To counter Chiang’s intransigence, Roosevelt sent Mountbatten. Although the ever-charming Lord Louis explained that there were simply no extra planes available, Chiang continued to demand 535 transports. “The President will refuse me nothing,” he told the head of SEAC. “Anything I ask, he will do.” Even if that many planes could be found, Mountbatten responded, there was no way the Allies could meet Chiang’s demands and, at the same time, mount an air assault on Mandalay before the monsoon. After this, there was apparently a long dialogue in Chinese between husband and wife. Finally, May-ling turned to Mountbatten. “Believe it or not,” she told him, “he does not know about the monsoon”—the annual deluge that Tuchman called “the governing fact of life and of war in Southeast Asia.” China had no real monsoons. Therefore, Chiang Kai-shek, generalissimo of the Middle Kingdom, knew nothing about them.
On November 25, Thanksgiving Day for the Americans, Roosevelt announced that Chiang had finally agreed to send troops for the invasion of Burma. But by 9:30 that evening, the G-mo had reneged. The following morning, Roosevelt asked Mountbatten, Stilwell, Arnold, Chennault, and three other generals to go see him. Although Chiang continued to insist on his 10,000 tons of supplies a month, he agreed to join the Burma campaign—until the next day, when he changed his mind again. As he was leaving to return to China, he instructed Stilwell to protest in his name and continue to demand an air assault on Mandalay along with 10,000 tons of supplies monthly over the Hump for China.
During the conference the leaders agreed on a four-point program vis-à-vis China and Japan: (1) The Japanese must agree to return to China all the islands it had seized since the beginning of World War I; (2) Manchuria, Formosa, and the Pescadores (21 islands lying between the mainland and Taiwan) were to be ceded back to China; (3) Japan would “be expelled from all other territories which she has taken by violence and greed”; (4) Korea was to become independent; and (5) the allies would “continue to perservere in the… operations necessary to procure the unconditional surrender of Japan.” In other words, Japan’s territory was to be reduced from 3 million square miles to about 146,000 and its population from 500 million people (including Chinese) to 75 million.
On departing from Cairo, Chiang left a note for Roosevelt, handwritten by May-ling: “My dear Mr. President:… the Generalissimo wishes me to tell you again how much he appreciates what you have done and are doing for China. When he said goodby to you this afternoon, he could not find words adequately expressive to convey his emotions and feelings, nor to thank you sufficiently for your friendship. He felt, too, wistfulness at saying a farewell, although he feels that only a short time will lapse before his next meeting with you. Meanwhile he hopes that you will consider him as a friend whom you can trust.” The letter contained a postscript from Madame Chiang herself: “I do hope ‘Uncle Joe’ [i.e., Stalin] came up to expectations, did he?” Two days later, Chiang wrote in his diary that his “wife’s support” was the greatest factor in their success. “Otherwise, we could not have achieved so much.”
Meanwhile, Roosevelt and Churchill left for Tehran, where they met Stalin, who told them that the Chinese army suffered from “poor leadership” but agreed to join the war on Japan after Germany was defeated. One reason, according to a prominent Chinese diplomat, was that the USSR could not continue to receive Lend-Lease unless it remained in the war. The official Cairo Statement was issued on December 1, while Roosevelt and Churchill were still in Tehran. It was a triumph for Chiang Kai-shek, since it called for the unconditional surrender by Japan plus the return of all territories that she had taken from China. But the conference at Tehran radically altered the plans for Burma, since Stalin insisted that a giant cross–English Channel invasion take place in the spring of 1944—an assault that would require the landing craft that the United States and Britain had planned to use for the amphibious invasion of Burma. Churchill, who had never wanted to send British troops to the Bay of Bengal anyway, used this as an excuse to cancel the British assault on Burma. Having previously dismissed the Chinese as “four hundred and twenty five million pigtails,” the prime minister argued for three days with the president before convincing him to abandon the Burma operation for the time being. When Chiang arrived home, he was informed of the change in plans.
