and its re-\nlations to China.\nMR. KENNAN: Those are problems, of course, not only\nof resources that exist -- and it isn't absolutely neces-\nsary that resources should exist on a territory for it to\ndevelop military-industrial potential. England, of course,\ntoday has in 20th century terms -- as distinct from 19th\ncentury terms -- relatively little in the sense of resources.\nI think the answer to that question lies very largely in\nsocial and political conditions in the Asiatic countries\nand in the question of whether they are going to be able\nto develop a stable enough society, administratively\nstable enough, to provide a framework for world trade.\nThat is, for overseas trade, plus the moderation of\napproach to other nations which seems to be necessary to\nhave overseas trade. And whether they are going to be\nable to develop within themselves the necessary accumulation\nof capital to build up what is necessary for a military\nindustrial potential.\nNow\n-12-\nNow in China I must say that looks to us very far\noff. China's resources aren't very great in any of the\nthings which we regard as the guts of industrial power.\nHer coal resources are meager compared to those of the\nSoviet Union or the United States or Western Europe.\nHer oil resources are almost non-existent compared to the\nknown reserves in the Soviet Union and the United States.\nIron also does not compare and, as we went down the list\nof things, it's my recollection you found China having\nanywhere from 15 to 35 percent of the raw material re-\nsources of these other areas. Now, as I have said, you\ncan import these things but then you have got to have\nsomething internally which China has not got and that is\nthe ability for capital accumulation. In China it takes\nfour peasant families to nourish one family not on the\nland, where here the relationship is just about reversed.\nIn those circumstances it seems to me the possibilities\nfor accumulation of capital are tremendously diminished.\nI don't know what the mathematical factor would be as\ncompared with ourselves but it's a tremendous one and it\nmust proceed very very slowly. And I believe that India\nwould have the capacity to become a very considerable\nagricultural country and probably eventually industrial\ntoo, although apparently the Indian leaders themselves\nare beginning to swing rather to the idea that they would\ndo better to develop their country agriculturally.\nAlmost everyone else has wanted industries with an\nalmost childlike absorption with the sort of romance of\nhaving great industrial plants on your territory in an\nundeveloped nation. I do think the possibilities are\ngreater in India than they are in Chine and if India can\ncreate the prerequisites to be a world trading power,\ndevelop her agriculture, handling her demographic prob-\nlem, I believe then you could get certainly a fifth world\nindustrial center of great importance.\nMR. COONS: Mr. Chairman, may I ask Mr. Kennan if he\nwould explore a little further his conclusion that the\nrelationship of Japan to China is more important poten-\ntially from the standpoint of the utilization of resources\nand the combination, I suppose, of capital and labor,\nthan the Soviet Union to China. You mean now in the very\nimmediate future, or over a long period?\nMR. KENNAN: I mean now. There are many factors that\nenter in there. One is the existing industrial plants,\nskills of Japan, the fact that those are surplus to Japan\nitself, and have to find some sphere in both the sources\nof\nCONFIDENTIAL\n-13-\nof raw materials and markets. In other words, Japan's\nindustrial strength has got to operate in a realm much\nwider than the Japanese Islands themselves, as does that\nof the British Isles. That is not true of the Russian\neconomy and will not be for a long time. Vast sections\nof the Soviet Union today need very much the same sort of\ndevelopment that China needs. The Soviet Government is\nin no great real shortage of manpower, which would be\nwhat China has to offer.\nThe transportation from the East to West in the\nSoviet Union is still in a very primitive state and I\nreally believe that it would be a very serious problem\nthere were the Soviet Government ever to attempt to do\nmuch in the way of inter-twining its economy with that of\nChina. Of course. as highways might be constructed, you\nwould have something perhaps comparable to what exists on\nthis country but all that has to run through areas which\nare far less developed, and in many ways far more diffi-\ncult in operation than areas you have to cross in this\ncountry.\nThe possibilities for maritime connection are still\nvery rudimentary and poor. I was thinking primarily to-\nday than in terms of the next 10 or 20 years. It will take\nthat time for Russia to build a modern transportation\nsystem if all goes well and it will take certainly that\ntime for her to develop her Far East.\nI remember Stalin one time snorting rather con-\ntemptuously and vigorously because one of our people\nasked them what they were going to give to China when\nthis war was over and he said in effect, \"What do you\nthink we can give to China? We have a hundred cities of\nour own to build in the Soviet Far East. If anybody is\ngoing to give anything to the Far East I think it's you.'\nAnd I think he was speaking quite sincerely.\nNow, that is a very real factor. The Russians are\ntrying to build cities like Komsomolsk, Yakutsk. They\nare trying to develop that whole area and there are a\nthousand demands daily on the Soviet Government which it\ncan't possibly supply. Many of them are for housing and\nthings which vitally affect the living standards and not\nonly that but the working efficiency of the people they\nhave got out there. When similar demands come from China\nthey have to allot priorities and I believe, from what\nStalin said, those priorities will normally and naturally\nbe given to the Soviet Far East.\nThat\n-14-\nThat is not the case with Japan. And Japan has\nbetter communications by far than the Soviet Union to\nthe most important districts of China.\nMR. MURPHY: In contrasting the various power areas\nand the possible combinations which would be a threat to\nus, you made the point, I think, that the combination of\nRussia and Central Turone would be a more effective and\nmore dangerous threat than the combination of Russia and\nChina; I think you said because Central Europe was a more\nhomogeneous group, a more uniform group. Is that right?\nMR. KENNAN: It's a very powerful military industrial\nunit in its own right, Central Eurone, and that was demon-\nstrated during the last war. If you think what the Germans\nwere able to develop and maintain over a series of years\nin the way of military forces, it was terrific! And if\nyou add that to the Russian potential, if Russians and\nGermans contrive to combine -- if only for a decade -\nthose two potentials, you would be faced with the only\ncombination I think that would give you something in abso-\nlute terms considerably more powerful than what we have\nhere in North America. That was my point.\nMR. STALEY: May I ask your comment on this line of\nthought: \"hat is the Russian view of the importance of\nChina and Asia in the world political struggle as you\ngather it (a) in relation to military nower in the narrower\nsense, and (b) in relation to the political infiltration\nsort of struggle which I judge from your remarks you might\nthink would be more important in their view: And may I\npreface it further with this observation that 1t would\nseem the old arxist doctrine that the countries of most\nadvanced canitalism would be the first to have their\nproletarian revolutions -- that has been a great failure\nas a forecast. In no country of really advanced industrial\ndevelopment has there been a revolution of that type.\nThe revolutions that have been successful from the\npoint of view of proletarian dictatorship have occurred\nin the so-called backward countries. They still predict\nwe have our contradictions that will lead us to eventual\nrevolution but now isn't it true that the emphasis in\nthis thinking perhans has shifted to the so-called\nexploited under-developed countries and they may put more\nemphasis on them now realistically in their strategic\nplanning.\nMR. KENNAN: I think that is quite true. I think\nmilitarily they do not look to the Chinese for very much\nexcept\n-15-\nexcept on a local scale. That is, I would say that if you\nwere able to take apart the minds of people in the Kremlin\non this subject you would find that the role they allotted\nto the Chinese Communist military forces was one of assur-\ning the exclusion of ourselves and other \"imperialist\"\nelements from those areas contiguous to the borders of the\nSoviet Union and that they would be relying still basically\non the Red Army for their security. They would allot a\nsort of a role of provincial legionnaires to the Chinese\nCommunist forces in their minds and not a major role. I\ndoubt that they would want them to become, even if they\ncould, a major militery power.\nPolitically I think you have quite a different pattern\nand what you have said is very interesting and very true.\nEvents are proving the Marxist analysis of what was going\nto happen to capitalism and people's reactions to capitalism\nto be correct almost everywhere where capitalism is not\nvery far developed and not correct in the countries where\nit is. And I lieve there has been a considerable amount\nof soul searching ideologically within the Communist move-\nment to find a rationalization and to find ways of explain-\ning how it is that colonial countries - I'm speaking here\nfrom the standpoint of Marxist ideology -- can step from\nthe feudal orpre-capitalistic stage into the people's\nrepublic stage.\nI think they are rationalizing that in China and I\nbelieve that that is where they are going to have their\ngreat successes in establishing their ideology, on the\nfoundation of what I described as the have-not psychology\nin the world. I think that offers great possibilities to\nthem. I wouldn't underrate it for a minute.\nHow that will work out in terms of relationship be-\ntween them and regimes like the Chinese Communist regime\nI don't know. That will be a problem similar to the\ninter-relationships within great religious movements of\nthe past. But that this Marxist analysis, with all its\nover-simplification and what seems to me to be really its\nphony qualities, has huge emotional appeal for peoples I\nbelieve is a fact.\nNow, there is where I think they place their great\nhopes but at the same time they will be extremely cautious\nabout it in Asia because they are very well aware of the\nfact that if you cannot overshadow a country militarily,\nideology is in itself an untrustmorthy means with which to\nhold them. It's a good beginning and it's fine to have\nthem\nCONFIDENTIAL\n-16-\nthem inspired your way but it's not a guarantee against\nTitoism and I don't think they know of anything really\nexcept the shadow or the reality of military domination.\nAgain I'd just like to say I'm not predicting a\nrepetition in China of what happened in Yugoslavia. I'm\nonly saying that I think the Russians are very alive to\nthe fact that you can get a lot of people, ideologically,\non your side and still the logic of power compulsions can\ncause them to challenge your physical authority at some\nstage along the way. For that reason they will be very\ncareful in hondling this thing in /sia.\nMR. LATTIMORE: I should like to ask Mr. Kennan a\nquestion to tie together two things that he made in his\nintroductory statement. Mr. Kennan, you pointed out\nquite likely that Japan already has the industrial set-\nup; what it needs is a wider sphere of activity for it.\nThen separately you mentioned the defense and security\nrequirement, of being able to maintain air-seas super-\nvision over Japan's strategic position. Japan's industrial\npower grew up very largely by the importation of energy\nand supplies from the North of China and Manchuria. And\nthat was done under conditions where the Japanese not only\nhad the industrial relationship but the strategic control\nof the industrial relationship. How, if they are to re-\nsume their access to those sources, the operation of which\nthey are familiar with, the strategic control would remain\nwith a China which is going to be either Communist or\nCommunist dominated. And the Chinese would have at least\nthe option of rationing their supplies to Japan. They\nwould say, we supply you so much on condition me get back\nan import from you of machines and so on, leaving no margin\nfor you to build up a kind of power that has strategic\npower over us. In other words, the Chinese may be in a\nposition to make an effort to interdict the military side\nof this Japanese military industrial potential in such a\nway that it would strongly affect this concept of a mili-\ntary industrial potential in Japan controlled areas at\nlong range by the United States.\nUR. X HMAN: There are two or three things that I\nthin': ought to be taken into consideration on that. Again\nI raise the question of whether the Chinese Communists are\ngoing to be economically so much in the driver's seat that\nthey can sit back with equanimity and grant or decline to\ngrant favors economically to Japan on how much that is\ngoing to be a two-way proposition. I think what you say\nis correct, in both the mainland of Asia - not only, of\ncourse,\nCONF IDENT LAD\n-17-\ncourse, China but also Korea being under Russian domina-\ntion and Manchuria. And we ourselves as the major mari-\ntime power in the Pacific have holds on Japan which can\namount to perhaps almost a veto power on Japan's again\nbecoming a great military power.\nThis makes me think of something I found in a state-\nment of Theodore Roosevelt which seemed to me to have\nrelevance just to that problem. He said: \"Of course, if\nJapan were content to abandon all hope and influence unon\nthe continent of Asia and tried to become a great maritime\npower she might ally herself to Russia to menace the\nUnited States. But in any such alliance between Russia\nand Japan do not forget what surely the Japanese would\nthink of, viz. whereas the sea powers could do little\ndamage to Russia they could do enormous damage to Japan\nand might well destroy Russia and blockade the Japanese\nIslands.\"\nI think 1t remains today that Japan is a valuable new\npower from the standpoint of whoever controls the seas and\nthe air today in the Pacific region, and there are raw\nmaterials which she cannot get, I'm sure, from North Chine\nor Manchuria on which she will be vitally dependent. If\nwe really in the Western world could work out controls, I\nsuppose, adept enough and fool-proof enough and wisely\nenough exercised really to have power over what Japan im-\nports in the way of oil and such other things as she has\ngot to get from overseas, we would have a veto power on\nwhat she does need in the military and industrial fields.\nMR. HEROD: I'd like to ask Mr. Kennan one query in\nregard to the question of China allying to Russia or\nRussia being a less likely proposition with Japan as it\npertains to the military industrial potential. In our\nobservation, from the standpoint of scientists, Russia\nhas some very good ones. So has Japan. From the stand-\npoint of engineers they have got very good ones. As far\nas industrialization is concerned, Russia was estimated\nas having 17 percent of the world's manufactures just be-\nfore the world war as against less than 5 percent in Japan.\nAs far as steel production, as far as power production and\ncoal production is concerned, Russia exceeds Japan's pro-\nduction many times.\nAnd it would seem to me that whether there is a\nlikelihood of Russia allying with China depends to a\ncertain extent upon Russia's size-up of her objective and\nthe degree to which Russia sizes up the indigestability\nof\nCONF IDENT\n-18-\nof China, granted there is a great shortage in Russia\nagainst a surplus of these facilities and techniques\nand technology 1n Japan. But Japan hasn't a free choice\nand Russia has, and Russia has been known to divert her\nattention at the expense of her domestic market and at\nthe expense of her own people into foreign channels when\nshe had an objective that looked as if it were worthwhile\nto do it.\nI don't believe we can count upon its being a more\ndangerous or a more critical proposition for us to give\nconsideration to the Japanese relationships with China.\nI think we can count upon it for the short term because\nI think it's expedient in Russia. I think Russia's idea\nis, just leave it and let it stew in its own Juice, with-\nout a strain on Russia's resources.\nIf she felt she could use it as a jumping off point,\nI think Russia, having these resources, could divert them\nto China as well as Japan could divert them at the expense\nof her own people, which I believe the Kremlin would do if\nshe felt the price were worth 1t.\nMR. KENNAN: The whole trend of Russian economy in\nthe past 40 years has been away from that of a trading\nnation which had surpluses to give to the rest of the\nworld and rather toward one which had a hard enough time\nsupplying her own needs. While the Russian Government is\ncanable of allotting priorities of very formidable in-\ntensity and therefore achieving given objectives in fields\nwhich it marks out for itself as of great importance, it\ndoes that at the cost of huge sacrifice. Its economy is\nconducted the hard way and the wasteful way and I don't\nthink there is a great margin with which to play except\nin cases of tremendous national emergency.\nNow, you may say that Asia might become of such\nimportance to Russia that it would be equivalent to one\nof those periods of great national emergency and that\nthey would say this is the time to do what we did during\nthe world war, to push living standards ruthlessly down\nand free a surplus of the labor of the people to use for\nnational purposes of this sort. That is possible at a\nlater date. Right now I think most of us tend to forget\nhow deep and how raw are still the scars of the last war\nin Russia, how little of the damage done really has been\nrepaired, despite the fact that production has been\nbrought up.\nThe\nCONF TAL\n-19-\nThe Russian people are no where near the term of that\nrhythmic swing which would put them in a frame of mind\nagain to enter in a contest. I would also add to that:\nlet's remember that never in Russian history have the\nRussians ever, that I can remember, been enthused about\nany deliberate aggressive action of their own outside of\nRussia. The things which have really caused the Russian\npeople to get down and work and show this tremendous spirit\nof sacrifice and endurance and enthusiasm have been the\nattempts of foreign powers to plunge into the heart of the\ncountry and the folly of foreign powers in giving the\nRussians the feeling that they regarded them as dumb,\nsecond-rate people who could be pushed around that way.\nThat really arouses Russian national spirit more than any-\nthing else. But whether anybody will ever be able to\narouse the Russian spirit for different sorts of ventures,\nI'm just not sure.\nMR. BUTTERNORTH: With respect to the question of\nrecognition, the Chinese Communist authorities have now\nannounced that they have organized themselves as a gov-\nernment and they have addressed communications in a rather\nterse fashion to the other powers. About the time that\nthe Communist forces crossed the Yangtze we made our first\napproach to the other powers about this question of recog-\nnition. The unexpected ease with which the Communist\narmies swept down from Mukden to the Yangtze upset not\nonly the plans and concepts of the Nationalist Government\nbut those of the Communists, political and military\nauthorities as well. It is quite clear they never ex-\npected the kind of collapse that in fact took place.\nSo they began revising their own political time-\ntable and it became clear to us that about this time they\nwould organize themselves as a government and invite recog-\nnition. As a matter of fact, we picked out the arbitrary\ndate of the Double 10 and that might well have been the\ndate. I have the feeling myself that the action of the\nChinese in Lake Success in bringing forth this case may\nwell have had the effect of hastening as much as possible\nthat timetable.\nBut about this time when Shanghai was being menaced,\nthrough Ambassador Stuart at Nanking and through our\nenvoys in the friendly capitals, we broached the question\nof recognition with the friendly countries. We pointed\nout to them that we did not think this was an immediate\nproblem and that we did not expect that it would in\npractice arise, although the world press and particularly\nthe\nCONT\nTAL\n-20-\nthe American press wanted to force this problem onto us\nimmediately. We expressed our view that we thought it\nwould be desirable for the powers who were sufficiently\ninterested in China to have diplomatic representation\nthere to consult with each other, that we for our part\nwere quite ready and willing to do SO. Our own view was\nthat no benefit would be derived by any hasty individual\nact, that the first come would not in fact be the better\nserved, and that we thought that this was a problem of\nsufficient complexity and seriousness that it should be\napproached with great caution and with no sense of haste.\n\"e found general agreement with those views with two\npossible exceptions. Australia did not share these views\napparently at all and believed that the Chinese Communist\nregime, when it was set up, should be recognized at the\nearliest moment. And Dr. Evatt made a public statement\nsubsequently along those lines. The Indian Government\napparently was thinking along the lines at that time of\nwhat it called de facto recognition of the Northern Com-\nmunist regime.\nAs we pursued this we found that they had an idea\nbut it didn't seem very clear in their own minds or ours\nexactly what they meant by it. They agreed that some\nconsultations should take place, but it left us with the\nsense that they would be more willing to act readily when\na government was set up than would ourselves or some other\npower.\nNow, the British not only trade with China, but also,\nunlike us, they have large investments in China with firms\nlike the Jarden Matthewson Firm who not only have agencies\nfor British manufacturing concerns but own docks and\nbreweries and textile mills and operate on joint account\nwith the Chinese interests in a number of concerns, so\nthat, whether they cut their losses for a period or\nwhether they fold up for a time and come back, they are\nfaced with problems which are not the same as ours.\nThere is no doubt that the British are more anxious\nto trade, therefore more anxious to regularize their\nsituation with a Chinese Communist regime than our in-\nterests necessarily persuade us to do. I'll touch on\nthat a little later, but that is the position today. We\nstill believe that this problem should not be pursued\nwith any great haste, that there is no great urgency and,\nin fact, the Chinese Communists do not control a sub-\nstantial part of China and, furthermore, they have given\nno\n-21-\nno indication of their willingness to undertake the type\nof responsibilities which normally devolve upon a govern-\nment.\nTheir propaganda over many months has contained\nreferences to their desire to abrogate what they call the\nKuomintang treaties. But the Chinese Communist propaganda\nveered away a little bit from that and the latest line is\nthat they are going to look and see what treaties are\njustified, what are just treaties. But it's quite clear\nand it's significant that in their recent note they made\nno reference to this matter and that is a point which of\ncourse we are concerned about and which I suppose would\nconcern all friendly countries having interests in China.\nConcurrently, I might mention this question of trade\nwhich is a contentious issue. Our general analysis of the\nexport-import situation in China is that, although China\nrequires imports of a considerable variety of products,\nher very size and the agricultural nature of the country\nmake her relatively self sufficient. Her deficiencies lie\nmainly in the importation of machinery and in oil.\nChina is not one of the countries that you would\nselect if you were going through the list of countries\nthat would be particularly vulnerable, we will say, in\ntime of war, to economic warfare. That is, although the\ncutting off of her imports would entail a good deal of\nsuffering and a good deal of dislocation, it would not\nnecessarily strike at her vitals.\nIn February we decided to approach the British Gov-\nernment in anticipation of the onward sweep of the Chinese\nCommunist armies and discuss with the British, in the\nfirst instance, the question of the imposition of con-\ntrols on trade with China. It seemed perfectly clear\nthat we should not let the products which were being\nrestrained in terms of east-west European trade from\nreaching Russia and the satellite countries reach Russia\nthrough the back door. Those are the categories which\nfall under the heading of 1A items.\nWe thought that a selected number of 1B items should\nlikewise be put under control so that we would have the\noption of modifying, restraining or allowing products to\ngo as determined by the events. Until our position was\nclear with the British there was obviously no purpose in\nhaving discussions with other interested nowers.\nThe\nCONFIDENTIAL\n-22-\nThe British have been very reluctant to put under\ncontrol 1B items with the exception of oil. They do not\nfeel that 1B items moving into China can in the present\ncircumstances do very much harm. They are keenly aware\nof the importance to trade of their Tientsin and Shanghai\nentrance, and they are acutely sensitive to the fact that\nHongkong future is inextricably bound with its hinter-\nland. They are, of course, in agreement about the 1A\nitems. And these discussions are going on and other\ncountries will be approached on this same basis.\nThe blockade port closure has produced a new situa-\ntion. Communist propaganda has it that it was an American\nidea. I think it was a complete accident myself. An air-\nplane, as far as I can gather, flew over the entrance to\nthe river and saw a ship zigzagging in a queer way and\nthe pilot, when he got into Shanghai, began talking and\nsaid, \"Perhaps this ship was laying mines.\" This got in-\nto the North China Daily News and they published it as a\nreport and the port of Shanghai suddenly then closed be-\ncause everybody then assumed that the Yangtze was being\nmined.\nThe Communists were furious and made an attack on\nthe Daily News. But, nevertheless, shipping stopped for\nseveral days until small ships could be got out into the\nYangtze and attempts made to find these mines. No mines\nwere ever found. The idea had obviously had a wider\ncurrency and the Nationalist Government then sought the\npossibility of nort closure. The order which they cir-\nculated to all friendly shipping countries, particularly\nthose having shipping companies, very carefully avoids\nthe word \"blockade\". It calls it a \"port closure.\" But,\nnevertheless, it seems to require of second countries\nbehavior similar to that which would be entailed if a\nblockade had been proclaimed.\nNow, our traditional policy has been over the years\nto proclaim that a blockede be declared and made effective.\nFurthermore, in our present position as the greatest naval\npower in the world -- with England practically the only\nother naval power in the world -- it would not be in our\nstrategic interests to see countries with a few ships and\na few airplanes suddenly declaring large parts of the\ncoastline blockaded. We have to some extent a monopoly\non blockades and we keep that monopoly at rather heavy\nexpense and are not prepared to give it up rather readily.\nAt the same time, we obviously do not want to be the means\nby which this blockade in Shanghai is broken. That is not\nour\nCOMPIDEN\n-23-\nour affair. That is the problem which concerns the two\nwarring elements of China.\nThe first consulate we decided to withdraw was the\nConsulate General at Mukden. For the first three weeks\nof the Communist occupation of Mukden our people were\nproperly treated and were even allowed radio communica-\ntion with us but suddenly they were put in their com-\npounds and were held more or less incommunicado since\nthat date. It was obvious that we had no option but to\nwithdraw them. They were not being allowed to perform\ntheir functions and were living under circumstances of\nhardship and indignity. So we gave instructions to have\nthem withdrawn. We took the matter up at Peiping with\nthe Communist authorities and received assurances from\nthem that our Consul General and his staff would be pro-\nvided with American facilities and they would be permitted\nto leave. That was some months ago and these assurances\nhave not yet been implemented.\nThe next step that we took was to meet with the\nbusiness and missionary interests and discuss with them\nour decision to close the offices at Chungking, Kunming,\nand possibly Canton before those cities were overrun by\nthe Chinese Communists.\nThere are not large numbers of American citizens in\nthose areas and there are comparatively very few American\ninterests. Communications have been extremely difficult\neven with the favorable facilities that we have had in\nChina from the end of the war until a comparatively recent\ndate when we had a military and air advisory group which\nhad airplanes there and we could fly in supplies.\nWe felt from the point of view of their utility to\nus and the facilities that would probably be accorded\nthem, it would not be worth our while to keep them. We\ndebated about the question of Canton, because Canton is\na long-established office and we consulted with the\nmissionary and business interests as to whether they\nthought that we could be of particular aid and assistance\nto them. Given the presence of Hongkong and its prox-\nimity, we decided we would close the office at Canton,\nalthough we still keep there our Chargé d'Affaires until\nsuch time as the capital moves elsewhere.\nLikewise, we are going to close out the offices at\nDairen and Tsingtao: In Dairen because our people are\nso circumscribed that they are leading a quite impossible\nlife\nCONF IDENT\n-24-\nlife and are of very little or no utility to us, and at\nTsingtao because with the departure of our fleet there\n1t is a very dead place and our consulate serves little\nor no purpose. There are very few Americans and all\nthat are there want to leave. Therefore we will keep\nthe traditional service at Peking, Tientsin, Shanghai,\nNanking and Hongkong. We have no intention of closing\nthose. Hankow is also being closed on account of the\ncommunications problem.\nMR. DECKER: I should like Mr. Butterworth to dis-\ncuss with us the question of de jure and de facto recog-\nnition, that is, degrees of recognition, what the\nimplications of those alternative courses would mean,\nand another very important question -- what the implica-\ntions would be for the existing Nationalist Government.\nassuming that that Government stays in possession of at\nleast a substantial segment of China, as it 1s at the\npresent time. Would recognition of the Communists as a\nregime imply the withdrawal of recognition from the\nNationalists, and what would be the result of that? A\nthird point, the question of recognition in its relation-\nships to the UN and arrangements in the Security Council.\nI think those are all questions we would like to have him\ndiscuss.\nMR. BUTTERNORTH: If I could touch on the first two,\nI think in a way it is theoretical to discuss the varia-\ntions between the de facto and de jure recognition because\n1t seems quite clear to us the Chinese Communist authorities\nwould not be prepared to accept what is commonly called\nde facto recognition, and I feel quite sure that a con-\ndition precedent to the exchange of envoys and the usual\nthings that take place on the occasion of recognition\nwould be in their mind a withdrawal of recognition from\nthe National Government, so I think in practice the\nproblem that faces the United States and faces the other\npowers is whether or at what time to accord normal de jure\nrecognition, and I think it is because they have held this\nview, that they have been so arbitrary and narrow in their\ninterpretation during this pre-government period of the\nstatus of all foreign envoys and representatives, consular\nand otherwise.\nI would like to comment on the third question as an\namateur. One or two broad things seem clear, that the\nquestion of recognition will probably arise in the Security\nCouncil and then possibly move to the General Assembly,\nwhich is the higher court of appeals. The whole is no\ngreater than the sum of its parts in this instance, because\na large\nCONF\n-25-\na large part of the territory still lies within the juris-\ndiction, nominal and otherwise, of the National Government,\nand therefore you cannot at this stage of the game get a\nrepetition of the Czech case, where, you will recall, the\ncredentials of the outgoing government were withdraw\nlargely on the initiative of the Secretariat on the basis\nof the fact that the United Nations does not recognize\nregimes as such. It recognizes states, but here is a state\nthat at the moment is a divided one, so that would not seem\nto apply. That being so, the question would move on the\nattitude of the several powers in this question.\nMR. DECKER: Are we then to assume that we really\nhave a take-it-or-leave-it proposition so far as the Com-\nmunists are concerned in their demanding de jure recogni-\ntion, setting limitations? Is there any situation in\nwhich e unilaterally grant one or the other?\nMR. BUTTER ORTH: Our recognition is not a unilateral\nmatter, it is a mutual matter. Their exact terms are by\nno means clear from their brief and somewhat tersely,\ncurtly worded note and it is clear they do not encompass\nby any means all of the territory of China yet. It is not\nat all clear what their attitude is designed to be towards\naliens' obligations.\nMR. COLEGROVE: Did not the State Department throw\naway a strategic advantage in withdrawing our consulates?\nThere are adventuresome young men in the Foreign Service\nwho are willing to take the risk and there are experienced\nconsuls who know how to get along in countries like China\neven though they have little contact with their Government.\n\"e know how difficult it is to resume consular relations\nwith Communist countries. We have had some unpleasant\nexperiences about that. Would it not have been better to\nhave left these consulates scattered through China as\nlistening posts or as posts which we already hold even\nduring a time when we have little communication with\nCommunist China? And still again, are we not going to\nhave a great deal of difficulty in re-opening these con-\nsulates after we try to get a modus vivendi for trade with\nCommunist China some time in the near future?\nMR. BUTTERNORTH: I shouldn't imagine that, if it is\nthe policy of the Chinese Communist Government to have\nforeign consulates in these places, and that is not clear\nyet, it would be difficult should recognition take place\nto obtain the same facilities that other powers have. On\nthe other hand, your reference to listening posts really\ngets\nCONFIDENT\n-26-\ngets to the heart of the problem. The utility of a\nlistening post is not only that you can listen but also\nthat you can purvey what you have heard to somebody else,\nand our experience does not lead us to believe that would\nbe possible. Furthermore, we have good reason to believe\nthat our adventuresome young men would have very great\ndifficulty in getting into these places, that it would be\na question of maintaining our staff at the places rather\nthan rotating or sending new ones there.\nFurthermore, there is the general concept among a\ngreat many Chinese, and particularly strongly held by the\nCommunist Chinese, and you find it in trade, that the\nWestern powers in general and the United States in par-\nticular is extraordinarily dependent upon its relationship\nwith China both in trade and in other things and it 1s an\nextremely valuable market to us. These mysterious\nforeigners come there, and exactly how they make the money\nwhich allows them to live on the scale of merchant princes\n(even though they are clerks) is not wholly clear to the\naverage Chinese in the street, but he feels obviously\nsomething is being taken out of China and that China is\nextremely important. We get the most extraordinary alle-\ngations from the Chinese Communists as to what has happened\nin the last five or ten years. You would never have thought\nthat we had imported gratis into China thousands of tons of\nfoodstuffs and other material. I for one am not at all\nsure that psychologically it is a bad thing to have re-\nstricted our representation. I think it would be a mistake\nif we voluntarily withdrew our consulates in the traditional\ncities where we have always been But of course, if our\nrepresentatives are treated a certain way in the days to\ncome, when recognition is not readily forthcoming, we will\nhave no option but to withdraw them, and I myself would\nfavor a policy of withdrawing them rather than to allow\nthem to remain serving no purpose but suffering indignities\nwhich do not reflect well upon any of us.\nMR. ROSINGER: I would like to ask two questions.\nFirst of all, what is the importance to Britain of its\neconomic stake in China in terms of the British home\neconomy, and, secondly, what particular obligations do\nwe have in mind in connection with the Communist assumption\nof Chinese obligations?\nMR. BUTTERWORTH: I might indicate on the most obvious\nones, the treaty obligations which they inherit, that the\nidea that we should in effect agree to the abrogation of\ntreaties or provide terms under which the abrogation\nshould\nCONF IDENTIAL\n-27-\nshould take place, is out of the question. Secondly, on\nthe question of normal treatment accorded to foreign\nresidents and officials: ready travel, access, the\noperation of courts of justice which are effective, and\nso on.\nMR. ROSINGER: On question 22, \"To what extent is\nthe upheaval in China and elsewhere in the Far Tast a pre-\ndominantly political movement, and to what extent is it\nthe expression of deep-rooted forces arising out of social\nand economic conditions?\" I think it is rather clear that\nwhile the political aspect is important, nevertheless we\nare facing pretty deep-rooted social and economic con-\nditions in the region; that even given a change in the\nexisting political movements, you would have the gravest\nkind of discontent, the gravest kind of political upset,\nbecause of the general poverty of the area, because of the\nunresolved social and economic conditions which have the\ncharacter of a long-term revolutionary process which\nstarted a long time back and will not be completed in our\ntime.\nMR. DECKER: When we think back on the constructive\nmeasures which the Nationalist Government took from 1930\nto 1937, and then its rejection just a few years later,\nI think we must recognize that they have been the victims\nof circumstances beyond their control. It was the ill\nfate of the Kuomintang to have had the responsibility at\na time when China was passing through a frightful experi-\nence which registered in the food and the clothing or the\nlack of them that the great mass of the people had avail-\nable and that more than political maneuverings have been\nresponsible for the outcome.\nMR. VINACKE: I don't think anyone can disagree with\nthe fact that you have your political movements rooted in\nthe social and economic causes. At the same time, you\nalso have to recognize, it seems to me, that there is the\npolitical expression at a given moment of these economic\nand social causes of concern to us outside of China, and\nconsequently we might come to an agreement on this\nproposition, but I don't see that it adds up to very much\nin relation to the position of the United States and the\nneeds and interest of the United States at the present\nmoment.\nMR. COONS: Probably two-thirds of the people around\nthis table have probably written in the vein of the deep-\nrooted forces, of the total social and economic and\npolitical\nIDEN TAL\n-28-\npolitical revolution in China, but I should like to throw\nmy influence in the same line as Mr. Vinacke. After all,\nwe are facing a political movement and we need to analyze\nit - the significance of the deep-rooted forces -- in\nterms of whatever it may reveal for us, in terms of the\nmeaning of the present political movement and what we do\nabout it. Let us all admit the history and move on to\nthe question of what we do from now on.\nMR. TAYLOR: If this question 22 means anything at\nall, it raises in my mind the question of the nature of\nthe Communist movement in China today and of the Kiit. If\nyou put it that these are all deep-rooted forces and there-\nfore can't be dug up but must be allowed to grow as they\nnow are, you get into a frame of mind There you say, this\nwill happen, you can't stop it, here it is and you might\njust as well be scholarly and recognize deep-rooted forces\nwhen you see them. It is my impression that the political\nform that these deep-rooted forces are taking in China to-\nday is a very specific one and one that can be described\nand should be. I think it is a political movement. It is\none which is using deep-rooted political forces. The\nCommunist movement in China today is one which is taking\nadvantage of a situation which is not ne\", which has\nexisted there for a very long time, and it should be\nanalyzed as such. It is a political power movement. It\nis using propaganda which includes the idea of social re-\nform, and so on, but basically the motives behind it I\nbelieve are definitely political, connected with an inter-\nnational organization although taking place in China.\nThis is occurring in a country where this sort of thing\nfits extremely well. Nothing fits in China quite so well\nas a bureaucratic, one-party monopoly government.\nYou are not dealing with a feudal society. The\nRussian position is that this is a feudal country. If I\nmay refer to Mr. Fairbank's excellent book, I think that\nshows very well indeed that the idea that this is feudal\nhas got to be discarded. It is a society in which this\ntype of one-party political bureaucratic program fits so\nperfectly that very few Chinese \"ill have any particular\nintellectual difficulty in accepting it.\nMR. COLEGROVE: If I may make a remark with reference\nto question number 1, I think to a large number of people\nin the United States, a large growing public opinion, not\nmerely experts but opinion of colleges and universities\nand press and the forums, that United States foreign policy\nshould be a global policy and there ought not to be a\nsharp\nCONF\n-29-\nsharp difference between our policy in the Orient and our\npolicy in Furope -- and for Latin America for that matter.\nThis first question uses the term totalitarian regime.\nAt the present time our policy toward Europe is a policy\nof trying to keep countries like Greece and Italy free so\nthat they can practice democracy without being submerged\nand oppressed by aggressive nations that are trying to\nforce another system upon them. If that is our policy in\nEurope, and I think we agreed that it was, why shouldn't\nthat be our policy in China? Why shouldn't we have the\nsame global policy in all parts of the world? It seems to\nme that our foreign policy should be made consistent in\nthat respect.\nMR. BRODIE: The question, as I see it, is do we have\nto assume now that China is lost to the Communists or do\nwe not? The tenor of the White Paper, as I see it, is\nthat it is. I should like to know from the experts who\nare around this table whether there is general agreement\non that particular conclusion. It seems to me that is\nessential to everything else we have to discuss.\nLIR. McNAUGHTON: I'll give you my answer to the first\nquestion. Presently I think we are all washed up in China.\nSecondly, I think we ought to do what we can to keep the\nrest of the East from going the way China did.\nMR. BALLANTINE: Mr. Chairman, I'd like to modify\nthat point a little bit. I think that even if we assume\nthat Russian domination of China is an accomplished fact\nwe shouldn't accept that as final. We must always bear in\nmind that there are at least six million overseas Chinese\nin the territories of South East Asie and they are bound\nto go the same way eventually as their people at home and\nthey would constitute a tremendous force and influence\ntoward undermining our efforts to arrest the advance of\nCommunism, if we didn't try to take care of the situation\nin China when and as we have the opportunity.\nMR. COLEGROVE: I would not agree at all that we are\n\"washed up in China\" nor that the Nationalist Government\nis washed up either. Now, Mr. Kennan said that the\nChinese Communists did not control at the present time a\nmajor part of China. That fact, of course, is a fact and\nwe might as well operate upon it. Are there other healthy\nforces that are still resisting the Chinese Communists?\nWell, to name one, there is General Pai, who has according\nto our latest information controlled at least three\nNohammedan\nCONT\n-30-\nMohammedan provinces -- and we know how Mohammedan\ncountries look at Communism. It seems to me that General\nPai Chung, who still is loyal to the Nationalist Govern-\nment, is one healthy source still remaining which\ndeserves the assistance of the United States.\nI take the position, also, of course that General\nChiang still deserves our support. We have, of course,\nGeneral Chennault's plan whereby he thinks that he could\nsave a large part of China with the expenditure of not\nmore than $200 million, following tactics which he used\nduring the world war. I won't agree at all that we are\nwashed up in China. There are healthy spots which 11\nstill resist the Chinese Communists and which deserve our\nattention. Of course, my assumption is that our policy\nin China should be the same sort of policy as in Europe,\nviz., to resist totalitarian regimes which carry on\naggressions very much like the aggressions which Hitler\ncarried on at the beginning of the world war.\nMR. DECKER: I would agree that we are by no means\nwashed up in China. I think 1t's very important for us\nto keep that constantly in mind. I do so, however, for a\ndifferent set of reasons than those I believe Mr. Colegrove\nadvanced. I think there is no doubt whatever but that\nthe leadership, the present political leadership, of the\npresent regime in China is Communist and certainly for the\ntime being at least is thoroughly committed to a Russian\nline. I think it would be very foolish if we were to\nassume anything else. But it's yet to be seen how\neffective that group is going to make that control of\nChina itself.\nThose of us who went through the Revolution of 1925\nto '27 or '28 know how quickly these enthusiasms can\nspread in China and how quickly disillusionment can\nfollow. And I do not think it is wishful thinking to\npoint out that the Communist Party has got to navigate\nthe same waters that wrecked the Kuomintang and if we\nhave got to look any further than the end of our noses\nI'm very sure that we ought not to assume here that it\nis going to be able to make China as a whole an effective\ncat's paw of Russian policy or that it is going to be\nable to set up and to maintain a stable effective govern-\nment over the continent of China.\nThen there is another thing. Experience in one of\nthese revolutions has taught us how quickly an anti-\nAmerican or anti-foreign or anti-everything else kind of\na movement\n-31-\na movement can change into something that is very different.\nAnd I for one don't for a minute believe that the good will\ntoward America that has been such a fact in China in past\nyears has all been dissipated. Some of it has been dissi-\npated. We have suffered seriously. There is no question\nabout that. But that it has been completely dissipated,\nI think is not in accord with the facts.\nThen, too, we know what a tremendous place the\nAmerican people and American institutions have had in the\ntraining of the only effective Chinese leadership that the\nChinese people have, politically conscious people, people\nwho have ideas of modern government and who will have to\nbe depended upon to be the backbone of any government which\nis to emerge in China.\nThe contributions of those who have been trained in\nRussia have also got to be reckoned with. But it is going\nto take more than a decade of this kind of a regime to\npersuade me that the effects of that good work that we\nhave done in the past has been totally lost and so, if\nthe first question assumes that the present regime in\nChina is bound to be a cat's paw of Russian Communist\nimperialism I think we are basing our argument on a false\nassumption.\nMR. MURPHY: On the question of whether we are washed\nup in China, if by being washed up in China means that we\nhave lost the capability to make China completely an\ninstrument of our own policy, as is the complacent attitude\nof a great many Americans, I think we are washed up. But\nI don't think basically that is a justifiable assumption.\nJust after the question of being washed up was made, some-\nbody made the remark that we could assume that Russian\ninfluence would automatically predominate in China. I\nthink that is a very unsound assumption.\nMr. Colegrove raised the point of the three Mohammedan\nprovinces that were run by General Pai Chung Hsi and the\nquestion of using various other Kuomintang forces in China\nas a point against the Communists. I would say that his\nnewspaper information was probably about two weeks out\nof date because the newspapers for the last two weeks\nhave carried a continuous report of the going-over of all\nthose provinces into the other camp. And the Foreign\nTrade Council just this week put out a memorial reporting\na statement made by the American Chamber of Commerce of\nShanghai which was sent here to the State Department in\nwhich our businessmen in Shanghai stated among other\nthings\nCONFIDENTIAL\n-32-\nthings that the Nationalist Government is finished for\nthe foreseeable future and please - so their throats\nwon't be cut -- don't send any more money over there for\nthe central government, such as the $12 million two or\nthree months ago, that was sent over for military supplies.\nMR. MacNAUGHTON: Doesn't that maintain my point that\nat the present they are washed up?\nMR. MURPHY: If that meant we had the capability of\nusing China narrowly as an instrument of our own foreign\npolicy.\nMR. KIZER: Mr. Chairman, in the sense that Mr.\nMacNaughton used the word, I agree with him heartily that\nwe are washed up in China. I take it that Mr. MacNaughton\nmeant that the policy of pouring lavishly arms and\nsupport in the hands of the Generalissimo has been demon-\nstrated to be a complete failure, that we ought to think\nour policy out in new terms. As to Dr. Colegrove's\nsuggestion that there are healthy sources of resistance,\nI suggest that they only appear healthy in areas where\nthey have not yet been effectively challenged by the Com-\nmunist group. Under the Nationalist Government, as far\nas I know, there are no healthy sources of resistance,\nparticularly once the Communists have made such a display\nof military force as they have made.\nWhenever those are approached I believe they will do\njust what the others have done, they will surrender. And\nI think we ought not to rely upon it. Anyone, it seems to\nme, who has read the report of Major General Barr and the\nJUSMAG group in the White Paper, anyone who has read the\nreport of General Wedemeyer on what Chung Hsi did in\nFormosa must, I think, come to the conclusion that the\nuse of military force. or assistance by us to resisting\ngroups in China is a tragic mistake, that the quicker we\ndrop it and move to other resources we have in our hands\nthe better off we will be. T'e have succeeded to a large\ndegree in Europe because of the effectiveness of the\nMarshall Plan and the use of economic and social forces.\nWe couldn't use those in China because such as we sent\nover under UNRRA and under our assistance simply were\nused as instruments of war by the Generalissimo. We\nhaven't done anything in that sense for China except on\na very small scale.\nI'm\nIDENT IAL\n-33-\nI'm in hearty sympathy with what Mr. Decker has said\nabout the potential sources of support for us that exist\nindividually in China. I think that United Service to\nChina, what the missionaries have done, have created many\nplaces of good will. I know now that there are mission-\naries of ours, and I speak as one not interested in the\nmissionary movement except in an economic and political\nsense, operating in China behind the Communist lines that\nhave established sources of friendship there and are\ngetting on in a way that is surprising. And I know that\nthat sort of thing can be continued.\nWhen we come to the economic and social assistance\nthat we can render in the Far East I should want to speak\nagain, but just for the present I do want to emphasize\nthe fact that our military assistance to the Generalissimo\nas a policy is completely washed up, as I see it.\nMR. BUSS: Mr. Chairman, I should like to observe\nthat Mr. MacNaughton's remarks and Mr. Murphy's remarks\nwere not the same. Mr. MacNaughton said \"we are washed\nup in China\". The Foreign Trade Council's report is that\nthe Nationalist Government is washed up in China. It's\na dangerous identity to put ourselves, \"we\", as the\nNationalist Government.\nMR. VINACKE: I'd just like to make my position clear\nby reformulating the first question. It seems to me that\nAmerican policy should be directed toward maintaining\nnormal access to China but not in establishing or seeking\nto save China for or against any particular type of regime.\nBeyond that, American policy, it seems to me, should be\ndirected toward trying to insure that any regime in China,\nas far as we can, is independent of any external control,\nincluding our own.\nMR. RAYMOND FOSDICK (CHAIRMAN): Gentlemen, we agreed\nthis morning that we would start off this afternoon with a\nbriefing on the military situation by Col. McCann, who\ncomes from Central Intelligence Col. McCann, will you\ntake over.\nCOL. McCANN: Mr. Chairman and Gentlemen: This map\nshows the general military situation in China with China\norientated in relation to the rest of the Far East.\nThe total opposing forces in this situation are on\nthe order of 4,000,000 Communists and something less than\none and a half million Nationalists. The Communist forces\nare\nCOME TAL\n-34-\nare divided approximately equally between irregulars and\nregular combat forces. The latter, generally speaking,\nare well-led and well-equipped. They enjoy high morale,\nhigh combat effectiveness, and have demonstrated a\nparticular mobility in their operations.\nThe Nationalists, which total something under one and\na half million, include a disproportionately large per-\ncentage of service forces which are not used in combat.\nThe combat forces include a small Navy and Air Force,\ntotalling something between 8 and 900,000. The Nationalist\nforces are characterized by professional ineffectiveness\nand, generally speaking, they lack the will to fight.\nThe low morale of the Nationalist forces invites Communist\nsubversive activities.\nAdded to the numerical and qualitative supremacy of\nthe Communist forces is the geographical isolation of the\nmajor groups of residual forces. This enhances the Com-\nmunist capabilities for eliminating those residual forces\nsuccessively or simultaneously.\nThere are a maximum of 100,000 forces in the north-\nwest which have withdrawn before a Communist advance of\nover 700 miles which has over-run most of Chinghai Province\nand parts of Ningsia and Kansu Provinces in three months.\nThe forces apparently available for the defense of\nSzechwan and Yunnan Provinces in the West and Southwest\ntotal about 200,000. These are under the nominal\ncentralized control of Chang Chun. Actually, the great\nbulk of these forces are loyal only to their immediate\nwar-lord commander. Even for a brief defense of Szechwan\nProvince there are probably not over 50,000 troops.\nAs to Yunnan Province there are already good indica-\ntions that the local authorities there are not to be\ndepended upon in a showdown. The recent publicity on\nGovernor Lu Han's coup, or attempted coup, indicates that\non the surface the Generalissimo has settled that problem.\nHowever, it appears to be a temporary settlement of\nexpediency on the part of Lu. Already there are con-\nsiderable areas in the provinces which are under control\nof the pro-Communists and bandit groups.\nIn the general area of Canton there are three commands.\nThe bulk of the forces are under command of General Pai\nChung Hsi and occupy the northern sector in the Kwang Tung\nterritory.\nThe\nCONFIDENTIAL\n-35-\nThe Communists have been maintaining pressure on the\ndefenses of Canton as noted by a succession of probing\nattacks and advanced operations by irregular forces operat-\ning in front of the regular combat forces. The Communists\nare believed to have the necessary preponderance of\nmilitary strength in this area to mount an assault at a\ntime of their own choosing.\nIt is currently reported that the forces on General\nPai's right flank in this approximate area have been\nordered to withdraw into Canton even prior to the Com-\nmunist assault on orders of the Generalissimo. If this\nwithdrawal takes place it will expose Pai's right flank\nand expose him to being cut off from the coastal area.\nIt would appear that he would then have to make an early\ndecision between holding his position and fighting out a\ndecisive tion. but losing battle in his present area of occupa-\nThe alternatives that are available to him appear\nto be to withdraw into Kuang-si Province and postpone the\nfinal decision, or secondly, to make a deal with the Com-\nmunists.\nThis latest of the Generalissimo's interference in\nmainland military operations has followed his refusal to\nafford assistance to the mainland commanders since the\nfall of Shanghai in May. It is on this point that the\nresidual commanders frequently tend to blame their re-\nverses. None of them seemingly take into account the\nfact that in this interim none has attempted to provide\nan inspiring leadership or to cooperate among themselves\nin a joint effort.\nIn the East China-Taiwan area we find the region of\nthe Generalissimo's particular concern. In this area he\nhas approximately 300,000 troops, including Navy and Air\nForce. This area is under his personal command and that\nof his most trusted General.\nNumerically this force is probably adequate to defend\nthe island of Taiwan indefinitely. I should say that most\nof these forces are in Taiwan itself and numerically the\ngarrison is probably adequate to defend the island. More-\nover, the Nationalists, with their Navy and Air Force, have\na considerable capacity : for resistance to the very\nlimited Communist amphibious capabilities against Taiwan.\nThis despite the fact that there is a low percentage of\ncombat effectives in the Nationalist garrison in Taiwan\nand\nCONT IDENTIAL\nTREATE\n-36-\nTHE\nnational\nName\nFEE\nand despite the fact that defense preparations are not\nin evidence. The Communist capabilities for taking\nTaiwan are greatest in causing the fall of the island\nfrom within.\nThe discipline and morale of the troops is at a low\nebb. It is the result of pest defeats and inadequate\nleadership.\nThese factors create a situation in which active\nCommunist subversive activity is effective. The Communists\nare already known to be infiltrating the island.\nThere is another factor on Taiwan. The excesses of\nthe Nationalist administration in Taiwan since V-J Day\nhave earned for the Chiang Kai-shek regime the earnest\nhatred of the Taiwanese. This has a two-fold effect.\nFirst of all it has a bearing on the probable effective-\nness of the troops in the garrison there. Secondly, it\nprovides a second fruitful field for Communist subversive\nactivity on the island.\nIn the light of all these considerations, it seems\nprobable that a Communist take-over of Taiwan probably\nwould not be preceded by a major military assault of the\nisland.\nIn summation, the life expectancy of organized\nNationalist military resistance in China is extremely\nshort. Generally speaking, the Communists will set the\ntimetable. Not only do they possess the predominant\nmilitary power but more importantly they will not rely on\nmilitary force alone to achieve their objective of extend-\ning their control over all China.\nMR. HEROD: I would like to ask, is there any informa-\ntion or intellis ence that leads you to believe any\nmunitions -- arms -- or military support, if not general-\nship, is coming from Russia?