Foreign Relations of the United States, 1946, The Far East: China, Volume X

Marshall Mission Files, Lot 54–D270

Minutes of Meeting Between General Marshall and General Chou En-lai at No. 5 Ning Hai Road, Nanking, September 4, 1946, 4:30 p.m.

Nanking, September 4, 1946, 4:30 p.m.

Also present:	Col. Caughey
	Capt. Soong
	Mr. Chang

General Chou: The other day when you left for Kuling I had intended to see you but the time was too late so I called on Dr. Stuart and he told me that your trip to Kuling was intended to discuss with the Generalissimo a possible arrangement for effecting the cease fire. Later on I saw the statement made by Dr. Peng Hsueh Pei and Wu Ting Chang.³⁰ They take an attitude of refusal to discuss the cease fire question. They assert that the hostilities are entirely due to the attack of the Communists and the Government launched no offensive since January 10. Such an attitude as expressed by the Government officials seems to me highly unsatisfactory. I exchanged views on this attitude with Doctor Stuart.

At that time we were rather inclined to wait for the outcome of your discussion with the Generalissimo at Kuling regarding the truce. Subsequently, Dr. Stuart left for Shanghai and I read another statement made by Dr. Wu Teh Chen in Kuling and he too expressed the same opinion as the other two Government officials to the effect that the question of truce does not exist at all because all the fighting was initiated by the Communists since 10 January. As regards the 5-point demand, he stated that it could not be abandoned. It all amounts to this: that prior to the meeting of the Dr. Stuart’s small group the Government has already expressed a firm refusal to those two questions. Such an attitude seems to me unreasonable.

Later on, I further learned that the transactions about the surplus property were to be signed in Shanghai immediately and so I thought that I should make a trip there to save the situation. I left on Sunday morning for Shanghai. I saw General Gillem³¹ at the airfield and there I learned that Mr. Peterson³² and his party just enplaned to go back to the United States. It was clear that everything was already fixed and nothing could be done. So, I felt there was nothing else for me to do than express our attitude and our views in this matter to the press. In general, we highly complain about the conclusion of the surplus property agreement³³ at this critical stage of the negotiations for peace. This deal, which amounts to US$825 million, greatly strengthened the Government and leave the Communist Party in a very embarrassed position. Our protests were completely ignored.

Now, on coming back to Nanking, I intended to see you in order to get myself informed as regards the Generalissimo’s attitude towards the arrangement for a cease-fire so I did not call on Dr. Stuart. Rather I wished first to see you.

Yesterday the Government representatives, Wu Teh Chen and Chang Li Sheng, came to see me and they assumed a rather evasive attitude towards the question of truce. They say that the question of truce does not exist because all fighting was initiated by the Communists. I retorted that since there is a state of war and that we are all seeking peace, let us better not discuss who is right or wrong in the past, but rather face the matter squarely and find a practical means to stop it. They did not criticize my views but refused to discuss the affairs of truce.

As regards the Generalissimo’s 5 conditions, they expressed the opinion that the question is not whether the 5 conditions should be dropped or not. The question is the settlement of conditions in various areas. Today I read in the newspapers that they made further statements to the effect that all the outstanding issues regarding the truce and settlements in various areas should be discussed by the forthcoming State Council. Such an attitude looks rather strange to me because yesterday I stated quite explicitly to them that unless the fighting is stopped there is no possibility for the Communist Party to submit the list of the State Councilors. They nodded, implying that they understood my position but still they issued such a statement today. Previously it seemed to me that the Government was exploiting the discussions on government reorganization to strengthen its military position. I told the representatives that the question of government reorganization could be easily settled, but Chang Li-sheng said nevertheless we might have very lengthy discussions. So, it appears even more clear to me that the Government would, under cover of this discussion, try to intensify the warfare in order that they may mislead the people at home and abroad and further secure the Americans’ assistance.

