893.00/13770: Telegram
The Counselor of Embassy in China (Lockhart) to the Secretary of State
[Received December 16—6:30 a.m.]
615. 1. Except for the growing belief, apparently now well-founded, that General Yang Hu Cheng has not actually staged a revolt and that General Chiang Kai Shek is still under restraint, the situation at Peiping vis-à-vis the Sian imbroglio remains unchanged with a welter of misinformation being circulated, some for political, some with a view, apparently, to influencing the Chinese bond and stock market (notably of Chiang’s release and return to Nanking which had its origin, it is now learned, in Chinese banking circles) and some based on mere hope and speculation. The only encouraging aspect of the whole unfortunate situation, as I see it, is the remarkable capacity of the Chinese for extricating themselves from critical situations. Whether the present one is beyond their customary resourcefulness remains to be seen but the possibility of settlement by negotiation and compromise rather than by military operation offers perhaps the best prospect of releasing Chiang and solution of the problem, which unquestionably has shaken the whole of China as no other incident in recent years has done.
Repeated to Tokyo.