\nCOL. McCANN: There have been numerous reports to\nthat effect as the Communists have advanced. It is becoming\nincreasingly difficult to get exact information. While we\nhad representatives in North China and Manchuria, U. S.\nrepresentatives when confronted with this proposition by\nthe Nationalists, asked for proof. They were not given\nsubstantial proof of the allegations. At the time the\nCommunists took over in the Peiping-Tientsin area there\nwere observed some Russian type trucks and vehicles but\nin such small quantities as probably to be insignificant.\nIR. COLEGROVE:\nCONFIDENTIAL\n-37-\nMR. COLEGROVE: May I ask Col. McCann, what is the\nposition of the Red Army in North Korea? Has it with-\ndrawn and if so, what is the character of the Korean Army?\nCOL. McCANN: The Soviet Army announced its with-\ndrawal last December from Northern Korea. As far as I\nknow it has been substantially carried out. The Northern\nKorean forces received a degree of training and secondary\nequipment from the Russians prior to their withdrawal.\nThere might be still an advisory mission there.\nMR. HEROD: To what extent have American munitions\nand instruments of war found their way into Communist\nhands?\nCOL. McCANN: There again we lack the facilities to\nmake an accurate survey and come up with current figures.\nI can give you indications of it. The Communist forces\nthat took over Tientsin were so completely equipped with\nAmerican equipment that they appeared to be American\nequipped units. Certain Nationalist units that had been\nUS equipped some months back were defeated or surrendered\nand something like three quarters of their equipment fell\ninto the hands of the Communists.\nMR. PHILLIPS TALBOT: Is there an available estimate\nof the magnitude of American aid that would be required\nto extend the indicated life expectancy of Nationalist\nresistance, if such a policy were determined upon?\nCOL. McCANN: Such an estimate would have to be based\non who are we going to support and to what purpose -- what\nare the means available for getting the material to them -\nhow soon can you get it to them -- under what circumstances\nwill they use it?\nMR. TALBOT: Your statement of indicated life\nexpectancy of the Nationalist forces was based on present\nAmerican policy in relation to Nationalist forces. Is\nthat correct?\nCOL. McCANN: Yes, necessarily so.\nMR. JOHN W. DECKER: I wanted to ask, is there any\nevidence the Communists will develop a reconnaissance or\ntactical air force?\nCOL. McCANN: No Communist aircraft have ever appeared\nover combat areas. It is known that they have acquired\nthrough\nONFIDENTIAL\n-38-\nthrough capture or defection -- captured on the ground or\nactual defection -- small numbers of Nationalist aircraft\nand they claim some thousands of Nationalist Air Force\npersonnel have gone over to them but their claims in that\nrespect may be exaggerated, but so far there have been no\nindications that they have any effective air arm at all.\nMR. TAYLOR: Could you tell us about the oil supply\nof the Communist armies? According to our observers they\nare well disciplined, highly mobile and highly mechanized.\nWhere do they get their oil?\nCOL. McCANN: I would agree with you on all points\nexcept that they are highly mechanized. While they are\nhighly mobile, it is by marching rather than by any\nmechanization.\nMR. STASSEN: To what extent are the commanders of\nthese 2,000,000 Communist forces decentralized and to\nwhat extent is there an effective centralized command; in\nother words, are there a series of units under separate\ncommand or are they very clearly under one centralized\ncontrol?\nCOL. McCANN: In the operations prior to the crossing\nof the Yangtze River, the major field commanders apparently\nhad considerable independence in the conduct of their\noperations. Subsequent to that time there are indications\nof increasing centralized control of those major field\ncommanders.\nMR. STASSEN: Is there any information as to how that\ncentralized control is being equipped?\nCOL. McCANN: As far as I know 1t is being equipped.\nMR. STASSEN: Are there any significant Nationalist\nGenerals who are still in command of troops that have\ngone over?\nCOL. McCANN: None have appeared so far as I know.\nI think it is likely that these troops have been taken\nand used in the Communist forces but not as units.\nMR. STASSEN: At the end of the war with Japan, what\nwas your estimate of the Nationalist armed forces and of\nthe Communist armed forces in numbers?\nCOL. McCANN\nIDENTIAL\n-39-\nCOL. McCANN: At that time the Communist forces were\nestimated in the neighborhood of 800,000. Of those not\nmuch more than half were considered to be adequately armed\neven with rifles. The Nationalist forces at that time\ntotalled something in the neighborhood of two and three-\nquarter millions.\nMR. VINACKE: The 300,000 Communist troops -- are\nthey indoctrinated or are they professional soldiers work-\ning temporarily under Communist Party control?\nCOL. McCANN: I think it has been a feature of the\nCommunist program to indoctrinate anybody coming under\ntheir control and going about it rather thoroughly.\nMR. VINACKE: And it has been done thoroughly in the\ncase of Chinese troops?\nCOL. McCANN: Things have expanded rapidly but the\ntroops under their control are becoming more thoroughly\nindoctrinated every day.\nMR. VINACKE: How much use is made of the political\ncommissar in connection with the command of the Communist\narmed forces'\nCOL. McCANN: I believe they follow that pattern.\nMR. STASSEN: What is the nature of the terrain on\nthe southwestern half roughly of China, compared to the\nnortheasterly half so far as military operations are con-\ncerned?\nCOL. McCANN: The answer to that is that it would\nhave been possible to present quite a clear-cut picture\na few months ago. In general it would have been possible\nto say that the Manchurian area and not the China area\nis fairly level and militarily favorable to operate in\nthat area.\nMR. STASSEN: How does their advance now compare to\nthe Japanese advance at the high point of the war?\nCOL. McCANN: The Japanese on an east-west general\nline were in about that far. The Communists had moved\ninto this area and somewhat down into here and in the\nEast China section there was a considerable area that\nthe Japanese had moved through but did not hold. That is\ngenerally believed to be under Communist control at this\ntime.\nMR. BRODIE:\n-40-\nMR. BERNARD BRODIE: To make what is admittedly a\nfar-fetched assumption, supposing a change in American\npolicy should somehow enthuse a new spirit in the\nNationalist armies in the South, are there any reserves,\nor any men having some amount of training that might be\ncalled upon to fill out those numbers that are indicated\non the map? Do those figures represent existing combat\neffectives or do they take into account what might be\nconsidered available reserves?\nCOL. McCANN: Those figures represent the strength\nof the so-called combat units. They are not necessarily\nindicative of combat effectives. As to reserves and even\nthe troops here in question -- I think the problem of\nturning them into effective forces would require, among\nmany other things, starting from scratch with the in--\ndividual soldier.\nMR. BRODIE: In other words there are no men not\nalready in the army service who have some military train-\ning in the area still under control of the Nationalist\narmies.\nCOL. McCANN: I would say they have no effective\nmilitary training.\nCHAIRMAN: A week or two ago Governor Stassen came\ndown to see us and we had an interesting talk with him.\nI suggest at this time that we ask him, if he will, to\ntalk to us so we can have the benefit of his counsel\nbefore he has to leave us.\nMR. STASSEN: In my judgment Asia is No. 1 on Russia's\nboard. I think that Russia puts Asia up in first place in\nher considerations. I say that notwithstanding the\nrecognized center of industrial powers that Mr. Kennan\ndiscussed this morning. I say that because I feel that\nthe geography of the situation is such that Asia is the\nunder belly of this vast country of Russia and that she\nhas one projection out toward Europe and the other pro-\njection out toward Alaska and that the very vast under\nbelly is Asia; that the Russians are very security con-\nscious as we realize but that I do not agree with Mr.\nKennan that you can consider that their thinking is\ndifferent from Hitler's; that is, I do not feel you can\nsay they are less aggressive in their tendencies than\nHitler was.\nWhile\n-41-\nWhile it is true they consider that capitalism has\nthe seeds of its own destruction, I understand their\ndoctrine to be that when capitalism sees it is about to\nbe destroyed by those seeds that capitalism will go into\nan imperialist war, and that they have demonstrated be-\nfore in the case of Finland they will take aggressive\nadvance action in an effort, as they see it, to prepare\nthemselves for an unbalancing capitalistic imperialistic\nwar. So I would say in our world strategy we should con-\nsider aggressive action by the Soviet Union as one of the\ndefinite alternative possibilities.\nLooking at the over-all objectives of our country on\na world basis, it seems to me that clearly they are to\nadvance the standards of living and the freedom of peoples\nthroughout the world and to do that in a world at peace.\nWe are going to have peace for a generation at least un-\nless Russia commits aggression but in my judgment I see\nvery little possibility that there would be any war on\nthis earth of any consequence in the next generation un-\nless Russia commits an act of aggression and, therefore,\nthis great problem of peace in the atomic period focuses\ndown to our very key consideration of what will affect\nthe policies of the leaders of the Soviet Union and I\nbelieve that so long as they are uncertain about the\nfuture of Asia and of Asia's attitude, they are not likely\nto commit aggression and that they are at this time giving\ngreat concentration to.\nAfter starting with their first advance or infiltra-\ntion methods which is so evident throughout Asia - and\nnot just in China - not from a standpoint of drawing\nfrom it a military potential -- I do not feel that in a\ngeneration anyone will draw from Asia any great forces or\nany military potential to play a part in aggressive action\ntoward some other continent. But I do feel that the\nquestion of whether or not forces in Asia, limited in\ntheir military effectiveness though they may be, need to\nbe contained by one side or the other -- might be crucial\nin a future war and therefore might be crucial in a\ndecision as to whether or not a war should be attempted\nand that is why I feel that from the many indications of\nconcentration of policy on the part of Russia in the last\ntwo years that Asia is No. 1 and they are now concentrat-\ning in the early stages in their attempts to consolidate\nthat vast area.\nMoving on from that, 1t therefore follows that very\nhigh on the American policy should be to prevent Russian\nconsolidation\nCOMPENSIONAL\n-42-\nconsolidation of Asia. I have the strong feeling that we\nare spending altogether too much time thinking of a China\npolicy as a separate matter. I think that is a very un-\nfortunate aspect of our thinking in these recent months\nand years. I say that only in projection because I do\nemphasize that we are not meeting to either approve or con-\ndone any past act but it is a question of where from here\nand it is only in that sense I comment on it.\nI think it is of vital importance that our country\nadopt an Asiatic policy, of which the Chinese situation\nis an important part but definitely a subordinate part of\nthe whole Asiatic approach and that if you take that\napproach it isn't quite so significant as to how far the\nCommunists advance in China or just exactly what happens\nin the Nationalist Government or the Communist Government\nof China, or rather, how does this all affect this whole\nvast area of China, and of course as we all know, more\nthan half the peoples of Asia are outside of China, in\nMalay, in Siam and Burma and most of all in India, the\nIndies and the Philippine Islands, and so forth.\nI think, looking at it in that respect, that our\ncountry should at the earliest possible date, which pre-\nsumably would be after Congress meets in January, initiate\nan economic aid to Asia program. I think that the exact\nframework and details of course must be developed as time\ngoes on but I think some comment could be made on it at\nthis time.\nIf we continue for a long period an stmosphere that\nthe US is waiting to see what happens in Asia, that is\npart of the creation of a vacuum and certainly all the\nlessons show the Communists thrive on vacuums. They push\nin on it and we must not to a greater degree than possible\npermit vacuums to be present in Asia. Therefore, my\nthinking runs along this line, that we establish an Aid\nto Asia Program and that we decide, with all the total\ndemands upon our resources, what we can afford to spend\nin Asia and clearly our own defense forces --- the carrying\nthrough of the Marshall Plan and the Atlentic Pact arms\nmust be firm commitments and our own internal problems\nof security for our own people and conduct of our govern-\nment are demands upon our resources.\nThere is a limit also to our resources but it seems\nto me, when you add all those things up and look at the\nworld picture, we not only can afford up to one-fortieth\nof our national budget in Asia or one billion dollars a\nyear\nCONF IDENTIAL\n-43-\nyear and the one one-hundredth of our annual production,\nbut that we can not afford not to do it. So I am think-\ning in terms of broad strategy, saying, we are going to\nspend a billion dollars a year in Asia for a long time\nand then, moving from that, to establish a headquarters\nfor the program in Asia.\nIt is my feeling that Bangkok in Siam would be the\nbest headquarters for an American office for an Ald to\nAsia Program and from this headquarters to carry out this\naffirmative aid program in whatever area remains not under\nCommunist domination in China and in the rest of Asia.\nIn many respects it should be similar to that superb\nplan in Europe which is named for the distinguished\nAmerican that sits at this table, and that has done so\nmuch for the advancement of the world's peace --- the\nMarshall Plan. Of course in other respects it must be\nvery different because the conditions in Asia are SO dif-\nferent.\nI would say it should be a firm rule of that plan\nthat we do not hand out any aid to or through any govern-\nments in Asia because of the experience and the knowledge\nof the questions of corruption and weakness of governments;\nthat we consult with governments as to what is to be done,\nand we have joint committees, but that the aid be handed\nout directly through American agents having in mind not\nonly the corruption but, on the other side, the great need\nof evidence of aid that needs to be carried on from the\nstandpoint of goodwill.\nIn that positive program to China and to the rest of\nAsia, I would try to do such things as the drilling of\nwells in those plateaus that have good water -- with good\nwell-drilling equipment -- the development of land in the\nmatter, in some instances, of water conservation and fertili-\nzation, and things of that kind. Admittedly you would\nmake a small dent on that vast area and its people but\nthose are the kinds of constructive things that should go\non and a part should underwrite American private capital\nin going in and seeking to develop some of the resources\nof Asia, and doing that part with an underwrite action\nunder the Point 4 or that particular clouse of the Marshall\nPlan, and with a special headquarters in Bangkok, selected\nfor its central approach and stability, and develop an air\nservice with planes with American flags on them flying\nonce again throughout Asia, cerrying officials and some\nof the minor supplies, and to the physical presence of\nAmerican air power, provide some news print and get out\ninformational\n-44-\ninformational services throughout the whole of the Asiatic\narea; develop the support to the informational services in\nAsia and of course things having to do with health and\nthen the educational approach.\nIn other words the immediate and the long-term to me\nare not two things because there is only one kind of pro-\ngram you can have in Asia and that is a long-term because\nit is a long-term continent as I see it and its position\nwith reference to Russia.\nNow then, that economic thing I would put up first\nand carry on regardless of what happens in China and then\nfrom the military side, which clearly should be a separate\nprogram and clearly should be under the direction of our\nown military leadership, I would emphasize here that there\nmay well be intelligence information which I do not have\nand do not seek to have, which would vitiate the position\nI take.\nI do not feel anyone can be certain you can write off\nnon-Communist China at this time. I think there should be\nan encouragement to opposition to the Communist advance\nanywhere in Asia and with the rough terrain to the South\nyou might well find there would be considerable pockets\nof opposition that would continue on for a number of years\nand that during those years of time the problems of the\nCommunists in the rest of China will clearly multiply.\nMr. Kennan has correctly said that China is the most\nhave-not of the have-not nations and this is the first\ntime that the Communists have taken over a have-not\nnation. We all recognize that Russia has tremendous\nresources. When the Communists took over Russia with its\ngreat fields of grain and mineral resources and coal mines,\nthey had within their borders a lot of natural resources.\nNow they are taking over what clearly should be charac-\nterized, in relation to the numbers of population, a\nhave-not nation and the likelihood would be that in these\nnext two or three years while the pockets of resistance\nwould continue in the non-Communist China that a great\namount of difficulty would arise in those areas under\nCommunist domination, possibly leading to splits within\nthe Communist area or riots causing great difficulties\nthat no one can foresee.\nI had a conversation with one of the men most in-\nformed about the whole of China and of Asia and when I\nasked him at the end of the war what would happen in\nChina,\nCOME IDENTIAL\n-45-\nChina, he said: \"Governor, if anybody asks you what will\nhappen in China, don't answer him.\" There is a lot to\nthat kind of advice. Nobody can draw a blueprint.\nI do know that in some respects the Communist advance\nthrough south China has been slower than it was estimated;\nthe advance up in northwest China is faster than it was\nestimated. We are inclined to think, from our standpoint,\nthe withdrawal of forces shows weaknesses, but if you are\nfacing a million men with 250 thousand men and with the\nlack of morale, maybe the best thing you can do is try to\nkeep your men intact and keep on withdrawing until you get\nto the very nethermost areas of your country. I mean\nChina is so different that you shouldn't attempt to change\nit, from our standpoint. I think there is every indication\nthat if we have the basic policy of opposition to the\nCommunist advance and the Communist consolidation of Asia\nthat we should play out every card of opposition, and that,\nof course, means that it would be unthinkable to recognize\nthe Communist government in China and to withdraw recog-\nnition from the Nationalist government. But even though\nthe last vestige of military opposition disappears, in my\nfeeling, very strongly, a number of years should still go\nby before we recognize that new government, remembering\nthat the recognition of the new government would have a\ntremendous impact throughout Asia toward placing the new\ngovernment with a seat on the Security Counci of the\nUnited Nations, with full veto power, and in my judgment\nit would be one of the most tragic moves we could make in\nthe long-term world strategy. So I feel very strongly\nthat we should not recognize the Communist government in\nChina even though they go on and consolidate the remaining\narea, and that may still be a long way off in the very\nrugged terrain of the south of China, thinking again from\nan Asiatic and a world-wide policy.\nOn the other side of military aspects, I am inclined\nto feel that Formosa is an important strategic area for\nour own outer perimeter. Here again the military judgment\nshould carry. There are excellent airfields in Formosa.\nIf antagonistic air bases exist on Formosa you have quite\neffectively severed the Philippine Islands and Japan from\neach other. They are immediately astride that airway or\ndirect seaway. So that having in mind also the psychologi-\ncal effect of some firm position, I feel we ought to\nevaluate with the fact that Formosa is still not returned\nto China as a part of China; Formosa is still in an un-\ncertain legal position. Then the war ended, China was\ngiven the Nationalist government. Then China was given\nthe\nCONF IDENTIAL\n-46-\nthe right to go on to disarm the Japanese; they were not\nhanded Formosa, there had been no peace treaty, no de-\ncision, so that the legal situation as to Formosa is an\nuncertain one and an undecided one. In view of that and\nin view of the picture in China, I feel that we ought to\nask the United Nations to take the position that an\nattack on Formosa would not be countenanced at this time.\nObviously, the United Nations could not take such action\nunder the veto of Russia, but that we should then announce\nthat we consider Formosa a very vital part of our perimeter\nand that we would not permit an exterior armed assault on\nFormosa. That is a very firm position to take. I think\nthe whole picture requires some of that kind of firmness.\nIf Formosa falls by internal infiltration, I feel we\nshould not and cannot take action to counteract that. We\nshould not land troops on Formosa, but we should take a\nfirm position against assault from the mainland of China\nupon Formosa. I think if the British take a stand in\nHong Kong we ought to back the British up with everything\nthey want us to back them up with in Hong Kong. These are\nmatters of alternative, and if the British, who must be\nour close partner in this world picture, decide they are\ngoing to stand and fight, what do we do? Do we appear\nbefore the world as weak and indecisive? Do we back away\nfrom our British friends or do we send ships and give them\nsome air cover and do that sort of thing and indicate that\nwe stand with them in a firm position against the Communist\nassault in Hong Kong? I grant these are grave decisions,\nbut I think the whole picture demands that kind of very\nfirm action and that it will have repercussions to it, and,\nof course, this military side leads to the question of\nPacific pact, and I know these statements of Quirino and\nRhee, and so forth. I cannot see that an affirmative\nPacific pact of the nature of the Atlantic Pact can be\nsolemnly formed at this time because I do not believe that\nIndia could join such a pact now, and I think that India\nmust be a major consideration in our Pacific policy. And\ntherefore I think we ought to say to Quirino and Rhee that\nwe do not think they should take action unless Nehru joins\nin it, and that will automatically defer it and cause it\nto be a more gradual policy in that area. And it ought\nto be our position that as far as association of the non-\nCommunist area of Asia that it should not move any faster\nthan Nehru is willing and India is willing to go along\nwith it, but we should develop that relationship in India\nwhich, I understand, the British have made more open to us\nnow, by sending in equipment to assist in the development\nof hydroelectric power and of dams, engineers and capital\nand\nIDENT IAL\n-47-\nand all that that involves. And, of course, with this is\nconstant pressure, not too great, but with definite under-\nstanding upon the Dutch and the French to work out their\nsituations in the Indo-China and in the Indies on a\nfavorable basis. Perhaps if the Dutch policy now evolves\ninto fair stability that pattern might be the basis of\npressure on the French to try to move in the same direction.\nIt will be slow, difficult, there will be setbacks, but I\nthink it is the unending kind of thing we must do in Asia,\nand I do feel strongly that adopting an overall coordinated\npolicy and putting it under able men who are out there in\nthe headquarters like Bangkok and who then will give it\nbody and sinew and detail, much as did General Marshall and\nthen Paul Hoffman in the Marshall Plan and more recently\nthe Atlantic Pact, that that kind of a development out of\nthe beginnings of a broad policy will lead to a honeful\nsituation. I am perfectly willing to contemplate that the\nCommunist advance might go a lot farther before it subsides,\nand the question of its subsiding is really the question\nof our own fundamental future.\nThat's an outline of my thinking and I state it not\nwith an attitude that here are the answers, but more to\nexpose in definite form a set of thinking that has de-\nveloped over a period of years so that it might be differed\nwith, it might be modified, and we might contribute toward\nan answer. I have purposely refrained from discussing the\nsituation publicly since the White Paper was published be-\ncause I felt that by direct conferences with Dr. Jessup\nand such as this there might be a better chance of develop-\ning governmental policy than by any public debate at this\nstage, at least, on the situation.\nMR. FAIRBANK: Mr. Chairman, I agreed so much with\nthe intent and some of the first part of Governor Stassen's\nstatement and not with the latter part, so that I hope\nthat he stays here long enough and we can discuss things\nback and forth, because I think the intent is part of our\nAmerican tradition that we help Asia to help itself and\nthereby help ourselves, and yet I think some of the\npractical measures that Governor Stassen mentioned are\nnot the way to operate to reach this intent. Rather than\ntake them up as incidental items, I would generalize that\nwe have to approach Asia in such a way that we get the\nmajority of Asia working with us. That means that we are\nworking with them. The Communists and the Marxist approach\nand the Russian approach are succeeding because they are\ngetting into a rapport with these revolutionary forces in\nAsia,\nCONFIDENTIAL\n-48-\nAsia, which we are not equally in rapport with, and our\nproblem is to ally ourselves with the forces of the\nfuture in Asia, which I think we can do. The peasant,\nfor instance, is there to be organized, revolution is\nthere to be led, and our problem is to relate ourselves\nto these movements in Asia, not try to do the job alone,\nand that is the specific aspect of Mr. Stassen's remarks\nthat seemed to me to be difficult. Many things he\nmentioned would be things that we would be trying to do\nalone. We would be trying to take a leadership which\nmight not carry people along with us.\nMR. STASSEN: In what respect? I didn't mean such\nan aspect to it.\nMR. FAIRBANK: For example, setting up a headquarters\nin Bangkok might be difficult, and a headquarters anywhere\nmight be a target which the Communists could bedevil us\nwith and we wouldn't get out of it as much as we would\nlose by it. For instance, the suggestion of an air service\nwith the American Flag might antagonize the nationalist\nfeeling of countries and make them feel threatened more\nthan it would impress them and bring them to our side.\nAnd, similarly, the manner of our doing it, it seems to\nme, is most important. It has to be done in a way to\nconciliate, persuade, and push the Asiatic forward. The\nfurther factor in all of this, I think, is the world view\non which we operate, and I bring that up because we are\nup against Marxism. The Marxists have a world view and\nthey sell it and it is being accepted, and, as Mr. Kennan\npointed out, so much of it is phony and yet it succeeds or\nworks along at least for a while. The Chinese intel-\nlectuals are accepting Marxism; they are accepting the\nRussian world view that we are imperialists, and for\ncertain reasons which we cannot help. This Marxist world\nview is an explanation of the world's evils, it is an\nexplanation of our activity, it is an explanation of how\nwe can be such good people individually and have the good\nintentions which Governor Stassen has mentioned, and yet\nbe imperialists. It is all consistent in this Marxist\nworld view. We have to recognize that we are working not\nto get control over territory or supplies or anything else,\nbut to get the allegiance or the alliance and get into our\ncamp the minds and beliefs of these Asiatics. Well, now,\nit seems to me we have not competed on the side that\nMarxism is so successful on -- the ideological side. Our\ndifficulty is that, as has been said, Asia is so different\nthat the things that seem obvious to us do not seem obvious\nto\nIDENTIAL\n-49-\nto them; the things we want perhaps they don't think of.\nTo take one example: The White Paper, in the letter of\ntransmittal, referred to the support of democratic in-\ndividualism -- the democratic individualism of China.\nWell, now, that phrase translated as \"democratic in-\ndividualism\" into Chinese is not a golden word but a\ngarbage word to the people in Peking, because \"individu-\nalism\" interpreted in their present lingo means the\nchaotic, selfish, personal, family-centered, anti-social\nactivity of individuals rather than what we think it\nmeans -- the development of the individual as we would\nlike to see it, which is one of our great ideals. So\nthat the word has turned turtle on us and that phrase\nhas been picked out of Mr. Acheson's letter and used\nagainst us by the Marxists and the Chinese Communists.\nAnd, therefore, in the realm of operation we have the\nmechanics, logistics, supplies, and the know-how and eco-\nnomic development potentialities, but to put these things\ntogether it seems to me we must aim primarily at getting\na world view formulated more specifically for Asiatic con-\nsumption. And, of course, as a liberal country we have\nmany world views, many formulations, no party line, yet\nit is possible for us, I think, to pay more attention to\nour view of how the world is going and be more specific in\noffering alternatives to its going in a Marxist direction.\nWell, now, this world view applies directly to the way we\noperate. You see, we can so easily do something which is\nabsolutely sound from our point of view, which is oper-\nationally correct, unselfish, which is aiming at an ex-\ncellent objective in Asia, yet can be labeled imperialist\nand turned against us unless we have this ideological\ncontext properly under control. And it seems to me that\nthe way we are losing is that the Russians, being closer\nto the Asiatic scene as a peasant, undeveloped area, have\nat present got the jump on us in the ideological context\non how to interpret our activity, and so this is partly\njust ideological warfare, but it is also a vital link in\nthe whole chain of getting those people on our side or\nkeeping them out of the other side.\nMR. STASSEN: I still don't see how you would differ\nin how you move on your economic aid. Would you give\neconomic aid to the area?\nMR. FAIRBANK: I would start off at the other side of\nAsia. I would go to Indo-China and I wouldn't hold Formosa\nagainst the Chinese Nationalists. I think we must play a\nlong game for China. We have got to play it for the long\nterm.\nCONFIDENT\n-50-\nterm. To try to hold Formosa with troops would give so\nmuch ideological ammunition to the Chinese Communists\nthat it would unite China more readily against us. The\nmore pressure we bring, the more we can expect hostility\nin return. The Chinese Communists are prone to regard\nus as imperialists who are threatening them; they are\nsuspicious of us, they are always talking about spies and\nsaboteurs coming from us, and they have got to have us as\nenemies to hold their system together. The more we play\nthe role of enemy the more we play into their hands in\nthat respect. Now if Formosa were an absolute life and\ndeath matter to us, that would perhaps take precedence,\nbut I think we have got to consider all of Asia as a life\nand death proposition. We have got to go into places\nlike India. To hold Formosa would defeat our ends by a\nmiscalculation of the response in China, just as our\nmilitary support of Chiang Kai Shek defeated our ends\nbecause we couldn't foresee his inefficiency and that\nChiang would have a lack of support, and so on. That's\na specific example on Formosa.\nIn the case of economic development, it seems to me\nwe must give these Asiatic peoples the feeling that they\nwill have a chance to use our resources and aid without\ngetting too much involved in trade with us nor tied up\nwith our economic nexus. They have in mind, from the\nCommunist stuff that has been fed them, that we are\ndangerous economically because we go into depressions,\nand that's a theory we have got to combat. We have com-\nbatted 1t because we haven't got into depressions, but\nstill Marxism feeds them that line. The intellectuals\nin Peking are being told now that the United States is in\na depression; it must be, because it is a capitalist\ncountry. And so a certain kind of economic connection\nmay seem dangerous to them.\nMR. STASSEN: We might focus on that economic thing\nfor a bit. Suppose, as I envisage it, that in various\nareas of South Asia American economic aid is coming in\nand getting some results in improved crops, in slightly\nbetter living conditions, in improved water and irrigation,\nand all that goes with it, whereas up in the Communist\narea of China they are going into a really economic tail-\nspin. Isn't that the kind of thing that over a period of\na few years would begin to make some sense and give some\nanswer to the great promises and claims of the Communists\nin Asia? I don't see where you have really differed in\nyour specifics to that kind of an approach, and I do\nemphasize\nCOMP TAL\nTHE\n-------------------------\n-51-\nemphasize that if we pour in large sums of money in the\nhands of governments it is very unlikely that it gets\nright out to the peasants. So what I am emphasizing is\nthat what we do should be in terms of simple farm imple-\nments and of well-drilling equipment and of the simplest\nkinds of things put directly in the hands of the people\nwithout charge. Then it would be very hard for them to\nlabel that as imperialistic.\nMR. FAIRBANK: My objection is not to the economic\ndevelopment idea, which I think is absolutely necessary,\nbut merely by itself I think it is incomplete and might\nbe disastrous because it wouldn't take account of the\nNationalist political feelings and the nationalism of the\narea and might not take account of the ideological ideas\nthat I have mentioned, and there is also a large social\nproblem. You would have to see that you didn't step on\nthe toes of the native peoples and by your economic aid\nnot throw certain people out of employment who went\nCommunist against you. In other words, it is a total\noperation we must perform in all aspects of society and\nit must be in a proportion which does not let it get too\nheavily military or economic which might upset the other\naspects of it. So we have to study these things as they\nwould apply in the Asiatic scene to have a program which\nis in proportion -- the economic side must be related to\nsocial changes which will occur because of people changing\ntheir livelihood or because of a certain class being\nbetter off or certain politicians not getting their cut,\nand we must take account of national independence, and\nthose things must be put together. And having been in\nthe information business in China, I was always very\nunhappy -- in 1945 and 1946 -- in the way our information\nnetwork wasn't in the game of really trying to out across\nour American policies as fully as they could be. It\nwasn't being used as an arm as fully as it might have\nbeen used because we stopped psychological warfare when\nthe war ended. We haven't been carrying that on in China\nsince. We do not do the things ideologically that we did\nbefore, that we could do.\nMR. TALBOT: I would merely like to say that the\neconomic development of this area would seem to me to be\nfundamental if we are going to have a long range counter-\nattack to the Communists. However, because of the con-\nsiderations which you have mentioned, it could very easily\ngo wrong if there should develop in that area a feeling\nthat our economic aid is linked to an anti-Communist\nstrategy.\n-52-\nstrategy. In India, for example, obviously Nehru is one\nof the strongest persons in the whole of Asia, from our\npoint of view and for the future of the type of Asia that\nwe are interested in, the type of world we are interested\nin. In order to get over his internal difficulties --\nhis internal economic difficulties -- he stands in serious\nneed of economic help. But the way we could destroy Nehru\nmost rapidly would be to make him appear to some of his\nown people to be an American puppet. It seems to me in\nthe question of giving economic aid to this part of the\nworld, we must very carefully consider whether we are\nputting up political strings at the same time; whether we\nare saying to these people so long as you do not recognize\nChinese Communism, so long as you take a strong anti-\nCommunist stand, we will help you, but you must do that in\norder to qualify for our aid. If, on the other hand, we\ncould say to them we believe that a generation hence the\nworld will be better 1f the peoples of South Asia have\nmore to eat, better places to live, and we are prepared\nto support that, then I think there is a chance for that\nsort of local cooperation in consonance with national in-\ntegrity and national pride and we stand the prospect of\nmaking some progress and having a successful policy in\nthat area.\nMR. STASSEN: I agree that you should not require that\nthey have an affirmative anti-Communist program politi-\ncally as a preroquisite for economic aid; you should simply\nrequire that they be non-Communist dominated and on that\nbasis move on your economic aid.\nMR. TALBOT: I wonder whether you would feel that the\nsolution of the colonial problem in the area would be a\nprerequisite to effective influence of the American point\nof view in that area.\nMR. STASSEN: To answer that I would say that it is\nvery important, but I don't say that it is a prerequisite.\nIn other words, I feel that the whole of Asia is such a\nvast problem that you can't say anything is a prerequisite\nto the program. Just as in the matter of studying just\nhow you do these economic things, granted they need con-\ntinuing study, but if we wait until we conclude our\nstudies until we act, we will all be dead before there is\nany action. Nobody could have painted out in detail the\nMarshall Plan when Secretary Marshall made that great pre-\nsentation at Harvard.\nMR. VINACKE:\nCONFIDENTIAL\n-53-\nMR. VINACKE: The first problem is insuring that the\ngovernments, whether they are independent governments or\ncombinations of colonial governments and nationalist\nregions where there is conflict going on, themselves have\nthe feeling that they have worked out the plan that is\nsuitable for them and that we will support them; that\ntheir efforts are related to our efforts rather than our\njust going in, which is what I think Mr. Fairbank also got\nfrom your original statement -- our going in on an American\nbasis in terms of American conditions. It seems to me in\nthis whole southeast Asia area one place where we did that\nwas the Philippines, and it seems to me we might very well\nmake a very excellent start in re-establishing our position\nif we said frankly we made a mistake in the Philippines in\ninsisting that you people should amend your constitution\nso that American businessmen should have a preferential\nposition as against others. It is that sort of thing\nthat leads to the charge of imperialism, you see, and if\nwe could straighten out on an independent basis some as-\npects of our Philippine relationships and say we propose\nto go into Siam and some of these other areas on invitation\nof the people concerned to enable them to help themselves,\nthen I think you have met the objections Mr. Fairbank\nraised; whereas if you are proposing to do it as an\nAmerican operation because we have this power to save these\npeople in spite of themselves, I think you are going to run\nup against the objections.\nMR. STASSEN: I, of course, don't mean we go in in\nspite of local governments or use American power to force\nour way in on the economic program, but that we go in with\nthe permission and with joint working arrangements with\nthe local governments, as we have in fact done in some of\nthe South American countries, but that there should be\nthis distinction in the actual distribution of material --\nthat is, that the prerequisite of our reaching agreement\nwith the local government is that we be on hand in the\ndistribution so that it doesn't go into the black market\nand doesn't get dissipated as so much of that economic aid\ndid get in Asia.\nMR. BALLANTINE: Mr. Chairman, I feel that there is\none approach along which we should move simultaneously\nwith moving along the economic front. One of the diffi-\nculties that we have to overcome in Asia is the idea\namong a great many Asian people that our motivation is to\nbuild them up either as a first line of defense against\nthe Soviet Union or to build them up as a place in which\nwe\nIDENT\n-54-\nwe can have a beachhead for assault and that it wasn't to\nbe used by us for any such purposes. I think, first of\nall, we have to convince the people of Asia that that is\nnot our motivation; that our motivation is to build a\nworld in which all people are free from aggression, free\nto enjoy the four freedoms and have an opportunity to con-\ntribute to creating an era of peace and stability in the\nworld. And if we can start building that idea among the\nAsian people that we are not just trying to use them, I\nthink we can do a great deal in the economic field. I\nhave two particular things in mind. There are large areas\nin China that today cannot be utilized under the traditional\nhorticultural methods of the Chinese people but would yield\nto tractor cultivation. In Kwang-si Province - I have\ntraveled all through that province and have seen millions\nof acres lying idle because they can't be tilled under\ntraditional Chinese methods. They could graze tremendous\nnumbers of cattle and horses if they could get the place\nclear of rinderpest, if you could have American veteri-\nnarians come in and help them. The second line is in-\ndustrialization, to reduce that tremendous pressure of\npopulation upon the land that you have in the river valleys\nand the plains and coastal areas in these Far Eastern\ncountries. Now instead of starting on a tremendous hydro-\nelectric project and shoe factories and a great many\nthings that are unrelated to their standard of living, why\nnot make simple beginnings along developing export in-\ndustry, such as the British and Americans did a century\nago when they started in trading: redevelop again and\nexpand these cottage industries, these handicraft in-\ndustries, such as the making of embroideries and straw\nbraids and paper braids and mattings and decorated porce-\nlains, and all these things that require the minimum\namount of capital and give employment to the maximum amount\nof people, and those industries developed would be export\nindustries which would export to the United States and\nother rich countries and get the foreign exchange with\nwhich to buy the things they need. You have to make small\nbeginnings before you can go on a very large way.\nMR. LATTIMORE: Mr. Chairman, the discussion thus\nfar seems to show that the theory (why we think certain\npeoples and countries are the way they are) and method\n(how we do what we intend to do) are very delicately\nconnected with each other. The recent discussion has\nwaivered back and forth between certain things which \"e\ncould do and the reasons why we should do them. I would\nlike to make a few off-the-cuff remarks about that, but\nI\nCONFIDENTIAL\n-55-\nI should like to point out that the theory that govern-\nments in Asia are so corrupt that American aid should be\nkept in American hands until channeled directly to the\nrecipient is hardly an adequate answer. There is no such\nthing, I believe, as a million dollars that is not politi-\ncal, and a billion dollars is a thousand times as political\nas a million dollars. In such countries whoever gets that\nmoney becomes politically important in his country. So\nyou do interfere in the politics, especially of backward\ncountries, when you undertake to alter their economic con-\nditions by the action of American money.\nAnother point is that we cannot rely simply on joint\naction between American money and American know-how. Know-\nhow exists on several levels and it isn't an American\nmonopoly. There may be levels of know-how which are rather\nlow as compared with American levels but are sufficient to\ndefeat American purposes. I think one of the very signifi-\ncant lessons of recent years is, for instance, that\nAmerican equipment intended for use by the Kuomintang for\none purpose was inefficiently used and the same equipment\nwhen it passed into Communist hands was much more ef-\nficiently used -- not efficiently from an American level,\nbut much more efficiently from a Chinese level -- than the\npeople into whose hands we had originally given it. In\nthat connection, a pamphlet has just been published by\nthe Harvard University Press containing a very interesting\ncontribution by Mr. Fairbank, who is here today, and also\nan extremely important and very short treatment of the\neconomic problem by Mr. Cleveland, who has been in charge\nof the China Branch of the ECA, in which he takes up the\nquestion of the ability to absorb, an aspect that has been\nneglected in this discussion so far. It is not only the\nAmerican ability to give; it is the ability to absorb.\nThe general trend in Asia since the end of the war is that\nin some way the ability to absorb is very closely related\nwith domestic political changes in the country concerned,\nso great as to amount to revolution, whether the revolution\nbe military or peaceful in form. I think that that in-\ndicates that one of the guiding principles in channeling\nAmerican aid is that aid should go in the largest quantities\nand most promptly to those countries which by modernization\nof their political forms have created the political con-\ndition under which economic improvement can be carried for-\nward. That is one of the reasons why India is so important.\nThen another thing which has been totally neglected\nso far, and something which I think could do great damage\nto\n-56-\nto the (merican interests, is that the have been talking\nabout isia, the American problem. Since when and by whom\nwas Asia given to America to solve all its problems' \"e\nhave undertaken very considerable programs with very\nheartening results in Eurone. We still have to integrate\nour European problem with our problem in Asia. Many parts\nof Asia have Puropean roots in then that are much deoper\nthan our American roots. One of the economic problems,\nprecisely, is to restore the flom of investment one way\nand trade the other way between Europe and Asia as well as\nbetween America and Asia, and this much more comnlex prob-\nlem, at least three-way problem, can only be solved if\neverybody concerned is convinced that what he is getting\nout of it is conditioned by the fact that the other two\npartners must get something out of it, too. There must\nbe a realization that anything that 1s undertaken is for\nthe joint benefit of Europe, ista, and America and cannot\nsucceed unless the mutual benefits are reasonably dis-\ntributed. And in that connection we come to the final\npoint I want to make in very strong endorsement of what\nMr. Talbot said just now on the subject of not making some\nkind of a condition of political hostility to some other\ncountry or some system. There was a little interchange\nand one opinion was: \"No, you mustn't make hostility to\nRussia a condition but you must make absence of Communists\nor Communist threats from government a condition.\" I\ndoubt if that is a workable condition in view of the\npresent world distribution of power. It seems to me that\nwhat we can do above all other countries is to show coun-\ntries in isia, as in Europe, that it is possible to do\nwithout Russia to precisely the extent that you are on\ngood terms and mutually beneficial terms with the United\nStates. I think that to make the condition, for instance,\neverybody in Asia accepting Communist China will not be\nadmitted to American trade, and so on, would be ideologi-\ncally disastrous for our cause. It would look like\npunishing the people of China for having a government that\nwasn't approved in advance by the United States. It also\ngoes against the basic human principles of bargaining, if\nyou say to people you must have this or not have that be-\nfore you get /merican aid, it simply enables them to turn\nto the Russians with a better bargaining position against\nus. It could strengthen their position. Thereas, on the\nother hand, If a country like China, in shite of its\nCommunists in the government, is shown that certain con-\nditions of prosperity go better and faster by friendly\nassociation with the United States, that is something that\nautomatically weakens the Chinese connection with Russia.\nTherefore,\n-57-\nTherefore, it seems to me that the conditions for American\naid should be ability of the country to absorb the aid,\nmaking the necessary reforms to accomplish the absorption\nof the aid, if that is necessary, and the principle of\nmutuality -- many-sided mutuality -- not only between in-\ndividual countries and the United States, but individual\ncountries and the European-American-Asian complex, of\nwhich the United States is so important a part.\nMR. TAYLOR: It seemed to me two generalizations have\ncome out of the discussion that we have just listened to:\nOne is that the major force in Asia that can be used\nagainst Comminism is Nationalism. I don't know whether\nyou would agree with this, but this generalization came to\nme anyway, and we can and should use nationalism against\nCommunism and separate the two. It seems to me that in\nChina the Communists are using Chinese nationalism and\nriding in for their own purposes, and the Chinese are be-\nginning to find out and will find out in large quantities\nduring the next few years. I thoroughly agree with Mr.\nFairbank and, I think, with Mr. Lattimore, that there is\nno way of dealing with these people except that they are\nnationalists, they have national pride, and they have to\nbe dealt with as independent people. But the other gen-\neralization that came out, particularly out of Fairbank's\ntalk, is that the Russians are fighting us on a good many\nlevels, and, as an old frustrated OWI man, I certainly\nunderline everything he said about the ideological level.\nIt seems to me we have lost a big propaganda battle in\nthe Far East. When Russia takes two billion worth of\nmaterial out of China and we put two billion in and we\nare left with the reputation we have, there is something\nmissing on the propaganda front. They are fighting us on\nthe ideological level, institutional level, military\nlevel. We have to meet them on all levels, and it seems\nto me what you are feeling for was some way of integrating\nall these things together at the same time. I think he\nput it very well that in some cases you have to judge\nwhether your military considerations warrant an ideological\ndefeat or whether in other cases it may be the other way\naround. The map of the world, from a military point of\nview, ideological point of view, the institutional point\nof view - you don't have one fitting on the other exactly.\nSo I would endorse very strongly, Mr. Chairman, a feeling\naround for and a discussion of the many levels upon which\nthis conflict is going and a pulling together of our dis-\ncussion into a long range and short range. The first\nanswer to China is outside of China. I think we have come\nto\nCOME IDENT TAL\n-58-\nto that conclusion. There is not a lot left in China,\nfrom a military view, that we can save. From my view 1t\nwould be foolish. The second answer would be in China\nitself, as what we do inside begins to have its effect\nin China.\nMR. DECKER: Nothing that I have heard here this\nmorning has been more reassuring than the very clear\nrecognition of the fact which came from Mr. Kennan that\nour basic problem was the consideration of the \"have\"\nnation -- a great \"have\" nation -- against all of the\n\"have-nots\". Now I have been devoting my life to an in-\nterest that has been assaying the task of adjusting that\nbalance, and I will tell you that it 1s one of the most\ndifficult and one of the most discouraging and one of the\nmost delicate tasks that one can undertake. The next\nthing I should like to say is that I do not believe that\nour plans for the rest of Asia should be shaped so that\nin effect they give up the present Communist-dominated\nChina; that is to say, if we draw our lines and make our\narrangements so that we throw ourselves over against that\npart of China -- the new regime in China -- we shall make\nit very much more difficult to achieve what I think can\nbe achieved, namely, the recovery of a lot of our in-\nfluence in that part of the world. Another thing I should\nlike to note is that this area that we are essaying to\ndeal with is one that has known colonialism, has been\nburned by it, has come into a new freedom in nationalism,\nand so whatever plans are made have got to be extremely\ncarefully laid at that point. We cannot afford to formu-\nlate any plans which seem to mean an extension of American\nimperialism -- the substance of a new imperialism for\nothers from which they have just fled themselves. Now\nthat makes this area of the world very different from the\ncountries that we have been dealing with in Western Europe.\nWe have been accused in Italy and we have been accused in\nFrance of carrying on a program of American imperialism,\nbut France and Italy have both been independent enough\ncountries, stable enough countries so that they need not\nbe terrified of their fate by that accusation, but that\naccusation in Indo-China, in Burma, or in India will carry\na very great deal more weight. Now that fact is a basic\nfact which must condition all of our efforts to put up\nanything like a Marshall Plan in this section of the world\nas successful as that plan has been in Western Europe.\nMany of our efforts in assisting in Asia have begun at too\nambitious a level. They need to be carried down to the\nlevel of the people -- in the improvement of the lot of\nthe\n-59-\nthe individual farmer, the improvement of the health in\nthe villages -- rather than in great hydroelectric pro-\njects or the importation of American goods or American\nservices. Those services have got somehow to get down\nto the roots of the people. But our basic difficulty is\ngoing to be this one of setting up an American head-\nquarters in Bangkok dealing with those sensitive, newly-\nliberated peoples in that section of the world without\nlaying ourselves open to the devastating charge of a new\nimperialism.\nMR. KIZER: I would like to back up what Mr. Decker\nhas just said about the inadvisability, however, of moving\ninto Bangkok. That, I think, would be one of the poorest\nplaces to select, and I would suggest that wherever we go,\nas Mr. Lattimore has suggested, we move in where the\ngovernment is one that we can come most nearly trading\nwith. Having dealt somewhat with relief in the Far East.\nI realize the extraordinary difficulty there is in building\nup a distribution of economic aid or assistance in that\narea without dealing almost directly with the government.\nIf you lean the least bit away from the government it\nreflects itself in the minds of the people. You have to\nhave a government you can work with. Therefore, I would\nlike to support what Mr. Lattimore has said about working\nin India. Now some steps have already been taken with\nregard to India in the last five weeks. The first loan\nmade by the International Bank for Reconstruction and\nDevelopment was 34 million dollars, made the last of August,\nfor the purpose of enabling the Indian people to have loco-\nmotive parts and boilers. Now that kind of a loan creates\nthe income from which the loan can be paid itself. A\nsecond loan has been made of 10 million. And while I\nsympathize generally with what was said about ambitious\nhydroelectric projects, there are in India smaller pro-\njects that irrigate the land and bring new lands under\ncultivation, and that type of loan is also submitted to\nthe Bank. Food will win this thing more than any other\nproject, and if we can help India to become self-sufficient\nin food, that means a greater annual income for her govern-\nment, it means greater education for her people, and\npromotes the whole Indian welfare. The Chinese are smart;\nthey will catch on fast enough to what we are doing there.\nThere is another thing that I would like Governor Stassen\nto reflect upon. He said he would like to see us play\nout every card of opposition we can to Communism in the\nFar East. I don't want us to be too afraid of Communism\nin the Far East. We can overestimate its potentialities\nof\nCONFIDENTIAL\n-60-\nof danger if we are not careful. On the other hand, by\nplaying out every card of opposition we do build up what\nMr. Fairbank laid special emphasis upon, and that is the\nthought in the minds of the people in the Far East that\nwe are an imperialist nation. We are a great asset to\nCommunism now because they can accuse us of imperialism.\nWe must strike where we are strongest, in the economic\nfield, not in the military. No country in the world can\nequal the United States in that field, and that, it seems\nto me, is what we should do. I agree, too, that we must\nnot approach this program on too ambitious or too vast a\nlevel; we must work by degrees and to refine some pro-\njects, and in that way we can win that struggle.\nMR. STASSEN: I think Mr. Lattimore was under a mis-\napprehension. By what I said regarding American aid, I\ndidn't mean to indicate that Asia was an exclusive prob-\nlem of our country, and I fully realized the inter-relation\nof Europe and Asia and the whole world, but what I wish to\nemphasize is that when we are the country that has the\nmost, when we actually with about 1/16 of the world's\npeople produce one-third of the world's goods and services,\nthat we do have a very heavy responsibility toward this\ngreat continent and its have-not peoples there.\nIt has key relevance in the world security aspect\nwith reference to Russia, and also I do not indicate that\nwe try to pass upon whether there are any Communist\ntendencies in any country before giving economic aid but\nI do feel strongly that if there is Communist dominance\nof a country, we should not go in with an economic aid pro-\ngram.\nI feel that it is fool-hardy for us to pour in what\nis admittedly a limited resource into the area under\nCommunist dominance. I not only feel that from a positive\nprogram but I think that in fact it would be quite academic\nto argue to the contrary. We must remember the realities.\nYou will never get through Congress a program that\nwould grant the permission to give economic aid to the\nCommunist dominated sectors of China. There are those who\nadvocate aid to the Communist areas of China in the hope\nthere would develop a form of economic Titoism there.\nThat has a false promise. Tito did not move away from\nRussia because of any promise of aid on the part of this\ncountry toward him. As a matter of fact, he moved away\nat a time when we had been the firmest with him following\nthe\nCONT\n-61-\nthe shooting down of planes, etc., and, as long as he could\nfollow a position of, in effect, taking direction from\nRussia and taking resources from us, that was the role he\nplayed, but that when he had to choose and then came up\nagainst the result of his choice and tightening of the\nscrews by Russia, then that famous break came,\nI actually asked him in March of 1947 whether he was\ngoing to take his economic direction from the Soviet Union\nand he got up from the luncheon table and paced up and\ndown and said, \"We are learning much from the socialist\nexperience of the Soviet but Yugoslavia is a country.\" He\nwas agitating on the Nationalist angle, and now that he\nhas made the break, I think it is right that we should be\nable to give some limited aid. I think we should couple\nit with some insistence that there be a gradual moving\ntoward more freedom in Yugoslavia at the same time, even\nthough very slow and very gradual, but the direction of\nmovement of a government should be toward the freedom of\nits people while receiving American aid, and clearly that\naid should not go in when the direction of the movement or\ngovernment is to the contrary.