T.V. had arrived from Shanghai for a meeting of the Executive Yuan in Nanking in what the correspondent for Time referred to as “a howling gale of antipathy and criticism,” a storm set in motion by a Chinese historian who had denounced T.V.’s economic policies, his “haughty and taciturn” personality, and his ignorance of his homeland: “As for his knowledge of Chinese culture, even after chemists analyzed it down to the smallest fraction, one can hardly find any trace of it.” Shortly after arriving in Nanking, T.V. walked into a meeting of the Legislative Yuan, took a seat in the center of a long curved table facing the other members, and read his resignation slowly and calmly. “Three times during the course of the last year I submitted my resignation.… The Generalissimo has finally granted my request.” Complaining that neither the government nor the people had shown self-restraint regarding their currency and that the only recourse had been to print more, he described the current economic crisis as “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.” After a few minutes of heckling, he rose, answered the hecklers, and prepared to leave. “I have made my report,” he said. “I had better go.”
There is an intriguing note in T.V.’s handwriting dating from this period. The person for whom it was intended is not named, but in thinking about what he wanted to say, T.V. had jotted down several points: “Because of my experience always felt sorry for Marshall… Sorry for Chiang also because he was fumbling about democratic instruments which he did not know how to handle.” T.V. also referred to his brother-in-law as a “bad administrator,” adding “what I was trying to do.… make effective use of American aid & build up economy & keep fighting inflation so that gov could have democratic institutions. With running away inflation no gov’t let alone democratic gov’t could exist.… With Chiang force counts not money but I [Chiang] am the state.”
T.V. left the government just in time. Shortly after Truman’s speech, Undersecretary of State Dean Acheson told the House Foreign Affairs Committee that “the Chinese government is not in a position at the present time that the Greek government is in. It is not approaching collapse. It is not threatened by defeat by the Communists.” Ergo, there would be no help for the Chinese. The Communists reacted to this statement with renewed offensives in Manchuria, Jehol, and Shensi. Alarmed by these developments, the United States temporarily lifted the embargo on military equipment, and the KMT was able to purchase enough ammunition to stop the Communist thrust, but not enough to go on the offensive. On May 1, 1947, Mao renamed his soldiers the People’s Liberation Army, and by June it had taken over the initiative in Manchuria. In early July, Chiang ordered a general mobilization.
On July 9, Truman and Marshall sent General Wedemeyer back to China to assess the situation. The Wedemeyer mission was the president’s answer to political pressure from several fronts, primarily the members of Congress, who were “accusing the Administration of pursuing a negative policy in China.” The KMT was pleased with Truman’s choice of investigator, since Wedemeyer hated the Communists. Directed “to appraise the political, economic, psychological and military situations,” Wedemeyer traveled from Mongolia to Taiwan. When he returned to Nanking, Chiang asked him to prepare a speech for officials of the government and the military. Both Chiang and Ambassador Stuart urged him to speak frankly, which he did, reporting that on his tour he had “found evidence of maladministration, corruption and lethargy.” But Wedemeyer’s honesty got him in trouble. In trying to “jolt the Nationalist leaders into taking action which would convince America that they were worth supporting,” he had placed himself in opposition to U.S. policy, eventually ending his own career in the military.*
AT THE BEGINNING of January 1948, the Nationalists numbered nearly twice as many men under arms (1,250,000) as the Communists (700,000)—a fact that may have encouraged Chiang Kai-shek to try to hold on to Manchuria, rather than negotiate while, as one writer put it, “he still had something to negotiate with.” The generalissimo was irrational on the subject of Manchuria.
It was there, at the capital city of Mukden, that the Japanese had launched their war on China in 1931, and he apparently felt that if he gave it up, he would lose the Mandate of Heaven. What Chiang failed to realize was that insofar as the Chinese and particularly the Manchurians were concerned, he had already lost it. Stubborn as always, Chiang moved to Peiping in order to direct the northern campaign. His military strategy—concentrating his troops in widely separated towns—necessitated the use of the railways, which, by this time, had nearly all been captured or destroyed by the Communists.
