To: Hermann and Greta

Who cooked after me so were in the final stages of writing this book, with every best wish and thanks, in friendship

From

Freda Utley

Washington D.C.

11. Nov. 1947

COPYRIGHT, 1947, BY FREDA UTLEY

PRINTED IN THE UNITED STATES OF AMERICA

By FREDA UTLEY

Lancashire and the Far East

Japan's Feet of Clay

Japan's Gamble in China

China at War

The Dream We Lost: Soviet Russia Then and Now

First Edition

To P. M. A. L.

Foreword

It would be impossible for me to list the names of all the Chinese and Americans to whom I am indebted in writing this book. Some of them are mentioned in its pages; others to whom I owe as much are not referred to since one cannot always quote those from whom one has learned most.

For interviews and hospitality and other kindnesses I wish to thank Generalissimo and Madame Chiang Kai-shek, Dr. H. H. Kung and Dr. Wang Ch'ung-hui. Foreign Minister Wang Shih-chieh and Vice-Foreign Ministers Kan and Liu Chieh, Chen Li-fu, K. C. Wu, Wu Te-chen and my old friend Francis Yao who was working with him at Kuomintang Headquarters, Chang Kuo-san of the Chinese Central News Service, Cheng Ming-shu and Ma Yin-Ch'u, S. Y. Wu, Secretary of the Executive Yuan, Generals Tang En-po and Li Tsung-jen, Dr. Wong Wen-hao, Premier Chang Chun, Yu Ta-wei, Wang Yun-wu, Chu Chia-hua, Fu Ssu-nien, Y. C. Koo, T. F. Tsiang, K. C. Wu, Carson Chang, Hsu Tao-liu, Shu Shen-yu (Lao-shu), Lo Lung-chi, Wei Tao-ming, Dr. Robert K. S. Lim, Mary Chen and Loo Chi-teh; "Sinmay" and other Shanghai friends too numerous to mention.

I am particularly indebted to Counselor Chen Chih-mai of the Chinese embassy in Washington (a former collaborator of Dr. Hu Shih's on the Independent Review in prewar days), who combines a profound understanding of China's political and economic problems and culture with a Western liberal outlook. My thanks are also due to Dr. Hu Shih himself, the former Chinese Ambassador to the United States who has been my friend for many years and first helped me to understand the Chinese attitude toward life. I am also particularly indebted to Dr. Fu Ssu-nien, the distinguished historian who combines the learning of China with that of the West and who, while fearlessly criticizing the government of his country, has a deep understanding of its difficulties.

I wish also to express my gratitude to my Communist hosts in

Yenan who received me with every courtesy in spite of my pronounced anti-Communist views. Although we are on opposite sides of the barricades, so to speak, General Chu Teh, Ching Ling my interpreter, the editor of the Emancipation Daily, Chiang Lung-chi, the doctors at the International Peace Hospital, and many another Chinese Communist made me welcome in Yenan, showed me everything I asked to see and spent hours talking to me. I am especially grateful to Chou En-lai, the Communist representative in Chungking, who made it possible for me to visit the Communist Northwest.

Among the Americans to whom I am indebted for information and assistance are General Albert C. Wedemeyer, Colonel "Bill" Mayer and Captain Gates of the Public Relations office, Generals George E. Stratemeyer and Paul Caraway and George Olmsted, Colonel Pendleton Hogan, Brigadier Middleton, Colonel Don Scott, Colonel Ivan Yeaton, Admiral Daniel E. Barbey, General Worton of the U.S.M.C., his aide Captain Tom Watson who died in China, and other Marine officers, Colonel Kellis of the O.S.S., Dr. Logan Roots of UNRRA, Walter Robertson, the United States Charge d'Affaires, Bland Calder of the United States Embassy, and John L. Kullgren of the War Department, Tillman Durdin of the New York Times and Arch Steele of the New York Herald Tribune.

My special thanks are due to Dr. J. Lossing Buck, the foremost American expert on China's agrarian problem who gave me invaluable assistance in writing the chapter on "Poverty and the Land."

I have also to thank General Victor Odium, the Canadian Ambassador and perhaps the best informed and wisest of all the diplomats I met in China; also Sir George Sansom, British Representative on the Far Eastern Commission. Finally I must express my gratitude to Dr. Paul Linebarger of the School for Advanced International Studies in Washington for his help in the preparation of this book; his personal encouragement has been as valuable as his readiness to answer my inquiries.

My thanks are due to the authors or publishers who have given me permission to quote from the following books and articles: Random House: Battle for Asia, by Edgar Snow; William Sloane Associates: Thunder Out of China, by Theodore White and Annalee Jacoby; Doubleday & Company, Inc.: Wrath in Burma by Fred Eldridge; The Macmillan Company: China's Destiny, by Chiang

Kai-shek; Harold Isaacs: The Tragedy of the Chinese Revolution; Lin Yu-tang: The Vigil of a Nation; Paul Linebarger, for permission to quote from his books and his article in the Yale Review; Emily Hahn, for permission to quote from one of her articles; the Associated Press, for allowing me to reproduce extracts from the dispatches sent by Richard Cushing and Spenser Davis about Manchuria.

I have not attempted to follow Sinological academic style in the rendering of Chinese names into English; I have used the spelling employed by the persons referred to or by the American Press.

While I acknowledge my indebtedness to others the opinions expressed in this book are my own, unless otherwise clearly indicated by quotations. My acknowledgments are a record of thanks and in no way attribute responsibility for the views I have expressed.

Freda Utley

Martha's Vineyard, Mass.

July 25, 1947

CHAPTER I
"We Want to Go Home"

he flight traffic clerk asked me in mid-Atlantic why on earth I was flying from America. It was October 1945 and I was on my way to China via India. The giant Air Transport Command plane carried only three passengers from the United States to Calcutta.

Why, indeed, was I flying to the Orient now that the war was over?

If I had replied that I wanted to learn who had won the war, this GI would surely have thought me mad. Like most Americans he no doubt considered that the war was won once the fighting stopped, and that after victory one simply went home.

Nor could I have truthfully told him that I wanted to write an impartial book on China. The test of a tale is the teller thereof. Everyone's views are the result of prejudice and experience, and behind cool, so-called neutral books there often lurks a deceitful author whose real aim is to show that the world ought to be run according to his own pet ideas or illusions. I am fully aware that my own views are the result of the life I have led, and that I am not at all impartial in the world-wide struggle between Communism and democracy.

I simply replied that I was a writer and earned my living that way.

To have explained further why the fate of China seemed to me so important, I would have needed to tell him the story of my life. That would certainly have taken too long. Moreover my past experiences in Russia, Japan and China would have been as incomprehensible to this young American as a life lived on another planet. So I did not mention that I had left behind, in a boarding school in Connecticut, a son born in Moscow, who was all I had left from the days when I lived under the Communist dictatorship with my Soviet husband. Nor did I tell him that my husband had been carried off one night by the secret police to disappear without trial into one of Russia's concentration camps.

16 Last Chance in China

It is also difficult to explain in a few words why my feeling about China has remained constant through all my experiences and disillusionments. In my childhood and youth the Chinese appeared as a people victimized by Western imperialism in general, and in particular by England, the country of my birth. Nearly twenty years ago I had come overland from Russia to China believing that only Communist leadership could free the oppressed people of Asia and the rest of the colonial world from exploitation, oppression and grinding poverty. The year I had spent in Japan with my husband in 1928-1929 had given me an inside view of Japanese tyranny and conditioned me to champion China. In Russia where I lived from 1930 to 1936 I had learned to know a despotism more cruel even than Japan's. This new "progressive" Soviet imperialism was now menacing China as Japan had formerly done.

The Chinese seemed fated to be forever the victims of injustice and aggression. For them the Allied victory in World War II had only opened the door to a new menace. Had the long war of resistance against Japan been fought in vain?

In 1938 I had come to America for the first time to speak for the American Committee for Non-Participation in Japanese Aggression. In those days I had spent my energies trying to get America and England to stop war supplies to the Japanese aggressors. Now America, my adopted country, was blindly helping Russia by giving encouragement to the Chinese Communists. It seemed to me that history was repeating itself. First Japan had been helped to conquer China. Now Soviet Russia, through her agents the Chinese Communists, was being assisted by America to get into position to acquire dominion over China. One had to start all over again the struggle to awaken American public opinion to the issues at stake in the Far East, lest a worse Pearl Harbor befall us in the future.

At Casablanca, where we stopped four hours during the night for the plane to be checked over, the Red Cross hall was filled with soldiers waiting their turn to go home. Most of the other rooms and buildings were empty. It was like wandering round the stage of an empty theater after the actors had all gone.

Next morning in bright sunlight we breakfasted at Tripoli. Late that afternoon, after hours of flying over blue seas and brown deserts, the green ribbon of the Nile Valley appeared in the distance. On the

We Want to Go Home" 17

desert's edge we saw the Pyramids below, and the Sphinx seemingly no larger than a cat.

Impossible to stop in Egypt even for one day of sight-seeing. The plane traveled day and night, never stopping for more than the scheduled forty minutes or four hours.

Everywhere we were asked why we were flying to the Orient and not away from it. The men one talked to eating a quick meal in the Army mess halls had only one desire, to get the hell out of Africa or Asia and be home.

American demobilization and its results were apparent in the spring of 1946 when I left China to return to the United States by the Pacific route. I traveled then by Marine plane to Hawaii. Neither the Marines nor the Navy nor the Air Transport Command could any longer send their giant transports by day and night over the oceans. The shortage of personnel made it impossible to service the planes after dark.

From Newfoundland to the Azores, from Casablanca across North Africa and the Holy Land, over the burning sands of Arabia, across Persia, on to Karachi and Calcutta, across Burma to Kunming and Chungking, across Central China to Shanghai, up to Marine territory in North China, on the islands and atolls of the vast Pacific Ocean— everywhere were the unmistakable signs of American power, American efficiency and American prestige. But everywhere too the visible power of the United States was fading away as its soldiers and sailors returned to their homes.

Passing over the Dead Sea in the moonlight, with the lights of Bethlehem far away to the west, I thought: The devil can take you to the top of a high mountain and tempt you with dominion over all the kingdoms of the earth only if you come from a desert or from an overpopulated, backward and poor or misgoverned land. Not if you come from a prosperous and free country with an abundance of resources and little poverty. Americans, sailing in their great ships high up over the earth, are not even aware of any temptation to dominate the world. They just want to go home. . . .

Empires have been built by merchants and adventurers leading paupers, or by tyrants seeking to keep their own people enslaved by diverting their thoughts away from dreams of liberty to the "glories" and rewards of foreign conquest.

18 Last Chance in China

Ancient Rome conquered the Mediterranean World after her peasants had lost their lands to the rich while fighting for "security." Britain began her empire-building in the days when freebooters like Drake plundered the galleons of Spain in the Atlantic. Next came the colonization of America by men and women escaping religious persecution, or seeking freedom from feudal restraints, longing for liberty, opportunity and enough to eat.

But the greatest expansion of Britain's power came in the late eighteenth and nineteenth centuries when her dispossessed peasants were impressed into the navy, or enlisted in the army to avoid starvation, while trade followed the flag in Africa and Asia.

Today the British Empire is contracting and the British people are too weakened to maintain the world order they established in the nineteenth century. Germany lies in ruins but a new imperialist power has arisen. Soviet Russia is driven to expand by incentives which are both new and very old. The Communist ideology is new and the world order which Moscow seeks to impose is radically different from the old British concept. But the economic and political motivation for Russian expansion is similar to that which drove the Czars or ancient Persia and Assyria to conquest: the need of tribute from abroad in order to maintain tyranny at home.

