Chiang Kai-shek and Taiwan

Leo Tolstoy describes history as “nothing but a collection of fables and useless trifles cluttered up with a mass of unnecessary figures and proper names.” Perhaps. But historians are required not to pass judgment. They obey the dictum of Leopold von Ranke: “Wie eigentlich gewesen or as is factually seen.”
Chiang Kai-shek, who started a personality cult in Taiwan after his arrival in Taipei at the end of 1949, was praised by his loyal followers as “the savior of the (Chinese) nation” but is now condemned by his detractors as the “chief culprit” of the bloody February 28 Incident of 1947 and the “butcher” in the reign of white terror that followed. The truth, however, is somewhere in between.

Introduction: Road to Cairo
Chiang Kai-shek never came to Taiwan while the island was under Japanese colonial rule. However, his Kuomintang government in Nanjing was sympathetic to Taiwanese independence activists, who were organized as the Taiwan Volunteers to help fight the Japanese invasion army before Japan attacked Pearl Harbor on December 8, 1941.
With the United States declaring war on Japan, President Frank D. Roosevelt began helping Chiang’s China in earnest. Chiang was made commander-in-chief of the China-Burma-India Command, with Lt. Gen. Joseph Stilwell as his chief of staff. As Great Britain planned to retake Burma, Chiang was asked to meet Roosevelt and Prime Minister Sir Winston Churchill to talk things over in Cairo in November 1943. At first Joseph Stalin of the Soviet Union was also asked to join in the meeting, but he did not want to meet Chiang. Stalin later met Roosevelt and Churchill at Tehran.
The generalissimo left Chungking (Zhongqing) on November 18. He was made Chairman of the National Government of the Republic of China on September 13 to succeed Lin Sen, who died on August 1. So he took part in the Cairo conference as president of the Republic of China. He was accompanied by Madame Mayling Soong Chiang. They reached Cairo on November 21.
Sir Winston arrived on the same day. He and Chiang met at his villa in suburban Cairo for the first time. President Roosevelt arrived on November 22, and on the following day the first plenary session of the Cairo conference took place. Churchill attached little importance to the Burma campaign and believed Roosevelt had taken “an exaggerated view of the Indian-Chinese sphere.” In an informal dinner at his villa, President Roosevelt asked Chiang on November 23 how postwar Japan should be dealt with. Chiang said Japanese militarists had to be wiped out. As to what form of government Japan should adopt, Chiang told Roosevelt, “that question can be better left to the awakened and repentant Japanese to decide for themselves.”
Roosevelt was also told the territories Japan wrested from China, such as Taiwan and the Penghu and Manchuria should be restored to their rightful owner. Okinawa, Chiang said, might be placed under the joint trusteeship of the United States and China.

Road to Cairo II
Chiang Kai-shek met and talked with President Franklin D. Roosevelt of the United States and Prime Minister Winston Churchill of Great Britain in Cairo, Egypt. The political affirmations of the tripartite summit conference were embodied in a statement known as the Cairo Declaration. The actual text of the statement was completed on November 26, 1943. Its final composition was hurried in order that it might be finished before Chiang left for Chungking and Roosevelt and Churchill for Tehran. It was agreed that Stalin would be told at once of the statement and it would be publicly issued as soon as possible thereafter.
Roosevelt and Sir Winston left for Tehran on November 27. They met Stalin and showed him the draft statement. Stalin “thoroughly approved of the communiqué and all its contents.” The declaration was made public on December 1. It expressed the resolve of the three Allies – the United States, Great Britain and China – to bring unrelenting pressure on Japan until they could obtain unconditional surrender from Tokyo. The declaration, which was not signed, says in part:
“It is their (the three leaders’) purpose that Japan shall be stripped of all the islands in the Pacific which she had seized or occupied since the beginning of the first World War in 1914, and that all the territories Japan has stolen from the Chinese, such as Manchuria, Formosa (Taiwan) and the Pescadores (Penghu), shall be restored to the Republic of China.”