In February, Marshall, now secretary of state, informed an executive session of the Foreign Affairs and Foreign Relations Committees that he had warned the G-mo that “the odds were too heavy” against the KMT, and therefore the United States should supply no more military aid. He said that he had tried to convince Chiang of this, but that there was “constant insistence on the part of the Generalissimo and his high military and political group that the only way the issue could be settled was by force.” Beyond military weakness, Marshall said, there was “conspicuous ineptitude and widespread corruption among the higher leaders” which had resulted in the “consequent low morale of the Chinese Government armies.” He said that in order to keep the KMT going, the United States “would have to be prepared virtually to take over the Chinese Government and administer its economic, military and governmental affairs.” Such a course of action, Marshall contended, would “most probably degenerate” into a “dissipation of U.S. resources [that] would inevitably play into the hands of the Russians.” The Chinese Communists, he said, “have succeeded to a considerable extent in identifying their movement with the popular demand for change in present conditions”; on the other hand, there had been no sign that the current Chinese government “could satisfy this popular demand or create conditions which would satisfy the mass of Chinese people.” It was at this point, according to Crozier, that the China Lobby “rallied to the Generalissimo’s defence.”
THE HISTORY OF the lobby goes back to June 1940, when T. V. Soong arrived in Washington with instructions to get financial and military help for his brother-in-law’s government. He set about making friends with influential types like Harry Hopkins, Henry Morgenthau, Joseph Alsop, and Henry Luce. But, according to Ross Y. Koen, whose book The China Lobby in American Politics was originally banned by the U.S. government under pressure from Taipei and the lobby, T.V. had “achieved only a modicum of success between 1940 and V-J Day in securing financial aid for China.”
He had first teamed up with a Polish doctor named Ludwig “Lulu” Rajchman, a former head of the Health Secretariat at the League of Nations who knew his way around the diplomatic world. A “clever and charming” man, according to Reporter magazine, Rajchman was disparaged by a confidential source in the FBI files as “a Polish Jew [who] should be watched.” After the passage of the Lend-Lease Act in March 1941, Rajchman advised T.V. to set up China Defense Supplies, an entity that would represent China in dealing with Lend-Lease. Roosevelt suggested that Soong hire William S. Youngman, Jr., as head of the agency. Formerly a general counsel for the Federal Power Commission, Youngman helped Soong staff China Defense Supplies with “influential Americans and a few persuasive Chinese.” The agency’s counsel was Roosevelt’s close friend and adviser Thomas G. Corcoran, who described China Defense Supplies as “an unorthodox operation… dubious according to the letter of the law.” Chinese requests for Lend-Lease arrived with endorsements from Hopkins or Currie, were “expedited” by the China Defense team, and put through the system by high-placed friends of Corcoran or Rajchman.
In 1942, in response to Roosevelt’s concern about the deteriorating relationship between the United States and China, Lauchlin Currie blamed T.V., claiming that relations between China Defense Supplies and the U.S. Army were “very bad” due to the peremptory way Chiang’s brother-in-law was handling
Lend-Lease. An example of T.V.’s high-handedness can be seen in the case of Leland Stowe, a Pulitzer Prize–winning journalist who wrote for the Chicago Daily News syndicate from hot spots around the world. In a series of articles, only two of which ever made it into print, Stowe documented one of the major reasons that China was short of armaments: “Because the Burma road has for years been dominated by racketeers and war profiteers, ten thousand Chinese soldiers have gone without rifles, hand grenades or munitions.” T.V., whom Chiang had designated foreign minister during the fateful month of December 1941, protested to the White House, and the rest of Stowe’s articles were killed.