Five days later, Stilwell, who needed to know what to tell the generalissimo, met with Roosevelt, Hopkins, and John Paton Davies, Jr. He described the meeting in his diary:
Roosevelt:
Well, Joe, what do you think of the bad news?
Stilwell:
I haven’t heard yet how bad it is.
Roosevelt:
We’re at an impasse. I’ve been stubborn as a mule for four days but we can’t get anywhere, and it won’t do for a conference to end that way. The British just won’t do the [Burma] operation, and I can’t get them to agree to it.
Stilwell:
I am interested to know how this affects our policy in China.
Roosevelt:
Well, now, we’ve been friends with China for a gr-e-e-at many years.… You know I have a China history. My grandfather went out there… in 1829.… He did what was every American’s ambition in those days—he made a million dollars, and when he came back he put it into western railroads. And in eight years he lost every dollar. Ha! Ha! Ha! Then in 1856 he went out again and stayed there all through the Civil War, and made another million. This time he put it into coal mines, and they didn’t pay a dividend until two years after he died. Ha! Ha! Ha!
According to Davies, this “lore of Cathay appeared to be the most vivid part of his [Roosevelt’s] knowledge of China.” The president then told stories about financial negotiations with Kung, while Hopkins asked questions about China’s economy, but “at no point did either give the general [Stilwell] a coherent statement of what they wanted him to do” now that the British had canceled their part in the assault on Burma. Stilwell finally said, “I take it that it is our policy to build China up.”
Roosevelt: “Yes. Yes. Build her up. After this war there will be a great need of our help. They will want loans. Madame Chiang and the G-mo wanted to get a loan now of a billion dollars, but I told them it would be difficult to get Congress to agree to it.… How long do you think Chiang can last?”
Roosevelt, who had already cabled the news about Burma to Chiang, asked if the G-mo would agree to accept an “altered plan” or would postpone the assault until the following November. In spite of Stilwell’s warning to May-ling not to let her husband try to blackmail the United States, Chiang, according to Stilwell, had come back with a “squeeze play”: “O.K. if you give me a billion dollars and double the air force.” Stilwell, who wrote that this “brief experience with international politics” had confirmed him in his “preference for driving a garbage truck,” felt that May-ling had done the best she could with her husband. “She realizes the implication and it drives her nuts.… I can see she is pretty low & hasn’t much hope of changing the little bastard over.” The next day, he met with both sisters. “They’re close to nervous prostration,” he wrote. “Can’t sleep. May said she prayed with him [Chiang] last night. Told me she’d done ‘everything except murder him.’ Ella says when he’s tired he takes refuge in being ‘noble.’ ”
CHIANG’S CONTINUING DEMAND for money was based on more than just pique at having the plans for the Burma campaign changed behind his back. Throughout the two previous years (1942 and 1943) the U.S. Treasury, according to Fairbank, had “denied the Chinese nothing that the loan agreement permitted them to request, though the temptations to refuse were inherent in the persistent inefficacy of Chinese financial policy, which failed to pursue the most practicable courses to stem inflation.” The loan agreement in question was a request from the generalissimo, submitted just twenty-three days after Pearl Harbor, for $500 million. The money, Chiang said, was necessary to boost the morale of the Chinese people after the Japanese attack. The G-mo had refused to say what the money would be used for and had put on “an ela
borate act of claiming that to make any accounting for it would be so very, very humiliating to a proud Chinese that he would rather commit suicide, etc., etc.”