The Cairo Declaration was not reported in Japan. The people of Taiwan did not know the Allies had decided to strip their island home off Japanese colonial rule and return it to China, from which it was ceded to Japan in 1895 under the Treaty of Shimonoseki. Taiwan became Asia’s first republic on May 23 by proclaiming a declaration of independence. Its first president, Tang Ching-sung, fled in 12 days, but the war of independence against Japan continued until October 21, when Tainan fell into the hands of the Japanese. A series of revolutions against Japanese colonial authorities followed, all aimed at independence with Chinese support or Taiwan’s return to Chinese rule.
The promise of the Cairo Declaration was reiterated in the final wartime pronouncement of the Allied leaders at Potsdam on July 26, 1945. President Harry S. Truman, Churchill and Stalin signed and “with the full concurrence of President Chiang Kai-shek,” issued the Potsdam Proclamation, which stated “The terms of the Cairo declaration shall be carried out.” Japan accepted the Potsdam proclamation to surrender on August 15, 1945.
The Cairo Declaration got the U.S. government planning for the initial postwar treatment of Taiwan under way. There were a number of questions to be answered. What would be the legal status of Taiwan between the time of a Japanese surrender and the formalizing of a Japanese cession of it to China under a treaty of peace? Would sovereignty continue to rest in Japan during this period, or would it reside with the United Nations which was founded in June 1945?

Taiwan’s return to China’s fold
As the United States continued to plan how to deal with Taiwan after the Second World War, American strategists had to ask if sovereignty over Formosa (Taiwan) would pass to China at the same time with its takeover of the island. Entirely apart from the legal principles involved, it was apparent that in practical application a clear-cut ruling would present difficulties for the United States. In the quandary thus produced, Washington made no public pronouncement at all on the subject. Nevertheless, the general thinking after the Japanese surrender was that although, by signing the instrument of surrender, Japan had relinquished sovereignty over Taiwan, and although the Chinese reoccupied Taiwan and assumed an interim administrative authority, legal transfer of that sovereignty to China would require formalization by a treaty of peace.
But no decisions were taken, while the Pacific War went on. A plan was formulated for the seizure of Taiwan to precede the occupation of the Philippines. It was abandoned, because President Franklin D. Roosevelt had to acquiesce to General Douglas A. MacArthur, who vowed when he left Luzon at the beginning of the war he “shall return.” It was not President Chiang Kai-shek who made Roosevelt change his mind to drop the plan to invade Taiwan. The island was neutralized by carrier air attacks, however. In the course of the U.S. advance on Japan after the recovery of the Philippines, Taiwan was bypassed in favor of an attack on Okinawa. The capture of Okinawa on June 21 obviated the need of seizing Taiwan for use as a staging area for he contemplated final assault on the Japanese home islands.
When Japan announced its acceptance of the Potsdam terms as a basis for surrender, the United States prepared a draft of General Order No. 1 to be issued by the Tokyo government for implementing those terms. This document, among other things, provided that the surrender of the Japanese armed forces in Taiwan would be taken by Chiang Kai-shek. Washington had to drop consideration of seizing Taiwan and running a military government after Chiang made clear the Chinese forces were ready to move with American assistance to Taiwan to accept the Japanese surrender.
On October 25, 1945, General Chen Yi, appointed administrator-general of Taiwan by Chiang Kai-shek, took over the administration of the island in pursuance to the Japanese instrument of surrender and to General Order No. 1. The instrument did not mention Taiwan specifically, but it stipulated complete acceptance and fulfillment of the terms of the Potsdam Proclamation, which had confirmed the provisions of the Cairo Declaration. Chiang made Taiwan the thirty-fifth province of the Republic of China.
