Foreign Relations of the United States Diplomatic Papers, 1941, The Far East, Volume V

893.00/14832

The Ambassador in China (Gauss) to President Roosevelt ⁵⁶

Chungking, November 19, 1941.

Dear Mr. President: When I called on you last April before leaving for my post, you asked me to write to you from time to time on the China situation.

The following paragraphs give in broad outline, unburdened by detail, my estimate of the present position and possibilities in China, viewed in the perspective of what I understand to be our immediate and urgent objective—to encourage the Chinese in continuing resistance against Japanese aggression.

Political. I am convinced that Generalissimo Chiang Kai-shek is thoroughly sincere in his determination to continue resistance to Japan. He is the inspiration and strength of the spirit of resistance; without the force of his leadership, unity in China would vanish and there would be no effective resistance to Japan. There is at present no outstanding military or civilian leader who could replace him; no one who could command the support and allegiance of the people, the Party, or the Army.

In addition to the new-found national spirit of the Chinese people, encouraged and directed through Generalissimo Chiang’s leadership, there have been two important factors that have contributed largely to Chinese resistance:

(1) The unimaginative and repressive course that the Japanese Army has followed in occupied China. Those elements in free China which might have exerted a strong influence for making terms with Japan—and there can be no denying that they exist—have been silenced by the sheer stupidity of Japanese policy in occupied China.

(2) The hope and expectation, from the very beginning of the China Incident, that Japan would, sooner or later, clash with other Powers having interests in the Pacific and that in the resulting armed conflict China would be saved from Japan.

Most Chinese believe that no real peace can come until Japan is crushed by force of arms. At the same time they realize that China cannot accomplish this objective alone. Therefore they look for help in the form of hostilities between Japan and America, or Britain, or Soviet Russia.

Bearing in mind this attitude of the Chinese, it is not diffcult to understand the dismay and apprehension evidenced here following reports of American-Japanese conversations at Washington exploratory of a possible basis for a peaceful settlement of the problems of the Pacific. Any détente between the United States and Japan which failed to solve the China problem satisfactorily to China would have repercussions adversely affecting Sino-American relations, the Generalissimo’s leadership, and China’s will to continue resistance.

The Generalissimo and his supporters are anxious for greater recognition of China’s co-partnership with the democratic nations in the fight against aggression. It is trite but it is nevertheless true that “face” plays a large part in shaping Chinese actions and reactions. Whatever we can do, quite apart from material assistance to China, to give “face” to those in this country now in control of policy would be well worth while in sustaining the will to resistance.

Relations between the Kuomintang Government and the Chinese communists are severely strained. The main communist area in China is literally quarantined by Government troops. No military supplies have been shipped to the communist forces for a year or more, and even medical supplies have not been permitted to enter the communist area. Viewed in the light of this situation, Chiang’s assurance to me when I first met him that there would be no collapse of the “united front” can only mean that there would be no open clash between the opposing forces. Chou En-lai, the official communist party representative at Chungking, told me recently that relations with the Government are on a very unsatisfactory basis. Unable to foresee any change for the better, he did not however anticipate a change for the worse. He asserted that Chinese communist resistance against Japan would continue.

Deep seated personal animosities, as well as fundamental differences in social concepts, keep the communists and the Kuomintang apart. Common adherence to the policy of resistance to Japan prevents an open break. Hence, while hostilities continue with Japan, I believe that civil warfare will be avoided.

There is undoubtedly need for political and social reform in China. My estimate of the present dominant elements in the Kuomintang does not lead me to confidence in their ability or desire to effect substantial reforms. Politically, they have a “one party” concept of government; and socially they are not liberal. The communists, equally (if differently) unsuited to the task, have however pointed the way toward reform in the field where it is most needed—land tenure and district or local administration. There exists in the Government an element which, if given a chance, might be able to break the hard shell of conservative leadership and at the same time cut the ground from under the communists through effecting reforms along democratic lines.

Military. When after the valiant defense of Shanghai the Chinese finally retired westward, the Generalissimo’s modern German-trained army had been practically wiped out, and most of its equipment was lost or destroyed. The Generalissimo set himself at once to the task of building a new army which, taking positions commanding the routes into the mountainous regions of western China, has thus far been successful in maintaining resistance to any further substantial Japanese encroachment. The Chinese, having little more than small arms, but possessing numerical superiority, have been a match for the Japanese in these inaccessible areas where support for the Japanese from their heavy artillery and mechanized equipment is not practicable.

The Chinese forces may be expected to maintain their present defensive position in western China, and they are not likely to be dislodged unless the Japanese direct much greater strength to the settlement of the China Incident, pouring in heavy reinforcements of troops and augmenting their present air force in this country.

The Chinese cannot be expected, however, in their present state of training and equipment to move down on to the plains and give battle to the Japanese.

I do not believe that it would be practicable for us—or that time would permit us—to endeavor to equip and train a Chinese army for any major large scale offensive against the Japanese.

What we can hope to do is deliver to the Chinese materials in sufficient quantities to enable them to continue to contain the large Japanese forces now in China. The Chinese reserves of small arms and ammunition are stated to be running low. They have arsenals but they need raw materials. They also need pack artillery and anti-aircraft guns. These items, in addition to motor transport vehicles and gasoline for their operation, are I believe the principal military needs under our lend-lease program. This however is a problem for study by the American military mission. The immediate attainable objective is to keep Chinese forces in effective opposition.