Now what I want to find out first of all is what is the Generalissimo’s attitude—whether or not he is inclined toward effecting a truce. I hope that you can tell me about his true intent on this matter.

General Marshall: In the first place, I left for Kuling in order to be there, in touch with the Generalissimo, in view of the possibility that you would hear from Yenan on Saturday morning as to whether or not there was any possibility that Chairman Mao Tze Tung would follow the course of proclaiming a 4-day cessation of hostilities on the part of the Communists. That was the reason for my departure Friday night.

General Chou: Now regarding my contact with Yenan, I had a talk with Dr. Stuart on Friday night. I originally meant to explain directly to you but on account of your early departure I talked to Dr. Stuart regarding the text of the message to Yenan. In the message I made four possibilities regarding the issuance of a cease fire order. I supposed Doctor Stuart would relay to you the essential points of that text so that you may have it for reference in Kuling. In that message I cited four possible cases.

First, issue a cease fire order by us and followed by a similar one by the Generalissimo. I also took into consideration that the Generalissimo might feel himself put in an embarrassed position because his order follows the Communists’ order. So, maybe the Generalissimo would prefer a second case, in which both the Communists and the Government issued order at the same time. This would be o. k. with the Communist Party. The third case is that the Government might wish to take the initiative in issuing that order, as in the case of the armistice. This is acceptable to the Communists. The fourth case is not acceptable. That is, suppose that the Communists issued a cease fire order and the Government would say it is entirely right for the Communist Party to issue the order but the Government would not because all hostilities had been begun by the Communists. Such a procedure cannot be followed by the Communist Party for two reasons.

The first reason is it would appear as if the Communist Party alone was responsible for the warfare. Secondly, suppose the Government would continue its fighting, then the Communist troops would be forced to take counter-actions. Then the Government would assert that the Communists broke their own pledge. I mentioned this to Doctor Stuart and Doctor Stuart expressed his agreement that the fourth case is not acceptable obviously. I asked Dr. Stuart to transmit my statement to you and so I did not repeat it.

General Marshall: I never got that statement.

General Chou: That is why I repeat it here.

General Marshall: Doctor Stuart telephoned to find out if I was going to mention this possible solution to the Generalissimo and I said I certainly was not. I was waiting to hear what you had heard from Yenan.

My understanding of this whole affair is quite different from your statement to Dr. Stuart. What I originally understood, without any reference to the Generalissimo, was that Chairman Mao Tze Tung should come out with an order for cessation of aggressive action of Communists for a period of say four days. It was not a case of going back to the original idea of joint action or some other arrangement; the Generalissimo acting first for example.

Returning to Kuling. The Generalissimo inquired if I had anything to discuss with him on Friday night. I told him, “No, nothing new. Possibly I would have Saturday.” I waited Saturday and into Sunday and then heard that you and Doctor Stuart were in Shanghai. I still did not go to the Generalissimo because I had nothing new to present; nothing that I had not already said most emphatically. On Monday some conversations occurred which were brought to the Generalissimo’s attention and he expressed a desire to see me that day. I discussed with him at length the question of organization of the State Council and its possible effect. Then he went into a further discussion of matters pertaining to the draft of the Constitution and the National Assembly. Later that night he came to my quarters (Monday night) and talked to me until about 11 o’clock, again discussing the questions I have just referred to and also mentioning in a very general way, the matter of the cessation of hostilities.

I will return to this discussion of political matters in a moment but first I wish to say this: You made very important reference to the Government statements; that is, by the Minister of Information. I have not read those statements. I told you the other day that you could not properly base sound logic on propaganda. It had to be based on facts. The discussion that you have gone into here is largely based on propaganda with which I am only interested to the extent that it seems unavoidable and presents grave difficulties in any negotiation. For example, take the question of the 5 conditions. Without having checked the matter, I believe the record will show that there was no reference to the continuation of these 5 conditions until after I had explained what had occurred between the Generalissimo and myself to you and after you made public reference to the fact itself. Then this Government propaganda immediately started up in rebuttal. What actually happened was the Generalissimo made a general statement which, if taken without detailed examination, would seem to register complete agreement with the ideas you had proposed towards the cessation of hostilities and towards the functioning of the State Council. But actually after I had questioned the Generalissimo minutely, I brought out the fact that he still had these conditions in his mind relating to Kiangsu, Tsingtao Railroad, Chengteh, etc.

