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Labor Action, 15 August 1949


Jack Brad

State Department Scraps Chiang –

U.S. White Paper Writes Finis
to Futile Polity in China


From Labor Action, Vol. 13 No. 33, 15 August 1949, pp. 1 & 4.
Transcribed & marked up by Einde O’Callaghan for ETOL.


The long-awaited White Paper on China has been issued this week by the State Department. While its major outlines have long been clear, many of the details and special reports appear for the first time. At this time a full appraisal of the huge mass of material is not yet possible and must await further study.

This is the story of the decline and fall of an entire social class – the nationalist capitalists of China who took power in 1927 through their party, the Kuomintang, and under their leader, Chiang Kai-shek, Unable to supply the answers to the most pressing needs of the nation, they likewise lost the key to their own continued rule.

Acheson states the case a bit over-simply but realistically enough:

“The first problem which every Chinese government has had to face is that of feeding this population. So far none has succeeded. The Kuomintang attempted to solve it by putting many land reform laws on the statute books. Some of these laws have failed, others have been ignored. In no small measure the predicament in which the Nationalist Government finds itself today is due to its failure to provide China with enough to eat.”

Holding Up Dead Hand

In other words, the victorious Nationalists of the late ‘20s failed to abolish the oriental feudalism of traditional China. They kept the masses of peasantry chained to the old order and thereby strengthened the dead hand of the past and repelled the people.

When the world economic crisis set in in 1929 and later the Japanese war broke out, this ruling class, cut oft from its 450 million peasants, made an alliance with the very reaction against which it had earlier fought. As the White Paper puts it: “The tragedy of these years of war was that physical and human devastation to a large extent destroyed the emerging middle class which historically has been the backbone and heart of liberalism and democracy.”

The capitalist class of China was crushed between the Japanese imperialists and the native landlord class. Deep in the interior of China during the war, cut oil from industry, trade, finance and their properties, the state dominated everything; and the state and the Kuomintang were taken over by the overwhelmingly superior landlords and warlords whom the republic had failed to cope with earlier.

The Kuomintang became the party of warlord factions and the fabulously corrupt Four Families (of which Chiang’s was the first), who took over the hardly functioning economy as personal domains to be looted and robbed. With the failure of the capitalist class, the U.S. lost its chief instrument of policy in China. Henceforth its policy was makeshift and tentative.

The White Paper makes clear that, from Pearl Harbor on, relations between the KMT and Washington were strained. It had always been uncertain as to just when the turning point was reached. The inner corruption of the Nationalists seems to have been already well advanced by 1941.

Since it is not possible in this space to cover the entire range of the White Paper, some outstanding points will be reviewed.

Wall Street versus KMT

(1) Three weeks after Pearl Harbor, Ambassador Gauss informed Washington that Chiang wanted a billion dollars to buy the support of the “self-seeking and, I fear, fickle elements intimately associated with the government.”

The threat was always peace with the Japanese. It was large-scale political blackmail. The British paid 100 million pounds sterling while Roosevelt sent $240 million in gold bullion. No accounting was ever made of the gold except that in 1944 the Treasury analysis of the deal was that “somebody was making a profit from it [selling the gold on the black market] and it was not the Chinese government.”

(2) A real conflict had developed between the military interests of the U.S. and the social interests of the KMT. The landlords had more interest in keeping their peasants under control and keeping the Communist Party troops behind a cordon so that the peasant movement did not spread than in fighting the Japanese.

The U.S., on the other hand, poured gold and arms into China to develop a continental front behind the Japanese rear. Thus the war in China had become a part of the world imperialist war and had ceased to have any significance as a war of national independence. The war against the Japanese was conducted by and under the inspiration of the U.S. and of the CP, the latter following Russian policy. It was this conflict of basic interest which led to the Stillwell incident.

(3) Not all of the corruption was on the side of the KMT. How else is one to characterize the cynical deals at Teheran and Yalta? “Marshall Stalin limited his ‘price’ with reference to Manchuria substantially to the position which Russia had occupied there prior to 1904. We for our part were prepared to and did pay the requisite price.”

