Before leaving England, Kung had cabled Secretary of the Treasury Henry Morgenthau, Jr., to ask if the U.S. Treasury would buy the 50 million ounces of silver that China had in New York. Kung had tried but failed to get a loan in London and needed foreign money to back China’s currency reforms. When he arrived in the United States, Morgenthau refused, so Kung, as he put it, “appealed to Roosevelt.… I think Morgenthau was trying to hold me up. He thought our price for silver was too high. He wanted it to go down so that he could get a bargain. After Roosevelt told him to buy more silver from me, Morthenthau and I arrived at an agreement.” What Roosevelt really told Morgenthau was that he wanted to treat Chiang “real nice” since the generalissimo’s government was trying to put its economic house in order. When he gave Kung the good news, Kung complimented the Americans for preserving a “strong China,” which, he said, would lead to peace and stability in the Far East. One of Kung’s associates then explained that what his superior really meant to say was that Morgenthau was a great statesman.
While Kung was in the United States, he received an honorary degree from Yale in acknowledgment of the fine work he had done in the fields of education and finance.
30
The Japanese are a disease of the skin, the Communists a disease of the blood-stream.
—CHIANG KAI-SHEK
ONE OF THE major factors in the economic manipulations of both Kung and Soong was Chiang Kai-shek’s constant demand for money to fight China’s Communists. The generalissimo’s bandit suppression campaigns had always been expensive, and he relied on two sources to fund them: his finance minister and his squeeze on the drug trade. The story of how Chiang managed to channel the proceeds of the opium market into his war against the CCP, while at the same time issuing self-righteous edicts against the use of drugs, is the tale of a successful politician with one hand on the Bible and the other in the till.
“Millions have been raised out of opium for military operations and civil propaganda,” complained the Peking-based secretary of the International Anti-Opium Association in 1928, the year Chiang established himself as head of the KMT. It was this sort of censure from the West, where Chiang was looking for aid, which must have encouraged him to make an outward show of outlawing the drug, and in August of 1928 he established the National Opium Suppression Bureau. “The national government will not attempt to get one cent from the opium tax,” he told its members. “It would not be worthy of your confidence if it should be found to make an opium tax one of its chief sources of income.”
Chiang’s promises meant nothing. Profiting from the drug trade was an old warlord game, and although General Feng spoke out against drugs and prohibited their use by his soldiers, he is said to have received as much as $20 million in opium revenues in a single year. As it was with the Christian General, so it was with Chiang. The Opium Suppression Bureau was, “in effect a licensing agency,” Sokolsky explained. “That is, you paid your money, you got a receipt, and the receipt meant that you could carry the goods, because it had already been ‘punished,’ a Chinese doctrine. So, the Opium Suppression Bureau collected the money and the money went to feed the soldiers.”
During the year after Chiang’s promise not to profit from opium taxes, the provinces of Hupei, Shansi, and Kwangsi raised some $17 million in what was euphemistically termed “opium prohibition revenue.” In 1930, 130,000 pounds of opium were imported into Shanghai from Persia and India, while the provinces of Yunnan and Szechuan sent hundreds of tons more down China’s “opium highway,” the Yangtze River, guarded by soldiers from Chiang’s army. Three years into the Chiang regime, China was producing seven eighths of the world’s narcotics. That year and the year after, the Nationalist government organized an opium monopoly in order to force out competitors, but the press raised such an outcry that it had to abandon its plans. In both instances, T.V. and Wang Ching-wei, then president of the Executive Yuan, supported Chiang. Even the influential British journalist H. G. W. Woodhead backed the idea, saying that it was the only way to surmount China’s economic troubles. According to Time magazine of April 27, 1931, “Finance Minister T. V. Soong cheerfully declared last week that China will soon have ‘a new and realistic opium policy… a ‘realistic’ opium policy, according to Minister Soong, cannot be one of prohibition.… If shrewd Minister Soong does harness opium to his Treasury chariot, he may find a way to balance the Chinese budget for some time to come.”