\nWhen it is the over-all aspect of security and the\nproblem of Russia, then we need to think of the world\nstrategy that is involved so that I definitely do not\nagree that any softness toward the Communists of China\nwill give a better prospect of Titoism developing. I say\nit should be firm and clear. If you are under Communist\ndominance, you don't qualify for American generosity and\nif you break with Communism, then there will be American\ngenerosity. I think that should be clearly our action in\nthis economic aid struggle.\nAs to being accused of imperialism, I think it is\nelementary that as long as we are producing more than the\nrest of the countries and living at a higher standard of\nliving, we are going to be accused of imperialism in\nevery argument that comes up all over the world regardless\nof what you do and if you let the accusation of imperialism\nstop you from a clearly indicated program of action, then\nit would be a sad day.\nSo you need to move carefully with all possible con-\nsideration of utilizing the Nationalism Mr. Taylor\nemphasized, but definitely move, and in your movement try\nto negate the charge of imperialism, but don't let that\ncharge stop you from moving.\nThere\nCONFIDENT\n-62-\nThere has been mention made of India as a center of\nAsiatic operation. As I indicated before, I agree on\nNehru being a name and India being of great importance\nbut it is a mistake to put our Asiatic headquarters in\nIndia because on the one hand there is the sensitivity\nof India toward the British, just having come out from\nunder, and a greater sensitivity there toward others com-\ning in than there would be in other areas of Asia.\nThen you get into the question of India and Pakistan\nand the Hindu and Moslem religious issue which might be\nquestioned in having our headquarters in India.\nSomeone suggested that our headquarters should be in\nManila. The atmosphere then would be that we were return-\ning to Manila rather than beginning a new Asiatic program.\nThere isn't the degree of democracy you would want in Siam.\nThe strong man's record with reference to the Japanese in\nearly 1942 is not good but when you consider that Siam\nwith approximately 17,000,000 people has one of the least\ndense populations and best food sources and greatest\nelement of stability and good location for travel by sea\nand air, I think you will come to feel that Bangkok is\nthe logical center on the mainland of Asia for a long-\nterm American program. Also, you have the fact that the\nterrain is additional security as to both Burma and Malaya,\nso in case of the greatest possible Communist onslaught\nBangkok would apparently be the last place to fall either\nby attack or infiltration, even if you take a black look\nat the future, and that is why I am inclined to feel for\na center of Asiatic economic aid, Bangkok is the place.\nI emphasize that it is notto be a unilateral program\nand not to be one that we in America will do alone. It\nmust be an aid to the people in Asia that help themselves,\nbut let us be sure it will get to the people and not\ncorrupt elements in the government. It will be a delicate\noperation and let us be certain we do not become involved\nin a joint operation with the British or French in a way\nthat would bring to us the onus of their past colonial\nposition. We do have a more favorable reputation in most\nof Asia than they do. While we must work closely with\nthem in the world picture, let us not give ourselves this\nintegration in a new aid program by tying ourselves too\nclosely to them.\nMR. EUGENE STALEY: I missed any reference to the\nrole of the United Nations or United Nations specialized\nagencies\n-63-\nagencies such as the Food and Agricultural Organization,\nthe \"orld Health Organization or the Economic Commission\nfor Aid in the Far East, which I believe is now located\nin Bangkok. I am wondering if you located an American\nheadquarters in Bangkok, the psychological effect would\nnot be, here the Americans are, moving in. It is the\nAmericans in place of the United Nations, and 30 I raise\nthe question that maybe we haven't more to gain from the\nstandpoint of American interests in setting up as against\na Marxist internationalism the United Nations type of more\nvoluntary internationalism and doing everything we can to\nboost that.\nMR. STASSEN: I would say that clearly there should\nbe consultation with the United Nations agencies and the\nutilization of them at every possible turn but I can not\nconceive that you could turn over the substance of American\naid to be decided by United Nations agencies in Asia for\na number of reasons. One is the aspect of the colonial\npowers being in there. The other is the amount of aid we\ngive would fall so far short of what could well be used\nthat I do not feel you could have the division of alloca-\ntion that would parallel the European --the OEEC in Europe.\nSo that I think we would need to keep a greater area of\ndetailed control of the funds and of the goods in Asia\nthan we do in Europe. I do grent and would urge that the\nUnited Nations agencies should be used to every degree\npossible.\nMR. MURPHY: I would like to support the last remarks\nof Mr. Kizer with respect to the hysteria or hysterical\ntendency of fear of Russia and the effect it has on our\npolicy. Governor Stassen referred in his original remarks\nto the Soviet under-belly of Russia. There is no doubt\nabout it, Russia is unvrotected for a great many thousands\nof miles in the Asiatic mainland but the theory that be-\ncause she is unprotected she has unlimited or strong\ncanabilities there is somewhat hypothetical, I think.\nAfter the war that Russia went through and after\nthe devastation the country was subjected to, I doubt\nthat she has quite the capabilities, aside from the atom\nbomb, that are attributed to her. I would like to make\nthe point that possibly sometimes we rather hysterically\nexaggerate her capabilities and in our reactions to them\ndistort our own true policies.\nI would like to make one further remark. It is my\nunderstanding that the expression \"Titoism\" refers not to\naid\nCONF IDENTIAL\n-64-\naid to Tito but to a national desire to prevent the dom-\nination by a foreign power and in that respect I would\nsay that the Chinese have very, very strong capabilities\nof Titoism because I think they are very nationalistic\nand very much nurture their independence.\nWith respect to Bangkok and the Government there, I\nwould say that the present head of the Government had not\nonly a bad record against the Japanese during the war but\nhas had a bad record against his own people or against a\nsubstantial segment of his own people in the last years\nand that there is a very excellent chance of an upset on\nthe part of the Free Thai group which might come at any\ntime. It is not a stable situation in my opinion.\nMR. ARTHUR COONS: I wanted to make the remark both\nto Mr. Stassen and to the group, with reference to this\nquestion of whether or not any aid should go to a Communist\ndominated government, that it seemed to me that in the in-\nception of the Marshall Plan in Europe Secretary Marshall\nand the State Department and Government placed our country\non a high level of statesmanship in making that aid, at\nleast at the beginning, potentially available to any\ncountry of Europe, whether Communist dominated or not,\nwhich might join with the organization of European states\nand which might agree to certain standards, with reference\nto the distribution of that aid, that we might write down.\nFurthermore, it seems to me that with reference to\nthe Far East, particularly where there is a very sensitive\nNationalism, as we have all remarked, we might be on very\nmuch stronger ground if we should not distribute our aid\nuntil after we should have had a conference of the states\nand should have had an inclusive invitation to all states\nin the same manner we did to Europe. I think that would\nhave an appeal to the American public opinion.\nIt may be that certain states might themselves volun-\ntarily withdraw and this in itself may indicate the fact\nthat they were Soviet dominated. I wonder if we are safe\nin assuming every Communist dominated government is\nabsolutely a tool of Moscow. We all say that commonly in\nour speech but a fundamental element of American policy\nmust be to resist international Communism and resist the\nimperial encroachment of the Soviet Union. I should not\nwish to make the mistake of assuming that every Communist\nlabelled Nationalist movement in the Far East were\nnecessarily so and even if there were a lot of voices that\nseemed to sound like Moscow voices.\nI\nCOME\n-------------------------\nMrs\nam\n-65-\nI just wanted to remind us of the breadth of the\napproach to the European scene and the desirability\nperhaps in a policy of following a similar line in the\nFar East.\nMR. COLEGROVE: Any plan for economic rehabilitation\nin Asia should also include a large plan of education -\nof bringing large numbers of young men and women from\nAsiatic countries to receive their education in the United\nStates and then go back and try to carry on the democratic\nexperiment in cooperation with our ideas. Of course,\nthat is the long-term project. It would be 10, 15 or 20\nyears before such a group of educated young men and women\ncould become effective in their own countries.\nMR. HEROD: By popular vote apparently my hydro-\nelectric project has been thrown out the window at this\nconference which I object to very much. I think we all\nagree with Dr. Stassen that what we want is a positive\npolicy but I would like to suggest from a businessman's\nstandpoint, particularly in Asia, that American economic\naid, particularly if free, should be given most sparingly\nand most highly selectively.\nWith the differences in culture and a marginal\ncivilization as far as economic opportunity is concerned,\nI don't think we get the reaction from them for a democracy\nand I don't think we get the reaction from them against\nCommunism that we get in Europe. I personally am opposed\nvery much to the increase of statism -- of having our\ngovernment go into the business of dispensing our resources\nother than in certain humanitarian cases except where it\nlooks like there will be a real return and self-liquidating\nventure.\nPrivate capital can take up a great many things if\nthe people at the other end would be square about letting\nit work. I don't believe we will increase the world trade\na great deal in those areas. It is very interesting to\nnote that world trade in finished goods in 1948 was no\ngreater than in 1913 and if you compare it with the decade\nof 1870, a period of somewhere in the neighborhood of\nseven to eight decades, world manufacture increased\nseven times as a multiple but world trade in finished\ngoods only two and a half, and in raw materials less than\nfour and United States trade in spite of our increase in\npopulation and imports was only running $14 to $18 per\ncapita as against $12 per capita back 150 years ago in\n1790. So I think you have the historic trend against you.\nWe\nCONFIDENT IAL\n-66-\nWe have to work I think for industrialization because\nthat is the biggest source for wealth and we have to\nbalance our hydro-electric projects along with cottage\nindustries but I think we have to be very skeptical in the\ndispensing of free aid, particularly to Asiatics who do\nnot understand it and don't show their gratitude. I be-\nlieve in the Hindustan language; there is no word for\n\"gratitude\". They inherently believe there must be some\nstrings attached to it and I am not keen on dispensing\nAmerican resources in the hope that will stave off Com-\nmunism.\nMR. ARTHUR HOLCOMBE: I would like to take off from\nthe proposition that a policy of containing Communism or\ncontaining Russia offers an excessively narrow basis for\na satisfactory American policy in China. A Communist\nregime in China will be supported by all kinds of Chinese\nand not merely by Communists. It is not at all certain,\nand indeed one might say it is very unlikely, that in the\nlong run a government at Moscow would find such a govern-\nment an altogether reliable instrument for its own purpose.\nI am struck by the many parallels between the revolu-\ntion in 1927 or 1928 and what we see going on today.\nFirst, take the most striking parallel in the field\nof military operations. I remember one night having a\nlong talk with an American attaché. He said the northern\nMilitarists had a large number of soldiers under their\ncommand, they were better armed and equipped, they were\nfighting nearer their bases, that their bases had better\nfacilities for the production of equipment, they enjoyed\nthe advantages of interior lines of communication. He\nwent on with all the many advantages which the northern\nMilitarists possessed, and he predicted that the\nNationalists would not reach Peiping.\nEverybody knows that they did reach Peiping even\nthough the Japanese offered some aid to the northern\nMilitarists and it is quite evident what was lacking in\nthe analysis of the situation; there was an improper\nappreciation of the intangible and the moral factor. We\nhave seen that happen all over again in the last year.\nThe Nationalist Government possessed all those military\nadvantages but the other side wins. It would seem as if\nthese intangible and moral factors are more important\nthan is commonly recognized. However, that is hindsight.\nWhat\n-67-\nWhat do we see today? We see the same thing happen-\ning again. We have been turning out Chinese students,\namong others, during these years since 1928 -- we didn't\nteach them to be Communists -- but they are trying to work\nunder the Communists in a striking preponderance of cases.\nI think we are bound to assume that most Chinese are going\nto accept the new regime, as most Chinese twenty years ago\naccepted the Nationalists, as a fact, a given condition\nin the problem, something they had to reckon on at least\nfor the near future, and I think most of them are going to\ntry working with 1t, and that means that the Communists as\nthey build up their institutions, like the Nationalists 21\nyears ago, are going to become dependent upon the collabora-\ntion of considerable numbers of persons who don't share\ntheir ideology but who feel constrained by circumstances\nto try to make a go of the regime. And however difficult\nit may be for outsiders like ourselves to deal with such a\nregime in its early phases, I believe that in the long run\nit offers the prospect of a regime with which we can deal\nand that in the long run it is by no means certain that\nMoscow will find it a better agent of its purposes than\nwe found the Nationalist government to be of our purposes.\nMy feeling is that we ought not to assume a position at\nthe outset of unchangeable hostility to the new regime; we\nshould adopt a policy of watchful waiting, if I can use\nthat expression without getting into trouble, in the hope\nthat presently it will prove possible not only for our\nmissionaries and our educators but for our businessmen to\nfind there some opportunity for resuming their activities.\nThe new China, like the old, will need certain things from\nus. I think we should keep ourselves, if possible, in the\nposition to give those things.\nMR. ROSSINGER: There have been a number of suggestions\nthis afternoon concerning the possibility of blocking China\noff or, to put it differently, writing China off. The\nassumption seems to have been that, for one thing, the\nChinese Communists and the Communist-dominated regime\ncould be allowed to stew in its own juices, get into in-\ncreasing dilemmas, and finally after the passage of years\nbe overthrown or come to the United States and ask for the\nassistance it must have in order to continue. The second\nassumption seems to have been that in the meantime we\ncould, undisturbed, except perhaps by certain local\nphenomena, build up our position and the position of friendly\ngroups in the countries of southeast Asia and interest\nIndia and Pakistan; therefore, that we would have great\nfreedom of action, that the Chinese Communists would have\nan\n-68-\nan increasing lack of freedom of action. I would like to\nstate as a possibility that the Chinese Communists, while\nfacing extremely serious problems, may solve those prob-\nlems in fair degree; that is, that the view that they will\nbe unable to solve these problems is of the present moment\nan assumption. There are several evidences which would\ntend to support that assumption; there are others which\nwould tend to oppose that assumption, and the assumption\nitself needs to be analyzed very seriously. With regard\nto the second point about our own ability to act relatively\nunimpeded in southeast Asia, I think there 1s an assumption\nthere that the new regime in China will simply accept this\nsituation of blockade and do nothing to counter 1t. My\nreading of the present situation in southeast Asia is that\nthe Western powers with interests there are extremely\nvulnerable; that the British and Dutch are having problems\nand the French are having problems in various areas; that\nthe ability of the United States to influence the situation\nin those places decisively cannot be taken for granted at\nthis moment. I think if we look at the existence of\nChinese populations in a number of the countries of south-\neast Asia, if we look at a certain community of economic\ncondition, a certain community of political outlook -- I\ndon't mean on the Communist ideological level but on the\nideological level of nationalism and unsolved economic\nproblems which give rise to certain political attitudes --\nthat there is a significant community between China as to-\nday constituted and various countries of western Asia. I\nwould go further and say that if the relations between the\nUnited States and this new China are utterly hostile we\nwould have to expect that every possible instrument would\nbe used against us in these areas of southeast Asia and\nagainst nations closely associated and allied with us.\nTherefore, I think 1t is dangerous to look at this as &\none-sided proposition in which the other side stands still,\nis confounded, faces dilemmas, while we act. It is an\ninteracting situation and we ought to weigh very carefully\nthe question of whether our power to harass, simply to put\nit on that level, is equivalent to the power of others to\nherass us. I am not at all sure that the answer is that\nour power is greater in this respect. This brings me to\na further point. I don't think we can write China off.\nWe need to have a constructive policy towards southeast\nAsia and India. By all means, we must promote the economic\nrecovery of those areas, we must promote their alignment\nwith us, no question about it. I don't think that can be\npursued most constructively if China is imagined as utterly\noutside this plain as an area with which we are completely\nhostile. I would like to suggest, then, that the\nnormalization\nCONFIDENTIAL\n-69-\nnormalization of our relations with China is an important\nprerequisite to effective action on our part in other\nsections of Asia. To put it in a slightly different way:\nThat our ability to be constructive, let's say, in India\n1s not something which can be considered independent of\nour relationship with China. My own view 1s that the\nnormalization of relations with China is essential in fair\nIndia. degree to the development of constructive relations with\nMR. QUIGLEY: I think that there is a field for\ngovernmental assistance to the peoples of Asia through\ndirect relationships, though, of course, I agree with\nProfessor Lattimore that that cannot be arranged except\nwith the consent of government. But I can't go with my\nfriend Stassen into India and southeast Asia, and so on,\nunless he goes with me into China also. It seems to me\nthat we cannot conclude that Communism in China will be\nthe same thing as Communism in Russia, and it seems to\nme we must distinguish, therefore, in our national policy\nbetween countries that are Communist of their own choice,\nas far as we can tell, and those that are dominated from\noutside. And at the present time I would be inclined to\nsay that the burden of proof that Communism in China is\nmerely another brand of Russian Communism is on the person\nwho makes that allegation. I would also like to raise\nthe question as to whether we may expect that other\ncountries of Asia will be favorable toward a program which\nwill not contemplate aid to China as well as to them. I\nrather doubt 1t. There has been developing, as all of you\nhere know, an inter-Asianism, a sort of one-Asiaism sense\nof a common interest, common concern which seems to work\nagainst a program that did not take all countries into\naccount, and I rather think that Nehru would have that\nfeeling with regard to China. I would like, if I may, Mr.\nChairman, to ask if it is proper that we call upon Dr.\nStuart on this point of the possibilities of resistance\nto outside control of Chinese thought that are latent in\nChinese culture.\nMy question is: Do you think that Chinese culture\ncontains powerful forces of resistance to domination by\nany outside culture?\nMR. STUART: Yes, emphatically. We have in China a\nfascinating sociological laboratory. Communism is being\ntried out in a country very different from anything where\n1t has been in control before. I don't think anyone can\nprophesy just what will emerge from it, but it will be\nsomething that is distinctively Chinese.\nMR. VINACKE:\nCONFIDENTIAL\n-70-\nMR. VINACKE: May I ask if the Ambassador would com-\nment or give his explanation --- from his contacts with\nthe student class -- of an apparent complete swing of the\nstudent class in China away from the United States, toward\nthe Soviet Union in the recent years?\nMR. STUART: The student class, as I understand it,\nhas been in revolt against the Kuomintang because it had\nfailed to carry out the social program that they looked for\nand which is all in the three principles of Sun Yat-Sen.\nThey turned to Communism as highly organized, efficient,\nand as promising to make those social reforms, and we were\nidentified with the corrupt, and not so much corrupt as in-\nefficient, Kuomintang government which had swung back to\nthe old dynastic traditions of self-aggrandizement and\nostentation rather than the reforms for the welfare of the\ncommon people. It wasn't Marxist ideology originally that\ntook them over; it was this revolutionary movement which\nthey looked for in the Kuomintang and were disappointed in\nnot having. Here was a promise of a thorough-going, smash-\ning social revolution. We were identified with what seemed\nto them the reactionary forces.\nMR. BRODIE: I should like to climb aboard the Stassen\nbandwagon. It seems to me one of the issues which we have\ncompletely side-stepped is the issue of the peculiar nature\nof Communism today and how it affects the pattern of the\nproblem we are dealing with. Now, I do not believe that\nour experience thus far with Communism in European countries\nwould argue that the particular cultural pattern of the\npeople upon whom Communism is imposed has relatively little\nto do with the matter. I had assumed that by this time it\nwas trite that Communism of the Russian-inspired pattern\ndepends very heavily on coercion, thought control, etc.\nThat, somehow, seems not to have entered into the thinking\nthis afternoon. Secondly, it appears to me that we have to\nrecognize that whether we like it or not we are facing con-\nflict with Russian-inspired Communism, and it seems to me\none of the questions we might ask ourselves is what oppor-\ntunities, 1f any, will be permitted to us to do the various\ngood things we want to about China once the Communists take\nover.\nMR. TAYLOR: I just wanted to say that the question\nof whether the hinese-Communists resent outside inter-\nference is one thing, and I agree that they, no more than\nany other people, like to be ruled by everybody else, but\nthat's a very different question from whether Communism --\nand I agree with your definition of it very strongly --\nwhether\n-71-\nwhether Communism of the present sort fits into China. I\nargue that 1t fits extremely well. There is certainly\nvery little cultural basis to 1t. I am still wondering\nabout Mr. Rossinger's argument that we must ask the Chinese\nCommunists before we do anything in India. I think they\nhave some intentions of their own in southeast Asia what-\never we do, and I would like to put up the counter-\nproposition that they are in alliance with - they are not\nsatellites, they are in alliance with - a very powerful\ncountry which is out, by its own admission, for as much\nterritory and as many people as it can possibly get; it is\none of the facts of life.\nMR. ROSSINGER: The statement that I thought we should\nask the Chinese Communists about their Indian policy be-\nfore proceeding on it represents a misunderstanding of what\nI said. My point was that I felt that the normalization\nof relations with China was an important element in our\ncarrying on an effective policy in other parts of Asia, not\nthat we need ask permission.\nMR. STUART: I just want to add one sentence to make\nit perfectly clear that whatever may develop in China under\nCommunist control the present Communist leaders are deter-\nmined to carry out all the techniques of orthodox Communism\nas they have learned it from Russia. The question of\nwhether they succeed or not is another matter.\nMR. BRODIE: It seems to me that so far as our interest\nin this problem is concerned, I am certainly sympathetic to\nwhat one might label as the altruistic motives which have\nbeen so generously supported here, but it seems to me also\nthe question, in 1ts more critical sense, at any rate, is\nwhat are the external alignments of China going to be, and\nI say again in that respect whether Communism succeeds or\nnot in China is comparatively irrelevant. They may fail,\nbut nevertheless so far as our security interests are con-\ncerned the alignment remains very closely Russian and very\ndefinitely hostile.\nMR. RUSSELL: Mr. Fosdick, there was a cartoon in the\nNew Yorker a short time ago, In which a bartender, leaning\ntoward another bartender, said, \"Say, Joe, have you\nnoticed how 1t takes more drinks than it used to before\nthey know the answers to the international questions?\"\nI suppose it is on that theory that the Acting Secretary\nhas asked this group to join him in the North Room of the\nMayflower at six o'clock.\nCHAIRMAN\nIDENT\n14,\n- 72 -\nCHAIRMAN (Mr. Jessup): It might be useful this morning\nif we could open up a Southeast Asia picture, introduce\ninto our conversations the problems of Southeast Asia and\nthe position of India with reference to the whole Far\nEastern picture and that\ndiscussion might properly lead\nus into a consideration of the various proposals for some\nkind of regional pact or union in the area. I should hope\nthat our discussion might then lead us into a consideration\nof a problem which has been raised with us by a good many\npeople who have written in, and that is the relative pos 1-\ntion in terms of American policy of three possible centers\nof power and influence in the Far East, that is, Japan,\nChina and India, the extent to which our policy should be\ndirected toward re-establishing or strengthening or main-\ntaining close ties with one or more of those countries.\nMISS DuBOIS: The countries of Southeast Asia vary so\ngreatly that it seems to me any estimate of that or any\nspecific program of action in Southeast Asia which in\nphrased for the region as a whole will need reinterpreta-\ntion when applied to a particular country. It seems to me\nthat a single program or estimate for Indonesia and Thai-\nland would be as inappropriate as a single estimate or pro-\ngram for, let's say, Korea and Japan.\nDespite the diversity which does occur, a few general-\nizations can be risked. The first and the broadest 1s one\nwhich was discussed at the very beginning of yesterday's\nmeeting, and agreed upon, namely, that there 18 a revolution\nIn progress in Southeast Asia and that that revolution is\nnot coeval with US-USSP tensions. It 18 a revolution cer-\ntainly of 50 years duration. It has affected more or less\nacutely all functions of the cultural lives of these disparate\npeoples. Yet it is A revolution which has not always been\ndisorderly, and simultaneously one should remember in dealing\nwith Southeast Asia that not all disorders are necessarily\nrevolutionary. For the US to interpret the Southeast Asia\nscene solely in terms of its own preoccupations with anti-\nCommunism is to run the risk of seriously misunderstanding\nthe forces at work in Southeast Asla and thereby of alien-\nating the all-important leadership of the area.\nFortunately the USSR seems to be making this very error\nin Southeast Asia. The reasons, we may assume, are the\ndoctrinaire quality of its Southeast Asian advisers, who\nimpress one as being either fairly incompetent or too intim-\nidated to render an honest judgment on the scene.\nNow\nCONFIDENCE\n- 73 -\nNow the revolution which is taking place in Southeast\nASLE uan be subsumed under three major blanket terms:\nnationalism in its political thinking, socialism in its\neconomic & spirations, and hume initarianism in its social\nprogram. These, of course, are direct reflections of\nWestern Memocratic thought, although certainly their ap-\npearance in contemporary Southeast Asia lags behind their\nfulles manifestations in Europe. That these three ma Jor\ntrends are Western European in origin gives the US a tre-\nmendous psychological advantage in dealing with Southeast\nAsi/ leaders. However, it would be a mistake to expect\nno mutations in these major trends in the course of being\nMansplanted\nThus, the nationalism which is at the moment the major\npreocoupation 18 still phrased to a large extent as anti-\nimperialism. Furthermore, nationalist leaders have problems\nof unifying the nations that they aspire to create which are\nas great, certainly, as those our forebagra had in the 18th\ncentury Sovereignty neither in its internal nor external\naspects 1s yet 8 deeply experienced and internal force. I\nwould expect, therefore, that their nationalism would be\neasily directed into international channels as soon as the\nthreats of imperialism are removed and hypersensitivities\non this score are respected. Once unity in these severely\nsplintered countries- and I exclude the Philippines and\nThailand is established, international preoccupations will\nappear more consistently and frequently. However, until\nthat time internal problems will seem more urgent than ex-\nternal ones in each of these countries. This complicates\nthe situation. It means that the US has to deal with five\nor six separate entities instead of one. It may retard CO-\noperation between the countries of this area, and then of\ncourse there is the danger that splintered nations may more\neasily be exploited by those who enjoy fishing irresponsibly\nin troubled waters\nSocialism to take the second main theme in Southeast\nAsia--1s still more an aspiration than a fact. It is closely\nassociated with the desire, however unrealistic, to industrial-\nize and achieve some degree of autarchy. In part, these de--\nsires stem from the realization of how vulnerable the export\neconomy developed by European nations have made these areas\nto fluctuations in the world market I need scarcely say the\ndepression of the '30's was a very bitter experience in this\npart of the world Another contributing factor 18 the knowl-\nedge that they lack investment capital and they need such\ncapital\nCONFIDENTIAL\n74 s I\ncapitel from European sources, but that in acquiring it\nthey do not wish to exchange economic controls for the\npolitical freedom which they have just acquired. On the\nwhole, therefore, the preference 1s for inter-government\nloans and government-controlled enterprises.\nThe third main strain in the Southeast Asian revolu-\ntion, the humanitarian one, is for the moment represented\nby a remarkable eagerness for education and for the de-\nvelopment of literacy in the area. This, of course, was\nof value in the European nations where most of the south-\neastern leadership studied. It appears to them a sine qua\nnon of intelligent and enlightened sovereignty It is a\nforce which, I believe, most nearly represents a mass\nmovement in contemporary Southeast Asia. That highly\nliterate populations like those of Germany and Japan have\nbeen no insurance against political abuse seems to escape\nmost people's attention.\nAssociated with this trend is the desire for a higher\nstandard of living and great admiration for American\ntechnology I feel that our propaganda does not need to\nstress our technical competence or our standard of living\nanywhere in the world. It has already been sold and resold\nIt is a revolutionary force, some writers claim, which\nmakes Communism a pale and reactionary phenomenon by com-\nparison Although we do not need to sell the superiority\nof our technology it may be wise of us in Southeast Asla\nnot to rub in the differences in standards, of living, and\nabove all not to appear niggardly in sharing our greatly\nadmired know-how It may be unwise to arouse envy and un-\ndesirable to trade on strength which, though greatly ad-\nmired, is admired in Southeast Asia when well encased in\nvelvet.\nIf the main elements then of the Southeast Asian revo-\nlution have been correctly appraised, the next question\nwhich arises is: \"Where are the fulcrums for the effective\nexercise of influence by the US?\"\nIn terms of the class structure the major locus of\npower is the present leadership. It is predominantly\nwestern-educated and western-oriented in its thinking. The\novert leaders who fell under the leadership of Moscow and\nremained there can be counted practically on the fingers of\nboth hands Furthermore, the peasant masses of Southeast\nAsia are still largely politically unawakened, although that\nsituation\nIAL\n- 75 -\nsituation is changing faster than we may like to realize\nin countries like Indochina and Indonesia, which have had\nto fight for their independence. In dealing with these\nleaders we shall have to appreciate that they, like all\npoliticians, will be under local pressures from their own\npeoples which we here in the United States only vaguely\nunderstand and probably frequently do not appreciate. We\nmust realize, however, that the greatest danger to us in\nSoutheast Asia is that the armed and aroused peasants may\nescape from the control of leaders essentially friendly to\nthe West and become the pawns of Communist agitators.\nAn early and equitable settlement of disorders in\nSoutheast Asia and every effort to strengthen the present\nleadership in its unification of these countries appear\nto me to be essential to US interests. It is recognized\nthat such leadership may not always be to our taste, however.\nA second point d'appui open to the US has already\nbeen suggested. It is the generous sharing of our tech-\nnology, Here a generous technical assistance program was\nconceived. The realization by our economists that on its\npresent scale it will not fundamentally alter even in a\ngeneration the Southeast Asian standard of living has led\nto the suggestion that private capital is needed, but\nnaturally it must be provided safeguards. Actually, whether\nsuch safeguards will coax American capital into underde-\nveloped areas may be worth pondering. The Bell Act, which\nhas been a thorn in Philippine national pride, has not de-\nluged the Philippines with American enterorises. In any\nevent, the US with its evaluation of private enterprise runs\nsquarely against the state socialism of Southeast Asian\nleadership. Already fears have been expressed in the region\nabout our intentions on that score. Undoubtedly to secure\nour assistance the Southeast Asians will temporize with\ntheir aspirations, but the attendant frustrations and re-\nsentments should not be ignored, should be carefully weighed\nagainst the chances of success in getting American private\ncapital into the area.\nA third and closely related lever available to the US\nin Southeast Asia 1s the previously-mentioned desire for\neducation. The Fulbright Act was probably one of the most\nconstructive long-run measures for Southeast Asia enacted\nin postwar years. However, 1t 1s limited to only three\ncountries in the region, it has been slow in getting under\nway, it has been loosely coordinated with other policies\nsubsequently developed like the technical assistance pro-\ngram, and has been nibbled away by other interests, lack of\nsuitable\niss 76 -\nsuitable personnel and the innumerable difficulties that\nalways seem to beset the best of intentions The Fulbright\nAct, however, 13 miniscule by comparison to the needs and\naspirations of these areas. I feel that any guidance that\nthis group could offer in refining and enlarging our US in-\nformational and educational program and in enlisting our\nprivate educational groups in a multitude of both advanced\nand elementary programs,\nmight be amply repaid\nin terms of long-run national interests.\nNow these are some of the assets we possess in South-\neast Asia Where, then, are the weak points in our potenti-\nalities? Here 1 would like to consider two types or weak-\nnesses, those which are inherent in Southeast Asla and those\nwhich are inherently our own.\nIt seems a justifiable assumption that the Chinese\nCommunists will continue their push into the neighboring\ncountries of Southeast Asia. What their reactions will be\nwill depend upon the nature of the push. Let u8 suppose\nthat it would be directly military and would be limited to\nthe land approaches.\nMr. Furnivall, an outstanding British expert sympa-\nthetic to the present Burmese Government, is convinced\nnowhing would heal the present schisms in Burma more\neffectively than an armed Chinese incursion along the\nnorthern Sino-Burmese border.\nIn Indochina the dislike of the Chinese is traditional\nIt has been reinforced by the postwar Chinese occupation\nof northern Indochina. Any Vietnamese Communist leader-\nship In the Republic of Vietnam which would encourage or\ncondone Chinese military incursions would be widely dis-\ncredited and might make more friends for Bao Da1 than the\nFrench or the Emperor himself have yet been able to win.\nThailand's traditional nationalism and anti-Chinese\nposition is presently more overt than ever under the\nauthoritarian Premier Phibun In fact, Phibun has re-\ncently stated that Thailand would welcome British and\nAmerican troops on Thai soil in the event of a Communist\ninvarion.\nAll of these factors are not unknown to the Chinese\nCommunists and it seems improbable, therefore, that they\nwould take the risks involved in direct military action\neven though they might be militarily successful. Also, it\nis still far from clear that the USSR trusts the Chinese\nCommunists\n- 77 -\nCommunists sufficiently to use them BE their \"running dogs\"\nin Southeast Asia.\nObviously, however, direct military incursion is not\nthe only instrument at the disposal of the Chinese Com-\nmunists. Chinese governments have traditionally taken a\nproprietary attitude toward their six million overseas\nChinese in Southeast Asia. Such attentions have never\nbeen welcomed by the government of any region. Among the\npeople of the area, justly or unjustly, the Chinese have\nalways been suspect. This position is intensified at\npresent, for the Chinese have held aloof from the national-\n1st struggle. The increased nationalist sensitivities in\nthese countries since the war is likely to make Chinese\nCommunists appeals to their overseas dependents as ob-\nnoxious 8.8 those of Nationalist China. This, however, is\ncertainly no adequate discouragement to the Chinese Com-\nmunists.\nIf no direct military action is likely, what are the\nChinese Communist potentials? Open propaganda, which has\nalready been launched from Peiping on Southeast Asia, will\nundoubtedly be intensified, but in my estima tion it 18 of\ndubious effectiveness. I suspect that shrill propaganda\nmay be one of those self-defeating techniques whose effec-\ntiveness 18 already largely exhausted. However, it may be\nunwise to underestimate it too soon, at least in these 80-\ncalled marginal areas of the world, But our own information\nservices, expanded, more astute, certainly more repetitive\nwould probably stalemate the line coming out of Moscow and\nPelping\nFar more sinister are the possibilities of clandestine\ninfiltration and activities whose goal will be to intensify\ndestructively every possible grievance, racial discrimina-\ntion, minority frictions, pay differentials, poverty, police\nmeasures, national aspirations and that whole bost of evils\nwhich exists today in Southeast Asia.\nThese clandestine efforts will certainly be facilitated\nif the countries of Southeast Asla will recognize the People's\nRepublic of China Chinese Communist diplomats will afford\nthe opportunity to shout at clandestine operators, to bribe\nand to terrorize the resident Chinese in Southeast Agia who\nhave always been noted for their practicality in such matters\nrather than for the strength of their moral convictions.\nFurthermore, to the extent that the People's Republic of\nChina\n78 $ I\nChina gains a position on the international forum ite\nstrident echoes of the USSR on the subject of Anglo-American\nimperialism will have the weight of an Asian voice which\nhas been \"successful\" in its revolution. I think that we\nshould not underestimate the fact that the Communist success\nin China is seen 88 a successful revolution in many parts\nof Asia. It seems to me that in a case of that sort on the\ninternational forum our best defense will be the kind of\ndiplomatic astuteness which Mr. Henderson has had in India\nand above all our actual record, about which, it seems to\nme, we insist on being far too modest.\nIn my opinion this question of the overseas Chinese\nand the opportunity they offer Communist China for clan-\ndestine and diplomatic infiltrations in Southeast Asla 19\none of the greatest hazards to US interests in the area.\nUnfortuna tely, in terms of other considerations, recogni-\ntion may have to be granted to the People's Republic and\nthe attendant liabilities reckoned with.\nIn addition to the difficulties posed by the overseas\nChinese and the recognition of Communist China, which are\nimmediate, there are long-range difficulties. The popula-\ntion problem, particularly in relation to the food supply,\nis perhaps one of the major ones. The Far East as a whole\noccupies a unique position in world economics by being pre-\ndominantly agricultural, and yet being on the whole a food\ndeficit area. Faced with this gross problem the impulse\nis to encourage rice-producing areas like Thailand to pro-\nduce as great an exportable surplus as possible. If the\nOffice of Intelligence Research estimates are correct, there\nis little likelihood that any foreseeable amount of encourage-\nment to rice production will result in more rice than the\nFar East sellat a good price until 1960. However, by 1970\nIt is estimated the population and food production may once\nmore be unbalanced as they are today. It is also estimated\nthat the Chinese Communists will still be in control in\nChina in 1970. It is here again that bold new plans seem\nas urgent to the US interests as they are urgent to Asian\nleadership.\nHere, perhaps, modest industrialization and economic\ndiversification might concern us with equal seriousness and\nsimulteneously with the food-population equation. Certainly\nin an area as large and diversified as Southeast Asia any\nsimple unilateral approa ch would not be adequate.\nIt\nIDENT LAL\n- 79 -\nIt may be appropriate now to pass on to inherently\nAmerican difficulties when we operate in the region The\nfirst two difficulties seem to me closely related--in-\ndifference and commitments elsewhere. At the beginning\nof World War II China \"specialists\" were practically a\ndime a dozen compared to those on South Asia. Since the\nwar Japan \"specialists\" seem to outnumber even those on\nChina Persons interested in the Far East are termed\n\"specialists\" while every fifth person in the US has no\nhesitancy about speaking authoritatively on Europe. He\nmay do it even in fluent French or German. It is not\nastonishing, therefore, that in both our war and peace\nstrategies our concern has been primarily for Europe It\n1.8 undoubtedly both practically and emotionally an area\nrequiring urgent and vigorous effort If, however, we are\nnot to go on waiting for crises to develop before we become\naware of them, it will be necessary to act like the USSR\non e global basis In respect to Southeast Asia we are on\nthe fringes of crisis. The initistive I consider is still\nnarrowly on our side Specifically, what this may mean\n1s: will the US and here I don't mean just the policy\nmakers be rich enough and above all willing and foresighted\nenough to apply preventive measures before South Aelan\nopportunities are squandered?\nIn our preoccupations with Europe and our heavy and\nlegitimate responsibilities there, the weight of European\narguments may cloud our judgments. For example, the\ninterests and stability of France and the Netherlanda, close\nand familiar as they are, may serve to three cut of per-\nspective our very real interests in Indochine and Indonesia.\nTraditional British pre-eminence in South Asia may have made\nus careless of developments in the region.\nTo continue with this weighing of Europe versus Asia,\nthe question of the Pacific versus the Atlantic Pact 18\nanother case in point. If the Atlantic Pact is obviously\nin our immediate interest, is a Pacific Pact less in our\nlong-range interest? Or, to narrow the matter down, can\nwe judge whether military support to the Northeast Asian\ngroup--Korea, Formosa, Japan and the Philippines--is more\neffective than support to the Southwest Pacific group--\nAustralia, New Zealand, the Philippines, perhaps plus other\ncommonwealth nations? or, thirdly, 1a 1t more effective\nto support the more nebulous Indian Ocean bloc? Do US\ninterests lie in consolidating the Indian Ocean bloc with\nthe two Pecific arcs or do our interests lie in two or more\nsuch aggregations in the Far Eastern periphery? If one or\nthe other course seems wise to us, what means can be applied\nto\nCONSI\n- 80 -\nto implement them? These are questions which I assume this\ngroup will discuss in the course of the day\nIn discussing US weaknesses in the Far East I have\nraised two related issues, our preponderant interest in\nEurope and therefore the degree to which we have as a people\nconcentrated our eggs in one basket.\nThe last point I should like to raise in respect to\nSoutheast Asia has to do with our moral leadership 1n the\narea. If we wish to be seriously hard-headed about the\nSoutheast Asian scene it is necessary to realize that\nSTRATE\ntheir moral values are still potent and prized factors.\nTheir leadership was primarily trained in our founding\nfaith. The streets of Saigon and Batavia were plastered\nwith slogans from Jefferson, from Lincoln, from the Declar-\nation of Independence, from the Constitution and from the\nAtlantic Charter when the Allied troops arrived in Septem-\nber 1945. In our commitments to Europe and our antagonism\nto the USSR we may appear in that area to have temporized\nwith the idealistic and perhaps naive expectations of South-\neast Asians, Whether it was avoidable or unavoidable we\ncertainly lost much of our influence in the area. Whether\nor not we personally as individuals prize our traditional\nmorality or have been won over to real politik 1s not\nrelevant sociologically. What is relevant is to the extent\nthat the US temporizes with its own principles it 18 abandon-\ning an instrument of great political force in Southeast Asia\nThe USSR, were it in a similar position of active responsi-\nbility, would undoubtedly be even more gross by contrast,\nbut so far we are in Southeast Asia, at least to some extent.\nWe have the initiative. The USSR and Communist China are\nstill only potential forces, perhaps brighter for being\nless manifest.\nThis much is clear: Whatever our priorities in the\nshort run, however coldly calculated in power terms, they\nmust be compensated for by long-range encouragement, re-\nassurances and planning with and for the South Asians 1f\nwe are to counteract Communist intrusions\nMR, COLEGROVE: Would Miss DuBois be willing to comment\non Gov. Stassen's proposal for an American propaganda center\nat Bangkok?\nMISS DuBOIS: Siam has always, of course, been very\nsensitive to the fact that it has been the one independent\nnation in Southeast Asia that has not fallen directly under\ncolonial\nCONFIDENT IAL\n- 81 -\ncolonial control. India considers Siam today a rather in-\nsignificant and reactionary country. Bangkok is not an\nswfully pleasant climate. The port 1s not a very good one,\nit has only north-south transportation on land at least.\nI should think if one has to have an American capital in\nSoutheast Asia we might at least find a more aslubrious point.\nMR. COLEGROVE: Where would you have the capital if\nnot at Bangkok, or would you have a capital?\nMISS DuBOIS: I would not\nMR. DECKER: I would like to ask Miss DuBois to com-\nment briefly on the relationship of the American position\nin the Philippines to this Southeast Asia mass. We have\nhad some experience in the Philippines and I happen to\nknow that many of those areas do look with considerable\nint erest to what is going on in the Philippines. I wonder\nif that gives us an advantage or disadvantage.\nMISS DuBOIS: I think our record in the Philippines\nstands us in very, very good stead in Southeast Asia. I\nmean that 18 an honorable record and that is always quoted\nand that 18 of great advantage.\nI would say the administratively and politically\ncompetent leaders in that area are very, very few. That is\none of the very serious problems, one of the great weak-\nnesses, but those who are the leaders by and large, with\nsome exceptions that can be named, are very strongly on\nour side.\nMR. VINACKE: How far do they have mass following?\nMISS DuBOIS: I think that varies tremendously. I\ncan't make a generalization for Southeast Asia.\nMR. HEROD: Gerald Winfield in his book on China gave\nsome very plausible arguments for increased food production\nby a lot less people by a large distribution of land rather\nthan smaller ones and certain other changes. Does Dr. DuBois\nsee the possibilities in Southeast Asia and also in China\nof any corresponding increase in food production to change\nthat equation?\nMISS DuBOIS: I think there will be no difficulty, once\npolitical settlements have come, in increasing the rice\nproduction of Southeast Asia.\nMR. HEROD:\nCONFIDENTIAL\n- 82 -\nMR. HEROD: Also China?\nMISS DuBOIS: I have no judgment on that, I am sorry.\nBut even with no very elaborate large-scale rice culture,\neven using the old techniques with slight improvements in\nstrains and fertilizers, rice production in Southeast Asia\ncould be practically doubled. You see, all the surpluses\nof Indochina, for instance, aren't available now. That 18\nalmost a million tons prewar that was exported. That 18\nnot on the market now. Itwould save India a great deal\nif they could buy that Chinese rice.\nMR FAIRBANK: In connection with the lack of leaders\nin Southeast Asia, don't we have a great danger from the\ncorresconding lack of American personnel who are able to\nmaintain real contact with those few leaders that are\nthere? It seems to me in all of Asia we suffer if we rely\nonly on our embassies and consulates to maintain contact\nwith the native leadership because 1f you want contact\nwith the revoluticnists and you are in diplomatic channels\naccredited to the local regime it is difficult. We need\ncertainly a great many more Americans like Mr. Talbot, if\nI may take an example, who has had personal experience in\nthe field. He is an unusual and almost unique individual\nbecause a particular foundation saw to it that he spent\nsome time seeing people 23 a private citizen in those coun-\ntries.\nOne thing this conference might consider is the need\nof getting more Americans into the Far Eastern scene outside\nof diplomatic channels which handicap their contacts, with\nmore freedom to develop an association or understanding\nof the native leadership.\nMR. COLEGROVE: May I ask Dr. DuBois one question re-\ngarding trade between Japan and Southeast Asia? If Japan\nrevives economically and lessens the burden on the American\ntaxpayer, Japan must have markets. One market, of course,\nwould have to be Manchuria and North China, and we hope\nIndonesia and possibly a revival of the old trade with\nBurma, Stam and other Southeast Asian countries. I believe\nthe figures before the war were about 15 percent of Japanese\nimports came from Southeast Asla. Does Dr. DuBois think\nthat trade could be revived and expanded?\nMISS DUBOIS: I think that the Department will bend\nevery effort to encourage the development of Japanese-\nSoutheast Asian trade Japanese consumer goods and things\nof that sort in return for Southeast Asian rice.\nMR. COLEGROVE:\n83 1 I\nPR. COLEGROVE: Will Southeast Asia take Japanese\nexports?\nMISS DuBOIS: I think they would.\nMR. VINACKE: I was just wondering whether your last\nreference meant that the heat would be put on by the United\nStates; for instance, until we compel the Philippine Govern-\nment to go further than it has been willing to go under\ncertain pressures up to the present time in reopening trade\nwith Japan on a basis that leaves the trade open to Japan\nrather than on any other basis. Was that the implication\nwhen you said the Department was going to open up trade?\nMISS DUBOIS: I was saying they would do everything\nto facilitate the surplus trade rather than our shipping\nin costly dollar wheat. It was in the food for consumers\ntrade.\nMR. DECKER: I would like to have Dr. DuBois comment\non the present appalling conflict in Burma-- to what extent\nshe sees that as an evidence of Communist influence, in-\nfiltration? To what degree is it domestic to Burma, and\ndoes she see any solution of it?\nMISS DUBOIS: Burms is not the field that I watch\nfrom day to day, Mr. Decker. I can here only cuote Mr.\nFurnivall's opinions, and Mr. Furnivall is of the opinion\nthat Communism today in Burma is not a menace; that you\nare seeing characteristic interim disorders that have been\ntraditional in Burmese history. Mr. Furnivall is of the\nopinion that the Karens far more than the various splintered\nso-celled Trotskyist and Stalinist groups-that the Karen\nuprising is more important than the Communists, and cer-\ntainly the Karens are not a radical group. In fact, one\nof the things they are protesting is the radicalism of\nthe present Government of Burma. It seems to be simmering\ndown. I suspect that you are going to have in maybe four\nor five years a reasonably stable Burma under a fairly\nsocialistic government.\nTR. DECKER: I agree with you entirely.\nIR. TALBOT: At this point I merely wanted to add a\nfootnote that the South Asian demand for Japanese trade\nat the present time has swung over to a different line\nthan it did before the war. Textiles are no longer the\nhig\n- 84 -\nbig demand from Japan, now it is more machinery, machine\ntools, and semi-productive equipment. Many of the South\nAsian countries are concerned with producing their own\ntextiles, so that the nature of the trade may be somewhat\ndifferent even though the trade itself may come to approxi-\nmate what it was before.\nMR. STALFY: I would like to ask, with reference to\nthe possibility that the United States might start, say,\nin the fairly near future, a program along the lines of\n\"Point 4\" in this area, what particular countries do you\nfeel would at present be the best places to start? Some\nof them I suppose you just couldn't start very effectively\nnow, in terms of leadership available, willingness, desire\nfor this sort of thing, and all the other factors one would\nhave to take into account.\nMISS DUBOIS: As long as a settlement is not reached\nin Indonesia, as long as the war continues, as long as the\ndisorders continue in Burma, these are not profitable places\nto start a \"Point 4\" program. We have put a good deal of\naid into the Philippines already, and we consider our record\nthere on the \"Point 4\" level is very good already. Thailand\nis one of the places where we can start moving immediately,\nlet's say, and, in fact, we have in terms of the Internation-\nal Bank loans and so on, that sort of thing is moving along.\nIndonesia will offer tremendous possibilities if all goes\nwell, say by mid 1950.\nMR. ROSINGER: Could you give us some impression of the\nsituation in Indochina?\nMISS DuBOIS: The March 8 Agreement with Bao Dai has\nmoved very, very slowly toward a constitution, only beginning\nin September with the ten subcommissions set up to begin dis-\ncussing further carrying out the March 8 agreement. The first\npriority was given to the transfer of the Courts of Justice\nin the theater and seems to have led to a good deal of diff-\niculty. Those negotiations promise to drag on, if the Indo-\nnesian negotiations are any criterion, for years if the Bao\nDal regime lasts that long. The Republic of Mentnew (?) is\ncalling Bao Dal a traitor and a puppet of the French. There\nare estimates which are very discouraging to the success of\nthe Bao Dai experiment. I think that most of the Western\nEuropean nations, including ourselves, hope that the Bao Dai\nexperiment will work, that Bao Dai will be able to set up an\neffective\n- 85 -\neffective government and gain considerable popular support,\nbut I think it is only a hope and far from an assurance.\nR. ROSINGER: I was thinking particularly about the\npresent military situation. The question was raised as to\nwhat effect increased arms from across the border would\nhave then the Chinese Communists reach that frontier. How\nwould it effect the Indochinese military situation?\nCOL. McCANN: I think there would be considerable\npolitical implications which might not be as pronounced\nas if the Chinese Communists tried to get into the area\nthemselves, but I don't quite visualize their just giving\nthis stuff gratis to the Ho Chi Minh elements in Vietnam.\nThere would be some quid pro quo involved, I believe.\nHowever, I think, in general, it is = fair assumption that\nthe arms traffic would increase. Another aspect is, of\ncourse, that as the French might expand =11 their military\nresources, and they might become increasingly unable to\ncope with the seaborne arms traffic which is going on in\nthe area, the Ho Chi Minh forces have achieved at least\na stalemate in the area. While there is a continued French\neffort to achieve a military solution, it is not a self-\nlicuidating proposition. In fact, it inherently increases\nthe opposition that that military strength must encounter.\nHow for the French can expand their military effort depends\nupon n lot of cuestions: their problems in North Africa,\ntheir commitments in Western Europe, and the extent to\nwhich the United States is willing to back a military solu-\ntion in Indochina, even indirectly through the Western Euro-\npean organization.\nR. ROSINGER: My impression, which I offer very tent-\natively, is that the military situation in Indochina,\ngranting a number of differences, might be compared roughly\nwith the position of the Generalissimo's forces in China\nitself, let us say in 1947 or possibley early '48. In other\nwords, I PM wondering whether the French prospect there 1s\nof the same general character as Chiang's prospect was a\nyear or = year and a half ago.\nCOL. McCAIN: There are aspects of similarity, certainly,\none of which I have mentioned--that seeking a military solu-\ntior SOWS the seeds of its own failure. There is snother\nsimilarity in the military situation--that the French are\nholding principal cities by military force, and attempting\nto keep open certain major lines of communication, which is\n& very costly sort of an operation against a determined\nopposition. That is one of the things that makes the French\njob so costly in military terms.\nIN. MORRAY-\nNEIDI NTI\nE\n98 I )\nMO\nMR. \"URPHY: I would like to ask Miss DuBois's opinion\nof the political effect in China of the Atlantic Pact arms\nturning up there in the hands of the French?\nTISS DUBOIS: First of all, the French have had Ameri-\ncan equipment there, you know, in addition to which there\nwas left-over stuff; in addition we have already had ECA\nmaterials leaking into Indochina, which has been observed\nand criticized. Officially Ho at least has taken an\nastoundingly moderate attitude towards FCA and towards\nthe Atlantic Pact. It has been quite unKremlinish. He has\nsaid: \"Tell, sure we understand the United States wants\nto help its friend, France. Why not? We don't begrudge\nFrance's sttempt to get back on its feet\", and so on. It\nis only when the stuff begins to appear in Indochina that\nthen you get expressions of resentment toward the United\nStates, and since the stuff has been coming in one form or\nanother either through FCA or Lend-Lease, and the old war-\ntime arms and SO on, I don't think it will come as anything\nnew or shocking.