As we have seen, the bill granting $500 million in credits to China with no strings attached had passed Congress in February 1942. According to Reporter magazine, which devoted two issues to the China Lobby in the spring of 1952, around $220 million of the half billion dollars was used, per Kung’s request, to buy gold in the United States, supposedly to stabilize the ever-shrinking Chinese dollar. But much of this money was apparently put up for sale in China “under circumstances that allowed insiders to make big killings in a single evening.” Reporter alleged that Ai-ling Kung “would buy Chinese dollars on the Shanghai exchange just before new credits to the fund were publicly announced, then sell when the announcement sent the currency up temporarily—thereby, of course, helping to send it back down.”
Another $200 million of the loan, Reporter claimed, had been set aside to redeem U.S. bonds and savings certificates issued by the Chinese government. Although the bonds were not redeemed as promised, those in the know were able to sell their holdings before the redemption clause was publicly rescinded. These same people, who knew in advance that the savings certificates would, unlike the bonds, be redeemed, quickly bought up the certificates. Reporter said that T.V. had invested $5 million in these securities “as a patriotic duty,” while the Kungs invested some $70 million.
The story is also told that one day in 1945, H. H. Kung’s luggage was opened during a flight over the Hump into China, and it was discovered that he was carrying $1 million in cash. He informed the pilots, who were not permitted to carry this kind of cargo, that not only was the money insured in the United States but he had another $9 million* waiting in New York to be sent to China, thus intimating that the $1 million did not mean much to him. Nevertheless, he compromised with the crew; they allowed him to take his cash into China, providing he did not try to have the rest of it flown over the Hump.
The Allied victory over the Japanese in the summer of 1945, a sudden development that might well have ended or at least slowed down the China Lobby, only altered its composition. After the war there were, according to Reporter, three distinct groups of lobbyists: the realists, who feared a Communist victory in China; the opportunists, who looked to enrich themselves through loans and gifts to the national government; and the evangelists, who were themselves incorruptible and believed that Chiang’s government could be reformed.
Typical of this last group was Dr. Walter Judd from Minnesota. Judd, who had started working as a medical missionary in China in 1925, had run for Congress in 1942, where he helped see that the bill repealing the Chinese Exclusion Act was passed in 1943. Called by Reporter a “selfless, altogether dedicated man who had seen China suffer and had suffered with it,” Judd was typical of the idealistic members of the China Lobby.
Alfred Kohlberg was a different breed of lobbyist. A “mild-mannered, unassuming little man,” Kohlberg was less than five feet, five inches tall, with a soft face and bald head. Perhaps the most famous of the nongovernmental figures connected with the Lobby, Kohlberg owned a business—he was known as “the handkerchief king”—an enterprise that brought in around $1 million a year until its owner ran afoul of the Federal Trade Commission for selling Chinese-decorated lace handkerchiefs under European names such as “Valenciennes” and “Cluny Venise.” Like Hurley and later Joseph McCarthy, Kohlberg never stopped trying to ferret out Reds in high places, particularly the U.S. State Department.
Another important member of the China Lobby was William C. Bullitt, former U.S. ambassador to the Soviet Union and France. Bullitt wrote an article for Life magazine in 1947, in which he claimed that Roosevelt, Stalin, and Churchill had signed “secretly, behind the back of China, an agreement by which vital rights of China in her province of Manchuria [called by Bullitt ‘the finest piece of territory in Asia’] were sacrificed to Soviet imperialism.” According to Bullitt, an ardent believer in superlatives, “No more unnecessary, disgraceful and potentially disastrous document has ever been signed by a President of the United States.”
A major recipient of help from the Chinese Lobby was Claire Chennault, who started a commercial airline with Whiting Willauer, a former official of China Defense Supplies. The initial capital came from a $2 million U.S. loan; operating capital was provided by private Chinese and American investors. CAT, as it was known, flew everything from seeds, medicine, farm equipment, and banknotes to herds of cows and sheep into the interior and brought back tung oil, hog bristles, cotton, wool, tobacco, silk, and tea. According to Reporter, Chennault and Willauer “were able to exchange their Chinese dollar profits for U.S. dollars at the fixed rate of exchange,” and CNRRA (the Chinese equivalent of UNRRA) arranged top priority for all CAT airlifts at the open-market rate, which was “many times the legal rate.”
