794A.00/6–750: Telegram
The Chargé in China (Strong) to the Secretary of State
877. Source inside Chinese Government recently made remarks on following subjects during long private conversation:
Chinmen Island. Recent Communist shelling destroyed facilities where supplies and troops landed and debarked. Resupply of food hampered and if it were necessary evacuation could not be carried out for estimated 20 days until wharf built. Do not expect Communists attack Chinmen. Although government will withdraw troops eventually, no hurry to do so because lack billets Taiwan (comment: Communist gunfire may interdict beach use for landing supplies from LST and thus necessitate construction wharf outside gun range).
Ground forces. Now total 410,000 on Taiwan and Chinmen. Some 26,000 able bodied males from civilians on Chusans were brought back Taiwan and enlisted in armed forces. Source believes they will be no military value at time needed. Taiwan defenses planned consists of four lines, one on beach, one between beach and railway line, one based along railway lines, and fourth in foothills. Only first two lines will be completed. Final stage will be retreat into mountains and carrying on warfare from there.
Communists. Buying laid-up vessels Hong Kong and Singapore. Using various methods economic warfare against Nationalists such as depressing Hong Kong gold market, reducing price salt.
[Page 360]Nationalist soldiers. Will probably prove willing fight because are convinced mainland holds no living for them now and all information from their homes tells them stay here.
Chen Cheng. Submission of resignation1 not due proposal increase power of Sun Li-jen (which source says Gimo will never agree to) but result of furor created by failure of SOS general in Chusans (a Chen Cheng man) to bring out military supplies and equipment; he gave precedence to commercial cargo which he and many associates (also Chen Cheng men) were trading to and buying from mainland on grand scale. Sun Li-jen central figure in this discrediting of Chen because Chusan forces accountable to him for much of equipment and supplies left behind and he is demanding they be made good to him or he has inadequate material for Taiwan defense. One of major reasons for recent drop in rice price was loss of Chusans which ended easy means trading rice to mainland.
Gimo. Recently more bitter than ever against US. As is always case when he is in tight spot and things going badly he shouts over telephone and at visitors, and slams objects about his office. Chang Chun is also bitter against US but on other hand states Chinese Government not doing well at all. He is no longer “in the know” on all inner affairs though he spends considerable time with Gimo. This has affected his normal balanced humor because he constantly has to cover up his ignorance of what is going on.
Gold reserves. Now being spent at rate $95,000 monthly. Official reports say about $600,000 left (apart from reserve for currency). Private information corroborates this information. Hopeful of reducing to $70,000 outlay monthly.
Hainan. Debacle caused by leak in Taipei. One division of 32nd Army placed to prevent interior Communists attack Haikow or Hsueh Yueh’s2 rear. When Gimo ordered Hainan evacuation, Hsueh in conference with Chen Chi-tang3 and Yuhan-mou4 decided attack Communist landing force with all reserves, which in part were brought up from south by air. Few hours before attack due, CAF scout plane reported could not find the division of 32nd Army containing interior Communists. More planes sent out but could not find this division. While Hsueh still debating what to do, interior Communists sortied from lairs, threatened Haikow and Nationalist rear and forced cancellation attack plans. Division never seen again; believed started march for Yulin, surrounded by Communists and cleaned up to last man. Later investigation revealed Chief of Staff of 32nd Army learned [Page 361] of evacuation plans and either flew himself or sent representative to Hainan to hold meeting with officers of division concerned. At meeting it was agreed Hsueh intended sacrifice division (Shantung men) in rearguard action while Cantonese troops abandoned them. Thus decision disobey orders and return Yulin. Chief of Staff of 32nd Army arrested Taipei as result.
Sent Department 877, repeated info Hong Kong 264.