The Loss of China

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1912 – Republic of China

The Republic of China was founded in 1912 during the Xinhai revolution, a revolution that overthrew China’s rulers, the Qing dynasty. The revolution installed a provisional government headed by Dr. Sun Yat-Sen. As is often the case when a powerful ruler is overthrown, a power vacuum is created, and powerful people compete for the position of top dog. This power struggle between warlords lasted from 1916 until 1928, when Chiang Kai-shek officially unified China.

Around the same time as the start of the founding of the ROC, Germany found itself the loser in the first world war. Heavy penalties were laid on Germany, including restrictions on its military and its trade in Europe. To circumvent these restrictions, (military) industrial firms formed partnerships with nations that did not sign the treaty. Warlords need weapons, so a vast market for military equipment emerged in mainland China.

With the help of German military equipment, the ROC was able to win their military campaigns against the warlords in its 1926-1929 Northern Expedition. However, many warlords still maintained influence in their regions, which led to continuing internal conflict throughout the 1930s.

When the Nazi Party won control over Germany, Sino-German cooperation picked up yet again. Germany needed raw materials that Europe would not provide, and China needed armaments to keep control over the warlords and prepare for the encroaching Empire of Japan. Germany went further than just supplying arms. German engineers were sent to China to help with its industrialization, and German military experts helped organize its army. Germany also built large sections of railway in China to aid in the export of raw materials.

1923 – A New Direction for China

Up to 1923 Sen would often lecture on his political philosophy, inspired by Marxism, for the future of China. Presumably to deepen his understanding of Communism, Sun Yat-sen sent Chiang Kai-shek, whom he trusted deeply, to Moscow to study the Soviet political and military system.

Chiang came to the conclusion that the Soviet model was not suitible for China, and Sun came to that same conclusion. It seems that Sun obtained a copy of the book “The Social Interpretation of History”, written by little known author and New York dentist Maurice Williams. Harley Farnsworth MacNair, professor of history at the University of Chicago and a noted China scholar of the time, notes the following:

“In paragraph after paragraph, Dr. Sun either quoted, almost word for word, or paraphrased, the arguments which he had found in the Social Interpretation of History. He now repudiated several of his own earlier theories, substituting therefor the system of thought which he had recently discovered in Dr. William’s work.”

When Sen died in 1929, Chiang continued in Sen’s new view for a constitutional republic of China.

1937 – Second Sino-Japanese War

The second Sino-Japanese War was a military conflict between the Republic of China and the Empire of Japan which started in 1937 and lasted until the end of WWII in 1945. When the conflict began, Germany had to pick a side. It is said that Hitler saw Japan as a better geostrategic ally in an upcoming conflict with the Soviet-Union. Germany broke off its partnership with China in favor of Japan.

This left China without one of its most valuable partners.

On December 7,  1941, well into WWII, tides changed as Japan declared war on the United States. Chiang sent a telegram to President Roosevelt on December 8, 1941:

“To our new common battle, we offer all we are and all we have to stand with you until the Pacific and the world are freed from the curse of brute force and endless perfidity.”

The United States had enacted their Lend-Lease act earlier that year, on March 11. This program sought to arm its allies with food, oil and arms for the war against its adversaries. Under this program, the US arranged for a loang of $250 million in gold to China, which it desperately needed to regain control over the rapidly falling value of its money.

The man in charge of delivering the gold to China was Assistant Secretary of the Treasury Harry Dexter White. Only $27 million of this loan was ever shipped. In 1945, a second loan of $500 million was arranged for, but no gold would ever reach China. China emerged from WWII economically crippled.

1946 – Marshall’s Plan for China

After WWII, Marshall went to China with the goal of unifying the Nationalist government of Chiang, and the Revolutionary Communists led by Mao. No significant agreements were reached. In an effort to drive both parties to a ceasefire, Marshall banned the sale of military equipment from the US to China. Marshall had this to say about his move:

“As Chief of Staff I armed  39 anti-Communist divisions, now with a stroke of the pen I disarm them.”

