CHAPTER IX

_Quo Vadis?_

The dangers facing the United States and the countries friendly to

us are becoming increasingly serious. We must recognize the fact

that, as individuals, we are as responsible for what is happening

today as were the people living peacefully at one time under Hitler,

Hirohito and Stalin, and whom we heartily condemn for having allowed

disastrous conditions to develop and get beyond their control.

Concerning the forces building up around us and the world today,

we are still far too apathetic and complacent. Much of the

responsibility for this must, of necessity, be placed upon our

leadership. We know that America is the one bastion of freedom left

in the world today, and that continued strength in it reflects the

hope of the world—that is, of the free peoples of the world as well

as those behind iron curtains everywhere who now know the true

meaning of slavery which was sold to them in the guise of “security.”

Remaining strong entails a price. What is it? To me, above all, it

requires faith in God, faith in our fellow man and faith in ourselves

and other individuals of personal integrity. Meanwhile, we must

first keep strong our foundations of initiative, self-reliance and

individual responsibility for our actions with respect to our duties

to our own country.

Unfortunately many people in America have believed the Henry Wallace

theory that it was an “over-abundance” or “excessive production”

which brought on the depression of the Thirties, or that has or

ever could, cause any depression. But this is not true. Economists

tell us today that “misdirected production, plus misdirected and

over-stimulated consumption” aided our previous downfall, and that

it was an abuse of our credit, both at home and abroad. But what

does this mean? Was part of our trouble then, as now, caused by too

many loans to foreign countries for goods bought here, and an abuse

of credit to consumers (you and me) here at home? This did bring on

the boom of the late Twenties and also the terrific maladjustment

which the depression of the Thirties should have corrected, but

which it could not, under the circumstances existing then. The

“over-abundance” or “excess savings” theory—that we had so much that

we could well afford to give it away—is dangerously misleading. It

was invented to justify unwise, if not calculated, giving to foreign

countries with the resultant weakening of our own country to a point

where Social Security and many other “social laws,” including the

limitation of productive effort were adopted as expediencies here at

home. Outright charity to people has, throughout history, tended to

destroy their moral fiber. Proud people will not, moreover, accept

charity and will be determined to work out their own salvation.

Finland is just such an example. Contrast that country’s attitude

with France today, and even with England.

Our country, America, has always been a philanthropic one. No one,

in his right mind, could or ever has, questioned the humanitarian

feelings of the American body politic, but unless our assistance is

selective and well timed, it cannot bring permanent relief, nor can

it accomplish worthwhile objectives.

There are some who say that America has always had a hit-or-miss

approach to most of her problems, and that Lady Luck has been on

our side. This also is not quite so. In the 19th Century, we had

a relatively free competitive society—not perfect, of course, but

the best we’d ever had. The laws which govern human nature under a

government of limited powers, such as we had under the Constitution

before we began changing it, operated then. During that period these

laws governing human nature were patterned on a system of checks and

balances, remarkably similar to those dictated by God to Moses at

Mount Sinai. The hit-or-miss approach became apparent only when we

began to turn to government “to relieve us from our mistakes under

freedom.”

We know that this nation came into being after the victory of

the War of Independence. At this time, a Constitution was drawn

up and ratified by the states. But there is more to it than

that. A confusion in terms always has led to a misunderstanding

in definition. There are some who feel quite strongly that

“democracy” is a principle, and was never intended to become a

form of government. The word “democracy” does not appear once

in our Constitution, the Bill of Rights, or the Declaration of

Independence. In our Salute to the Flag, known by every school boy

and girl in America, it is the “Republic” for which we stand—not a

“Democracy.” Of course the words are used almost interchangeably in

the encyclopedia, and we know that the purest form of democracy

envisions the realistic participation in the government on the part

of all the governed. Town meetings were typical of this in the past,

but as our society became more complex, it was found impractical

to hold these, and as a result, representatives were selected, and

a Republic evolved. It all boiled down to what might be called a

practicing democracy, because people do have the opportunity today

to make their desires known as to how and by whom they will be

governed—that is, however, on condition that they express themselves

at the voting polls.

The framers of our Constitution sought to give each department of

government its due share of power, and to prevent any one of them

from making itself supreme. In his “_Back to the Republic_,” Harry

E. Atwood comments: “Almost daily Russia is spoken of as ‘the new

republic.’ That phrase is as inaccurate as it would be to speak of a

drunken man as a new example of temperance. To speak of Mexico as a

‘republic’ is as inaccurate as it would be to speak of fanaticism as

a new form of reverence. To call Communist China a ‘republic’ is as

far-fetched as it would be to speak of insomnia as a new form of rest

... for at the present time, these are all types of democracy, they

are not republics....”

In the “_Federalist_,” James Madison said of our government: “The

true distinction between these forms (democracy and republic) is that

in a democracy the people meet and exercise the government in person.

In a republic they assemble and administer it by their representative

agents.... The first question that offers itself is whether the

general form and aspect of the government be strictly republican? It

is evident that no other form would be reconcilable with the genius

of the American people.”

We know from the experiences of other nations that perfection in

government never has been found _via_ the route of mob rule. If

we think otherwise we play right into the hands of the Communists

and all others who oppose our government. Unethical procedure

in any established order is brought about little by little. The

theory of lesser concessions is always active. In our trend toward

paternalism in government we must constantly guard against the ogre

of an established bureaucracy, a denying to the individual those

“inalienable rights” of “life, liberty and the pursuit of happiness,”

so definitely vouchsafed to him in the Republican form of government

which was established in this country “under God.” With any

impairment of our system of checks and balances, all power to protect

every man’s God-given rights is rendered impotent.

Everywhere people are expressing the thought that, “Things just

can’t go on like this,” and “What is going to happen?” Is there

then, a sense of impending judgment in the very atmosphere itself?

Let me illustrate the theory of lesser concessions mentioned above.

Back in September, 1932, during a campaign speech at Sioux City,

President Roosevelt accused the Hoover administration of being the

greatest spendthrift in U. S. history; that bureaus and bureaucrats

had been retained at the taxpayers’ expense, and then he proceeded

to out-Hoover Hoover with alphabetical agencies to the point where

cartoonists branded us “alphabetical goofs.”

The Foundation for Economic Education at Irvington-on-Hudson, has

compiled some interesting statistics:

“Expended by all Presidents up to Lincoln $ 1,795,319,694

“Expended by Lincoln (including the

Civil War) 3,252,380,410

“Spent by Johnson thru Taft 19,373,146,217

“Wilson (including World War I) 47,938,260,143

“Warren G. Harding 6,667,235,429

“Calvin Coolidge 18,585,549,115

“Herbert Hoover 15,490,476,636

“Franklin D. Roosevelt (including eight

years of peace) 67,518,746,001

“Total expended by all Presidents from

the beginning to July 1, 1945 $179,630,113,645

“Total spent by Harry S. Truman from

July 1, 1945, to September 1, 1949 $191,081,394,191”

With constantly rising taxes and increased government spending, the

dollar bill soon will be worthless, as will be the paper on which it

is printed. A mathematician figuring hurriedly on his cuff, comments:

“We’ll be back to where the South was in 1865, with its worthless

Confederate money.” Why? Little by little our executive branch has

usurped the functions of Congress, under the flimsy guise of a

so-called “mandate” from us, the people. Unless we become _aware_ of

what we have permitted to happen in our midst, and elect people to

Congress who will make the government their servant and not their

master, we will soon be where the Germans were under Hitler, the

Italians under Mussolini, and where the Russians are today, under

Stalin—and the British to a lesser degree, under their socialist

regime.

For the first time in global history, the forces are drawn between

two distinct ways of life—Christianity and Barbarism. Through the

cobwebs of confusion and the roadblocks of distortion we now know

that our one enemy is Stalin and his particular brand of thuggery.

Modern, civilized peoples throughout the universe, including those

behind the iron curtain, have but one common enemy—Communism. If we

do indeed believe what we profess, as Christians, to believe, “Man

cannot serve God and Mammon,” how can we expect a United Nations to

succeed in anything so long as the head of the Communist Governments,

the world over, is represented in its midst?

All doubt and uncertainty has been dispelled as to who, where and

how our enemy operates. In China we have seen the Communist system

operate to the complete disintegration of human rights. Here in

the United States we do not know precisely how many Communists are

among us, or exactly where and how they connive. We are told on

good authority (J. Edgar Hoover) that they are growing in strength

and numbers as well as going underground, but we are unable to put

our fingers on enough of them. Communism operates and succeeds by

deception here as in the early phases of China’s recent history.

It bores from within. Frequently its voice is soft and seductive,

like the voice of Delilah, and equally treacherous. As we have seen

though, once it has the situation in hand, it does not hesitate to

use brute force.

In contrast, what we call Democracy makes its mistakes openly for

all to see and endeavor to correct. Democracy, to us, means complete

personal liberty, the right to live, work and play how, when and

where one chooses, in open competition, and is maintained by a

process of checks and balances or trial and error. We who live in

this atmosphere of free enterprise, take these things for granted,

while treason catches us off guard. Until we recognize this, we will

continue to be at the mercy of organized political traitors both

foreign and domestic. We can no longer afford to assume a casual

attitude, even though history reveals that the Communism of Stalin,

like other world shaking movements in the past, if given sufficient

time, will fall of its own weight.