Russia has abundant raw material resources and a starved internal market. But the Soviet economic and political system, which they call Socialist, is too oppressive and cumbersome, and therefore inefficient, to give the Russian people tolerable material conditions of existence. The loss of freedom under the Communist dictatorship has therefore not been compensated for by the gain of security.

The Kremlin is driven to a policy of conquest by the permanent crisis in the Soviet economy. A complete breakdown can be avoided only if Russia can obtain goods from abroad without the necessity of paying for them.

Before the war the younger generation of Russians knew nothing better than their own subsistence scale of living. Today many Red Army men have had a glimpse of the far higher standard of living in the "capitalist world." Stalin and the Communist bureaucracy can never sleep easy if outside the confines of the Soviet Union there are prosperity and freedom. Imperialist expansion offers the only hope of stilling the longing of the Russian people for liberty and better material conditions. If the capitalist world can be first weakened and

"We Want to Go Home" 19

then destroyed, the Communist dictatorship can be made secure. If other nations can be forced to work for Russia her people may obtain the necessities of life which the Soviet system fails to produce. If there is no freedom anywhere the Russian people can be expected to accept their lot. As Stalin himself has written:

It is inconceivable that the Soviet Republic should continue to exist interminably side by side with imperialist states. Ultimately one or the other must conquer.*

To the Communists all capitalist states are by their very nature "imperialist," and they regard the United States as the leading "Imperialist Power." Yet in the United States, which combines the natural resources of Russia with the freedom and efficiency which can make full use of them, there is no social basis for imperialism nor much economic need for it—as yet. America's resources are still great and her land not overpopulated. Above all, the American people participate in and control their government.

Foreign trade, which is a question of life and death for Britain as for Germany, still seems unimportant to the majority of Americans. American exports for three decades have represented, in the main, gifts to foreigners in the form of unrepayable loans, Lend-Lease or UNRRA contributions. The fact that the United States tariff has prevented repayment except in gold is a proof of America's near self-sufficiency.

Why should the American people accept the responsibilities of empire since they neither need nor desire its profits and glory? This was the basic truth which gave American isolationism its strength. Today, however, the terrible march of science has created such long-range and devastating weapons of destruction that the United States has lost the security which geography once afforded her. Today also there exists a great power determined to extinguish America's attraction for Europeans and Asiatics, and confident that American policy can be rendered nugatory by domestic pressures manipulated from abroad while her potential allies are dragged one by one into Russia's sphere in anticipation of the battle of the giants to come. Each country unable to resist Russia or weakened from within by the Communist

______________

* Problems of Leninism. International Publishers, New York City. This book is circulated in thirty languages to millions of people.

20 Last Chance in China

disease is not only a lost ally, it is also a potential ally of the enemies of democracy.

America is the only country strong enough with her allies to impose universal peace, and possessing both the resources and the political freedom not to be tempted to enslave other peoples. But whoever heard of, or imagined, a country giving peace and security to others without oppressing and exploiting them? How is it to be expected that any nation will give the world the benefits of imperialism without its curses? This is the dilemma of our age. Those who want power want it for bad ends. Those who reject power are the only ones who could use it for the good of mankind.

In China I saw America's power and prestige being whittled away and her hands tied by misunderstanding of the international situation and the strident demand to "bring the boys home." America's strength was also her weakness. However privileged their position abroad, Americans long for home. In the nineteenth century the British Tommy, born in the slums of London or some other city of the Empire over which the sun never sets, lived better in India or elsewhere in the Colonial Empire than in England, and he could enjoy feeling superior to the "natives." But the attitude of most Americans was summed up for me in the words of GI's I talked to in Kunming. Parked waiting in the warm sun of lovely Yunnan they said: "China! Let the Chinese have it; we want to go home."

It may be different if mass unemployment comes following the postwar boom, and foreign trade seems a solution for economic crisis and a substitute for the vanished frontier. America's lavish use of her raw material resources has already created some shortages. We are no longer free of the necessity to import vital strategic materials. There may soon be an economic basis for American interest in free trade and a free world obtainable only through the exertion of American power.

Already many demobilized men look back on their life in the Army, Navy or Marine Corps with some faint regret. Or so at least I was told by some of their buddies in China. Some few re-enlist without going home, saying they "never had it so good." Certainly it is better than a civilian job at $25 a week. The soldier, sailor and marine has no housing difficulties to contend with. And there is always the type of man who cannot settle down again to work on the farm, or in

We Want to Go Home" 21

a factory or office, after a war. But so long as the American people control their own destiny, so long as neither demagogues nor dictators deprive them of freedom, world power is not likely to attract them. This is the tragic paradox of the world situation. By rejecting their historical opportunity to establish an American world order the American people may leave a free field for those whose every effort is bent toward the attainment of world hegemony.

You have here a strange situation, a situation without historical precedent. While other nations strive, or have striven, for empire or world domination, the United States refuses the prize which her arms and her industrial might have won. No one could challenge the United States if her people desired empire over the earth. Their power is predominant. If the eagle felt like screaming the other nations would listen and obey. Without America there would have been no German or Japanese defeat. But, having fallen into the war, the American people hastened only to scramble out of the lands which would gladly have seen them stay.

It is understandable that every American soldier wants to go home. It is less comprehensible that the American people, having proclaimed themselves overwhelmingly opposed to an isolationist policy, should have demanded that we "bring the boys home" and refrain from using our power to make secure the aims for which we fought.

Wars are not football matches fought only to be won. They would be senseless unless an effort were made to achieve an objective and insure a lasting peace. As Congressman Walter Judd said shortly after V-J Day, "It is most unfortunate that so many Americans concluded that the war was over and we had won it when as a matter of fact all we had done was to defeat the Germans and the Japanese. Who wins the war depends largely on what we do from here on. It will be won by whatever forces and ideas dominate in the reconstruction of Europe and the development of Asia."

The issue of world hegemony is most clearly presented in China. Here is the arena where a clash could occur which would lead to a third world conflagration as surely as Japan's rape of Manchuria in 1931. The Far Eastern policy which the United States has pursued more or less consistently for decades, here comes into conflict with a Russian policy as inimical to it as was Japan's.

Russia today, even more positively than Japan yesterday, threatens

22 Last Chance in China

the complete extinction of American rights and interests in China. Not only this. A Russia dominant in Asia with bases in the Kuriles and in Siberia facing Alaska constitutes a far greater threat to American security than Japan ever did.

Since the end of the nineteenth century the United States has opposed the domination of China by any one power, has sought to preserve the integrity of China and insisted upon the open door for the commerce of all nations. This policy has, however, been negatively rather than positively applied. Principle has time and again been sacrificed to expediency.

Up to Pearl Harbor neither national interest nor security was ever thought to be sufficiently involved for the United States to take a positive and strong line of action in defense of either China's integrity or American interests in China. Japan's territorial conquests were not "recognized" but Americans continued to do business with her at China's expense. The United States, like the British Empire, supplied the Japanese with oil, scrap iron, machinery and anything else needed for war, confining her protests to the infringement of American rights, not China's.

For four decades the United States strove to avoid war over China by giving only lip service to the principle of maintaining China's integrity. War came nevertheless in December 1941. This was not only because Japan had allied herself to Germany. It was also because there came a moment when principle and self-interest required the same action, when it was no longer possible to maintain the second without the first. Thus American insistence on the preservation of China's integrity and national independence was the immediate, although not the basic cause for her involvement in World War II. If the United States had not refused to sanction the territorial gains of Japan's long series of aggressions against China, Japan would never have joined with Germany and Italy in a military alliance, nor have challenged the United States in December 1941. On the other hand, if the United States and Britain had firmly and actively supported China, there would have been no Pearl Harbor.

The essential weakness in United States Far Eastern policy has not been inconsistency but vacillation as regards the means to be adopted to achieve its aims. Over and over again we have failed to take strong diplomatic action in time to save the necessity for future mili-

We Want to Go Home 23

tary action. It is obvious now that the war with Japan which cost so many American lives in the bloody battles on the islands and atolls of the Pacific could have been avoided had we applied economic sanctions against Japan when she first attacked China. We know that Japan was ready to surrender before the atom bomb was launched on Hiroshima. Once cut off from imports of oil and other war materials she had no chance at all to survive.

Today we are faced with a very similar situation to the one we failed to cope with in the thirties. Russia has stepped into Japan's shoes. She has inherited the "divine mission" of keeping China disunited and powerless. Russia today, like Japan in the early thirties, exploits the centrifugal forces in China in order to convert her into a satellite.

President Roosevelt at Yalta promised Stalin to bring pressure upon the Chinese Government to force it to give up to Russia the imperialist privileges in Manchuria which China had struggled fifteen years to deny to Japan. In so doing he not only disregarded China's legitimate interests, but he forgot that Japan had originally been raised up and supported by his relative Theodore Roosevelt as a counterweight to Russia whose Czars, at the end of the nineteenth century, threatened to acquire hegemony over the whole of China. The elimination of Japan and the unnecessary concessions made at Yalta to Stalin's imperialist ambitions have put Russia back into the position she occupied at the beginning of the century. The great game begins anew. The conflict between the West and Russia for predominant power over the body and soul of China has been resumed, following the episode of Japan's rise and fall. But today it has become part of the world struggle between the opposing forces of Communist Russia and democratic America.

In the nineteenth century Britain and Russia met face to face in China, but Britain supported by the United States managed to push Russia back by building up Japan. Today it is America, not the weakened British Empire, which faces Russia across the huge body of China. Today the conflict between the West and Muscovy in the Far East is primarily an American-Russian conflict. The Russians understand this only too well and act accordingly. But Americans are loath to see in yesterday's ally the enemy of today and tomorrow. Japan never really had a chance to establish control over China.

24 Last Chance in China

Her armies could advance and do untold damage, but too few Chinese were ready to co-operate with her to establish effective rule over the occupied areas. Russia enjoys great advantages over Japan in this respect. Her resources are much greater, she has a land approach to China and she has something more than a Fifth Column in the shape of the Chinese Communists with their own army controlling large territories in the North. Moreover, Soviet Russia, never having gone to war against China, can hope to succeed where Japan failed. She may be able to revive and exploit the latent anti-imperialist and anti-Western sentiments of the Chinese people so skillfully used by Russia from 1924 to 1927 when she almost succeeded in shutting out the Western Powers from China. Her failure then was due to Chiang Kai-shek and the moderate elements in the revolutionary Kuomintang which he represented. Stalin has never forgotten or forgiven the Generalissimo for orientating China toward the West. Now, twenty years after, it is a primary object of his policy to destroy China's national leader and National Revolutionary Party.

How few Americans today remember that only two decades ago Russia, not Japan, constituted the greatest menace to American, as well as British, interests in China! The struggle with the USSR from 1922 to 1927 was the bitterest that American influence had ever faced in the Far East. If the alliance between the Chinese Nationalists and Russia which existed in the twenties had been continued, it would have proved irresistible. The threat of a Russian hegemony over China led America, from 1927 onward, to join with Britain in strengthening the non-Communist majority in the Kuomintang, led by Chiang Kai-shek. Only eighteen years later General Marshall came to China to try to revive in the name of unity and democracy the Kuomintang Communist coalition which America had been intent on destroying in 1927.

My three visits to China have coincided with three distinct phases of her history and her relations with the West.

In 1928, when I visited China for the first time, I had come from Moscow to Shanghai across Siberia bearing secret messages from the Comintern. It was shortly after the split between the Kuomintang and the Communists and the establishment of the Nanking Government headed by Chiang Kai-shek. The Communists who had sur-

We Want to Go Home" 25

vived the massacre in the spring of 1927 were either in hiding or with the Red Army in Kiangsi.