I mentioned these facts to you because I was fearful that you were laboring under a misunderstanding when you talked to Doctor Stuart of the possibility of Chairman Mao Tse Tung coming out on his own initiative, without reference to the Generalissimo, in an announcement that he had directed all Communist forces to cease fighting for a period of four days. That consideration has never appeared in the propaganda merely because you did not mention it. But the five conditions have appeared in the propaganda because you did mention that.

Now to return to the State Council. I would like you to keep clearly in mind that Doctor Stuart and I turned to the State Council proposition because we had failed to overcome the impasse regarding the cessation of hostilities. We thought that it might be possible to make this move on the purely political basis, to reach an agreement for the organization of the State Council. In doing so, we hoped to develop a different state of mind which might provide the opportunity to bring about an agreement for the cessation of hostilities. We wished, and so far as we were concerned we determined, that this small group, which was our proposal, should confine itself to discussions concerning the State Council. I mean by that that we did not want any extraneous matters brought in to complicate the discussion. We had determined that Doctor Stuart would not continue as chairman if such discussions were insisted upon because we thought the issue would become involved automatically in so many other matters that nothing would be accomplished except more of hard feeling.

I would also like you to have in mind that it was only on the insistence of Doctor Stuart and myself, principally my insistence, to the Generalissimo that we got his agreement to this procedure. Now, to my great discouragement, I find that before the committee has even met, conditions other than those pertaining to the organization of the State Council are being put forward and discussions started regarding matters which are not stipulated as those to be discussed by this small group. In other words, we have apparently failed before we have started. I have been doing my best to break through the present impasse regarding the fighting. Doctor Stuart’s group was the one single procedure we could find towards that end. I have also tried to be very careful to have no misunderstandings.

Now I will turn to another matter, the surplus property. I told you in May, I think, that when certain discussions came up in Congress they had been pending for many months and were brought up for settlement because of the approaching adjournment of Congress until the following January. Incidentally, Congress is now adjourned. The surplus property transaction has been under discussion since last January when you were in Chungking. It was pretty well settled before I left for the United States in early March. I ironed out most of the difficulties while I was in Washington in March and early April. The Chinese Government could have concluded an agreement very easily last February but the delays involved were an effort to improve the terms—delays which I thought were very costly to the recovery of China.

Meanwhile three other complications arose. One related to the heavy cuts made in military and naval appropriations in Congress which caused the Army and Navy Departments to undertake, at considerable current expense, the return to the United States of the “cream” of this property to offset the heavy reductions in appropriations which had just been made. These arbitrary reductions in the stockpiles of property on the various islands upset all the inventories and brought the whole transaction to a standstill. Another reason was a change of policy of the United States Government with regard to the property in the Philippines because of the heavy pressure brought to bear by the Filipinos, particularly during the gathering of officials at the celebration of the independence of the Philippines. For that reason the head of the surplus property disposal, Mr. McCabe, was accompanied out here by a representative of the War Department, Mr. Peterson, and a representative of the Navy Department, Admiral Cotter, who had the power to adjust here on the ground any War and Navy Departments interference with these items of property so that the negotiation could be completed.