“Well,” you may ask: “If Communism is going to fall anyway, (or be

pushed), why bother to do anything about it now?” The answer is

simple. We must do something about it now because generations, even

centuries, may elapse before it collapses without help other than

human intervention. In the meantime, what will happen to us and

to our children? Do we realize the long period of humiliation and

degradation, with increasing controls by the Communists, that this

means?

War, a global holocaust, in the not too distant future seems a much

more likely turn of events. We know that Russia is expanding and

improving her military force, including long range submarines and

airplanes as well as ultra-destructive weapons. She has more planes

than the United States and other democracies put together. We are

told that Russia is making A bombs and has already had at least one

atomic explosion behind the Iron Curtain. The H bomb is a logical

sequel. She is capable, we understand, of delivering a surprise

atomic attack against any part of the United States, while we have no

sure defense against such an attack. Her submarine fleet rapidly is

being patterned after Germany’s and this, with her other combat ships

will make her the third greatest Naval Power. She has an army of two

and one-half million uniformed troops and thousands of undercover

agents to act as spies or scouts. We know that she is on a complete

war footing, just as England was during the latter days of World War

II and as we made an attempt to be.

This is grave food for thought. If our most responsible leaders are

assured that Russia is intending to attack us within a short time,

then should we not prepare and attack first, trying with the initial

blow, so to paralyze the enemy that she will be unable to retaliate.

This would be a terrible decision to have to make, and we may not

have the chance, but we must give it serious thought.

As long as Russia feels that she is winning the cold war, however,

she would be a fool to start a hot one she might lose. I do not

believe that she would even let herself be goaded into it. When

she is ready to strike, she will strike, of that we may be sure.

It may be possible that the men in the Kremlin are hesitant about

upsetting their present position, fearing counter-revolution at home

and abroad. Perhaps the mighty armada is for propaganda purposes

and to hold the Red Empire together. If this is so, we must never

relax our own efforts behind the Iron Curtains everywhere in order to

enlist the support of the unhappy 90 per cent of the enslaved people,

without whose help we cannot hope to defeat the Soviet Union. Our

most powerful secret weapon is not the A or the H bomb, but this same

overwhelming majority of victims who fought and won a revolution only

to find that they had been sold down the river at the moment of their

victory.

These terrorized victims in every country are our most powerful

potential allies, and we must do all in our power to make them

understand that we are in sympathy with them—with their hopes and

prayers for liberation—and that the only thing we reject is Communist

despotism. All peoples who are denied the basic freedoms of speech,

press, religion, assembly—immediately become enormous whispering

galleries. There is greater “lure” in suppressed facts and ideas than

there is in political propaganda. Even the threat of death will not

keep people from reading forbidden material when they are hungry for

news from those who may be sympathetic to their plight. But all this

would take well-trained counter espionage, and it would cost money.

It would make sense to me if, first of all, we saw to it that our

homeland was protected—but not by an armed camp or maintained by a

disproportionate amount of military might that would hamstring our

economy or deprive us of too many of our liberties. Our military

forces should be trained and equipped to provide a reasonable degree

of military security for the United States. Then, bring about this

same type of coordination in Canada and the Latin American countries,

thereby creating a modicum of safety throughout the Western

Hemisphere.

In doing the above, we’d be licked before we started unless we

made assurance doubly sure that we, the people, knew beyond all

possibility of doubt, what was going on and why. Once we are

possessed of complete understanding, and support the purpose for

which we may be called upon to make the greatest sacrifices of our

lives—even including our lives if need be—our objectives will thus

be constantly in view. We know this would require a rebirth or a

resurgence of courageous leadership, honesty and integrity—and an old

fashioned “patriotism” too long lacking in our leaders. But are not

these qualities still inherent within us? They were, certainly, until

clever and sinister propaganda infiltrated our very marrow.

To go a step further. We know that we cannot stop with our own

Western Hemisphere. Our thinking and our responsibility is now

global. There’s “no hidin’ place” anywhere. Therefore we must improve

our position, militarily, economically and psychologically throughout

Europe and Asia by helping nations and peoples there to help

themselves to keep their few remaining freedoms. Of course we have to

protect certain sea and air routes to and from our best sources of

raw materials.

To me, it is sheer nonsense to give, indiscriminately, whether it

be money or military aid, without stipulating that we get something

for it. To do otherwise is contrary to individual human nature, and

yet as a nation, we have given billions in money and material—not

to mention thousands of lives in Korea—without demanding anything

in return. To keep on throwing good money, things and men into the

hopper will bring no permanent relief, nor will it accomplish any

outright objective.

We need oil from the Middle East, uranium from the Belgian Congo,

or anywhere else we can get it, and we need tin and rubber from

southeast Asia, plus other important things. But if we are cut

off and cannot get them, then we can use our almost unprecedented

ingenuity in the department of synthetics. Germany demonstrated what

can be accomplished with ersatz.

I agree heartily with Generals MacArthur and Wedemeyer, and others,

who have not expressed their views openly, or who have so indicated

and been severely reprimanded for it, that we must have areas of

operation such as the British Isles, Formosa, the African coast,

Philippines, Japan, the Scandinavian Peninsula, Denmark, Iberian

Peninsula and Saudi Arabia. These could be held or taken, if need be,

with a minimum of manpower, for we know our weapons are far superior

to those of our enemy, both in mechanics and quality, while their

manpower is far in excess of anything that we can muster. From these

so-called “islands” it would be possible for the allied forces to

rain ultimate death and destruction on the enemy, and without them we

are powerless to strike except from long range.

To those who, like General Marshall, insist that we must have

an enormous land army, or armies, to go in and occupy conquered

territory so as to be able to control the people, I give this answer,

or make this suggestion. Why not establish colonies of people of

all nationalities, who would be charged with responsibilities of

teaching people how to produce or earn a living and to study forms

of government suitable for creating small civil communities that

could be transplanted into any conquered territory after organized

resistance had been broken by the military? This would be entirely

within the realm of possibility, and it would definitely conserve our

most precious potential—manpower.

It has been said that: “Every despotism has an especially known

and hostile instinct for whatever keeps up human dignity and

independence. Materialism is the sister doctrine of every tyranny,

whether of the one or of the many. To crush what is spiritual, moral,

human in a man by specializing him; to form more wheels of the great

social machine, instead of perfecting individuals ... is the dominant

drift of our epoch.... The test of every religious, political or

educational system, is what it does to man. If it injures his

intelligence, it is bad. If it injures his character, it is vicious.

If it injures his conscience, it is criminal.”

Expediency is the voice of danger. We must do away with the false

idea that immediate and temporary gain is a substitute for moral

principle. We can recognize, as did Thomas Jefferson, that:

“Whenever a man casts a longing eye on office, a rottenness begins

in his conduct.” We must become aware that slavery develops in

direct proportion as government control becomes a substitute for

self-control and responsibility. Search for the solution at the

spiritual instead of the material level.

Aristotle, the philosopher, has told us: “There are a million ways

to be wrong, but only one way to be right.” A principle is a very

tangible “element” that we treasure as an active force of life or

nature or—God. If we know, in our hearts, that a thing is _right_,

even though the results of such thought or action may not become

evident within the span of our own lifetime, and we go ahead and

sacrifice the principle for expediency, ours is a crime far greater

than that which was committed by the hand that “all the perfumes of

Arabia could not sweeten!”

This is the day of the individual. Only you and I, as independent

units, can right the wrongs that have beset our nation and the world.

This is encouraging, isn’t it? Dean Russell tells us: “Fortunately

for the cause of freedom, it is only as an individual that you or I

can do anything at all. This is the voluntary way of accomplishing

a desired objective. It is the only method that is in accord with

freedom.” The opposite side of the coin is that people who have

agreed to accept a bad idea band themselves together to force—by

vote or otherwise—their ideas upon other people. It may all be

perfectly legal, but it is dishonest. We are at perfect liberty to

vote ourselves into serfdom. But it is very dangerous to believe that

freedom automatically is safe because the individual vote has become

so popular in America, where the “democratic” way prevails. When

we vote money into our pockets, old age pensions, farm subsidies,

price parities and a million other “props” to lean on, we are voting

paralysis to our brains and slavery to our physical beings.

It is a dangerous thing to do, but I would like to make one

prediction. Each day we live we draw nearer to a climax in human

history. The immediate future is dark. Bitter conflicts at home

and abroad are on the horizon. I believe that the armies of all

nations will, during the next two years, be drawn inevitably toward

the countries in and around the Great Pyramid of Egypt. The crisis

precipitated in Iran over the nationalization of her oil industry,

makes this highly probable, in my opinion. Let me substantiate

further.