The documents, which I carried "in my bosom" in the style of old-fashioned melodrama, had to be delivered in Shanghai with elaborate precautions. My instructions were to register at the Palace Hotel and telephone to a certain "Herr Doktor Haber" saying I had arrived with "the samples of silk stockings." When he came I handed over with relief the sealed and silk-encased package which contained I know not what secret instructions for the furtherance of Comintern aims in China. I had been chosen to bring them because I was English and the holders of British and American passports were least likely to be searched at the border. Nevertheless I was glad my mission was accomplished, for I am not the stuff of which conspirators are made.

Before sailing for Japan with more secret messages I was allowed to spend an evening with the leaders of the Shanghai underground. We met after midnight in a whitewashed cellar somewhere off Nanking Road. The Comintern agents plied me with questions about happenings in Moscow, which in my innocence I was unable to answer. The men I met, Americans and Germans or German-speaking Europeans, must have been, if not Trotskyists, at least extremely unhappy revolutionaries. They had witnessed Stalin's sacrifice of the Chinese Communists and were watching with dismay the beginnings of his transformation of the Comintern into a suboffice of the Russian state.

Exactly ten years later I was to meet two of them again. In October 1938 when about to leave Shanghai for America, I was awakened early in the morning by the telephone ringing. A man's voice asked me if he could come up but would give no name. I was still half-asleep when a white-faced, emaciated and shabbily dressed man entered the room. I did not remember him but he gave me such full details of my visit to Shanghai in 1928 that I was convinced. He was pitifully nervous and begged me to come and visit him and his wife that evening.

They were the once famous couple called Noulens who had been arrested as Comintern agents around 1933 and made the headlines when they went on a hunger strike.

I agreed to visit them but I was nervous because Noulens had insisted on my telling no one. For all I knew he might still be Moscow's agent or he might even be working for the Japanese, and both might want to have me quietly disappear.

I took Randall Gould, editor of the Shanghai Evening Post, into my confidence. He offered to wait for me in his car at the end of the street and to come and rescue me if I did not rejoin him in an hour's time.

The Noulens told me they had been released from prison in 1937 and Madame Sun Yat-sen was supplying them with enough money to exist. But they had been warned to see no one—or so they said and I believed them. They said they had so longed to speak to someone they had once known and trusted that they had risked asking me to their home. They were obviously terrified. They were Austrians without passports and with nowhere to go, for it was clear that they feared to be liquidated if they returned to Russia. They knew too much. I urged them to meet Randall Gould, who was a liberal and a kindly man and who I knew would try to help them. But they dared not.

Poor devils. I left full of pity for these two white-faced derelicts of an age in Comintern history long past. They had left one prison only to fear incarceration in another. Rejected by everyone, they were too broken in spirit to save themselves and start a new life. I had known men and women like them in Moscow, old revolutionaries whose hopes were dead but who could not break with their past and waited only for death.

"Dr. Haber" seems to have had better luck and more sense. He had organized a real import business as a facade for his Comintern activities and developed it into a flourishing enterprise. Some of his employees acted in the double capacity of traveling salesmen and agents of the Comintern with their salaries halved between Moscow and Haber's business account. According to the account given of him in Pattern for World Revolution by the former Communist "Ypsilon," Haber, whom he calls Comrade L, decided in the early thirties that the Revolution was dead and he would henceforth become simply a businessman. His business was by then netting him a hundred thousand dollars a year profit. He calmly returned the amount of the original capital advanced to him by Moscow, arguing that this was

"We Want to Go Home" 27

all the Comintern had a right to expect since he had all along paid ten percent interest besides performing his duties as a Comintern agent.

I had not seen much of the Chinese on my first brief visit in 1928. Hatred of the "Western Imperialists" was then still so great that my Communist friends warned me against walking in the streets of the city. I spent most of my time investigating the cotton industry as a bona fide research student of the London School of Economics. I also tasted Shanghai's gay and opulent social life with Britishers who were shocked to hear that I was writing articles for "that Red rag," the Manchester Guardian. All values are indeed relative. Five years later in Moscow in one of the periodic "cleansings of the apparatus" it was brought up against me as a sign of bad bourgeois connections that I had once worked for the Manchester Guardian !

The attitude of most white people in Shanghai toward the Chinese twenty years ago made me understand and sympathize with the burning desire of the Chinese people to throw them out of China. Now as I write, in 1947, Communist-inspired anti-American demonstrations prove how easy it is to revive latent hatred of the West among the ill-fed, ragged masses of the Chinese cities.

On my second visit to China, in 1938, I had come by sea from England. By that time I was anti-Communist, having lived for six years in Soviet Russia. The change in China was as great as the change in me. I had learned that, compared with the tyranny and oppression, misgovernment and poverty under Russia's Communist Government, British imperialism is enlightened. The Chinese, far from wanting to oust the British and Americans, were hoping against hope that the West would come to her aid to rout the Japanese. The attitude of the British and Americans in China had undergone a similar transformation. The old China hands who had once seen Japan as a useful junior partner in the business of holding China down and preserving foreign rights and privileges, were now cheering on the Chinese. Of course, they still did business with Japan, but they recognized and admired the stubborn courage of the Chinese and hoped that China would continue to resist Japan in spite of the material help the latter was getting from the United States and the British Empire.

28 Last Chance in China

Then as now the Western democracies were backing both sides. From 1937 to 1941 America and England had tried to avoid antagonizing Japan while giving China just sufficient aid and encouragement to keep her fighting. Following V-J Day, they tried to conciliate Russia and the Chinese Communists while giving strictly limited aid to the Chinese Nationalists.

In spite of all the changes in international alignments, China on my third visit seemed as far as ever from her goal of national liberation. As so often in the past hundred years she had exchanged one aggressor for another. Russia instead of Japan held Manchuria and was seeking to keep China disunited and powerless until she should submit and "co-operate."

Because the odds against her had been too great, victory had found China too weak to profit by it. Her people had borne too-heavy burdens for too long. The "diseases of defeat" had taken too heavy a toll for her to have strength to resist either Russia or the Communist infection unless aided by Western science, Western supplies and the heartening medicine of American sympathy and support. But America was vacillating once again. She refused wholly to repudiate the Communists as she had formerly refused to cease all aid to Japan.

At the time of my arrival in China it seemed that the policy of the United States might be taking a logical course. The clamor of the Left coupled with the overriding desire to "get along with Russia" had not succeeded in stopping aid to the National Government of China in its postwar efforts to re-establish its control over the provinces formerly occupied by Japan.

One of the best-informed diplomats in Chungking, General Victor Odium, the Canadian ambassador, told me he was inclined to believe that the United States had decided upon a courageous and far-sighted Far Eastern policy.

"There are," he said, "Russian clouds on the international horizon. The only sound American policy would be to strengthen China, dominate the internal armed strife, improve Chinese communications and help train her army.

"If the United States does not vacillate in its support of the National Government, economic recovery will be rapid and the Communists will no longer be in a position to disrupt Chinese unity in Russia's interests. Time is flowing against the Communists. It will

increase their difficulties and their problems, provided only that American policy does not switch back to the Stilwell line of favoring and encouraging Communism."

General Wedemeyer, whom I interviewed two months later in Shanghai, was convinced that the security of the United States required a strong China freed from the Communist menace. In private conversation he said to me:

"Were the United States to abandon China now, all our costly sacrifices in the war against Japan would have been in vain. Both the honor and the interests of the United States require that we continue to support our most faithful ally and greatest potential friend, the Republic of China.

"China is the sincerest friend of the United States, for the simple reason that, whereas American interests and those of her other great allies are often in conflict, the interests of the United States and China coincide. It is only natural that other nations should try to get as much as they can out of America, while at the same time competing with her. China is the least involved in such an approach.

"Russia's goal is the establishment of puppet or satellite regimes along her Asiatic borders as well as in Europe. Stalin wants to have the psychological as well as the political and military initiative in Sakhalin, Korea, Manchuria, Jehol, Chahar, Hupeh, Inner Mongolia and Sinkiang, as well as in Persia. If the Chinese Communists are not forced to give up their private army and autonomous administration, Russia will get what she wants."

Both during and since my last visit to China there has been a continual seesaw in the relations between the National Government of China on the one side, and Russia and the Chinese Communists on the other side, depending on the amount of backing China received from the United States.

The Chinese Government never knew whether, in a showdown, America would use her power to prevent Russia from encroaching on China or whether China would be abandoned to her fate.

When America appeared to be taking a line of strong and uncompromising support of China, Russian pressure on China was relaxed and the Communists became less intransigent. In the summer of 1945 when General Hurley and General Wedemeyer represented the United States Government and armed forces in China; when Amer-

30 Last Chance in China

ica's hands were about to be freed by the collapse of Japan and there was a prospect that President Truman would not continue the Roosevelt policy of giving Stalin everything he asked for, Moscow ceased denouncing the Government of China and negotiated the Soong-Molotov Treaty of August 18. Thereafter, however, General Hurley's recall again gave Russia and the Communists hope that America was vacillating in its support of China. The Chinese Communists broke off negotiations in Chungking and started to tear up railroad lines and grab as much territory as they could.

From the Communist point of view, the greater the economic chaos and misery in China, the better their chance to dominate. Moreover the worse communications became and the greater the difficulties of the government in reviving trade and industry, the greater the disillusionment of the Americans with their ally China and the greater their desire to "leave China to the Chinese."

The Japanese had comforted themselves all through the war with the belief that even if they lost, China could not win. In August 1937 The Oriental Economist had written:

In any event before Japan could fall in the struggle, China's movement to mould herself into a modern state and her programme of economic reconstruction would both go crashing down, leaving little of such Central Government as there is at present.

The Japanese were a little too optimistic. This dire prophecy has not been quite fulfilled. But since V-J Day China has moved perilously close to the abyss of disintegration. Economically and politically she is far worse off than in 1937, and the Communist menace which Japan pretended to see in the thirties is now a grim reality.

Can the United States, and will the United States, give China the necessary backing and assistance to prevent her crashing down? When I first arrived in China it seemed that we should.

When I left China in the spring of 1946, it appeared far more doubtful that America would pursue a policy to her own and China's advantage.

CHAPTER II
Gray Dawn in China

he large and luxurious C-54 which had carried me so quickly from Washington to India terminated its flight at Calcutta. I was not, however, able to stay in India, even for a few days. The British authorities after keeping me waiting two months for a visa had given it to me only on condition that I fly straight through to China. No doubt the fact that I had been a Communist two decades ago was recorded and I was still a suspicious character.

After a day's sight-seeing and a much needed night in bed, I left Calcutta in the early dawn, sitting now on a bucket seat in a smaller plane filled to capacity with UNRRA personnel and other civilians.

We had expected to fly over the Hump and were disappointed that with the war's end the Army Transport Command had abandoned the beautiful if perilous route over the Himalayas. We flew instead over the vast green jungles of "liberated" Burma to Yunnan province.

The C-47's did not travel by night and the traffic in as well as out of China was still heavy, so we were delayed twenty-four hours in Kunming among bored GI's waiting their turn to go home.

In the evening Dr. Logan Roots, who had been my fellow passenger from Washington and who was a friend from Hankow days, took me to visit missionary friends who had lived in China through the whole war. We talked far into the night and then drove back through the old city to the army post at the airfield. Here I found the English doctor who shared my hut asleep with DDT powder liberally scattered on the blankets and floor. I reflected that she was going to find life insupportable in the interior of China if she feared vermin even in the spotlessly clean U. S. Army billets.

Next afternoon we reached Chungking, just seven days out of Washington, and seven years after I had left China in the second year of her war against Japan.