Up until this time, Big-Eared Du and his Green Gang had controlled the opium trade in Shanghai. After the gang’s help in suppressing the Communists in the city, Chiang had named both Du and Pockmarked Huang “honorary advisers” to the Chinese army, titles that carried with them the rank of major general. In what one writer terms “more substantive concessions,” the generalissimo turned his opium rights in Shanghai over to one of Du’s companies and arranged for members of the police and the Chinese navy to help guard the Green Gang’s opium, whether in transit or in storage.
But Du reaped more than money. When he arranged a grand opening of an ancestral temple in Kaochiao village where he was born, 80,000 visitors showed up to pay their respects. Aside from $600,000 worth of gifts, Du received presentation scrolls singing his praises from the mayor of Shanghai, Wang Ching-wei, and Chiang Kai-shek himself. After the celebration, Du located his largest morphine factory in Kaochiao. An American diplomat, curious about how and why Chiang always met with Du in Shanghai, had it explained by a Chinese official this way: “whenever General Chiang went to Shanghai the first thing he did was to send Du his card… the present relationship between the two men involved merely an arrangement whereby Du and his gangster colleagues were to keep the Communists and other lawless elements in order, in return for freedom of action with respect to what can best be described by the American slang term ‘rackets’ connected with gambling, the opium traffic, and vice.” To satisfy Du’s ongoing desire for status, Chiang named him chief Communist suppression agent for Shanghai. Nevertheless, when their opium monopoly fell through and the leaders of the Green Gang demanded a refund—they had paid the government 6 million yuan in start-up money—T.V. offered them payment in government bonds, which he (and unfortunately Du) knew were worthless. It is hardly surprising that on July 23, 1931, the day of Madame Soong’s death, the attempt was made on T.V.’s life,* after which we can assume that the refund owed to Big-Eared Du was promptly paid in cash.
Up until 1933, Du’s organization had operated out of the French Concession in Shanghai, and of the $6 million per month it yielded in opium revenues, the French Concession police netted some $150,000. This cozy relationship came to a sudden halt, however, when a French naval officer arrived in Shanghai to investigate the corruption. In spite of Du’s messengers, whom he sent off to Paris loaded with bribes, and members of the Chinese government anxious to stop the investigation, the French remained determined to clean up the graft. After a big dinner given by a new, incorruptible consul general and an old police captain who had once double-crossed Du, several officials died in agony from poisoned food. The French assumed that the culprit was Du, and he was forced to take his opium trade out of the French Concession and conduct his business from the Chinese district of Shanghai.
The move did not hurt Du’s business for long. He rebuilt his organization and continued to protect his turf by dispensing huge bribes. His men operated ten morphine factories in the vicinity of the city for which they paid the Nationalists $400,000† a month in protection money. In late 1932, Du requested official sanction for his opium monopoly in the city. For this he offered a monthly payment of $3 million to the Ministry of Finance, and the deal was made. When T.V. took over the Finance Ministry from Kung, he put the Hankow Special Tax Bureau, the central point of the operation, under the jurisdiction of Chiang’s headquarters, and the next month, the government put Chiang in charge of opium suppression. By the beginning of May 1933, Chiang had his opium business—officially called opium “suppression”—up and running. By the end of the year, the
Hankow Special Tax Bureau had collected well over $16 million‡ in opium taxes, and one expert estimated that all the opium tax bureaus under the Nationalists netted around $30 million§ a month.¶
Not surprisingly, there were many Chinese intellectuals and Western observers who decried Chiang’s use of opium to fund his government. But according to the American consul in Hankow, “Inasmuch as the Nanking Government has for several years been piling up a mounting deficit by reason of Chiang’s tremendous military expenditure, it is not believed that the latter is prepared to cut off a lucrative source of revenue such as he has in the opium monopoly merely for the promotion of the common good.”
