INTELLIGENCE HIGHLIGHTS - WEEK OF 13 APRIL - 19 APRIL 1948

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01082A000100010024-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: December 16, 2016
• Document Release Date: April 13, 2005
• Sequence Number: 24
• Publication Date: April 19, 1948
• Content Type: PERRPT

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OFFICE OF ffi:TORTS Ai'$D :iSTI?TAT. S, CIA
PAR EAST/PACIFIC BRANCH
INTELLIGENCE HIGHLIGHTS - t;' EK OF 13 APRIL ?- 19 APR2i'x:, 19"
Chinese attitude toward the new Siamese Government
h Hasa overnmen is serious y onoeemed over the recent change
in the composition of the Siamese Gover irnent but -bakes the pcmitiorr that
since the Phibul Government came to power by ostensibly or:ns : tutiona1
'procedures the question of recognition does not arise, The .-,nin:ipal
preoccupations of the Chinese Foreign Office regarding the Siamese problem
are: (1) the desperate need of China for Siamese rioe, (2) -f e lam e
number of Chinese residents in Siam, and (3) the -Increase in Communist
activities in Siam. Though disliking and distrusting Phibul for his strong-
armed methods as well as his anti.Chi.nese record, the Chines- Government is
impressed by his strength and his ability to get things done and has
decided the best policy is to make the best of the Phibul Government. The
Chinese Government, however, is anxious to get US, UK, and French cooperation
in order to impress on Phibul that his interests lie in i ?teynatiem ,].
?ooperation and in fully discharging treaty obligations.
Ja nnNEI trade agreement negotiated
The 1-15 Politic AdV 9E r 2 '`o yo has been advised ^} .- I,,t General
Wybrandus Schilling, Head of the i1ethe.rlands ;: ilitary al o.sion in .,apan,
that an agreement has been negotiated whereby Japan is to se .l $60",000.000
worth of products to the NrEI and is to purchase $30,000,000 u:,~orth from the
ItI. It is estimated that the real value of Japan's exports under -e is
agreement are somewhat less, and Japan's imports somewhat groater, than
that country's annual trade with the R1[,x in the middle 1930's (after
currency value adjustT.wnts). However, it is not yet clear mhether the new.
agreement covers only a single y,year..
General Schilling also told the Political Adviser that without adequate
transport for Dutch troops, disorder could possibly spread in Java, thus
affecting, adversely the exchange of goods be tween Japan and the t:.I,, He
stated that, because of the almost total lack of transport fable to the
Dutch military authorities in the I I,he had asked both Under-Secretary of
the Army Draper and General MacArthur for 5,000 motor trucks; but that
although sympathetic they had indicated that the trucks could only be
declared surplus by arrangerrsents between the US Departments of State and
the Armyo
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Twenty -two Cabinet V{ ce ;.o.rai s~:,iru u .pointelo Aft-r a ro?ral by the Prf=sidnnt
of the )per House ari the Speaker of the Lol'Ier hoiiue o t' a Diet, the Cabinet's
selection of twenty-two Vice l ini.st-ors was forr.:ally annrnirco:l on 15 :prl.l. The
Social Donocratic Party has received eleven of the Vice 1.:in'stries vrn le the
Donoorats, the R;roknzfu-kai and the Poo,}le's Cooperatives were res?:)ect'vely
awarded seven, three and one Vice Ministries. The number of Cabinet Vice
Ministries has been virtually doubled in what a :pears to be an effort to provide
the faithful with political "p lures" ? It is felt that the a: o;.ntments Indicate:
(a) a Aolitica?, measure aimed at a ;,eneral election lxhereby Diet mertbors can
^ain "face" by lroducinZ a record of Cabinet service as a clai n for reel'ct- on;
(b) an attempt to win increase.I support from the it okuitl-kai (Green Drcezo
Society), a large Croup of inle')endents in the U?hpor House i h'.ch includes both
pro-Coveernnent and pro-o7::)os;.tion factions, by the a poi ntne_it of three members
to Vice-Ilinistrios; (c) recognition of what the Ja ::anese, at least, consi..der
the weaker sox by the apnointrlent of one female Social Derocra,t us Vice Minister
of :'elfare.