32 Last Chance in China

The road from the Chiulungpo airport to the city was inches deep in mud and rutted. At each hairpin bend up and down the steep hillsides I clung to the jeep with both hands. The rain veiled the beautiful hills of Szechwan in mist. In my tired and melancholy mood I felt that the heavens themselves might weep for the tragedy of the Chinese people. Though they were patient, intelligent, industrious, tolerant and good-humored, history had not given them a break for over a hundred years.

First Britain and France, and on their heels Germany, Russia and Japan, had taken advantage of China's military weakness to despoil her; to wrest territories, concessions and privileges by force from a people who wished only to be left alone.

Now even in victory the Chinese were tasting only the fruits of defeat. Russia, instead of Japan, had control of Manchuria. The extraterritorial rights in China given up by the Western Powers had been revived in Russia's favor in the unequal Sino-Russian Treaty of August 1945.

The Chinese people seemed never able to acquire a breathing space. If they quenched the flames on one side of their house, they had immediately to turn to battle a conflagration on the other side.

I remembered how, when the Sino-Japanese War began, China's optimists and pessimists had alike believed that China could not hold on unaided against Japan's overwhelming military might unless she soon acquired allies. Both had been wrong. China had resisted alone longer than anyone had believed possible in that long-ago summer of 1937. Yet help when it came had been too little and too late. Japan, not Germany, had attacked the United States in December 1941, but America decided that Germany was the greater menace. Blockaded China was told to go on sticking it out while we defeated Hitler first. China's situation had become ever more desperate. The British loss of Malaya and Burma left her completely blockaded. The flow of Lend-Lease, denied to China, when it could easily have reached her, was turned over to Russia. Paeans of praise arose in America for the valiant armies of Stalin, armed by America. Adding insult to injury, scorn was heaped on the Chinese, the flower of whose armies had been cut down years before in the three-months' battle for Shanghai and the nine-months' struggle to save the Wuhan cities.

Gray Dawn in China 33

It was almost dark when we arrived in the suburbs of Chungking and I looked down for the first time on the calm clear waters of the Chialing River far below. We rushed through the narrow streets miraculously avoiding accidents. The danger from speeding American trucks and jeeps in the narrow crowded streets was an old story by now to the people of Chungking. To me the vehicles and the American soldiers offered a striking contrast to the China I had known. If only a little of this American aid had been given sooner! In 1937 and 1938 it could have saved China from the long series of defeats and retreats which had broken her people's morale.

I had never before been in Chungking. In 1938 when I had reported the war for the London News Chronicle, Hankow, or rather the three Wuhan cities on the Yangtze, had been China's temporary capital. I had left them on the eve of their capture by Japan. Canton had fallen ignominiously a few days later, adding the terrors of cowardice and treason to the burdens, already heavy, of the invasion.

The heroic days of China's long war of resistance had ended when I sailed to the United States in the fall of 1938. The coastal cities and provinces were all in Japanese hands. China was settling down to a weary, grim and seemingly hopeless struggle for survival.

The much-bombed city of Chungking came to symbolize the patience and courage of the Chinese people. But it was also a byword for corruption, misgovernment and misery.

I was returning to a China cleared of the "dwarf robbers from the East," but a strange nostalgia gripped my heart for the Hankow days when China had been battered but proud in her determination to go on fighting alone at whatever cost. Now although victorious she was regarded by her allies more as a victim saved than as the oldest fighter of them all against aggression.

Drained dry both by the Japanese and the demands of the long war on her primitive economy, the Chinese were still unable to undertake the gigantic tasks of reconstruction and reform. An undeclared civil war was raging in eleven provinces. The destruction begun by Japan was being completed by the Communists, who were busy destroying railroads, bridges, industrial equipment and mines.

Communist military strategy required that they thus prevent the Nationalist Armies from taking over the provinces liberated by Japan. But it also seemed that they were counting upon economic collapse

34 Last Chance in China

to bring about the fall of the government and the establishment of their own dictatorship.

Nor was China threatened only by the breakaway of the North under a Communist administration. The Russian Army was still in occupation of Manchuria. Moscow was already violating the Sino-Soviet Treaty of August 1945, in which Russia had promised not only to evacuate China's Northeastern provinces within three months but also to give moral support and material aid only to the National Government of China.

China was once again threatened by a choice between partition and submission. Russia and the Communists, in place of Japan and her collaborators, menaced her integrity and independence. The Communists were playing a role which was compared by some Chinese to that of the war lords in the past, or to that of the Japan-sponsored "autonomous" regimes in North China in the thirties. China was even less united than before the Sino-Japanese War began. As for a century past, foreigners were taking advantage of her weakness. As one Chinese newspaper expressed it, China had seen the dawn but not yet the sun.

My first two weeks in Chungking I felt like a Rip Van Winkle in the Press Hostel. I had hoped to find a few old friends, for I knew that some of the "Hankow Last Ditchers," as we used to call ourselves in the fall of 1938, were back in China. But no veteran correspondents of China's war were then in Chungking. I got involved in fierce and futile arguments with young men who, in the days when China fought alone with little besides flesh and blood to oppose the modern armaments of the invaders, had probably hardly known there was a war going on in the Far East.

They had forgotten that, whereas the Poles, Danes, Norwegians, Belgians and even the French had gone down to speedy defeat, the ragged, ill-armed, badly led Chinese had continued year after year to deny victory to Japan's military machine.

These correspondents had arrived too late on the scene and they knew too little history to understand or sympathize with China. Like most Americans they had not been looking while the Chinese were fighting bravely in the early stages of the war, without adequate arms, without allies or any hope of outside aid. All they had seen, or

Gray Dawn in China 35

knew about, was the exhausted and demoralized China of the last four years of the eight-year war.

It was, in any case, natural that these young Americans, fresh from the most prosperous, free and technologically advanced country in the world, should attribute all the ills of China to its government. They lacked even the smattering of knowledge of medieval history which Europeans acquire in school. Nor had they ever seen the poverty of Eastern Europe. Their experience and knowledge were in general as remote from the bitter realities of life for nine-tenths of mankind as those of an inhabitant of Mars. Seeing for the first time the age-old poverty of Asia and the corruption which is so much more obvious in a poor country than in a land flowing with milk and honey, they had concluded that the Chinese people were worthless. Or they belonged to the Teddy White-Edgar Snow school which believed that the Communists were the hope of China.

A few months later when I returned to Chungking from Shanghai, the whole atmosphere of the Press Hostel had changed and I felt as much at home as with the intelligent, well-informed, cynical, but sympathetic and realistic Americans I had known in Hankow. But in October of 1945 the American correspondents, with the exception of Spencer Moosa of the Associated Press, were the type to whom the following words of Colonel Linton, published in Stars and Stripes, might have been addressed:

It is almost tragic that American soldiers have eyes and do not see, ears and do not hear, minds and do not understand. They see the poverty, the filth, and humanity serving as beasts of burden, but they do not see how all these things are inherent in the history of a great nation struggling to emerge from the days of handicraft to the day of modern technology. They hear a strange language, but they do not hear the voice of a people singing faith and hope for its future. Their minds tell them that China is different, very different from the life they know, but they do not understand that, like ourselves, and like all peoples, China must begin today from where she is.

In the old days before China became our ally by action of Japan, American correspondents had lived on about the same level as middle-class Chinese or foreign missionaries. Moreover their attitude had not been one of lordly superiority. They had been ashamed that these

36 Last Chance in China

poor, inadequately armed pacific people were fighting to hold off Japan's tyranny while Americans aided the aggressors by letting them buy all they needed in the way of war materials and machines.

Now American correspondents had the privileges, as well as the uniforms, of United States Army officers. They received the same rations and PX privileges and had little contact with ordinary educated Chinese.

Sitting at our all-too-abundant meals at the Press Hostel, warmed by a roaring fire in a country where few Chinese even of high rank had fuel, the correspondents would comment on the venality of Chinese officials and the general rottenness of China. The idea never struck them that, possibly, on the salary of a Chinese official inadequate to provide the barest necessities of life for a family, they too might not have been so pure. As a Chinese official in the Executive Yuan said to me one day: "The Americans in China are Sons of Heaven; what can they know of our trials and our temptations?"

Yet I found American officers and men in Chungking, Kunming and Shanghai who, having served in the interior and being themselves inured to hardships, had a quite different attitude toward the Chinese. There were, for instance, the two happy and handsome young officers I had met at the Red Cross Club in Kunming. One, a Major Bohlen from Indiana, had walked two thousand miles along the Burma road in charge of a convoy of mules. The other, a Texan, had served as an artillery instructor with the Chinese Army in Hupeh. Both told me they had started by thinking the Chinese hopelessly backward and uncivilized but had soon changed their minds after living and working with them.

"My God," said the Texan, Captain Wilson, "I don't know how they do it! Their guts and good humor, the way they smile in pain and the dreadful conditions they endure so cheerfully—it makes one feel ashamed to complain."

He told me how the soldiers, half-starved themselves, often had to carry the guns because the animals were too weak through underfeeding to bear their burdens. Yet the Chinese soldiers had been apt pupils. Both these officers criticized those who thought that the American way of doing things was always the best. They had learned what the Chinese were up against and had marveled at their ingenuity in coping with difficulties which had seemed insurmountable to the Americans.

Gray Dawn in China 37

In Shanghai when dining with General Tang En-po, the commander of the area, I met a certain Colonel Don Scott who had been chief American supply officer in the South in the last year of the war. An elderly, hard-bitten regular officer and a former Olympic champion, Colonel Scott was certainly no sentimentalist. But he was anxious to impress on me that "there are some good Chinese."

"General Tang En-po," he said, "used our equipment right. He corrected many abuses. His soldiers were properly taken care of. General Tang, he's a man. He does things right."

Colonel Scott came to see me next day because he wanted to give me information to counteract some of the calumny against the Chinese Army in the American papers. He painted a vivid picture of the difficulties the Chinese had had to contend with. On his way to Kunming from Chungking he had seen the starved recruits prodded on with bayonets. In Kweichow he had been impressed by the contrast.

Colonel Scott and General Tang En-po had had "rice sessions" once a week. Tang did the procuring and the Americans supplied the transport. Kweichow was the poorest province in China and rice had to be brought clear from Chungking. Seventeen thousand U. S. Army trucks were used to haul the rice for hundreds of miles. Tang En-po saw to it that there was no "squeeze"; that all the rice went to feed the Chinese soldiers.

"I've seen what the Chinese have done; how they're coming along," said the colonel. "But how could any Chinese general feed his soldiers until we gave them transport?"

I had met General Tang En-po at the front in 1938 and liked him. But I also knew that he had got himself a bad name in Honan in the 1943 famine. He had roused the violent hostility of the peasants because he forced food out of them to feed his soldiers.

A country such as China, with poor communications or none at all, with a backward peasant economy and her few industrial cities and all her ports in the hands of the enemy, simply did not have the means to supply her huge armies and her refugee-swollen city population. It could be done at all only by squeezing the peasants. There were many Chinese generals who cared nothing either for their soldiers or the common people and used their power only to enrich themselves. But some of the best generals had sometimes been forced to oppress the people to secure food for their men.

The foreigners who cried loudly that the government should have

38 Last Chance in China

instituted land reforms in the midst of the war, thereby ensuring the good will of the peasants and their willing support of the war effort, ignored economic realities. If the landowners had been expropriated and the land divided, it would have been impossible to supply China's armies and the population of the cities with even the meagerest rations. Since blockaded Free China could produce few manufactured goods, the peasants would not voluntarily have sold their grain to the government. China would have been in the same state as Russia from 1919 to 1922, the period of "War Communism" when the peasants, after acquiring possession of the land, refused to sell their produce for worthless paper and had to be forced to give up their grain at the point of the bayonet.