Toward the end of 1949, England received warning from Iran on this

impending move, for she believed that only a violent act on her part

could meet this extreme emergency. London correspondent Kenneth de

Courcy, cabling to _Intelligence Digest_ on April 1, 1951, stated:

“More than a year ago, a prominent Persian statesman gave Britain

his final confidential warning. He said that only drastic action

could save the situation. A Persian statesman flew to America and

remained there for several days in an effort to lay all the facts

before Mr. Truman. Attempt after attempt was made to arrange a

meeting. The envoy, although carrying high credentials, was refused

an interview. The Persian statesman had been one of his country’s

most important and successful Prime Ministers. His prestige and

influence were considerable....”

De Courcy concluded:

“The Persian situation has now been allowed to deteriorate to such

an extent that no politician there dares oppose the popular movement

which has been whipped up by the extremely clever work of Soviet

agents. Some of the highest officials, moreover, are on Russia’s

payroll, and this has been allowed to happen right under our noses.”

On Saturday morning, June 2, 1951, the following headline appeared in

_The Los Angeles Times_:

“TRUMAN INTERVENES IN IRAN OIL ROW.” The Associated Press dispatch

datelined Tehran, June 1, 1951, continued in part:

“President Truman took a hand personally today in the

British-Iranian oil dispute by sending letters to Premier Mohammed

Mossadegh and Prime Minister Attlee reportedly urging moderation on

both sides. The unusual move by the President indicated the extreme

seriousness with which the U. S. government views the oil crisis.”

A member of Iran’s Senate who declined to reveal his name, was quoted

by _The Los Angeles Times_ article as saying:

“Why should Truman belittle himself by sending such a message?”

In my humble opinion, therefore, World War III began on June 25,

1950. Our entry into it was two days later. There will be no peace,

of any importance, as I see it, until 1953 or thereabouts. I say

this with a heavy heart. This war that is so pointless and was so

unnecessary, had its birth in our Administration’s betrayal of China.

It will have its death on a bloody battlefield in Palestine.

What a heritage we have, on the one hand, and what means for

destruction on the other! How far we are today from Chaos, no man

knows. It may be far later than we think. Until the time of greater

enlightenment we know that a strong and forceful public opinion can

be the result only of strong and forceful individual opinions. We

are not, as yet, God-like creatures, but by making a supreme and

prayerful effort we might become more nearly creatures like God. One

small voice crying in the wilderness can be doubled and quadrupled

into millions until, finally, it becomes the deafening roar of all

freedom-loving peoples the world over.

“The journey of a thousand miles,” the Chinese say, “begins with

just one step.” If each of us will take that one step now, toward a

better understanding of how to protect our country from its enemies,

both within and without, America will remain the light to which the

whole world turns in the blackness of its oppression. And let us each

remember that, as individuals, “it is better to light one candle,

than to curse the darkness.”

In the words of our own beloved National Anthem:

_“Oh! thus be it ever, when free men shall stand

Between their loved homes and the war’s desolation!_

_Blest with victory and peace, may the Heaven rescued land

Praise the Power that hath made and preserved us a nation._

_Then conquer we must, for our cause it is just,

And this be our motto: ‘In God is our trust.’_

_And the Star-Spangled Banner in triumph_ SHALL _wave

O’er the land of the Free and the home of the Brave!”_

EPILOGUE

Deep in the Siberian mine,

Keep your patience proud;

The bitter toil shall not be lost,

The rebel thought unbowed.

The sister of misfortune, Hope,

In the under-darkness dumb

Speaks joyful courage to your heart:

The day desired will come...

The heavy-hanging chains will fall,

The walls will crumble at a word;

And Freedom greet you in the light,

And brothers give you back the sword.

ALEXANDER SERGEYEVICH PUSHKIN

_Appendix_

THE WEDEMEYER REPORT ON CHINA AND KOREA

_Submitted to_

THE PRESIDENT OF THE UNITED STATES

_September 9, 1947_

_by_

ALBERT C. WEDEMEYER

_Lieutenant General, United States Army_

Paragraphs which have been deleted for security reasons

are indicated by asterisks.

[Illustration: Decoration]

PART I—GENERAL STATEMENT

China’s history is replete with examples of encroachment, arbitrary

action, special privilege, exploitation, and usurpation of territory

on the part of foreign powers. Continued foreign infiltration,

penetration or efforts to obtain spheres of influence in China,

including Manchuria and Taiwan (Formosa), could be interpreted only

as a direct infringement and violation of China’s sovereignty and a

contravention of the principles of the Charter of the United Nations.

It is mandatory that the United States and those other nations

subscribing to the principles of the Charter of the United Nations

should combine their efforts to insure the unimpeded march of all

peoples toward goals that recognize the dignity of man and his civil

rights and, further, definitely provide the opportunity to express

freely how and by whom they will be governed.

Those goals and the lofty aims of freedom-loving peoples are

jeopardized today by forces as sinister as those that operated in

Europe and Asia during the ten years leading to World War II. The

pattern is familiar—employment of subversive agents; infiltration

tactics; incitement of disorder and chaos to disrupt normal economy

and thereby to undermine popular confidence in government and

leaders; seizure of authority without reference to the will of

the people—all the techniques skillfully designed and ruthlessly

implemented in order to create favorable conditions for the

imposition of totalitarian ideologies. This pattern is present in

the Far East, particularly in the areas contiguous to Siberia.

If the United Nations is to have real effect in establishing economic

stability and in maintaining world peace, these developments merit

high priority on the United Nations’ agenda for study and action.

Events of the past two years demonstrate the futility of appeasement

based on the hope that the strongly consolidated forces of the Soviet

Union will adopt either a conciliatory or a cooperative attitude,

except as tactical expedients. Soviet practice in the countries

already occupied or dominated completes the mosaic of aggressive

expansion through ruthless secret police methods and through an

increasing political and economic enslavement of peoples. Soviet

literature, confirmed repeatedly by Communist leaders, reveals a

definite plan for expansion far exceeding that of Nazism in its

ambitious scope and dangerous implications. Therefore in attempting

a solution to the problem presented in the Far East, as well as in

other troubled areas of the world, every possible opportunity must be

used to seize the initiative in order to create and maintain bulwarks

of freedom.

Notwithstanding all the corruption and incompetence that one notes

in China, it is a certainty that the bulk of the people are not

disposed to a Communist political and economic structure. Some

have become affiliated with Communism in indignant protest against

oppressive police measures, corrupt practices, and maladministration

of National Government officials. Some have lost all hope for China

under existing leadership and turn to the Communists in despair. Some

accept a new leadership by mere inertia.

Indirectly, the United States facilitated the Soviet program in the

Far East by agreeing at the Yalta Conference to Russian re-entry into

Manchuria, and later by withholding aid from the National Government.

There were justifiable reasons for these policies. In the one case we

were concentrating maximum Allied strength against the Japanese in

order to accelerate crushing defeat and thus save Allied lives. In

the other, we were withholding unqualified support from a government

within which corruption and incompetence were so prevalent that it

was losing the support of its own people. Further, the United States

had not yet realized that the Soviet Union would fail to cooperate in

the accomplishment of world-wide plans for postwar rehabilitation.

Our own participation in those plans has already afforded assistance

to other nations and peoples, friends and former foes alike, to a

degree unparalleled in humanitarian history.

Gradually it has become apparent that the World War II objectives for

which we and others made tremendous sacrifices are not being fully

attained, and that there remains in the world a force presenting even

greater dangers to world peace than did the Nazi militarists and the

Japanese jingoists. Consequently the United States made the decision

in the Spring of 1947 to assist Greece and Turkey with a view to

protecting their sovereignties, which were threatened by the direct

or inspired activities of the Soviet Union. Charges of unilateral

action and circumvention of the United Nations were made by members

of that organization. In the light of its purposes and principles

such criticism seemed plausible. The United States promptly declared

its intention of referring the matter to the United Nations when that

organization would be ready to assume responsibility.

It follows that the United Nations should be informed of contemplated

action with regard to China. If the recommendations of this report

are approved, the United States should suggest to China that

she inform the United Nations officially of her request to the

United States for material assistance and advisory aid in order to

facilitate China’s postwar rehabilitation and economic recovery.

This will demonstrate that the United Nations is not being

circumvented, and that the United States is not infringing upon

China’s sovereignty, but contrary-wise is cooperating constructively

in the interest of peace and stability in the Far East, concomitantly

in the world.

The situation in Manchuria has deteriorated to such a degree that

prompt action is necessary to prevent that area from becoming a

Soviet satellite. The Chinese Communists may soon gain military

control of Manchuria and announce the establishment of a government.

Outer Mongolia, already a Soviet satellite, may then recognize

Manchuria and conclude a “mutual support agreement” with a _de

facto_ Manchurian government of the Chinese Communists. In that

event, the Soviet Union might accomplish a mutual support agreement

with Communist-dominated Manchuria, because of her current similar

agreement with Outer Mongolia. This would create a difficult

situation for China, the United States and the United Nations.

Ultimately it could lead to a Communist-dominated China.

The United Nations might take immediate action to bring about

cessation of hostilities in Manchuria as a prelude to the

establishment of a Guardianship or Trusteeship. The Guardianship

might consist of China, Soviet Russia, the United States, Great

Britain and France. This should be attempted promptly and could

be initiated only by China. Should one of the nations refuse to

participate in Manchurian Guardianship, China might then request the

General Assembly of the United Nations to establish a Trusteeship,

under the provisions of the Charter.