There was another, the third, very compelling factor involved and that was that we could not continue the expense of safeguarding this property. Also the property, itself, would be under rapid deterioration in the tropics from the heat and rainy weather and, to the north in Okinawa, by the winter season and the consequent storms, everything being in open storage. It was a question of either completing this negotiation with China or immediately disposing of the “cream” of the property to other governments in the Far East and dumping the remainder into the ocean. In either event the people of China would have got none of this material, which would be of vast importance to the resuscitation of their economic status. This was not an issue brought up in three weeks. It was the completion of a negotiation covering more than six months. If your, and the Communist Party, recommendations and propaganda had been accepted, the people of China would have been denied the whole for the future. That would be a terrific price to pay by some 400,000,000 people because of two warring elements.

The aspects of the transaction have been translated by propaganda, regarding which I have already expressed myself, into every evil purpose conceivable. As much harm as could be done has been done and I suppose we will have other slants of propaganda of the same nature later on. I accept that as inevitable but I am getting very tired of it. What I am worried about is when a proposal such as the establishment of the State Council is being almost destroyed by reasons of propaganda.

General Chou: I paid so much attention to Doctor Peng’s statement because it was issued on the instruction of the Generalissimo.

General Marshall: Now, to return to the National delegates for Doctor Stuart’s group which is to discuss the organization of the State Council. When the proposal was made to the Generalissimo by me for this group, he remarked that it would not be an effective procedure because the Communists would immediately introduce other matters and so complicate the discussion that no progress would be made. My answer was that Dr. Stuart was only going to function as chairman during discussions of the State Council issue. Therefore, if these other issues are to be brought up at this time with that group, it seemed to me the way out would be to terminate the discussion under Doctor Stuart’s chairmanship. I have been exerting every effort and every argument I could find to break down the present impasse and secure a cessation of hostilities. So far as I know, I have left no stone unturned. I have ignored the attacks on me personally—those that are of public knowledge and those of individuals within the Government who are opposed to almost everything I have been trying to do. It would almost seem now that propaganda wins the day, which is chaos.

I had come away from Kuling Tuesday somewhat encouraged because I had gotten the Generalissimo into somewhat detailed discussions of the question of preparation of the draft constitution under the arrangements of the PCC and an approach to the National Assembly on a general, rather than a unilateral, basis. Throughout this, I have maintained that it would be quite impossible to have negotiations conducted by the State Council while fighting is going on. It has been my hope that once we had gotten an agreement as to the basis for the State Council; had gotten that confirmed by the Steering Committee; had gotten the candidates designated, and had possibly even sworn them in, by that time we would have found a solution to the problem of terminating the fighting.

General Chou: Regarding the statement you have just made, I feel compelled to make some explanations to clarify the points. It is a matter of fact that you and Doctor Stuart have transmitted to me the statements and conversations of the Generalissimo. On the other hand, as one of the parties involved in the negotiations, I also feel the responsibility to bring forward to you our viewpoints regarding the various matters.

Take the example of the informal group which was a proposal of Dr. Stuart and yourself. I wish to reiterate the basis upon which we expressed our acceptance to that proposal. I told Dr. Stuart several times that we accepted the proposal on the guarantee that cease fire arrangements would be made and that the Government would drop the 5 demands after the conclusion of the formula for the government reorganization in Dr. Stuart’s group. I repeated this point almost every time I talked with Dr. Stuart. I also explained to you that it is inconceivable as far as I am concerned that after the government reorganization we could designate the candidates while the fighting is still going on. The reason why we had conceded to discuss the reorganization of the State Council at this moment, while the discussion of the cease fire is deferred, is purely because the Government officials, including the Generalissimo himself, asserted repeatedly that without a political settlement there is no guarantee from the Government point of view once the military hostilities are stopped. It is in view of the foregoing that we accepted a discussion of the reorganization of the government provided that there will be a guarantee for the cease fire. Based on the guarantee, we then may turn over to discuss the details for the cease fire arrangement. I also conveyed that to Dr. Stuart at least two or three times. According to the statement you have just made, it seems that we would merely discuss the reorganization of the State Council; that we may even designate the candidates; and that the State Council may even be convened before the fighting can be stopped. Such a procedure is inconceivable to me because I could never accept the submission of the candidate list while the fighting is going on. I also explained this point to Colonel Caughey when he came over to me to ask under what conditions we would be ready to nominate the candidates. At that time I stated that under two conditions: 1. When there is a cessation of hostilities and 2. When the reorganization of the government will be enacted in accordance with the PCC resolutions.