Land reform in China in the years 1938 to 1945 could have led only to a similar situation. Instead, China kept her old agrarian system and used the landowners as tax collectors. Grain was forced out of the peasants as rent and as taxes through the machinery provided by the old land system. It was not a pretty process, but no more was War Communism in Soviet Russia. Since the war in China was also financed by the government's printing presses, mounting inflation tended to improve the lot of the peasants in some places. Many were at least freed of their old cash debt burdens.

Of course there was and is a lot of cheating. The landowners pass as much as possible of the burden of taxation onto the peasants. But they themselves could not escape the government's exactions. China's financial system during the war was, and had to be, a so-called "feudal" one. The government used the landlords to squeeze the peasants and in turn squeezed them.

The Communists place all the emphasis of their propaganda on redistribution of the land. But an examination of Chinese resources shows that expropriation of the landowning class could not afford a lasting solution of the agrarian problem. China's situation is entirely different from Russia's. The Soviet Union has vast territories and a comparatively small population. There is no lack of land. China on the other hand has even less arable land than India and a larger population.

My first week in Chungking I looked up Dr. Robert Lim with whom I had visited the front in 1938 when he was head of the Chinese Red Cross Medical Commission. In those days he had been working

Gray Dawn in China 39

without government funds and with precious little help from anyone in authority. Together with a group of Western-trained Chinese doctors and with funds supplied by overseas Chinese and a few foreign friends he had been trying to create in the midst of war a medical service to save some of the wounded soldiers.

The grim sights I had seen at the front in the days of Japan's offensive against the Wuhan cities were indelibly burned on my mind. The wounded limping back from the front. The men dying in the hovels called collecting stations. The complete absence of ambulances or even trucks to move them. The gallant efforts made by Bobby Lim and his helpers and by his friend, Dr. Loo Chi-teh, the surgeon general, to provide dressing stations, to train first-aid workers, to acquire a few trucks from abroad to move the wounded.

Bobby Lim had to contend not only against the callous indifference, incompetence and corruption of the old-style Chinese generals who did not consider it worth while to save the wounded but the International Red Cross had also refused him aid because it had to be "neutral" in the war, and would only help civilian victims of the air raids.

The New Life Movement under the direction of Colonel (now General) J. L. Huang and others in Madame Chiang's confidence had hindered rather than helped him. They constantly interfered with serious relief work by publicity stunts and had been jealous of Bobby Lim's success. Since he is not a Christian he had no contact with Madame Chiang through foreign missionaries and I had myself secured him his first interview with her in 1938, following which she had allocated funds to his organization from the foreign donations she received.

Since Bobby Lim, whenever able, had sent medical supplies and doctors to all the fronts, his enemies had accused him of Communist sympathies. He had been regarded as a hero by Agnes Smedley, the American whose heart and soul are with the common people of China and who believes that the Chinese Communists are China's hope.

I had always regarded Lim as one of the best Chinese I had ever met, a man with the highest medical qualification who had given up an easy living abroad or in Shanghai to give all his talents and energies to his country at the worst period of her fortunes. It was therefore to me a proof that everything is not now so wrong with the state of

40 Last Chance in China

China as her critics maintain, that such a man as Bobby Lim had become surgeon general of the National Armies while Dr. Loo Chi-teh was now in charge of the training of army medical personnel. The redoubtable Tai Li, the almost legendary figure who headed the Chinese secret police and co-operated with the American OSS in intelligence work during the war, had cleared Lim of any suspicion of Communist sympathies. And the Generalissimo himself had recognized Lim's worth, talents and devotion to his country, by putting him in charge of the army's medical services, backing him in his efforts at reform and making him a two-star general.

Bobby Lim came to fetch me at the Press Hostel as soon as he got my message that I was back in China. After my first two depressing days in Chungking it was wonderful to spend a week end at the army medical headquarters at New Bridge, fifteen miles outside Chungking. With Bobby I found another old friend, Mary Chen, whose husband had recently been reunited with her after nearly four years as a guerrilla fighter in the Philippines. There was also Dr. Wang, one of the few survivors of the original Changsha group, who now also was a general but just the same unassuming, honest doctor I had known in the old days.

Mary cooked us a Chinese dinner and Bobby opened a bottle of Scotch whisky which he had been saving for just such an occasion. Sitting on the terrace, with the flooded rice paddies in the valley below faintly illuminated by the moonlight, we talked far into the night. There was a lot of "do you remember?" but I also learned a good deal about what had happened in the years between. Next day we talked again, but Bobby was as busy as he had been in Changsha in 1938, when he had not even a secretary or a typist to help him with his administrative work and his appeals for medical supplies from abroad. Now he had a large staff and smart sentries guarded his headquarters. But he still gave his talents and his time and energies as unstintingly as before to the service of the Chinese soldiers.

An American Medical Service officer arrived in the morning and spent his day with us. It was, he said, his pleasure and his relaxation to come out to Lim's headquarters. Other days he came out on duty; on Sundays he came out to enjoy himself. This Major Puy was one of the many American officers I met who showed understanding, appreciation and sympathy for the Chinese, and felt completely at

Gray Dawn in China 41

his ease with them. The Chinese doctors, for their part, were only too happy to be receiving expert advice and help from the United States Army.

Bobby told me that many reforms had been carried through in the army. He now had authority to reform the formerly hopelessly inefficient and corrupt Army Medical Service. Wounded soldiers in the later stages of the war had had a far better chance of surviving. Reforms in the methods of recruiting soldiers and in their treatment had been inaugurated. They were now somewhat better fed. Abuses whereby the commanding officers could profit by misappropriating the funds which should have bought food for the rank and file had been remedied by the direct issue of rations. American officers had helped a great deal. Above all Lend Lease, scanty as it was, had been of great help in improving the Chinese soldier's lot. For, after all, it was China's extreme poverty and the loss of resources to Japan which had been the root cause of the miserable plight of the Chinese soldier.

Bobby Lim was one among many old Chinese friends and acquaintances with whom I spent my time in Chungking. I was surprised and moved to find myself still remembered, after so many years, as the author of Japan's Feet of Clay. This book, which attempted to expose both Japan's basic weakness and the falsity of her democratic pretensions, and to awaken the Western world to the need to call her bluff and stop her aggression, had been translated into Chinese and widely sold. Even now, nearly ten years after its publication, I was remembered as a friend by both "reactionaries" and liberals because I had been one of the few foreigners who had tried to help China in the early days of her war of resistance when most Westerners were indifferent to her fate.

General Chen Ming-shu, who had commanded the Kuomintang forces which took Hankow in 1926, who had been a member of the Wuhan Government the following year, who had fought with the Nineteenth Route Army from Fukien against the Japanese in Shanghai in 1932 without Chiang Kai-shek's support or encouragement and who was now an unemployed general and one of the government's bitterest critics, often invited me to dine at Chungking's "Canton restaurant" of which he was part owner. Chen Ming-shu himself, no longer young but slim and handsome with the eyes of a dreamer, had

42 Last Chance in China

been a friend of mine in 1938. He represented to a greater degree than any other Chinese I knew the hopes, the fire and enthusiasm and the sincerity which had inspired the Kuomintang in its early days.

I could not but agree with him that China's primary need was the separation of civil and military power, and that there can be no democracy until civil liberties are secured. It was obviously true that as long as the provinces were governed by military men with armies at their disposal there could be no civil liberty or popularly elected administrations. It was perhaps true that Chiang Kai-shek considered China's armies as "his" rather than the nation's. It was undoubtedly true that many able, experienced and honest men in China were not employed by the administration because they failed to give allegiance to Chiang Kai-shek personally while many "blockheads" belonged to the Central Executive Committee of the Kuomintang. I could also well believe that Chen Ming-shu was right in saying that the National Government had become a "clique which stands together," and that many Kuomintang members were dissatisfied and sympathized with the opposition. I hoped that he was right in believing that "the democratic elements in the Kuomintang" now out of office and impotent would soon become powerful and "show the world" a real implementation of the San Min Chu I.

But it seemed to me that Chen Ming-shu, like other sincere and honest liberals, ignored the terrible compulsions of the international situation. How could a civil government be established, the armed forces drastically reduced and democratic liberties be made a reality as long as China was threatened with destruction by the internal and external enemies of democracy?

Chen Ming-shu and others like him were not Communists but they practically ignored the Russian threat to Chinese independence. They were still living in the world of twenty years earlier.

For all his criticisms of Chiang Kai-shek's dictatorial nature and desire for personal power, Chen Ming-shu was still not his enemy. "If only," he exclaimed, "his attitude were different! Chinese of all parties, in particular the able and sincere men of the Kuomintang, would sympathize and co-operate with him. But Chiang is like Louis XIV who said 'I am the state.' He considers himself to be the law, justice, everything. He kills men without trial. Even provincial magistrates may not be appointed without his consent.

Gray Dawn in China 43

"Chiang Kai-shek," he continued, "has two natures. The one is lawless since he himself transgresses the laws and destroys them. The other side of his nature is good. He sincerely loves his country and desires to lead China to independence and good government. He could be a great leader if only he would not insist on everyone in the government being a 'yes man.' I myself still love Chiang from the bottom of my heart. I wish I could help him to be China's George Washington."

Chen Ming-shu and his friends all lived in the simplest fashion with the exception of some of the wealthy members of the Democratic League. But so also did most of the government leaders except for a few millionaires like T. V. Soong and H. H. Kung and some others who had inherited or married money.

In few of the Chinese homes I visited did I find what would have been considered in America as tolerable conditions of living. Some of my old acquaintances, even those holding positions in the government or in the Kuomintang Party organization, were so poor that they had sold almost everything they possessed to buy food for their children.

I was often reminded of Moscow in Chungking because both the similarity and the differences were so striking. The Chinese capital was as dilapidated as the Russian, and the majority of the people lived in the same squalor and poverty. There were the same scarcity of manufactured goods and lack of housing except for the leading members of the bureaucracy. But, in Chungking, human ingenuity had free play. Every little bit of everything was used either to repair the bomb damage or to make something useful. Discarded American cans and other refuse were manufactured into all sorts of implements and utensils. Every bit of land outside the town was intensively cultivated. The hillsides were green with vegetables almost all the year round. Nothing was wasted.

In China you are not rated a capitalist or an enemy of the state if you try to help yourself by hard work and ingenuity. The bureaucracy might control large-scale enterprise, but at least the dew of freedom allowed small enterprises to burgeon and grow and hide the scars of war.

I dined often in restaurants and private homes with high officials. Never once did I find anything approaching the luxury and wealth

of the Soviet bureaucracy. Of course, one must reckon with the difference in culture or lack of it. Display, luxury and barbaric ostentation are as alien to Chinese civilization as they are natural to the Russians. Nevertheless it was obvious that belonging to the top ranks of the ruling Kuomintang Party in China conferred nothing comparable in the way of privilege and material advantage to the perquisites of the leading members of the Communist Party in Russia.

Nor was the contrast between the living standards of rulers and ruled nearly so great. Many people are starving or living on the border line of starvation in both countries. But the difference in living standards between the majority of the people and those of the bureaucracy is far greater in Russia than in China.

No doubt the Chinese bureaucracy is as self-seeking as the Russian. But its income and its powers are far more limited. A Chinese government official can live in comfort only if he takes bribes; can get rich only through speculation and the manipulation of the country's finances. In a developed Communist society such as the Soviet Union the corruption of the ruling class is both of a subtler nature and more far-reaching. The Communist big shots simply allocate to themselves an inordinately large share of the national income. The high Soviet functionary is paid a huge salary and also has the right to the free use of all kinds of so-called state property: apartments, country houses, automobiles, hospitals, special schools for his children and other services. Like an aristocrat or a millionaire he is not subject to temptation.