McCarthy would later attack Marshall for this decision:

“When Marshall was sent to China with secret State Department orders, the Communists at that time were bottled up in two areas and were fighting a losing battle, but that because of those orders the situation was radically changed in favor of the Communists. Under those orders, as we know, Marshall embargoed all arms and ammunition to our allies in China. He forced the opening of the Nationalist-held Kalgan Mountain pass into Manchuria, to the end that the Chinese Communists gained access to the mountains of captured Japanese equipment. No need to tell the country about how Marshall tried to force Chiang Kai-shek to form a partnership government with the Communists.”

Indeed the Communists captured this abandoned Japanese equipment, and used it to drive Chiang’s Nationalists to the island that is now known as Taiwan.

Speculation on US Interference.

As we have come to know, the person responsible for the disappearance of over $700 million of US aid to China was Harry Dexter White. Two years after his death, on October 15, 1950, White was identified by the FBI as a Soviet spy though evidence gathered by the Venona project.

Since it is now confirmed that at least one US based Soviet spy actively interfered against Chiang’s anti-communist government, we can take a deeper dive into US involvement during this time. Certainly it is strange that Marshall would limit aid to Chiang at such a crucial time. The result of this should have been considered as a possible result at least. This raises suspicions about Marshall, although nothing was ever confirmed.

The plan for limiting aid to China was first proposed to Marshall by Lauchlin Currie, later found to be a soviet spy by the same Venona project mentioned earlier.

Much later confirmed is that main financiers of the CFR,  J.P. Morgan, John D. Rockefeller, Bernard Baruch and Paul Warburg, were involved in financing Nazi Germany before the start of WWI. For example, payments were made by John D. Rockefeller up to 1944 for the development of synthetic oil and rubber. In fact, in 1938 Rockefeller provided I.G. Farben (Germany) with its new butyl rubber process. Germany imported up to 80% of its rubber before this time, much of it from Asia.

Could it be that this synthetic rubber deal had something to do with Germany’s backing of Japan, instead of China, in 1937?

Note on Maurice William

Born in Kharkov, Russia, William immigrated with his family to the United States at the age of eight. The immigration officer on Ellis Island evidently had difficulty understanding the family’s name — Ilyn — which he rendered as “William.” Hence Maurice got a new last name.

In New York, Maurice attended P.S. 5, and after school he sold newspapers. A few months before his graduation, his family decided he was old enough to work full time. He was placed in a dairy shop, where he worked twelve hours a day. After about a year, he moved on, to work in a printing plant, and then as a messenger and clerk, and still later as a guard. As William’s biographer says, Maurice learned about the proletariat at first hand.

At the same time, William was deeply involved in the socialist movement. He wanted to remake society, but also get ahead himself. To this end he studied law part time, but gave that up when he heard Meyer London, New York city’s first and only socialist congressman, denounce lawyers as “parasites.” (London, by the way, was himself a lawyer.) Casting about for a career, William was advised: “Become a dentist, comrade. Under the most perfect system of society, there will still be rotten teeth.”

Following that faultless argument, William worked for several years, and saved money, and then put himself through dental school. In 1907 he received his degree of doctor of dental surgery, got his license, and, as was usual for neophyte, penniless dentists in New York, began to work at one of the city’s many “dental parlors” — places that marketed dentistry on a mass scale. William soon learned that the emphasis in these “parlors” was more on marketing and less on dentistry: the “care” was shoddy at best. Later, when William had his own independent practice, he was instrumental in getting New York to adopt legislation guaranteeing ethical standards in dentistry, and together with several colleagues, he established one of New York’s first free dental clinics.

It was William’s experience with the exploitation of working class New Yorkers, and his disillusionment with World War I, that led him to reassess Marxism and to self-publish The Social Interpretation of History in 1920.

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