893.00/7–2948: Telegram
The Consul General at Mukden (Ward) to the Secretary of State
[Received July 30—11:42 a. m.]
320. Turbulent emotion northeasterners over July 5 shooting northeast students Peiping giving way to considered resentment against Government with unconcealed airing northeastern grievances past 2 years against graft, corruption, maladministration and highhandedness. Hitherto very reliable, well informed, highly respected source, who desires identity not be divulged for moment and on whose statements much of following is based, states no animosity felt by either students or northeasterners towards Fu Tso-yi in whose area shooting occurred or towards Li Tsung-jen who was in Peiping at time incident. Northeasterners convinced Fu had previously issued direct orders prohibiting violence against any such demonstration. North-easterners claim have information bloody incident was instigated by [Page 385] Government group to embarrass both Fu and Li. Predicating their actions on this assumption, determined group northeastern leaders exemplifying attitude of vast majority northeasterners toward Government now pressing demands punishment persons responsible. Wei Li-huang transmitted request to Nanking for information concerning incident soon after occurrence. No reply received. On or about July 20 Wei wired urgently to Generalissimo requesting action be taken investigate matter and mete out punishment to guilty. Told Generalissimo unfavorable reaction growing in northeast and unless immediate conciliatory action taken serious consequences could be expected. At same time Wei sent northeasterner, chief of his staff, to Nanking to press for investigation and punishment. No reply received to wire and Wei’s delegate received no satisfaction.
Northeasterners then advised Nanking unless action taken by August 1, northeast would establish “emancipated regional government” and would consider itself no longer politically dependent on Nanking. On July 26 Wei dispatched third urgent wire to Nanking requesting immediate answer and assurance of action and advised failure to take action could result in open rebellion northeast. No answer received to date. Northeasterners presently determined, unless Government acts by August 1, abolish subservience to Government, remove all non-desirable civil officials in northeast and replace with locally appointed northeasterners. Wei considerably disturbed over turn events. Has been in constant contact with source pleading for additional time receive Government reply. Source states northeasterners adamant on present schedule. Student and labor demonstrations planned. Representatives 100,000 laborers called on source and assured him their cooperation. Desired take immediate action but were dissuaded. Local students and instructors following same procedure. Source stated matter became prematurely out hand July 27 when orderly student demonstration and rail strike took place. While northeasterners professing hope Government will take action on Peiping incident, it may be “emancipation movement” has snowballed beyond point of arrest.
In reply query whether northeasterners had completely considered effect such move their part pertaining (1) necessity issuance new currency, (2) possible cessation airlift food supplies and (3) possibility withdrawal Government troops Manchuria and Communist occupation all northeast, source minimized importance first two points. Stated Government currency now not worth paper on which printed and new currency to be issued by emancipated regime will be based on confidence in administrators much more competent than present. Emancipated regime will issue own fiat money and, in absence of foreign trade, foreign exchange value of no immediate consequence. [Page 386] (He disregards need foreign exchange, now paid by Nanking, for chartered airlifts to northeast.) Source stated food stocks and anticipated harvest sufficient carry northeast through coming winter and improved morale and military potentialities could relieve situation during next year. (This contention so far food supply concerned is highly debatable.) Third point considered most serious, but north-easterners have no intent interfere with military. Will do all possible, including recruiting and training 200,000 local militia, enhance present Government military strength northeast. Source does not believe Government will withdraw troops because such action would immediately open door for Communist invasion north China and ultimately central and south China.
Source stated his basic reason not believing emancipated regime would disadvantageously affect present situation northeast except advantageously for China is that it is impossible for Government (by Government he means Generalissimo) maintain military power beyond two months hence. Believes Generalissimo political power solely dependent on military strength and once this latter removed his political power will crumble. Source, close friend Fu and Li, states believes Li will inaugurate regional government move north China near future. Military strength will be supplied by Fu Tso-yi, Wang Yao-wu, and Pai Chung-hsi. When queried as to part Wei Li-huang will play such move and whether or not he would remain loyal Generalissimo in event such move by Li, source simply stated: “Wei very sympathetic to Fu.” In discussing present authorized aid China, source sought information as to America’s attitude toward such regional moves. Was advised no US policy has been enunciated and consequently not in position discuss. Source stated that present Kmt regime in China doomed to failure and early demise and that US friends of China should be prepared seize opportunity about to be afforded by regional regime to maintain territorial inside [integrity?] China, failing which land and people of China can pass into Communist orbit. He stressed that American aid should be allocated to China by regions and not in lump to Government for disposal in its discretion and that unless some radical improvement occurred in Government immediately (he stated considerable pressure being brought on Generalissimo take long rest in US) Government would not be in position to attempt equitable allocation of aid when received. Also stated any independent move by Li or northeasterners would carry on present plans remove Communism of Soviet ilk in China and that had reason believe rumors reported meeting Fu, Li, and Chou En-lai not groundless. Not altogether inconceivable some type truce may be arranged north China areas which would permit Communists center attacks on central and south China. Credence is lent this [Page 387] statement by reliable report received from recently recaptured Liaoyang to effect that Communist propaganda has of late been almost as acidly anti-Soviet as anti-American (widespread rumor, believed have no foundation whatsoever, being circulated Communist areas [to] effect Mao Tse-tung seized by Soviets and taken across border as result repeated refusal comply recent Soviet demands partial administrative control presently occupied Communist holdings).
Wei undoubtedly fully aware of August 1 plans, but absence Mukden construction any barricades or other form street defenses indicates movement will not be opposed by military action. Wei evidently sufficiently realistic recognize hostilities between dissident northeasterners and military would prove suicidal to both sides under present Communist threat to Mukden.
Even though threatened northeast break-away does not materialize August 1, which is possibility, degree to which it has been planned and is now being discussed is highly indicative of low esteem in which local leaders hold Nanking Government. Should spark not catch fire, present discussions will in all likelihood weld local dissidents into closer group and embolden them in future pursuit of rectification northeast grievances. If credence can be given recent whisperings of imminence regional breakaways from Nanking Government in China proper, declaration of emancipated regime in northeast may prove signal for similar occurrences elsewhere.
If danger of creating an opportunity Waico [which?] may be seized and exploited by Communists in dismembering China is to be obviated, and we have not already formulated policy regarding our attitude toward support of regional groups which are loyal to China but which nevertheless divest themselves of subservience to present Nanking regime, time has come when formulation such policy can no longer be safely delayed.
Sent Nanking 405, repeated Department 320. Department pass Nanking.