As to the matter whether the Government has made propaganda in connection with the truce or not, I wish to point out that that was not due to our efforts. The Government made much propaganda on this point following the same line as you have mentioned above. I hope you fully understand our views on this whole matter. If that opinion of ours is ignored in dealing with this matter and if I participate in an arrangement which is not in line with my original point of view, it would appear to Yenan, as well as the other parties, and the Chinese-people, that I am misleading them.

That cease fire arrangements be left for discussion to the reorganized State Council is entirely a scheme suggested by the Generalissimo.

General Marshall: Where was that suggestion made?

General Chou: It was made in the newspaper. He explained the Government’s point of view in this matter. That is entirely the scheme of the Generalissimo. According to my view, the cease fire arrangements should be effected in accordance with the January 10th agreement and the negotiations in June. If this matter is left to the State Council for discussion, then the Kuomintang, which occupies a large number of the total seats, and together with the Young China Party, which is actually a part of the Kuomintang, will secure a majority in voting and any agreement will be in favor of the Kuomintang. If we reject their proposal we would be turned down. On the other hand, we cannot agree to any proposal that is merely in favor of the Kuomintang.

You are certainly not a member of the State Council. The whole affair is separated from the Committee of Three. According to my view the cease fire business should be taken up by the Committee of Three alone. If there is no guarantee for a truce after the discussion on the State Council business is completed then it doesn’t seem to me profitable to have that discussion.

Regarding the propaganda, I wish to make it clear that it was not initiated by my side. Regarding the 5 point demand, it was first given to the correspondents by Mr. Fugh³⁴ when Dr. Stuart came back from Kuling. It was immediately published by them. He told them everything we had talked about. It was published by the Kuomintang papers. Later, on August 14th, the Generalissimo in his public statement reiterated the terms for a cessation of hostilities, in which he demanded Communist withdrawal from all places that menaced peace and disrupts communication. The Kuomintang Party press immediately interpreted that to mean he was demanding the Communists to evacuate from those 5 places. The Central Daily News still reiterated those 5 conditions. Such propaganda was carried on by the Government papers continually and I am certainly the last one who mentioned this point. That was around the 25th of last month.

Regarding the cease fire arrangement, the Government made certain propaganda. The Kuomintang papers asserted throughout that it was the Communist Party which initiated the truce. Therefore they saw no necessity on their part to undertake any action to stop the fighting. That was throughout their argument. Doctor Peng has been instructed to make a statement to this effect and Mister Wu Teh Chen at Kuling again reiterated this point. Today the paper again expressed the view that the whole responsibility should rest with the Communists. Wu Teh Chen declared in today’s paper that the cease fire would only be arranged by the State Council after its reorganization. That is the Government’s propaganda with regard to the truce. From the statement you just made it appears to me that the thought of the Generalissimo is following the same line. In view of these facts, how can I strictly separate the propaganda with the facts in considering the various points.

General Marshall: May I interrupt here a minute. I was aware of the press statements and the propaganda efforts following Philip Fugh’s report to the press. I was aware that this resulted from Doctor Stuart’s conversation with General Chou when Dr. Stuart returned from Kuling. What I was referring to was the statement that came out following my conversation with General Chou the other day which appeared in relation to the State Council issue.

There was also a public statement from the Communist headquarters regarding the State Council which did not help matters for me and that was when Colonel Caughey went over confidentially to ask a question and the next morning that appeared in the paper and also Colonel Caughey’s name. (To Colonel Caughey: Is that correct?).

Colonel Caughey: Yes sir.

General Marshall: However, all of that is water over the dam. It goes to show the confusion into which this general propaganda effort is drawing everything. If both sides would just stop the fighting and would indulge only in propaganda I would be more cheerful about it.