Japan continues to attack free China from the air quite successfully, and there is no substantial defense against such operations. Lieutenant Colonel Chennault (U. S. Army, Retired), who is now developing and training an American volunteer aviation unit in Burma for use in China, tells me that nothing spectacular should be expected from his efforts. He will have accomplished much if he is able to place a force in the air capable of opposing attacks on the Burma road by Japanese planes. If he were able to organize one or more bombing squadrons they would serve a very useful purpose in harassing Japanese forces in China. When an American air force starts operations in China we may expect the Japanese to concentrate heavily on its destruction. It is imperative therefore that the American force have superior planes in sufficient force to cope with such an attack.

Economic. The financial-economic situation is serious. On the one hand the productive capacity of free China falls far short of being able to produce sufficient consumer goods for the public and the army, and on the other hand currency inflation is proceeding at an alarming rate. These two factors, principally the latter, have caused prices to pyramid until they are now from twelve to fifteen times pre-war levels.

There is a monthly government deficit of over a half billion Chinese dollars which is being met largely through bank loans involving the issuance of new paper currency. The ratio between government expenditures and revenues is about ten to one.

The usual sources of Government revenue have fallen largely into Japanese hands. The market for Government bond issues is limited; almost nonexistent.

Belated study of the problem is now being made, but it must be admitted that the Government is not strong, experienced, or determined in financial and economic matters. The Generalissimo himself has but limited grasp of these problems, and the present Minister of Finance has given little evidence of being able efficiently to solve them.

Sir Otto Niemeyer, the British economist, is in Chungking as the head of a British mission to study the problems. He tells me that he does not see that there is a great deal that he can accomplish; but he may be able to make some substantial recommendations.

It appears (1) that government expenditures might be reduced, perhaps as much as twenty-five percent, through reforms in the government and the disbanding of unneeded troops; (2) that revenues might be increased by levying higher taxes on landlords; and (3) that agricultural and small industrial production might be increased through the investment of small amounts in land reclamation and small factory projects such as those fostered by the Industrial Cooperative movement and through the release of farm labor now doing service in or for the army. These things could be done if there were a will to come to grips with the “vested interests” of the military leaders, the politicians, and the landlords. In the meantime, finance officers search for other ways to slow down inflation.

The foregoing is not a hopeful picture, but I have the impression that the economic situation, bad as it is, will not cause an early break in the resistance front.

Burma Road. Material aid to China is dependent at present upon the amount of cargo that can be moved over the Burma road. There has been some improvement in this traffic but the organization of the road and provision for maintenance of transport have been delayed. There are a number of political problems related to the operation of the road. The Chinese alone can solve them. When this finally has been done the road administration, with the assistance of American technical and mechanical personnel, should be able to increase the monthly average tonnage above 20,000 tons.

Burma Railway. It is the expectation that the facilities of the Burma road will be supplemented by the construction of the Burma railway, for which we have provided certain materials and equipment under the lend-lease program. The Chinese will require about one year to complete the roadbed of the China section of the railway but rails and ties cannot be laid until the Burma section is constructed by the British, who estimate that two years will be required for the completion of their section. Efforts are being made to convince the British that more rapid construction of their section may be feasible.

Air Transport. Several thousand tons of cargo might also be brought in each month by transport planes if such planes were available. I understand that a limited number of such planes are to be provided for the purpose next spring.

Threat to the Burma Road and Yunnan. The present very real anxiety that the Japanese may be preparing for an invasion of Yunnan with the objective of cutting the Burma Road route “points up” the whole question of Chinese resistance and our assistance. Whether or not the Chinese are right in expecting an invasion of Yunnan, the possibility of such a move makes imperative the taking of all possible precautionary measures. Whether or not the consequences of a successful invasion would be as dire in terms of Chinese resistance as is being predicted, they would most certainly be serious. Whether or not the Chinese armies might be able to halt such an invasion without the assistance of the Anglo-American air units that have been requested, it is clear that such units, if they could be released and maintained for service in Yunnan, would be able to play a great, if not decisive, role in stopping the Japanese and in discouraging them from further ventures southward. In this connection it is pertinent to note that the Japanese quite probably will concentrate heavy air attacks on the Burma road in China if they do not undertake the land invasion that is feared and air forces are the only effective means of protecting the road from such attacks. These are simply considerations to be duly weighed with other heavy considerations that I realize go to determine decisions with respect to the allocation of the materials of war that we have and are producing.

I believe that it is important—indeed vital—that we give China all the support we can in her fight against Japanese aggression. At the same time I believe that it is important that we bear in mind that the defeat of Japanese aggression does not necessarily entail, as many Chinese think, our crushing Japan militarily. The complete elimination of Japan as a force in the Far East would not be conducive either to order or prosperity in this area.

Respectfully yours,

C. E. Gauss

56. Transmitted to the Department by the Ambassador in China in his covering despatch No. 220 of November 19 (893.00/14827); received December 8. Forwarded to President Roosevelt on December 11.