All six million people on Taiwan and Penghu rejoiced in their good luck to be able to return to the Chinese fold. A truly moving welcome was extended to a Chinese reoccupation army that arrived at Keelung aboard American landing ships on October 17. The troops were more enthusiastically welcomed as they moved down to Taipei.

Short-lived welcome
Few who did not welcome the shabbily uniformed troops of Lt. Gen. Chen Kung-tah could imagine how enthusiastically people of Taipei did so on October 17, 1945. Tens of thousands of people lined the main streets to jubilate, waving small national flags of the Republic of China. Many women took out their long-hidden chipao or qibao (traditional women’s dress in China) and put them on just to appear in the lines to show their closer Chinese identity. All of them sang San Min Chu I or the Three Principles of the People, the national anthem, which they had just learned to sing, albeit practically none of them understood what they sang. The troops were hailed as liberators. They would see to it that the Japanese colonialists would all leave Taiwan. The people looked forward to be reunited with their brethren on the other side of the Taiwan Strait.
Chiang Kai-shek paid his first visit to Taiwan in 1946. The purpose was to “shun” the public celebration of his sixtieth birthday on October 31. It is customary for Chinese leaders to leave home and pass their birthdays in private. Accompanied by Madame Chiang, he stayed in Taiwan for a week and accepted a repaired mansion of the Japanese governor-general as a birthday present from the people of Taiwan. The building, which is now used as the Office of the President, is an edifice erected at a cost of 2.83 million yen, more than one-twentieth of Taiwan’s total budget of 47.18 million yen for the fiscal year 1912. Construction started in 1912 and was completed six years later. It was seriously damaged in American aerial bombings in 1945. General Chen Yi, administrator-general of Taiwan, could not use the damaged edifice and had to set up his office at the Taihoku (Taipei) city government building, which, with new annexes added, houses the Executive Yuan now.
People of Taiwan, including schoolchildren, chipped in to raise a fund for the repairs of the governor-general’s mansion, which was renamed Jieshouguan or Hall in Celebration of Chiang Kai-shek’s Birthday. The avenue leading to it was named Jieshoulu or Boulevard in Celebration of Chiang Kai-shek’s Birthday. The avenue was renamed Ketagalan Boulevard in 1996 by Chen Shui-bian, the then mayor of Taipei. Ketagalan were the indigenous people resident in the Taipei basin who have been all but totally assimilated by the ethnic Chinese. Chen named the Jieshouguan as the Office of the President last year. The plaque proclaiming the building as Jieshouguan was removed.
Taiwan also opened its first provincial games on the first anniversary of its retrocession to China. The games were closed on Chiang Kai-shek’s birthday, with the records – the best in China – presented to him as a gift in appreciation of his contribution to Taiwan’s liberation from Japanese colonial rule.
Up to the end of 1946, the people of Taiwan thought they were reunited on terms of equality with their brethren on the Chinese mainland. They still welcomed their new administration, which, however, assumed the character of a military government. The provincial administration soon outlived its welcome.

February 28 Incident of 1947
One American estimate placed the people massacred in the February 28 Incident of 1947 at 10,000. The bloody incident, which changed totally the relationship between the natives of Taiwan and the Chinese from the mainland, has been well recorded; and so only the role Chiang Kai-shek played in the tragic incident is dealt with in this column.
Chiang, who would be elected president shortly, received reports on the incident from his administrator-general of Taiwan Chen Yi. Chen was a general and doubled as commander of the Taiwan garrison command. But he had no troops of his own. While Chiang was ruling the whole of China, many of his generals commanded their own divisions that obeyed their orders rather than those of the generalissimo, who nominally was commander-in-chief of all the forces. Chen Yi was not one of such generals. He reported the riots after the killing of a bystander by a Taiwan Tobacco and Monopoly Bureau agent were planned and organized by the Chinese Communists.