Initially China might interpret Guardianship or Trusteeship as an

infringement upon her sovereignty. But the urgency of the matter

should encourage a realistic view of the situation. If these steps

are not taken by China, Manchuria may be drawn into the Soviet orbit,

despite United States aid, and lost, perhaps permanently, to China.

The economic deterioration and the incompetence and corruption in the

political and military organizations in China should be considered

against an all-inclusive background lest there be disproportionate

emphasis upon defects. Comity requires that cognizance be taken of

the following.

Unlike other Powers since VJ-Day, China has never been free to

devote full attention to internal problems that were greatly

confounded by eight years of war. The current civil war has imposed

an overwhelming financial and economic burden at a time when

resources and energies have been dissipated and when, in any event,

they would have been strained to the utmost to meet the problems of

recovery.

The National Government has consistently, since 1927, opposed

Communism. Today the same political leader and same civil and

military officials are determined to prevent their country from

becoming a Communist-dominated State or Soviet satellite.

Although the Japanese offered increasingly favorable surrender terms

during the course of the war, China elected to remain steadfast with

her Allies. If China had accepted surrender terms, approximately a

million Japanese would have been released for employment against

American forces in the Pacific.

I was assured by the Generalissimo that China would support to the

limit of her ability an American program for the stabilization of

the Far East. He stated categorically that, regardless of moral

encouragement or material aid received from the United States, he

is determined to oppose Communism and to create a democratic form

of government in consonance with Doctor Sun Yat-sen’s principles.

He stated further that he plans to make sweeping reforms in the

government including the removal of incompetent and corrupt

officials. He stated that some progress has been made along these

lines but, with spiraling inflation, economic distress, and civil

war, it has been difficult to accomplish fully these objectives.

He emphasized that, when the Communist problem is solved, he could

drastically reduce the Army and concentrate upon political and

economic reforms. I retain the conviction that the Generalissimo is

sincere in his desire to attain these objectives. I am not certain

that he has today sufficient determination to do so if this requires

absolute overruling of the political and military cliques surrounding

him. Yet, if realistic United States aid is to prove effective in

stabilizing the situation in China and in coping with the dangerous

expansion of Communism, that determination must be established.

Adoption by the United States of a policy motivated solely toward

stopping the expansion of Communism without regard to the continued

existence of an unpopular repressive government would render any

aid ineffective. Further, United States prestige in the Far East

would suffer heavily, and wavering elements might turn away from the

existing government to Communism.

In China and Korea, the political, economic, and psychological

problems are inextricably mingled. All of them are complex and

are becoming increasingly difficult of solution. Each has been

studied assiduously in compliance with your directive. Each will be

discussed in the course of this report. However, it is recognized

that a continued global appraisal is mandatory in order to preclude

disproportionate or untimely assistance to any specific area.

The following three postulates of United States foreign policy are

pertinent to indicate the background of my investigations, analyses,

and report:

The United States will continue support of the United Nations in the

attainment of its lofty aims, accepting the possible development

that the Soviet Union or other nations may not actively participate.

Moral support will be given to nations and peoples that have

established political and economic structures compatible with our

own, or that give convincing evidence of their desire to do so.

Material aid may be given to those same nations and peoples in

order to accelerate postwar rehabilitation and to develop economic

stability, provided:

That such aid shall be used for the purposes intended.

That there is continuing evidence that they are taking effective

steps to help themselves, or are firmly committed to do so.

That such aid shall not jeopardize American economy and shall

conform to an integrated program that involves other international

commitments and contributes to the attainment of political,

economic, and psychological objectives of the United States.

PART II—CHINA

POLITICAL

Although the Chinese people are unanimous in their desire for

peace at almost any cost, there seems to be no possibility of

its realization under existing circumstances. On one side is the

Kuomingtang, whose reactionary leadership, repression and corruption

have caused a loss of popular faith in the government. On the other

side, bound ideologically to the Soviet Union, are the Chinese

Communists, whose eventual aim is admittedly a Communist state in

China. Some reports indicate that Communist measures of land reform

have gained for them the support of the majority of peasants in

areas under their control, while others indicate that their ruthless

tactics of land distribution and terrorism have alienated the

majority of such peasants. They have, however, successfully organized

many rural areas against the National Government. Moderate groups

are caught between Kuomintang misrule and repression and ruthless

Communist totalitarianism. Minority parties lack dynamic leadership

and sizable following. Neither the moderates, many of whom are in

the Kuomingtang, nor the minority parties are able to make their

influence felt because of National Government repression. Existing

provincial opposition leading to possible separatist movements would

probably crystallize only if collapse of the government were imminent.

Soviet actions, contrary to the letter and spirit of the Sino-Soviet

treaty of 1945 and its related documents, have strengthened the

Chinese Communist position in Manchuria, with political, economic

and military repercussions on the National Government’s position

both in Manchuria and in China proper, and have made more difficult

peace and stability in China. The present trend points toward a

gradual disintegration of the National Government’s control, with the

ultimate possibility of a Communist-dominated China.

Steps taken by the Chinese Government toward governmental

reorganization in mid-April, 1947, aroused hopes of improvement

in the political situation. However, the reorganization resulted

in little change. Reactionary influences continue to mold

important policies even though the Generalissimo remains the

principal determinative force in the government. Since the April

reorganization, the most significant change has been the appointment

of General Chen Cheng to head the civil and militant administration

in Manchuria. Projected steps include elections in the Fall for

the formation of a constitutional government, but, under present

conditions, they are not expected to result in a government more

representative than the present regime.

ECONOMIC

Under the impact of civil strife and inflation, the Chinese

economy is disintegrating. The most probable outcome of present

trends would be, not sudden collapse, but a continued and creeping

paralysis and consequent decline in the authority and power of the

National Government. The past ten years of war have caused serious

deterioration of transportation and communication facilities, mines,

utilities and industries. Notwithstanding some commendable efforts

and large amounts of economic aid; their overall capabilities

are scarcely half those of the prewar period. With disruption of

transportation facilities and the loss of much of North China and

Manchuria, important resources of those rich areas are no longer

available for the rehabilitation and support of China’s economy.

Inflation in China has been diffused slowly through an enormous

population without causing the immediate dislocation which would

have occurred in a highly industrialized economy. The rural people,

80 per cent of the total Chinese population of 450 millions, barter

foodstuffs for local handicraft products without suffering a drastic

cut in living standards. Thus, local economies exist in many parts of

China, largely insulated from the disruption of urban industry. Some

local economies are under the control of Communists, and some are

loosely under the control of provincial authorities.

The principal cause of the hyper-inflation is the long-continued

deficit in the national budget. Present revenue collections, plus

the profits of nationalized enterprises, cover only one-third of

governmental expenditures, which are approximately 70 per cent

military, and an increasing proportion of the budget is financed

by the issuance of new currency. In the first six months of 1947

note-issue was tripled but rice prices increased seven-fold. Thus

prices and governmental expenditures spiral upwards, with price

increases occurring faster than new currency can be printed. With

further price increases, budget revisions will undoubtedly be

necessary. The most urgent economic need of Nationalist China is a

reduction of the military budget.

China’s external official assets amounted to $327 million (US) on

July 30, 1947. Privately-held foreign exchange assets are at least

$600 million and may total $1500 million, but no serious attempt has

been made to mobilize these private resources for rehabilitation

purposes. Private Chinese assets located in China include probably

$200 million in gold, and about $75 million in US currency notes.

Although China has not exhausted her foreign official assets, and

probably will not do so at the present rates of imports and exports

until early 1949, the continuing deficit in her external balance of

payments is a serious problem.

Disparity between the prices of export goods in China and in world

markets at unrealistic official exchange rates has greatly penalized

exports, as have disproportionate increases in wages and other costs.

Despite rigorous trade and exchange controls, imports have greatly

exceeded exports, and there consistently has been a heavy adverse

trade balance.

China’s food harvests this year are expected to be significantly

larger than last year’s fairly good returns. This moderately

encouraging situation with regard to crops is among the few favorable

factors which can be found in China’s current economic situation.

Under inflationary conditions, long-term investment is unattractive

for both Chinese and foreign capital. Private Chinese funds tends to

go into short-term advances, hoarding of commodities, and capital

flight The entire psychology is speculative and inflationary,

preventing ordinary business planning and handicapping industrial

recovery.

Foreign business enterprises in China are adversely affected by

the inefficient and corrupt administration of exchange and import

controls, discriminatory application of tax laws, the increasing

role of government trading agencies and the trend towards state

ownership of industries. The Chinese Government has taken some steps

toward improvement but generally has been apathetic in its efforts.

Between 1944 and 1947, the anti-inflationary measure on which the

Chinese Government placed most reliance was the public sale of gold

borrowed from the United States. The intention was to absorb paper

currency, and thus reduce the effective demand for goods. Under the

circumstance of continued large deficits, however, the only effect of

the gold sales program was to retard slightly the price inflation and

dissipate dollar assets.