anti-Conmiiulists set-backs. Recent set-backs suffered by anti-Co-..?_un_st forces
in two in er :ant aryl and industr;nl :?:orkers or-anizet`.ons illustrated the
strength of the Co:^mzni st )osi, tion in Ju,a ne:.e labor. The anti-Con^riurist nove-
ment in Jap%anes e labor has1 been a dvancinr. steaeil:r s i.nce v . d-194C. To some
extent this growth has been cued by successive anti-Commuri st s ;atements of
US officials and reflects the results of occupation- efforts in labor e.i-aca-
tion. More it odia'.:ely the Marti-Comm:znist stand of the left-i:~inv Socialists
and the relatively open support of the last two Ja_)nnose Cabi.n cts, 't;';e Labor
portfolios of wh4oh have been held by Socialists, have cor.sidurably advanced
the spread of Democrati zat..on L(-agues, the form which the anti-Coruuni.-st move-
ment has taken i.n labor. Defeat of Corriunist candidates in recently held
elections in the Government Railv-ruy 'e:orkers Union has boon the he _~;ht of
success to date, Carryini; of the anti -6oi n:,uni st movement Democrat? zat *,.on
tactics to the Japan Farmers Union an:1 the All Ja_)an Electrical :orkers Union,
where the Communists !re stron;ly entrenched, have _.:rodaced the current
di#'ficultieso
Announce; Wont in March of the or,;ani. zati_en of a D-:r:ocrati zat' on Leav..ze
within the Ja ,an Farmers Union evoko:1 violent o post ion from tail1 cant loi'1;-
ists in the JPU. The leftistschi rLed that the Leaf ue a violation of the
princi~7le of political neutrality to My ch the Jb'U has adhered since its
inauCurati on in early 1946 and an atLe_ t to di srupt ,rorl:i.n class u':i.ty. In
the Central Ixeeuti.ve Cormiittee rieetin;; hold this _-ast week in place of the
regular national convention of the union which vvas 'ost'aoned due to the
violence of the disal;reerlents, Corznum_sts or Communist Byrn it :izers have
derianded the dissolution of the Deno crntizat;. or. LoaL;:ae and the call nz; of the
Central Conference of the -~olicy-na lung Central Conrvitte:e on which these left-
win ;ers have a controllin,; voice. Ri.~;ht-vringcrs have >ro 7oso3 limitation of
discussion to "daily li. fe str~.z,~le" as a method to avoid an o len split in the
union. These ri.uht wi.n ?ors arc o_)p oseci to the rais' nl; of "I,(- Communism issue
in the Central Co:'`:ittee now when they r1i ;1it be defeated and sock tine to
permit their movement to gain strenCtho nti_-Communist Socialist left-,?Angers,
11:1JUMl Junzo, SitTAiE Shinichi and T 1'?.1 A Orinoshin are the leaders of this
right veins movement vri th,.n the JFU. One of their ma; or notive . in this sort-'-e
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JAPAN (Cont.)
is an attempt to obtain the realignment of former JFU members who left the JFU
with HIRAITO Rildzo and who, although, they joined his National Farmers Union,
(NFU) did not lbrsake the Socialist Party when Hirano organized the Social
Renovation Party.
JFU Chairman Kuroda, one of the Levi important left-wing Socialists who still
cling to the idea of a united front with the Commun_sts, has pleaded for union
unity but as ;art taken no stand opposing the Communists. Kuroda recently
vehmently announced that there had been no change in the JFU position that
members were entirely free to belong to the political party of their choice.
11hile the atten )t of the left-wing socialist to bring the ITFU back into the
J;'U depends in lame measure upon their ability to eliminate Communist influence,
the strength of the Communists position in the Central Committee and the probable
attitude of delegates who stand with Kuroda in, denouncing, any move to precipitate
an open split in the union as a "betrayal of the peasants", make it imperative
to avoid for the present the showdown for which the Communists are pressing.