Those were fabricated reports, however. No Communists were involved in the spontaneous riots, though they tried to take advantage of the incident to attempt an overthrow of the Chen Yi administration and liberation of Taiwan. Chiang, who was busy trying to suppress what he called a Communist rebellion in the Chinese civil war, believed General Chen Yi and granted the latter’s request to send reinforcements to Taiwan with a warning that no retaliation against the innocent people of Taiwan would be tolerated. Chiang’s Kuomintang chapter chairman in Taiwan sent a similar report.
As Chen Yi lacked forces to cope with a 2/28 incident settlement committee, headed by Taiwanese leaders, the islanders were in the ascendancy or in control throughout the island by March 5. Two days later, the committee demanded that the Taiwan garrison command be abolished and all Taiwanese “war criminals” be released at once. Among the war criminals or Taiwanese collaborators with the Japanese was C. F. Koo, the late business tycoon and chairman of the Straits Exchange Foundation, a semi-official organization charged with the conduct of non-official relations between Taiwan and China. The demand was considered an act of sedition and was so reported to the generalissimo.
On March 8 Maj. Gen. Chang Mo-tao, commander of the Fourth Gendarme Regiment, visited the settlement committee in Taipei and guaranteed that Chiang’s government in Nanjing would dispatch no troops to Taiwan and take no military action against the island. After dark, however, transport ships docked at Keelung and discharged over 10,000 troops. More than 3,000 others landed at Kaohsiung simultaneously. It was these troops who, with the help of the gendarmes, started the island-wide massacre in violation of Chiang’s order to take retaliatory action. Keelung was the first city “pacified” by the government force on that day. The SET TV cable network, commissioned by the Government Information Office, produced a doctored documentary about the pacification of the north Taiwan port city earlier this year in commemoration of the sixtieth anniversary of the 2/28 Incident, the “chief culprit” of which President Chen declared was none other than Chiang Kai-shek.

February 28 Incident II
I joined in an attack on a small Chinese contingent that guarded an arsenal near Sanzhi, only a few miles north of Tamsui. Sanzhi is the native village of President Lee Teng-hui. The attack was planned before the landing of the reinforcements from China at Keelung on March 8. All of us, about 45, were armed. I carried a dummy Japanese Type 38 rifle. We learned how to fire blanks – dummy rifles which could fire only blanks were used in military drills – in middle school during Japanese occupation of Taiwan. Some of us were armed with real rifles and pistols surrendered by policemen in Tamsui. Our purpose was to obtain weapons the Japanese had left in the small arsenal. A classmate of Lee Teng-hui was our war party leader. Like Lee, he was made a lieutenant in the Japanese imperial army at the end of the Second World War.
We were aboard a truck to get to the arsenal. Before reaching our destination, we were fired upon. The Chinese guards strafed with machine guns. Fortunately, none of us were wounded. Those were, I believe, warning shots. Our commander planned a pincers attack. One section advanced for a frontal attack, while another section would surprise the enemy from behind. That tactic didn’t work. We had to retreat without obtaining any weapons. In retreat, a couple of us dropped their dummy rifles, which were later picked up by the Chinese guards and identified as those kept in the Tanjiang High School arsenal. Its principal and an athletic education teacher were arrested and summarily executed. So were half a dozen of us in our small war party.
After that episode, I encountered a number of patrols aboard two-ton army trucks on which machine guns were mounted. I witnessed a younger brother of my classmate shot to death by a machine gun bullet. We were together on the main street of Tamsui when a gendarme patrol passed through to enforce martial law. My friend and I were able to find cover behind brick columns in the covered sidewalk. His brother couldn’t find a column and squatted beside a cement garbage box and got hit on the head.
That incident compelled my father to take me to Hsinchu, where he worked as a branch bank manager. He told me and one of my cousins in Hsinchu had a safe place, because the commander of the force enforcing martial law in the area was a native-born islander. Su Shao-wen, the commander, was a major general. He went to China from Taiwan in his youth and was graduated from Chiang’s military academy. We found Hsinchu truly peaceful, while the killing was going on elsewhere in Taiwan. In fact, there was no curfew. My cousin and I were able to go to movies every night while we were in that peaceful city. It was peaceful because General Su made sure his troops obeyed Chiang’s order against retaliation.