A program to stabilize the economic situation was undertaken in

February, 1947. The measures included a wage freeze, a system of

limited rationing to essential workers in a few cities, and the sale

of government bonds. The effect of this program has been slight, and

the wage freeze has been abandoned. In August, 1947, the unrealistic

official rate of exchange was replaced, for proceeds of exports

and remittances, by a free market in foreign exchange. This step

is expected to stimulate exports, but it is too early to determine

whether it will be effective.

The issuance of a new silver currency has been proposed as a future

measure to combat inflation. If the government continued to finance

budgetary deficits by unbacked note issue, the silver would probably

go into hoards and the price inflation would continue. The effect

would be no more than that of the gold sales in 1944-1947, namely,

a slight and temporary retardation of the inflationary spiral. The

proposal could be carried out, moreover, only through a loan from the

United States of at least $200 million in silver.

In the construction field, China has prepared plans for

reconstruction of communications, mines and industries. Some

progress has been made in implementing them, notably in the partial

rehabilitation of certain railroads and in the textile industry.

Constructive results have been handicapped by a lack of funds,

equipment and experienced management, supervisory and technical

personnel.

On August 1, 1947, the State Council approved a “Plan for Economic

Reform.” This appears to be an omnibus of plans covering all phases

of Chinese economic reconstruction but its effectiveness cannot yet

be determined.

SOCIAL—CULTURAL

Public education has been one of the chief victims of war and social

and economic disruption. Schoolhouses, textbooks and other equipment

have been destroyed and the cost of replacing my considerable portion

cannot now be met. Teachers, like other public servants, have seen

the purchasing power of a month’s salary shrink to the market value

of a few days’ rice ration. This applies to the entire educational

system, from primary schools, which provide a medium to combat the

nation’s grievous illiteracy, to universities, from which must come

the nation’s professional men, technicians and administrators. The

universities have suffered in an additional and no less serious

respect—traditional academic freedom. Students participating in

protest demonstrations have been severely and at times brutally

punished by National Government agents without pretense of trial or

public evidence of the sedition charged. Faculty members have often

been dismissed or refused employment with no evidence of professional

unfitness, patently because they were politically objectionable to

government officials. Somewhat similarly, periodicals have been

closed down “for reasons of military security” without stated

charges, and permitted to reopen only after new managements have

been imposed. Resumption of educational and other public welfare

activities on anything like the desired scale can be accomplished

only by restraint of officialdom’s abuses, and when the nation’s

economy is stabilized sufficiently to defray the cost of such vital

activities.

MILITARY

The overall military position of the National Government has

deteriorated in the past several months and the current military

situation favors Communist forces. The Generalissimo has never

wavered in his contention that he is fighting for national

independence against forces of an armed rebellion nor has he been

completely convinced that the Communist problem can be resolved

except by force of arms. Although the Nationalist Army has a

preponderance of force, the tactical initiative rests with the

Communists. Their hit-and-run tactics, adapted to their mission of

destruction at points or in areas of their own selection, give them

a decided advantage over Nationalists, who must defend many critical

areas including connecting lines of communication. Obviously large

numbers of Nationalist troops involved in such defensive roles are

immobilized whereas Communist tactics permit almost complete freedom

of action. The Nationalists’ position is precarious in Manchuria,

where they occupy only a slender finger of territory. Their control

is strongly disputed in Shantung and Hopei Provinces where the

Communists make frequent dislocating attacks against isolated

garrisons.

In order to improve materially the current military situation, the

Nationalist forces must first stabilize the fronts and then regain

the initiative. Further, since the government is supporting the civil

war with approximately seventy per cent of its national budget, it

is evident that steps taken to alleviate the situation must point

toward an improvement in the effectiveness of the armed forces with

a concomitant program of social, political and economic reforms,

including a decrease in the size of the military establishment.

Whereas some rather ineffective steps have been taken to reorganize

and revitalize the command structure, and more sweeping reforms are

projected, the effectiveness of the Nationalist Army requires a sound

program of equipment and improved logistical support. The present

industrial potential of China is inadequate to support military

forces effectively. Chinese forces under present conditions cannot

cope successfully with internal strife or fulfill China’s obligations

as a member of the family of nations. Hence outside aid, in the form

of munitions (most urgently ammunition) and technical assistance,

is essential before any plan of operations can be undertaken with a

reasonable prospect of success. Military advice is now available to

the Nationalists on a General Staff level through American military

advisory groups. The Generalissimo expressed to me repeatedly a

strong desire to have this advice and supervision extended in scope

to include field forces, training centers and particularly logistical

agencies.

Extension of military aid by the United States to the National

Government might possibly be followed by similar aid from the Soviet

Union to the Chinese Communists, either openly or covertly—the latter

course seems more likely. An arena of conflicting ideologies might

be created as in 1935 in Spain. There is always the possibility that

such developments in this area, as in Europe and the Middle East,

might precipitate a third world war.

PART III—KOREA

POLITICAL

The major political problem in Korea is that of carrying out

the Moscow Agreement of December, 1945, for the formation of a

Provisional Korean Government to be followed by a Four-Power

Trusteeship over Korea. The United States-Soviet Joint Commission,

established in accordance with that Agreement, reached a deadlock

in 1946 in the effort to implement the Moscow Agreement due to

Soviet opposition to consultations with the Commission by all Korean

democratic parties and social organizations, as provided for in

that Agreement. Soviet motives have been to eliminate the extreme

rightist groups in the United States zone from consultations and

subsequently from participation in the new government thus ensuring

a Communist-dominated government in Korea. Soviet objections to

such consultations have been based on the rightist groups’ openly

expressed opposition to trusteeship, while the United States has

taken the position that to disqualify these groups would deprive a

large section of the Korean people of an opportunity to express views

regarding their government.

A resumption of the Joint Commission meetings in May, 1947, following

an exchange of notes between Secretary Marshall and Foreign Minister

Molotov, resulted in a further deadlock on the same issue, although

these notes had established a formula which would have permitted

participation in consultation by the rightist groups in question.

After the Soviet Government failed to reply to Secretary Marshall’s

note of August 12, requesting the submission by the Commission of

a joint status report or separate reports by each Delegation, the

United States Delegation, on August 20, transmitted a unilateral

report to Washington. An American proposal then made to China, the

United Kingdom, and the Soviet Union for a Four-Power Conference to

discuss Korea has been agreed to by China and the United Kingdom, but

has been rejected by the Soviet Union.

Internally, the Korean problem has been complicated by the Soviet

establishment of a Communist regime in North Korea and by the

machinations in South Korea of Communist groups, openly hostile to

the United States.

* * * * *

The latter, in accordance with their directives, are endeavoring

to turn over to Koreans as rapidly as possible full administrative

responsibility in governmental departments. In consequence with this

plan they have organized an interim Korean legislative assembly and

in general, are striving to carry out a policy of “Koreanization” of

government in South Korea.

ECONOMIC

South Korea, basically an agricultural area, does not have the

overall economic resources to sustain its economy without external

assistance. The soil depleted, and imports of food as well as

fertilizer are required. The latter has normally come from North

Korea, as have most of the electric power, timber, anthracite, and

other basic products.

The economic dependence of South Korea upon North Korea, and of Korea

as a whole, in prewar years, upon trade with Japan and Manchuria,

cannot be too strongly emphasized. Division of the country at the 38°

North parallel and prevention of all except smuggling trade between

North and South Korea have reduced the Korean economy to its lowest

level in many years. Prospects for developing sizeable exports are

slight. Food exports cannot be anticipated on any scale for several

years, and then only with increased use of artificial fertilizer.

South Korea’s few manufacturing industries, which have been operating

at possibly 20 per cent of prewar production, are now reducing their

output or closing down. In part this is a natural result of ten years

of deferred maintenance and war-time abuse, but lack of raw materials

and essential repair parts, and a gross deficiency of competent

management and technical personnel are the principal factors.

A runaway inflation has not yet occurred in South Korea, because

the Military Government has restrained the issuance of currency by

keeping governmental expenditures and local occupation costs at

reasonable levels; because cannibalization and the use of Japanese

stocks have kept some industries going; and because the forcible

collection of rice at harvest time has brought in sufficient food

to maintain—with imports provided by the United States—an adequate

official ration in the cities. Highly inflationary factors such as

the exhaustion of raw material stocks, cumulative breakdowns in

public services and transportation, and the cutting of power supply

from the North might occur simultaneously. The South Korean economic

outlook is, therefore, most grave.

A five-year rehabilitation program starting in July, 1948, and

requiring United States financing at a cost of $647 million, has

been proposed by the Military Government. A review of preliminary

estimates indicates that the proposed annual rehabilitation cost

would be substantially greater than the relief program of $137

million which was tentatively approved for fiscal 1948, but later

reduced to $92.7 million. These preliminary estimates of costs and

the merits of individual projects need careful review. It is not

considered feasible to make South Korea self-sustaining. If the

United States elects to remain in South Korea, support of that area

should be on a relief basis.

SOCIAL—CULTURAL

Since the Japanese were expelled, the Korean people have vehemently

and unceasingly pressed for restoration of their ancient culture.