\n\"R. MURPHY: Except that there will be a good deal of\nnew reference to it within Indochina. I believe there has\nbeen already, which might make the situation comparable to\nthis 1947 Chiang Kai-shek episode in China.\nMISS DUBOIS: We haven't any increasing love in Indo-\nchina, but oddly enough We have not been as disliked as we\nmight have expected, and it is quite astonishing in reading\nthe extreme right and the extreme left press in China to\nfind them almost indistinguishable in their anti-American-\n1sm. In Indochina, the reactionary forces have been as\nbitterly anti-Americen and have thrown around the reaction\nof American imperialism as rashly and as frequently as the\nextreme left press has.\nIR. HPROD: What is the present status of the policy\nof FCA aid in the Metherlands East Indies in the light of\nthe Hague Conference?\nTISS DUBOIS: The ECA cancellation of aid to Indonesia\nstill holds until, presumably, an a reement has been reached\nat the Hague. I think our position has been impeccably\nneutral. By and large our negotiators have been remarkably\nimpartial in trying to get a settlement. I mean they pres-\nsured both sides, depending on which side at the moment\nneeded most pressuring in seeking agreement. I have the\ngreatest respect for \"r. Cochran's astuteness and impartiality.\nMR. LATTIVORE:\n-87-\nMR. LATTIMORE: I think that one of the things which\nwe must face very realistically is that American propaganda\nthroughout Asia emphasizing the Kremlin sympathies and\nKremlin ties of the new Chinese Communist Regime may be\nless effective than the tendencies of nationalist movements\nof all colors in Indonesia in proportion as they tend to\nbecome militant to imitate what has been done in China be-\ncause it has been successful rather than because of the\nsource of 1ts origin. One conclusion I would draw is that\nColonel McCann has shown us a military situation in Indo-\nohina which in a general way, allowing for differences\nbetween the two countries, resembles the military situation\nin China, say, a year and a half ago, and I would not be\nsurprised If the military stalemate which Colonel McCann\nsays Ho Chi Minh has achieved in Indochina might, if it\ngoes on long enough, cease to be statio and lead to the\nbeginning of her turn-over movements in Indochina, which\nhe says have not become manifest yet.\nIou might easily get a situation in which 1f the\nFrench, pressed by their difficulties elsewhere, to which\nColonel MoCann alluded, felt themselves forced to try to\noperate in Indochina by arming Bao Dal units rather than\nFrench units, those units might begin to turn over as units.\nMR. PEFFER: I agree with Dr. DuBois that you have to\nlook at all of Asia, now as always. I think from Burma up\nto Vladivostok everything will turn on how we act towards\nChina. The moral effect of the Chinese revolution 1s, of\ncourse, as liquid as the Japanese victory over Russie in\n1905. As she also sald, there 18 8 considerable whispering\ncampaign-- I guess it begins in Bombay and goes to Vladivostok\n--about America having grown up and being like all grown-\nups-bad. It 18 a great power, so 1t is a great empire.\nThat is probably not true, but it is a good talking point.\nIf we take the position with reference to China that we are\nobstructing everything, that we refuse to recognize-- am\nusing \"recognize\" not in the technical sense-that we refuse\nto acknowledge what has happened in China, 1f we attempt to\nsabotage right away or even to oppose, to out off, to ostra-\ncise, to expel, I think certainly from India on it will be\nsaid by the Ho Chi Minhs, by the Siamese, by the Burmese,\nby the Sukarnos: \"Well, you see the Russians are right,\nthe Americans are just imperialists.\" We have stood histor-\nically in that part of the world largely on our Philippine\nrecord. We have stood historically 85 anti-imperialists,\nas equitable with respect to Asiatic people. That is at\nleast\nCONSIDENTIAL\n- 88 -\nleast in question now in the minds of all these people.\nNo matter how much USIS, no matter how much propaganda,\nyou have got, it will do you no good as long as we give at\nleast the impression that we have changed, that we are no\nlonger the country that freed the Philippines and which\nsent the school teachers instead of the soldiers, and that\nwe are out (1) to keep the status quo of five years ago,\nand (2) to use any power in Asia with regard to our larger\npolitical purposes, that 1s, our opposition to Russia.\nIf we recognize first that these people are going to\nhave to get their independence sooner or later and if we\ndon't blackball them, even if their ideas are different, I\nthink we can hold them. I mean by that we can keep them\nfrom going to Russia. I think the key will be taken by\nwhat we do in China. The odds are against us now and we\nlose part of Asia. I think we can turn the oads. First,\nat least neutrality about Communist China. Second, no ob-\nstruction to either (1) the nationalist movement, which\nhas got to win sooner or later, and (2) measures for eco--\nnomic and social change.\nWith respect to the danger, the sort of magnetic\ndanger from China, the Chinese Communists, the fear that\nthey are going to come in, I am not so sure they won't try\nto come 1n. The Chinese have a way of losing their heads\nwhen successful. They proved that in '27 and '29, but\nmaybe not. As for their pouring arms into Indochina,\nIndonesia, Burma, Siam, elsewhere, where are they going to\nget the arms now? Not from us any longer, that's true.\nThey are not going to be operating on a surplus economy,\nare they? I don't think there 1s much danger from that.\nI think the question 1s largely a moral question. They\nwill be with us or against us according as they think we\nare for the status quo and ante 1939, and they will make\nup their mind, I think, in accordance with what we do\nabout China,\nMR. VINACKE: I think the question I was going to\nraise has been partially raised in what Mr. Peffer just\nsaid as his conclusion. His conclusion, or apparently\nthe implication of it, is that the United States should\nput all of 1ts efforts directly behind revolutionary\nmovements wherever they appear, if they are to have any\nsort of mass foundation. That 1s, there should be no\nneutrality in relation to nationalism in Indonesia as\nagainst the Dutch. No neutrality as against nationalism\nin\nCONPIDENTI\n- 89 -\nin Indochina as against the French, No neutrality in re-\nlationships in China itself, where there 1s an apparent\npossibility in long-run historical terms of a local\nnationalist movement's being successful, then our policy\nshould be directed toward assuring that it will be success-\nful 80 far as possible. Is that the implication?\nMR. PEFFER: I wouldn't go that far. I wouldn't go\npell-mell to making revolutions, because even if they are\nright they cause embarrassment and we have got enough em-\nbarrassment.\nMR. VINACKE: Where they exist you would support them,\nrather than be neutral.\nMR. PEFFER: I wouldn't be obstructive. I don't think\nI would go looking for Ho Chi Minhs where they didn't\nexist. I mean just merely on the principle that the less\ntrouble there is the less trouble we have got, but I would\nnot obstruct.\nMR. VINACKE: The most stabilization 1s in a status\nquo situation, not a revolutionary situation.\nCHAIRMAN: Is there a difficulty in determining whether\na Ho Chi Minh is really an indigenous leader of a foreign\nrevolution or whether he is a foreign agent?\nMR. PEFFER: Isn't he generally both?\nCHAIRMAN: You have to take that into account.\nMR. PEFFER: But if he 1s enough of a local leader, I\nwould say you might as well swallow with bad grace, if neces-\nsary, but swallow the fact that he is also a foreign agent\nand by not antagonizing stand as well in with him as the\nforeign guy does, he being Joe Stalin.\nMR. DECKER: I don't know whether I understood Mr.\nVinacke a moment ago, But he wouldn't suggest that status\nquo is stable when a revolution is going on at the same\ntime in the country.\nMR. VINACKE: If we can stabilize conditions you have\nmore stabilization than if you have a continuing revolution-\nary situation.\nMR. LATTIMORE:\nIDENTIAL\n- 90 ou\nMR. LATTIMORE: On this question of the local leader\nor some other leader who is also to some extent a foreign\nagent don't we have to go a little further into the back-\nground than that? It seems to me that the fundamental\nfact is that in our time there has been a basic shift in\nall Asia which consists of the fact that before 1918 there\nwas no really effective way in which the peoples of Asia\ncould play off the great Western powers against each other.\nSince then, growing after the First War, and increasing\nvery rapidly after the Second World War, there exists a\nsituation in which nothing that we can do can prevent these\nnationalist leaders from profiting by the fact that the USSR\nexists, and that they can play the rivalry between the USSR\nand the US and make a percentage on it; that that creates a\nkind of leverage which they have and which we can't take\naway from them.\nNow some of those leaders and negotiators may like\nand admire the Russians whose existence they are using,\nThe others may be using them without particularly liking\nor admiring them. But the fact is that all of them can\nuse that existing situation.\nMR. MURPHY: With respect to this dual relationship\nthat we have just been discussing, one thing we have to\nconsider is which 1s the No. 1 motivation and which the\nsecond. Taking Ho Chi Minh, for instance, some people\nconsider him a patriot. Some people consider him an agent\nof Stalln. There is always the possibility that he is the\npatriot, No. 1, and a Stalin agent, No. 2, and that if he\ncan advance his program and be successful on a national\nbasis he would prefer it. But if he ends up in a stalemate,\nthen he takes the ald of Stalin. With respect to this\nplaying off of one against another I think Dr. DuBois will\nagree that in Thailand, for instance, for the last thirty\nyears, until this post-war period, it was a definite and a\nwell-recognized technique to play off the British against\nthe French. Three or four years ago at the end of the war\nsuddenly the Americans appeared and 80 the Thais all sat\nback and said: \"Here 1s another element that we can use.\"\nI think with respect to all of Southeast Asia there is\nno doubt about it that in almost all the countries, and I\nwould include Mr. Nehru's Government, there 1s a spiritual\naffiliation, though not necessarily a political affiliation,\nwith the Chinese Communist movement.\nMR. LATTIMORE:\nCONFIDENTIA\n- 91 -\nMR. LATTIMORE: A man like Ho Chi Minh 1s inevitably\nreferred to as Noscow-trained, but if we go back in his\npersonal history we find that he began as a French Colonial\nintellectual who went to France, became affiliated with the\nFrench Socialist Movement and at the end of the First World\nWar followed the European Left Socialists who took over and\njoined the Bolsheviks, Communists. He then went to Russia\nand got some Russian training. But 1f we are thinking of\nour own problem, which is basically more significant, the\nrelatively short Moscow training, or the relatively long\nFrench training, which is more significant in colonial\npolitics- the spiritual affiliation with Moscow, or Peking,\nor the spiritual difficulties, affiliation of the progressive\ncolonial Asian intellectual who takes a try at the best that\nthe West has to offer, and then goes on down and down the\nladder until he gets off the ladder altogether and starts\nup the Moscow ladder? That is a problem which is our prob-\nlem and with which our policy can deal.\nMR. BRODIE: I would say, and here I have reference\nparticularly to the implementation of a \"Point 4\" Program,\nit makes a great deal of difference to this country what the\ncharacter of the leadership of a revolutionary movement 18.\nIn that respect I think one might profitably contrast the\nsituation in India with that in Burma. India is clearly\na country today in which the implementation of the \"Point 4\"\nProgram would be meaningful. Burma, so far as I can see,\nand, again, I speak with a very large measure of ignorance,\nbut again it seems to me quite clear that Burma 1s not such\na country, and the difference 1s very largely in respect to\nthe character of the leadership of the revolution movements\nin both countries.\nI think Mr. Vinacke had a point which probably he spoke\non too briefly to get across, and that is that in order to\ndo our utmost and exercise and utilize our resources,\nintellectual and moral as well as economic, in those areas\nin the manner which helps them and thus indirectly us, we\nare very concerned with achieving B situation of genuine\nstability, and that in many instances such stability seems\nto be better implemented by supporting the regimes which are\npresently in control even though they have the bad onus of\nbeing colonial regimes. I wouldn't want to stress that point,\nbut I would certainly feel that the mere fact that there 18\na revolutionary ferment in the area, the mere fact that\ncolonialism 1s definitely passe sofar as moral hold 1s con-\ncerned, etc., does not by any means argue that it is in the\nAmerican interests to go whole-hog for any revolutionary\nmovement\nCONFIDENTIAL\nas 92 -\nmovement that appears regardless of the character of its\nleadership, regardless of the character of its popular\nfollowing, and SO on.\nMR. KIZER: I recall from the White Paper of the De-\npartment that back in 1944 Mr. Davies, who was then asso-\nclated with the Theater Commander as an observer, I assume\ndrawn from the State Department, warned us rather carefully\nthat the policies we were engaged 1n, supporting whole-\nheartedly with various military supplies the Nationalist\nGovernment during the war, and doing nothing with respect\nto the Chinese Communists, was bound to drive them into the\nhands of Russia. I think we ought to bear in mind that we\nhave done a good deal in that way in driving potential\nmovements into the arms of Russia, and for that reason I\ntend to go along with what Mr. Peffer has well said, and\nI bear in mind what the last speaker, Mr. Brodie, has also\nsaid-not that we should go whole hog. But when it be-\ncomes apparent, as I think it has become apparent in Indo-\nchina, that the days of France are numbered, and that the\nrevolution is on its way toward control, it seems to me\nwe ought to be quite sensitive and watch for that situation,\nand, in the first place, not take sides unless we are com-\npelled to, and see to it that we don't drive the revolu-\ntionary movement again into the arms of Moscow.\nOn that subject I think Miss DuBois put the matter\nvery well when she said that Russia's \"doctrinisms\" put\nRussia at a great disadvantage in understanding or dealing\nwith the complex problems of the Far East. We must in our\nturn be careful our dogmatisms don't drive that revolu-\ntionary ferment away from us and into the arms of Russia.\nCareful sensitiveness as to what is going on in the Far East,\non both sides, and when the issue 1s in doubt aloofness from\ntaking sides, I think 1s pretty desirable in all of this\nsituation.\nWe were discussing yesterday what we could do in India\nto strengthen that situation. If India becomes, which it\nmay during this period of confusion, the leader of the Far\nEast, in any policies that we frame with respect to the\nFar East it seems to me we would do well to learn as much\nas we can from Indian leadership as to what is going on in\nthe Far East. A number of their leaders are men very\nacutely intelligent and observant and our policies will\nhave to be made, it seems to me, in the Far East to some\nextent as well as in Washington, I, therefore, strongly\nsupport what Mr. Lattimore was saying about the need to have\nmen like Mr. Talbot, for instance, who are individual ob-\nservers and bring back the news of what 18 actually going\non under the smooth, official surface of public life.\nMR. TAYLOR:\nTAL\n- 93 -\nMR. TAYLOR: I am speaking right next door to Mr.\nTalbot and he can correct me immediately if I am wrong,\nbut I am under the impression that Mr. Nehru's attitude\ntoward communists 18 not like the one you refer to in\nthe White Paper--apparently he puts them in prison and\nbreaks up conspiracies. Apparently he does not feel they\nare for sale, or they can be bought, or influenced by\nfavor or torn from the loving arms of Russia. So I\nwonder how your two basic ideas fit together? Is that\ncorrect about Nehru's attitude?\nMR. TALBOT: I would be glad to make a comment on\nthat. I think they would indeed be grateful for American\nadvice on what to do about the internal Communist problem.\nOn the external scene, the problem doesn't appear to them,\nit seems to me, in quite the same perspective. They have\nfelt Russia is a large country and a close neighbor and\nthey must somehow live with Russia to a degree. My im-\npression is that many of them now feel that the new regime\nin China more adequately reflects the social forces and\nother forces at work in China than the old regime has done,\nand that for that reason India must get along with that\nneighbor too, and adjustments must be made with that neigh-\nbor, and with that new regime. I would be very surprised\nto see the Indian Government pursue the same type of\nattitude towards the Chinese Communist regime that it does\ntoward the local Indian Communists.\nMR. FAIRBANK:\nSTATE\n- 94 -\nVR. FAIRBANK: We have to seek personnel to conduct\nrelations with revolutions, not relations with governments.\nThe Foreign Service is for the purpose of relations with\ngovernments. We are dealing with revolutionary situations,\nas we have all said. That requires, I think, a new approach\nto the problem of personnel.\nVery briefly, a man who is to deal with a revolution,\nto have 1deas about our relations with it, must of course\nbegin with the local language. That is very difficult to come\nby in Southeast Asia. Further, he must know the local culture,\nreally the people live and think. He must, in other words,\nlive and think with them as a Cominform agent would do. Third,\nhe must know the local personalities so he can really look at\nthe politics in operational terms and he must know local\nconditions from contact. To do this, in my view, one must\ndevelop personnel who understand in detail the aspirations of\nthe people who are trying to remake their countries, so that\nthis country can get on the same beam with this native leadership.\nI would say further that our objective there is to formulate\nan alternative to the Marxism which provides them with a world-\nview spiritual dynamic, or the like. The United States, it\nseems to me, is short on that side, say, of a country not in a\nrevolutionary ferment. Our ideology is very rich and we are\nvery much devoted to it, but we do not have it as an export\nproduct, it seems to me, in an organized form for the present\nday. We have started a revolution in Asia but we are not now\nthe guiding force in 1t from the outside.\nTo carry out this project of persons who can put the Asiatic\nrevolution in terms that make sense, both in terms of the\nAsiatic and to us, these personmel must have nonofficial status\nfirst of all. They must be in these regions not with the\nresponsibilities of government status, and of course they must\nhave on-the-spot operational contact, be there not just as\nstudents wandering about, but doing something with the local\npeople. Further, they must have freedom to think and develop\ntheir ideas in any way that the situation seems to call for.\nContinually if we want people in this kind of free contact in\nAsia it seems to me we must look to private agencies in this\ncountry and we very practically could ask a number of specific\nprivate agencies what might be proposed as personnel programs.\nFducational institutions. for example, can develop a very\nextensive contact. A youth organization, a YMCA -- that sort\nof think might be tried and possibly develop personnel programs.\nIn general this need reflects the fact that in Europe we have\na vast reservoir of personnel. Think of the hundred if not\nthousands of young American personnel who have been in Europe\nthis summer with intimate contact in their cultural background\nand people who are now available for programs that we may have\nthere, and compare that with Asia.\nMR. DECKER\n- 95 -\nMR. DFCKFR: I am sure everyone around this table knows\na lot about the potentialities of the missionary movement in\nthis respect. Certainly one would not claim for the missionary\nmovement that it represents in every case people who are aware\nof the wider context and are thinking sufficiently intensively,\nexploring sufficiently widely to be of much use. But neverthe-\nless there do emerge from time to time a great many individuals\nwho are located in these countries in very active and very\nintimate contact with the people there who know in great detail\nand in clear outline what they are thinking, and whose\ncontributions would be extremely valuable from time to time.\nNow it must be said that the missionary movement is very\nsensitive about being used as the cat's paw of the American\ncentury or of American colonialism OT imperialism, or what you\nwill. It is there for its own moral and spiritual purposes\nand it cannot be expected to be untrue to its guiding principles.\nAt the same time I do think that I know that these leaders are\nalways ready to share what they see to be the truth with people\nwho are seeking the truth, and I think that better ways could\nbe devised whereby the Department of State could from time to\ntime consult with some of these people and get the benefit of\nthe truth as they see it. They will usually be fully ready\nto share it with you.\nMR. TAYLOR: I am sure that Mr. Fairbank would agree with\nan addition to his list of people who might be used, and that\nwould be people from the labor unions of this country. The\nfact that one dislikes Communism doesn't mean that one doesn't\ndeal with it. They have done as good a job in dealing with\nit as anyone here, and understand it very well indeed. I\nwould be very happy to live in a world which is three-quarters\nCommunist if I could live peacefully with 1t. My basic feeling\n1s that we have no choice in that matter. that the fight 1s on\nand we have to carry it on. Therefore, I would strongly\nencourage the labor unions to send as many people over as they\ncan. They have already taken the initiative, as a matter of\nfact, in many countries of the world.\nThe second short comment, again on Mr. Fairbank's point,\nis that ideological one. That is extremely important for an\nadditional reason that I would add to all of his, and that is\nthis: that so much of the discussion goes on in categories\nwhich do not belong to us, categories furnished us by other\npeople. Imperialism, for example - what is your definition?\nIs 1t the Leninist definition which you could shoot holes into\nat any moment? Colonialism? These categories that we use -\nwe do need a cleaning up of our own ideology and let it be our\nown, and if we use their terminology, let us understand what\nthey mean by it.\nMR. TALBOT\nCOME IAL\nde 96 -\nMR. TALBOT: I would like to take the opportunity to\nmake one or two comments on the experience of the Institute\nof Current World Affairs, which is the organization that\nsponsored various young men in studies of this kind. First\nis the comment that Mr. Taylor made sotto voce a moment ago,\nthat we not only have to have men who know something about\nthe area but they have to make a living when they get home.\nBut it has been the experience of this Institute that it takes\nfive to six years of fairly concentrated work in a given area\nbefore the first three qualifications Mr. Fairbank mentioned\ncan begin to be absorbed. The tourist traffic to Furope is a\nfine thing because of our cultural connections. To Asia that\nsame thing rarely holds. The problem is complicated and is\nextraordinarily difficult. For 20 odd years this Institute\nhas been sending out such young Americans, giving them an\nopportunity to operate entirely independently. I would merely\nsay in this connection that the thoughts coming around this\ntable are the thoughts of that particular organization and\nthey are now making an effort to expand their very limited\nresources and trying to send more people than they have in\nthe past.\nMR. HFROD: I would like again, being a lowly businessman,\nmerely to refer to the fact that business generally pays these\nbills. Business is the one, in addition to the missionary and\nthe educational fellows, that has permanent men out there, and\nI should think with the American shipping companies, the\nAmerican air lines, the American oil, the American import\npeople, the American communications people, who have the\nhighest investments in China, the biggest permanent personnel\nin China, that it would be wise to include some of their\nviewpoints.\nYou can't get men out when you get them 1n. You can't\ninduce new menito go and you can't get them out. You can't\nwith Government guarantees as to investments deal with\nparticular men on that particular basis. These problems have\nto be considered as the things that are stifling investment,\nstifling trade and economy and they have to be given good,\nserious, thorough consideration with government support.\nMR. COONS: It seems to me that either before the Far\nEastern policy of this Government shall have been formulated\nor subsequent to 1ts formulation and announcement there would\nbe very real wisdom in drawing up a consultative committee of\nrepresentatives of all American business interests that deal\nwith Indonesia, Southeast Asia, China and Japan and seeing\nwhether there may not be ways and means whereby we could\nutilize some of the resources of American business leadership\nto implement and to strengthen whatever foreign policy is\ndeveloped. One of the objectives that we have not discussed\nhere is the exploration of how we can build up the middle\nclass of the countries where we are dealing. We have been\ntalking here pretty much in peasant terms, in terms of the\nagricultural\nCONFIDENTIAL\n- 97 -\nagricultural characteristics of the Far East, but as industry\nand business grow there will necessarily come an increasingly\nmiddle-class group. On whose side will this group be? Those\ncontacts that will be established will be with American\nbusiness firms, American government representatives, commercial\nrepresentatives of other countries. We might ask American\ncompanies operating abroad to increase the number of native\nemployees and to implement the Point 4 program by something\nlike our World War II training-within-industry program, to set\nup schemes of communication, of the techniques and requirements\nof management, sharing with native peoples more of these aspects\nof organization and of operation and some of the requisites of\nthe economic operation in the modern world.\nNow this, of course, is a long-run proposition but I think\nI see in it some opportunity to build up the strength of an\neconomic group which may have ultimate political significance\nin certain countries.\nMR. QUIGLFY: We are developing,as you know. in our\nuniversities the type of program known as area study, and I\nthink it won't be very long before we will have reached the\npoint of saturation of the field with our students -- graduates.\nI have wondered whether it would be possible for business\nfirms to give more consideration to the employment of such men\nafter they have completed their work or while they are, say,\nin the period between master's and doctor's degrees and\nmaintain them for a period of years partly in their employ,\npartly for the purpose of continuing their education. They\nwould be in a sense cultural attaches of business concerns. I\nhaven't lived in the Orient myself for a good while, but when\nI was there the general impression that we had was that\nAmerican young men in business in China didn't stay very long.\nThey went out for the voyage, you might say, and to test the\nliquor, and it was the Englishmen and the Dutchmen and\nFrenchmen who really stayed on. Indeed, when I was in Peking,\nthe chairman of our leading American bank in Peking was an\nEnglishman, a very able man too. But it seems to me that if\nthat situation still prevails there is an opportunity for\nassociating graduates of these area study programs with business\nconcerns.\nMR. ROCKFFELLFR: I just wanted to make one comment on\nwhat Mr. Fairbank said. I am sympathetic to the idea of people\ngoing out as suggested, but I was a little concerned by the\nindication that he would go out as a specialist in the\nrevolutionary contacts mentioned. He mentioned that they would\nnot have contacts with government because government was\nalready in contact with our government. I just think there\nis real danger in going out on too limited a basis and coming\nback with a one-sided viewpoint.\nMR. FAIRBANK:\nSONFIDENTIAL\n- 98 -\nMR. FAIRBANK: Compression leads to distortion in my\nremarks. By \"revolutionary\" I meant they should look at\nsociety as as whole and have broad c ontacts and not be In\nviewpoint. government jobs themselves. I thoroughly agree with your\nMR. BUSS: Mr. Chairman, it seems to me that this\nthinking all proceeds from a premise that there 1s something\nto be gained on our part in combatting the position of the\nCommunists or the revolutionists or whatever you wish to call\nthem in this area. I think as far as our policy is concerned\nIt is quite clear to me that we all feel that there is much\nto be gained in some sort of B program, in some sort of\nencouragement of young Americans to go on. I should like to\ngo on from there. Assuming that more activity is in order on\nour part, I think it becomes very pertinent now, from the\nstandpoint of what our policy should be, what 18 the nature\nof this enemy that we are contesting with which has already\ngained a hold in some of the revolutionary movements in this\ncountry? If I may go back to things in these countries in\nSoutheast Asia, 1f I may go back to some things that\nMr. Lattimore said a few minutes ago, Mr. Frodie commented on\na little bit later, I assume # is a good thing for us to be\nthinking in terms of combatting these movements there. but\nI should like to know more about the nature of the hold on\nthe leadership in these revolutionary movements in these areas\nalready. I think it is in order to question the assumptions\non which some of our observations are made. My thought is\nthat I want to go on into the nature of the control of these\nrevolutionary movements and then our policy should be to get\na better hold.\nMR. BRODIF: It seems to me there has been made public a\ngood deal of investigation of general activities of the\nCominform. I have a colleague who has made an extremely\nintensive study of that, among other aspects of the activities\nof the Soviet elite, and I was citing what I presumed to be in\nthe public domain concerning general information as of this\ndate of how the Cominform operates concerning its local\nleadership; that 1s, it is one very largely of control. Again\nthe Tito spisode, which incidentally, we must remember was\nprecipitated by Moscow, not by Tito, indicates that freedom\nis not one of the major commodities exported by Moseow to its\nlocal leaders. Also, I think we can see from what has happened\nto Communist leadership in various countries, including our own,\nthat Moseow has a good deal to say about who carries the banner\nfor their movements, I agree with your point that we have to\nknow a good deal, not only about the areas concerned, but also\nabout the character of the Moscow operations which are\nexpressed\nCONFIDENTIAN\n-99-\nexpressed in these areas. It does no good to send the person\nout to Indonesia, let's say, and to learn all about Indonesian\nculture, etc., without knowing something about how Communism\noperates with 1ts local revolutionaries in the local area.\nMR. REISCHAUER:\nTROMAN\nANNUH\n\"NATIONAL\nARCHIVES AND\nLIBRARY\nRECORDS\nU.S.\nSERVICE\nBOVERNMENT\n- 100 -\nMR. REISCHAUER: The discussion so far this morning\nhas emphasized the intelligence aspect of the problem.\nThat 1s absolutely essential to a good defense; there is\nno doubt about that. As Mr. Fairbank brou up the\nproblem yesterday, though, he emphasized, let's say, the\noffensive a little bit more, the ideological concept there,\nwhich is an entirely different thing, but closely related\nto the whole problem, and Mr. Taylor touched on it briefly.\nI ht start with reference to Janan where the point is\nprobably particularly clear. ..e have carried out in reality,\nor at least attempted to carry out, a sweeping social\nrevolution in Japan. ..e e have done things more revolutionary\nthan anything the Communists have tried in Asia. At the\nsame time we have not presented an ideology to 80 along\nwith the practical measures we have taken there. As a\nresult the Japanese people often grasp for an ideology\nand while going throu h our type of transformation are\ngrasping at the Communist ideology, which really doesn't\nfit with the thing. They are asking for an ideology. .e\nhave in many ways failed to :Ive it to them. There is a\ncrying need for people to give our iceology. We aren't\nin the habit of giving it. We haven't been thinking in\nthose terms for a long time. Le have the ideology but we\naren't presenting it to other people. The same thing\napplies throughout Asia, perhaps not as keenly as in Japan,\nwhere you do have a largely literate populace, and possibly\npeople that are inclined a little bit more to our Luropean\ntheoretical approach than you find in the Far East. Still\nI think the thing does apply there. They are obviously\ngrasping for ideolo ies in lack of any other expressed\nideology. They graso at Communism when we have something\nI think that would really appeal very much more to them.\nAs long as they are reaching for the stars they might reach\nfor the real stars that we represent.\nMR. PEPFER: Couldn't you agree, on the basis of\nAsiatic history in the last generation, that if there had\nnever been & Cominform, if there had never been a Lenin,\n1f there had never been a Stalin, if Nicholas II were still\nin St. Petersburg. there would still be & Ho Chi Minh, 2\nU.S. TRUMAN\nSukarno, a Mao Tee-tung, or three fellows with different\nnames doing exactly the same thing. Do you have to know\nthose people? You don't. The fact 1s that these movements\nwould all have come about as they have come about because we\nlet it 80 by default. They have no doubt got a Russian\ninflection by default. Since there would have existed\nanyway that Russian inflection, it is not necessarily\nfatalistically\n- 101 -\nfatalistically permanent, but you will never understand\nthose people and what they stand for if you think of them\nonly in terms of Cominform. They are what they are by\nAsiatic birth, and nothing could have changed them. If\nthere had never been a Russia they would have had perhaps\nother ideologies and would have been just as disagreeable\nto us of the Western world. I mean by \"disagreeable\" they\nwould have caused us just as much embarrassment. I don't\nthink that you need to send people out for five or ten or\ntwenty years to worry about Ho Chi Minh, and the Cominform.\nYou had better just worry about Ho Chi Minh and Asia.\nMR. STALEY: I think we should recognize that the\n\"Point Four\" type of program has considerable potentialities\nin helping to make social change in the area evolutionary\nand constructive rather than explosive and revolutionary.\nMR. VINACKE: One thing that has been introduced by\nMr. Peffer was the question of historical perspective.\nBut there is one side of the historical picture, it seems\nto me, he completely left out, possibly because it isn't\nhistory. It is the present, in relation to these national\nmovements. It seems to me that we have lost sight of the\nfact that there has been a war, and that during the course\nof that war these countries were under Japanese occupation,\nand that as a result of the conditions at the end of the\nwar a nationalism in Southeastern Asia that hadn't gone\nvery far in the maturing of its leadership, in the\nestablishment of a mass basis for revolution, was put in\na position to temporarily assert itself.\nAll of these things indicate to me that we are\npossibly on & long-run basis exaggerating the extent to\nwhich there has been developed and disseminated throughout\nthese countries a nationalist exoression that is purely\nlocal and that assumed power because of its local rootings\nrather than because of the situation created, partly\ndeliberately, it seems to me, by Japan; partly inadvertently,\nin the course of the war; and that, it seems to me, ought\nto be kept in mind when we proceed on the historical\nassumption that here you have a constant accelerated\ninterference of its own forces, the development in these\ncountries. I think it has been something that has been\ncreated in part as a result of a war situation.\nMR. BRODIE: I would like to add two brief points:\nOne, I am reminded of what Mr. Taylor said yesterday when\nthe\nIDENT\n- 102 -\nthe point was made that we are after all dealing with\nvery deep-seated social and political movements in the\nFar East. His reply was: \"To be sure, but also we are\ndealing with very specific movements, which are only one\nof numerous conceivable realizations of those aspirations'.\nSecondly, and related to this, I think we have to\nrealize that we are in an age when revolution, or at least\none kind of revolution, is reactionary, and it seems to me\nwe have to distinguish very carefully, again for our own\ninterests as well as those of the people involved, between\nrevolutions which are reactionary, and I would say a\nrevolution which aims at imposing dictatorship 1s\nreactionary, and those which are truly liberal.\nMR. MURPHY: I wanted to make a brief remark with\nreference to Mr. Brodie's cuestion of the degree of control\nby the Cominform of these revolutionary leaders in the\nvarious countries. the were talking about Ho Chi Minh.\nMr. Lattimore gave something of his background -- many\nyears of French socialism, and a short period of Moscow\nindoctrination. During the war I was in China in the Army.\nwe were engaged only in fighting the Japanese. We had\ncertain people down with Ho Chi Minh who spent at least\ntwo years in contact with him, and at least one of these\npeople had six months of constant association with him in\nthe jungle, a few miles from the Japanese all the while,\nand for what it is worth, and granted that we are not\nnaive enough to believe that Ho Chi Minh couldn't have\nhad private thoughts, nevertheless, six months in the\njungle 1s a long and arduous period, and my friends who\nwere with him have continuously ever since maintained that\nhe was at least ninety percent patriot; that they didn't\nbelieve that his ties with Russia were the predominant\nUSA\nmotivation in his life.\nBOVERNINGS\nMR. ROSINGER: I would like to speak briefly on a\nquestion of ideology. We have had some discussion this\nmorning of the importance of having more American 3 familiar\nwith Asia and there is certainly no question of that. We\nhave had some discussion of the importance of how the\nUnited States speaks to Asia, and I think that subject is\nalso significant, but I would like to suggest that our\nideology in Asia is basically the sum total of our actions\nin Asia, and the generalizations that the people of the\nvarious sian countries form about us, our way of operating,\nour\n- 103 -\nour way of thinking and doing things, on the basis of\nthose actions; that is, that any emphasis on words alone\nis misleading and deceiving to ourselves unless, let us\nsay, in Indonesia, Indonesian nationalists feel that\nAmerican policy is really promoting Indonesian independence,\nif thathappens to be the kind of appeal we wish to make.\nIn other words, that we have to think primarily on the\naction level, primarily on the level of what policy\nactually does. I don't believe for a moment, for example,\nthat it would be possible to sell to the bulk of the\nChinese people, or the bulk of Chinese intellectuals, or\nthe Chinese middle class, hostility toward the United\nStates just on the basis of words. There must have been\nsomething in their own experience which made them receptive\nto that kind of approach and, therefore, it is to the\nactions and not to the question of words, even though\nwords can be persuasive for a time, that we must primarily\naddress ourselves.\nI would like to mention one concrete question which\nI had hoped to brine up before in connection with Miss\nDuBois' presentation. There has been an item in the press\nin the past few days to the effect that gold from Japan\nis going to be transferred to France in the name of Indo-\nchina in connection, I believe, with reperations arrangements.\nI don't know whether that gold is to be used in Indochina\nby the French or whether it is to be used in France. That\nwould be a significant question. From the news reports,\nwhich were brief, it is to be assigned to the Bank of\nIncochina in some form. I would suggest that nothing we\ncan say is one-hundreth as important as the concrete\nquestion of whether a certain number of millions of dollars\nof gold is going to be used in Indochina for French\npurposes, and then without considering the further question\nof the particular use that is made of that gold.\nIn other words, I don't think, to sum up, that we can\nconsider this simply on a verbal level. I defer to Mr.\nReischauer on the question of Japan, and I would certainly\nagree that Japan is more ideologically conscious than China\nor the areas of South Asia. But taking China, taking the\nareas of South Asia, and taking even Japan in the sense,\nI believe, that the Japanese people are considered highly\npractical as well astheoretical, I think actions come first.\nIf the actions sppeal, then you have a marvelous talking\npoint. They can be played up in extremely persuasive ways.\nBut they are basic.\nMR. REISCHAUER:\nCOMPIDENTIAL\n- 104 -\nMR. REISCHAUER: I would certainly agree with\nMr. Rosinger about the importance of deeds. There is no\ndoubt about that, and it is hard to carry out a wo rd\npropaganda without the deeds to go with them. However,\nno one can say that the Russian actions toward China have\nstrengthened their ideological cause, and yet the ideological\ncause has gone ahead in spite of the robbing of Manchuria\nand all that. There are two levels and they can't get too\nfar out of step with each other without serious danger.\nMr. Colegrove referred to the excellent \"Primer of\nDemocracy\". At the working level in lower education we\nhave done very good work. It is hardly ideological; it is\nmore practical. You have to have textbooks in the school,\ntherefore, we went about doing it. At the same time in\nthe university level, and that represents a generation\nwhich will be effective a little bit sooner than the\ngeneration in primary school, that is at the purely\nideological level. We have the Japanese university schools\nand the recent graduates from higher schools all crying\nfor ideologies and we have not answered the crassest sort\nof Communist argument that is going to the Japanese\nintellectual -- economic and political theory of the\nCommunist sort which is presented as the latest in Western\nscience. Well, almost any merican intellectual could\nargue against that very effectively. All we have been\ndoing is frowning, though. We have not argued on that\nlevel, even though the arguments are all on our side. I\nthink that is a better comparison with the situation in\nWestern Asia than the school book problem is. Ee are in\n15\nnovern\na position, though, to send people over there. I think\nthe audience would be extremely receptive. If you think\nback a decade or two to the time when John Dewey and people\nlike that went over, a program like that expanded, I am\nsure, would have great effect. of course, B reverse program\nof bringing Asiatic students here is the same thing done\na different way,\nCHAIRMAN: There is one point which has been raised\nseveral times earlier this morning on which we would very\nmuch like your views, and that has to do with this question\nof any kind of association of the Southeast Asian states\nor of the states of the Pacific or the whole area. The\nthesls which is constantly presented is this: that if\nthe United States should seek to stimulate any such\norganization or grouping, that would be self-defeating,\nthat we would then not have a useful grouping of states,\nand that it would be merely thought that the United States\nwas trying to line up a group of allies that would not in\nthe\nCONF IDENT\n- 105 -\nthe long run be useful either to the people in the area\nor to the United States, The corollary to that is that\nany such movement should be an indigenous movement. The\nquestion is as to whether there is really in the area the\nseed of a consciousness of a regional solidarity and a\nmutuality of interests there.\nSecondly, in terms of the interests of people and in\nthe interests of the United States, is there a definite\nadvantage in their coming closer together in some kind of\npact or union or association of whatever character? Se\ncould have some more expressions of views on that general\nproblem that would be extremely helpful.\nMR. COLEGROVE: With reference to the Pacific pact\nand its connection with the Southeast Asian pact, is it\nnot true that the Philipoine Government as well as the\nGovernment of South Korea, which are independent\ngovernments, actually expect the United States to promot e\na Pacific pact and would they not be greatly disappointed\nif we do not promote that pact? What are the facts on\nthat point?\nCHAIRMAN: The situation on that Is that there are\nundoubtedly a number who look for some kind of a Pacific\npact comparable to the Atlantic Pact, which would be a\npact of military guarantees and everything of that kind.\nThe Secretary of State made a statement, I think it was\nin May, indicating that we did not contemplate entering\ninto any such pact at this time. That is still the\nposition which we have taken. I think that is fully under-\nstood in the Philippine circles, at least, and I think\nalso in Korean circles. .0 still have an interest in it\nthere and I think some interest in it in Australia and\nNew .ealand as a long-term proposition. But, as you know,\nafter the original Quirino-Chiang talks the Philippine\nGovernment did publish the instructions which they gave\nto imbassador Romulo which suggested a less detailed\nmilitary pact for the Pacific and a more general cultural-\neconomic-political association.\nMR. COLLGROVE: My impression seems to be that our\nso-called sllies, in the Pacific will -- and this will\nhave repercussions upon Japan too -- feel that we have let\nthem down, that we are practically abandoning them if we\ndo not look favorably upon a nact of this sort.\nMR. HEROD:\n- 106 -\nMR. HEROD: I would be inclined to say that the leader-\nship seems to me to have an increasing cognizance of the\nmutuality of interests, but, as you drop from the leadership\ndown to the masses, I would say it is noticeable how the\nconsciousness decreases and that the masses as a whole have\nvery, very little recognition or aspirations toward regional\ndirection.\n:R. KIZER: I suggest that if we are to have the region-\nal pact in that area, it should be on a rather broad basis\nrather than a narrow one, that Australia and New Zealand,\nwhich have a keen interest in Asia, should be included in\nit along with India, Pakistan and the Southeastern countries.\nI suggest further that it should sheer away as much as possi-\nble from any military assistance and be placed squarely upon\n8. study of their economic situation as to what they can do\nto help each other and what in turn we can do to help them.\nIf we follow out pretty much the Marshall Plan in that\nABCRIVES\nrespect and keep away from the military aspects of the At-\nlantic union, I think we will 80 much farther and tend to\nrob that sort of association of its unpleasant Yankee im-\nBOYERNMENT\nperialistic aspects. In that field we must look for leader-\nship. I am not sure that we have yet found the leader, al-\nthough I have suggested earlier that India at least for the\ntime night be that leader. But I think Australia has a very\nkeen interest in that area and would help very greatly. Our\nexperience with the Australians that came into China with\nUNRRA was that they were some of the best people we had, and\nthey came because of the extreme interest of the Australian\npeople in the Far East. I know they are eager to work in\nthat context. With that sort of a broad union, looking to\na solution of the economic problems which press so greatly,\nparticularly the food problems, I think we might give en-\ncouragement. I feel there has been such 8 complete bank-\nruptey of military assistance in that area that to the\ngreatest degree we should sheer away from that.\nHR. HOLCOMBE: It seems to me that a regional pact de-\nrivcs much of its value from the relations between its mem-\nbers and that for the best results those relationships\nshould be the relationships that can be established among\nmembers who are not too unequal in strength and political\nexperience. Applying that test, there are very great\ndifferences between the conditions under which the Atlantic\nPact was negotlated and the conditions under which any\nPacific pact might be negotiated. It seems to me that we\nwould run the risk of being misunderstood if we should\nattempt to negotiate a Pacific pact without explaining very\ncarefully that we had something quite else in mind than we\nhad when we negotiated the Atlantic Pact. I think Mr. Kizer\nhas\n- 107 -\nhas stressed some very important factors in the problem\nwhich make it a different one and obviously that is only\nthe beginning of an analysis of the situation, but my own\nview is that the Department has been well advised in\nJoing slowly in that direction.\nMR. BUSS: Day before yesterday a Filipino official\nin the Embassy said: \"No Filipino could possibly oppose\nthe Pact. We have nothing to lose by it, and 1f it is\n3 means of getting us closer to the United States, any-\nbody would be for it.\"\nI would suggest on a pact that there are two regional\ngroupings, at least, which would have to be taken into con-\nsideration if you are going to negotiate for a Pacific pact.\nI am thinking of the Southeast pact which stems from the\noriginal Australian-New Zealand agreement. You can't ignore\nthe existence of the Asian Congresses. I think the two\nmeetings they have had show those groupings must be had in\nmind. A caution which would also be in order would be the\nvery precarious nature at this point of all three proponents\nwho have been identified with the Pacific pact to this point.\nEither Quirino in the Philippines or Phibun Songgram in\nThailand or Chiang in China would be very wobbly props for\na Pacific pact policy.\nIR. DECKER: Mr. Chairman, would not a major obstacle\n11.\nbe the very disturbed condition, to put it mildly, of that\nROVERTMENT\nwhole peninsula of Burms, Siam--I don't agree that Siam\nis a stable situation by any means--Indochina and Indonesia?\nIt would seem to me until there has been some clarification\nin that area, some stabilization, that anything approaching\na political pact might very well leave us holding the bag\nfor a reactionary régime or a régime which would be shortly\nrepudiated by the people themselves. It isn't clear yet\nwhat the people of Indochina want or what they are going to\nget, nor is it true of Burma or Indonesia. Until those\nfactors are clear it doesn't seem to me we have a sound\npolitical basis for this kind of move. Some loose cultural\nassociation might be in order, some association of certain\ntypes of mutual assistance, but certainly not something that\nwould tie us down to governments now existing in a number of\nthese countries.\nMR. FAIRBANK: Along that line of thought shouldn't we\nconsider that perhaps in China by aiding a régime which\nfaced & revolution we contributed to its downfall because\nwe let it rely upon our aid instead of meeting its problem\nof revolution? Don't we face the difficulty that if we do support\na\nCONF\n108 I 1\na régime in any country which is going through rapid changes,\nunless our support is in a vory wide and proportionate\nmanner in all aspects of the society, not just in politics,\nwe run the danger of supporting it as an alternative to its\nsolution of its problems and it begins to rely upon us in-\nstead of coming to terms with its revolution. So that we\ncan be the kiss of doeth in a purely political arrangement.\nConsequently, our political arrangement must be part of a\nmuch broader approach on economic lines too.\nCHAIRM N: Would that lead you to say 1f there were a\ncontinuance of movement in the area for some such grouping\nthat It would be better for the United States not to be\npart of the group, to perhaps encourage them to 50 ahead,\nbut to keep out?\nMR. FAIRBANK: J. should think it would be excellent\nfor us to keep out 8.3 far as we possibly can, that is,\nkeep our political connections minimal SC we maintain maxi-\nmum flexibility regarding any particular régime. A régime\nwhich we begin to support when it looks excellent, 1f we\nsupport it too strongly, may become reactionary in the\nsense of not keeping up with its own situation. We can't\nSEAL\nafford to tie ourselves, it seems to me, to political régimes\nbeyond the minimal point to get the result you want.\nMR. PEFFER: Don't you first have to ask this question:\n\"Would there be any chance of such an alliance?\" I am 1m-\npressed by what Mr. Herod found by his own observation, the\nlack of any mutuality. Is there any mutuality there except\none, a fear of Communism and reliance on America? America\nmay give the kiss of death but can there be any birth with-\nout America? If that is true, is there anything genuine,\naside from Mr. Buss's point, if we let it go? Under certain\nauspices we kill it right away. You ask yourself, would\nthere be such a pact without our encouragement and support?\nIf there would not be I should say that would fairly well\ndefine It as unnatural and not very likely to survive, in\nwhich case we are associated with something that is going\ndown. I think we ought to give up. If it goes on its own\nmomentum, if 1t grows out of its Asian Congress, well and good,\nbut otherwise not. We ought to keep out until it is\nstarted under its own genius and power.\nMR. MURPHY: I would agree with Mr. Peffer and also\nwith Mr. Docker that the political times are not propitious\nfor either a Facific pact or for & Southeast Asian group.\nI think it is quite clear that Australia, primarily, and\nNew Zealand behind her have been very, very anxious for a\nPacific pact. They had 8 very narrow squeak during the war\nwhen\nfine 109 the\nwhen the Jupanese practically came into Australia, and they\ndon't want that to happen again. Obviously the Australians\nwould be the first to oppose an association such as what was\nproposed by Chiang Kai-shek recently. I don't think such\nan arrangement between Australia and New Zealand and the\nthree who were recently promoting a pact would be fessible.\nIn Southeast Asia most of the countries are in 8 great\nstate of flux and I don't believe would be stable enough\nto support such a pact.\nCR. TALBOT: The history of the entire people's rela-\nJons since that Congress in Now Delhi in 1947 has suggested\nthat there is no effective basis for strong political oper-\nation with various countries, but at the same time the\nleaderships are groping toward some sort of mutuality, but\nin groping they have a very strong psychological feeling\nthat this is their own groping. The greatest point of\npride in New Delhi in 1947 was the fact, \"We are doing it\nnow\". Asians have previously met under the aegis of Euro-\nbean countries. This is the first time in 200 years they\nhave come together. It seems to e the flowering of that\nspirit has to procede any effective grouping of these\ncountries.\nMR. COONS: May I conclude that this discussion with\nreference to regional association is almost entirely at\nthe political level and that we really haven't discussed\nthe question of the economic side, that there is conceivably\nmuch to be said on the aspect of a regional economic approach.\nTRUMAN\nBRUNY\nNATIONAL\nRECORDS\nINVOICE\nMR. S. C. BROWN:\n15.\nSERVICE\"\nBOYERNMENT\nCONF\nOIL 1 $\nMR. S. C. BROWN: I understand you would like a few\nwords said about the economic aspects of the southeast\nAsian question. I would like to say that this concept of\na Marshall aid program for Asia is not altogether new to\nthe Department; 1t has come up indirectly, you might say,\nin meetings of the Economic Commission for Asia and the\nFar East. That United Nations body has concerned itself\nvery largely with the industrial needs of Asia, and some-\nthing like a year ago they appointed a committee which\nsummarized the reconstruction and development programs of\nAsia and the Far East. based altogether on local and\nnational programs, and they came up with a figure, I think,\nof 13 billion dollars as being the requirements in terms\nof United States dollars. Now of that, six billion was\nrequired in foreign exchange and it was perfectly obvious\nthat they expected that six billion dollars to come from\nthe United States. It also appeared that these respective\nnational programs had not been drawn up with much regard\nfor realism. They were expressions of hope rather than any\nblueprints for something useful. We have constantly in\nthis Economic Commission for Asia and the Far East had to\nface just that problem of these countries in a sense try-\ning to put us on the spot. They drew their requests for\nthe industrial items they needed from the industrial powers -\nthe Western industrial powers, they say --- but it is quite\nevident that by \"Western powers\" they mean the United\nStates.\nThe economies of these areas are not interdependent\nin the same way that the economies of Europe are, for in-\nstance, and you would not in all probability get in those\nareas through the expenditure of aid funds on a large\nscale the accumulative and multiplying effect that you\nget by expenditure of similar funds in Europe. The third\npoint, which I think has been overlooked in discussion of\nthis problem here previously, is the effect internally in\neach of the economies of the expenditure of large sums in\na program of that kind because when you are putting some-\nthing like, say, six billion dollars of foreign exchange\nin goods into an economy it does require a very large ex-\npenditure concurrently of local funds. In other words, you\nare creating an inflationary situation which might have\nvery serious effects. The fourth point which has appeared\nin our consideration of the matter is this: That even\nassuming that you might be able effectively to industrialize,\nsay, India and southeast Asia and those regions, you can-\nnot be by any means certain that you will actually make\nthem\n- 111 -\nthem any better off, because of the population problem.\nI am sure by the time your process of industrialization\nis completed your population may well have caught up with\nit or even gone beyond it.\nThere is another aspect, and that is this: A tenden-\ncy which has appeared in this ECAFE body to regard the\nregion too much in regional terms. We feel there may be\na tendency for them to think of themselves as a more or\nless closed economic unit and we, on the other hand, are\nvery much interested in integrating that region into the\nworld trade picture. I am sure it is quite apparent to\nall of you that in pre-war days, by and large, the trade\nof the United States, particularly with southeast Asia,\nwas the balancing factor in our trade with Europe. Now if\nsoutheast Asia is to become more or less a self-contained\nunit, that is likely, certainly, to have effects elsewhere\nwhich would not be altogether desirable. Now for these\nreasons, among others, we have been inclined to go slow\nin the concept of an over-all program of the Marshall type\nin that part of the world.\nI should like to devote the rest of my remarks to the\nquestion of China. The basic fact about the Chinese\neconomy 1s the fact which has been implicit in all the\ndiscussions at this table, and that is China's poverty.\nFrom 1910 to 1937 China had an average annual deficit on\nmerchandise balance of trade of 135 million. In normal\ntimes that was, of course, made up by remittances from\nemigrants abroad, by expenditures in the country, by foreign\nmissions and diplomatic, consular and military establish-\nments and things of that kind. Moreover, it is not only\nthe general trade deficit that is important but it is the\nparticular commodities in which these deficits occur. For\ninstance, in the five years from 1933 to 1937 China\naveraged annual imports of over half a million tons of\nwheat, of nearly 900 thousand tons of rice. In other\nwords, it is a deficit economy over the years in food-\nstuffs as well as in other things.