In China, which like Russia does not produce enough of the bare necessities of life to go around, the bureaucracy has not been lifted up into such a high-income bracket that it is above temptation. The inflation which was the unavoidable result of the long war, the blockade and the civil war, has reduced the value of an official's salary so low that only the most high-principled and honest men, or those with private incomes, abstain from some method or another of supplementing their inadequate salaries.

At the time of writing (June 1947) the salary of a divisional chief in a Chinese Ministry is around 600,000 CN a month plus a rice allowance while a skilled worker earns about 800,000 without a rice allowance. In Soviet Russia when I lived there the average wage for the working class was less than 300 rubles a month as against ten

or more times that sum for the director of a state enterprise, and up to 10,000 rubles for commissars and other big shots.

During the war years in China only payment of salaries and wages in kind, rationing and the severest regimentation could have prevented gross inequalities and have produced uniformity in poverty. Rationing is well-nigh impossible in a loosely organized and economically backward country, and price control without rationing has proved unworkable even in countries where the government exercises far greater power than in China.

It should be remembered that during the first eight months of the Sino-Japanese War the value of China's currency had been maintained in terms of foreign exchange. This was no mean achievement and bears testimony to the confidence of the Chinese people in the National Government. But, following Japan's occupation of the coastal provinces, the government was deprived of the customs dues, which had been its main source of revenue. There was no way of preventing the depreciation of the yuan with foreign trade drying up, military expenditures increasing and trade and industry stultified. Once the government could no longer afford to give foreign exchange for the great quantity of yuan offered, a flight from the currency began. The demand for goods as the only stable store of value continually decreased the value of the currency and pushed the price of the small available supply of goods to greater and greater heights. The spiral of inflation which no country avoids in wartime naturally proceeded at an accelerated tempo in blockaded China whose war lasted so much longer and was fought with so much less American help than that of other countries.

The Chinese Government should, no doubt, have made a greater effort to impose direct taxes on the rich. The political results of forcing the Soongs, Kungs and the other few rich families in China to disgorge a part of their American-invested fortunes would have been excellent. But it would not have ameliorated materially the basic causes of inflation, at least so long as China was blockaded. The basic problem of how to feed the army and the officials out of a diminishing revenue would have remained.

The National Government might perhaps have been able, if it had tried harder, to finance the war in part by internal loans. But since the Chinese middle classes had for the most part lost their sources of

46 Last Chance in China

income through Japan's occupation of the coastal provinces, there was in fact little possibility of selling war bonds.

Inflation as a method of financing war expenditures has its compensations. At least China faces the future without a huge internal debt, while the blockade also precluded her burdening herself with future interest payments to foreign countries. If the rise in prices had been uniform and affected all classes equally, the depreciation of the currency would not have been harmful so long as the inflation was kept within bounds.

During the war years the inflation does not, in fact, appear to have had generally injurious effects. Some elements in the population suffered greatly but the workers and a substantial proportion of the peasants seem to have positively benefited by it.

Collection of the land tax in kind, instituted by Dr. Kung in 1941, enabled the government to collect a revenue which, if it did not keep pace with the advance in prices, followed closely behind. But the land tax could not produce sufficient revenue to finance war expenditures so that prices rose continually through the ever-increasing quantity of paper currency put into circulation, as well as on account of the scarcity of commodities. Naturally everyone who could "invested" in goods as the only stable store of value, and hoarding and speculation further intensified the inflation.

Nevertheless Dr. H. H. Kung's so-called feudal methods kept the inflation within what were to seem moderate limits a year or so after he was succeeded in the management of Chinese finances by Chiang Kai-shek's other brother-in-law, T. V. Soong. Moreover, by supplementing the salaries of government officials with rice payments, the much maligned Dr. Kung did something toward checking the graft which riddles the administration. Not all officials succumbed to temptation once they were no longer driven to be venal by the impossibility of feeding their families on their almost worthless money salaries.

The postwar attempt to adopt Western fiscal policies, at a time when civil war was wrecking the country and American financial support was lacking, resulted in far worse inflation and social injustice, less production and more misery. It was after V-J Day that the Chinese yuan plunged catastrophically.

Taking the period January to June 1937 as 100, the price of all commodities in Szechwan in terms of Chinese currency stood at 1,950

Gray Dawn in China 47

by June 1945. But by April 1947 the index of wholesale prices in Nanking had risen to 18,000.

When I arrived in China in October 1945 one could get only about 1,000 yuan for an American dollar. Six months later one could obtain 2,000 in Shanghai. At the time of writing (May 1947) the free or black-market rate has jumped to 23,000. The most spectacular fall in the exchange value of the yuan followed General Marshall's recall at the beginning of 1947 and the subsequent announcement of the withdrawal of U. S. armed forces from China. There is little doubt that the many indications of withdrawal of full American support from the Chinese National Government have diminished confidence in the currency equally with growing Chinese distrust of the administration.

Nor should it be forgotten that the cessation of dollar expenditures of American soldiers, marines and sailors in China constituted a severe blow to the exchange.

Some foreign experts, notably Dr. J. Lossing Buck, attribute the present inflation in large part to the government's mistaken exchange policy. According to his view the government's policy increased the intensity of the blockade during the war years and has created an artificial blockade since V-J Day. For, because the exchange rate of the yuan was set artificially high instead of being allowed to find its natural level, Chinese goods became too dear to export. Thus, he argues, the pegging of the exchange rate, far from curbing the inflation, probably intensified it by cutting off the source of foreign credits. Exports are naturally discouraged when the foreign buyer can obtain too few yuan for his dollars to buy Chinese products at a price at which they can be sold abroad. The artificially high exchange rate also cut off remittances from Chinese overseas who saw no sense in sending dollars to their relatives so long as the dollars could be exchanged for so few yuan as to make the gift almost worthless.

Although the government insisted on maintaining the exchange value of the currency in order to import and in order to maintain confidence, there is evidence that it actually defeated its own purpose.

In economics as in politics China fell between two stools. It was neither liberal enough nor sufficiently totalitarian. Either a policy of free trade and free exchange, or complete control of the national economy, could have prevented the present disastrous situation. The

48 Last Chance in China

mixture of the two has stymied the whole economy. The government has neither the power nor the machinery nor the will to control and direct all economic activity in the interests of the state or the ruling party. But, at the same time, it interferes enough with private business, trade and exchange to hamper and destroy independent private economic activity. China hangs suspended between the capitalist democratic world and the Soviet so-called socialist world of state-administered production and trade.

Unless China receives American loans and American technical aid she cannot afford a laissez-faire economy. Nor is it possible to imagine that graft can be eliminated until there is a middle class independent of state patronage and free from the dreadful fear of sinking back into the abysmal poverty of the masses. Insecurity is so widespread and the fear of destitution so strong in China that even the comparatively well-to-do are obsessed by it.

Unless outside aid is forthcoming to help solve China's economic problem and set her on her feet, she faces disintegration or colonization by Russia or regimentation by her own rulers on Communist, National Socialist or state capitalist lines.

Nothing could be farther from the truth than to call China's National Government a "fascist tyranny." If Chiang Kai-shek had been a dictator and the Kuomintang a totalitarian party, China would have fought a better war. It would have been possible to force equality of sacrifice and equal poverty on all except the members of the ruling party. Everyone would have been compelled to fight or work for the nation.

China has, it is true, a secret police and men are sometimes imprisoned without trial. But speech is comparatively free and everyone is not terrorized by fear of condemnation to forced labor. Even its worst enemies have never accused the National Government of keeping millions of political prisoners in concentration camps. There is nothing comparable in China to the slave labor which has become an integral part of the Soviet economy.

I spent a morning at the university with Professor Ma Yin-ch'u, who is represented by Communist sympathizers as a martyr who spent two years in a concentration camp for his wartime diatribes against the government. He told me himself that he had never been ill-treated. He had simply been under house arrest in a remote district. He

Gray Dawn in China 49

laughed as he related how he had made his guards climb mountains with him, and how he had lectured to them on economics and made them take notes. The young men of the secret police, he said, were decent fellows and he had proposed that they all be given university tuition at government expense. This large, robust and happy ex-Yale man bore no resemblance whatever to the tortured and starved inmates of a Russian or German concentration camp.

To everyone who has lived under a totalitarian tyranny as I did for six years in Soviet Russia, it is absurd to describe the National Government of China as such. Of course, China is not yet a democracy. But there is no sign of the all-pervading terror which bows down the Russian people. The Chinese criticize the government to their hearts' content, meet and talk to foreigners without fear of the secret police, go about their business without being haunted by dread of arrest and the concentration camp.

The main defect of the Chinese Government is not its dictatorial character but its failure to govern, the graft with which it is riddled and its inability to check abuses and carry out the reforms to which it is pledged. Its impotence is partly due to the wide variety of political and economic theories held by the leading members of the Kuomintang Party. In an administration where some want to go Right, some Left and some to stay where they are, there is practical immobility or utter confusion.

The principal complaint I heard from Chungking businessmen concerned the uncertainty caused by the government's vacillating economic policy and the contradictory orders given by various branches of the administration. T. V. Soong, who was Premier and also controlled the Central Bank of China, was issuing one set of instructions, while the Legislative Yuan headed by Sun Fo passed laws which went directly against them.

Mr. T. A. Hu, managing director of the China Industry Company, told me that his most difficult problem was not knowing what degree of freedom of enterprise was to be allowed to private business in the future.

"Look," he said, pointing to his company's sprawling factories across the river from his downtown office. "During the war we produced pig iron, steel, cement and china. When Mr. Donald Nelson came to Chungking he congratulated us on our achievement in build-

50 Last Chance in China

ing up an efficient industry here in wartime. Our steel mill employed three thousand people and produced ten thousand tons of steel a year. Now we may have to stop production altogether."

"Your factories are still working, aren't they?"

"Yes, but only to about half their capacity and soon we may have to shut down."

"Why?" I asked. "Is it because you no longer receive orders from the government? Surely there must be a huge peacetime demand for your products?"

"That's the whole trouble," replied Mr. Hu. "We don't know where we stand. Not long ago the Executive Yuan passed a resolution that China should in general have a free economy. Subsequently strong opposition to this policy in certain government circles led to its modification in favor of more government control of industry. An Executive Yuan decision today may always be countermanded tomorrow. No Chinese industrialist can be certain that if he invests his capital in what has been declared a free field for private enterprise, he may not wake up one morning and find it has been declared a government monopoly."

Other Chungking businessmen told me the same story. They were all waiting anxiously to know what kind of private undertakings were to be allowed to survive and develop. There were rumors that the textile industry would be nationalized. The former Japanese or puppet-owned Shanghai mills were being organized by T. V. Soong into a state corporation. Fears were expressed that the native cotton growing and manufacturing developed in Szechwan during the war might be jettisoned in favor of the Eastern mills using imported cotton.

At a small meeting of Chungking industrialists arranged for me by the Democratic League I heard bitter complaints concerning T. V. Soong's policies. T. V., as the Generalissimo's Harvard-educated brother-in-law is called, although well known and liked in America where he is regarded as a liberal, seemed to be regarded as a Chinese J. P. Morgan by these Western businessmen. They all considered that the native industry they had built up in the Southwest during the war was being ruined by the "Eastern financiers." Everyone knew, they said, that T. V. had a tremendous fortune salted away in America and that his interests lay with the Shanghai bankers and

Gray Dawn in China 51

merchants allied to foreign financial and merchant interests. An executive of the West China Development Company said:

"The government has spent three hundred and fifty million Chinese dollars to send workers home to the East, when only fifty million would have sufficed to start us up again here following the post-war depression in Szechwan. T.V. Soong knows how to make money so he is regarded as a specialist in economics. But it is production which is important, not financial speculation. Here the mines and mills are closing because there is no money to carry on; and the government is trying only to resurrect the industries in the liberated coastal provinces instead of also preserving those built up here during the war."