There is particular zeal for public education. Individual and

collective efforts to reduce illiteracy have produced results meeting

the praise of American Military Government officials. There will be

materially better results when there are more school buildings, more

trained teachers and advisors, and many more textbooks in the Korean

language. Current American activities aim at adult visual education

on a modest but reasonably effective scale. South Korea’s health

and public-welfare work are at present fully as effective as under

Japanese administration and considerably more so in the prevention of

serious diseases. Even the Koreans’ eagerness for improvement cannot

immediately overcome the unquestionable need for large funds for

social betterment.

MILITARY

The military situation in Korea, stemming from political and

economic disputes which in turn are accentuated by the artificial

barrier along the 38° North parallel, is potentially dangerous

to United States strategic interests. Large-scale Communist

inspired or abetted riots and revolutionary activities in the

South are a constant threat. However, American forces supplemented

by quasi-military Korean units are adequate to cope with such

trouble or disorder except in the currently improbable event of an

outright Soviet-controlled invasion. Whereas American and Soviet

forces engaged in occupation duties in South Korea and North Korea

respectively are approximately equal, each comprising less than

50,000 troops, the Soviet-equipped and trained North Korean People’s

(Communist) Army of approximately 125,000 is vastly superior to the

United States-organized Constabulary of 16,000 Koreans equipped with

Japanese small arms. The North Korean People’s Army constitutes a

potential military threat to South Korea, since there is strong

possibility that the Soviets will withdraw their occupation forces,

and thus induce our own withdrawal. This probably will take place

just as soon as they can be sure that the North Korean puppet

government and its armed forces which they have created, are strong

enough and sufficiently well indoctrinated to be relied upon to carry

out Soviet objectives without the actual presence of Soviet troops.

It appears advisable that the United States organize, equip, and

train a South Korean Force, similar to the former Philippine Scouts.

This force should be under the control of the United States military

commander and, initially should be officered throughout by Americans,

with a program for replacement by Korean officers. It should be

of sufficient strength to cope with the threat from the North. It

would counteract in large measure the North Korean People’s Army

when American and Soviet forces are withdrawn from Korea, possibly

preclude the forcible establishment of a Communist government, and

thus contribute toward a free and independent Korea.

PART IV—CONCLUSIONS

The peaceful aims of freedom-loving peoples in the world are

jeopardized today by developments as portentous as those leading to

World War II.

The Soviet Union and her satellites give no evidence of a

conciliatory or cooperative attitude in these developments. The

United States is compelled, therefore to initiate realistic lines of

action in order to create and maintain bulwarks of freedom, and to

protect United States strategic interests.

The bulk of the Chinese and Korean peoples are not disposed to

Communism and they are not concerned with ideologies. They desire

food, shelter, and the opportunity to live in peace.

CHINA

The spreading internecine struggle within China threatens world

peace. Repeated American efforts to mediate have proved unavailing.

It is apparent that positive steps are required to end hostilities

immediately. The most logical approach to this very complex and

ominous situation would be to refer the matter to the United Nations.

A China dominated by Chinese Communists would be inimical to the

interests of the United States, in view of their openly expressed

hostility and active opposition to those principles which the United

States regards as vital to the peace of the world.

The Communists have the tactical initiative in the overall military

situation. The Nationalist position in Manchuria is precarious,

and in Shantung and Hopei Provinces strongly disputed. Continued

deterioration of the situation may result in the early establishment

of a Soviet satellite government in Manchuria and ultimately in the

evolution of a Communist-dominated China.

China is suffering increasingly from disintegration. Her requirements

for rehabilitation are large. Her most urgent needs include

governmental reorganization and reforms, reduction of the military

budget and external assistance.

A program of aid, if effectively employed, would bolster opposition

to Communist expansion, and would contribute to gradual development

of stability in China.

Due to excesses and oppressions by government police agencies basic

freedoms of the people are being jeopardized. Maladministration

and corruption cause a loss of confidence in the government. Until

drastic political and economic reforms are undertaken United States

aid cannot accomplish its purpose.

Even so, criticism of results achieved by the National Government in

efforts for improvement should be tempered by a recognition of the

handicaps imposed on China by eight years of war, the burden of her

opposition to Communism, and her sacrifices for the Allied cause.

A United States program of assistance could best be implemented

under the supervision of American advisors in specified economic

and military fields. Such a program can be undertaken only if China

requests advisory aid as well as material assistance.

KOREA

The situation in Korea, in its political, economic and psychological

aspects, is strongly and adversely influenced by the artificial

barrier of the 38° North parallel separating agricultural South Korea

from the more industrialized North Korea.

The South Korean economic position is grave. Agriculture is

debilitated and there are few other resources.

The establishment of a self-sustaining economy in South Korea is not

feasible. Accordingly, United States aid should include a minimum of

capital investment and should consist chiefly of items required for

support on a relief basis.

Korean Communist agents are creating unrest and fomenting disorder in

South Korea.

* * * * *

Since the United States-Soviet Joint Commission meetings have

twice ended in deadlock, and offer no real hope of success, the

United Nations now seems to be the appropriate medium through which

a Provisional Korean Government, functioning under a Four-Power

Trusteeship, can be established.

The United States may be confronted with a situation requiring

decision concerning continued occupation in South Korea should the

Soviet Union withdraw her occupation forces. This could reasonably be

expected to occur when the Soviet-created puppet government and its

armed forces are sufficiently well established to carry out Communist

objectives without the presence of Soviet troops.

The creation of an American controlled and officered Korean Scout

Force, sufficient in strength to cope with the threat from the North,

is required to prevent the forcible establishment of a Communist

government after the United States and Soviet Union withdraw their

occupation forces.

PART V—RECOMMENDATIONS

It is recommended:

That the United States Government provide as early as practicable

moral, advisory, and material support to China and South Korea in

order to contribute to the early establishment of peace in the world

in consonance with the enunciated principles of the United Nations,

and concomitantly to protect United States strategic interests

against militant forces which now threaten them.

That United States policies and actions suggested in this report

be thoroughly integrated by appropriate government agencies with

other international commitments. It is recognized that any foreign

assistance extended must avoid jeopardizing the American economy.

CHINA

That China be advised that the United States is favorably disposed

to continue aid designated to protect China’s territorial integrity

and to facilitate her recovery, under agreements to be negotiated

by representatives of the two government, with the following

stipulations:

That China inform the United Nations promptly of her request to the

United States for increasing material and advisory assistance.

That China request the United Nations to take immediate action to

bring about a cessation of hostilities in Manchuria and request that

Manchuria be placed under a Five-Power Guardianship or, failing

that, under a Trusteeship in accordance with the United Nations

Charter.

That China make effective use of her own resources in a program for

economic reconstruction and initiate sound fiscal policies leading

to reduction of budgetary deficits.

That China give continuing evidence that the urgently required

political and military reforms are being implemented.

That China accept American advisors as responsible representatives

of the United States Government in specified military and economic

fields to assist China in utilizing United States aid in the manner

for which it is intended.

KOREA

That the United States continue efforts for the early establishment

of a Provisional Korean Government in consonance with the Moscow

Agreement and meanwhile provide necessary support of the political,

economic and military position of South Korea.

APPENDIX E TO PART III—KOREA

POLITICAL

_Resumé of United States Policy Toward Korea_

The first treaty between the United States and Korea, signed in 1882,

provided that if other powers dealt unjustly or oppressively with

either Government, the other would exert its good offices to bring

about an “amicable agreement.” During the early period of United

States-Korean relations the United States considered Korea as an

independent state for the purposes of fulfilling treaty obligations,

although that nation was actually under Chinese suzerainty. Prior to

the Sino-Japanese War of 1895, when efforts were made to gain the

support of the United States to avert war, the United States took

the position that, while it stood for peace, it would do nothing

which might cause it to assume responsibility for settlement of

the dispute. Under the treaty ending the war, China relinquished

suzerainty over Korea, which was in turn assumed by Japan. Therefore,

the United States continued its policy of non-interference in Korean

internal affairs and in 1899 denied a Korean request for American

initiative in obtaining from the powers an agreement guaranteeing

Korea’s integrity. At the time of the Russo-Japanese War of 1904-05,

President Theodore Roosevelt stated that the United States could

not intervene to preserve Korea’s integrity since the Koreans were

unable “to strike one blow in their own defense.” When Japan forced

the Korean Emperor to agree to Japanese control of the administration

of Korean affairs, the Emperor appealed to the United States, under

the good offices clause of the United States-Korean Treaty of 1882,

but his appeal was denied. Nor did the United States protest Japanese

formal annexation of Korea in 1910. Thus, with little or no effort

on the part of the United States to oppose such a development, Korea

passed from the suzerainty of China to that of Japan and thence

to the status of a Japanese colony. Efforts of Korean exiles to

introduce Korea’s case at the Paris Peace Conference and at the

Washington Conference of 1921-22 were rebuffed, but these exiles

continued their efforts to further the cause of Korean independence,

some of them in the United States. With the outbreak of World War II,

the question of Korean independence was revived and Korean exiles in

the United States and China began to agitate for Korean independence

and official recognition. At the Cairo Conference in 1943, agreement

was reached by the participating powers, later adhered to by the

Soviet Union, that Korea would become independent “in due course.”