\nn\nNow another point to keep in mind is that China's\nexports as of now are in a relatively weak position in\nthe world market. There is nothing that China supplies\nto the world for which there are not alternative suppliers\nor adequate substitutes, and I think that was made quite\nclear by the experience during the last war, when we got\npractically nothing out of China. Now I have spoken about\nChina's being a deficit economy even in the sense of\nfoodstuffs.\nCONF\n- 112 -\nfoodstuffs. But we shouldn't forget that during the war\nalso China got along without imports of food from the\nrest of the world. In other words, by taking a lower\nstandard of living they can survive. Now that is a situa-\ntion that the Commies are taking over. Their program,\navowedly, is a program of industrialization. They say\nthey intend to raise China from an agricultural to an in-\ndustrial state rapidly. Some of the more hopeful of the\nparty leaders speak of 10 to 15 years; others speak of\nlonger periods. They have not attempted to socialize or\ncommunize the whole economy. What they are doing 1s to\nintroduce what might be called a mixed economy. They have\ntaken over all the enterprises which were formerly in the\nhands of the National government, and that covered a good\nsector of the economy. They are also confiscating what\nthey call \"bureaucratic capital\", which accounts for\nanother substantial part of the economy. But they say\nthat they intend to protect and encourage private enter-\nprise at the same time, and their reason is very logical\nbecause they say production comes first. That is the\nemphasis of their whole program.\nTHE\nMR. STALEY: Would you explain at that point what\nthey mean by \"buresucratic capital\"?\n<<\nMR. BROWN: It has never been carefully defined, but\n1t appears to mean the enterprises owned by the Chiangs,\nthe Kungs, the Sungs, and the Chens. They speak of the\nfour bureaucratic families, and I presume there are some\nfringes around that too which they include. In that\nconnection, they have said that they intend to respect\nthe private ownership of shares in enterprises which are\njointly operated by government and private capital. In\nfact, what they have done up to now has hardly been en-\ncouraging to private enterprise. That may be because of\ncircumstances which they couldn't change, but there has\nbeen heavy taxation and, of course, there has been a stag-\nnation of business due to the practical cessation of\nforeign trade and to the blockade. There have been labor\ndifficulties affecting both foreign and Chinese firms.\nThe Communist propaganda, of course, led labor to believe\nthat it would definitely have the upper hand and there\nare indications that even the Communists themselves may\nbe somewhat disturbed at some of the excesses. But in\nany case two very important difficulties, I think, must\nbe faced by the Communists as a result of the poverty of\nthe country and of their program as they have expounded\nit. The first has to do with their relations with the\nindustrial\n113 $ I\nindustrial laboring classes. They emphasize production\nat all costs. That means, of course, that the workmen\nhave got to become more efficient and take less perhaps\nin the way of wages than their bargaining strength with\nCommunist support might otherwise enable them to get.\nThe other problem is the problem of financing the neces-\nsary imports of capital goods to proceed with this in-\ndustrialization program. At present the Communists have\nno foreign exchange reserves to speak of that we know of.\nThey have no gold reserve. It would appear, therefore,\nthat they will have to finance these imports almost entirely\nby the proceeds of current exports. Now the bulk of current\nexports is very likely to be the product of the farms.\nThey will rely on the Manchurian soy beans, bristles, tung\noil, and things of that kind. It will mean that by one\nmeans or another they will have to acquire from the peasants\nsufficient quantities of those goods at a low enough price\nto enable them to pay for the necessary imports. Now if\nthey intend to industrialize at a rapid rate, that means\nthat they will have to exercise ever greater pressure on\nthe farming population to get what they need, or else they\nwill have to seek foreign loans and credits or admit pri-\nvate investments into the country, and the last two alterna-\ntives seen to be directly contrary to their program and\ntheir party principles. So, as I see it, they are in a\nvery difficult position. It doesn't mean that they might\nnot succeed over the long run 1f they are willing to take\na less rapid pace of industrial development. It does not mean\nthat economic pressure denying them these industrial goods\nor even the other imports would necessarily succeed in\noverthrowing the government. But with or without that\nthey are still in a very difficult position. What we want\nto do would depend, I think, on our estimate of the effects\nof various courses that we might take, and, as we see it,\nthere are, broadly, three alternatives: We might try to\nrestrict supplies of goods to China to such an extent that\nit would endanger the stability of their government or\ncompel them to come to us. We might display what I some-\ntimes think of as a judicious disinterest in their prob-\nlens -- buy from them what we find useful and sell to them\nwhat they can afford to pay for -- make no loans or invest-\nments; in other words, let them stand on their own feet and\notherwise at most take the necessary precautions to prevent\nthe Russians from using them as purchasing agents to get\nwhat they can't get directly from us. The third alternative\nwould be to lond such assistance as we can to them in\nstabilizing the economy and rehabilitating them. It would\nnot necessarily mean helping them to expand it; it would\nmean such things as encouraging trade, encouraging long\nprivate\n- 114 -\nprivate loans and investments where possible; it might\neven include government assistance, say, through resump-\ntion of ECA aid or possibly Point 4 assistance. Those,\nroughly, are the three alternatives.\nNow the first alternative -- that of restriction --\nhas got to be considered in line with the facts, and the\nfacts are these: If you really want to restrict China's\ntrade for the purpose of upsetting the government you\nhave got to restrict such things as wheat, cotton, the\nwhole range of commodities. And the second point is that\never such a policy or a somewhat less restrictive policy\nwould not be effective unless we could obtain the coopera-\ntion of other suppliers to China, which is highly unlikely.\nWe have been, of course, a large supplier of manufactured\ngoods and petroleum to China, but we are not the only\nsupplier, and if we should cut off our trade while the\nothers permit theirs to go freely, it is likely that we\nwould not impede in any significant way the progress of\nrestoration of the economy, while we would at the same time\nput our people -- our nationals out there - in a very\ndifficult position and cut off our businessmen from legiti-\nmate trade.\nThe second alternative would mean merely that we\nwould stop the back door of Russia, you might say, to the\nflow of these strategic commodities, but otherwise we\nwould not take too great an interest in what the Chinese\nobtain. There are sound arguments in favor of that. In\nTHIS\nthe first place, the Chinese economy is at such a level\nSTATE\nAND\nthat it could hardly be developed in any short time in\nUNITED\nNEW\nSERVICE\na way that would be dangerous to us. On the other side,\nthere is the argument that if we want to detach the Chinese\nBUYERKMENT\nfrom the Russians the way to do it is to shut them off\ncompletely and show them what they are missing. But that\ncould be effective only if they actually do miss it,\nwhich, as I have said, is unlikely.\nNow the third alternative -- that of actively assist-\ning them -- it seems to me, proceeds on the assumption\nthat you can buy the friendship of people who are your\navowed opponents. There are other arguments in favor of\n1t, perhaps -- the humanitarian argument and all of that ---\nbut in the present situation, where we don't know quite\nwhere they stand, it seems perhaps unwise to make a bet\non where they will stand eventually.\nThere\n- 115 -\nThere is another consideration that I would like to\nmention, and that is this: In a situation of uncertainty,\nsuch as this is, and in circumstances apparently where we\ncannot affect it directly, it would seem advisable not to\nget ourselves into too definite a position until we know\nwhat developments will be, but at the same time to put\nourselves in such a position that we can immediately take\nadvantage of what developments may occur.\nLR. TAYLOR: I wonder if we aren't in danger of under-\nestimating to some extent the strength of China's position\nin respect to the rest of Asia. It seems to me in relation\nto Japan they can put us on the spot, they are in a very\npowerful position. The coke and coal, I understand, for\nJapanese industries has to come from China. I believe you\nsaid there were alternative supplies or substitutes for all\nChinese exports. I suppose you could get coke and coal\nelsewhere but it would have to come a long way. China is\na natural market for Japan. That is another reason why\nthey would be in an extremely powerful position.\nThirdly, they are in a position to whip up anti-\nJapanese feeling in all parts of Asia, and in that way\nembarrass any effort we might make toward extension of\nJapanese products to other parts of Asia, which of course\nis necessary to ever get rid of the $450,000,000 a year\nthat we pay into Japan now. It seems to me from that point\nof view they have a good many bargaining positions on their\nside.\nMR. BARNETT: I think what George Taylor has pointed\nto is certainly an important problem for the United States\nand for Japan and for China. We all know that about 40\npercent of Japan's pre-war trade was with Manchuria, North\nChina, China, Korea and Formosa. That trade since the end\nof the war has practically dried out for a number of\nНАПОНАL\nobvious reasons.\nMA\nIt is our conclusion, having made various projects\nas\nfor the development of Japanese trade over the future,\nBEIERVMENT\nthat Japan must trade with North China and Manchuria and\nKorea and Formosa if it is to become self-supporting\nagain. At the present time we are meeting the Japanese\ntrade deficit to the tune of about 400 million a year.\nWe are making, in cooperation with the Japanese, con-\nstructive efforts to enlarge Japanese trade. This spring\nand summer, for instance, a mission was sent to South\nAmerica and a series of negotiations resulted in the\ngeneral\nONE\nIDENTIAL\na 116 -\ngeneral conclusion that if all goes well there may be a\nflow of trade of 100 million each way into South America,\nwhich 1s about 400 per cent more than pre-war. There is\n& demand in South America for Japanese goods.\nA sterling agreement was worked out by the Japanese\nand the British Commonwealth, which ran into, I think,\nabout 120 million sterling. The difficulty there is that\nwhereas the Japanese can provide the exports, the sterling\narea has not been able to provide the means for payment,\nand at the present time Japan is holding a very large\nsterling balance.\nThere is some trade between Japan and India, and in\nthis connection I wanted to mention this morning that in\nIndia and southeast Asia as a whole there is very little\nreluctance, in fact there is no evidence of any reluctance,\nto buy Japanese goods, very surprisingly, and with one\nexception, which is the Philippine Islands. In India\nthere is a good doal of interest to get from Japan tech-\nnical assistance of the Point 4 variety.\nHaving added up all these very optimistic prospects\nfor Japanese imports and exports and bearing in mind the\nloss of the silk market in this country, we still feel\nJapan cannot balance her trade without substantial re-\nsumption of commercial operations with the continent. As\nto the risk which Mr. Taylor pointed to, the risk, that\nis, of an unwholesome dependence of Japan upon the raw\nmaterials of the continent, some of us feel that an\neconomy which is 85 percent agricultural is a very sluggish\neconomy, and benefits from trade with Japan will be bene-\nfits realized arithmetically, as 1t were, slowly over a\nperiod of 15 02 20 years, whereas Japan's benefits from\nresumption of trade would be instantaneous and geometric,\nin a sense.\n100VB\nNow Japan needs to have a degree of internal sta-\nbility and a degree of normalization of her over-all\n83.\neconomic relations abroad in order to develop export\nmarkets which can in the long run be alternative to the\nChina market and give her an independence in dealing with\nChina in the long run. Therefore, our feeling in the\nshort run is that Japan stands probably to gain more from\na continuation or a resumption of trade relations with\nChina than through attempting at this time to get along\nwithout China and continue to depend exclusively upon\nthe United States subsidy.\nCHAIRMAN:\nCONFIDENTIAL\n- 117 -\nCHAIRMAN: I wonder if we could address ourselves to\nthe question, which is a very pressing constant policy\nquestion in the Department, what should be the attitude\nof the United States toward American trade with Communist\nChina? Should we discourage it? Should we prevent it?\nShould we encourage 1t? Should we tolerate it? There is\na central problem there which I think is obvious to all\nof you and which does confront the Department.\nMR. BRODIE: Isn't there another question which be-\nlongs with that, what are our expectations concerning\nCommunist Chinese willingness to trade with Japan except\non terms which may be from our point of view unacceptable.\nMR. COLEGROVE: Touching upon the general subject you\nhave mentioned, and Mr. Brodie's question, it is rather\ninteresting to note that within the last three weeks a\nleading Japanese columnist by the name of Nosaka, who is\none of the three leaders of the Communist Party in Japan,\nmade a public announcement to the effect that he person-\nally, representing the Communist Party, would be able to\nbring Japanese morchants into touch with Chinese merchants\nto establish trade relations. This would indicate that\nthe Communist Party in Japan was trying to jump the gun\non SCAP or the American Government in establishing such\ntrade. Now I think It is generally agreed that if Japan\nis going to rehabilitate her industrial position, it is\ngoing to be absolutely necessary to have these markets.\nMr. Barnett said 40 percent of the imports of Japan came\nfrom China and Manchuria before the war. I think it is\neven a little more than that, about 42 percent, and that\nis a market that can't be ignored. Japan will have dif-\nficulty enough in getting new markets or re-finding her\nold markets in the United States, now the silk trade has\ncollapsed, so I think we can 60 on the assumption that\ntrade must be revived between China and Japan. If that\nis the case, it will be better for us to try to get ahead\nof the Communists in making these trade agreements, and I\nthink Nosaka's assurance that he could arrange trade\npersonally between or officially with the Communist Party\nbetween Japanese merchants and Chinese Communists shows\nthat there is willingness among Chinese Communists to\nenter such trade.\nMR. VINACKE: On Chinese Communist terms?\nMR. COLEGROVE: Probably.\nNE\nSIRVICE\nMR. VINACKE:\nCONF IDENT TAB\n- 118 -\nMR. VINACKE: That is quite important, I think, to\nkeep in mind. A broader proposition was, can this trade\nbe opened or ré-opened from a Chinese Communist side on\nterms that would be acceptable to us, the opposite of\nwhich is on terms acceptable to them.\nMR. BRODIE: I gather from what Mr. Barnett said\nthat the Japanese are much more dependent on trade with\nChina than Chinese are on trade with Japan. It seems to\nme that is an exceedingly important part of this problem.\nMR. ROSINGER: I don't think we can find out whether\nChinese Communist terms are acceptable until trade is\nactually launched as a real possibility, because my 1m-\npression is that in all trade with the United States, be-\ntween the U.S. and other countries, and so on, you first\nhave to have an actual proposition come forward and then\nyou reach your decision. I think 1t would be very un-\nfortunate if on the basis of a possibility that Chinese\nCommunist's terms might be unacceptable we didn't find\nout what those terms actually were. I think another con-\nsideration is that in most trade that goes on you will\nfind some terms acceptable and some not, so that would\nseem a day-to-day process of bargaining on the part of\nthe people, private and official, who are actually ne-\ngotiating the trade.\nMR. BARNETT: Certain commercial relations are under\nconsideration now between Communist China and Japan. The\nrelations are not direct, they are through commercial\nagencies, some of them in Hong Kong and some elsewhere,\nwho have contacts with the Japanese and contacts with\nthe Chinese Communists in Tientsin. The question, there-\nfore, poses itself, not whether there will be contacts\nbetween Communists in Japan, but whether there will be\nsteps taken to prevent a flow of commerce which makes\nsense in terms of private profit for private or govern-\nmental agencies acting on behalf of their principals.\nAs to the bergaining position of Chinese Communists\nand the Japanese, I would say the bargaining position of\nthe Japanese at the present time was much stronger than\nthat of the Chinese. In the long-term, the considerations\nwhich Mr. Brown has mentioned might make the Chinese Com-\nmunists' bargaining position stronger, but now the Chinese\nCommunists' modern economy is practically prostrate. Its\ntransportation system is worn out, its communications\nsystem is worn out, its factories lack spare parts, its\ngenerators\n- 119 -\ngenerators are wearing out, their spare parts for the re-\nhabilitation of the minimum modern equipment for'a & modern\neconomy must be found in Japan and the bargaining position\nof the Chinese who have not restored their mines into\noperation, have not restored transportation system to a\npoint where they have large stockpiles in the ports, etc.,\nis comperatively week, so in the short run the bargaining\nposition is not in favor of Chinese Communists.\nMR. BROWN: In this past year the Chinese Communists\nhave had some of the most serious natural calamities that\nhave befallen China in the past 30 years. They have had\none of the most serious droughts in North China and North\nManchuria in 30 years. That was followed by serious floods\nboth in the north and along the Yangtze and they are in an\nextremely difficult position at the moment. We have informa-\ntion, for instance, that they are desperate for such things\nas raw cotton, rail materials and gasoline and things of\nthat kind, and they have not got the exchange to buy it.\nThey want to barter of course.\nMR. MacNAUGHTON: A long time ago we were on paper\nmoney in this country and somebody said we ought to resume\nspecie payment. Cleveland. I think, said the way to\nresume is to resume. We will never get this world going\nunless we start trade and I would start trade with Com-\nmunists in China until I found out they were impossible\nto do business with.\nMR. MURPHY: I feel that if we don't trade with the\nCommunists in China it is pretty obvious that since they\nhave a very crying need for goods it simply amounts to\nforcing them to trade with Russia on Russia's terms.\nRussia, I think, has a very comparatively small surplus\nof goods to give China. Therefore, I think she will be\nfor giving them and sure that she gets the best possible\nterms for them.\nSecondly, our trade with Communist China in the be-\nginning, so far as we can see, will be fraught with great\ndifficulty. The Communists seem to be doing all that\nthey can to insult us, at least verbally. I think we\nwould be very foolish and lacking in poise if we allowed\nthat to be a consideration as long as we are not\nphysically barred out. I think that the Communists in\nChina are going to have a very hard time establishing\nthemselves throughout the country and among all the\npeople. I think that before they do establish themselves\nthey\nCONF\n- 120 no\nthey will have had to modify their program very materially.\nWhere that will end up in the course of a number of years\nnobody here I think can now foresee, but if we disregard\ninsults and difficulties and are still in there then we\nstand to efit from any modification of the Communist\nprogram that is forced on them. If, alternatively, we with-\ndraw, then when the modification has taken place we will not\nbe there to benefit by it, and possibly the modification\nwill not take place because the Russians will be in there a\ngreat deal more securely than they would be had we stayed\nin.\nMR. HEROD: I have a very definite feeling that we\nshould not discourage US trade with China because its\npolitical government happens to be Communist except in so\nfar as those particular war or strategic materials are\nconcerned which might be used in a military sense against\nus. I think it would be most ill-advised to do it.\nFirst, I don't think you could do it effectively to\nthe disadvantage of the Chinese. I think the absence of\noil would be an inconvenience but I think that the Chinese\nstandard of living and of life is such that it would be\none more irritation on the part of a few people, but it is\nso predominantly agricultural that we would not really\nattain any fundamental objective and we want from China\nantimony and tungsten and certain other things for our\nindustrial machine here. I think we should be willing to\nsupply, let private traders supply, various goods for the\nChinese which may not be in the classification of strategic\nmaterials. I would not extend any government credit. If\nthe private individuals want to risk their own money and\nlose it or make on it, I would more or less let them do\nwhat they pleased, but I certainly would not discourage\nANYL\ntrade in non-strategic items between the United States and\n-\nSERVICE\nChina. I think if the British and other countries which\nare lower-margin so far as their economies are concerned\nwill not follow along, China will get what it wants. When\nGod and Mammon are on the same side, you can of course make\non awfully good case, When God and Mammon happen to be on\ndifferent sides, you sometimes have to capitulate to\nexpediency. I have a feeling that if we place our\naspirations on a little too high a plane of nobility that\nwe business fellows will capitulate to expediency and I\nthink the rest of you will do it too under different sets\nof words.\nNow, as far as the Japanese trade with China is\nconcerned, I think you cannot disassociate completely this\nquestion of trade from the question of investments. We\nhappen\nCONT\nIDENTIAL\n- 121 -\nhappen to trade in China. At the outbreak of the Japanese\nwar, my own companies had about 2400 employees in China. We\nhave never since the war gotten up to more than about 800\nemployees. Trade is very difficult at the present time, but\nwe shipped 10 days ago a power plant for Yu Fund, a cotton\nmill down on the Yangtze, up to Tientsin. The thing is\nthere and we have received the dollars and I would be\ninclined to think that that would be a legitimate sort of\nthing to undertake and do. We likewise received an order\nlast week with corresponding dollars from Kunming and I\nwon't tell you the name of the customer because somebody\nwill tell my competitor, but some trade is going on. It is\na mere trickle and I think it would be highly undesirable to\ncut that trade on private account or to discourage it, and\nI think it would be ineffective to discourage it as I don't\nbelieve it would obtain a political objective of any greater\nsecurity for the US or following any objective of the US\nthere,\nAs to Japanese-Chinese trade, I also have some pretty\npositive ideas. I had & long talk with General MacArthur\nand we have decided we would not take back at the present time\nour investments in Japan. A portion of that is due to US\npolicy. US policy is not sufficiently clear for us to have\nany expectancy that we would not be sticking our neck out\nunder a guillotine if we did that. The companies with\nwhich we were associated in Japan rose to approximately\n100,000 employees during the war. When I was there last\nyear it totaled 34,000 employees and they have now got,\nperhaps 25,000. They have been ordered by the new law that\nhas gone through of de-concentration of industry, to divest\nthemselves of 27 of their 41 plants. They have been ordered\nby the law, which was put through by Americans going around\nto the Diet and telling the Diet that it should be put\nthrough, to likewise sell machinery and go out of business\nin certain particular lines. They had been ordered in\naccordance with the law of Japan, which the Americans have\nnot been wholly oblivious to and have had some irons in\nthe fire in putting through, not to have interest in any\nother companies, and the new ideas the US Government has\nbeen insisting on in Japan have unfortunately been a\ndeterrent to many of us to go in.\nGeneral MacArthur was kind in inviting me to come\nout there, writing a letter asking us to come with our\ntechnology, was very kind in expressing appreciation, and\nwhen I gave an interview indicating I thought the situation\nwas\n(\n- 122 -\nwas not right, 1t was not an hour and a half until the\nPrime Minister of Japan sent his automobile asking me to\ncome to see him, the Governor of the Bank of Japan asked\nme to come to see him. They were extremely interested,\nbut we by our own actions are urging rather deterrent\nthings to the economic rehabilitation.\nWe have discussed this with the State Department and\nthe Department of the Army and I think very constructive\nsteps are now being taken to try to correct some of them,\nbut P think we are going to have to let Japan as a low-\nmargin country trade with China. I think we are going to\nhave to let Japan develop a merchant marine, because\nJapan's shipping has been one of the prominent elements\nof her competitive position in the past. She has been\nable to buy cotton from India and other places, and bring\nit into Japan in her own ships, work it up into textiles\nand ship 1t back into India at lower prices than the\nBritish could ship and a lower price than even the Indians\ncould make in some particular cases, and our own former\nassociated company in Japan has had a technical mission\nout and been requested by the Indians to turn over their\ntechniques. They have asked us about it. We have said it\nis a good thing to go ahead and do 1t. I think you have\ngot to have the market for Asia open, whether it is going\nto be Communist dominated or not as far as political\ngovernment is concerned, to the private traders, to let\nthe Japanese recover, to let the world recover, and I\nwouldn't handicap that too much. I would be a little bit\nmore liberal in permitting Japan to trade with China than\nI would United States trade if the necessity arose because\nJapan is a lower margin country than the United States.\nWe can afford to do a lot of things which some of the\nother countries can't always afford to do, and I feel very\npositively it would be unwise to limit that trade other\nthan in certain strategic things where an element of\nsecurity might be involved.\nE\nMR. MachAUGHTON: On what Mr. Murphy said about not\nbeing frightened off by Communists, I was reminded of a\ncase in the bank. We had a customer to whom we had loaned\na good deal of money. He had machinery to sell, tried to\nsell it to a mill man. He came to me and said, \"I had a\nterrible time.\" He said, \"He called me an s.o.b. but he\ndid it in a nice way, so I sold it to him anyway.\" You\nlet trade alone. As long as it makes a deal that is a\ndeal that will stand up, we will take care of ourselves.\nMR. MURPHY\n- 123 -\nMR. MURPHY: I was just interested in a point Ur.\nHerod made when he talked about an installation he had\nmade recently In Kunming after we were talking about our\nconsulates in China and which ones we were keeping open\nand which ones would close, and among the ones being\nclosed was the one in Kunming. Mr. Butterworth when he\nwas discussing it said several times we had not had a\nconsulate in Kunming in the Years 1920 to 1930 or there-\nabouts, and that seemed to be a consideration. I have\njust wanted to raise the point that Kunming in the early\n'20's and Kunming, I would say, today, were two entirely\ndifferent places. In the early '20's Kunming was almost\nabsolutely isolated. The only approach was by French\nrailway from Hanoi. Since then, the Burma Road has come\nin; the road to Chungking, if it was a road in those days,\nhas certainly been improved. The road to the east, to the\nnorth-south Hankow-Canton railway, and the railroad into\nGuajo Province have been built since then, and I would say\nKunming is a much more open place than it was then.\nMR. rockefblier: It seems to me we have two basic\npossibilities in China. One is condemning Communism and\nthe other is to make them look to us instead of Russia.\nAs I see it, problems that come up under one heading may\nbe in conflict with the other heading, and I think that is\ntrue with the problem of trade. It seems to me we have to\nweigh in our minds as to which it the most important and\nthen have the courage to act.\nOn U.S. trade with China, my own reaction is that 1t\nshould be limited. It seems to me that the fastest way to\ncontain Communism is to discredit it in the eyes of the\npeople of China, It seens to me if the economy worsens,\nthis will arouse opposition to it, and opposition is\nessential if net leadership is to develop in China, and I\ndo feel that this new leadership is tremendously important.\nI appreciate that curtailing trade will be a source of\npropaganda for the Communists to use. They will say we are\nstarving the Chinese people by not continuing our trade,\nbut it seems to me whatever position we take in China, the\nChinese Communists will develop propaganda that will be\nagainst us, and certainly if by trading with China we do\nhelp conditions there, the Communists will be the last to\ngive us any credit for 1t.\nI realize this is a negative approach to the problem\nin China and 3 dislike very much negative approaches.\nTherefore. it would seem to me this would only be part of a\nbroader approach which would be of a positive, constructive\ncharacter, of the type that has been discussed here in the\nlast two days, the type of economic aid in the Far Past\ngenerally, educational assistance, information service,\nthings of that type.\nFinally,\nCONFIDENTIAL\n- 124 -\nFinally, I would say I realize this trade matter is\none that is very difficult for us to take a position on by\nourselves. It would seem to me basically important that\nwe be in touch with the British and work out some kind of\ncommon procedure with them.\nMR. PEFFER: If we restrict China trade, there is no\nuse doing it unless we can do it enough to hurt, and hurt\nmortally. There is no use doing it unless thereby we can\nmaterially contribute to the downfall of the Chinese Com-\nmunist regime. If we do that, if we can -- I don't think\nwe can -- that fact will be just as evident to the Chinese\npeople as it is to us, whether the Chinese people are Com-\nmunists or just ordinary Shanghai traders. If we know we\nhave been able to hurt them enough to cripple them, they\nwill know it. If they know, and crippling their economy\nis not an abstract matter for a textbook, it means millions\nof people don't eat. If millions of people in China know\nthey don't eat because of America, now tell me which will\nthat discredit most, the Chinese Communists or Americans?\nIf it discredits the Americans most, then does that dis-\ncredit the Russians even more? Undoubtedly, whether we wish\nto contain Communism or not, we wish to keep Russia out,\ndon't we? Shall we as Americans do most to keep Russia out\nby making ourselves as disagreeable as possible, by hanging\non us the onus of having starved the Chinese? Is this not,\nas Mr. Murphy said before, God's gift to Mr. Stalin? I\nthink it is.\nMR. COLEGROVE: It seems to me that the remarks by\nMr. Herod were extremely realistic. The point that we are\ninterested in right now is reviving Japanese trade, which\nwe agree is necessary. Japan needs food from China. On\nthe other hand, she needs a market in China for her tex-\n18311\ntiles and other manufactures. Now, if we are going to re-\nvive trade in Japan, manufacturing in Japan, we will have\nAT\nto, it seems to me, relax some of the interior controls\nwhich have been set up under SCAP. One of these controls\nunfortunately is the Zaibatsu legislation, to which refer-\nence was made, and another is the unfortunate extent of\nthe purge under military occupation. We have purged well\nover 200,000 of the best brains in politics and the best\nbrains in industry, and Japanese industry is going to find\nit extremely difficult to revive and expand and carry on\nan external import policy with the lack of the good brains\nwhich have been purged.\nOne thing I think is quite clear. At this time under\nthe Yoshida Government, if the U.S. should withdraw from\nJapan\nIDENTIAL\n- 125 -\nJapan at the present time, one of the first things that\ngovernment would do would be to repeal the Zaibatsu legis-\nlation, and of course to \"unpurge\" the purgees, especially\nthe brains of industry which have been purged. This should\nbe taken into consideration with reference to our Chinese\npolicy and in respect to reviving trade relations between\nJapan and China. One other thing with reference to the\nZaibatsu legislation; that legislation originated, I am\nsorry to say, among the trust-busters in our own Department\nof Justice. It was a great mistake that this was a policy\nforced upon Japen.\nI call attention to the fact that Japan was able to\ncapture a large part of the textile markets in Asia in\n1929, 1930, and 1931 by very peaceful invasion of those\nmarkets under the Zaibatsu economy which existed at that\ntime. That economy eliminated a certain kind of competition,\nit introduced a better system of manufacturing, So that the\nJapanese were manufacturing cotton goods even below the cost\nof the British manufacturing. They had the advantage, of\ncourse, of being nearer the markets in Asia. It seems to\nme that the time has come when our Government should direct\nSCAP to relax the Zaibatsu legislation and to unpurge a\nLarge part of the purgees.\nMR. KIZER: It seems to me that the time is ripe for\na review of some of the difficulties that face the Chinese\nCommunists themselves. What is going to be their position?\nIf they could have moved on, privince by province and\nlocality by locality, they might have rationalized the\nagricultural economy with fair success, but the same dif-\nMARRY\nficulty comes to them that came originally to the Kuomintang\nE\nin that they have all China rather suddenly placed in their\nNOVERNATION\nlap with very great difficulties indeed. Late reports in-\ndicate that unomployment is on the increase, that inflation\nis now entering into their currency, as is only natural in\ncarrying on a war on a great plane, much larger than they\nhave heretofore been carrying it on. To meet that in-\nflation which arises --- of course, they are spending more\nthan they can possibly raise by taxation --- they must as\nquickly as possible begin to discharge men from their armies\nand put them back to work, and there will probably not be\nfarms or land for them to work.\nI surmise when that time comes we will see some of\nthese elements running into the hills and taking up the\nancient and honorable practice of banditry and there will\nbe confronting the Chinese Communists not only these im-\nmediate difficulties but permanent difficulties of trying\nto\n126 1 1\nto solve the problems of a country that has more and deeper\nand bigger problems than any other country. The Communists\nhave certain promises which they must redeem and which they\nwill have very great difficulty in redeeming. I doubt if\nit is necessary for us to try to bring pressure from the\noutside to disillusion the Chinese people and their lead-\ners about what Communism can do for them. I think if we\nwill go on and keep on as reasonably friendly a basis as we\ncan, along the lines of trade such as Mr. Herod and Mr.\nMacNaughton and Mr. Murphy have pictured, I think we then\nwon't need to take the onus.\nLet us be sure that we don't intensify world antagonisms\nin what we do. World antagonisms are the climate in which\nRussia trades to best advantage. To the extent that we can\nbring about world reconciliation, we are doing more than in\nany other way to establish our own democratic procedures\nand our own welfare and I don't put my trust in any respect\nin the increase of antagonisms in this world.\nMR. TAYLOR: On just one point about Zaibatsu, I under-\nstand the policy has already been relaxed upon that. Cor-\nrect me if I am mistaken. As a friend of mine put it, we\nare putting the cartel before the hearse! I am not quite\nsure where the argument is now, but it seems to me that\nthere is a link between what we are saying this afternoon\nand what we said at the end of this morning, and that is\nthe possibility of alinement in the Far East. Whether that\nshould be military or not, I wouldn't like to comment on,\nI\nbecause I don't know all the military factors involved.\nTHE\nMARCHAL\nARGUIVES\nMI\nThey are more obvious in Europe, not quite so obvious in\nREQUIRE\nDISTRAY\nthe Far East. It does seem to me that this struggle is\nus.\nSERVICES\ngoing on in so many levels that we might pay attention to\nsome of them. and in this economic discussion it does seem\nto me to be important in that respect. Would it not be best\nto conceive of a kind of Zollverein in the Far East, an\neconomic customs union between as many countries as possible?\nIndia has been mentioned as the pivot of an Asiatic policy,\nand I thoroughly agree with that, but Japan has got to be\nbrought in too, We can anticipate within 6 months a fierce\npropaganda move on the part of the Chinese Communists to\nwhip up anti-Japanese feeling everywhere else in Asia. I\nthink we have got to face it head-on. We have got to get\nJapan back into, I an afraid, the old co-prosperity sphere\nand include India in it. If you build up a sort of economic\narrangement between as many countries as possible, I believe\nin trade with the Communist China on conditions, certainly\nnot giving them material for militarization, which will be\none\nCONFIDEN\n- 127 -\none of their first objectives, in such a way that there\nwill be a growing contrast between this economic union and\nChina, always leaving it possible, as we invited countries\nin Europe to enter the Marshall Plan, for them to come\ninto this on proper conditions. Thinking along those lines\nand particularly of propaganda lines as the way in which,\nof the many levels on which we are struggling with the\nSoviet Union, in this particular area we can do it most\neffectively.\nMR. VINACKE: For the record I am not sure that I want\nto be associated with Mr. Colegrove's \"we\" with respect\nto the general agreement that it is indispensable to the\nUnited States to revive completely the Japanese economy.\nIt depends on the conditions under which it revives, on\nthe conditions of its relationship with other economies in\nthe Far East. I just wanted to make that position clear.\nWhen Mr. Colegrove said \"We are agreed\", I am not in that\narea of agreement.\nBeyond that I would like to come back to the alterna-\ntives suggested to us by Mr. Brown. It seems to me that\nin relation to trade with Communist China, his second\nalternative is the one certainly which commends itself to\nme. That is to say, I don't think for a minute that there\nshould be on the part of the United States any financing\nof the trade with Communist China on a credit basis. Any\ntrade should be financed along the lines of Mr. Herod's\nsuggestions, where there is a demand for American products\nwhich are paid for cash-on-the-line and not with any\nlegacy left over of the problem of collections and can-\ncellations, and so on, no restrictions on trade, but no\nfostering of trade except in terms of a day-to-day mutual-\nity of interest. It seems to me that is the one way in\nwhich we can move economically without putting ourselves\nin a very bad position with respect to the Chinese, and,\nit seems to me, at the same time we may keep ourselves in\na position to move as Mr. Brown suggested, flexibly, as\nthe situation develops.\nTHE ASCHIVES NATIONAL - TIMET\n13.\nSERVICE\nMR. DECKER\nCORP\n- 128 -\nMR. DECKER: I don't believe it is entirely naive\nor a piece of over-rosy idealism to draw a distinction\nat times between the Chinese people and the Chinese\ngovernment. I do believe that that distinction is a\nvalid one. I see the Chinese people as still cherish-\ning down in the bottom of their hearts, most of them,\na very high regard for the United States. They have\nbeen caught in 8. maelstrom of tragic circumstances and\nthey have been faced with impossible dilemmas, and had\nwe been faced with the dilemmas in the same terms and\nwith the same influence which they had, I am not at\nall certain that our decisions would not have been the\nsame 88 theirs. Now I know how difficult it is to sup-\nport the Chinese people or to assist the Chinese people\nwithout in indirect ways assisting the Communist govern-\nment, but I do believe that we can leave time and the\nundoubted difficulties that the Communist regime will\nmeet in China to deal largely with that question. And\n30 I hope very much that not only in the realm of\nprivate trade but in the realm of private relief or\nreconstruction work that may be undertaken by private\nagencies in China that the door will be left open.\nNow, mind you, I am not optimistic about the immediate\nprospects for being able to extend a large measure of\nthat sort of aid or relief to the Chinese. For one\nthing, we have got to justify it with the American\npeople, and the American people simply will not furnish\nthat relief if it has to be furnished on unreasonable\nterms. But let's not in our policy in any way close\nthe door for that effort.\nCHAIRMAN: We want to give you a picture of what\nthe overseas information policy toward the Far East\nhas been and is because we need your advice and counsel\nARE\non this, Mr. Sargeant will present the briefing.\nARERIA\nNOTWERWENS\nKR. SARGEANT: Our immediate objective in the pro-\ngram of the United States Information and Educational\nExchange Service are of two kinds. First, we are\nattempting to aline public opinion throughout the world\non the side of the United States and it has two aspects\nto it: a positive side, In which we are trying to\ndemonstrate that US policies are in effect to the self-\ninterest of other nations and other peoples; it is to\ntheir advantage to support these policies. I think there\nis a negative side. I think that is the demonstration\nof what the USSR and specifically those aspects of\nCommunism\n- 129 -\nCommunism which are represented by imperialism, aggression,\nbrutality, etc., really mean in terms of the lives and\nfutures of entire peoples and nations.\nIn the Far East I will pose five or six specific\ngoals that we are striving for. For one thing, we are\ntrying to drive home to the peoples of the Far East the\nfact that there is an inminent danger of Communist pene-\ntration and of possible conquest; that this does not mean\nwhat they have been led to believe of a Soviet paradise -\nthe folklore and myth. We tell them what has been found\nto be the case in satellite countries in Europe under Com-\nmunism. Secondly, we have to let people of the Far East\nknow what constitutes the fertile growing grounds for Com-\nmunism. I would hope that our policies are so shaped that\nwe will be prepared to do things which correct those con-\nditions under which Communism can grow and can spread.\nFurther we are attempting to encourage certain types of\ntendencies to separate and divide among the Chinese Com-\nmunists and other known Communist parties. In part we\nplace some emphasis on what has happened in Yugoslavia and\nother tendencies in Western Europe. We are hitting at a\nmyth that is held too widely in the world -- the belief\nthat the United States in some ways is really the proponent\nof reaction, that we are really the people that want to\nperpetuate the system of absentee landlordism or the ex-\nploitation of the masses by a small reactionary clique.\nWe are very much concerned with convincing the peoples\nin the Far East that their ultimate salvation does lie in\nclose cooperation with the countries of the West; that the\nWestern countries are in fact in sympathy with their\nnational aspirations.\nAlthough we can't operate in these areas where the\nCommunists control, we do have at least one officer of\nUSIE who is retained. They do handle certain reporting\nand caretaking functions, but there is no program of the\nkind that you people have known in the past. Our\nLISBARY\nprincipal effort there at present is radio. We are\ncarrying 3-3/4 hours a day in English, beamed both\ndirectly by shortwave from Stateside transmitters and\nby relays in Honolulu and Manila, which now include\nmedium-wave relay, which does reach certain areas of\nChina. Te have, in addition, two hours a day in Mandarin,\nwe have a half hour a day in Cantonese. Most of those\nprograms\n130 1 8\nprograms would be heard in the Far East in the evening\nhours between six and ten o'clock at night, but we do\nhave a couple of morning breakfast-time shows. Now this\nis a small program that we are able. to retain in China.\nWe are doing some things to establish ourselves in Hong\nKong, where in addition to a local program we hope to\nhave a regional center for distribution of materials to\noperate as a production and distribution point not only\nto China but to other areas that are near by, where very\nimportant elements to reach will be those Chinese elements\nin the local population.\nTo give you some idea of what 1t means to cut the\nChina program back, in Korea we still have one of the\nmost extensive country programs that we are operating any-\nwhere in the world. This is a program which, as you know,\nwe have recently inherited. We have inherited it from the\ntime of the military occupation. We are spending a little\nunder two million dollars in the current year in Korea\nalone. We operate nine information centers there. We\nhave special publications, including weekly newsletters,\na world news periodical, a monthly magazine; we carry a\nre-broadcast over an 11-station network, the Korean broad-\ncast, the Voice of America; we have locally-produced news\ncommentaries; we have a very large motion picture program,\nincluding mobile units to take it out to local centers of\nthe population; we have a Fulbright agreement which has\nbeen drawn up but not yet signed, to expand the relatively\nsmall exchange of persons program in Korea. The current\nestimates are that these nine information centers are being\npatronized by an average of one million Koreans a month.\nNow that's the other end of the scale from China, and I\nintroduce Korea into our thinking so that you can see how\nat the present time we have relatively little ability other\nthan by radio to effect the Chinese people and the Chinese\nthinking.\nOne problem that we in the Department now face and\none on which this group will have views -- given the con-\nTRIUM\nditions we now have in China and that we will have in\nLIBRART\nthe foresecable future, is it practical to expect that\nany major onslaught can be made in ideological campaigns\nSE\nby purely open overt means? I am not suggesting any\nanswer one way or the other, but it is a problem broad\nin its dimensions. A number of people who have thought\ndeeply and who have had profound experience in this\nfield are inclined to believe that the operation must\nshift\nCONF TAL\n- 131 -\nshift from the completely open basis to one that does\noperate, at least in part, on a clandestine basis.\nThere are others who feel deeply and with equal convic-\ntion that you cannot fight Communism, whether it be\nRussian Communism, Chinese Communism, or any other form\nof Communism, by these particular tochniques. They\nthink this permits the opponent to choose the terrain\nand they feel basically that we are not going to succeed\nby the use of such strategy. This extends, of course,\nbeyond China itself; it extends to other areas of south-\neast Asia-those areas adjoining Japan. If, for example,\nwe are able to maintain an effective information program\nwith the Chinese elements in neighboring countries, to\nwhat extent is this government and the United States\nconcerned to see that that information and some of those\nmaterials do reach the interior of China--reach thinking\nChinese in the Communist-held areas? I think that is\none of our big problems--how the emphasis should be\nplaced in the future in developing in this particular\narea.\nBARRY U.S. ARCHIVES \"NATIONAL RECORDS SERVICE\" BOVERNMENT TREMAN AND LIBRARY\nMR. FAIRBANK\nCONF\n- 132 a\nMR. FAIRBANK: I assume there 1s very little question\nabout an information program being needed, and, I am afraid\nmy own mind is fairly closed, that 1t is absolutely essential\nand ought to be much larger than it has been. Ithas to grow\nslowly, you can't expand over night with personnel and\noperations, but that should keep on expanding because it is\nlacking largely in all those operations.\nAs a country we approach Asia, 1t seems to me, with\nmuch more concern for economic and material and military\nmatters, at which we are good, and much less concern than\nwe ought to have for intellectual matters. I would like to\nraise a question as to the meaning of the term \"clandestine\".\nMR. SARGFANT: Actually my intent was to pose the whole\nproblem. I didn't mean simply to suggest that you should\nput out a type of commentary that you and I might both know\nas of the psychological warfare kind. I am thinking\nspecifically that you may have problems in China in which\nno statement made by a Western democracy is going to carry\nconviction, yet statements ought to be made. Perhaps the\nstatements should be actually attributed to a source other\nthan the one which is preparing 1t. Perhaps the distribution\nshould not be related to any government, whether Western or\nFastern. Perhaps you would have to have a system of completely\nclandestine distribution, clandestine in the sense that the\nmaterial is being distributed in areas in which its distri bution\nis prohibited and for that reason must be done in ways which\nare not open ways. I really meant my question to refer to\nthe whole gamut of activity.\nMR. FAIRBANK: If I may answer that directly, I would be\nrather loath to see that started without a good deal of\npreparation. It would seem to me most of that black propaganda\nduring the war was quite ineffective except when it was geared\nup with war-time conditions and an army operating along with\nMARGY\n-\n1t, military controls, and so on, and some of that kind of\nSTRRARY\nthing could backfire much more than it would help us.\nE\nMR. MURPHY: I feel strongly as Mr. Fairbank does that\nin peace-time black-gray programs are very dangerous and can\nvery much boomerang against us. I believe that our programs\nshould be restricted to what Mr. Sargeant said Gen. Marshall\nreferred to as truthful information. I agree very much with\nwhat was said this morning, that repetition is necessary,\npounding it 111, but I believe that 1t should be on a dignified\nbasis; that 1s, we should not take the tone from the Communists,\nfrom either Russian or more recently the Chinese Communists.\nI agree with Mr. Sargeant, if clandestine means getting\ninformation\n- 133 -\ninformation into places where otherwise we couldn't get the\ninformation in there, that in that sense it can be clandestine\nbut it should be restricted to straight information.\nMR. HFROD: I don't know whether any observations of my\nown in this connection would be of any value, but in this\nlast four months I have been east of the Iron Curtain in\nEurope, trying to look out for some things and we likewise\nhad six of our men who finally got out of Russia within the\nlast year. My own observation in the countries in which I\nhave been these last few months, as well as their observation,\nhas been that in general the programs when they are heard are\nheard by a very small percentage of the people. To our true\nfriends they are a confirmation, but as a proselytizing agency\nto make converts they have not been very effective. Secondly,\nin so far as facts and information handled with a certain\namount of dignity are concerned, there seems to be a feeling\nthat they have been constructive; in so far as they tend to\nbecome a propagande instrument particularly identified with\nauti-Communist thoughts or showing up what we think 1s the\ntrue situation 1n the Communist countries and in the lies that\nthey tell about us, they are discounted about one hundred per\ncent as being foreign stuff inspired by our own objectives\nand the agencies of propaganda within those countries are\nsufficient that they take precedence over anything that we can\ndo.\nI haven't had the pleasure of investigating it in Asia,\nbecause I haven't been in Asia now for a matter of almost a\nyear, but in Eastern Europe those are my observations, and\nour fellows that have been in Russia and have come out have\nhad those observations.\nFREE\nLAWAY\n15.\nHávicas\nMR. VINACKE: It seems to me that in this you have to\nSPYERNMENT\nmake a little different breakdown than is represented simply\nby the use of the word \"information\" and then going into the\nclassical media. You can have two types of information program,\nit seems to me, each of which 1s distinguishable from what\nmight be called a political warfare program. Two types of\ninformation program which may be called a passive information\nprogram or an active information program. It is comparatively\neasy to occrate negatively, that is to say, passively an\ninformation program or frequently it is easy to get it set up.\nThe Dutch, for instance, in Indonesia toward the end of the\nwar were prepared to view with a good deal of sympathy the\nestablishment of an information program provided it was to\nbe understood that it would be passive in the sense that the\nUnited States would assemble materials in libraries, would\nmake no effort to get any of those materials out of the\nlibraries\nCONF IDENT INL\n- 134 -\nlibraries but would sit there waiting for people to come and\ninform themselves as to the United States. That sort of\nthing is what I would describe as passive information program.\nThe active program 1s apt to get you into contact with a\ngood many more groups in the country, 1t is apt to be a good\ndeal more difficult to operate, and it is apt to be, if success-\nfully operated, a good deal more effective in getting a point\nof view from the U.S. into the community, but 1t demands a\ndifferent type of set-up, a different type of skill, but\nneither the passive nor active program, it seems to me, is\ndesigned to serve the purpose in China at the present time or\nin many of the oriental countries. what is required there, it\nseems to me, is not information in the sense of giving to them an\nunderstanding or making available to the peoples an understanding\nof what is in American libraries or what we are viewing in the\nmovies, and so on, but something that is pointed up and sharpened\nin relation to American political purposes in that area.\nIf that type of program is going to operate successfully,\nit has to be operated in very close coordination with the\npolitical agencies of the American Government. For example,\nwithout wanting to speak too sharply from the standpoint of\npropagenda in China, the White Paper was one of the most unfor-\ntunate documents, in my opinion, that could have been issued\nat this particular time because of the materials that it gives\nto the foreign propagendists and because there is no material\nin it that I can see that would be useful to the American pro-\nmine\npagandists trying to get support for American policy in China.\nI am not suggesting that the White Paper should not have been\nissued, but I am raising a question as to whether there is a\ndegree of coordination with respect to publications of that\nsort between the information agencies of the Department and the\npolitical agencies of the Department, SO that the question is\nraised with respect to every move we make in advance of taking\nthe move, \"Is this move viewable in terms of propaganda value\nor propaganda advantage?\" The answer may be that it is not,\nbut it has to he made anyway. Then your propagandist has to\nmake the best of it, but at least he hasn't been caught off base\nhe knows what he has got to deal with in terms of preparing the\ngrounds of accepting policy and that is the basis of psychologi-\ncal warfare.\nMR. SARGMANT: Actually there is a tremendous problem of\ncoordinating information policies and programs with what is\ngenerally described as political decisions. I think, frankly,\nover the last two years we have made more progress in this\nfield than I thought we would. It is something our Advisory\nCommission on Information--including Mark Etheridge, Canham,\nJustin Miller\nCONSTDENTAL\n- 135 -\nJustin Miller, May, and others-- have been interested in, but\nwe still haven't reached that point-and unless there 1s a\nnew technique of administration, frankly, we are not going to\nreach it--at which each decision, each formulation of policy\nis in fact subjected to the 1deal test, to which Mr. Vinacke\nsuggests it should be. I thoroughly agree that it should be,\nbut so far as I know no one has yet devised the administrative\nmachinery for doing it. Dean Rusk and I were talking about\nthis a couple weeks ago at lunch, and we agreed that although\nyou might get a climate of understanding and support for it in\nan agency, we still weren't quite sure how you could accomplish\nit at all levels. We thought at first you had to work on cer-\ntain control points. I think on control points we have done\nvery well.\nMR. REISCHAUFH: I think this group would be in general\nagreement that a program of some sort 1s needed and should be\nexpanded. The problem is how to do it most effectively; in\nview of the great interest in China in rumors you might say\nit would be more effective to go in for underground informa-\ntion than above-board information. They might enjoy a rumor\nthat tells a truth more than they do a straight news story.\nThe real point I want to bring up is the problem of the\nspecial place of the scholarly classes in the Far East, par-\nticularly in the area of China, Korea, Japan, the area affected\nby Chinese civilization. I do not know whether 1t applies to\nother areas of the Far Fast as much. If we exploit the special\nprestige position of the scholar intellectual group in that\narea -- 1t would seem to me that propaganda TO rk. information\naimed primarily at them would be the most effective kind of\ninformation work, It might be advisable to try to put American\nprofessors in every university to the extent that universities\ncan absorb them. I am sure there are many places in the Far\nEast where they would like to have good American professors\n1f we can get right in there. To what extent have we been\nbringing future intellectual leaders of that area to this\ncountry for extensive training? Japan affords an extreme case\nprobably, but I think the situation there in intellectual\nclasses, which are the key classes, is that they have asked for\n1deas and TO have given them bread. They really would prefer\nthe ideas in this case instead of the bread.\nMR. DALLANTINE: I would like to supplement something that\nMr. Vinacke has said. I feel very strongly that the most\nimportant 1tom of content of our information message should be\nto convince the people of Asia that we are not going to use\nmilitary strength, force, or our economic force to coerce them\ninto ideas, into adopting a political, social and economic\npattern to our liking, not through those agencies, we are\ngoing\nCOME DENTIAL\n- 136 -\ngoing to restrict ourselves to moral information, to suggestion\nand example. Of course, I don't want to be too unkind about\nthis thing, but I think it might be rather difficult to do this\nin the light of some of the things that we have done in Japan\nand also in the light of some of the suggestions that emanate\nfrom this country, but I think we could counteract these sug-\ngestions that come from this country by meeting that and saying,\n\"Of course, some people in America suggest so-and-so, but that\nis not the feeling of the American people\". I think 1t is to\ncounteract that Soviet propaganda, that Soviet claim that we\nare forcing our imperialism upon those people of Asia--I don't\nknow of anything that is more important to convince them of\nthan that. I think we also ought to try to make it clear to\nthem that when they realize the danger that they are facing\nfrom Communism and feel that they must make sacrifices and must\ndo something to meet it, to draw up, if and when they draw up\nprograms of their own, economic and social, we will then see\nhow we can fit into their programs, the ways that we can help\nbecause those programs involve choices that only they can make\nand we cannot make those choices for them. Therefore 1t is\nnot up to us to initiate these programs for the uplifting of\nthe Asian people.