The attitude of the politically impotent Chinese industrialists toward the Soongs seemed not unlike that of a Midwestern American toward "New York financiers" or the big corporations operating from the Atlantic seaboard. Most of the Chungking industrialists, I was told, would welcome Kung back as the lesser of two evils. In their view, although unable to curb graft among his subordinates, Old Man Kung was at least not a monopolist who used his power as Minister of Finance to squeeze the independent businessman out of existence. He "broke no one's rice bowl" if he could help it.

The resignation of T. V. Soong in 1947 did not surprise me in view of what I had heard in Chungking. He was hated even by the Leftists inside and outside the Kuomintang. This was brought home to me forcibly one evening when I dined with my old friend S. Y. Wu, Secretary of the Legislative Yuan and Sun Fo's "brain truster," and some Chungking businessmen.

"We'd rather have the old man back" was their unanimous opinion. "Kung had his faults but Soong is far worse. Kung at least gave the small manufacturer and merchant a chance to live. But T. V. is trying to get into his own hands control over the whole Chinese economy. He is like an American trust magnate; he is trying to establish his own monopolies in textiles, shipping and anything else he can lay his hands on.

"Kung had some regard for China's interests even while promoting his own. But Soong is concerned primarily with his private interests. Even now while the Political Consultative Council is sitting in Chungking to decide the political future of China, T.V. Soong who

52 Last Chance in China

is Premier is not participating. He is not even here. He is too busy founding his huge personal monopolies in Shanghai."

"Why then," I said, "does Chiang Kai-shek keep him in office, since it is generally thought that the Generalissimo does not like or trust T.V.?"

"Soong is America's favorite. The Americans like and trust him, so Chiang keeps him in office as the price of American support, hoping he will get China a big loan."

Perhaps it was the feeling that H. H. Kung at least adhered to more traditional and easily understood methods of acquiring wealth which made him less unpopular than T. V. Or perhaps it was just that in China's wretched situation whoever was responsible for the public finances was bound to be hated.

This was the picture of "Daddy Kung" given me by a Chinese newspaperman who had formerly worked under him.

"Kung," he said, "is the descendant of generations of Shansi bankers, which means the only bankers in existence among us before Western civilization opened our doors. The bankers of Shansi were the Jews of China. Shansi is a poor province and many of its sons went elsewhere to make a living. They stuck together and pooled their credit. Eventually they spread over the whole of China, their business depending upon mutual trust. But they were disinclined to trust anyone but men from Shansi. Kung likewise trusts men from his ancestral province first; it is easiest to get a job with him if you are from Shansi. But he also favors graduates of Oberlin College and of Yenching University because he was a student at the former and is President of the latter.

"Once you get a job with Kung he trusts you. So naturally people take advantage. If they make mistakes or are caught in wrong doing, they know it is their wisest course to confess to the old man. This impresses him with their honesty and he just says, 'Don't do it again, my boy.'

"He treats his own employees very generously; he overpaid his staff when in office. So he is naturally popular with those who work for him.

"On the other hand he is henpecked by his wife and is too indulgent to his children who are spenders. Thus despite his patriotism and his own personal honesty he was not keen enough or strong enough to

stop corruption among those near to him or who worked under him. He was weak too in his dealings with the Generalissimo. He just couldn't say 'no' when the latter demanded money, and of course it had to be raised somehow."

In other words Dr. Kung seems to have both the virtues and vices of an old-style Chinese in his loyalty to his family, friends and associates and his inability to be as hard in his dealings with individuals he knows personally as China's situation demands. His methods of acquiring wealth may be suspect in Western eyes, but they are old and well-established in China, and he was always ready to "share the wealth" so to speak, by helping his subordinates and his friends.

T.V. Soong, on the other hand, is hated for his arrogant manner, and his methods of acquiring personal wealth being those of Western executives or trust magnates, not those of an old-style Chinese official, seem more reprehensible in Chinese eyes.

Even Leftist journalists liked Kung personally while inveighing against him. Like Emily Hahn I have a warm regard for him, but perhaps I am prejudiced by the fact that it was Kung who circulated my Japan's Feet of Clay among the delegates to the Brussels Conference of the signatories of the Nine Power Treaty, and tried to make Nevil Chamberlain read my book to awaken him to the necessity of stopping Japan.

Soong is hard and Kung is soft, and China needs hard men now. If Soong had been successful in his efforts to curb corruption among his subordinates, his unpopularity in China would have been proof of his virtue. But he was found to be no more capable than Kung of curing the disease which debilitates the Chinese Government. He was accused of showing favoritism to corporations with which he or his friends were connected and in general of ruining small business.

Nor can Soong be said to have done anything to promote democratic government in China. He showed disdain for the Legislative Yuan, refusing to account to them later for his actions while Premier of China. Impatient and arrogant, he has few friends and is disliked in particular for his un-Chinese rudeness of manner. Professor Fu Ssu-nien, the distinguished historian, wrote of him, "I would request the chemists to have his body analyzed and see if there is one molecule that gives a trace of Chinese culture."

In his speech to the Legislative Yuan on March 1, 1947, following

his resignation as President of the Executive Yuan (Cabinet), T.V. made a spirited defense of his actions in a speech which graphically described the insurmountable difficulties faced by anyone in charge of the finances of a country in as desperate a situation as China. He justly claimed that the managed currency system which he had inaugurated in 1935 had enabled China to stand the eight-year war against Japan, but that the system also "contained the germs of the poison that the country is suffering from now." "When expenditure exceeded receipts," explained T. V., "the only resource was the printing presses. On the part of all agencies of the Government the argument became: Why should the Ministry of Finance limit expenditures when it has only to print a little more currency?"

Whatever T. V. Soong's personal faults, no one could deny the truth of his words when he said:

When the war ended, the course of inflation could have been stopped, that is, if there had been internal peace. Military expenditures could have been cut down, and revenues increased, and with the assistance of receipts like the Government sales of enemy property and gold, further issue of notes could have been avoided, and prices stabilized.

We know what did happen. Instead of peace and reconstruction the country was plunged into a state of war and destruction by the Communists that was even fiercer than during the Japanese occupation. With the Japanese, destruction of property was largely incidental to the war, with the Communists it was deliberate and conscious, and their aim was to destroy the economic system so that the Government would collapse, and they could then introduce their Communist system. Hence railways were destroyed, factories dynamited, mines flooded, and where they could hold they erected their own administration, set up their economic blockades and issued their own currency. Instead of the healing process of peace that the people looked forward to, they were plunged into civil war cumulatively more exhausting than the war with Japan. Revenues could not increase as rapidly as we hoped, more and more appropriations had to be given to the repair of railways, mines and industries, and military expenditures swelled to huge proportions.

This is the answer to the question raised in the beginning of my talk. Compared to the Communist war, the civil wars in the past were child's play. Those were the wars between rival armies, there was not the deliberate destruction of all means of communications

and production, and the disruption of the social system which the Communists have as their conscious aims.

Even more important, as I have already pointed out, in the days of specie-backed bank notes, there were natural limits to inflation that were lost when we adopted the managed currency system. From the resulting unchecked increase in bank note issue came rising prices, speculation, and high interest rates; in fact, all the evils that the Legislative Yuan is contemplating today.

During my years as Minister of Finance, I was the watchdog of the treasury, I was the one who stood up against expenditures that could not be borne by the Treasury. When I became President of the Executive Yuan, events unfortunately made me the first and only line of resistance to demands for more and more money.

I have nothing but sympathy for our people who have suffered during eight years of war, and who ask for some surcease from pain now that the war with Japan is over. But facts are facts, and when the Ministry of Finance could not raise the necessary funds it had to be a struggle with me every time a larger appropriation was asked for. I had to help the Ministry of Finance to devise new sources of receipts such as the sale of enemy property and the organization of the China Textile Industries, Incorporated. I need only mention in passing that although there were charges of corruption in the disposal of enemy property practically every case related to the time before the Executive Yuan took over the assets and set up the Alien Property Custodian. Last summer an investigation body made up of the Control Yuan, the People's Political Council and representatives of public organizations organized many teams and went over the Alien Property Custodian operations throughout the country with a fine comb. Not a single case of corruption was discovered among the responsible heads of the organization. There were cases of petty larceny, and that was perhaps inevitable, but not a single one of the responsible men broke his faith with the country.

I shall also mention in passing the China Textile Industries, Incorporated. Had I listened to public clamors and sold the Japanese cotton mills, I would have enriched a few persons at the expense of the nation, I would have secured perhaps 200 or 300 billions sale price for the Treasury. Last year the net profit of the China Textile Industries, Incorporated, was 400 billions, this year it will reach 1,000 billions. If as the Government intends to do so now, the China Textile Industries, Incorporated, is offered for sale to the public, it will have an asset worth between 3,500 and 4,000 billions. No, I do not have to apologize for organizing the China Textile Industries, Incorporated.

I have often been accused of being arbitrary. I have only striven to conduct affairs of the state without fear or favor. From my own

56 Last Chance in China

point of view, indeed I have looked upon myself as the most oppressed person in the whole country. The Ministry of Finance turns in very limited amounts of revenues and to meet Government expenditure it has to resort to the printing press. I know what that adds up to and night and day my colleagues and I worried over the situation. I have striven time and again to limit expenditures because I knew the danger that confronted us. Nearly all Government agencies, be it military or civilian, came to look upon me as the man responsible for frustrating their wishes for increased appropriations. When I asked for reconsideration on some item of expenditure forthwith there were inspired articles in the newspapers that while everyone had sanctioned the increase the President of the Executive Yuan was holding it up. I have borne this unpopularity because I considered it was in the line of duty.

The truth can be told in one sentence. The present economic crisis is the cumulative result of heavily unbalanced budgets carried through eight years of war and one year of illusory peace, accentuated to some degree by speculative activities.

T. V. Soong used to be well liked by the Communists and is always classed as a liberal by Western writers antagonistic to the National Government. Yet Dr. Lo Lung-chi, the voluble spokesman of the Democratic League, described him as a "comprador." The explanation undoubtedly lay in the League's tie-up with the small businessmen of Szechwan and Yunnan left out in the cold since the liberation of Shanghai and the coastal provinces. The Democratic League, for all its friendship with the Communists, was financed by such men as Miao Chia-min who owned some forty factories in Yunnan.

Although my first interviews with Chungking industrialists were arranged by members of the Democratic League, I found a wide divergence in the views expressed by the League's leaders and Chungking's businessmen. They had been brought together only by a certain community of interest in opposing the government. The heavy hand of the administration, coupled with the inflation and the transfer back to the East of China's capital, was ruining the industrialists who had flourished in wartime fulfilling government orders. It was natural that the Chungking businessmen and Szechwan bankers should now consider that government best which governed least, and support the opposition.

However, the Democratic League's alliance with the Communists was alienating its capitalist supporters. It was also alienating the best

Gray Dawn in China 57

elements inside the League. Dr. Carson Chang, leader of the Social Democratic Party, when I interviewed him in Chungking, made it very clear that he had no sympathy with the Democratic League's policy of trying to ride to power by hanging onto the Communist Party's coattails. Carson Chang is an intelligent liberal, an economist and a patriot, not a politician mainly interested in securing a cushy job in the government. According to him China had other alternatives than the present administration or a coalition with the Communists.

There were, he said, plenty of good men in China and efficient administrators who could cleanse and rejuvenate the government. The Democratic League was making a great mistake in identifying liberalism with Communism which was antiliberal and totalitarian.