However, Acheson makes clear that the U.S. did not really give away a part of sovereign China, whose territorial integrity has been as much their diplomatic concern as the chastity of white womanhood is in the South – that is, the other fellow had better not take it. For our loyal Russian ally “could in any case have seized all the territories in question and considerably more regardless of what our attitude had been.”

Marshall Never Saw It

(4) When the Yalta agreement was arrived at, it was decided to keep it a secret – from the Nationalist government. “For reasons of security and for those only it was considered too dangerous to consult with the Nationalist government regarding the Yalta agreement.” One might normally wink a cynical eye and note that the true reason is a bit more obvious.

But the White Paper offers evidence that “security” may really have been the reason. “It was felt that that there was a grave risk that secret information transmitted to the Nationalist capital at this time would become available almost immediately.” For just as gold, ammunition, gasoline, everything that was flown over the Hump or otherwise brought to China at great effort, was available to the highest bidder, including the Japanese and the Communist Party, so was intelligence. The Japanese hardly needed spies. Chinese government officials were ready to supply the necessary information.

(5) There is the sordid story of General Li Tsung-jen, would-be American puppet and acting president after Chiang’s retirement last year, who offered in effect to hand over his army to American officers so that the U.S. would take full responsibility for the government’s conduct of the civil war and in that way satisfy the U.S. desire for efficiency and an end to corruption.

(6) Because the U.S. could neither abandon China entirely nor intervene in full-scale war, the only possible alternative was: “While assisting the Nationalists to assert their authority over as much of China as possible and endeavor to avoid a civil war by working for a compromise between the two sides.”

So while the air force was ferrying whole KMT armies to Manchuria, Marshall was trying to play the neutral at Nanking. He failed to convince the CP, which was bad enough for his purpose. But he also failed to convince the KMT, which saw in the actual physical support that the U.S. was giving full validation of that assumption that Washington simply could not abandon them.

Marshall never could understand why Chiang was so “unreasonable.” He could not see that a social cleavage separated the contenders which would not permit them to live side by side peacefully. He approached the matter as if he were negotiating between two state powers.

This was true insofar as both had armies and governments. But they were in competition over the same territory and people. And each stood for a completely different kind of rule, both domestic and foreign. Marshall simply failed to see that a Stalinist society and a semi-feudal one could not live together.

(7) There is much in the White Paper on the inefficiency, corruption, spinelessness, nepotism, self-seeking, etc., of the KMT leaders. And equally there are numerous suggestions from the U.S. on how to straighten out finances, keep an accurate budget, make officers responsible for the pay the soldiers were to receive, streamline and make efficient all sections of the administration – in short, to Americanize the way of doing things. Of course, none of this was ever carried through. Stillwell broke his head trying.

Washington Couldn’t Do It

It could not be done because modernization in the manner of doing things is alien to a traditionalist,. Confucianist, semi-feudal society. What possible difference could it make if each general had to send an accounting for funds assigned to pay his troops when that officer had the power of life and death over his soldiers and the peasant-conscript had been dragged to the army in chains, subject all the way to whippings and starvation?

However, there is one field in which the White Paper does not record proposals for change and that is in social relations. Washington does not seem to have had any ideas about agrarian change other than possibly increasing agricultural efficiency. Yet without this nothing else mattered. So long as the peasant had nothing to fight for and the KMT was the party of the landlords, he would listen to the CP. Yet Washington could do nothing about this.

In the first instance, it meant tampering with private property – anathema! Second, if landlordism were destroyed, the KMT would also be through. While a “liberal” group might eventually replace it, this would take time. Third, the KMT had become too corrupt by 1941 to do what it had been unable to do 15 years earlier. And it was impossible for the U.S. to carry through such a program directly.

This is not dealt with in the White Paper but it is crucial. Capitalist penetration had caused a degeneration of Chinese feudalism without eliminating it. It was the very effect of capitalism on China which created the American dilemma there, making the KMT unsuitable for U.S. policy.

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