This phrase caused great resentment among the Koreans who felt that

they should be given immediate independence upon the defeat of Japan.

This resentment was increased when the decision was reached at the

Moscow Conference in December, 1945, that Korea would be placed

under a Four-Power Trusteeship (the Soviet Union, the United States,

the United Kingdom, and China) for a period of up to five years.

A tentative agreement in this regard had previously been reached

between the United States and the Soviet Union, and when the end

of the war was imminent agreement was reached between the United

States, the Soviet Union, the United Kingdom, and China that Soviet

forces accept the Japanese surrender in Korea north of the 38° North

parallel, while the American forces would accept such surrender south

of that line. This arbitrary line, originally serving as a marker

of military responsibility, soon became a complete barrier to free

movement between North and South Korea. It has resulted in separation

of the country into two parts, an economically unstable division

which has seriously blocked efforts to establish a unified Korea.

_Current Political Situation_

The major political problem in Korea is that of carrying out

the Moscow Agreement of December, 1945, for the formation of a

Provisional Korean Government. The United States-Soviet Joint

Commission, established in accordance with that Agreement, held

its first meeting March 8, 1946, but finally adjourned on May

28, 1946, without having reached an agreement looking toward the

implementation of the Moscow Agreement regarding Korea. The failure

of the Joint Commission arose from the unwillingness of the Soviet

Delegation to agree to consultation with the Commission of all

Korean groups, as provided for in the Moscow agreement, to assist in

the formation of the Provisional Korean Government. Soviet motives

have been to eliminate the majority of the rightist groups in the

American-occupied zone of Korea from consultation and subsequently

from participation in the new government. Had the Soviet Delegation

been successful the result would have been a Communist-dominated

government in Korea. Soviet objections to consultation with these

rightist groups have been based on the latter’s openly expressed

opposition to trusteeship. The American Delegation has taken the

stand that criticism of trusteeship did not disqualify Korean groups

from participation in consultation, since to do so would deprive

a considerable section of the Korean people of an opportunity to

be heard in regard to the formation of the Provisional Korean

Government. An exchange of notes between the Secretary of State

and the Soviet Foreign Minister in April and May, 1947, resulted

in a resumption of the meetings of the Joint Commission on May 21,

1947, under a formula which provided for consultation by all Korean

groups which were prepared to sign a declaration that they would

not, after such signing, “foment or instigate active opposition”

to the work of the Joint Commission or to the fulfillment of the

Moscow Agreement. After repeated sessions of the Joint Commission a

deadlock was again reached in July, the Soviet Delegation returning

to its position of the previous year and the American Delegation

insisting upon the implementation of the formula set forth in the

Marshall-Molotov letters, which guaranteed wide-scale participation

of Korean democratic parties and social organizations in consultation

and freedom of expression of opinion by all Koreans. Further meetings

of the Commission having produced no results, Secretary Marshall

addressed another note to Foreign Minister Molotov on August 12,

requesting that the Commission submit by August 21, 1947, a joint

status report or that each Delegation submit separate reports. No

reply having been received to this note and the Soviet Delegation

refusing to participate in a joint report, the American Delegation

on August 20 transmitted a unilateral report to Washington. Since

the receipt of this report, the Secretary of State has addressed

identical notes to China, the United Kingdom, and the Soviet Union

proposing a Four Power Conference for a settlement of the Korean

situation. China and the United Kingdom have indicated their

willingness to participate in such a conference. The Soviet Union has

declined.

Internally, the Korean problem has been complicated by the Soviet

establishment of a Communist state in North Korea and by its

encouragement of the activities of Communist and Communist-dominated

organizations in South Korea hostile to the United States.

* * * * *

The rightist groups are probably the best organized parties in South

Korea. They command a majority of the Korean Interim Legislative

Assembly and, if elections were held under present conditions would

gain control of any government established in South Korea by such

elections. The American authorities in South Korea are endeavoring

to turn over to the Koreans as rapidly as possible administrative

responsibility in the various departments of the United States

Military Government, have organized a half-elected and half-appointed

Korean Interim Legislative Assembly, and in general are striving to

carry out a policy of “Koreanization” of government in South Korea.

_Military Government Directive and Steps Taken to Implement Same_

The Directive under which the United States Military Government now

operates in Korea sets forth three basic United States objectives:

(1) To establish an independent and sovereign Korea, free from

all foreign domination and eligible for membership in the United

Nations (2) to insure that the National Government so established

shall be a democratic government fully representative of the freely

expressed will of the Korean people; and (3) to assist the Koreans

in establishing the sound economy and adequate educational system

necessary for an independent democratic state. The Directive points

out that the policy of the United States in regard to Korea, in

accordance with the Moscow Agreement, contemplates the establishment

of a Provisional Korean Government to assist the United States-Soviet

Joint Commission in preparing Korea for self-government, the creation

of some form of trusteeship for Korea under the United States, the

United Kingdom, China, and the Soviet Union for a period of up to

five years and the complete independence of Korea at the earliest

possible moment, with subsequent membership in the United Nations.

The Directive goes on to state that the American occupation of South

Korea is for the purpose of facilitating the attainment of the

basic American objectives in Korea and shall continue as long as it

contributes to that end.

As a result of Soviet obstruction and tactics designed to eliminate

the majority of the rightist groups from participation in the

new government to be established for all of Korea, the American

military authorities in South Korea have been unable to proceed

with the initial steps required for the establishment of a

Provisional Korean Government. As required by the Directive, the

American authorities have made considerable progress in utilizing

qualified Koreans in posts in local and provincial administration

and in the administration of the United States zones as a whole.

American personnel remains in the provincial administrations only

in an advisory capacity and all administrative posts are filled

by Koreans. In the overall administration of South Korea, all

Government departments are now headed by Korean officials and

Americans are utilized only in an advisory capacity, although

important controversial matters may be referred either to the United

States Military Governor or the Commanding General of the United

States Occupation Forces for final decision. American military

personnel in the Military Government are being replaced as rapidly

as possible by American civilians. A Korean Interim Legislative

Assembly was established in December, 1946, half of its membership

being selected by the United States Commanding General from a list

of Koreans recommended by Korean groups and half being elected

as representatives of the various provinces and municipalities.

Presently under consideration by this Assembly is a program for

land reform in South Korea and the Assembly has recently adopted

a general election law providing for election of officials to an

Interim South Korean Government according to certain stipulated rules

and regulations. In accordance with the Directive, the United States

military authorities have permitted full freedom of expression to

all political groups, except in those cases when the activities of

certain Communist-dominated groups were clearly prejudicial to the

security of American military occupation.

* * * * *

In seeking to attain the cultural objectives set forth in the

Directive, the United States occupational authorities have caused

funds to be set aside for training courses in industry and

agriculture, have encouraged the establishment of teacher training

schools and of summer and winter institutes for the reeducation

of teachers and have in general devoted their efforts to the

restoration of schools, the enforcement of new system of education

and expansion of school facilities. They have also encouraged the

formation of various committees for the purpose of democratizing

the Korean educational administration. The implementation of these

programs has been handicapped by lack of funds. Culturally, as well

as politically, efforts have been made to carry out a process of

“Koreanization” looking toward a free and independent Korea.

It should be pointed out that the Directive itself necessarily allows

latitude of interpretation and execution and that the American

authorities in Korea have functioned within the framework of that

Directive.

* * * * *

Also, the failure to implement the badly needed land reform program

has been due to the desire to await the unification of North and

South Korea, at which time a Provisional Korean Government would be

in a position to carry out a uniform program of this kind for the

entire nation. Now that unification appears to be a matter for the

indefinite future, plans are being made to carry out such a program

at the earliest possible moment.

_Obstructions to Realizations of United States Objectives_

The chief obstructions to the realization of United States objectives

in Korea have been the division of that country by the 38° North

parallel barrier and the lack of Soviet cooperation in carrying out

the provisions of the Moscow Agreement regarding Korea. Behind the

38° North parallel the Soviet Union has established a Democratic

Front Government modelled along Soviet lines and has eliminated

all political parties of a non-Communist character. North Korean

Communist groups have thus been able to encourage and assist the

activities of the Democratic Front and other Communist-dominated

leftist groups in South Korea hostile to the United States by the

infiltration of agents from North Korea into the American zone

of occupation. The Soviet refusal in the United States-Soviet

Joint Commission to consult with all Korean political and social

organizations, as the first step in the formation of a Provisional

Korean Government, has so far made it impossible to realize American

objectives in Korea—the establishment of a self-governing, sovereign

Korea, independent of foreign control and fully representative of the

freely expressed will of the Korean people.

Other obstructions to the realization of American objectives in Korea

have come from sources within the United States zone of occupation:

* * * * *

2. Similarly, extreme leftist groups have endeavored to foment

hostility to the United States and opposition to the attainment of

American objectives in Korea. Such groups have been particularly

active among Korean peasants in opposing the rice collection program

instituted by the United States Military Government for the purpose

of ensuring sufficient food for the urban areas.