“In the central provinces of China, especially in Hubei and Hunan, nearly every government organization has come to depend on opium revenue for maintenance,” said one authority, citing figures from a particular locality in which one picul (approximately 140 pounds) of opium cost $400.* To this basic cost, officials added $320 in ordinary taxes, $32 for Communist suppression, $3.20 for the national government, $1.50 for the local Chamber of Commerce, $2.50 for Special Goods (opium) Association fees, $2.50 for a local girls’ school, and $7.00 for protection fees. To this total, the monopoly authorities then added $920, increasing the original cost of the opium by more than 400 percent, to $1,688.70.†
What angered the West was the fact that the Nanking government continued to blame foreign governments for China’s dependence on opium. To quote H. G. W. Woodhead, “It is rather curious to read in the newspapers on the same morning a report from one Chinese news agency stating that altogether 204 opium traffickers have been executed in China during the current year; from another that at present there are about 3,000,000 opium and drug addicts in the country; and from a correspondent in Poseh [Kwangsi] a description of the arrival in that city of a caravan carrying 1,800,000 ounces of opium, which was stored in the offices of the Opium Suppression Bureau until it had paid the required taxes.” There was a story, reported by the North-China Daily News, of a customs officer in Kiukiang who was arrested for smuggling opium, when, in fact, his real crime was “being over-zealous in seeking out smuggled consignments.” Or, as the North-China Herald put it, “The scandal is so deep that it must be stirred up very gingerly.”
In 1935, Chiang abolished the Opium Suppression Bureau and declared himself opium suppression superintendent. But he soon ran into competition from the Japanese, who had turned the areas of north China under their control into “one vast poppy field,” from which they refined opium derivatives and other narcotics. On January 1, 1937, the generalissimo promulgated strict laws making the use of these narcotics illegal. According to Inspector Papp of the Shanghai Municipal Police, “the Chinese Government had a monopoly in the opium trade in China while Japanese subjects were dominant in the narcotic drug traffic. Therefore, the concerted efforts taken by China to eradicate the narcotic drug traffic and habit principally affected Japanese subjects… meanwhile, fearing extreme punishment if apprehended trafficking or consuming narcotic drugs, Chinese subjects were tending to turn from narcotic drugs to opium with the result that opium consumption is being increased and Government revenues thereby benefitted.”
IT WOULD BE instructive to know just how much Madame Chiang knew about her husband’s involvement in the opium trade. Like him, she may well have been able to keep the contents of her mind carefully compartmentalized. This sort of mental gymnastics was exemplified in her statement about Big-Eared Du, who, after attending prayer meetings at the Kung’s, was baptized in 1936. Madame Chiang is said to have told an American bishop that “Du Yueh-sheng is becoming a real Christian because ever since he was baptized there has been a marked decrease in kidnapping cases in Shanghai.”
In 1939, Madame Chiang published a series of ten articles entitled “Resurgam,” meaning “I shall rise again.” Printed in a special supplement to the Chungking Central Daily News, these articles were notable for two things: first, May-ling’s view of the history of China and where its people had gone wrong, and second, an inescapable contrast between what the G-mo’s wife recommended as appropriate conduct for a good citizen and the behavior of the members of her own family. “It is the duty of each of us to clear our national records of the old stigma of dishonesty and corruption,” she wrote in the second installment. “… Only a traitor… would… divert to his own pockets directly or indirectly, funds intended for national purposes or for the pursuance of our resistance.” In the seventh and eighth installments, she outlined what she considered the “Seven Deadly Sins” to be expunged from Chinese life. “1. Self-seeking, i.e., the “squeeze”; 2. The concept of “Face”; 3. “Cliquism”; 4. Defeatism; 5. Inaccuracy; 6. Lack of self-discipline; and 7. Evasion of responsibility. Long ago they combined to retard our emergence as a first-class world Power,” she declared, “and they now delay our victory in this war.” These articles were incorporated in a book of essays and speeches entitled China Shall Rise Again, published in 1940. In it, the generalissimo’s wife claimed that “China was strangled to death by an economic noose fashioned by Japan out of British appeasement, American profiteering and French fear.”