\nMR. TAYLOR: The subject 1s so b1g that it is difficult\n.\nto know where to begin. I watched the development of the pro-\npaganda--the information program in the Department with great\ninterest during the last two or three years. I think, consid-\nering the difficulties that the Department has had to work\nthrough, that they have done an extremely good job, but having\nsaid that; one can refer very specifically to the difficulties.\nThey haven't had enough money and they haven't had enough\npolicy. I know the problems of coordination are terrible but\nthere has to be some, and it is better to have no information\nprogram at all than have one which is not to some extent linked\nwith policy. I remember one time when the country was appeal-\ning for everyone to eat not more than two pieces of toast and\nthe Department of Agriculture put on a pie eating competition.\nThat sort of lack of coordination is not so very good for a\npropagandist, and in thinking of China today obviously there\nis not much more you can do at the moment, I would say, than\nto hold the fort, than to establish- which I trust is estab-\nlished--its credibility. It is said that if you merely give\na straight newscast that can be done. Anybody who is working\nin business knows it is extremely difficult to get straight\nnews in the first place and to make 1t look straight when you\nget it out.\nThe problem of the propagandist is to state his case in\nterms of the other fellow's case. I think Mr. Fairbank was\ntalking about that to some extent yesterday, and it needs a\ngreat deal of work on material that doesn't look to the\nuninitiated\nCONFIDENTIAL\n- 137 -\nuninitiated always like propaganda, but if you are in the\nbusiness of creating attitudes which lead to action, you have\nto decide what kind of action you want, and what kind of\naction do you want in China today? I don't know. What is\nour policy? You cannot create cleavages with propaganda but\nyou can exploit them, make them bigger. You have to find out\nwhere they lie first. Do you want to increase any cleavage?\nDo you want to make them as unhappy as possible? What sort of\naction will make some groups turn away from the government\nand other groups to turn to other countries: What do you want?\nThat has to be decided. I think at the moment that you are on\nthe spot. You have no Chinese policy to speak of and not until\nyou get one and decide what sort of action you want to create,\nto get moving, can you have a proper information policy. And\nso long as you are going on the miserable pittance you are\nworking on now, I see no chance whatsoever of competing with\nour friends from the other side. If I were in the Kremlin.\nthe first thing I would try to decide is what kind of war is\nthe United States preparing for, and I would decide immediately\nthat 1t was preparing for the last one. They are not preparing\nfor the war of ideas, and I would therefore fight the war of\nideas and leave them with all their guns and B-36's and the\nrest of them, and let them get out of date. I would fight it on\nthe word level. It seems to me we are not fighting it on that\nlevel. I don't think we should disarm--far from it, but for\nheaven's sake, let us arm ourselves with the best things we\nhave. We have the best social science in this world and the\nfirst job for the U.S. outfit, it seems to me, is to study.\nWhat is China today? Nothing like it used to be. What will\nit be under the Communists? We don't know how a system like\nthis breaks down. We don't know how cleavages and lines run,\nand the chances of overthrowing it in my mind is almost negli-\ngible, but perhaps 1f war should come you can perhaps do things\nwith 1t. Te have got to do things with it, but the first thing\n1s to understand it and not to treat it as if it were a projec-\ntion of American middle class, or a mirror of Americans. There\nis time to do that. You haven't got much money to do anything\nelse with anyway, and there is time to study, to find out what\nyour policy is and to devise the means through propaganda with\nwhich to implement it. Unless it is conceived of as an arm of\npolicy and used that way 1t merely gets in your way.\nMR. FAIRBANK: Could I just support everything Mr. Taylor\nhas said. I think it is very much on the beam and ought to be\nlooked at with care. For the record, also, the line of anti-\nCommunism in Asia 1s not a very good line. It is a subjective\nprojection of our own view.\nGENERAL MARSHALL:\n138 i I\nGENERAL MARSHALL: The ordinary term, the \"complexity\"\nthe problem has been over-used, but I have never known\nany problem that had 60 much complexity involved in it be-\ncause, you might say, the simplest part of it 1s the Chinese\npeople themselves and the immediate situation in China. Then\nyou take the conditions in Japan; you take the situation in\nIndonesia; you take the situation in Indochina; you take the\nsituation in India; then you Introduce Pakistan; and then the\nBritish former economic almost domination in China, and the\nefforts of the Labor Government to maintain itself and the\nreaction of the Conservatives against it, which affects what\nyou are getting into; and the French with relation to Indo-\nchina; and then the Dutch in the Western European pact, and\nthen over in Indonesia in a sense doing something else; then\nAustralia. The variety of influences involved in this thing\nare just funtastic when you try to arrive at & sound basic\ndecision.\nThen, of course, you have your immediate action and then\nthe longer view, and 1t 1s much easier to approach the longer\nview than the immediate action. One of the great struggles\nin conducting the strategy in a large war 16 the political\nnecessity for action as compared to the military necessity\nof making haste slowly. When you have a situation like our\nchannel crossing, we were over a year and a half getting\nready for that. The great question was what did you do\nduring the year and a half to keep the public quiet the\npolitical leaders had to have some action. The dangerous\nfactor was if you started action anywhere you immediately\nbegan with assurances of a minimum and ended up with a maximum,\nand something this and something that, and delayed your whole\noperation. I have been through all the agonies of that.\nNow you have been confronted with that the State Depart-\nment has been with the Chinese problem. People want action\nand they want it today. That 1s the way a democracy goes and\nyou cannot get away from it. There 18 no use 1n wrangling\nabout it, that is a fact.\nTime is of vast importance in this affair; but that, too,\ncould go to extremes. There 18 great danger of making the\nvery serious error that I often think Government departments\nwaiting until the situation built up against you and\nyou are on the defensive. That 18 fatal. I always want to\nmove in first. On the other hand, it 1s equally dangerous\nthat the \"first\" may get you in before 1t is the proper time\nto get in. So timing 16 a vital consideration in this.\nAnother\nCONF\n- 139 -\nAnother thought that occurred to me, listening to your\ndiscussion, is that a good many of the things I have heard\nproposed here, in my opinion, could not possibly be handled\nby our Congress.\nNow, what 16 the idealistic solution to this business?\nAfter you have decided on that, we will trim it down and put\nIt on a practical basis; there would be many amendments, many\nmodifications. But you have got to keep the idealistic in\nmind. There 18 the spiritual involved in this thing.\nI have been tremendously impressed in our dealings with\nTurkey with the effects of our missionary efforts and Roberts\nCollege in Turkey. That Just meant everything to us in the\nassociations we had with them in connection with the Soviet\nUnion. And I was very much interested in the reestablishment\nby the Methodist Mission of schools around Tehran which the\ngovernment had taken over, because that was erecting a barrier\nof a kind that is acceptable to the world and has great\nstrength in the roots it establishes. of curse, that takes a\nlong time; you cannot put it up tomorrow and have it effective\nthe day after tomorrow, but those considerations must be taken\ninto account.\nYou have a situation in China that is closely related to\nthe current situation in Japan because of the economic factors\ninvolved. I am going to turn to Japan for a minute because\nI think 18 18 very much concerned in our relationship to China.\nJapan is costing us a great deal of money; that cannot go on\nindefinitely. We have established this operation in Western\nEurope and we have done it on the basis of its reaching a\ntermination in 1952. It ought to be terminated in 1952. You\nhave got to stop somewhere. It 18 a very seri ous matter that\nthis government remain strong, SQ there has to be a definite\nlimit. You get a man to a certain point and then he has to\ngo on from there alone, and he has to know he has to do it.\n15.\nWhen you come to this Japanese affair, you have a very\nserious question of trade between Japan and China. You have\ngot this much small area into which we have poured many more\nJapanese; we have greatly increased the density of population\nin Japan. There has been taken away from them Manchuria, with\nall of its rich contributions to the economy of the country,\nKorea, Formosa, and the general trade with China. We have in-\ncreased the population very decidedly, and reduced the area.\nThere has to be some outlet, some import of raw materials and\nexport of finished goods.\nChinese-Jupanese trade, I certainly think, should be per-\nmitted. Mr. Herod commented that if you leave the business-\nman alone he probably will promote the business if you don't\nget in his way. Something of that kind has to be done.\nI\n- 140 -\nI don't think you can call the Japanese-Chinese trade\nexactly a \"must\" but it comes pretty close to being that.\nWe are not going to go on forever providing the goods, the\nfoods, and the money that has been necessary to keep Japan\nafloat.\nI have sort of indicated my thoughts at the moment, re-\ngarding the government proclaimed by the Chinese Communists,\nin saying there is a great question of timing involved in\nthis thing on one side or the other--it 1s kind of a fine\nbalance with the political pressures that are coming on.\nAlso involved in that 18 the British attitude and the French\nattitude. We have got to proceed very carefully and not be\nplunged by political momentary pressures into action that we\nmay find later was highly inadvisable.\nI will just interject for a moment some of my reactions\nat the time I was in China regarding these fellows that are\nat the head of the Chinese Communist Government--Mao Tse-tung\nand Chou En-lai. I had officers pretty much all over North\nChina, along the Yangtze and in Manchuria, and I always felt\nthat the reports I got were far better than those the Gen-\nerallesimo received. He was being fooled time and again be-\ncausethis fellow was trying to defend himself. If he with-\ndrew in an ignominious fashion, he always made it a great\nbattle with Russian tanks and Russian soldiers. The only\nthing they did not introduce was the Russian paratroops; they\nhad everything else. I would find out from my people it was\na patrol encounter, and that went on all the time. Always I\n186 trying to find out anything you could put your finger on\nthat was authentic as to the Soviet influence or Soviet help\nin all this; I never got anything except the influence of\nwhat I would call the spiritual, or something akin to that.\nThe Chinese Communists made no pretense about being\naloof from the Soviet Union, they had Stalin's picture and\nLenin's picture over the theater.\nThey were Marxist Communists and bitterly resented impli-\ncations they were agrarian Communists of the new stripe. They\nwere Marxist Communists. I remember Chou En-lai startled my\nwife. He was telling her just what he was. They did not\nmake any pretense of not being associated with the Communists\nof Russia; that was rather natural, they were Communists,\nthey were Marxists, and that was the seat of all that develop-\nment.\nBARDY\nNATIONAL MV\nTISTED\nWhen\nCONF IAL\n- 141 -\nWhen it came to Soviet assistance, I never could get\nmy hands on 1t. I VHB given all sorts of schedules but, in\nthe opinion of all my advisers and intelligence, they were\nnot supporting them. Sometimes there were records of little\nconferences, but you could change a single sentence and\nchange the whole impression. What did worry me more serious-\nly than anything else W&B that 1t seemed apparent to me that\nthe Soviets were leaning over backwards, except as to Dairen,\nin their attitude out there. As far as I could see, what\nthey were preparing themselves for was a case before the\nUnited Nations, where they could appear 88 clean as the\ndriven snow and we would have our hands muddied. I would\nprobably be the particular lump of mud they would throw.\nNow, I am not talking about the ravaging of Mukden.\nThat was e booty transaction under their claim. I am talking\nabout the procedure that followed that under the treaty. I\nWES always concerned, and I think it 16 still going to show\nup here when they get to this, that they will make a case\nthat they sat back and gave the Generalissimo a wide sweep\nof opportunity and look at what has happened--the United\nStates interfered and brought about this catastrophe. They\ncould accomplish elmost all their purposes by negative action.\nAll they had to do was to abandon the dumps, leave them to\nfall into the hands of the other fellows. All they had to\ndo was to make st impossible for the Nationalist Government\nto use the railroad, and yet not introduce any complications\nabout the movements of Communist troops that were moving in\nand getting set up in Manchuria, we will say, for later\naction. But that worried me a great deal, and I think you\nwill hear from it later.\nAs to Formosa, I think that 1s a dangerous situation,\nin one sense, because Formoss lies in the general direction\nfrom Japan to the Philippines, and 1f 1t were taken over by\ninfiltration, as it well might be, it might be very serious.\nI don't know what we will do about that.\nIt seemed to me when I was listening to Governor Stassen's\ntalk about establishing an American center in Bangkok that\nthe psychological focus for the United States in approa ching\nthis ares, 1f it did 30 through any such procedure, 18 the\nPhilippines. I may be entirely wrong about this, but all\nof the Far East looks on the Philippines as a manifestation\nof the square deal. We certainly went through with it there.\nI think there is great significance to our action in the\nPhilippines which affects all those people. I have talked to\nsome of the Philippine leaders and they have emphasized that\npretty much to me.\n19898\nRECEIVED\nTHE\nThe\nus.\nBERVICE\"\nADVEDIMENT\nIDENTA\n- 142\nThe general picture indicates to me what would seem to\nbe more desirable is the slow build-up in the actions we take,\nnot big things but many little things.\nIt has seemed to me for quite a long time that we are in\nthe midst of a world revolution and you can not confine it to\nwhat you are thinking about in the Pacific. Someone said\nhere that the Communistic factor was more or less of an inci-\ndent but it was riding on that flood. Well, the actions we\ntake, I think, have to be adapted somewhat to the fact that that\nis the temper of people all over the world. \"e can not\nignore that.\nI believe in the end it is fairly sensible to figure\nout what is your ideal, and then trim that down to its\noractical application Our constitution was so established\nand it has done pretty well\nR. HEROD: Do you feel that Mao Tre-tung and Chou En-\nlai would accept Moscow or Kremlin Dictation when it went\nagainst their own size-up of their advantage or the advantage\nof their own group?\nGENERAL MARSHALL: I am rather inclined to think there\nwould not be domination, but I would say that with a great\nmany qualifications,\nChou En-lai is a very able negotiator. In E. great deal\nof his negotiating with me, and I went to about 600 different\nmeetings, he seemed to be really negotiating There is a\ngreat difference between that and a man who has strict orders\nand can only do what he is ordered and nothing else. On the\nother hand, you would come to some things when it was quite\nevident that he was just speaking a piece. I know he several\ntimes brought me back from Yenan the statement from Mao Tae-\ntung that they were determined to establish a Marxist Commun-\n1st regime in China but they realized that could not be done\nin a minute and felt it would have to pass through the Ameri-\ncan democratic procedure first on the way to the Marxist con-\nception, but he would say that so often that it was merely\nreciting. On the other hand, it got to the point that I\nEvints\nvirtually had to intercede with Mao-Tse-tung to continue him\nin his position as negotiator, because it looked for a while\nROVERNMENT\nthat they would relieve him. They thought he compromised\ntoo much.\nMao Tsetung I could not pehetrate. That is a real\niron curtain there. We had some very frank talking 1st it\nwas just talk.\nThey\nCONF\n143 0 s\nThey undoubtedly felt that they could win politically\nand, therefore, if they could avoid the military effort,\nthey were very much better off. They had discipline and 8\nsolid perty; whereas they felt the Kuomintang was just an\nicing on the top and all its former foundations of public\nsupport had become non-existent or hostile.\nMR. QUIGLEY: General, was there any suggestion on\ntheir part of Russian participation at this stage of media-\ntion?\nGENERAL MARSHALL: No, no, not at all. I don't recall\nthey ever made such a proposal.\nMR. COLEGROVE: Your view 18 that American aid to Japan\nshould continue as long as 1t seems necessary to keep the\npopulation from starving and to get on their feet industrially?\nGENERAL MARSHALL: I would say so, but the qualification\nthere 18, \"as long as it seems necessary.\" I would have to\nlook at that through a magnifying glass because you just can\nnot continue this thing indefinitely. It just can not be\ndone. It can not be done politically, for one thing, and it\ncan not be done economically, I think, for another.\nMR. DECKER: It seems to me that one of the very serious\npolitical obstacles that we are going to meet in attempting\na settlement with China--political from the standpoint of\nsentiment in the United States is that long period when we\nhad the support of Chiang Kai-shek and he was the one hope\nof continuing China in the war. That was in our dark hour\nand we were very dependent on him, and what he represented,\nto keep Chins In line. Now, there is a moral situation in-\nAND\nvolved there 63 well. I would like you to, 1f you can and\nLIDERRY\nif you will, comment on what the abandonment of Chiang Ka1-\nshek 18 going to mean-what its significance may mean po-\nUNSERRMENT\nlitically.\nGENERAL MARSHALL: Well, I would say we did our best in\nspite of action that ruined that best in its application to\nthe situation. Throughout all of this procedure there was\ncontinuous pressure to eliminate Chiang Kai-shek, but no one\never suggested anyone could take his place.\nYou have the great moment of his career, about 1927,\nwhen he was a great inspiration, when the Nationalists came\nup from the South, and then you go through a transition when\nthese young military subordinates of his, that did such a\nfine job, had become corroded by long tenure of office with-\nout any opposition whatsoever, and the procedure lent itself\nto\nCONFIDENTIAL\n- 144 -\nto weaknesses more than almost any other country. It has\njust got worse and worse and worse, and it was very hard to\nrealize sometimes that this man that we were dealing with\nhad been this other fellow when he was a young man not in\ncivil office.\nCHAIRMAN:\nTHE HARRY 8.5. ARCHIVES *NATIONAL GOVERNMENT SERVICE RECORDS TRUMAN AND LIDRERY\n- 145 -\nCHAIRMAN: I would like to suggest that we might\nhave a few minutes taking up the question of the recog-\nnition of the Communist Government in China. May I\njust mention a few of the factors as they confront the\nDepartment in connection with this, illustrating again\nwhat General Marshall said about the complexities of\nthe issues that enter int the situation.\nI think in some of the discussion of recognition\nthere is some confusion between the short-term and long-\nterm aspects. There is the question of whether you\nrecognize the Communist Government immediately on the\none hand. On the other hand, there is the picture or\nthe phantom of a duplication of the situation which\nexisted with respect to the S viet Union over a period\nof 15 years practically in which we said it did not\nexist when it did exist and you know the complications\nwhich arose from that.\nIn terms of the short-run picture you have the\ncomplication of the situation in the General Assembly\nof the United Nations and a great deal of speculation\nat Leke Success as to whether a Communist delegation\nwill suddenly turn up at Lake Success and get into\nGatu5 early and sit down in the seat of the Chinese\ndelegate and say, \"We are it.\" There are a lot of\ntechnical problems there as to how the General Assembly\nacts in terms of conflicting claimants to representa-\ntion of a member state.\nWe have I think in connection with the recognition\nJ.\nproblem also a good many of the elements which we have\nSEAL\nSERVICE\ndiscussed in connection with the business of trading\nwith the Communist areas in terms of immediate action.\nYou have also I think to weigh, as General Marshall\npointed out, in other connections, the attitudes of\nother governments and the effects on other governments\nof action by the US. You have the possibility that a\ngreat many other states might recognize the Communist\nGovernment, and what would be the resulting position if\nthe US is one of a small minority which does not? You\nmay have many states withholding recognition and the\nquestion of the extension of recognition by the US\nGovernment and its effect on thinking in Southeast Asia,\nfor instance, where Communism seems to them to present\na serious local problem.\nI just want to throw out some of those points and\nto ask you to address yourselves for a short time to\nthis problem of recognition.\nMr. Staley:\nCONF\n- 146 -\nME STALEY: A point that Mr. Butterworth made the\nother day seemed very interesting and important. I think\nsome of us assumed there might be some difference as\nalternatives between de facto and de jure recognition,\nbut from what he said I gather it comes down to whether\nwe 80 whole hog or not; that 18, he indicated that the\nChinese Communists would not play ball on any other basis\nbut full de jure recognition 30 that was really the only\nalternative open to us,\nCHAIRMAN: I think in terms of what we know about\nthe Communist position it is true that what we have had\nfrequently in the pest 18 a situation in which by admit-\nting certain authorities are de facto authorities in the\narea you nan do business with them and we have operated\nthrough consular officers. A de facto basis with us\ninvolves a question of de jure recognition. It is indicated\nby the current Chinese Communist position that they are\nnot ready to shift their attitude. They refuse to acknow-\nledge representatives or foreign consular authorities on\na de facto basis in Shanghai in that or any other place--\nand until the de jure recognition 13 extended they will\ncontinue their policy of discrimination, The latest is\nbanning of newspapermen of any country that has not extended\nrecognition, so I think we may be confronted there with a\nsituation In which de facto recognition does not enable us\nto move forward the way we have in similar situations in\nother countries in the past.\nMR. COLEGROVE: Mr. Bohlen gave an address in New\nYork, I believe, on the 19th of January this year, in\nwhich he said that our government had come to the conclu-\nsion that Soviet Russia would not keep treaties and our\nonly recourse was a day-to-day arrangsment with Soviet\nRussia which would not be necessarily a long-term legal\nagreement but mersly a day-to-day modus vivendi,\nNow presumably Russian-trained Communists in\nCommunist China would follow somewhat the same tactics as\nthe Kremlin. The point I am asking is this: Is 1t\nREVENUNDENT\npossible to have a modus vivendi for trade and communi-\ncations with Communist China without giving either\nde facto or de jure recognition?\nCHAIRMAN: They are not satisfied with half-way\nmeasures. It may be they will become SO. I think the\npresent Indication is that they want all or nothing.\nMR. McNAUGHTON:\n- 147 -\nMR. McNAUGHTON: Sitting in this room arguing and\nlistening, I think I would say we had come to a state of\nmind where we would recognize the Communist Government\nin China, but a lot of things we are talking about you\ncan not get the American public to take right now or the\nCongress to take. I think the procedure should be to\nwatch and wait.\nCHAIRMAN: Speaking as a representative of the\nAmerican public in a particular area of the country, do\nyou think recognition would go down in your area?\nMR. McNAUGHTON: I think they would blow up.\nMR. KIZER: As of today, but what they will do to-\nmorrow 1s another story.\nMR. HEROD: I would hazard a suggestion that we\nshould not recognize today because there is still civil\nwar going on and the Communists have not got the machinery\nof state except in certain areas, but I would be inclined\nto think that if they do obtain the machinery of state then\nwe should be prepared to recognize them.\nI think 1t is rather amusing. We recognized Russia\nand Yugoslavia. We recognized everybody else. It has not\nbeen a question of Communists as Communists that has pre-\nvented our recognition. Much of it has been some of the\ndespicable things some of the gangsters in some of the\ncountries have done. I understand it took 26 years for\nthe Russians to recognize us after our revolution. They\ndid not recognize those terribly rebellious colonies until\n1807. It did not do the Russians any good and it did not\ndo us any good or any harm.\nI would suggest that we watch the situation daily and\n1f and when the Nationalists lose control completely and\nthe Communists attain the position of having machinery of\nstate that we at that time accord them recognition unless\nin the meantime there has been some other factor.\nI think you have to take this present situation that\nthere is a definite rejection by the Chinese people of the\nNationalists independent of any Russian connection whatso-\never. The military figures cited by Col. McCann the other\nday indicated at the end of the war the Nationalists had\nthe armies, the equipment and they had the facilities. To-\nday the preponderance has entirely shifted.\nMy\nCOME\n- 148 -\nMy own experiences in China since the war have indi-\ncated that the Chinese people, with whom I have had very\nmany contacts, even though not Communists, are so fed up\nwith the former Nationalist regime that they definitely\nwant that out no matter what happens and I don't think we\nshould be hitching our wagon to a descending star on any\nideological basis. I think we have to be bright and\npractical people.\nMR. MURPHY: I strongly second Mr. Herod's remarks\nabout the attitude of the Chinese people toward the\nNationalist Government and to the present Communist\ngroup.\nWith regard to the United Nations, the most fre-\nquently attributed reason for the failure of the League\nof Nations was the interference of Britain and France in\nthe critical years of the League--the making of the\nLeague an instrument of their private policy. With re-\nspect to the United Nations, there is no doubt in my mind\nthat the Russians have weakened the United Nations by\nfollowing in general the procedure that was attributed to\nBritain and France with respect to the League of Nations.\nTherefore, I think that however inconvenient in the Council\nand in the Assembly the presence of Chinese Communist mem-\nbers may be, I think we have to take our chances when the\ntime comes.\nMR. VINACKE: I would like to associate myself with\nwhat Mr. Herod said, but I would like to put a further\nproposition in there. I think under the present circum-\nstances it is very important that if we are going to\nfollow the policy of recognition whenever the civil war\nJun n YORK\n13 over, that should be made very clear at the present\ntime rather than waiting without any indication as to the\ncircumstances under which we will or will not recognize.\nT think that is very important domestically and in pre-\nparing the ground. I think we have to recognize the\nChinese Communist Government on the assumptions just set\nforth and I think it is equally important in the attempt\nto influence a full movement in the Far East either in\nconnection with this or other questions that may arise.\nWe are in a position at the present time where as far as\nimmediate recognition is concerned, all the advantages of\nimmediate recognition have been secured by the Soviet\nUnion. All we can now do is avoid getting ourselves in\nthe position where whatever we do 1s thrown back at us\nas\nCON\nTOENTO\n149 8 1\nas something we have been forced to do rather than some-\nthing we attempted to do in terms of principle as we our-\nselves established the principle.\nThe part of the principle, it seems to me, is when\nwe have recognized or when we are prepared to recognize,\nwe should expect the Chinese Communist Party to show a\nwillingness to meet the ordinary tests of government in\nthe treatment of nationals of other states in territories\nthey have under their control. I think those things\nshould be put in a definite statement of policy with re-\nspect to recognition when it occurs.\nMR. DECKER: I would associate myself with those\nfavoring recognition, although I want to say something\nabout timing. That recognition would rest on the funda-\nmental fact of the importance of the Chinese people in\nthe world, our historical relation to them, and the fact--\nand this is the central fact--that the Chinese people have\nrepudiated the Nationalist Government. That repudiation is\na fact that 1s at least five years old at the present time.\nWe have just begun to see it.\nSome questions are raised in my mind about the existing\nNationalist Government, which was our war-time ally and\nfriend, and the question of what it would mean for that gov-\nernment as long as it holds on to a substantial part of\nChina. That is a question of timing. I think a rejection\nof the present Nationalist Government would make your pres-\nent political problem considerably more difficult.\nMR. PEFFER: I would also make it a matter of timing\nand I would wait. I would wait four weeks or five or six\nweeks. I don't know when the Communists will get to Canton,\nbut I would guess not over six 07 seven weeks. The only\nother Chinese regime will be in Formosa which is, at least\ntechnically, not Chinese territory. It is still Japanese.\nTIBRET\nAnother matter. Tell me, is not the burden of proving\non those who don't want to recognize? The Communists are\nthere. They are going to be there 20, 30, 40 years. Who\nknows? What do you lose by recognizing? What do you gain\nby not recognizing? The only really serious thing I sup-\npose is what Ambassador Jessup has said, that sometime soon\nChou En-lai\n- 150 -\nChou En-lai will sneak into Lake Success before Dr. Tsiang\nand take a seat in the General Assembly. What about 1t?\nWhat can Chou En-lai do to embarrass Ambassador Jessup\nthat Vyshinski can not do better? He vetoes on the Council.\nWhat about 1t? One 18 enough, isn't it, for technical pur.\nposes? They have one, haven't they, and suppose they do\ngang up and by some miracle get a third in their support--\nwe have one too. Tell me, what is there to be lost?\nNow, the argument against 1t. There is a great deal\nto be said for General Marshall's very mellow and very\nwise recognition that there is an American public opinion.\nI think there might be an attendment to that. Suppose it\nis true the State of Oregon blows up. Well, it will settle.\nIs it not a very dangerous principle now, when the world is\nas tense as it 1s, that we are going to surrender by default\nto the guy who is the best lobbyist and does the best propa-\ngenda, even when surrendering by default 18 against the best\njudgment of those who know most about 1t? Haven't we a\nlesson on that?\nThis is no secret state. The people professionally\nengaged about the Far East, diplomatic, military, journal-\nistic, scholarly, commerce--and I think Mr. Herod, the\nbusinessman will bear that out--have all known for two or\nthree years--cortainly for two years--that what we were\ndoing in China had not the slightest basis in sense, fact,\nor reality--not the slightest. And yet ifethe people in\nthe building in which we are now sitting had not had their\nway in accordance with their best judgment, there would\nhave been no difference whatever except about a billion\nand a half which we would have had which we haven't got.\nWe gave them what help we could morally and other-\nwise--presumably in a moral obligation--and they sank.\nIf we had not given 1t to them they would have sunk too.\nIt would have made a difference of four, five, or six\nweeks. Are we going to go along against our better judg-\nment because momentarily Portland, Seattle, Chicago, or\nsome building in Rockefeller Center-will blow up? Let\nthem blow.\nIf this country--the most powerful in the world at\nthe most dangerous time in the world--1s at a stage in\nwhich the Government is hog-tied against its better Judg-\nment because some people are going to blow up, then God\nhelp the Republic.\nTHE\nMR. HOLCOMB:\nU.S.\ngaverument\nIDENTIAL\n- 151 -\nMR. HOLCOMB: I go along with those who have spoken\nand I guess most of us do--perhaps all--on the question\nof recognition and the question of timing, and I take 1t\nthat most of those who have spoken would also add that\nsince to get exactly the right time 1s exceedingly dif-\nficult, it is better to be too early than too late. At\nany rate, that would be my view. It seems to me the\nreluctance to face that issue springs from misgivings\nrespecting the political situation. My belief is that\nthose misgivings are exaggerated.\nI think we have been very fortunate in the start\nthat has already been made in preparing the public for\nan honest re-appraisal of the situation. The publication\nof the White Paper was a shock to many of the public at\nthe time. At the same time it was an exceedingly wise\nand fortunate and well-timed move. Honest confession 1s\ngood for the soul and that goes for nations as well as\nindividuals, and I think our people are in a much better\nposition to understand and to support the next step be-\ncause of the candor and courage which the Government\nshowed in showing its hand at the time when 1t did.\nof course there will be a good deal made by critics\nof the Government of the opportunity for criticism, but\nI believe the public, once convinced that it is being\ntreated honestly by people in power--and they should be\neasily convinced of that--I believe the public would\nfollow and that the difficulties growing out of domestic\npolitics will prove to be much less serious than has been\napprehended. The White Paper is a good beginning and if\nthe administration follows in the same spirit, timing\nmoves as best it can, I think it will get public support.\nI am sure It will in my section of the country.\nMR. COONS: I should like to inquire whether it is\nthought a matter of practicality to utilize the suggestion\nof Mr. Vinacke that our recognition of the Chinese Com-\nmunist Government should proceed at a time or after there\nshall be evidence on their part that they are accepting\nthe standards of any government that behaves within the\nsociety of nations. To what extent is the question of\nrecognition a matter of negotiation, or are we so over the\nbarrel that we either have to do or not do it? I am in-\nterested in that angle of the question because it seems to\nLine\nme\nWAIVER\nARCHIVER\nAND\nSERVICE\"\nBRITERNINT\nCO\n- 152 -\nme--although I associate myself with the view we shall\nrecognize them sooner or later--maybe they realize that\nand maybe they realize that we will do it sooner or later\nand, therefore, they will not be party to any negotiation.\nCHAIRMAN: Very briefly, as you know, the whole his-\ntory of our recognition policy has been one of fluctuation,\nif you take the entire period of the country. The out-\nstanding position of the Department on recognition ties in\nparticularly with two things: first, it is a question of\nview as to whether it is the government of the country\nrunning it; second, if it is, the government's will to\ncarry out international obligations. Those are the two\nkey points, I think, in our standing recognition policy.\nMR. COONS: May I ask another question? Yesterday\nwe were talking about the desirability of allowing trade\nto proceed with the Communist areas of China. Let us say\nwe will, from the standpoint of timing, withhold recog-\nnition 05 China's Communist Government for a matter of\nweeks or months. In the meanwhile is it possible for us\nto have a policy? Is there any practicality in allowing\na laissez-faire relationship with American trade vis-a-vis\nthose areas under control of the Chinese Communists, or\ndoes that also seem to be tied up with the question of\npolitical recognition?\nMR. BALLANTINE: I would like to raise a small voice\ntoward putting a brake on this bandwagon. I think we need\nto recognize facts. We are confronted with a dilemma here.\nIf we accept the idea that we have to recognize right away\nor feel we have to jump before we are forced into jumping,\nI think that we lose 2. great deal of bargaining power. We\nlose an opportunity to get conditions we want. The Soviet\nbloc has blocked the admission into the United Nations of\na number of states.\nI think there is a good deal of room for interpreta-\ntion as to what constitutes the Communists' having an\neffective government in all China. There is room for\ninterpretation as to our judgment as to their ability to\ncarry out international obligations and I don't think that\nwe should make any statement or make any public announce-\nment at this time as a sort of preparatory step toward\ngetting into this thing, because then we will be open\nimmediately to the charge we have further prejudiced the\nposition of the Nationalist Government of China and that\nK.TROMAN\nwe\nTRATIONAL\nARCHIVES AND\nREGUNDS\nLIBRARY\nWE\n#ERVICE\nAUTERNMENT\n- 153 -\nwe have contributed to their downfall. I think that the\nmore that we can keep people guessing, the more we can\nstill make them believe that there is a possibility there--\nthe better terms we are going to get.\nMR. LATTIMORE: I am encouraged by the trend this\nmorning that we should proceed from facts rather than from\nsubjective attitudes. I hope the Department feels its\nhand strengthened but if we, representing the different\npoints of view that we do represent, are to be of any\nservice to the Department, 1t seems to me that we should\ncome back once more, more closely to the point raised by\nGeneral Narshall that timing is all important in what you\ncan get through the necessary and basically desirable\nprocess of debate. And I think that while the recent\nspeakers have all spoken directly to the point of China,\nwe should look a little more widely and take in the rest\nof Asia as well, and the relationship of politics and\nprestige in the whole of Asia to the process by which\npolicy 1c formulated, debated and put into effect in this\ncountry. It seems to me there is a sort of scissors dia-\ngram here. On the one side domestically in the United\nStates, we have a situation in which one of the most 1m-\nportant political maneuvering devices is that each of the\ntwo great parties feels continuously under pressure to\ndemonstrate to the nation as a whole that it is not less\nenti-Russian and anti-Communist and anti-appeasement than\nthe other great party. Therefore, the party which controls\nthe administration must present any policies they advocate in\nin such a manner as to expose itself to the minimum to the\ncharge of appeasement.\nThe other blade of the scissors tends to get neglected.\nWhat is likely to be the reaction in other countries in Asia\nto American speed or American delay in recognizing what\nalmost all of us here appear to recognize as the facts of\nlife in China? I think under the 19th-century standards of\ninternational prestige that the time of your willingness to\nrecognize a new state was extremely important. I think that\nsince the two world wars, those standards of prestige have\nchanged sowewhat. We have to face the fact not only in Asia\nbut throughout the world that what has happened in China is\nregarded as a setback to American policy and the diminution\nof American prestige. The question is how to minimize that.\nOver-haste in recognizing the new situation might indicate\npanic, indicate to people in Asia that we have been panicked\ninto a big over-all retreat and that would certainly draw in\nwith\n-\nADDRESS AND\nPLEASE\nLIBRARY\nDEVICE\nSEVERNMENT\n- 154 -\nwith criticism in the Congress and in the press in this\ncountry. On the other hand, too much delay might have a\ndeteriorating effect on our prestige in As1a that in the\nlong run would be more damaging to us because there would\nbe the feeling that while a new situation has developed,\nand in spite of the fact that that doesn't really alter\nthe mechanics of how we handle things in the United\nNations--for instance, the veto ratio is changed but the\nveto situation is not changed--in spite of that fact the\nAmericans appear to be so baffled that they don't know\nwhat to do. We give the impression of being thrown off\nbalance, flustered, having lost our heads, incapable of\nfacing a surrogate Vyshinski in addition to the original\nVyshinski, and that, I think, would be a very bad situa-\ntion for us to handle.\nIn this connection I should like to put forward the\nsuggestion that we have missed one important opportunity\nwhich could have enabled us to ease the general situation\nin our favor. Before the recent United Nations meeting\nopened, the Secretary General, Trygve Lie, referred to a\nlist of nations coming up for admission and said that, in\nhis opinion, this particular list should be admitted. By\nand large, that is the list that has brought a division\neach time--we reject certain applications and the Russians\nreject certain applications. As the list now stands, it\nis slightly in our favor. I think that if we had indicated\na. willingness to admit the whole slate if the Russians would\nalso admit the whole slate, we would have been much better\noff. The list would have included completely satellite\nCommunist-dominated countries like Outer Mongolia (the\nMongolian People's Republic), but there is a Soviet satel-\nlite that has been in existence for a long time and has not\nparticularly changed the balance between Russia and our-\nselves in any way, and the willingness to admit such coun-\ntries would have been a willingness to recognize existing\nfacts without any loss of prestige on our part. If we had\ntaken a list such as this, then we would have been greatly\nstrengthened in being deliberate about recognition of the\nnew regime in China because we would then be clearly on\nthe record that our position was related to changing facts\nin the structure of the world as well as to our own par-\nticular ideological preferences.\nIn view of that, couldn't we consider the desirability\nof an American approach to the problem of recognizing the\nnew regime in China that would throw other things into the\nTUBMAN\nbargain\nBUY\nNATIONAL\nsectives\nAND\nLIBRARY\nAT\nservice\"\nREVERNMENT\n- 155 -\nbargain as well as this particular problem. It is very\nmuch like the old technique of buying curios in Peking.\nThere is some one thing that you particularly want, the\ndealer knows you want it and he puts on it a price higher\nthan you are willing to pay. The way you get it 1s to\nbuy not only that thing but a number of other things, then\nyou make a lump price and he cuts his price somewhat and\nyou come up scmewhat; eventually you get what you really\nwant and he gets what he really wants for that main object,\nbut neither person has lost face.\nCouldn't we couple recognizing the new regime in China\nwith a number of positive steps in Asia as a whole, showing\nAmerican initiative and desire to get things done in the\nimprovement of various situations, such as those in\nIndochina and Indonesia, possibly Burma, whatever we can\ndo in India and Pakistan, to show that the United States\n1s not against changes in the status quo as such, but on\nthe contrary is anxious to get the most progressive and\nliberal settlement possible, and that the United States\nstops short of wanting to aid or encourage the development\nof Communism but is eager to promote alternatives which are\nacceptable to the maximum number of people in Asia and\nEurope? If we could handle the question of China in that\nwider context of an active American policy elsewhere in\nAsia, it seems to me that we could do a great deal to\nretrieve the prestige situation and consolidate the ac-\ntual power situation.\nMR. HEROD: The statement was made that, independent\nof recognition, trade could go on. That statement is\nprobably correct. On the other hand, I don't think that\nthis group wants to minimize that without recognition the\neffort which will be exerted by American traders will be\nfraught with additional uncertainties as a result of which\ntrade will not be as great, and certainly there will be\nless credit, less investment and more uncertainty from the\ntrader standpoint as to what the American attitude will be,\nwhat with export licenses and the ability of the American\nGovernment to prevent your shipping for some reason. That\nthey will pull out due to the political situation domesti-\nTHE\ncally is a factor at the present time.\nNATIONAL\nAND\nLIBRARY\nMR. ROBERTSON: I'd like to associate myself with\nservice*\nMr. Herod in this question of recognition. I agree that\nREVENUENT\nthe question of timing 1s of the utmost importance.\nDr. Fairbank said yesterday that he thought the value of\ndirect contacts with people who had been in these parts\nwould be of Interest and value to the committee. We have\nin China, as our chief executive, a man named Paul Hopkins,\nwho is known, I think, to a good many of the people here.\nHe\n- 156 -\nHe 13 a good, loyal and patriotic American, and he has\nno particular reason to like the Communists. If I may,\nI would like to read to you, confidentially, from a\nletter which I got from him under date of September 21,\nwhich gives something of his experience in dealing with\nthe Communists in connection with our own business. I\nthought 1t might be illuminating if that sort of thing\nmight be put in the record.\nAfter talking about our own affairs, he says:\n\"The authorities are all significantly honest, hard-\nworking individuals, who live on the barest essentials of\nfood and clothing. They practice austerity tc the point\nof not using electric fans or elevators in the buildings\nwhich they occupy as offices or residences. In my opinion,\nthe extreme privation of those officers will have serious\neffect upon their health, particularly those with tuber-\ncular tendencies. I have found them all intelligent, very\nfrank in discussing problems, and most of them with a good\nsense of humor.\n\"There is no question but that 1t is a new type of\npeople who, if not subject to outside pressure, will\nultimately bring great progress to China.\n\"To my mind, the pessimistic future stems from the\nincreasing breach which has developed between China and\nAmerica. There are arguments on both sides, but, in my\nopinion, the passage of time has seemed to confuse the\nissue and eliminate realistic thinking which bodes 111\nfor everyone. I may be too close to the picture and\nhave lost perspective. The almost daily bombing ac-\ntivity of the KMT, and the increased miseries caused\nthe Chinese people by those activities against non-\nmilitary objectives, constantly irritate an open sore.\nGrant 1t be un-Angle-Saxon to dany an ex-war partner,\nbut evidence would seem adequate that that partner has\nfor several years served its people so 111 that 1t has\nbeen rejected by its own people. America is now con-\ntributing indirectly to the miseries of those people.\nRecognition should be withdrawn and the blockade of the\ncoast broken. 12\nI thought that might be useful to the committee as\nthe evidence from one man who is particularly competent\nto judge the Chinese situation due to the fact he was\nNATIONAL\nARCHIVEK\nAND\nkiroson\nLIBRART\nDERVICE\"\nborn\nBOYERNMENT\n- 157 -\nborn in China, he is the son of a medical missionary\nand, as I say, he has no reason to love the Communists.\nHe applied for an exit visa some time ago to come back\nand visit his people--he had been interned during the\nJapanese war. It was denied him and it was only after\nwe arranged to have somebody else take his place as a\nhostage that they finally consented to let him go, and\nthat with the understanding he was going back again\ninside of six months. So, as I say, he has no particular\nreason to love the Communists and I think this is good\nex parte evidence.\nMR. ROSINGER: I'd like to associate myself with\nthe view frequently expressed around this table that we\nshould extend recognition. My own personal feeling is\nthat the recognition should come as early as possible.\nAt the same time, I recognize that within this country\nthere are certain practical problems to be faced politi-\ncally in this connection. The question of timing has\nbeen referred to frequently; I think that is extremely\nimportant. I think there is a period, it is hard to\ndefine in advance, but a period of perhaps three, six,\nmaybe nine months, in which recognition by the United\nStates will have a certain value in terms of Chinese\nopinion and will not simply be a reluctant, grudging\nfollowing after the facts and after the actions of\nother countries which will have recognized before us.\nI would not agree with the statement that with recog-\nnition of the new Chinese Government by Russia all the\nadvantages of recognition are lost to other countries.\nI think that is not so, and the reason why I state this\nopinion is that I think we have to look at the state of\nChinese public opinion. As I see it, the bulk of politi-\ncally conscious Chinese opinion is not, to the extent that\nit is hostile to the United States, hostile because it is\npro-Russian; its anti-Americanism is not pro-Sovietism,\nby and large, regardless of what the situation may be in\nconnection with particular individuals or leaders.\nAs I see 1t, Chinese public opinion, politically\nconscious public opinion, is not by and large hostile to\nindividual Americans, regardless of particular incidents,\n1t is not by and large hostile to the United States as a\ncountry, but rather hostile on rather pragmatic grounds\nto particular phases of American policy as experienced\nand perceived in China over the past few years. If that\nis so, then there is a stake to be won in considering\nthis state of Chinese public opinion. If it is not now,\n1872013\nby\nBOTTORMENT\nEIDENTIAL\n158 -\nby and large, pro-Russian in its anti-Americanism, then\nthere 1s & much more favorable basis for returning it to\nsome kind of friendly attitude toward the United States\nthan if, let's say, its anti-Americanism were identical\nwith a pro-Soviet approach.\nI might add as a footnote that I think in a country\nof 450 million people such as China, in which only a\nsmall percentage of the population, even the politically\nconscious, have a clear-cut, fixed ideology, that this\nquestion of how people feel on grounds of personal reac-\ntion to the policy of a foreign power, in this case the\nUnited States, is very important. I, personally, as I\nhave suggested, would be in favor of recognizing at the\nearliest feasible moment. I think, though, that in terms\nof preparing American public opinion for recognition,\nthere is a process of disentanglement from the Chinese\nNationalists which can be carried out in the weeks ahead,\nand I think to the extent that we disentangle ourselves\nfrom the Chinese Nationalists, we lay the basis for\nrecognition. As a matter of fact, if we were to recog-\nnize today, assuming that were possible, we would be in\na highly contradictory situation of recognizing at the\ntime that we were delivering, through ECA, supplies to\nFormosa, and 80 on. We have not yet cleared ourselves\nfrom the entanglement with the Nationalists. I'd like\nto suggest, although I am not informed on the technical\nproblems of carrying out some of these actions, that we\nend our ECA assistance as soon as possible to the rem-\nnants of the Chinese Nationalists. I'd like to suggest\nthat one important question would be the position we\ntake at the United Nations in connection with the reso-\nlutions or the proposals of the Chinese Nationalists.\nI think to the extent that we associate ourselves at\nthe United Nations with their position, we make it very\ndifficult to nove toward recognition. I would be in\nfavor of keeping ourselves 88 clear as possible from\nassociation with the Chinese Nationalist position at the\nUnited Nations. I think the question of the blockade is\nextremely important. I was particularly interested in\nTHE\nthe phrase from the letter of Mr. Hopkins, just read by\nwhene\nMr. Robertson, to the effect that we should actively\nAnd\nservices\nAIRBADY\nbreak the blockade. Regardless of the phrase that is\nused, I think it 1s rather obvious that the blockade\nCOVERNMENT\ncould not continue if the United States and Britain\ntook an active position against it. The blockade, let's\nsay, arose independently of our will, but its continuance\nis dependent on the assumption of a certain position of\nacquiescence on our part.\nIn\nCOMP DENTIAL\nNBH 159 -\nIn this connection, I have been struck by the whole\nissue of the Isbrandtsen ships, in the stopping and\nseizure of two of them by the Chinese Nationalists. It\nseems to me that one of the questions that is most easily\nunderstood by the American public--and not just recently\nbut all the way back--is the question of the right of\nAmerican ships to trade freely in various parts of the\nworld. Had action been taken--again I won't try to\ndefine it, I don't know the technical details--but had\naction been taken to defend the right of these American\nships to trade through a blockade (which is not a block-\nade but technically a port closure, a port closure which\nwe have already asserted we don't recognize as a blockade),\nI think it would have been very difficult for any opponents\nof the process of moving toward recognition to say this\nshall not be done, 11 because this kind of action is highly\nintelligible to the broadest kind of American public opin-\nion.\nTherefore, I'd like to suggest, as a generalization,\nthat the process of disentanglement be carried forward as\nrapidly as we can carry 1t forward, as a basis for pre-\nparing public opinion as a basis for early recognition.\nMR. STALEY: It seems to me in this connection that\nit might be valuable to get out at some point a statement\nthat would make the points that our Chairman mentioned\nabout our traditional policy on recognition, before taking\nany final action here. 1 don't know just what the best\ntechnique would be, whether a direct statement or an\ninspired statement of some sort, but to get across to the\npublic that traditionally the United States recognizes the\nregime that controls the country and shows indication of\nwillingness and ability to live up to its international\nobligations. Let people kick that around for awhile and\nmaybe that will prepare the way for the conclusion on the\npart of the public that the informed group represented\nhere seems to be reaching.\nOne further note on the drift of public opinion in\nour area. As you know, Roger Lapham has recently returned\nfrom China where he was head of the ECA mission, and he is\na former Mayor of San Francisco. He gave a speech a couple\nWATIONAL\nof weeks ago out there before the Commonwealth Club, and\nARGNIVES AND\nRECORDS\nLIBRARY\neverybody knows, of course, that he is completely unsympa-\nSERVICES\nthetic to the Communists, but he came out rather directly\nREVERNMENT\nand emphatically for recognition, going a good deal farther\nthan most people have been going in speaking on the subject.\nSubsequently,\nCONFIDE TAL\n- 160 -\nSubsequently, the World Trade Association of the\nSan Francisco Chamber of Commerce considered in their\nExecutive Committee the four points that Roger Lapham\nhad suggested in his speech, of which the fourth said\nthat we will have to recognize the Chinese Communists,\nand they agreed with his views and passed them on to the\nSan Francisco Chamber of Commerce which, I am informed,\njust recently has taken an official stand as a body sup-\nporting that general view. The four points that they\nagreed with, that Lapham put forth originally were:\n1. To continue American private business with the\nChinese, as far as it may be possible, in such a\nway as not to enhance to any dangerous degree the\nvery limited war potential of the country.\n2. To extend all possible help to American pri-\nvately endowed enterprises--educational, medical\nand missionary--efforts being made to promote the\ncontinuance of the private support which these\nenterprises have received in the past.\nS. To keep open our Embassy and Consulates in\nChina, staffing them with the ablest personnel\nprocurable in order that we may pit our best ca-\npacities against the serious problems still to\nbe faced.\n4. The only practical way to keep the door open,\nas well as to listen and observe what goes on be-\nhind the bamboo curtain, is acceptance of the fact\nthat we may soon have to recognize, in such areas\nas they control, The Communist government as the\nde facto government, and be prepared to recognize\nIt whether we like it or not.\nTRUMAN\nThey went on to point out that we already recognize\nNATIONAL\nthe Soviet Union and Yugoslavia and other countries whose\nARCHIVES AND\nRECORDS\nLIBRARY\nregimes we don't particularly admire.\nU.S.\nSERVICE\nSOVERNMENT\nMR. REISCHAUER: The question has been brought up as\nto whether the recognition of China would have any influ-\nence on a peace treaty with Japan. I presume the question\nmeans 1f recognition of China should come before a peace\ntreaty has been made with Japan, would that have an adverse\ninfluence on the negotiation of such a treaty. I personally\nfeel 1t would have very little effect on it. Abstention by\nthe Soviet Union from such a peace treaty would already\nbreak\nCONF IDENTI\n- 161 -\nbreak up its international character. The Soviet Union,\n1f you had a veto system, would already have a veto; I\ncannot see why the addition of a Communist China to such\na peace treaty would have any great influence. On the\nother hand, if you negotiated a peace treaty with a rump\nKuomintang Government having membership at the table, I\nthink it would only have an adverse influence on China.\nThe Communists would be less likely to accept the results\nof that treaty. I don't think there is any reason for\nholding up recognition on that score. We seem to be in\nvery general agreement about the desirability of recog-\nnizing the Communist Government in China and recognizing\nit fairly soon. I should like to say, however, that I\nsee no reason for unseemly haste in doing it; there is\nnothing dignified in jumping on the bandwagon in its\nlast lap and I don't think we gain anything psychologi-\ncally. In fact, I think we might lose psychologically\nby doing 1t in haste. We would be \"panicked\" as 1t\nwere; at least that would be the interpretation on the\npart of the Chinese.\nI'd like to offer one practical suggestion: would\nit be possible to act in conjunction with a country like\nIndia? I think that would make it more palatable to our\nown people and more palatable in Asia, if we took an\nattitude actually giving India a large part in determining\nthe time, saying \"you are a great Asiatic country, we want\nto be friendly with Asiatics, your decision on this is\nsomething that really influences our thinking, we would\nlike to go along with you on the matter.