47.02.14A2(4547w)
TESTIMONY BEFORE THE SENATEFebruary 14, 1947
FOREIGN RELATIONS COMMITTEEWashington, DC
...I will speak first about China. That country, as you know, financially at least, is in a chaotic situation at the present time. The question is what our attitude should be toward China. The view of the Department, my own view, and I believe the president’s view, is that at the appropriate time we should endeavor to arrange to give them some financial assistance, but when that time comes is another matter. You have a tremendous deterioration financially in progress at the present time. However, in connection with that there is this difference between how we would visualize such a thing in the United States and how it develops in China.
There 80 percent, almost, of the population is in almost an agrarian life. This tremendous to-do over inflation relates to the cities, and relates particularly to Shanghai and, of course, to Canton and Tientsin and the ports and those cities that are closest to the ports—Nanking and Hangchow, for that matter....
ON GIVING U.S. FINANCIAL AID
Now, so far as the Department is concerned, so far as I personally am concerned, in studying the matter to see what might be done, unfortunately there is very little that one can put his finger on at the present time financially that would, we think, produce any definite result that would justify the American Government putting forward the money. Certain things have to happen over there. The great problem is how much deterioration sets in before those things do happen, if they ever are going to happen.
You have a situation now as to the method of handling the financial phase of the matter. That is a very intricate thing at which I am an amateur. There is a very decided difference of opinion between the management by the Executive Yuan, or Dr. T. V. Soong, and the desire to let nature take a little more of its course, particularly to allow the exporters to do the business for the profit that they are not getting at all now. The Government is controlling the export business in China to such an extent that the individual businessman makes almost nothing out of the transaction.
There is a very definite thought on the part of a great many that if the Government to an extent stepped aside on that, and let the thing rather balance itself, comparatively speaking a tremendous export business would be developed, because they would get the stuff to the seaboard one way or another, in the energetic way they show when the money is before them, whereas as it is now they are rather inert, and they derive almost no profit from the process of the export trade.
POSSIBLE USE OF UNRRA AID
There is a difference of opinion on a financial matter which is intricate at best, and regarding which there are always very decided differences of opinion. But at the present moment it would not appear to us that there is anything definite that would justify us in making a financial effort to intervene. There is this proposal being considered now, which seems to be a rather good idea, that the UNRRA shipment—I think there is about $200 million yet involved—be largely converted, if possible, to cotton, rather than to the projected shipments that they had calculated on, in view of the present situation.
Dr. Soong, the head of the Executive Yuan, has been trying to prevail upon us to loan the Government $150 million for cotton. Sometimes, I think, they mention as high as $200 million. If UNRRA can find it possible to convert part of their shipments, which are supposed to be enroute by March 31, to cotton, that may have a helpful effect without just pouring money down a rat hole, as it were.
METHOD OF PROVIDING AID
... We must never just give them money. It must be a very controlled matter. It has to be, every bit of it. But the question now is whether you can even do that with any prospect of a definite return, aside from the authority for doing it.
But, of course, the pressures to get it are tremendous, and I will add this: One of the saddest, or rather the most inexcusable, things is to say “I told you so.” But this was all foreseen and all stated again and again and again.
Now I move over to the turbulent side in a military way.
Senator [H. Alexander] Smith [Republican from New Jersey]. Where would the cotton go? Would that go to the Chiang Kai-shek government?
Secretary Marshall. It would get the mills going. There is a question of control, because the Government is controlling a certain number of the mills, and they go through a rather elaborate procedure there. That is something that we would be rather intimately concerned with, as to how that cotton was handled and whether it would go into the common economy of the country or into a government controlled and manipulated economy. That is a very serious situation in the matter. There is a great difference in opinion there, where the Government has taken over plants and operated them for about 3 years before they put them out into the general run-of-mine industry of the country. There is a great deal of opposition to that. Some part of that was undoubtedly necessary, in order to get it on its feet and get it started when they took them over from the Japanese.
[The discussion continued off the record.]
Secretary Marshall. Now to get to the military end of it. There again it is one of these tragic situations where it does not do any good to say “I told you so.”
[The discussion continued off the record.]
