893.00/5–449: Telegram
The Consul General at Shanghai (Cabot) to the Secretary of State
1506. While conflicting opinions and uncertain factors preclude predicting, our best information would indicate a probable shaping of events since breakdown peace negotiations along following general lines:
Li Tsung-jen’s plan hold Yangtze was ruined by (a) disregard of his powers by Tang En-po’s forces and (b) a progressive defecting of other Yangtze defense units which his lack of authority had rendered him powerless to combat (and which, through the resultant Tikiang and Kiangyin defections, forced his premature abandonment of Nanking, according to some sources). Thus convinced of utter futility of attempting lead anti-Communist resistance unless invested with full leadership, Li flew Chikow with Ho Ying-chin and demanded that Generalissimo either himself resume active military leadership and responsibility or give Li complete control Nationalist armies and resources. Generalissimo has done neither. While publicity [publicly?] professing full support of Li, he continues direct affairs and by way of added insult has advertised Ho rather than Li as chief Nationalist leader. Hence Li’s return to Kwangsi.
Generalissimo meanwhile has come Shanghai and still remains here—press reports to contrary, accenting his presence by recent dramatic speech declaring determination continue implacable fight against international Communism. Weight evidence suggests he seriously [Page 291] hopes and prepares to have Nationalists hold Shanghai long enough to:
- (1)
- Permit southward withdrawal Nationalist troops to Shanghai-Hangchow line and strengthen Ningpo-Hangchow-Nanchang defense system for protection Generalissimo’s Fukien base. Late information indicates this objective already impossible.
- (2)
- Complete southward evacuation from Shanghai by sea all of most valuable remaining troops, military equipment and general materiel. While no heavy troop evacuations yet confirmed, this conclusion supported by logic and fragmentary evidence including departure certain specialized units and Generalissimo’s evident preoccupation with assembling large fleet ships to prepare getaway.
- (3)
- Impress America, Britain with ability stage gallant defence city. Believed reliable sources state that on April 26 Generalissimo told Army Commanders American China policy could be expected change basically in 1 or 2 months and that Tang must hold city minimum 1 month. Tang reportedly declared would hold 3 months or suicide. Generalissimo also said giving pep talks to officers down to battalion commanders, promising World War III in 6 months.
- (4)
- In line with 2 and 3, suppress or at least delay action by Shanghai elements toward arranging peaceful turnover city in “going” and intact state to Communist. Aside from heavy shipments moveable physical assets, Generalissimo is known to be trying force evacuation of many professional persons against their desires, including entire bank staffs and also persons who he has reason believe will be key participants in peaceful turnover movement. Thus Tu Yueh-sheng’s departure for Hong Kong May 1 said forced by Generalissimo, who also said pressing Yang Hu to leave. Yang said feigning prepare leave but determined remain. Some allege that Generalissimo or his Military BIS84 supporters may take further step of ordering a scorched earth destruction or even physical attacks on foreigners (with intention incriminate Communists and involve foreign powers).
Powerful Shanghai interests deeming military defense city hopeless and anxious minimize destruction and make best of inevitable Communist occupation are seeking complete secret arrangements with Communists looking to early takeover city by intermediate regime made up of various local groups (Chambers Commerce, guilds, etc.) and backed by Yang Hu-Tu Yueh-sheng Green-Red Gangs organization, which would shortly hand over to Communist Government (see previous ConGentels). This plan envisages prior neutralization of at least part Nationalist troops and police through propaganda or bribery and special steps to protect vital properties and (allegedly) foreign lives. Underground representatives having approached ConGen claim that Communist cooperation already assured and that foreign, especially American, cooperation most important from standpoint of food supplies and winning public confidence in regime. Believe that, although these representatives probably exaggerate progress of their [Page 292] project toward winning Communist approval, something on general pattern of project is likely materialize.
Despite swift thrust of some units along Wusih–Soochow and Wusih–Kashing approaches to Shanghai, Communist main efforts appear thus far directed toward liquidating Nationally armies west of Taihu Lake with view opening up Nationalist Hangchow–Nanchang defense line preparations to easy destruction and isolating Shanghai from Hangchow; and Communist operations nearest Shanghai seem still in nature probings by light forces. Observers feel that as soon as sizeable force is readied for task, Communists can take Shanghai in short order; but that entirely possible they may deliberately delay occupation for considerations such as (1) food shortage and inability take over task of feeding population and factories, (2) unreadiness with respect administrative personnel, or (3) extreme anxiety to avoid destruction of city installations and consequent tendency to delay occupation pending further progress of secret arrangements to ensure peaceful turnover with adequate precautions for protection of city assets. Believe especial importance to last factor, which probably explains why, despite Communists’ undoubted ability to stir up major internal troubles through their infiltration of police and Other key organs and their reliably reported armed underground forces within Shanghai, city remains surprisingly quiet considering the very precarious labor situation. Same factor might also cause Communists to avoid pressing Generalissimo withdrawal too closely for fear it might precipitate his resort to scorched earth tactics before Communists have completed secret arrangements to combat such action. Course and timing of events remain unpredictable in view various uncertain factors such as: Extent to which silver dollars can make Nationalists fight; availability of dollars; Generalissimo’s real intentions; Communists’ planning regarding Shanghai; extent to which Communists: have actually committed selves to any local peace group; dependability of police (already known to include many Communists and Green-Red Gangs said to be taking action suggesting possible intention to cooperate eventually with peace planners); and the chances of serious misbehaviour by Nationalist troops or labor riots (from purely economic causes) which might force events and alter whole picture.
While risking no prediction we hazard guess that mounting labor tension is momentarily more menacing than politico-military potentialities and that, barring internal disorders serious enough to force Communist hand prematurely, city may well continue under reasonably orderly Nationalist control for at least week with fair possibility that no drastic change will eventuate for month or more.
One possibility to be kept in mind is that Communists, in hopes of maintenance ECA aid, may attempt effect changeover from local emergency regime to Communist dominated government in gradual [Page 293] manner with view to having their domination so camouflaged by local-coalition appearance during initial period that government could be declared still non-Communist.