\"\nMR. COLEGROVE: At an early stage of the discussion\non recognition, President Coons and Mr. Ballantine called\nattention to the fact that we must not lose the bargaining\nopportunity in recognition and I think it 1s very important\nto us that we should remember that. We are in a game of\npower politics, no matter what we may think we are doing,\nand in power politics we should of course play for stakes\nTHEMAN\nANNUM\nNATIONAL\nIn this connection 1t might be appropriate for the\nARCHIVES AND\nRECORDS\nAUVOUIT\nUS Government perhaps, in cooperation with England and\nas\nSERVICE\nIndia, to make a public statement as to our terms of\nGOVERNMENT\nrecognition, even during negotiations over those terms.\nIt 1s rather odd in this conference that we have not\nmentioned, except on one occasion So far, the traditional\nAmerican policy in the Far East and that traditional policy\nhas\nCOMP\nDENTIAL\n- 162 -\nhas been the open-door policy enunciated by Secretary\nJohn Hay and repeated again by Secretary of State Cordell\nHull in negotiations with Japan before the second World\nWar.\nAny bargaining with the Communist Government or\nrecognition 1t seems to me ought to include an attempt to\nget complete recognition of our old traditional policy on\nthe open. door.\nWhile Chiang's government existed, we urged upon the\nNationalist Government the necessity for a real democratic\nform of government and not having a government that was\ncontrolled by one party like the Kuomintang. One reason\nprobably why Chiang failed--one of the main reasons--was\nthe fact that we tried to make him take Communists into\nhis government. Why shouldn't we insist, in the new\nCommunist Government, that democracy 1s not promoted by\na one-party government and that there should be many\nparties represented in the new Communist regime?\nThat of course is a propaganda point that we ought\nnot to lose and I regret to see the light treatment that\nwas made of the effects of recognition of the Chinese\nCommunists within the United Nations. The General As-\nsembly has become a great propaganda forum and the words\nspoken there are repeated all over the world. Bringing\nthe Chinese Communists into a seat in the United Nations\nwould make US listen to a lot more Communist propaganda\nwhich was repeated widely throughout the globe.\nMR. KIZER: I should like to second the suggestion\nmade by Dr. Holcombe about the White Paper. I have taken\noccasion to read it over and I find it a fascinating docu-\nment and it contains good material and good sections with\nsome sandy strips of course in between.\nTRUMAR\nI should like to follow Mr. Lattimore with the sug\nRECORDS AND\nSERVICE\nLIBRARY\ngestion to go on trading before recognition. Incouldn'\ngo as far as Dr. Holcombe's suggestion that they reform\nGOVERNMENT\ntheir government by recognizing various parties. That is\na matter of scuttling recognition and introducing conflict\nwhere we should introduce agreement.\nIf we long withhold recognition we shall be contrib-\nuting to an iron curtain between ourselves and China.\nTherefore, I would like to see that recognition come just\nas quickly as the facts of life reached by Congress and\nthe\nCONF DENTIAL\n- 163 -\nthe American people permitted. The American people will\nrather quickly adapt themselves to 1t.\nOne thing further, and here I follow Mr. Robertson\nclosely. I think we should make a public disavowal of\nthe blockade Chiang Kai-shek is conducting with respect\nto China and I would like to see that followed up at an\nearly date with a withdrawal of recognition. It does\nseem to me that the bombing that he is doing is so heed-\nless and go sacrificial of human life without any objec-\ntive that the blockade is not a real blockade but a\nnuisance designed to hurt people he does not like and\naccomplishes no purpose for him, and if we withdrew\nrecognition of him or to a lesser degree, repudiated\nthe idea that we were associated with it, it would be\nto our advantage.\nMR. QUIGLEY: I would like to join in the general\nsupport of the policy of recognition in accordance with\nthe early precedents of the US. I think the departures\nfrom those precedents we have tried have not worked and\nif they would not work in this case, I think that recog-\nnition is essential to trade because I doubt if the\nChinese will trade without recognition, and in view of\nthe fact that China is there and there 1s no alternative\nto dealing with China through this new government, it\nseems to me that we have no alternative.\nWith reference to the sentiment of the country, I\nhave been quite surprised in my area of Minnesota at a\nshift of sentiment that has taken place within the last\nyear or two. I think perhaps a vote which I took in my\nclass in Far Eastern Politics last Monday is somewhat\nindicative of that shift. Mind you, there had been no\npropaganda from the instructor prior to the vote. A\nnotice came out in the paper that day and SO before\nMy\nNATIONAL\nbeginning the day's discussion I said: \"How many in\nARCHIVES AND\nMICONOS\nLIBRARY\nthis class (of about 36 students) would be in favor of\nSERVICE\nrecognition of the Communist Government?\" Nineteen\nGOVERNMENT\nraised their hands without considering. They just popped\nup. I said: \"How many opposed?\" and I got six hands. We\nhad to assume the others did not know.\nThat is an astonishing thing to me and 1t is partly\ndue to a shift in the sentiment of the missionary people\nof this country. We are a great exporting area, as you\nknow, of missionaries and I suppose the Middle West is\nbetter\nCO\nINTIAL\n164 * 1\nbetter informed on the Far East than it is on any other\nphase of our foreign policy; at least, what the conditions\nare that condition our foreign policy, 80 I doubt 11 there\nwould be 8 very serious explosion upon recognition if that\nwere proposed in this country.\nGOVERNOR STASSEN: I stated on Thursday that I was\nopposed to recognition of the North Government in China at\nthis time and at least for a question of a couple of years.\nI want to go into that a little more thoroughly because at\nthat time I stated a position on it.\nMy first comment 18 on the discussion this morning\nthat has been advanced along with recognition or steps\nwe ought to take, which I say, frankly, to me could be\nbest characterized as steps that would hasten the victory\nof the Communists in China and hasten the complete liqui-\ndation of the Nationalist Government.\nTo me that would be a very sad mistake in our world\npolicy. If we recognize the Communist Government of China\nnow, clearly that does mean we must at the same time not\nonly withdraw recognition of the other government--the\nNationalist Government--but that we must then join in\naffirmative action to throw the Nationalist Government\nout of the United Nations. There are no half-way measures\non this. You cannot be recognizing a government in one\nway and then in the United Nations tribunal, in which we\nare 2. great leading nation, take a different position to\nthat, nor should we possibly abstain. That would be a\ncowardly and weak position to take. So, we would then be\nin the position of going into the United Nations, with\nour great prestige, and throw out from the United Nations\nthe representative of whatever you may wish to call them--\nthe remants of a former government that still has now, and\nI think will for some foreseeable time, the effective juris-\ndiction over one-third of the area of China and one-third\nof its people and that is continuing to put up some form\nof resistance to the Communist areas.\nNow, to put ourselves in that position in my mind,\nTHOMAN\n\"NATIONAL\ncannot be countenanced and I might urge, as I go forward,\nAND\nand respectfully submit that there have been some impli\nLIBRARY\ncations that perhaps those that oppose recognition are\nNOVERNMENT\ntrying to play the popular tune in America. That might\nbe their motivation.\nThe great view of statesmanship is the contrary\nand difficult and unpopular course. I will not attempt\nto draw\nCORF AL\n- 165 -\nto draw any cloak of statesmanship about me, but I\nwould modestly state that the steps that I took in the\nearly days of opposition to Hitler on lend-lease and\nthe whole question of isolation and world trade have\nnot been popular courses at the time they were taken,\nparticularly in my home part of the country. So to the\ngreatest degree possible I approach these policies from\nthe standpoint of what is right in the long view for our\ncountry and our ideals rather than what 1s the current\npopular view; in fact, I have such faith in democracy that\n1f a policy 1s right then I am certain you can interpret\nit to the American people and convince the majority of\nthem it 1s right and that 1t should be taken.\nGoing to the specifics of recognition, it seems to\nme that taking the affirmative stand of ejecting the\nNationalist Government from the United Nations and\nplacing in its stead the Communist Government of the\nNorth would be a clear invitation to a disregard of our\nfundamental ideals and objectives in the world picture.\nWhatever else may be said about the Nationalist Govern-\nment, 1t seems to me that there has been a greater\nmeasure of democracy, a greater measure of individual\nfreedom, the right of free expression, of a free press,\nof the communication of news in that area than there has\nbeen in any of the Communist areas of the world.\nI might project my views of the Communist Govern-\nment of North China. I believe that in the early stages\nthey have brought some of those who are not Communists\nInto leadership--some of those we might call moderates.\nIn the early stages they will say to the American busi-\nnessman, 1f your country treats us better and recognizes\nus that will facilitate your doing business here. How-\never, you will find quite rapidly as they consolidate\ntheir control over the country and as they introduce\npeople into these industries and businesses who learn\nsomething about them, they will proceed to throw out the\nmoderates from the government and will tighten up and\npossibly expropriate and take over the business, and\nthat process will move forward steadily.\nIn saying that, I 111 anticipate that the pattern\nfollowed in Communist China will be the same as the\nCommunist pattern in the Balkan area. I have a vivid\nTO\nNATIONAL\nrecollection of a conference with President Benes of\nARCHIVES AND\nRECORDS\nLIBRARY\nCzechoslovakia two and a half years ago in which he\n11.\nSERVICE\nstated that Czechoslovakia was cooperating with the\nGOVERNMENT\nSoviet\nCONFIDENTIAL\n- 166 -\nSoviet Union. He thought It was the best policy and\nthat they were seeking to build a bridge between East\nand West and had pledged cooperation with Stalin and\nhe thought It was the right policy for his country\nand that Stalin had pledged to him that Czechoslovakia\ncould work out its solution in the broad democratic\nframework.\nI think it is quite clear now that approach was\nused to Benes and other people of Czechoslovakia as a\nmeans of getting control, first, of the police and of\nthe Department of Industries and then getting the men\ninto the various industries and then working on week\nafter week and month after month to obliterate human\nrights and control over the country and bring it under\niron-handed dictatership. The record in Poland has\nbeen similar to that.\nIf that effort is made In China, I believe you\nwill find then disaffection of some of the Generals\nin the Communist armies of China which will have to be\nmet by rapid liquidation and new leaders being brought\nin, or 1t might involve a real spit up and further\ndivision with that vast area of China in its leader-\nship. This process, as I vision it, while the armies\nare in being and still moving about, would take place\nwithin the next few years and I would think it would\nbe to be regretted 1f we added to the prestige of the\nCommunist Government of China and than a process of\nthis kind began to take place and we in fact would be\nin the position of always strengthening the hand of the\nnew Communist Government, which would be successively\nwiping out the liberties, freedoms, and opportunities\nof the Chinese people and would be putting down the\nefforts of those who wanted some Nationalism in China\nand who wanted some independence and who were breaking\naway from the Communist leadership; in fact, help them\nput down that situation.\nIn my mind the pluses are very large on the side\nof saying: Try having it as a reserve policy that we\nwant to watch this picture for a couple of years before\nwe recognize the Communist Government of China. We may\nTHEMAS\nwell find that just as the experts' anticipations have\n\"NATIONAL\nbeen unfounded so many times in China, that the antici-\nABCUIVES\nAND\nAscuros\nsuvency\npation and prediction now that the Communist armies can\n8.5.\nRERVICE\nconsolidate all China on their own timetable may meet\nSOVERNMENT\nmany\nTAL\n- 167 -\nmany a reverse in some of the mountain passes by some of\nthe troops who begin to defend their own territory as\ncompared with defending an area far away from home.\nNobody knows the frailties of the human race. Chiang\nKai-shek in more recent months and years has been an un-\nfortunate conclusion of what in many respects was a bril-\nliant and remarkable career. Who knows but that Chiang\nat his age may pass from the picture and others may rise\nto the future in the uncertain period of a few years and\nthat in that we might find grounds, perhaps, first, for\na withdrawal of the full powers of the Nationalist Govern-\nment in the United Nations, and perhaps even a request for\na United Nations Commission to study the situation in China,\nthat we might thereby gain time and we might serve notice\nwe are observing what the new government is doing in the\nmatter of observing the recognized international amities\nand how 1t 18 treating American businessmen and others who\nare there and missionaries and how 1t is going about the\nabrogation of international obligations before we move in\nto recognize and to urge their seating in the United Nations.\nCertainly the situation as to Tito was no indication\nthat you move people away from the Soviet Union by being\ngenerous to them. He moved away at a time when we were\nbeing the firmest and clearly classifying him in that\narea, and he, on the other hand, was greatly professing\nhis association with the Soviet Union at a time when he\ncould do it and still retain full American aid and full\nAmerican assistance and that was the time clearly that\nthere was no reason for him to take any other position,\nbut when he had to make a choice with the increasing\ntightening up of the screws becoming apparent from the\nSoviet Union, then he made the choice to move away.\nIf there are indications of moving away from Moscow\nand of a greater recognition of rights of people within\nNorth China, that would be the moment at which we might\ndecide to recognize and send assistance, but at a time\nwhen all statements being made by the leaders and the\nCommunist Government are insulting and attacking our\ncountry, when the treatment of nationals is at a low\nebb, clearly that is not a time to think of recognition\nthe\nand I do not agree that our prestige 18 involved in the\nAWARD\nquestion of recognition. I think our prestige is in-\nvolved in all of Asia and all we have done and all we\nwill do,\nI\n- 168 -\nI make the further point on this that by all means\nwe should have a new aid to Asia economic program under\nway, functioning before we recognize the Communist Gov-\nernment of the North of China.\nIf at a stage when the world says, what is America's\nAsia policy, if there is such a stage, the one outstanding\nfact that we recognized the Communist Government of North\nChina and joined in throwing out of the United Nations\nthat nation that stood firm in years of Japanese invasion,\nif that would be the one thing we did in Asia, I think the\nresult would be very sad, but if we start a new affirma-\ntive approach of aid to Asia in a positive way and if your\nprogram and policy begins to project itself and be under-\nstood--if at that stage we find the intelligence officers'\nreports are of complete consolidation and if at that stage\nwe find there 18 an element of increasing stability and\nrespect for rights rather than the reverse in the North\nof China, then at that stage I think recognition should\nbe given after a full consideration but not before.\nCHAIRMAN: I am going to ask Mr. Russell if he will\nread part of a telegram which we received from General\nWedemeyer.\nMR. RUSSELL: General Wedemeyer says: \"The United\nStates should not surrender the initiative in any field\nof international endeavor, in any area of the world. The\ntiming, the scope and the character of our efforts in one\narea, In this instance, the Far East, should be carefully\ncoordinated and integrated with our efforts in other areas\nof the world, for example, western Europe, central Europe,\nMiddle East, etc. To insure economy of means and to make\nour efforts more purposeful to all nations our efforts\nshould be integrated and coordinated with those nations\nand peoples having objectives comparable with our own.\n\"Specifically with reference to policies and objec-\ntives in China the following ideas appear pertinent:\n\"1. The pronounced and progressive deterioration\nof China's political and economic structures, also the\nimpotence of government military forces, render it\nimpractical at this time to provide large-scale material\naid. The remaining Chinese non-Communist forces or ele-\nments, with or without National Government's cognizance,\nare not organized or equipped to assimilate or to use\neffectively large-scale material aid.\nRECHIVER AND\nWINDKOS\nLIDRART\nDERVICE\n\"2. The\nBOYERNMENT\nCOME\nDENTAL\n- 169 -\n\"2. The Chinese people, individually and collec-\ntively, would receive a tremendous uplift in morale and\nwould derive strength and hope for the future if the\nUnited States, also Great Britain, France, and other\nfriendly countries publicly affirmed the determination\nto support anti-Communists or non-Communist elements in\nChina throughout the Far East. Such a public pronounce-\nment by the President or the Secretary of State would\nprovide the moral support SO urgently needed by bewil-\ndered millions not only in the Far East but in other\nimportant areas of the world.\n\"3. Material aid to Chinese leaders, communities,\nprovinces OZ specific areas, actively resisting or\ntangibly striving to generate realistic opposition to\ncommunism, should be given by the United States on an\nevaluated scale, carefully supervised by United States\nrepresentatives, progressively increased in scope if\ndevelopments warrant. In this connection military\nequipment, propaganda media, medical equipment, food\nand clothing might be distributed at times, in areas,\nand in quantities determined by careful evaluation of\nthe existing and developing situation. Our initial\nobjectives should be to restrict and harass the mili-\ntary and economic activities of the Communists and\nconcomitantly to refute the ideas, the ideals and the\nideologles of the Communist political and cultural\nforces.\n\"4. Continued observation and evaluation of the\nresults attained by the above unequivocal moral support\naccompanied by evaluated material aid, might justify\nlater greatly increased material aid in certain locali-\nties as, for example, in support of indigenous movements\nthat give tangible evidence of momentum and substance in\ntheir struggle against Communist domination.\"\nCHAIRMAN: I am going to ask you now if you would\nbe willing to discuss for a while the particular problem\nwhich seems to me to emerge in connection with a Japanese\npeace treaty.\nI think in some of the earlier discussion in which\nthe question of Japan has been touched on, a number of\npeople at least have expressed a point of view which\namounts to a suggestion that a termination of occupation\nof Japan as soon as practicable would be desirable and\nJapan should be started out again free from an occupation.\nThe\nLIBRARY\nadvice\nNOVERNMENT\nCONF DE AL\n- 170 -\nThe problem which arises in connection with the\nconclusion of a peace treaty and on which I hope you\nmay be willing to express opinions is this: It is\nquite within the realm of contemplation that assuming\nwe get over the procedural difficulties of arranging\na conference to conclude a peace treaty, that 1t might\nbe fensible to reconcile the points of view of the\nSoviet Union and other powers as to the terms of the\ntreaty. We have had some difficulty in concluding\npeace treaties in other parts of the world. The\nquestion is: If such a situation develops, is it\nmore desirable to continue with our occupation and\nwith no peace treaty or have those states who can\nagree on a peace treaty go ahead and conclude a peace\ntreaty of their own with Japan, even assuming other\nstates refrain from ratifying it and therefore remain\ntechnically in a state of war with Japan, or may con-\nclude their own peace arrangements with Japan.\nThat issue of a separate peace treaty if no unani-\nmous decision can be reached, or 1f there 18 no peace\ntreaty, on how the situation should be liquidated is\ncan which I think requires very carefuly decision and\nI hope that we might address ourselves to that for the\nnext period of our conference.\nMR. JOHNSON: I believe that a peace treaty with\nJapan should be negotiated as soon as possible. I feel\nthat the only way that you can free Japan to enable\nJapan to take the part that she has to take in the\ntrade in the Far East, which is necessary to put her\non her economic feet, is to have this peace treaty.\nI know the difficulties that Ne have had up to the\npresent time; we haven't gotten over the procedural\nhurdle. I, myself, feel that it is rather sad that we\ncan't get across that hurdle. My own personal belief\n1s that enough of the nations, that have been partici-\npating in the discussions at the Far Eastern Commission,\nwould go with U.S. on a peace treaty to make it worth while\ndoing it even 18 Russia was not a party to it. I profess\nto no knowledge of Russia and I don't know much about 1t,\nbut I have a feeling that 1f we could start in on this\nthing, Russia probably wouldecome along with us; because\nI don't think they could afford, or would feel that they\ncould afford, to let the majority of the nations of the\nPacific go forward in this matter and not participate in\n1t in some way.\nCUSTANT\nMR. REISCHAUER:\nSTREET\nCONFIDENTIAL\n- 171 -\nMR. REISCHAUER: I might dwell particularly on the\ninfluence or the China situation on the Japanese situati n.\nI think the Communist success in China does make it more\nimperative to make a peace treaty with Japan quickly, 1f\na suitable peace treaty cen be made. Of course, a peace\ntreaty made without the participation of certain great\ncountries like the USSR would be a blow at international\ncooperation. We'd have to recognize It as such - that is\na serious loss. A peace treaty in which we had to sacrifice\ncertain essential points would be disastrous. That is, if\nwe made a peace treaty in which Japan could not maintain 8\nviable economy, we'd be worse off than we were before.\nThere has been much reference to the American rec rd\nin the Philippines as being our greatest asset. I think,\nin 8 sense, the American record in Japan is, or at least\nwill be, superseding the record in the Philippines. The\nrecord in the Philippines 1s 8 colonial record for the\ncolonial period. We had very clean skirts in the colonial\nperiod. Asia is moving out of the colonial period into\nsomething else. Wittingly or unwittingly, we have tried to\ndemocratize Japan; there is no doubt about the effort and\nthere is no doubt in the minds of many people that that is\nwhat we tried. If Japan cannot live economically, of course,\nthat great experiment will collapse and it will backfire in\n8 tremendous way. I think 1t would be accepted as proof-\npositive that the American way, the American concept for\nAsia, 18 meaningless enough Asiatics probably believe that\nalready. We put ourselves way out on a 11mb in Japan some-\ntimeswithout recognizing it, but we are out there just the\nsame; we almost have to succeed. Unfortunately, I think\nwe would all agree, our position in Japan 13 definitely\ndeteriorating. I think it has been deteriorating for some\ntime. You do not, in the long run, create a strong demo-\ncracy through military dictatorship and we must admit to\nourselves that our methods inevitably have been those of\ndictatorship: we have told them what to do. There is, in\nthe long run, a conflict between the ultimate objectives\nand immediate methods; that conflict has grown year by\nyear. At a certain point it became so great, I put it in\nthe past tense, 1t became so great that we began to lose\nground rather than to gain ground in Japan. Particularly\nwith the Chinese victory, a Communist victory in China, I\nthink we will begin to lose ground, we will accelerate in\nour\nAND\nAMARY\nSWEENDMENT\nCOMP\n- 172 -\nour losing of ground. I say this because the area in\nwhich we are losing ground, I think, is the ideological\none primarily. There is, after a period of years, a\ngrowing resentment on the part of the Japanese toward\ndictation. In so far as they have imbibed some of the\n1deas of democracy, that irritation 1s all the stronger;\nit is natural to people with democratic ideas, so far as\nthose have gone across.\nThere is an idea in the mind of the Japanese that\nthey must live with the Chinese. The Russians exert a\nnegative pull there. Russia is highly unpopular. Com-\nmunism is popular in certain groups in Japan despite\nthe Russians not because of them. In the intellectual\nvacuum that Japan is, I think the Japanese have quite\nsuccessfully put them into two different compartments,\nRussia and Communism. It seems incredible to us because\nwe usually define Communism 1n terms of what exists in\nRussia. That is quite different in Japan. They define\nCommunism as a theory; 1t is on a very high level.\nRussia 18 something else. They don't like Russia.\nIn the case of China, a Communist China exerts a\ndifferent pull on the Japanese public, I think. They\nare in a state of mind where they have always been great\nadmirers of China despite all they have done. Today,\nafter their great defeat, I think they are in a position\nof being in greater admiration of China than ever before,\ndespite the situation in China today. They feel that\nthey must go along with China to a certain extent.\nI think 1t would be a highly disastrous situation\nif we seemed to be creating a wall between Japan and\nChina. Communistic China then would really exert a\nstrong pull on the Japanese imagination. Communism 18\nunquestionably growing in Japan, growing very fast, and\nI think we, ourselves, are the chief stimulus to its\ngrowth. The Army of Occupation is the type of thing\nthat does produce that. Therefore, the Communist vic-\ntory in China makes 1t necessary for us to move all the\nmore rapidly than before.\nThe matter of trade has been brought up several\ntimes, in terms of whether or not trade is more vital\nto Japan or to China. I should say the answer is very\ndefinitely it is more vital to Japan. China is on a\ndifferent\nNATIONAL\nARCHIVES\nAND\nResults\nAMOUNT\nNERVICE\nNOVERNMENT\nCONF AL\n173 I s\ndifferent time schedule, in fact, all our thinking about\nChina and the rest of Asia is on a different time schedule\nfrom our thinking about Japan and Western Europe. Those\nare industrialized countries, as Mr. Kennan pointed out\nthe other day. Japan is one of the potential areas for\nwar power, for industrial power. It is in a different\ncategory from the rest of Asia, something that can be put\ninto power terms within a matter of a year or two. Asia\ncan only be put in those terms in a matter of decades.\nI think in much of our discussion, when we said\n\"Asia, If we meant Asia minus Japan. Japan is in that\ndifferent time schedule. It makes no difference, really,\nwhether the Chinese Communists succeed in twenty years to\nindustrialize, or ten years. They are out on a very long-\nrange program, say fifty years if you want. China is not\ngoing to be a menace to us for decades. Japan has to live\nimmediately. It is an industrial power. In Communist\nhands 1t would be a menace to us. Its economic power can\nbuild up China and can help us greatly in reviving the\neconomy of the whole Far East. I mean this whole concept\nof production of rice in Siam and Indochina is premised\non the supposition it can be exchanged for Japanese in-\ndustrial goods, I believe. We have to succeed in Japan\nimmediately; the Communists don't have to succeed in China\nfor decades. From their point of view, I think the trade,\nin 30 far as 1t is an essential part of the Japanese eco-\nnomics, 1s more important to Japan than to China. Any\nfeeling on the part of Japan that we are stopping that\ntrade would be disastrous to us on the ideological ground\nas well.\nCHAIRMAN: How do you envisage the position of Japan,\nsay, in 1960 in the Far East?\nMR. REISCHAUER: Either Japan is going to live eco--\nnomically or else 1t is going to be a catastrophe. If\nshe is living economically that means she is living on\nexports, now, not on 80 much of consumer goods as capital\ngoods. The whole shift of postwar years has been in that\ndirection and that 1s what the Asiatics want from Japan,\nand Japan can provide these capital goods to the rest of\nAsia much more cheaply than anyone else can, in most cate-\ngories. If it succeeds, I should imagine in 1960 Japan\nwould be a very important part of the economy of the whole\nFar East. It is pump-priming mechanism, actually, that is\nthe thing that gets the rest of the Far East going.\nPolitically,\nWILL\nNATIONAL\nARGHIVES AND\nREGORDS\nLIBRARY\nSERVICE\nNOVEMBMENT\nCOMP N'T'T AT\n- 174 -\nPolitically, you have the question: Does Japan\nremain a peaceful nation, a nation attempting to carry\nout a democratic program, or swing to something else?\nThe problem is, what else would it swing to? I think\nthe history of modern Japan would indicate clearly\nthere are only two possibilities in Japan, either a\ndemocracy or back to the totalitarian pattern. The\nwhole try from '90 on is a swing between the two. They\nhave grown out of the modern Japan--a pull toward demo-\ncracy, which many of us underestimate in Japan, and a\npull toward totalitarianism which finally won out--they\nare products of the modern age. Japan is going to swing\nbetween the two. The question is what kind of totali-\ntarianism; that 1s academic. Totalitarian means pretty\nmuch the same thing. I think in Japan it would have to\nbe red because that 1s the only line possible; 1t would\nbe red in the sense it had a Communist ideology and a\ngreat number of old army officers running it. They would\nflock into that; it would be the only solution for them.\nThat would be a rather curious red, but it doesn't make\nany difference to them whether 1t is emperor-oriented or\nsomething else. We have that choice. If the thing suc-\nceeded, we have a chance to keep it democratic and we\nhave to work for that.\nMR. COLEGROVE: There 1s, of course, no doubt of the\nfact that the longer our military occupation remains in\nJapan, the more unpopular the United States becomes with\nthe Japanese people. We have been extremely popular in\nJapan, the military occupation has been very fortunate\nunder General MacArthur and I think that, from the very\nbeginning, we had the great bulk of the Japanese people\nbehind the American experiment in democracy, partly\nthrough the devotion that the Japanese people have to the\nemperor, because the emperor asked the Japanese people to\ngive support to General MacArthur, and because of the\nwisdom of the administration that we have carried on in\nJapan. But a military government is always unpopular and\nno matter how far we go in relaxing the immediate direction\nof governmental affairs in Japan to any government like the\nYoshida government, which is very favorable to the United\nStates, nevertheless, we increase our unpopularity in re-\nmaining. On the other hand, I think that we might well\nkeep in mind that the ideal procedure for a peace confer-\nence on the Japanese peace would be a conference of the\neleven nations represented in the Far Eastern Commission,\nbut if Soviet Russia will not cooperate in negotiating a\npeace in a conference of the eleven nations plus Japan,\nherself, making twelve, then wisdom would seem to call\nTOTAL\nfor\nWATERNAL\nAND\nLIBRARY\nINSTRUCE\nSOVERBERT\nCONTIDENTI\n- 175 -\nfor a conference of the ten remaining nations plus\nJapan. But one thing will have to be clear with refer-\nence to the American position and that 1s the problem\nof security in this great game of power politics.\nIn other words, does the United States have the\nbasis to resist a Communist, or, again, a Russian inva-\nsion not merely of Japan but also of South Korea? If\nwe withdrew without having it clear to the entire world\nthat we are ready to immediately oppose a Communist in-\nvasion of South Korea and again a Communist invasion of\nJapan, then, of course, we greatly have weakened our\nposition and strategy, not only in the Pacific, but I\nthink even in Europe, itself. In other words, South\nKorea today, its independence, is completely dependent\nupon the support of the United States; so 1t would be a\ngreat strategic mistake for the United States, even with\nan early peace treaty, to withdraw unless we may have\ntaken a strong position with reference to strategy.\nMR. DECKER: I imagine that a good many other people\naround this table have had the same experience that I\nhad in getting it from the horse's mouth, namely, from\nGeneral MacArthur, that he considered that continued\nmilitary occupation could not be successful. He said\na study of history disclosed it. A study of history\ndisclosed military occupations could only be successful\nfor a maximum of from three to five years, and the occu-\npation began in 1945.\nThe second thing I should like to say is I think it\nis very important that we should be prepared to follow\nthe logic of democracy and to accept its hazards as well\nas the benefits that we so profoundly believe in; accept\nits points of weakness as well as the strength in which\nwe have confidence, and that requires that the Japanese\npeople should, at the earliest possible moment, get on\ntheir own.\nThe third thing that it seems to me is completely\nobvious is that one of the very critical points is going\nto be Japan's viable economy and how that can be achieved\nwithout opening up trade between Japan and China. It\nseems to me that is a question that can only be answered\nin one way.\nThen there is a further thing that I think we ought\nto constantly keep in mind and that is the traditional\nfear which the Japanese have entertained toward the Russians.\nWhatever Communism may do in Japan, whatever may be the\nresult\nADVUNT\nDOVERNMENT\nCONFIDENTIAL\n- 176 -\nresult of the Communist success in China, I do not\nbelieve that they will eliminate from the Japanese\nmind and heart that rather deep-seated and well-\nfounded distrust of Russia.\nMR. MURPHY: In consideration of a peace treaty\nwith Japan, I think there are two major considerations,\nfirst, on the political level, the danger of our being\nresponsible for or underwriting the Japanese political\nsituation for a prolonged, indefinite, future period,\nand on the economic level, whether we can afford the\nnearly half billion dollars which we are being forced\nto contribute to their economy, when there is no evi-\ndence, no good evidence, 1t won't continue indefinitely;\nand secondly, the effect on the Japanese effort to make\nitself self-sustaining of our continuing to hold it back\nin that manner.\nWith regard to our occupation on the whole, although\nthere have been numerous mistakes made or claimed to have\nbeen made, on the whole the occupation has on balance\nbeen quite successful, but there is no guarantee that at\nsome near future time we may not begin to make serious\nmistakes; as Mr. Reischauer says, the situation tends to\ndeteriorate.\nWhen I was in Japan not very long ago, the general\nfeeling as reported to me there by both Japanese and\nAmericans was from the very end of the war the Japanese\nwere waiting to see us get out, much as they had unex-\npectedly liked us in the beginning and up to the present\ntime. Nevertheless, they were withholding all kinds of\nplans for the time when we got out. The question of\nreparations is pretty well settled by now, but it was a\ngreat drawback and holdback on Japanese plans for at\nleast two years. There are other restraints on them\nwhich our continued occupation and the lack of a peace\ntreaty impose on them.\nWith regard to the militarily strategic position,\nit seems a very, very doubtful thing whether we would\nbe in a position to hold Japan if we became involved in\nwar with Russia, and whether we were able to hold Japan\nor not in holding 1t be responsible for eighty million\npeople, I think it is generally conceded that we'd have\nalmost the same advantages in the islands like Okinawa,\nTinian, and Saipan, that we have in holding the islands\nof Japan. For that reason, I'd be strongly in favor of\nour moving toward a peace treaty with or without Russia.\nMR. VINACKE:\nSTATE\nNATIVAL\nNo\nCOMPEDENTE\n- 177 -\nMR. VINACKE: I would like to raise questions rather\nthan present a point of view. I think we are making\ncertain assumptions in our approach to this question, one\nof which is that a Japan restored in her independence as\na result of a peace treaty, would automatically thereby\nhave facilitated her access to the position which she must\nhave economically if she is going to retain her economic\nposition in Manchuria, in Korea, in North China, and in\nher trade relations with the southern Asian countries and\nwith the Philippines.\nNow, it seems to me that a great deal depends on the\ncircumstances and the nature of the Japan which regains\nher freedom of action, as to the attitude or reaction of\nthe peoples that are governed throughout the area, through\nthe resumption of trade relations on terms regarded by the\nJapanese as suitable, or we would regard as suitable in\nterms of the economic objective of restoring Japanese\npower. I am afraid that under those circumstances, as well\nas under present circumstances, we would find ourselves in\nthe position of being expected to exert considerable pres-\nsure in support of Japan on the states. It is not alto-\ngether clear yet whether they are prepared to make a peace\ntreaty with Japan on the assumption that Japan is going to\nbe a relatively economically strong Japan and, therefore,\nnot in an equal trading position with themselves, but really\nin a dominant trading position with themselves.\nI wonder whether we won't be in a better position to\napproach a peace treaty with Japan on a basis of negoti-\nation, if the negotiations were deferred to the time when\nwe could look at Japan as a factor in Far Eastern politics,\nrather than a factor in the American-USSR relationship,\nwhich is obviously, it seems to me, what we are doing now\nand what we have to do. I think we are in a much better\nposition in the present state of our relationships with\nthe Soviet Union to deal with Russia from Japan as a country\nthat is not independent than we would be if Japan had re-\ngained her freedom of action.\nMR. COONS: My remarks are a little bit along the same\nvein Mr. Vinacke has just brought forward. Supposing that\nwe shall have signed a treaty with Japan, we shall still be\nhaving the Japanese on our minds and hearts as a concern\nwith reference to their economy, and there is still the\nreal possibility that, if not from governmental sources,\nat\nWATHING\nMONIVELAND\nNAME\nITWARD\nBOYERNMENT\nCC.\n- 178 -\nat least from the capital markets of this country, equal\namounts of money will flow toward Japan. Now, we know a\ngood many of the countries of the whole Pacific basin\nhave been concerned about the drift of policy on our part\nwith reference to the revival of Japanese economic strength,\na policy which we have had to take for various reasons, and\nquite legitimately. Would it not be wise for us, before\nundertaking the negotiation of the Japanese treaty and\nrecognizing the concern that they have that we will either\nprivately or publicly finance the Japanese hegemony and\neconomy in the Far East, to do these two things we have\ntalked about before: namely, try to have some greater\nregional considerations of the flow of trade, and have a\npolicy of economic aids such as Mr. Stassen has referred\nto, which are already a part of the record, to mollify\nthat concern that is wholly legitimate on the part of\nmany of our Pacific confreres.\nMR. BALLANTINE: Mr. Chairman, I think that many of\nus Americans, in thinking of a peace treaty, have a con-\ncept that you conclude a peace treaty and then you settle\neverything for the rest of time and Japan will be off our\nnecks, we no longer have a responsibility toward Japan.\nNow, I think that we have to conceive of this problem of\na peace treaty as related to our ultimate objectives in\nJapan. I might express our ultimate objectives in these\nterms: we want to see emerge in Japan a country that will\nplay a constructive part in the family of peaceful nations.\nIn other words, that means we want a Japan that is going\nto be on our side. Now, if we want a Japan that is going\nto be on our side, we have got to make 1t to the interest\nof the Japanese people to be on our side. We want them to\nbe democratic. Well, if we want them to be democratic, we\nwant to convince them that that 1s a better way of life\nthan the kind of life that they have had before.\nNow, if we should conclude a peace treaty and Japan\nshould be left completely defenseless and still have\nfailed to achieve a viable economy, we will earn recrimi-\nnations to the rest of time; if Japan should find herself\ndefenseless against the Soviet Union, if Japan should find\nherself unable to make ends meet, that would certainly turn\nher into the hands of the Soviet Union. I think we must\nrealize that we have a continuing responsibility even\nthough we don't have any occupation forces, even though we\ndon't have any tutelage carrying on we do have a moral\nposition that we must continue to maintain in Japan, con-\ntinue to help Japan to arraign herself on our side, to\nmake it to Japan's interest to remain on our side. I just\nwanted to inject that note as an important consideration\nthat we must keep in mind.\nTHEREOF\nMR. LATTIMORE:\nAMOUNTS\n- 179 -\nMR. LATTIMORE: The dilenma of our position in\nJapan can be stated in B. way slightly different from\nany statement made so far. Either we have a Japan\nwhich before 8. treaty or after a treaty is primarily\ndependent on the kind of American economic blood\ntransfusions which General Marshall this morning said\nrepresented an intolerable drain in the long run--\nsomething that has to be diminished- that kind of\nJapan either under continuing occupation or a free\nnation which may take on the very deceptive appearance\nof a reliable ally but in fact represents 8. dangerous\ncommitment of enormous American resources in a distant\npart of the world which may not be the decisive\ntheater of power settlement.\nThe only other possible kind of Japan is one which\ndoes not in fact depend on American subsidies. Such a\nJapan is inevitably going to be a bargaining Japan\nand inevitably a bargaining Japan must bargain with\nthe counters it has at its disposal and among the most\nimportant of those counters are its possibilities of\nfriendly relations with a Communist Russia and & China\nunder increasingly strong Communist control.\nThese are unpleasant facts, but we have got to\nface them. There is no way of getting a really free\nand independent Japan that 1s not also a Japan capable\nof bargaining against us at our expense.' There 18 no\nway of having a dependent Japan that is not an embar-\nrassing drain on us. Those are the two horns of the\ndilemma and there is absolutely no other way of stating\nthe facts.\nI think we ought to give a little more attention\nto the problem of Horea. Korea appears to be of such\nminor importance that it tends to get overlooked, but\nKorea may turn out to be a country that has more effect\nupon the situation than its apparent weight would\nindicate.\nI don't know how it can be done, but I should feel\nvery much casier about the prospects of success of\nAmerican policy in the Far East as a whole if we can\nproceed to arrange our new relationship with Japan,\nwhatever it turns out to be, by disengaging ourselves\nas far as possible from southern Korea.\nIt has\nSTATE\nTHE\nWATNING\n15\n/\nNOVERNMENT\n- 180 -\nIt has been widely stated that Korea is not a\ndecisive strategic position. Certainly on the polit-\nical side Korea is likely to be an increasing embar-\nrassment. Southern Korea unfortunately is an extremely\nunsavory police state. The chief power is concentrated\nin the hands 05 the people who were the collaborators\nof Japan and therefore Korea represents something which\ndoes not exist in Manchuria and North China. If the\nChinese are lling to trade with Japan it is because\nthey no longet fear that trade with Japan means\nJapanese stra egic control. Southern Korea, under\nthe present regime, could not resume closer economic\nrelations with Japan without a complete reinfiltration\nof the old Japanese control and associations.\nKorea is a danger to us in other respects. I think\nthat throughout Asia the potential democrats--people\nwho would like to be democratic if they could--are more\nnumerous and important than the actual democrats. The\nkind of regime that exists in southern Korea is a ter-\nrible discouragement to would-be democrats throughout\nAsia who would like to become democrats by association\nwith the United States. Korea stands as a terrible\nwarning of who loan happen.\nMR. QUICLEM: I suppose we could say that the pro-\ngram of the occupation has two main phases--a police\nphase OF military control phase, established in order\nthat certain settlements might be reached, and the\nother, a totality or reformist phase which might or\nmight not have been undertaken but which we have under-\ntaken and it seems to me that we leave out the question\nof international complications--that probably on both\nof these aspects of the occupational program we would\nhave to say that the time has come to wi thdraw and to\nend the occupation.\nI agree with Mr. Reischauer's estimate of the\ntrend in the Japanese attitude toward us and wish there\nwere time to discuss the reasons for it, but of course\nthere isn't time. The cost of the occupation is of\ncourse tremendous for us and it is also tremendous for\nthe Japanese and it is to some extent delaying their\neconomic recovery. I would think, though, that we are\nfaced by a situation prompted by the now constitution,\nwhich will require us to set up a condition in the treaty\nwhich\nNATIONAL\nARCHIVES AND\nNECORDS\nSERVICE\nANVOUIT\nBUYERNMENT\nCOM\nDENTIA\n- 181 -\nwhich the Russians will not accept and I don't know\nwhether that is the main reason for their apparent\ndetermination to have a veto in the conference but\nthat perhaps you could tell us, Mr. Chairman. 110 have\nin the constitution, as everyone knows, required Japan\nto disarm and to remain disarmed permanently and the\nJapanese probably don't have the unanimous feeling as\nto just what obligations that leaves us under, but I\nknow some factors of our public opinion would feel if\nwe withdrew from Japan before this had been changed,\nthat we would be failing to discharge a moral responsi-\nbility for their protection.\nPerhaps other sectors of Japanese public opinion\nwould say, we prefer you to withdraw even so, and how\nthe majority would go I don't know but we are faced by\nE. problem there which I would like to see discussed.\nI don't know what the answer to it is myself. Certainly\nit will take, if we do desire to have that provision\nof the constitution or otherwise, considerable time to\nput them back into the military column. So far there\nhas been no public expression of any desire to see\nthat constitution changed. of course we know what the\nJapanese will do the moment we withdraw. It is more\nor less academic RS to what we think about it except\nfor the matter of the treaty and I don't know the\nanswer.\nCHAIRMAN: There is a great deal of speculation\nas to what the future relationship should be between\nIndia and the US. It depends in part I suppose on the\nevaluation of the future role of India in the whole\nAsian and Fer Eastern scene and if you would give us\nyour thoughts as to what is the position of India today,\nwhat it is likely to be, what the relationships of the\nU.S. to India should be, it would be extremely helpful\nand very timely for us now.\nI think one of the characteristics of the Indian\nsituation 19 that because of the recent emergence into\nindependent life, we approach the problem of India\nwithout the background of the historic context which\nis considered in relations with Japan and with China.\nMR. TALBOT: In B. very modest way for 8. few years\nI have been climbing stairs and walking down halls and\nknocking\nUNITED ARCHIVES RECORDS AND\nTHERE\nNATIONAL\nU.S.\nSERVICE\ngovernment\nCON IDENTIAL\n- 182 -\nknocking on doors and saying, remember there is India\nand in this world we have to think about that part\ntoo. Things have happened elsewhere in Asia and we\ncome to 8. moment when there is recognition of a country\ncalled India and there is a sudden jump and India 1s\nthe new bastion of democracy and India is the place\nwhere our policy, which had so many difficulties in\neastern Asia, can be retained. I am afraid that I\nfind myself in the minority in having to suggest that\nthere are a great many risks in the Indian situation\nwhich have to be considered carefully before we take\nsuch a long leap in the very new political situation\nthat you speak of.\nThere is an inherent regime and administration\nin that country which was badly fractured by participa-\ntion and indepondence. It is too early to judge what\nis going on and how effective the new implementation\nor new administration measure may be.\nIn the matter of top personalities, Nehru, the\nPrime Minister, 1s the boy of the crowd. He was 20\nyears younger than Ghandi and younger than practically\nevery other leader on the first team and yet he is 60\ntoday. Within the next relatively few years we have\nto count on a complete turnover and wonder what sort\nof change will como after that.\nThe Indians still have the problem of their rela-\ntions with Pakistan, with all the troubling difficulties\nexisting there and the uncertainties as to what may\ndevelop over Kashmir. Economically, there is the basic\nproblem of feeding people--the food problem which has\nto be met if the country is to be held together politi-\ncally, and it is still quite uncertain as to how it\nwill go on. They have had productive difficulties and\na strike in capital and a strike in labor which has\nbeen plaguing them. They have had many other diffi-\nculties. Socially they are going through a period when\nthe old stabilizing factor, the caste system, is break-\ning around the edges, and while social change is desir-\nable, it does not always come at a steady pace and it is\ndifficult to tell what will happen. Psychologically\nthere is a great danger.\nThere is very great danger in putting Nehru in the\nposition of being an American puppet. There is no better\nway to take the ground out from under him than that.\nIndia\nDEPARTMENT\nF\nRECORDEND\nSERVICES\nADVUNT\nGOVERNMENT\nCONF ID TAL\n- 183 -\nIndia is a risk, to my way of thinking, that is\nworth taking, and in considering the problems we should\nthink of it from India's point of view. Coming back\nto the food question, which is primary, if we were the\nIndian Government, where would we 80 to get aid? We,\nthe Indians, must get food to carry over the next couple\nof years. If we don't, the political and economic\nintegration will be get back, and where do we go? Ther-\never we can get it. We don't ask for ideology. We 80\nto Argentina or Southeast Asia and come to the U.S.\nBecause of pride we don't ask for grants but we know\nthe U.S. has a surplus in grains and in some way our\npride could be saved--we could make a borrowing arrange-\nment in surpluses that would help us.\nAgain, from the Indian point of view, on the longer\nterms, therells a great deal to be done in the increase\nof food production. Again there are many countries to\nwhom the Indians might 60 for aid. They will try to\nget what they can from Japan and see if they can get\nhelp in materials for wells and fertilizer from this\ncountry or if they can get it cheaper or better from\nEuropean countries or Australia.\nThen there are a great many other prospects for\neconomic viability. The Indians are thinking in terms\nof how will we stabilize our position, and not, how do\nwe fit into the American-Russian picture, but how to\nget our own problems settled. In line with that think-\ning, there is a great deal of help Americans can give\nto the Indian invitation and there are large-scale\nutilities that are needed. They require not only\ncapital goods: if you give them a big machine, you\nhave to train the people to operate it. There has been\nsome stocking of the steel mills by the British Common-\nwealth, run by Indians, trained by Americans; similarly\nwith aircraft and similarly with dam projects. They\nare small-scale businesses that Indians might invite.\nThe government people don't like the attitude of\ntheir own capitalists and they would not object to\nseeing American or European business on a small scale\nthere. They are proceeding with village and urban\nplanning and again at their initiative I think they\nmight very well derive some help. I don't know how\nwidely It is known that the Ghandi spinning wheel,\nwhich 1s a symbol of India, has been considerably\ndeveloped\nAMOUNT\nSERVICE\nANVOICE\nGUYERNMENT\nCONFIDENTIAL\n- 184 -\ndeveloped and refined by a Pole over the last 15 years.\nThe contributions of Americans on reconstruction\nhave been belpful 80 long as they have been at the\nIndian initiation. Similarly in training of adminis-\ntrators, they may want help and there may be a place for\noutsidera to help--university projects were mentioned-\nscientific training and others.\nReturning to my role as an American, it seems to\nme that because of the present situation in a country\nlike India, we don't want an American policy which says\nwe must line up India on our side. As an American, I\nwould like to see diversity in the world and people\ndeveloping as Indians are developing, in their own way.\nl:e take the risk. It 1s a lesser risk than if we try\nto people India to our pattern. Let them develop their\nown way and if we get that diversity I think we may\nsome day profit from It! As Mr. Lattimore says, we\nrun the risk that India will turn against us, but where\ndon't we run the risk?\nIn considering the problem of India, we have to\nthink of Pakistan, which is over-shadowed by India.\nIt is smaller and it is divided, one might say hope-\nlessly, geographically speaking, but confronted with\nother countries of Asia, it is a large and important\ncountry and I think in our fascination for a new role\nof India, W6 must be very careful in our treatment of\nPakistan.\nThe Indian Prime Minister is coming to this country\nnext week. It is very important and it good, but\nwe can not forget that the Pakistan Prime Minister,\nLiaquat Ali Khan, is going to MOSCOW in the next few\nweeks and there are suggestions that the Prime Minister's\nvisit to Moscow is at direct reaction of sensitiveness\nand irritation at our having glamorized India and having\nignored to some extent the potentialities of Pakistan.\nI think that there is a great deal we can do to\nstrengthen Indian society. I think we can help them\nstrengthen it. There is a good case for doing it. India\ndoes represent potential stability and the more stable\nit is, the more likely 1t is that it would be nearer to\nus than the other side. We don't have to be suckers for\nS\nthe ECAFE\nAND\nADVUNTS\nacavice\"\nBOVERNMENT\nCOM\nNUTAL\n- 185 -\nthe ECAFE plans Mr. Brown mentioned so badly organized.\nOn the other hand, the World Bank and others found it\nis possible to get good plans and support those and\ngive the Indians a feeling they are putting up a busi-\nnesslike proposition and we are doing business with\nthem. That would encourage their morale and give them\na sense of belonging to your world if anything does.\nIndia's importance is growing if it can achieve\ninternal stability. If all these risks I mentioned can\nbe surrounted, the role it will play in South Asia will\nbe very important, and I think that, generally speaking,\nit is likely to be nearer our side than the other\nalthough certainly rarely entirely on our side.\nAs a final comment I might observe that last night\na senior British official in Washington at dinner with\nthe Indian Ambassador, Mrs. Pandit, was speaking about\nKashmir. He over-simplified the case and said Kashmir\nis the central problem in the world and not the stom\nbomb, because If India and Pakistan 80 to war over\nKashmir they would bring chaos resulting in communism\nin India which would extend to the Middle East, which\nwould extend to Africa, and then would over-flow Europe.\nLater an officer of the Indian Embassy commented\nthat that presentation had probably done as much to\nirritate Mrs. Pandit and presumably the Indian Government\nas anything could. He said: \"We don't like the Kashmir\nproblem. It is something that bothers us. We want\nKashmir, but we don't like the way the thing is shaping\nup, but if people would only help us--why don't they\nsay, there is some way to approach the Kashmir problem.\nThat will help the Indians. Why do they have to say,\nyou are the spearhead and the end of the weapon for\nEuropean communism. If they looked at it from our point\nof view we might make progress.\nMR. HEROD: From purely a business and industrial\nstendpoint a few observations on India may be in order.\nI personally have not been in India for a little while.\n1.0 have branches there naturally and we do a considerable\namount of business there. As we look around Asia, with\nthe exception of Japan, India has 5 greater installation\nof electric power than any nation. It has a greater\nchange of stability than most of the other countries and\nhaving inherited an Indian civil service, it offers\nThough\ntremendous\nARGHIVES\nAND\nALCIMUM\nTHEAMY\nSERVICE\nBRYERWENT\nCO CIDENTIAL\nsea 186 -\ntremendous potentialities, and although our observations\nindicate the virility or vitality of the individual\nIndian is not as Creat as the individual vitality of\nthe Chinese, the Indians are going some place whereas\nthe Chinese are going less rapidly, let us say, in a\nroundabout direction. They have many plans and the\nfuture of those plans seem to be possible and reliable,\nbut I don't think we want to E0 over the barrel with\nour so-called aid to everybody.\nWe are getting the psychology that we can expend\nour patrimony and they will have gratitude. They will\nnot, in my opinion, and we will be dispensing our\nresources.\nThere are good prospects in India for credit exten-\nsion and likewise for loans self-liquidated which they\ncan have, and if we approach India on a business propo-\nsition and try not to weave it into a division between\nMOSCOW and Washington, I think we will get further\nalong.\nAlso, I think we should do a little clarification\nof our thinking. If our objective in India and Japan\nis constructive influence among peace-loving nations--\nmaybe democracy is only a means to that end--it imposes\non democracy certain standards--something which is a\ndesire to peace and I think we want to go easy on trying\nto jam down the neck of people abroad some conception\nwe have got--as to the way Hague in Jersey City or Huey\nLong in Louisiana or some other one of our politicians\nfeel--that so-called western democracy 10 necessarily\nthe best one to use or even democracy as we know it is\nthe best instrument to use in some countries in different\nstages of development.\nI think we should approach the Indian situation on\nthe basis of, here is a tremendous country which at the\npresent time and for the foreseeable future has the\ngreatost potentialities in Asia--second only to Japan--\nbut I don't believe the potentialities are going to be\nrealized. The realization of those potontialities I\nthink will be dependent to a maximum extent upon the\nIndians themselves.\nThe present laws and tendencies toward laws are\nsuch 83 to frighten capital--our private investment.\n%\nTROMAN\nNATIONAL\nARCHIVES AND\nThey\nnecomps\nAMOUNT\n11.\nSERVICE\nDOVERNMENT\nCOMP DENTIAL\n- 187 -\nThey are far more Socialistic or Communistic in their\nverbiage than in some cases in the Communist countries.