Now, as I understand the matter, there is no prospect of a meeting of Doctor Stuart’s group under the present conditions.

General Chou: I wish to continue my statement. Regarding the understanding about the proposal of a truce, your statement was correct in this sense that we have a different basis of understanding. My idea of issuing an order by Chairman Mao Tse Tung was entirely based on what Dr. Stuart conveyed to me. Since Dr. Stuart also felt that the Generalissimo would issue a statement that in case the Communists would stop fighting he would stop fighting too, therefore I thought we may make use of that statement. I therefore suggested this procedure.

I then began to wonder whether it was advisable for the Communist Party to first issue a cease fire order which after three or four days would be followed by an order by the Generalissimo. I was not very sure about the Generalissimo’s statement, and I refused to make a decision at that time. Instead I came to make further inquiry on you. After hearing your statement in connection with that part, I came to the feeling that my suggestion was rather superfluous. You then said you do not share my view on this point. Perhaps we may still make a try along this line. During supper I said I might get a reply from Yenan on Saturday and I would dispatch a message that evening and I wish to convey to you the essential points of that message. Seeing you had departed, I mentioned the message to Doctor Stuart with the view that he would relay it to you. At that time there was some difference of understanding between you and me as well as between Doctor Stuart and myself and this difference lies in the fact that while I am thinking all the time the order will be issued by both sides with a space of time between the issuance of the two orders, it never occurred to me that such an order should be issued by the Communists only because then it will be immediately seized by the Kuomintang propaganda. They have already made propaganda that the Communist Party alone should stop the fighting because the fighting was initiated by them. Therefore, all that is necessary is for the Communist Party to stop the fighting, while they do not feel committed to such an arrangement.

Coming to the surplus property, I do not want to go into another discussion on this point but I have to reaffirm my stand that we do not agree with such a deal. I also am in divergence with you regarding the view that it is profitable to the Chinese people at this moment. All I can see is that such items as trucks or communication equipment and the army rations and clothing can only be for the civil war purpose. As to the various other items, they will be turned over to the market and the income will also be expended for war. But still the Chinese people will pay the responsibility of reimbursement. So, of course, it is not in the interests of the Chinese people.

It is true that around April you did tell me about such a transaction. At that time we showed forbearing toward such an arrangement because we had in view that the reorganization of the Government will take place soon. Then all these materials would be turned for the purpose of reconstruction and not for war. What we now have is just the reverse of that state of affairs, so this is not a matter of propaganda but a matter of fact as we see it.

Now there is also another point which you related the other day and regarding which I did not make a reply. That is the point regarding the propaganda and its connection with Soviet Russia. Previously I have purposely avoided furnishing a reply regarding that point because I was fearful that it would cause embarrassment to us both and that any dispute over the point would be without result. But still I wish to say that I do not quite agree with your viewpoint comparing Soviet propaganda with the Chinese Communists’ propaganda. As a matter of fact, for quite a number of times, we (meaning the Chinese Communists) have taken the same line as the American public opinion or the line of the American Government. Particularly during the first three months after your arrival in nearly 80% to 90% of the propositions we shared your view and at the time when the Kuomintang launched an anti-Soviet campaign we entirely refrained ourselves from expressing our view. We merely followed your suggestion to work on the army reorganization plan and to conclude it because we thought that this procedure is to the best interests of the Chinese people. We want to do everything in the best interests of the Chinese people. Later on there was some criticism regarding withdrawal of the U. S. armed forces in China but that criticism has also been voiced in the United States.

Five days ago I learned that a straw vote had been held by a broadcasting station and the result of that straw vote was 8 vs 3 in favor of withdrawing American troops. I also recall that in March and April you mentioned the prospect of the United States armed forces now on duty being withdrawn. As regards the Soviet troops in China, I have also voiced at that time that we favor a speedy withdrawal of the Soviet troops. This shows we have the same attitude regardless of whether it is Soviet or American troops.