In the industrial workers field, the failure of a leader in the ?TCIU
Democratization League, OCflIAI Eiichi, to win re-election to the chairmanship
of the All Ja:aan Electrical Vorkors Union, has damaged the anti-Communist
movement in the flCIU. The AJE1.U national was considered the stronghold of the
forces within the TICIU seeking to reduce Communist dominance. Election of
NIAKAILtRA Junkichi, a Cormuni. st, to replace OCHIAI renders more difficult the
task of undermining the Comnuni sty hold on NCI U.
9r, re iister for eleetionso Although the final totals have not boon received,
over 5,000,000 of f- approximately 8,700,000 eligible voters in South Korea
are known to have registered for the UN-sponsored election to be held 10 May.
This tremendous registration, 93 of the electorate, may be due in part to
spontaneous public interest in participating; in an election, a privilege
Koreans have never before enjoyed. It also undoubtedly reflects a consider-
able degree of pressure on the public by the rightist police and strong-arm
youth groups. Both the police and the youth groups are elements in the Rhee
machine and are reported to have been offering "instruction" in democratic
procedures to the public in the provinces. The extreme Right has every
reason to feel confident of its success in the coning election. Soviet
propaganda has already begun attacking the validity of the election on the
grounds of coercion and intimidation.
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43 Z 1!tionalist headquarters in ilrinchuria expects that the next Coc nist
offensive against Lbkden will be launched in the 11sinain sector in about two
veeka, but adverse weather conditions have limited the mobility on both sides.
lla7ever, the press last peek reported skirmishes bettreen. LIukden and Chinchou
and noted the appearance of Lin Piro's 2nd oolimn (one of his best) near Faku,
z rttmreet of lUtden. The First division. of the t;ationaliati t s 8th Army, which
recently evacuated several parts on the north coast of the Shantung Peninsula,
has arrived at Chinchou. In Shantung, tho Cc amiote riere still laying siege
to deihsien and according to saw sources, were rukich more extensive use of
artillery than heretofore reportod in the Shantung fighting.
The Ca?siauniats were active in a vride. area around Feiping. They corti.r ed
their destructive raids.on the Peiping - Sui an railroad., re-occupied several
stations along the line, while rntaintaining a loose siege around Tatung, which
is nor being supplied by air. To the east of Peiping, Coauau ist thrusts ware
repulsed in the Paoti-Sanho area, but a new threat to the Chengteh - Pingchuan
region of Jehol has developed as Cormunist units have attacked the latter point.
The area around Chengchou continued to be the focal point of the military
scene in Central China. Comrnist troops from the Fouyang - Taiho sector
have moved northwest, occupying the Peiping - Flankocr railroad from Fisintyang
north of Chengchou. The Nationalists are rrintaining pressure on these farces
from the south and southeast. )inor activity was noted on the Hupeh - Shensi
border where Pai ho and Chunhsien were -reportedly captured by the Communists
Political
Chiang Kai-shek was elected the first constitutional president, of China
on 19 April by a vote of 2430 - 269 in the National Assembly. The only other
candidate was Chu Chem, president of the Judicial Yuan, Last week the
National Assembly passed a caoipror se measure granting the president during the
national crisis emergency pavers which will undoubtedly make the position more
attractive to the Generalissimo. The cor_,proiiiise also provided that the
National Assembly should be convoked again before 25 December 1950 to discuss
proposed constitutional amendments. The constitution provides that the As-
sembly meet every six years.
T National Assembly became a sounding board of public opinion last
week while it listened to reports on military, economic, and foreign policy
issues. The military report created the greatest uproar with delegates in-
sisting that their own areas receive greater protection against the Communist
offensive.
Student trouble continues in pactically all the col1e-gea in Peiping and
Tientsin. At the sane time a delegation of ctuden'ts from the N ,nking - Shanghai
area clashed with police when they attempted to enter the National Assembly,
They were finally allowed to enter and a committee was appointed to hear their
petition, Further student disturbances are feared during j y, the anniversary
of last year's student disorder. SIAnghai authorities anticipate trouble
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instigated t the C umunists in that city in conjunction with any attempts to
Gross the Yangtze.
In his review of Chinese foreign policy before the National Assembly on
24 April, Foreign Llinister :tang Shih-chieh stated that much of the critical
US opinion of China was justified, but in part was due to Comrnist propaganda.