\nI think you will find a great deal of difficulty in\nattracting private capital, but just because private\ncapital does not flow, I would urge caution on the\npart of government to become the instrument which in\ndefiance of good business prodence says, for some\naltruistic reasons we will extond the loans and do\nthese things to try to help out, because I don't believe\nthey are appreciated.\nMR. MURPHY: In my opinion the Indian people are\nnot a strong and practical people, in our definition,\nand despite Mr. Talbot's clowing presentation of the\nopportunities and the resources and the potentialities\nin India, nevertheless, within the last few months,\nwhen the International Bank sent a mission out there\nto examine all of the loan possibilities and programs\nthat the Indians were putting forth, after they came\nback I was told by the head of the mission that the\nIndians had actually put before them no important pro-\nposal which was a finished proposal that is, each such\nproposal lacked some characteristic either of using the\npower that was to be generated in the area in which the\npower installation was to be placed, or some other prac-\ntical element which made the proposal not a satisfactory\none for the Bank. They ended up by saying we will make\nsome small loans in order to save face; but there is\nthat danger that must be faced that the Indians want\n& great deel of support from us but there is the ques-\ntion of how fast we can EO along in giving that support\nin a practical manner.\nMr. Nehru is one of the great spiritual forces of\nthe world and his government is generally considered\nto be a democratic and a humanitarian government, and\nyet with respect to the three problems that they now\nhave at issue with Pakistan, of Kashmir, of the refugee\nproperties, and of the water rights in West Punjab, in\neach of those three preponderantly it soems to me the\nIndians are acting in a reactionary and arbitrary manner.\nGOVERNOR STASSEN: I just want to say that I asso-\nclate myself with Dr. Talbot and others who say that\nAND\nMADIONAL\nARGHIVES AND\nWO must not try to have the Indians take sides between\nBIRRARY\nthe Communists and ourselves. I think we must let that\n15\nSERVICE\npicture develop on pretty much their own pattern, and\nBUYFRUMENT\nI also\n- 188 -\nI also emphasize the view that you should try to get\nthe greatest amount of the business approach into\nthe situation, more of the underwriting of the Point\nFour and self-respect approach of the Indians. That\n1s why, too, the Pacific Pact thing, which might cause\nIndia to be outside of it, would be a very bad move,\nin my judgment.\nMR. DECKER: I was very much struck with the pos-\nsible wisdom of the suggestion made by Dr. Reischauer\nthat in the recognition of the Chinese Government that\nvery great care be taken to at least consult with India\nbeforehand. We may not be able to synchronize any\nsuch recognition or to adopt entirely parallel courses,\nbut that seems to me a suggestion that is very well\nworthy of exploration.\nI might add that I have been rather surprised here\nin this conference that we have not had more discussion\nof the question of the parallel action between ourselves\nand Britain on other matters, particularly on the matter\nof recognition, and the more specific things we have\ndiscussed which pertain to China. I am very certain\nthat is in the minds of the officers of the State\nDepartment and that every effort will be made to keep\nthe great English-speaking peoples in step, which is,\nI think, a very important objective to be sought.\nMR. VINACKE: One of the comments General Marshall\nmade with respect to the Philippines was that there 18\nto be association in advance of the action. We ought to\nkeep clearly in mind that the Philippines is an independ-\nent state, through which and in cooperation with which,\nwe could act very effectively.\nWARRY\nNATIONAL\nARCHIVES AND\nINDUST\nSERVICE\nNOVERNMENT\nCONFIDENTIAL\nMEMORANDUM OF NELSON T. JOHNSON\nON THE QUESTIONS DISCUSSED AT THE\nCONFERENCE ON CHINA\nThere are some thirty questions listed as for\nconsideration by the conference. These may be grouped\nsomewhat roughly by countries. Some can be divided\ninto two or more questions, numbers in parentheses are\noriginal numbers in conference list.\nCHINA\n1 (1). To what extent should American Foreign\nPolicy in the Far East be directed toward saving China\nfrom a totalitarian regime?\nI find it difficult to understand whence\nAmerica received a mandate to save China from a regime\nthat is totalitarian, which I assume would be a Chinese\ntotalitarian regime as the question does not speak of\nsaving China from an invasion or from an attack from a\nnon-Chinese totalitarian regime. Totalitarianism, as\na kind of government for human beings, and in its\ndeveloped perfection supported by the dogma of infalli-\nbility, originated in the Orient. The Chinese concept\nof a State was a theocratic totalitarianism headed by\nan Emperor bearing the title Son of Heaven to indicate\ndivine connections. Chinese leaders trained in America,\nEngland and France broke with this kind of a government\nin 1911 and attempted to found a new government under a\nconstitution modeled on that of the United States. By\n1923, influenced by Russian advisers, they set up a new\nkind of totalitarian one party nationalist state which\nruled China down to yesterday. Apparently, it never\noccurred to us to take steps to save China from that\nother Russian-inspired totalitarian regime. Instead we\nrecognized and did business with it as a legitimate\nsuccessor to other Chinese governments.\nWe should not forget that an international\neffort to save Russia from totalitarianism in 1918\nprobably did more to fasten it on Russia than all the\nefforts of Lenin and Trotsky. Russian Communists won\nadherents as the only element in Russia active in the\ndefense of the homeland against alien invasion. Attempts\nto save France by neighboring states probably did more\nthan anything else to produce the totalitarian Napoleon.\nPerhaps the worst thing that could happen to Mao's new\ngovernment\nCONFIDENTIAL\nCOM\nDENTIAL\n-2-\ngovernment would be to find itself alone to tackle the\neconomic problem of the Chinese peasant he and his\nfriends accused the Nationalists of neglecting. He\nneeds the United States as an alien sparring partner\nor enemy to fight to conceal his own inadequacy.\nChina has never really known any other kind\nof regime although during the past thirty-eight years\nChinese leaders have been struggling with the problem of\ntraining the Chinese people in more democratic ways of\ngovernment.\nMy answer to this question is that it is\nreally none of our business what kind of regime the\nChinese people set up for themselves and I see no reason\nwhy American Foreign Policy in the Far East should be\ndirected toward \"saving China from a totalitarian regime\"\nset up for the Chinese by the Chinese.\n2 (1). To what extent should American Foreign\nPolicy in the Far East be directed toward saving China\nfrom being used as an instrument of international\nCommunist aggression?\nIt seems to me that this is a question, and\njust such a question, as the United Nations under its\ncharter was organized to meet. China is, and presumably\nwill continue to be, a member of the United Nations. The\nproblem covered by the question is not our responsibility\nalone. The nations will have to determine what con-\nstitutes \"international Communist aggression\" and whether\nOI not China is being used as an instrument of Communist\naggression, and by whom. In any case, I do not see that\nthis question involves the sole responsibility of the\nUnited States. Once more I say, let us not forget what\ninternational intervention did for Communism in Russia.\n3 (2). In view of the shortcomings of the National\nGovernment and its defeats at the hands of the Communist\nforces, what should be the United States foreign policy\nregarding further assistance to the Nationalist regime?\nThe implication of this question, as I read\nit, is that the United States has been furnishing aid to\nthe Nationalist Government of China in its fight against\nCommunism. In the course of the fight there have been\nshortcomings on the part of the government we have aided\nand it has suffered defeats at the hands of the Communist\nforces.\nSTATE\nCONF\n-3-\nforces. Therefore, the question naturally comes up for\nan answer: Shall the United States give the Nationalist\nregime any further assistance?\nThe question is a legitimate one if it is\ntrue that we have been aiding the Nationalist Government\nof China in its resistance to Communism. But is it true\nthat we have given the Nationalist Government any aid in\nits fight against the enemy, Communism? I have examined\nthe statement of March 21, 1949 of the United States\nassistance to the Nationalist Government of China and I\ndo not find that any aid was given for that specific\npurpose. On the contrary, according to the White Paper,\nwe appear to have spent a good deal of effort between\n1942 and 1946 trying to persuade the Nationalist Govern-\nment of China that it should take the Chinese Communists,\narmed and unarmed, into its regime on a coalition basis.\nOur aid covered by the above-mentioned statement to\nCongress was given or spent for the purpose of \"keeping\nChina in the war with Japan\" and to help the Chinese\nGovernment (Nationalist) take the surrender of the Japa-\nnese forces in China after V-J Day.\nIt is well known that the Nationalist Gov-\nernment in China has been fighting Chinese Communism\ncontinuously since 1927, except for a truce during the\nfight against Japan. The Chinese Nationalist Government\nrefused to accept our advice to receive the Communists\ninto the government on a coalition basis. This question\ntherefore seems to have no basis in any previous aid to\nthe Nationalist Government in fighting Communism, and as\na question based on such aid as the United States ex-\ntended for war purposes, it lost its validity with V-J\nDay and the surrender of Japan.\nLet's not act like a child who got mad,\nkicked his block-built house all over the nursery floor\nand now howls if anyone else touches the blocks.\n4 (3). Are there any other healthy forces of\nresistance in China capable of exercising effective\nleadership and to which the United States support should\nbe given?\nNo nationally effective Chinese leadership,\nso far as I am aware, among the forces resisting the\nspread of Communism existing in China, has emerged to\nreplace the leadership of the Nationalist Government\nwhich we have opposed. It will take some time before\n/\nsuch new leadership can appear. The answer to this\nquestion,\nSTATE\nCONF TAI\n4-\nquestion, thus put, and in view of all the circumstances,\nis, that United States support would have difficulty\nfinding such leadership at the present time. We seem to\nhave lost practically all contact with any forces of\nresistance that may still be in being or developing.\n5 (4). If so, what form should such assistance take\nand how could it be made available?\nThe answer to the preceding question,\nnumber 4, was in the negative and therefore this question\nneeds no answer.\nI might say, however, that as a government\nwe might accomplish a great deal by stopping talk about\nthe shortcomings of the Nationalist regime and listen a\nlittle and see where and in what form resistance to\nCommunism in China may be developing. There has been so\nmuch recrimination that there has been little opportunity\nto discover just what new forces may be emerging. Per-\nhaps a little silence on our part would be as helpful as\nanything else. At least we do not need to encourage\nChinese Communists by attacks upon those whom they are\nattacking.\n6 (5). If the Chinese Communists unite all of China\nunder their aegis, what should be the United States\npolicy towards recognition, including representation in\nthe United Nations, and toward trade relations?\nThis question can be made more realistic by\neliminating the word \"Communists\" after the word \"Chinese\".\nThis question then becomes clear to an American who is\nconscious of the ancient relations that the United States\nhas had with the Chinese people and the answer becomes\nobvious. Mao Tze-Tung has as of October 1st declared\nhis Government the sole legal Government of China.\nSoviet Russia has recognized as of October 2nd the new\nregime and withdrawn recognition from the Nationalist\nregime of China.\n7 (9). Assuming Communist control of China, to\nwhat extent would the government be dependent upon out-\nside trade and financial relations for the internal\ndevelopment of the country?\nThe answer to this question depends upon\nwhat is meant by \"internal development of the country\".\nA survey\nCOMP\nA survey conducted by Lossing Buck, with the aid of\nfunds appropriated by the Nationalist Government of\nChina and the Rockefeller Foundation, of the condition\nof the Chinese farmer and the utilization of cultivated\nland in China, published in 1937, indicates that the\npoverty of the people and the low standard of living\nis due largely to certain causes which can, to a large\nextent, be remedied right in China. As the population\nincreases, this problem increases in urgency and com-\nplication. Control of pests, animal diseases, better\nseeds, more and better fertilizers, better marketing\nfacilities for the farmers' products, et cetera, are\nreforms that, it is said, will go a long way towards\nreising the standard of living by increasing the Chinese\nfood supply by fifty per cent. These reforms can be\nundertaken without adding an acre to the land under\ncultivation; without unnecessarily disturbing the life\nof the people by shifts in population; and without de-\npendence on outside trade.\nInternal developments extending to recon-\nditioning of the railways, roads and river transport,\nrestoration of factories, power plants, and river con-\nservation, et cetera, will be dependent largely upon\noutside trade and financial relations for the necessary\nmachinery, supplies and working capital. Influx of\ncapital will be dependent on establishment of internal\npeace and stability and protection of investments in\naddition to a willingness to have it come in.\n8 (10). Can it be anticipated that the United States\nwould be able to influence Chinese government policies\nthrough economic and financial measures?\nI think that the answer to this question is\n\"No\" based on previous experience. Chinese government\npolicies tend to nationalization of industry and secondary\nproduction facilities which are beyond the capacity of\nprivate Chinese enterprise. We are opposed to such a\ntendency in domestic and international business, believ-\ning in free enterprise and competition - or have been.\nNationalization distributes the risk which today a few\ncapitalists are in no position to take unaided.\n9 (11). Can it be anticipated that \"Titoism\" will\ndevelop in Communist China?\nIf the word \"nationalism\" is substituted\nfor this new puzzle-word \"Titoism\", the answer to the\nquestion\nCONF IDENTIAL\n-6-\nquestion is \"Yes\". The word \"nationalism\" makes the\nquestion realistic. The growing trend towards national-\n1sm will compel Mao Tze-Tung or any other Chinese\npolitical leader to pursue national policies independent\nof outside control. \"Titoism\" is a highly argumentative\nword and it is too closely connected with pan Slavism,\nSoviet Russia, Stalinism, and conditions in Eastern\nEurope. It is not applicable to the situation in China.\n10 (12). Under the most favorable circumstances\nfor those in control of China, how significant a mili-\ntary potential would that country develop in the next\nfive years? The next ten years? The next twenty years?\nIt will take fifty years for the Chinese\nto attain sufficient peace and order and food surplus to\ndevelop a military potential of her own of any significant\nimport or effectiveness at all. At no time during the\nrecent war was China's army able to push back enemy\nforces or invade enemy country. By that time, Chinese\nCommunism, if it persists so long, will be as different\nfrom the Communism that Mao Tze-Tung talks about, as\npresent day Stalinist Communism differs from the Commun-\n1sm of Lenin, Trotsky and Karl Marx. Already Soviet\nleaders such as Vishinsky in \"The Law of the Soviet\nState\" are busy explaining why government has not\n\"withered away\" in the \"Socialist homeland\".\nNEIGHBORING COUNTRIES\nDate MATIONAL - 120 THERE\ns\n11 (20). If the Communists consolidate their con-\ntrol over China, should it be assumed that they will\ncontinue their push into neighboring countries in South-\neast Asia, that is, Indo-China, Siam, Halaya, the\nPhilippines, Burma, India, Indonesia?\nAs I say below, Chinese living overseas\nmay be expected to take on the political coloring of\ntheir homefolk for the security which the group gives\nthe individual. They have generally been the under-\nprivileged minorities in the countries where they dwell,\nbecause of the inability of their homeland to protect\nthem and give them prestige in their foreign surround-\nings. Any one who watched the phenomenon of the Chinese\ncommunities in Siam, Malaya, and Java become hardened\ncenters of Kuomintang nationalism for purposes of self-\nprotection\nCONF IDENTIAL\n-7-\nprotection and agitation for local rights may know what\nto expect of the activities of overseas Chinese if their\nhomeland becomes united and strong under a Communist\nregime. Overseas Chinese were represented in the Govern-\nment of Kuomintang China. I understand they continue to\nbe represented in the New Chinese Peoples Government.\n(Note: Here is an interesting phenomenon. Chinese\nliving abroad, no matter how long, continue to think of\nthemselves as possessing a home in China even if that\nis no more than a grave at the end of a long life abroad.\nEven in China a native of one province living in another\nconsiders himself to belong to the province of his\nfathers. This may go on for several generations.)\nI doubt that the Chinese home regime will\nphysically push out from the homeland into neighboring\ncountries. If they do, protection should come from the\nUnited Nations set up to prevent international aggression.\n12 (21). To what extent are neighboring countries\nin a position to resist Communist pressures?\nThe answer to this question depends upon\nwhether the Communist pressure is exerted from within\nor without. Communist pressure in China has from the\nbeginning been \"from within\". The only part of China\nthat has been under the direct influence of Communist\nRussia is Manchuria, occupied by the Russian army in\n1945 for the purpose of ousting the Japanese who had\ntaken possession of the area after ousting Chinese\nNationalist and Soviet control.\nIf the Communist pressure in neighboring\ncountries follows the same pattern that it has followed\nin China proper, and comes from within, the struggle will\nbe between two domestic forces, each seeking to win and\nhold the support of the majority of the people. The\nresult of such a contest will depend upon the ability\nof the ruling group to hold the support of its people.\nThere is another contingency, however,\ne\nintimately related to this pressure from within which\nmust be taken into account. If there is a large Chinese\n11.\npopulation within the neighboring country such as is\nfound in Siam, Malaya, the Philippines, Java, Indo-\nChina, and Borneo, then it may be expected that the\nChinese population will follow any change in the\npolitical outlook of China. Patriotism and a desire\nfor the protection that comes from membership in a\ngroup\nCOMPIDENTI\n-8-\ngroup, are urges, plus the fact that the families or\nclans of these people will be under control of the\nCommunist regime in China, which will lead Chinese\nliving abroad to become Communist centers. They will\nbe Chinese Communists, primarily interested in their\nminority rights in the community in which they are\ndomiciled. It will be recalled that these same over-\nseas Chinese constituted centers of difficulty in\nJava, Malaya, the Philippines, and Siam when they\njoined the Kuomintang to benefit by the prestige of\nUnited China, to present a united front locally for\nprotection, and to assert and claim rights as Chinese\ncommunities. It may be expected that these same com-\nmunities as Chinese Communists will be troublesome\ngroups from the point of view of national security in\nthe countries concerned. They may be expected to\nsympathize and work with \"pressure from within\" groups\nto the extent that the latter welcome their aid.\nIf the pressure is from without, the\ncountry will have to rely upon such defensive strength\nas it may possess, aided by the powerful backing of the\nUnited Nations, which was organized for the purpose of\nmaintaining world peace and preventing international\naggression.\n13 (6). Should the United States take steps to\nprevent the Communists from seizing Taiwan (Formosa) ?\nIf the word \"Chinese\" is substituted for\nthe word \"Communists\", I think that the answer to this\nquestion becomes crystal clear, especially after what\nhappened with United States participation at Cairo and\nPotsdam. The only people other than the Chinese that\nmight have any colorable right to Formosa would be the\nJapanese, whose rights to Formosa might be considered\nin a light similar to the rights Russia claimed to\npossess in Port Arthur. We could repeat the proceed-\nings at Yalta and give Taiwan back to the Japanese.\nAfter all, Japan's fifty-year clear and unquestioned\nownership of Taiwan was of longer duration and of a more\nbasic character than was the Russian long-expired-twenty-\nfive year lease of Port Arthur and Dairen.\n14 (7). What should be the attitude of the United\nStates toward the status of Hongkong?\nPerhaps our attitude toward Hongkong\n(which for over a hundred years has been & British-owned\ncrown\nCONF IDENTIAL\n-9-\ncrown colony) might be determined in the light of\nprecedent established at Yalta in regard to the desire\nof Soviet Russia to have restored to it the long\nexpired lease-hold of Port /rthur captured by and\nsurrendered to the Japanese in 1905. British posses-\nsion of Hongkong stands on firmer ground than did\nRussian lease-hold of Port Arthur and Dairen. We\nshould be consistent in these matters. After all, our\ntenure of California is no better than British tenure\nin Hongkong. A Chinese attack upon the British crown\ncolony of Hongkong would be a matter which the United\nNations might well consider as a threat to world peace\nby an act of aggression. Just as a Mexican attack\nupon California would, I believe, be an act of aggression\nwithin the terms of the United Nations Charter.\nAs a matter of practical fact, British\noccupation of Hongkong would be difficult of maintain-\ning against a determined attack by the Chinese. The\nisland of Hongkong is dependent upon the mainland for\ndrinking water.\n15 (13). If China falls under Soviet-dominated\nCommunism how will that affect the free government of\nSouthern Korea and the prospect for the attainment of\nKorean unity?\nSTATE\nOne might ask, what has been the effect\nupon the free government of Southern Korea of Northern\nKorea falling under Soviet-dominated Communism? The\nFree Government of Southern Korea is closer economically\nand racially to Soviet Communist dominated Manchuria\nthan it is to China. My personal opinion is that China's\nbecoming Communist will have little or no effect upon\nthe future of Southern Korea. It will just make the\nsituation a little more so.\n16 (27). What role should India play in the crisis\narising out of developments in China and the Far East?\nI believe that the independent govern-\nment of India will decide this matter for itself and\nwithout reference to us. The crisis is already upon\nIndia and the rest of Asia. The question is, or should\nbe, what role is India playing? India is already play-\ning it, whatever that role is. India's first interest\nis to get her economy and polity organized, and settle\nmatters that are in dispute with Pakistan.\n17 (28). What\nCONFIDENTIAL\n-10-\n17 (28). What role should Australia and New\nZealand play in the struggle against disruptive\neconomic forces in China and the Far East?\nThere is a new assumption involved in\nthis question namely the assumption that the economic\nforces now working in the Far East and China are dis-\nruptive. Disruptive of what?\nNew Zealand and Australia, the Anzac\ncountries, are the only countries whose populations are\npredominately European and whose political fortunes are\ncompletely involved in the fate of the Pacific area.\nEconomically, however, they are tied very closely into\nthe economy of the British Commonwealth and the United\nStates. The Anzac countries will, in my opinion,\ndetermine their own role. They will not accept advice\nor any assignment of a role by us to serve our interest.\n18 (8). If the Soviets recognize a separate\npolitical regime in Manchuria, what should be the policy\nof the United States regarding that situation?\nRecognition by the Soviets of a separate\npolitical regime in Manchuria should be the signal for\nus to reconsider the Yalta Agreement with a possible\nview to 1ts renunciation. We should bring the whole\nbusiness before the United Nations. At Yalta, we\nassumed a responsibility for Russian conduct in Man-\nchuria. At Yalta, we agreed to use our influence to\npersuade the Chinese to consent to the return of Port\nArthur and Dairen to Russian control for a period of\nyears. To the Oriental, our position is that of a\nbondsman for Russian good performance in Manchuria.\nTherefore, under the Yalta proceedings, we have a right\nand a duty to take action in this matter. But we also\nS\nAMERICAN\nhave an obligation to act, for we are still party to\nthe Nine Power Treaty regarding Principles and Policies\nto be followed in matters concerning China, signed at\nWashington on February 6, 1922, which contains the\nfollowing:\n\"1. To respect the sovereignty,\nthe independence, and the territorial\nand administrative integrity of China;\n2. To provide the fullest and most\nunembarrassed opportunity to China\nto develop and maintain for herself\nan effective and stable government;\n3. To use\nCONFIDENTIAL\n-11-\n3. To use their influence for the\npurpose of effectually establish-\ning and maintaining the principle\nof equal opportunity for the commerce\nand industry of all nations through-\nout the territory of China;\n4. To refrain from taking advantage\nof conditions in China in order to\nseek special rights or privileges\nwhich would abridge the rights of\nsubject or citizens of friendly\nstates, and from countenancing\naction inimical to the security of\nsuch states.\"\nIt could be contended that we violated our\nobligations under this Treaty by the executive agreement\nand our action at Yalta. We should not carry our viola-\ntion any farther.\n19 (25). What should be the policy of the United\nStates toward the conclusion of a Pacific Pact for\nmutual security?\nWe should not participate in such an agree-\nment or pact if it is intended to divide Asia into hostile\ncamps.\nTHE\nJAPAN\nIII\nS\nI\n20 (14). If China remains Communist, under Soviet\ndomination or otherwise, what repercussions may be\nanticipated in Japan?\nIt is possible that a Communist China\nmight make the Japanese more conservative. It is also\npossible that China's Communism might make common cause\nwith Japanese Communism to unite the Chinese and Japan-\nese peoples and thus bring about something that the\nJapanese conservatives sought to accomplish but failed\nto achieve. \"Asia for the Asiatics\" is a powerful\nslogan so long as it does not mean Asia for the Japanese\nor the Chinese or the Russians. Japan and China comple-\nment one another in trade. Japan possesses the \"know-how\"\nthat\nCOM\n-12-\nthat China needs to rehabilitate her industries.\nChina has the resources --- food and raw materials -\nneeded by Japan. Such an outcome should worry the\nRussians more than it should us.\n21 (17). How should they (repercussions) affect\nout policy regarding the conclusion of a peace treaty\naffecting Japan?\nSuch a development should offer no bar\nto the establishment of a peace between us and the\nJapanese.\n22 (19). Can Japan be safeguarded as a barrier\nagainst Soviet Communism?\nIt seems to me that the United States\nand the United Nations ought to be able to safeguard\nJapan against aggression by Soviet Russia, if that is\nwhat is meant by the words used in this question. I\nsuspect, however, that this is not the meaning intended.\nI suspect that the meaning is \"can Japan be safeguarded\nas a barrier against the spread of Communism?\" I\nanswer, it can not, unless there is a strong body of\nJapanese prepared to fight Communism at home as a\ndomestic problem.\nOur serious difficulty is that we do not\nSTATE\nhave a policy in regard to Communism in our own midst.\nBARRY\nHence the inconsistencies in our attempts to be useful\nabroad in regard to Communism. It seems to me that\nS\nAMERICAN\nuntil we in the United States have made up our minds\nwhat we are going to do with our own home problem or\nbrand of Communism, we can do little to help or safe-\nguard the Japanese.\nIf it is Soviet aggression we are talk-\ning about, then we should first build a barrier against\nSoviet Communism in Alaska and work with the Canadians\nto build such a barrier in Canada. We would at least\nbe working within the Monroe Doctrine, on American\nterritory and with American forces.\n23 (18). How should they (repercussions) affect\nour economic policies toward Japan?\nI do not know the answer to this question.\nI am not certain of the meaning of the question. Until\nthe\nCONFIDENTIAL\n-13-\nthe Japanese have become self sufficient in their food\nproduction, or until they can obtain regular supplies\nfrom China or Manchuria, we are going to have to make\nup their food deficit and as long as we occupy Japan\nour economic policies toward Japan will be governed by\nJapanese food requirements and Japanese ability to\nobtain supplies 1n Asia. Our long range economic policy\nin Japan should be to encourage peaceful trade between\nAsia and Japan as a means to helping Japan to her economic\nfeet.\n24 (16). How should these repercussions affect our\noccupation policy in Japan?\nThe answer to this question will be found\nin the answers to questions 20, 21, 22 and 23.\n25 (15). How will they affect the economic rela-\ntions between China and Japan?\nChina and Manchuria, if the latter area\nis separated from China, acting together, can starve\nJapan, for between them they control the supply of soy\nbeans which provide the chief source of vegetable pro-\nteins demanded by the vegetarian Japanese. The question\n1s, will they act together? Should the Chinese Com-\nmunists dominate the relations with the Japanese to the\nexclusion of Russian dominated Manchuria then I would\nexpect that the Chinese would freely export to Japan\nin return for the consumer goods that Japan can make\nand the \"know-how\" that Japan possesses. Certainly every\nencouragement should be given by us to peaceful commerce\nbetween Japan and the Chinese.\nSOVIET RUSSIA\n26 (1). To what extent should American efforts\nassume Russian domination of China and therefore be\ndirected primarily toward the prevention of the spread\nof Communist domination over other countries in the Far\nEast?\nIn the first place, it is my opinion that\nit would be a mistake to assume \"Russian domination of\nChina\". I have not seen nor heard of any evidence to\nthis\nCONFIDENTE\n-14-\nthis effect in spite of Mao's recent declaration of\nsubservience to Soviet Russia's leadership. The\nquestion, as worded, seems to me to be confused. The\nquestion would seem to be: \"To what extent should\nAmerican efforts be directed primarily toward prevent-\ning the spread of Russian domination over other countries\nin the Far East?\" As long as this Russian domination,\nif domination it is, comes from choices freely and\nvoluntarily made by the peoples of countries in the\nFar East without evidence of force being applied by\nthe Russians, or agents who are Russian inspired, we\ncan do little if anything about it. Choices made in\nthis way can be withdrawn. We have certainly done\nnothing about it in China. On the contrary, since\n1942, we have opposed the resistance offered to Com-\nmunism by the established authority in China. Our\nattitude has not discouraged the establishment of a\nCommunist controlled authority in China as a substi-\ntute for the established authority we opposed. What\nthen can we say if the Communist authority that comes\nin announces itself to be more friendly to Russia\nthan it is to us? In other words, voluntarily chooses\nSoviet Russie as its closest friend? Are we certain\nthat native governments seeking to substitute them-\nselves for established authority elsewhere in Asia\nand the Pacific as in Indo-China and Indonesia will\nnot choose to be more friendly to Russia than to us?\n27 (11). Assuming the conquest of China by the\nCommunists, what are the presumptions as to the re-\nlations between the USSR and China?\nWith the assumption given, the pre-\nsumption must be that the relations between Communist\nChina and Communist Russia will be closer than they\nhave been. Communist leader Mao Tze-Tung has already\nstated that this is the case. This would seem to be\nnatural. Just as the principal officials of the\nNationalist regime who were friendly to us were\nTHE\ntrained in our ideological environment, so Mao and\nhis supporters were trained in and find themselves\nmore at home in the ideological environment of present\nday Russia. They may be expected to continue until\nthe new regime discovers that Communist Russia and\nImperialist Russia are the same, that Communism is\nmerely a fifth column concealing Russian Imperialism.\nThen I believe that these intimacies will cool off. It\nmust be remembered that Russia and China have boundaries\nthat\nCONT\nIDENTIAL\n-15-\nthat coincide for a great distance and that Russia has,\nsince the downfall of the Mongol Empire, worried about\nthe East and vice versa. Russian advance into Asia in\nthe 16th and 17th Centuries followed slowly the break-\nup of the Mongol Empire and the retreat of the Mongol\nhordes. Moscow now governs great areas once governed\nfrom Peking. Russian foreign policy for Asia has been\nformed with this threat from the East always in mind.\nPerhaps the over all experience of China with Russia is\ngreater than Mao's. Certainly China's past experience\nwith Imperialist Russia 1s well documented. Time will\ntell.\nUNITED STATES SECURITY\n28 (26). How should Communist developments in\nChina affect our policy regarding naval bases in the\nPhilippines, Singapore and elsewhere?\nI would be surprised if Communist\ndevelopments in China had any effect on our policy\nregarding naval bases in the Far East. I would assume\nthat we would strive to establish naval and other bases\nwherever we would need them without regard to what the\nChinese thought about it. We fought the Japanese while\nthe Japanese controlled the whole of the Asiatic coast\nfrom Vladivostok to Singapore, including the Philippines\nand the Solomons. I do not know who we are going to\nfight that will have a greater advantage.\n29 (29). What informational policies with regard\nSTATE\nto the peoples of China and the Far East would be most\nBANKY\nappropriate with a view to strengthening the forces\naligned against Soviet Communism and economic and\nS\nO\npolitical disintegration?\nI think we should talk less about Communism\nand more about Nationalism and its advantages. We should\npoint the finger at Russian Imperialism. We have no remedy\nfor the economic disintegration. That is a problem that\nthe Chinese Communists have come in to solve. The\nChinese people will watch the efforts of the new regime\nto solve the problem and will either help or sabotage\nthem. Let us keep quiet. \"e do not know too much about it.\nAs\nCONFIDENTIA\n-16-\nAs to Communists, we have not solved that\nproblem here in our own country. How then can we offer\nsolutions to a country and a people that we know so\nlittle about? Remember Communism is a product of the\nWest. We belong to the West. If we can't meet it at\nhome, what can we say that will be useful to the peoples\nof the East? Russian Imperialism is something that we\ncan talk about.\nNationalism is a new force in Asia and is\ncoming as a strong tide throughout that area. Let us\nrecognize and help it. It is opposed to international\nCommunism, which is the real enemy. It is also opposed\nto political disintegration, for 1t wants to accomplish\npolitical integration and organization on a national\nbasis of racial and geographical boundaries.\n30 (30). What is likely to be the impact of each\nof the various possible courses of United States action\ntoward China upon the majority of thinking Chinese?\nThe Chinese are realists. Once we are\nconsistent in our attitude and stop meddling, their\nreactions will be friendly and understanding. There\nstill remains a resevoir of good will towards the United\nStates among the Chinese.\nTHE FAR EAST IN GENERAL\n31 (22). To what extent is the upheaval in China and\nelsewhere in the Far East a predominately political\nmovement?\n32 (22). To what extent is the upheaval in China\nand elsewhere in the Far East an expression of deep rooted\nforces arising out of social and economic conditions?\nThese two questions are intimately related.\nPolitically the trend throughout the Far East and among the\npeoples of the Far East is toward nationalism. National\nOF\nindependence is the watch-word of the East. This trend,\nalready established, got a tremendous push forward during\nOF\nWorld War II when the Japanese played upon nationalist\nS.\ntendencies in an attempt to win the cooperation of the\npeoples of the areas from which they were driving the\nAmericans, the British, and the Dutch. The defeat of the\nJapanese\nCONF IDENT\n-17-\nJapanese who had caused the Americans and the British\nand the Dutch to lose \"face\" in the East did not restore\nthe prestige of the Americans and the British and the\nDutch.\nSecondarily the upheaval is due to deep\nrooted forces arising out of social and economic\nconditions which have been caused by the political\nupheaval. Native political regimes that have sought to\nsubstitute themselves for the alien political regimes,\nhave been having difficulty meeting the necessary social\nand economic reforms because of the cost and their\ninability to find new sources of capital and mediums\nof currency.\n33 (23). To what extent can the menace of political\nupheaval threatened by the Communist movement in that\narea be met by military action?\nThe political upheaval is nationalist in\norigin. It should not be met by external military action.\nTHE\nRemember the effect of military intervention in Russia\nin 1918-1919?\n12818\nS\nO\n34 (23). To what extent can the menace of political\nupheaval threatened by the Communist movement in that\narea be met by measures of economic and social improvement?\nI see no opportunity for us to meet this up-\nheaval by measures of economic and social improvement.\nCommunism is coming in charging the preceding\ngovernment with neglect in these matters and is now offering\nthe improvements, social and economic. The new regime will\nsucceed or fail on the program it offers and is deeply\nconscious of this fact. I think that the new regime will\nin the long run fail. Then perhaps will come a time when\nwe may offer other measures.\n35 (24). What steps should be taken to improve the\neconomic and social conditions of the Asiatic peoples?\n36 (24). How could the \"Point Four Program\" apply to\nthat area?\nAt the present moment, the new regimes,\nwhere they are offering themselves as substitutions for\nthe regimes that are being displaced by the \"upheaval\"\nmentioned, are offering programs of social and economic\nreform\nCOM TDENTIAL\n-18-\nreform which would make the use of the \"Point Four Program\"\ndifficult, if not impossible, of application. It is my\norinion that the Communist programs will fail just at\nthis point. Let 118 wait and see. Let us keep contact\nwith the Chinese people throughout this crisis. I am\nsure that the time will come when other and new\nopportunities for our help will be opened to us. Let\nus hope that we will then be prepared to accept the\nMARTY ARCHIVERDS TRUMAN NATIONAL SERVICES ROVERNMENT AND LIBRARY\nopportunity with all humility and without any thought of\nS.\nprofit at the expense of the local people.\nturn\nGeneral George C Marshall May 18, 1954\nMEMORANDUM ON CHINA at My request HSV.\nThe following is a very brief resume of as much of the Chinese situa-\ntion as I, personally, was intimately familiar with. The difficulty in preparing\nsuch a resume is the fact that there is so much of background essential to an\nunderstanding (General Hurley's activities, and others of the same nature) that\nit presents quite a problem as how to prepare a statement without practically\ngetting into a repetition of the China. White Paper. While I have sketched below\nan outline of my initial experience, I find that pages 136 to the middle of 149 of\nthe China White Paper present a clear, chronological statement of the events\nup to the development of the Manchurian complications. Thereafter, the situa-\ntion grew so complicated and there were so many related factors that it is\nexceedingly difficult to treat the affair with any degree of brevity.\nWhen I arrived in China, a few days before Christmas in 1946, a\nmeeting had already been scheduled for January, in which the Communist and\nother much smaller political parties were to be participants. The meeting was\nto draw-up the principles to be a basis for drafting a constitution to be consid-\nered by the Constitutional Convention scheduled for May 5. The preparatory\nwork leading up to this meeting had been developed largely by General Patrick\nHurley, then Ambassador to China, and it came to a head, just prior to my\narrival, with the agreement on the actual date for the meeting.\n2\nI found that it would be impracticable for me to proceed with my\nmission to halt the fighting without obtaining a great deal of information, par-\nticularly the opinions of people in all walks of life in China and of the various\npolitical parties. Therefore, my days were a constant succession of meetings\nwith all manner of people who were then resident at Chunking or came there\nfor the purpose of seeing me. Many of them, particularly women, endeavored\nto come in secret so their contacts with me would not become public.\nThese people presented a wide variety of views. The majority of\nthem, other than officials of the Nationalist Government, were bitterly hostile\nto that Government, particularly the women, though not necessarily friendly\nto the Communist Party.\nChou En-lai, the representative of the Communists, was then present\nin Chunking. Just how many of his followers were there, I do not know, but\nthere was not a sizeable number.\nIt was essential for me to move with all possible expedition, as the\nmeeting of all the political parties had been called by Generallissimo Chiang\nKai-Shek for January 10 and he wished to open the meeting with the announcement\nthat the fighting had ceased.\nIn order to find a basis for terminating the fighting, the General-\nlissimo appointed a so-called Committee of Three, consisting of myself as\nChairman, General Chang Chung representing the Nationalist Government, and\n3\nChou En-lai representing the Communist Party. Together, we went over the\nfactors which would be essential to a preliminary agreement. But it was not\nuntil the morning of January 10 - about one-half hour before the meeting - that\nwe reached a final agreement. This enabled the Generallissimo to make an\nopening speech of a character appealing to the generous sentiments of all con-\ncerned.\nFollowing this period, I in a sense cut myself off from this conference,\nas it was entirely political and I had been sent to China with instructions to\nbring the fighting to an end, if that be possible. The agreement reached by the\nCommittee of Three and approved by the Generallissimo had now to be imple-\nmented and, for this purpose, I immediately dispatched the Executive Officer\nof my staff, Colonel Henry A. Byroade, to Peking to organize a headquarters\nfor developing and directing the procedure to bring the fighting to a halt.\nUtilizing the buildings of the Peking Union Hospital, Colonel Byroade (now\nAssistant Secretary of State) built up an organization based on the principle of\nthe Committee of Three; that is, an American representative as Chairman of\neach subdivision and a representative of the Nationalist Government and repres-\nentative of the Communist Party. Walter H. Robertson, United States Minister\nto China, was dispatched to Peking to head the organization. There were to be\nmany teams in the field organized in the same manner and provided with radio\ncommunication and motor transportation.\n4\nThe measures followed in bringing at least a temporary halt to the\nfighting are well-known and are mostly recorded in the China White Paper.\nI might say in this connection that we found it very difficult in many cases, and\nusually very important cases, to get at the true facts. The two Chinese mem-\nbers of the teams were not only antagonistic, one to the other, but held to a\nvery strict course of action which would avoid anything prejudicial to their side\nof the current issue. As a result, it fell more and more to the American\nrepresentative and Chairman, and at times to me personally, to ferret out the\ntrue facts of a case or incident.\nFor example, we had one situation in Shantung involving coal, a very\nimportant issue, where a large number of Nationalist troops were surrounded\nby a larger number of Communist troops. At the same time, farther to the\nWest, we had almost an exactly similar situation, where a large number of\nCommunist troops were surrounded by a larger number of Chinese Nationalist\ntroops. The Communist representative on the Committee of Three with me was\nurging me to go personally to settle the western dilemma. The Nationalist\nrepresentative was opposed to my doing so. On the other hand, the Nationalist\nrepresentative was pressing me to go to the scene of the difficulty in Shantung,\nand the Communist member was strongly opposed to that action. This was\nfrequently the case, though not so clearly demarked as in this particular inci-\ndent.\n5\nThe information with regard to fighting was very difficult to evaluate\nbecause the reports were, as a rule, grossly exaggerated by the side which had\nsuffered the reverse or was charged with the renewal of the fighting, and fre-\nquently a light patrol encounter was exaggerated into a large operation. Des-\npite these difficulties, we brought the fighting temporarily to an end.\nThere now followed a serious dispute over the representation of\ndelegates to the Constitutional Convention scheduled for May 5. This provoked\nadded bitterness both in the field and among the workers behind the scenes\npolitically. The Generallissimo then postponed the meeting of the Constitutional\nConvention because he stated he could not find a satisfactory basis for the\nrepresentation of delegates. This was a very serious blow and, from then on,\nmatters proceeded from difficult, to bad, to worse.\nDuring most of the period following January 10, I found the Communist\nrepresentation and most of their forces in the field to be more responsive to\nthe dictates of the Committee of Three than the Nationalists. It seemed to me\nthe Communists felt that they could win their battle on political grounds more\neasily than on tactical fighting grounds because they had a more tightly held\norganization, whereas on the Nationalist side there were many contentious\nelements. The Communists continued on this line quite definitely, in my\nopinion, until early in June, after the postponement of the Constitutional Con-\nvention. The Nationalist commanders all seemed to be determined to pursue\na policy of force.\n6.\nDuring this period, and especially later throughout the summer, I\nwas making a strong effort to bring all the small political parties together.\nThese usually represented a rather small number in grand totals, but included\na large number of well-informed men. My thought was that, if they could be\nunited under one leader, they would constitute a balance wheel between the\nCommunists and the Nationalists so that, if either broke an agreement, it\nwould find this center group aligned against them. This would not have been\ntoo difficult of accomplishment had it not been for the fact that both sides,\nNationalist and Communist, endeavored to break down any such grouping by\ntempting leaders away by choice appointments or otherwise. This continued\nuntil the end of my stay in China, but it became quite evident in the Fall that\nthese parties had been broken down to such an extent that I could not hope to\nmake a union among them and, without that, there was little hope of getting any\norganized setup in China that would lead to an enduring. peaceful development.\nI received advice from numbers of people in China and elsewhere --\nAmericans, representatives of our press, British, Chinese, and among the\nlatter named certain prominent members of the Government who came to me\nconfidentially and gave me their opinions on the best course to be followed.\nAs the conditions of temporary peace broke down, the agreed arrangements in\nManchuria broke with them, and the movement of Communists into that country\ngot underway. The extent of this movement at the start was exaggerated by\n7\nthe Nationalists, in my opinion, but later on there was no question but what\nlarge numbers of Communist adherents and troops were filtering into the\ncountry.\nAfter the setup for implementing the enforcement of the agreement\nfor bringing the fighting to an end, I next turned to the conference appointed\nto prepare the basis for the military reorganization. This was again a Com-\nmittee of Three, though I appeared as an advisor, rather than as the Chairman.\nWithout too much difficulty, an agreement was reached in this matter for the\ngradual unification of all the military forces in China, which meant in fact the\nGovernment and Communist forces. This was formally approved by the Gen-\nerallissimo and agreed to by Mao Sse Tung. Two provisos in this agreement\nare important to understand:\nThe first was the fact that the Communists agreed that at the end of\neighteen months the Manchurian garrison should consist of fourteen Nationalist\nGovernment divisions and one Communist division (see page 141 of the China\nWhite Paper). The second was the prescribed organization of the country into\neight service areas (see Article 3, Section 2, on page 623 of the China White\nPaper).\nThe attitude of the Communist regime changed later on, decidedly,\nin regard to Manchuria, and the garrison proposed by them was greatly\nincreased with reference to the number of Communist divisions to be located\n8\nin that region. This action was a direct retaliation of the Communists to what\nthey held were unjustified actions of the Nationalist Government.\nThe second proviso mentioned was to be the basis for getting the\nChinese army out of politics, for breaking down the customary use of military\nforce, which had been wholly unacceptable to a democratic regime.\nFollowing the completion of the military reorganization agreement,\nI left Chunking with General Chang Chih-chung of the Nationalist Government\nand General Chou En-lai of the Communist Party on an inspection of the situa-\ntion in North China and the West to the borders of Mongolia. We endeavored\nto settle the various military complications which we found during the trip. We\npaused in Peking to visit the Executive Headquarters established there and\nendeavored to iron out misunderstandings and various oppositions.\nMeanwhile, there had been developing in Manchuria a most serious\nsituation. In the first place, the delay in the Russian withdrawal and their\nscuttling of all the industrial setups, particularly in the Mukden district, had\nbeen a continuing cause of complications. This situation was made the more\ndifficult because of the misunderstanding at Executive Headquarters in Peking\nthat the agreements of the Committee of Three for the implementation of the\npeace adjustments did not include Manchuria. As early as January 24, 1946,\nI proposed that Executive Headquarters send a field team to intervene in the\n9\nfighting which had developed at Yingkow in Manchuria. The Generallissimo\nwas unwilling to agree to this proposal. The Chinese Communist Party gave\nits approval. Further efforts on my part to establish Executive Headquarters\nfield teams in Manchuria were declined by the Generallissimo. General Chou\nEn-lai personally urged me to visit Mukden, but I did not think this wise at\nthat time. Finally, on March 11, the day of my departure for Washington, the\nGenerallissimo agreed to the entry of field teams from Executive Headquarters,\nbut with such limited powers that the teams would be unable to bring about a\ncessation of the fighting.\nThis developing situation in Manchuria became one of the determining\nfactors in breaking down all hope of negotiating a political basis for unity and\npeace in China.\nWith the Generallissimo's agreement to the entry of Executive Head-\nquarters field teams into Manchuria, but unfortunately before his limitations\non their powers became known, I departed for Washington to apprise the\nPresident of the situation and, particularly, to take up the question of the trans-\nfer of surplus property and shipping and the problem of loans to China.\nIn the matter of loans, I had not entered into any detailed discussions\nwith the Generallissimo up to that time. As to the vast accumulations of\n10\nsurplus property in the Pacific, I felt that here was an opportunity to check\nthe inflationary developments in China. This property could be used in many\nways to promote trade, to secure for the Government a tremendous cash return,\nand to provide labor for many engaged in its modification or repair. I felt\nthat the handling of this surplus property afforded a reasonably practical method\nof combating inflation and I was, therefore, anxious to promote the transfer as\nquickly as possible.\nAnother factor was the question of shipping. If China could obtain\nsmall coastwise and river shipping in these surplus property transfers, it\nwould provide an effective method of promoting trade relations throughout the\nriver valleys of China. In Washington, agreements were reached which would\nfacilitate the surplus property transfers and guaranteed the provision of coast-\nwise and river shipping for China. My negotiations with the United States\nGovernment groups concerned led to an agreement for a loan of $500 million\nto the Nationalist Government in China. Its conclusion merely lacked the signa-\nture of the Generallissimo's representative in Washington - - the Chinese\nAmbassador. The latter came to me with some modifications in the terms of\nthe loan, which the Generallissimo proposed. I informed the Ambassador that\nI had completed my personal efforts in the matter and, if any changes were to\nbe proposed, they would have to be instituted by the Ambassador. At the same\ntime, I advised him to sign the agreement for the loan immediately. Just what\n11\nhe would have done, I do not know, because on that day the Generallissimo\nmade a speech in China regarding the basis of any political settlement, which\ncaused the Import-Export Bank to withdraw its agreement to the loan.\nWhile I was in Washington, the day after the withdrawal of Russian\ntroops from Changchung, the Communist forces attacked the city and occupied\nit. From this time forward, there developed a series of incidents provoked\nin turn by the Chinese Government and by the Communist forces, which led to\na complete rupture of the relationships established to terminate hostilities.\nThe recital of these incidents and the discussions related to them would neces-\nsarily be a lengthy procedure and virtually a reproduction of the story as\nrecited in the China White Paper. From here on out, the Communists were\ncompletely distrustful, in fact rather scornful, of any proposition I made or\nthe Nationalist Government put forward toward finding an adjustment of differ-\nences. On the other hand, the Generallissimo, for the Nationalist Government,\nrepresented a varying role. At times his attitude was one of sincere endeavor\nto bring about some reasonable basis of adjustment, but invariably, it seemed\nto me, behind the scenes, his attitude with his leaders was one provocative of\nthe role of force. Always in my conversations with him I put forward my\nmilitary opinion that the use of force at that time by the Nationalist Government\ncould not be productive of more success than that of the capture of cities -\nthat the long lines of communication made military operations for the Nationalist\n12\nGovernment far more difficult than they were prepared to meet. So long as\nthe Communists confined themselves to attacks on the line of communications\nand the break down of the influence of the Nationalist Government with the\nChinese people, their eventual success seemed to me to be assured.\nAfter my departure from China and appointment as Secretary of\nState, I encountered the China problem in a somewhat different form than\ntheretofore. It had now become a political issue in this country and the repres-\nentations were highly colored by purely political motives. One of the most\ndifficult political reactions arose out of the fact that the Nationalist Government\nof China was not able to procure quickly the military supplies it desired.\nThese delays were charged to our Government. The facts were that our mili-\ntary reserves of modern equipment had been so reduced by allotments to various\ncountries that the War Department could not afford further to diminish them.\nEven so, a direct purchase was rendered difficult because the money received\nby the War Department, for example, would have to be turned in to the Treasury\nand a new appropriation secured, with the possibility of failure. And then there\nwould be the delay in the manufacture of the items, since there was no general\nmarket for such supplies. The War Department was loath to enter into the\nbusiness of these purchases because of their effect on the national defense.\n13\nFurther, the complications in the matter could not well be made plain to the\npublic in the midst of a vigorous political discussion, statements or debate.\nIn an effort to find some course of action that might be taken to\noffset the Communist gains in China, General Wedemeyer was sent over to\ninquire into the situation. It was on my instigation that he was sent to China,\nbut it was his desire, and quite a proper one, that he have a Presidential\ndirective in order that he might have a sound basis for meeting with the\nofficials in China concerned. You are familiar with the issues which arose\nover his visit.\nIt has been a great misfortune that throughout this period the Gen-\nerallissimo has had associated with him individuals who had grown steadily\nin power from the time of the Generallissimo's march from Canton to the line\nof the Yangtse. Originally, these were young men, presumably animated with\na very fine spirit to free China from the toils and treacheries of the past. But\ntheir steady acquisition of great power with virtually no opposition led naturally\nto a changed attitude until they were opposed to any effort along the line indicated\nby American policy. Partially discredited in 1946, they steadily regained their\npower, and found the development of the China political battle in the United\nStates greatly to their advantage.\n(Most confidentially, it had been hoped by Ambassador Stuart and\nme that my statement (page 686 of the China White Paper) following my\n14\ndeparture from China, published in Washington on January 7, 1947, would\nprovoke heavy attacks on me by this particular group of men, who seeing me\nleave the Government service would feel perfectly free to direct their attacks\nat me without reservation. In this way, we would have had a line-up of the\nirreconcilables. Unfortunately, however, because, I was told, of some leak\nat Spartansburg, South Carolina, with relation to the announcement of Secretary\nof State Byrnes' resignation, it was thought best immediately to publicize my\ncoming appointment as Secretary of State, instead of delaying this for the ten\ndays that I had requested. This announcement was made while my plane was\nflying homeward over the island of Okinawa. It, of course, resulted immed-\niately in a silence on the part of the irreconcilable group who, in the Chinese\nmanner, retired to their homes sick(?). They did not again appear on the\nscene until the political fight in the United States on the China question developed.\nI think that, had the second announcement been delayed the ten days I desired,\nwe would have had a public line-up of the men and their attitude who surrounded\nthe Generallissimo and are now, some of them, associated with him in Formosa.)"
}