Nor did Carson Chang think that the choice for China in the administration of her finances was one between Kung and Soong. China, he said, had several able and honest bankers who could run the Finance Ministry and the Central Bank far better than Kung, who was incapable of eliminating corruption, or Soong, whose main interest was the accumulation of a fortune in U. S. dollars.

It seemed to me after talking to them that the leaders of the Democratic League had no more right to call themselves representatives of the people than the Kuomintang. According to its own claims the League's membership in Yunnan and Szechwan was only five thousand, and elsewhere it had even less support. They appeared to be a small group of "outs" hoping to force their way into office through an alliance with the Communists, and equally ready to ally themselves to old style war lords if this could help them to acquire power.

The Democratic League was linked up with some of the most "reactionary feudal" elements in China. It had been protected by "Tiger Lung," the war lord of Yunnan, who encouraged all dissident elements in his attempt to remain independent of the Central Government. In Chungking the League's meeting place was a large and beautiful mansion owned by a bearded old gentleman of the old school who had made a fortune in opium in his younger days as a petty war lord.

In my first meeting with the Democratic League leaders I had been surprised—almost shocked—to hear them describe Tiger Lung as a democrat whose deposition by Chiang Kai-shek had been an outrage.

58 Last Chance in China

For Lung's oppressive and corrupt governorship of Yunnan Province had been responsible for the bad impression of China received by the many American soldiers and airmen stationed at Kunming, the provincial capital, during the war.

One afternoon in Chungking at a Democratic League press conference after listening to a long dissertation against the government for its failure to make way for a "democratic" government, I asked a simple question: "How would you hold an election in China? There is not even a reliable estimate of China's population, let alone an electoral register. And how could the peasants possibly know who to vote for, given their ignorance of everything outside their village, the lack of communications and newspapers and informed public opinion?"

My question obviously stumped the leaders of the Democratic League. They had never considered the practical difficulties. To them, it is not unfair to say, democracy meant giving them jobs in the government.

During the Political Consultative Council negotiations in January and February 1946, which proposed to draw up an agreement for a coalition government, it was obvious that the Democratic League, like the Communist Party, was not interested in anything like a general election. The Communists frankly admitted that they wanted the coalition government then envisaged to continue, not majority rule by elected representatives. Hence their opposition to the summoning of a National Assembly.

A coalition government is not, in the nature of things, democratic. If all parties are represented in the government there is no opposition. Moreover, except in times of grave national emergency such as war, a coalition government can be counted upon to be impotent, since it must be pulled all ways by the contending parties within it. A coalition government in China, far from giving her better government, would probably be even worse than the present one.

We should understand China better if we recognized that Chinese parties and factions are little more than organizations of individuals, not popular movements. China is still too backward, economically, politically and in social organization, for the mass of the people to play a role in politics. It is not even generally correct to describe the parties, factions and cliques inside or outside the government as representing

Gray Dawn in China 59

any particular class or interest. To a limited degree they stand for certain political ideas or economic and social policies but they are far more representative of powerful individuals or families. In China they don't usually say, "So and so has such and such political convictions." They say, "So and so is a Kung man" or a "Soong man," or one of "Sun Fo's group," or "So and so belongs to the Szechwan group."

Various cliques and groups inside and outside the government are connected with certain banking, merchant and industrial interests, or with a particular provincial faction and so forth. Other leaders are connected with the conservative or "feudal" elements in society, such as the reconditioned war lords or quasi-independent provincial governors or generals of provincial armies. Some leaders are more representative than others of the old-style literati, the scholar rural gentry. But one cannot truthfully say that any faction inside or outside the Kuomintang represents a particular class or a clearly defined vested interest. Too many government officials act in the interests of their relatives and friends but it is hard to point to any who act in the interests of a class.

Individual loyalties, family connections and personal striving for power play the predominant roles in Chinese politics.

Even before the long war ruined the young, independent middle class in China, industry and trade were largely dependent on the government which alone had large capital resources and the possibility of obtaining foreign credits. It depended even then very largely on government orders and subsidies or on credits from the banks whose directors were also government officials influential in its councils.

During the war the bureaucrats inevitably acquired both more power and greater opportunities for graft. It was perhaps always easier to acquire wealth through obtaining a high position in the government than by enterprise. Today with the government in control of almost the whole economy the independent capitalists find it harder than ever to exist. Hence the opposition to the government and the outwardly curious alliance at times between such reactionary elements as ex-war lords and "progressive" capitalists, and between both and the Communists.

Basically the trouble in China is that the war led to government control over the national economy, while not at the same time develop-

60 Last Chance in China

ing the democratic techniques for popular control over the administration.

During my first two weeks in Chungking, I heard enough and learned enough, to realize that the pattern of Chinese politics is too confused for anyone to be able to pronounce simple judgments concerning right and wrong as between the ins and the outs, and the good and the bad inside and outside the government. The views of Professor Chen Chih-mai, Counselor of the Chinese Embassy in Washington, seem sound. Speaking to the Harvard Law School he said:

It seems to me that many experts have treated the problem of China much as they would treat a mathematical problem, which is to be solved by arranging correctly the symbols involved. They would classify Chinese politicians into reactionaries, progressives, liberals, democrats, fascists, landlords, Communists, friends of America and foes of America . . . labels which are just as meaningless in China as they are in other lands. Having done so, they proceed to propose solutions by rearranging these individual groups, just as a mathematician would rearrange his symbols. . . .

I may go one step further in saying that I do not consider China as a problem, both in her internal and external relationships. China is, rather, a mass of problems, just like any other country, problems which assume ever-varying shapes and relationships in accordance with the subtle and complex laws of human character and the ever-changing colors of the general world scene. These problems are highly intricate, and must not under any circumstances be viewed in isolation from each other. . . .

We wish that you would pass judgment upon us not with your own yardstick but with one which fits in with the historical tradition and present conditions of China.

CHAPTER III
Coué Diplomacy

he late Dr. Coué taught that when sick you could make yourself well by saying over and over, "Every day in every way I feel better and better." Although he failed to convince many people that will power and optimism are worth more than medical advice, his theory is constantly applied in international affairs. In the year following the defeat of Germany and Japan its adherents practically monopolized the press and radio, and the statesmen of the victorious nations seemed convinced that the world's ills could be cured by refusing to believe they existed.

The newspapers and statements of public men were full of optimism and we were continually reassured that international relations were getting better and better. When Russia began to roar like a lion we insisted that she was cooing like a dove. The more clearly Molotov and Stalin revealed in their speeches that Russia's conception of collaboration was that of a boa constrictor with the lamb it has eaten, the more ruthlessly the Soviet Union extinguished the liberties of its small neighbors in preparation for the war between the Communist and capitalist worlds, which the Kremlin proclaimed to be "inevitable," the more determinedly cheerful the American press became.

As the red danger signals multiplied the greater became the public rejoicing at Russia's "expressed desire" for international collaboration.

The United States being strong and healthy was able to survive the Coué treatment. It diminished her influence, lost her friends and allies, and made well-nigh impossible the fulfillment of her war aims without another war, but she remained the arbiter of the world's destiny.

China, weak and sick, hungry and poor, desperately required a scientific diagnosis of her illness and healing medicine or perhaps

a major operation. But the United States insisted that all China had to do was to wish herself well. We told her she could become united and strong by persuading herself that she alone was responsible for the civil war which ravaged her.

In the winter of 1945-1946, not one word was released by the Chinese or American authorities about Russia's "preventive wrecking" of China's industrial base in Manchuria, or her refusal to get out of the Chinese Northeast. American diplomatic and intelligence officers had ample reports, but none of these was allowed to reach the public. A few columnists of the Right, such as Constantine Brown and George Sokolsky, hinted at the truth, but for the most part the American press was silent.

By ignoring Russian looting, America gave tacit acquiescence. The Soviet Government cannot be blamed if it regarded the United States State Department as both naive and silly for failing to protest during the process of robbery, only to bleat a meek "Alas!" upon revelation of the crime.

It was made clear to me in my conversations with Chinese Government leaders in Chungking and Shanghai that they were hoping against hope that if China pretended that the Soviet Government was friendly, it would in fact become friendly; that if no word of protest was uttered against Russia's breaking of the Sino-Soviet Treaty, Russia would begin to live up to it; that if it were assumed that the Chinese Communist Party did not take orders from Moscow, it would in fact become a Chinese party and make possible a political settlement and an end to the civil war.

When it had been Japan who filched territory from China, set up autonomous regimes and said that all she wanted was a "friendly" Chinese Government which would "co-operate," no one had believed her. When Japan said she was not committing acts of aggression but merely extirpating Communism in China, everyone realized it was a lie. But now that Russia was doing the same sort of things as Japan had done and making the same kind of excuses, there was a conspiracy of silence.

Even the terminology used by the Russians was similar to that formerly employed by the Japanese. The Soviet Union also said she merely wanted "friendly" governments on her borders. The Communists did not, of course, claim to be endeavoring to prevent China

Coué Diplomacy 63

going Communist They said instead that they were trying to make China "democratic." But the underlying purpose was the same and the hypocrisy equally blatant.

When Japan was the aggressor, China received little help, but at least she got sympathy. Now she was deprived even of that. Those who should have been her allies took Communist professions seriously and belabored the Chinese authorities with abuse.

The Chinese Government did its best to make Couéism work. In November 1945, at the very time when Russia had refused the Chinese National armies the use of the Port of Dairen (which according to the Sino-Soviet Treaty was to remain Chinese, unlike Port Arthur which was to be "shared" with Russia), and when the Chinese were being prevented from landing at Yingkow by Russian-equipped Chinese Communist forces in whose favor the Red Army had vacated the port, Dr. Sun Fo and other members of the Chinese Government were speaking in the warmest terms of Sino-Soviet relations. And Shao Li-tze, former Chinese ambassador to Russia, declared categorically that China's internal imbroglio was "not influencing Sino-Soviet relations."

The make-believe was, of course, transparent. When I returned to Chungking in mid-January 1946, every correspondent knew more or less what was happening in Manchuria. Stories of the Red Army's looting of the Chinese provinces were rife, and it was no secret that the Soviet Government was demanding a codominion over all Manchuria as the price of peace in China. Yet even in off-the-record press conferences General Marshall, like the Chinese Government spokesmen, refused to answer questions or comment on what was going on in Manchuria.

The American correspondents in Chungking early in 1946, unlike those I had met the preceding October, were for the most part men of experience and knowledge who knew the score. But when they tried to get information at the press conferences the government spokesmen had nothing to say. Poor "Wordless Wu," as the then Minister of Information was nicknamed, together with his colleagues from the Foreign Office and Executive Yuan, had to parry all enquiries and profess complete ignorance of what everyone in Chungking was talking about privately.

In an interview with the press in Chungking I gave what it seems

64 Last Chance in China

to me is still an accurate description of China's position. "China," I said, "is like a little boy being bullied by a big one. He fears that if he cries out no one will come to his assistance and the big boy will just beat him harder."

The Chinese Government issued no word of protest at the Soviet Government's breaches of the terms of the Sino-Soviet Treaty of August 1945. In that treaty the government of the USSR promised not only to respect the sovereignty of the National Government over the whole of China, including Manchuria; not only pledged itself to "noninterference in China's internal affairs," but also agreed:

To render to China moral support and aid in military supplies and other material resources, such support and aid to be given entirely to the National Government as the Central Government of China.

China had paid a high price for this promise. She had given up Port Arthur to Russia as a naval, army and air base; she had agreed to make Dairen a free port to and from which Russia could move goods without inspection or the payment of customs dues, and in which Russia would own half the harbor installations and equipment; and she had also been obliged to give Russia "joint ownership" of the railways of Manchuria. Since a Soviet citizen was also to be manager of the railways, China had in fact given Russia de facto control of her North