Now, coming to Dr. Stuart’s group regarding the discussion on government reorganization. I wish to repeat that each time you go up to Kuling to make laborious efforts for finding a way of settlement, I ask Dr. Stuart repeatedly what will be the Government’s stand toward the cease fire. Each time Dr. Stuart told me that there is still no such assurance but efforts will be made toward this end with a view to trying to secure such a guarantee. Yesterday I sent Mr. Wang Pin-nan again to inquire on this point and Doctor Stuart said this time that definite assurance has been obtained. He said he felt that some result could be obtained. However, on coming to see you today my impression is entirely different.

There is one thing that puzzles me, that is the role of Mr. Philip Fugh. It seems to me that Mr. Fugh is not always consistent in talking to me and to other parties. For example, he related sometimes that such and such a person in the Kuomintang has a Fascist tendency or that it is quite ridiculous for Dr. T. V. Soong to participate in the negotiations, or he said that he has the impression that the Generalissimo would not stop the fighting. During my discussions with Dr. Stuart, the conversation was largely led by Mr. Fugh because most of the time Dr. Stuart expressed very little. Most of the talking was done by Mr. Fugh. Each time he would then reveal the whole conversation to the newspapermen. For my part and my staff members, I strictly refrained myself and them from revealing the conversation to the newspapermen. Regarding the talk that Colonel Caughey has had with me, which later got in the papers, if my people said anything it merely concerned what was going on. This perhaps was not wise but anyway nobody intended to make things worse.

But Mr. Fugh sometimes went further. For example, I read in yesterday’s paper that, according to Mr. Fugh, Dr. Stuart’s group will also discuss the question of agrarian reforms. This statement was published in all Chinese newspapers. That is his statement. According to my understanding, it was only once that you brought up this question in our conversation here and nobody ever made any decision on this point. So I wonder how Mr. Fugh alone can make such a decision.

And in that statement he further said that the reason why this question should he discussed is because when the Kuomintang representatives discussed Communist areas they would immediately be confronted with this question. It seems to me that such a statement is tantamount to taking sides with the Kuomintang’s policy of force. Also, while in Shanghai, Mr. Fugh told some correspondents that there is absolutely no necessity for my going to Shanghai. I was puzzled as to the intent of such a remark. I am interested in these things because Mr. Fugh participates in all of the talks after which he tells everything to the newspapermen. For a series of days he criticized the Communist Party and this is strange from the point of view that he is in the position of mediator and that would only weaken that position. Yesterday I purposely did not call on Dr. Stuart because I wished to avoid Mr. Fugh.

However, I would like very much to talk with Dr. Stuart directly. I have this suggestion to make; in order to find out clearly how the present deadlock was brought about I would like to have another conference with you, Dr. Stuart and myself present. We can then find out the cause of the block in convening the informal group meeting. By that I mean that I hope that Mr. Fugh will not participate but you will participate so that we may clarify matters.

General Marshall. I will endeavor to arrange to see Dr. Stuart tomorrow morning and I will take up this matter of a meeting with him. If you do not object, I will read this statement regarding Philip Fugh to him.

General Chou: I have no objection just so it is read only to Dr. Stuart.

General Marshall: I will do that tomorrow morning and let you know the result. How about a meeting tomorrow afternoon at 4:30? We had better meet here and not at the Embassy.

General Chou: I agree.

30. Secretary General of the Chinese National Government.
31. Lt. Gen. Alvan C. Gillem, Jr., Commanding General, China Service Command.
32. Howard C. Petersen, Assistant Secretary of War.
33. Signed at Shanghai, August 30, 1946; for text, see Department of State Publication No. 2655, Report to Congress on Foreign Surplus Disposal, October 1946, p. 40. For correspondence on this subject, see post, pp. 1033 ff.
34. Philip Fugh, assistant to Ambassador Stuart.