Concerned by both the corruption and inefficiency of Chiang’s government, Treasury Secretary Henry Morgenthau had hesitated to give China the money, even after meeting with T.V., who “went through a long rigama-role, trying… to justify” the loan. “The President and the State Department want me to make a loan to China,” Morgenthau had told his staff in mid-January 1942, “… but… I would like to do this thing in the way that we could sort of kind of feed it out to them if they keep fighting, but I would hate to put $300,000 million on the line and say, ‘Here, boys, that is yours.’ ” But the loan, according to Chiang, should require “no security or other pre-arranged terms as to its use and as regards means of repayment.” Morgenthau complained to Secretary of War Stimson, “The attitude that they’re taking… is—really… a hold up.” Maxim Litvinov, the Soviet ambassador to the United States, was more succinct. “This,” he said “is nothing but blackmail.”
In the end, Morgenthau did what the president wanted, telling T.V. to pass the word to Chiang that he was going to Capitol Hill to get congressional approval for the loan. “This proposal is a war measure,” Morgenthau testified in early February 1942. “The effective continuance of the Chinese military effort—so invaluable in our fight against the Axis Powers—depends largely upon the strength of the economic structure of Free China.… The Chinese financial and monetary system should be made as strong as possible.”
Four days later, Roosevelt wired Chiang, “The unusual speed and unanimity with which this measure was acted upon by the Congress and the enthusiastic support which it received throughout the United States testified to the whole-hearted respect and admiration which the Government and people of this country have for China.… It is my hope and belief that use which will be made of the funds… will contribute substantially toward facilitating the efforts of the Chinese Government and people to meet the economic and financial burdens which have been thrust upon them by an armed invasion.” Or, as John Morton Blum* pointed out, the president managed to “put into idealistic cadence the high price of Chinese friendship.” Two months later, Finance Minister Kung asked that $200 million be deposited to the Chinese account at the New York Federal Reserve Bank to be drawn on to back the sale of securities to the Chinese public. But according to Blum, Kung and his ministry “made a fiasco of its sales of the dollar-backed securities, which were traded… to the considerable personal advantage of members of the Soong and Kung families.”
In the months before the Cairo Conference, the United States had spent nearly $20 million† a month on military and civilian projects in China, and Morgenthau announced that it could not afford to continue these expenditures at the present rate of exchange. The legal rate of exchange at the time was around 120 yuan to the dollar, but the black market went up as high as 600 to 1. Kung suggested a ratio of 40 to 1. According to Blum, “There was little reasonable about Kung, who held that it was impossible to keep secret any special price he gave the United States,” and a few months later, Morgenthau came to the conclusion that the Nationalist Party could not tolerate the “grafting family at the head of the Government” much longer.
After his return from the meeting at Tehran in December of 1943, Roosevelt had told Morgenthau about Chiang’s request for the loan of $1 billion. Everyone, including Roosevelt himself, agreed that there was no need for China to be given more money, particularly as it still had unused funds in the United States left over from the previous loan of $500 million. A big problem for the United States had surfaced in the army, however, which was behind schedule in constructing airfields in China and needed local currency to pay the Chinese laborers and buy food. At the official rate of exchange, the cost of building an airfield was $40 million, while the cost of a bamboo latrine was figured at $10,000 and up. At this point, Washington received a discouraging report from Chungking: “The United States Government has not committed itself to pay for these… bases at the official exchange rate and China is, therefore, holding up the work on them.… Progress is being made… on only four of the seven bases which China promised to construct.… The war effort in this theater will seriously be impeded by the delay.”
“Nothing could be more conducive to lowering the prestige of China in the United States… than the knowledge that China was not cooperating fully… in the building of these airbases,” Morgenthau cabled the generalissimo. “I firmly believe that I speak in the best interests of China when I recommend that immediate action be taken for the construction of the remaining bases… leaving for future determination the final question of the U.S. currency equivalent.” In answer to this, Chiang sent Roosevelt “a very tough cable” arguing that China needed the $1 billion loan to pay for helping the American forces, and if the Treasury disagreed, the United States would have to pay its own expenses in China at the official rate of exchange. If neither of these alternatives was acceptable, then China “would have… no means at its disposal to meet the requirements of United States forces in China and consequently the American Army in China would have to depend upon itself to execute any and all of its projects.”