He stated that the recent US decision to continue aid to China demonstrates
the fundaa~anta1 soundness of Sine - US friendship. US funds from the aid bill
would be used to (1) balance international payments, and (2) obviate the need
for fmother inflation projects. Simultaneously the Government would put into
execution Preaer Chang Chum's 10-Point self-4ielp program,
Foreign L!inister .?ang clearly implied that Sins-Soviet relations were un-a
satisfactory. He pointed out that, under the Sino-Soviet. Treaty of 1945, the
USSR assumed important obligations and that if Sino-Soviet relations were not
all they should be the fault was not with the treaty but in-its fulfillment.
He added that China Mould insist on strict observance of the Treaty. (However
US Embassy Vanking has learned from the Vice Foreign L tni.ster that China t s
basic policy toward the USSR at this time is to do nothing to aggravate Sino-
Soviet relations, and that recognizing US prior concern with I-Awope., China
would not consider pursuing a more aggressive policy toward the USSt' until
such time as it could rely upon effective US euppcrt.
!rations. Assembly delegates from Mongolia, Sinkiang and Taiwan (Formosa)
have attacked the Government's minority policy, especially the fact that these
regions were not even mentioned in the reports of the Tlinisters for Education
and Social Affairs. They demanded that the Government abolish the important
Tibetan - Liongol Affairs Commission and establish a Border Affairs Lilni.stry.
They also asked the Government to keep its earlier promise of Mongol and Taiwan
self government.
Economic
~?nep/Priees, The Shanghai exchange and commodity market showed a
downward tendency during the greater part of the past week with the US w black-
market rate falling after reaching CNI 700,000 to 1, and rice dropped from a
peak of CH v4 million a picul. However Reuters reports that the US 5; has
started on another upswing on the b]ackmkrket going as high as CN x740,000 to-
day, 19 April. This latest rise is reportedly due to rumors of another boost
in the official "open" rate, The almost daily, and oftentimes hourly, fluc-
tuations reflect the sensitivity of the money and commodity market conditions.
The Shanghai Market: US w L change (Selling, Rate) -dholesale Price of Rice
Official "open" Blacknarket _ per 172 lbw, icul
This week (16 Apr 48 CN $328,000 640,000 ON ~0,3, 500,000
Week ago ( 9 Apr 48 328,000 650,000 3,800,000
Zionth ago (16 Mar 48 19?, 500 465,000 3,600,000
Year ago (16 Apr 47) 12,000 13,500 165,000
Private Holdings in US. Ku Meng Tung, Manchurian delegate, has reportedly
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proposed to the National Assembly that a delc;ation be sent to Washington to
negotiate for disclosure of private Chinese wealth in the US.
Hainan Iron. An unconfirmed report from Tokyo states that three Japa--
neee tecbnialans have Wt Japan for a 45-day survey of iron mines on Hainan
Island, at the request of the Chinese Resources Coxiiesioa and the British
Ott Co.
Taivan. Pte. The Taiwan Power Co. will receive a 113 'R million lean
from ?estinghouae to purchase equipment.
Foorreig Trade. The Chinese Customs report January irq orts totaled US 19.,4
ndl11 i exports US 016.2 million, leaving a deficit of US w3.2 million
fired with a favorable balance of US ?4.3 million in December 1947 as based
an the average official "open" exchange rate.
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P ;T1 r_. rcetn]cA
Free~ph attempts to break deadlock in nep~otlations. The French in an
effort - to break the deadlocked ne/-otint ones between forger Arm amlte
emneror Pao nai and Figs Coi dssioner T'nllaert, have increased their pressure
an Pao Jai by sending Lcuis Caput, a socialist known to h eve been sympathetic
toward Ito Chi '%nh, to gong Fang, allegedly to contact Viet '=inh political
observers. The French arrarently hoped to rive the impression that they
*i"ht byi"se the ex-emreror and treat with ilo Chi "inh or an alternate, thus
enanureaiing !ao Dai to favorable action. The French at the same time aprarently
are attema ing to reach an w reenment by more persuasive means, as they are
reportedly considering the mending to Indochina, of n'eorges--Picot, an old
friend of the former emmr+eror. It is unlikely, however, that the stalemate
can be broken by either of these methods unless the French are willing to
rest the majority of Pao Dal's der" rx!s.