_Implication of Withdrawal of All United States Assistance or

Continuing Present United States Policy_

The American occupation forces in Korea could not remain in that

country if all assistance to South Korea were stopped, since the

cessation of all aid would lead to an early economic breakdown and

to the outbreak of riots and disorder throughout the United States

zone of occupation. The withdrawal of American military forces

from Korea would, in turn, result in the occupation of South Korea

either by Soviet troops, or, as seems more likely, by the Korean

military units trained under Soviet auspices in North Korea. The

end result would be the creation of a Soviet satellite Communist

regime in all of Korea. A withdrawal of all American assistance with

these results would cost the United States an immense loss on moral

prestige among the peoples of Asia; it would probably have serious

repercussions in Japan and would more easily permit the infiltration

of Communist agents into that country; and it would gain for the

Soviet Union prestige in Asia which would be particularly important

in the peripheral areas bordering the Soviet Union, thus creating

opportunities for further Soviet expansion among nations in close

proximity to the Soviet Union.

Present American policy provides that, in view of the failure of the

United States-Soviet Joint Commission to succeed in implementing

the provisions of the Moscow Agreement regarding Korea, the matter

be referred to the Four Powers for solution. It also provides that

the matter be referred to the General Assembly of the United States

in the event of the failure of the Four Powers to solve the Korean

problem. This indicates that the United States will continue to seek,

by consultation with the powers concerned, a solution of the problem,

but a failure to reach an agreement on Korea in the United Nations

will require that the United States make a decision regarding its

future course in Korea: whether it shall withdraw or whether it shall

organize a South Korean Government and under what conditions and

whether it shall give economic and military aid to such a government.

A continuation of present American policies will serve to give

notice to the Soviet Union and to other nations in the Far East

that the United States will not abandon Korea in the face of Soviet

intransigence and that the United States will continue to insist upon

the fulfillment of the Moscow Agreement regarding Korea.

A continuation of present American policies will serve to deny to the

Soviet Union direct or indirect control of all of Korea and prevent

her free use of the entire nation as a military base of operations,

including the ice-free ports in South Korea.

APPENDIX F TO PART III—KOREA

ECONOMIC

South Korea has few resources except agricultural land. This area

formerly obtained much of its anthracite, electric power, timber,

fertilizer, and other chemical products from North Korea, and

bituminous coal and food from Manchuria, but must now obtain these

essential items (except electric power) as well as raw materials and

repair parts for her industries, from other external sources.

_Coal_—The whole of Korea, particularly South Korea, lacks coal No

bituminous deposits are known and existing coal deposits are of

a law-grade anthracite. The coal runs high in ash, and tends to

disintegrate to powder. The largest producing mine in South Korea,

constituting in fact 50 per cent of the production, is located at

Sam Chok on the east coast. Production involves costly rail-sea-rail

distribution. This coal can be and is being used in thermal plants

by pulverizing and mixing with oil, but its use is costly and

maintenance of boiler equipment is heavy. In any case, bituminous

coal must be imported for the operation of the railways and most of

the industries.

_Electric Power_—Because of the unfavorable coal situation, South

Korea is at the mercy of North Korea with respect to electric power

because virtually all of the large hydroelectric installations are

in North Korea. In 1945 there was a total of 1,240,000 kilowatts of

installed capacity, 90 per cent of it hydroelectric and in North

Korea. Some of the capacity in North Korea has been removed by the

Russians. At the present time South Korea depends on North Korea

sources for 75 per cent of its power requirements in the winter

months when stream flow for its hydroelectric plants is low, and 50

per cent to 60 per cent during the rainy summer months. Conditions

will be critical during the coming winter. Minimum peak requirements

are estimated at 200,000 kilowatts and only 110,000 kilowatts are

in sight including the area’s own generating capacity of 60,000

kilowatts—and that only if rehabilitation materials are received—plus

50,000 kilowatts from North Korea, which is all the Russians profess

to be able to deliver. If North Korea power were cut off, all

industrial production in South Korea would have to be suspended,

and remaining locally generated energy rationed for military and

emergency use. Any new plants to correct this deficiency or permit

any revival of industry would require four to five years to complete,

and would still be dependent upon imported coal or oil, or upon a

considerable expansion of the low quality anthracite production.

There is no reasonable solution to this dilemma other than to unite

North and South Korea.

_Forestry_—The forest situation in South Korea is unfavorable. Before

the war, effective programs of reforestation and erosion control were

under way, but dining the war the annual cut averaged 168 million

cubic feet as compared with annual estimated growth of only 113

million cubic feet. Furthermore, over two-thirds of South Korean

requirements of lumber, fuel wood, and pulp were formerly supplied by

North Korea. With this source cut off and coal imports and production

drastically reduced, hills and mountains around the Urge cities have

been literally denuded. Unless North and South Korea are united or

substantial imports are provided, the needs of South Korea for fuel

wood, lumber, railroad ties, and telephone and telegraph poles, make

it inevitable that overcutting and denuding of forest land in South

Korea will continue, with resulting increased erosion and flood

damage to agricultural land.

_Mineral Resources_—Mineral resources of Korea are varied and rather

extensive, but with a few exceptions are of low grade. There is a

large deposit—over one billion metric tons—of low grade (35 per cent

magnetic) iron ore at Musan in Northeastern Korea which the Japanese

mined extensively before and during the war. Capacities are said to

have been developed for the production of over 800,000 tons of pig

iron and 350,000 tons of steel annually, but operations were possible

only by large imports of bituminous coal from Manchuria and Japan.

In both North and South Korea, gold and copper were also mined, the

latter as an adjunct of the former, and some lead and zinc, and a

large quantity of graphite, the latter, however, of low quality.

There is enough developed tungsten production in South Korea to make

it an important export commodity.

_Industries_—The prospects for Korean industry, even in the event

of early unification, are not bright. Before 1931 Japan exploited

Korea primarily as a source of raw materials, rice and cheap labor.

Thereafter Korea became Japan’s bridgehead to the Asiatic mainland,

and with Manchuria, was developed as the mainland portion of

Japan’s war potential. By 1938 there were 7,000 factories, mostly

small, employing 183,000 workers, principally in the production

of chemicals, textiles and processed foods. Main industrial

concentrations were in the north, near hydroelectric power plants

and the larger mineral deposits. This rather impressive industrial

plant was not damaged by bombing, but it would be a mistake to assume

therefore that Korea possesses a ready-made industrial plant which

could quickly be turned to full and efficient peacetime operations.

Production, at perhaps 20 per cent of capacity, was restored after

the occupation, but output has dwindled as stocks of raw materials

have been exhausted, and as machinery has stopped functioning

for lack of spare parts and competent maintenance and operating

personnel. The dearth of competent administrative supervisory and

technical personnel, practically all of whom were formerly Japanese

and are now evacuated, is the outstanding deficiency in Korean

industries, power, and transportation systems. The unification of

North and South Korea would make some of the required raw materials

available, and spare parts may eventually be obtainable from Japan,

but the serious deficiency of competent personnel is an unresolved

problem.

_Railways_—Korea has an excellent standard-gauge railway system

including a double-track main line from Pusan on the southeast coast

to Antung on the Manchurian border, which adequately serves the

country with the exception of the eastern half of Kangwon Province.

However, trackage, rolling stock except locomotives, and railway

communications are badly in need of rehabilitation as a result of

years of undermaintenance because of wartime shortages of materials.

The railways in common with the country as a whole have been

badly crippled by the evacuation of the Japanese administrative,

supervisory, and technical personnel. The right-of-way is excellently

engineered and constructed and characterized by a profusion of

concrete and masonry structures, but all of the seven million ties

in South Korea will require replacement within the next seven

years, and quantities of rails and fishplates are also needed. One

hundred and one new locomotives of the 2-8-0 type have been provided

by the Military Government, but much of the other rolling stock

requires overhaul. Railway communications also require considerable

rehabilitation.

_Highways_—There are no modern roads in Korea. The highways of South

Korea are practically nonoperable for automotive traffic except from

Seoul to Inchon, Kaisong, and Chunchon. Practically all supplies must

be distributed throughout Korea by rail.

_Shipping_—The only shipping of South Korea consists of eight Baltic

vessels, and 12 LST’s, operated by the Military Government coast-wise

and for some trade with Japan.

_Ports_—There are two major ports in South Korea; Pusan, an excellent

deep-water port with four large piers at the Southeast end of the

peninsula, and Inchon, west of Seoul, a much smaller tidal-basin

port which can accommodate four three-quarter-thousand-ton ships at

dockside in the basin and larger trans-Pacific cargo and passenger

vessels in the anchorage outside. Two other deep-water ports,

Masan and Yosu, were mined and are little used at present. Mukko

on the east coast is the export terminal for Sam Chok, the largest

anthracite mining area in South Korea. The other ports of Mokpo,

Pohang, Chinhae, and Kunsan are limited by unfavorable factors of

nigh tidal range, and a lack of berths and port clearance facilities.

In North Korea, there are two first-class warm water commercial and

naval ports at Wonsan and Chungjin on the east coast, the latter

particularly desirable from a Russian viewpoint, and other ports

Oongki, Rashin, Eungjin, Chinnanpo, and Simhu, the latter two

handicapped by the 25- to 30- foot tides of the Yellow Sea.

_Withdrawal of Japanese Personnel_