But there was increasing resentment in the U.S. government, according to Ambassador Gauss, because Chinese officials had been accumulating “large reserves of U.S. dollars out of our expenditures for the war effort.” According to Morgenthau, “They [the Chinese] are just a bunch of crooks, and I won’t go up [to the Hill] and ask for one nickle.” The secretary of war had the same reaction as the secretary of the Treasury. “China has been riding us pretty hard with the aid of Madame Chiang Kai-shek’s influence over the President,” Stimson noted in his diary. “… I do not fear that the Chinese are going to drop out of the war now that we are so close and I think that their present demands show a good deal of the Chinese bargaining.” As if to substantiate this opinion, Kung told Ambassador Gauss that it would break China’s “economic backbone” to alter the official rate of exchange. The man who had caused China’s runaway inflation now blamed it on the growing expenditures of the U.S. Army and claimed that China had repaid its previous $500 million loan with all the assistance it had given to the Americans in China. The Japanese, he told the U.S. ambassador, had recently made “some very good offers.”
In the end, Lucius Clay, the youngest brigadier general in the U.S. Army, a man known for producing order out of chaos, came up with a solution. It was based on the United States’ placing a stipulated amount of dollars in a China account, out of which the Chinese could then advance yuan to the U.S. Army. The United States would set the rate of exchange for a period of three months at somewhere between 100 and 200 to 1. The amount of yuan paid out would remain secret, but the Chinese would be allowed to publicize the contribution of American dollars in order to stabilize the value of their currency. Accounts would be settled after the war was over.
Construction of the airfields proceeded in typical Chinese fashion. Some 450,000 peasants were brought in from local districts, each district supplying its quota of men, women, and children along with tools and a three-month supply of food. The people walked from their districts to the work sites, bringing what they needed in wheelbarrows. They cleaned off the topsoil, carried it away in wicker baskets on shoulder poles, and flattened what was underneath by pulling enormous rollers back and forth by hand. They then gathered stones from the riverbeds and hauled them to the site to make a cobblestone base. They covered this with layers of soil mixed with mud slurry alternating with layers of rock that had been crushed by the women and girls working with hammers. Over this they put back the top-soil they had taken off. The work was directed by foremen representing each village. In ninety days all the fields—four with 9,000-foot runways—were completed.
“I should like to take this opportunity to congratulate you… upon having faced and passed an important military crisis,” Morgenthau wrote the president in early June 1944.
“General Somervell informs me that the United States installations in China are now practically completed… despite the financial problems which arose to disturb the cordial relations of this government with the Chinese government.”
OVER AND ABOVE specific monetary loans to China were the aid programs started by the United Nations Relief and Rehabilitation Administration (UNRRA) in 1943. Fifty-two countries eventually participated in this effort, contributing 2 percent of their national incomes for a total of nearly $4 billion. These monies were spent on distributing food and medicine, restoring public services, and supplying aid to agricultural and industrial sectors. China was the chief beneficiary of UNRRA,* receiving goods and services valued at over half a billion dollars, of which $470 million came from the United States. But whereas European countries receiving aid yielded control of all supplies until they arrived at the recipient’s door, the Chinese government maintained that no one knew how to operate in China except the Chinese and that the “dignity of the Chinese people” would not allow others to distribute the goods and services. Therefore, UNRRA could operate in China only as an adviser, while the Chinese would assume title to all supplies the moment they were put on a dock anywhere in the country. It was, according to George H. Kerr, a naval officer and later vice consul in Formosa,
a gigantic blackmail scheme.… The American public was not told that Madame Chiang’s family dominated the warehousing and shipping interests of China… and most of the principal warehousing facilities along the docks at every important riverport and anchorage in the country. These were the docks at which the UNRRA relief supplies would be unloaded and the warehouses into which they would be carried. UNRRA would be billed for both storage and transport.
The Last Empress Page 62