Incident -c licates ne .otiations. necrirainatiors concerning the alleged
mistreatment the 'Dutch Delegation upon the arrival of the ^ood ^ffices
Committee ( C) at Jogjakarta, the t publican capital, on 12 April may have
dissipated much of the good will which has been built up between the Dutch
and Republican Delegations during the past sax months. Although the I epubl; can
Co-ernmaent has apologized for the incident, Lt. Governor General Van Look and
the non-Republican Indonesians on the Hutch Delegation, against vhcm mob
action was directed, tended to regard the incident as serious enough to con--
.eider the return of the Dutch Gele;ation to Batavia. Vredenburch, the most
influential Dutch official in Indonesia at present, takes a more objective
view of the demonstration and believes negotiations should be resumed, The
IIS Delegation reports that should Vredenburch fail, negotiations may be per-
manently ended since the r'C will not suonort the Netherl nds nor will it
exert influence to bring the flenublican Delegation back to Batavia.
ten though the situation is smoothed over sufficiently to permit con-
tinuation of negotiations, the incident may v2eaken the Republics position.
It will serve to give weight to the Dutch contention that Tepublican officials
are incapable of maintaining order in areas under their control. Furthermore,
the recent demonstration by *'epublicans aimed at non-Republica. Indonesians
with whom the Republic is expected to cooperate in a federal united States of
Indonesia (T'ST) may complicate future discussions. In this tense atmosphere,
negotiations, if resumed, will be difficult and protracted.
STAY
Phibu]. Government rakes bid for forei.g approval. Phibul Songgram in
assuming -control o the S s iese Government must undertake the solution of the
same national problems and issues which were used as the e.xcmuso to oust the
preceding Thamrong and Aphaiwong Cabinets (the high cost of lving,the report
on the former King's death, and relations with the Chinese). A large measure
of Phibul's ability to remain iny will depend upon his success in treat-
ing. with these
o%lame If he i'ee hle to urine r-4 +.h theca prnhlems_ it is
p
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-a.
.4TAT'! (oaitinued)
possible that dissatisfied and easily disaffected elements among his Ara'
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Phibul has publicly promised that his government will act in accordance
with the constitution, be strictly democratic in principle and practice, and
depend on the vote and voice of the people for existence and guidance. This
statement has c omitted Phibul to a dependence upon Parlia..nentary approval,
but in the light of his past record of strong-ate methods it is doubtful that
he will live up to such confining promises. It is ostimated that the Premierts
statement is little more than a bid for foreign approval of his new government
and that once diplomatic relations are resumed he mill revert to policies more
consistent with his record,
rMT*YPTITTfi
Laurel continues presidential c ai , Two days after the death of
Area en a~as, Jose P. UZZ, occupation president of the Philippines,
Continued his 1949 presidential campaign with fervidly nationalistic sneeeh
in La Ibion province. In his first public statement since loocas' death he
unmistakably indicated that he would not abide by the offer he made a month
ago to withdraw from the campaign if 'toxas did not run.
Completely disregarding the plea of new President '?.uirino for "tolerance
and national unity," Laurel charged that av-overnment "incapable of maintaining
peace and order 3.s not government at all." "l]uding to the parity amendment he
stated that the Filipino people are tired of the present administrationte de-
sire "to change the nation's patrimony, r`ur lands, seas, forests, mines, lakes
are for Filipinos -- not foreigners."
Australian political leaders show unit in views or. f c reign affairs. Con-
siderable agreement etieen the government and the Opposition was apparent in
the April 9 Australian Parliamentary debate on foreign affairs. Both Foreign
1.'inister Evatt and Opposition leader ?'.enzies deplored the tension between the
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V`-13,r T__ LT.i (continued)
TT$ and m9R; defended the workability of the M. after tb pence treaties
are signed; and called for an early settlement of the Jarenese question.
They reiterated the Australian belief that Japan's industrial revival should
be on a moderate scale, and that her standard of living be no higher than
that of the countries she devastated. Poth paid tribute to the constructive
11 policy reflected in the ! uropean 'recovery Program and