GUERRILLA WARFARE
Secretary Marshall: They have a situation there geographically which is just made for guerrilla warfare. The Communists understand how to manage it, and they have troops, considerable forces, and 400,000 out of a million and a quarter who are imbued with a great zeal in what they are doing. They are of much greater value than just troops, just soldiers, and they will take punishment and endure, make physical efforts beyond what you can reasonably expect out of ordinary troops. All they have to do is be where the Government is not.
KEEPING THE RAILROADS OPEN
You have these tremendous distances in Manchuria and these tremendous distances in China, and generally wild country and mountains close to the railroads all along the line, so it is a very simple thing to cut the whole line. I held the Marines on the railroad for a long time for the specific reason that the coal from the Tangshan mines, which mines, incidentally, Mr. [Herbert] Hoover opened up, had to be shipped up the railroad to Chinwangtao, on the Manchurian border, where there was a dock and you could put it on vessels and bring it south. That coal is what kept the whole Yangtze and Yellow River valleys going. It kept the railroads going; it kept such factories as there were going, and it kept the utilities going. If that were cut off, there would be a collapse down there.
The question was, of course, whether the country could stand such a collapse. There were but a very few Marines that kept that thing going so that we would not have a complete collapse in Central China, in the Yangtze and Yellow River valleys; so that we could continue the operation of the two railroads in the north and south, and the functioning of the utilities of the cities as well as the factories.
When the Government began putting troops into the north, despite the agreements that we had, because the Communists had done things that justified the Government, they felt it violated the agreement of the previous January. They had moved an Army in from Formosa to Chinwangtao, to get into a campaign to which I was opposed and tried to stop. But the moment they got to Chinwangtao I pulled out the Marines, and I told the Government the Marines were coming off. The presence of that army enabled me to take the Marines off without the railroad being wrecked. As it was, for 2 or 3 months they ran about 60 percent behind on their coal deliveries. I got the Marines out of that picture because the Government then had somebody to put in their place.
Later it enabled the Communists to almost cause a collapse of the Government, by stopping that coal line.
Now they have this situation, where all the communications are open to continuous Communist attack. They have the conviction on the part of the Communists that they can continue that permanently. They have the conviction on the part of the Communists that the Government, financially, will collapse. That is the side they are playing very heavily, and there isn’t any question about that at all. You have the conviction on the Government’s side that they can, in a period of 6 to 8 months from December, destroy the Communist Army. That I do not think is possible. I would be very greatly surprised if they were able to do anything like that, and I would be greatly relieved if I thought they would not get into such a dilemma themselves that there would be almost a complete collapse.
PARTY IN POWER
Gentlemen, you have a concrete situation of a group of men who are military leaders and a political group on both sides. The military man is in the political council, the supreme war council at the top, who have been engaged in nothing but fighting. On the other hand you have the educated Chinese, the university man from this country, from England, France, and the universities in China, who has no political power. He is aware of the march of events in the world in relation to people, changes in government, and things of that sort. These other people are not aware of that, and they are not aware that they are unaware. That is really the serious part of it.
It [the Nationalist Party] has been a revolutionary party. They did a wonderful thing when they came on from 1926 and 1927, through that great struggle. You all know what happens when one group stands in continuous power without anybody to attack their motives and procedures in all the manifestations of governments, particularly low down in the provinces, in the cities and the villages.
NATURE OF CHINESE COMMUNISTS
Senator [Tom] Connally [Democrat from Texas]. I have heard it stated that the Communists, so-called, were not necessarily Communists, were not imbued with that ideology, but that the Government had just begun to call them Communists. What is your idea about that?
Secretary Marshall: I think the leaders of the Communists are pure Communists. I believe you call them Marxist Communists. They are very positive about that themselves. They resent any implication that they are a sort of agrarian group. They insist they are Communists. They insisted very plainly in writing to me that their desire was to form a socialistic government in China.
Senator [Alexander] Wiley [Republican from Wisconsin]. Are they Russian-inspired and sustained?
Secretary Marshall. They have had all their contacts, you see, with Russia, and they have exactly the same ideology, but intercommunication back and forth I never was able to pick up exactly. There are all sorts of accusations.