In spite of these and other less profitable efforts, at the beginning of 1948 there were still 10 million Chinese on the verge of starvation, while officials of the KMT officials continued to rob the people. One historian* told a story about the magistrate of Hsiaoshan county, who announced that the county would sell coupons to buy rice from outside the area to make up for shortages within. The magistrate then had all the rice transferred from the granaries to the stores of the local rice merchants. First the money taken in from the sales of the coupons was divided among the conspirators— county officials and big rice merchants. Then, when the public brought in their coupons to exchange them for rice and found none in the granaries, they were forced to go to the merchants, who grossly overpriced it. When the story came out, the magistrate fled. Later, some of the conspirators were caught, but not until the Communists took over the area.
Politically, militarily, and financially, Chiang’s government was obviously falling apart. According to eminent Chinese history professor Lloyd Eastman, “the fabric of rural society was becoming unraveled; industrial production was faltering; the transportation system was in a state of continual disrepair (largely owing to Communist sabotage); and inflation was daily eroding the value of the fa-pi, the national currency.” In spite of this, the Chinese National Assembly reelected Chiang president at the end of March 1948. Reflecting their growing disillusionment with the generalissimo, however, its members chose General Li Tsung-jen, a former Kwangsi warlord, as vice president. This was, as a member of the U.S. Embassy staff put it, “a disastrous blow” that “seriously undermined the position of the Generalissimo,” who had promised the position to Sun Yat-sen’s son, Sun Fo.
Twenty years earlier, Chiang had fought and beaten General Li, who, along with his partner General Pai (they were known as “The Two”), had made up the strength of the rebel Kwangsi Clique in the early days of Chiang’s republic. Having proved his authority over Li, Chiang had designated him pacification commissioner for the province of Kwangsi, and under the direction of Li and Pai, Kwangsi had developed local industry, sponsored education, and become relatively crime-free. After the end of World War II, Chiang appointed Li director of his (Chiang’s) presidential headquarters in Peiping and, as the situation in Manchuria deteriorated, tried to persuade him to take over the Manchurian campaign. But Li refused, hanging on to his Peiping office until 1948, when he announced that he would run for vice president. In beating out Sun Fo, Li not only caused Chiang to lose face—the gravest sin in the eyes of the G-mo—but put him on notice that he could no longer ignore calls for government reform. “The Generalissimo,” according to Roger
Lapham of the Economic Cooperation Authority (ECA), “was urged to welcome the elected Vice President, take him into his confidence, and with him work to bring all elements of the KMT together, thus strengthening the central government. The president refused this good advice, kept the vice president and the progressive elements of the KMT at arms’ length, and went his own sweet obstinate way to rule China as he saw fit.”
Military news from Manchuria during the spring of 1948 was no better than the political situation at home. “Poorly fed, poorly paid, poorly clothed… often short of ammunition,” ordinary Chinese soldiers were “easy prey for the clever and impassioned propaganda of the Communists.” Moreover, Chiang’s forces were apparently riddled with moles, among whom was the commander of over half a million of the G-mo’s best troops. Forced to evacuate Kirin in central Manchuria in March, the Nationalist army moved south to Changchun, where food supplies had been cut off by the Communists* and starvation was setting in. Mukden, south of Changchun, was also in danger. The head of the Joint U.S. Military Advisory Group urged Chiang to abandon Mukden, but he rejected the idea and continued to look to the United States for aid, refusing to admit that Nationalist defeats were due not to a lack of war material but to the defection of his troops to the Communists. As Lapham phrased it, Chiang was still “a stubborn, obstinate man, who refused to delegate authority, who relied on incompetent favorites for many of his subordinates, and who put on the shelf competent military men who could have helped him.”
The Last Empress Page 72