During 1939, May-ling also kept up a lively correspondence with Emma Mills, alternating as before between the voice of a loving, if complaining, friend and that of a wary politician. Emma had been urging her old friend to come to the United States—a visit she and others thought would help China’s cause—but Madame demurred. “I have thought much about it,” she wrote Emma in the middle of January after a two-month tour of the various fronts. “I am convinced that I would not be able to stand the mental and physical strain.… I work from daylight to dark, and I have no reserve left… it seems to me I would offend all whom I could not see and would consequently do more harm than good.… If I had the physical strength I might risk it, but… I would be a nervous wreck after the first day.” In her next letter, she remarked that she was “glad… you told me of the opinion expressed by one of your friends that he was darned tired of reading about the Chiangs. You can tell him I feel exactly the same way, and that the continual requests from abroad for messages, etc., have worn me to a frazzle.” When Emma offered to come to China two years later, May-ling discouraged her, citing air raids, poor living conditions, constant strain, and lack of social life. As a sop to her friend’s ego, she had the Chinese government award her its Medal for Distinguished Service.
Emma, who had been named executive vice president of the American Bureau for Medical Aid to China, informed May-ling that China was “almost non-existent in the daily papers—always a short column somewhere, but in an inconspicuous place.… We go on with money raising efforts, but don’t get enormous returns.” She herself, however, had been noticed by the U.S. intelligence service (then the OSS) and approached by a man who said he was sent by the State Department to find “some way to get to” Madame Chiang “without going through official Chinese channels.” But in a letter to May-ling, she explained that she “wasn’t cut out for intelligence work.”
In November, May-ling took another trip to the front—two thousand miles by airplane, car, sedan chair, sampan, and pony—“an assortment of conveyances, all of which were threatened each day by Japanese bombing planes. Several times I had to dodge into ditches and hide in holes to avoid being seen by the Japanese machine-gunners who consider it sport to mow down people on the highways.” During that month, she wrote Emma to say that she realized that it would be “difficult to help our relief funds now that war has broken out in Europe.… So far we have not had any particular repercussions.… It may interfere with our supplies of munitions, but we trust that the large-scale counter-offensive which is being planned for when a propitious time arrives will not be interfered with.” To which Emma replied wisely, “It comes down to the fact that Europe is after all much nearer to us all, most of us are second or third generation overseas Europeans.”
About this time the Japanese sent planes to bomb Chiang Kai-shek’s home province of Chekiang and specifically hi
s family home in the town of Chikow. One of the bombs exploded in the courtyard, killing his first wife (Ching-kuo’s mother), Fu-mei. The three-foot-high monument Chiang Ching-kuo erected over her grave bore the inscription, “It takes blood to wash out blood.” Four years later, the Japanese commander in charge of the area swept the graves of both Chiang Kai-shek’s mother and first wife and sent photographs of this to Chiang and his son, who were not impressed with the gesture.
BY 1939, THE Sino-Japanese War had reached more or less of an impasse. There were a million Japanese soldiers holding what they considered the most strategic points in China, including all the ports and big cities, while 4 million Chinese troops were fanned out over crucial spots in the interior. It is generally agreed that once Chiang Kai-shek withdrew his government behind the mountains in Chungking, he did very little either to fight the Japanese or to help the Chinese in the occupied territories—even after enemy planes dropped fleas carrying plague germs over Chekiang and later tried to infect the population there with anthrax, plague, typhoid, and cholera. While the peasants starved, the petty provincial officials, at the mercy of Japaneses soldiers and Chinese bandits, were vulnerable to kidnapping and even torture until they told the intruders where to look for money or goods. “In some districts,” according to the North-China Herald, “it has been customary to roast the victims in big kettles, without water, until the flesh falls from the bone.” At this point in the conflict, however, the generalissimo was concerned primarily with the actions of two old enemies: his former rival Wang Ching-wei and the Chinese Communists.
The Last Empress Page 45
