894A.00/5–2647
Memorandum by Mr. George H. Kerr 38 to the Director of the Office of Few Eastern Affairs (Vincent)
Subject: Probability of Communist Penetration in Formosa
Under present Chinese policy it is believed probable that Formosa will succumb to communism in the near future.
A minimum development inimicable to American interests will be an inconclusive struggle between the populace and the Central Government and the denial of Formosa’s wealth to the Far Eastern economy.
A maximum development will be the successful penetration of communist leadership, the elimination of Nanking’s representatives and—if there is a political fragmentation of China—the establishment of a strong communist control over rich natural resources and light industry potential.
The recent massacres, military subjugation (an estimated 50,000 troops now there) and superficial gestures in answer to popular reform demands have estranged the Formosans from the mainland.
General Chen Yi adroitly placed the blame for his recent revengeful [Page 467] massacre upon the Central Government and carefully identified the United States with support of his policies. The use of United States military equipment by his troops appeared to lend visible support to his propaganda. Organized communism, in exploiting this, appeals to Formosa to abandon hope for democratic intervention. Formosa’s coasts lie open to smuggled arms and agents.
Until mid-March responsible Formosans expressed the profound belief, here concurred in, that Formosa must pass under temporary United Nations or American supervisory control (with an all-Formosan Government having technical advisors) or become communist.
Before March 8 Formosans discussed the fact that sovereignty has not yet passed to China. The public refused to believe that America would permit the massacre to develop or the Chinese thereafter to remain in unlimited control.
If a formula could be found stipulating the investment of American aid in the existing economic structure of Formosa and requiring a joint management thereof (following withdrawal of troops), or if advantage could be taken of the de jure status of Formosa to insist on a supervisory body to reduce and check current excesses, the island might be reserved under temporary international control as a stable foothold for future liberal reconstruction efforts in China.39