(Classified) STUDY ON CHINA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP61-00017A000100040001-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 3
• Document Creation Date: November 11, 2016
• Document Release Date: November 9, 1998
• Sequence Number: 1
• Publication Date: August 17, 1954
• Content Type: MEMO

8TANDARO FORM NO. 64 Q CZ-0 2. (. +
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Office Memorandum ? UNITED STATES GOVERNMENT
25X1A9a
TO DIRECTOR OF TRAINING
TM U Chief/STD
25X1 A5a 1 SUBJECT:
Study on China
DATE: 17 August 1954
went No. 60
NO Cf. 4 in Class.
PECK SS,
Class. `',~; iS S C
DatgI 3 Z By: ?O
The events which have taken place in China are history. It is
our interpretation of these events which is likely to be the basis for
any action we recommend.
One school of thought, which could be termed the Fairbank-
Lattimore school, holds, that the impingement of Communism upon China
in the 1920's soon after Yuan She Kai's unsuccessful attempt to restore
the monarchy, met a set of conditions which were favorable to its
reception and adaption by reason of its close resemblance to the
Legalistic School of Confucian ethics. In other words, China was
"a natural" for Communism because of its acceptance of totalitarian
rule for ages.
Another school of thought holds that the aspirations of the
Chinese as expressed in Three Principles of Sun Yat-Sen, and especially
the third of these principles on Livelihood, were essentially humani-
tarian and democratic as expressed by the Iencian School of Confucian
ethics. This school looked upon Sun Yat-Sen as the George Washington
of China and upon the 1911 Revolution as akin to the American Revolution.
The three Principles were regarded as the Chinese Declaration of
Independence, a humanitarian document, based on the rights of man.
This school, which became the dominant element in the Kuomintang, was
led by Chiang Kai Shek, after Sun Yat Sen's death. For a -period of
nine years between 1928 and 1937, it made great headway in consolidat-
ing; Chinese progress around these democratic principles and China
;:Wade substantial progress.
Then Japan, for reasons of domestic policy, launched the "China.
Incident." It was begun because Chiang Kai Shek was kidnapped by
Ghana Tseu Liang, Chang Tso Lin' s Communist son, and forced to agree
to fight Japan on pain of death. A static condition was rendered
dynamic by his subsequent attack on the Japanese at the :Marco Polo
Bridge near Peking. The "China Incident" dragged on and led finally
to our involvement in World War II. Japan attacked us because we stood
between their militarists and their ambitions to create an Asiatic
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hegemony. During the war both schools buried their differences and
attack Japan as the common foe, but Chiang resisted all attempts of
the StillwellWallace-Lattimore-Davis-Service group to bring the
Co~-;munists into his government. Doth sides were fighting the
Japanese overtly but each other covertly, conserving their energies
for the inevitable resumption.. of inter-necine strife after the
war.
.,111 durinf the war Chiang relied upon American help. It now
develops that some of that help ($500 million) which the U.S. Congress
voted in 1941, was long withheld from China by the machinations of
Harry Dexter Maite, who, as head of the Division of Monetary Research
of the Treasury was entrusted with the dis-position of this fund de-
siLned to prevent run-away inflation in China, a disastrous development
,or which Chiang and the Kuomintang Party has been Beverly critized
ly the Lattimore-Fairbank school. As it turns out it was the red hand
of Harry Dexter White that actually manipulated the inflation.
After the war in 1946, we again sought to force Chiang to accept
the Communists into his government. Chiang refused and in October
1946, we ordered all U.S. assistance to Chiang to cease. The embargo
lasted nine months. This meant that ammunition supplies for the
large numbers of guns turned over to Chiang from the American World
War II surpluses on Okinawa, were cut off at the crucial point in
Chiang's fight against the Reds. This it has been contended, decided
the conflict between Chiang and the Reds in favor of the Reds.
'There is still some resentment particularly among the Nationalists
on Formosa against this action, which is regarded as a U.S. betrayal of
the Anti-Communist forces in China.
3o much is history. Next month, September 1954 the question of
recognition of the Communist Government in China will be a live question
before the United Nations Assembly. What attitude we take as a nation
may well decide the issue. The study under review adopts the view of
the Legalistic school of thought. If this becomes our Government's
view also, we would eventually recognize the Chinese Communists and
perhaps trade with them.
This study, if published, may well be accepted by the intelligence
community as reflecting our definite convictions. As such it could
influence NSC and other government policy. U.S. public opinion, however,
may well crystalize around those who would deny any recognition to the
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