As a matter of fact, let’s put it on a religious basis. If you were all Catholic and there was a Catholic organ in Moscow and a Catholic organ in Yunnan, you do not have to get together very much because you are all playing the same tune. They all—that is, the people in control—have the common thought.
Now, where the difference has come up is that a great many people, young fellows, fine young fellows I think, went from the universities to the Communists because of their complete disgust with what they found in the government of the cities and towns where they were. You have the instinct to squeeze there, and now you have the long control which adds to the graft of that situation, and then you have inflation, which magnified it still more, because an official could never hope to live on his pay. Naturally, if he could not live on his pay, he would do something else.
HISTORY OF COMMUNIST MOVEMENT IN CHINA
You have this situation. You have to go clear back to Sun Yat-sen, who tried to get the United States to help him and tried to get Great Britain to help, and the only positive help was from Russia. They brought in Borodin, they brought in supplies, and that is the way this thing started.1 That was the period of the Trotzky world revolution procedure—violence everywhere; and then the Generalissimo turned to them and purged the whole business.2 He threw them all out, and Borodin went back to Russia. But in this thing was a situation where the present chief of staff of the Chinese Army, his deputy in Canton, and up to Shanghai and Nanking, is a leading Communist representative, Chou En-lai, with whom I was dealing. He is a graduate of Wacow [Whampoa] MilitaryAcademy, from where this thing starts.
General Chang Che-Tung, who served on a committee of three with me, who is up in Turkestan now doing a very fine job against heavy odds, and Chou En-lai, were in the same room serving the same thing.3 They were both deputies. There is that intimacy all though the thing. Then this split came, when they got into this violent stuff that these fellows under Borodin were putting across. That was directed in the most violent manner toward the British or Americans or any foreigners that were in the region. Then that split came.
Then there were those of the Chou En-lai stripe and others who did not take such a serious view. I mean, they did not make that the consideration of first importance, what these fellows were doing toward the foreigners. Their reaction was that something had to be done to break down this control in China by a few, where all the privileges of easy living and of money and everything went to the few, and in order to get through to the many this was the conception they had, which, to a certain extent, you see, Sun Yat-sen put up.
Out of that developed this situation where you have former members of the Army, intimately associated with each other, brother alumni and all that sort of thing, that are divided between the two groups. But you have this young group in there that left the universities because they were completely disgusted with the situation, because of the extortion, and because of the corruption that has been so terrible in the lower ranks of the party.
[The discussion continued off the record.]
EFFORTS TO BRING HARMONY IN CHINA
Secretary Marshall. In the affair that occurred there in October, when we tried to close the deal in some way that would produce a reasonably harmonious situation, the small party groups, minorities, came up to Nanking from Shanghai and were all together. For a period of about 2 weeks they were quite powerful. Everybody courted their influence, Communists on one side and Government on the other.
I told them when they came to see me that that was fine, but that it would not last, with the two parties trying to tear them to pieces trying to get them on their own side, that a few of the leaders would give in for personal reasons and the thing would be torn apart.
That is exactly what happened, in a week. The Communists got one side and the Government the other, and their power vanished and they had no more power.
What I was struggling to do was to get the picture before the Generalissimo and before the world, so his choice would be plain to everybody, and in that way we might precipitate a cohesion of the liberal group, who were men of education, which is the important part, because they understand the change of thought in the world as to human rights and things of that sort.
SECRET POLICE
Now, in all of this business we were tortured by the fact of the secret police. The government had them, the army had them, and the political party had them. It seems strange to us to have a political party with secret police, but that is exactly what they had. You were struggling with that, and that was one thing that had the Communists in a state of complete suspicion, because they thought they would exterminate them if they were cornered through the operations of the secret police, and the Government put on a pretty good demonstration of that in February and March.
However, I do not want to prolong this thing. What I have been hoping for is evidence, plain evidence, that the Generalissimo has brought into control positions a liberal group of people that we know, who are men of reputation and men of integrity, and also men of education. That will be the beginning of what would seem to be a genuine step toward getting a normal democratic government. If you do not get this liberal group together you have no semblance of a minority party.