893.00/11–2344: Telegram
The Chargé in China (Atcheson) to the Secretary of State
[Received November 24—4:55 a.m.]
1888. While Chinese Government officials are endeavoring to put on a front of optimism, there has been spreading here in Chinese and foreign official and private circles since the fall of Ishan,24 real apprehension over the military situation and prospects for the near future. There appears to be general feeling among Chinese that the Chinese armies have gone to pieces and can not be depended upon to hold up the Japanese and there is in process among Chinese businessmen and some others a liquidation of goods into portable articles or currency and of conversion of Chinese currency into gold or United States currency, the latter being reflected in the recent almost runaway rises in the exchange rate which in some transactions has reached 640 to 1. Defeatism and apprehension is also clearly reflected in an attitude—which we find quite general—of cynicism toward recent and prospective further Government changes. They are shrugged off as being of little consequence now and as too much of the same thing; some Chinese liberals profess to believe that even formation of an actual coalition government would be too late to resolve problems which, they feel, will shortly become unrealistic if the military situation deteriorates much further.
The change in the War Ministry25 was, of course, a concrete improvement and our own military, who are striving night and day for effective reorganization of Chinese forces, are helping greatly to maintain morale in the highest Chinese official levels where their relationships are excellent. We understand that Nanning has been evacuated and that one Japanese column is nearing Hochih (on route from Liuchow to Kweiyang) if it has not, as claimed by the Japanese, already reached that place. If and when Hochih is actually taken by the enemy, the direction of his advance therefrom and of that of the Japanese force southwest of Liuchow will perhaps tend to clarify the situation and set the stage for an important test of what capability remains in the Chinese armies for effective resistance.