There might be other pockets of peace in Taiwan. If government troops obeyed Chiang’s order, there was no shooting to kill on sight. Even General Chen Yi couldn’t enforce discipline among the reinforcing troops who just did what they were told by their company commanders or platoon leaders. Chiang Kai-shek as commander-in-chief was responsible for the massacre. But he certainly was not the chief culprit. In fact, there were no chief culprits. Troops and their commanders who ordered summary executions were all culprits.
On March 16, 1968, all 347 villagers, most of them women and children, were massacred in My Lai, Vietnam, by a U.S. rifle company. The slaughter came to light, and altogether 26 officers and men were court-martialed for murder. Only one of them, Lieutenant William Calley, was convicted and sentenced to life in prison. President Richard M. Nixon freed him after he served four and a half months. Not even Calley’s divisional commander was charged as a culprit, let alone President Nixon.
Has Donald Rumsfeld, ex-secretary of defense, been called a chief culprit for the slaughter of Iraqi prisoners of war and civilians in the American-led invasion to topple Saddam Hussein? Or is Tony Blair so charged?

February 28 Incident III
After the February 28 Incident had been settled, Chiang Kai-shek met with U.S. Ambassador in Nanjing John Leighton Stuart and professed he was unaware of conditions on Taiwan. Chiang sent an investigation mission, headed by General Pai Chung-hsi, to Taiwan on March 17. Pai, minister of national defense, commanded general public confidence in China because of his long record for probity, for maintenance of discipline in his entourage, ad for his independence of character. Nevertheless, his report, or what was given out as purporting to be his report, stated that the revolt was due to Communist instigation, to the effects on Taiwanese of Japanese training, and to the machinations of ambitious islander politicians. General Chen Yi was exonerated.
At their meeting, Chiang asked Stuart to give him an independent report. A memorandum, prepared by the U.S. consul in Taipei, was presented to Chiang on April 18. It covered the incident in detail. Within a month after Chiang had received Stuart’s memorandum, General Chen Yi was relieved as administrator-general of Taiwan. Chiang appointed Wei Tao-ming, ambassador to the United States, to succeed Chen Yi. Wei was made governor. Taiwan’s provincial administration was on a par with all its counterparts on the Chinese mainland. During his term in office that lasted a year and a half, Wei made an honest effort to undo the ill effects of Chen Yi’s misgovernment. He formed a provincial council consisting of 14 members, half of whom were islanders. Chen Yi’s associates were replaced by new appointees, among whom many were islanders.
In a report to the Department of State, dated August 14, 1947, Lt. Gen. Albert Wedemeyer, chief of the U.S. military mission in China, summed up the situation in Taiwan as follows:
“Our experience in Formosa is most enlightening. The administration of the former Governor Chen Yi has alienated the people from the Central Government. Many were forced to feel that conditions under autocratic (Japanese) rule were preferable. The Central Government lost a fine opportunity to indicate to the Chinese people and to the world at large its capability to provide honest and efficient administration. They could not attribute their failure to the activities of the Communists or dissident elements. The people anticipated sincerely and enthusiastically deliverance from the Japanese yoke. However, Chen Yi and his henchmen ruthlessly, corruptly and avariciously imposed their regime upon a happy and amenable population. The Army conducted themselves as conquerors. Secret Police operated freely to intimidate and to facilitate exploitation by Central Government officials.
“The island is extremely productive in coal, rice, sugar, cement, fruits and tea. Both hydro and thermal power are abundant. The Japanese had efficiently electrified even remote areas and also established excellent railroad lines and highways. Eighty per cent of the people can read and write, the exact antithesis of conditions prevailing in the mainland of China. There were indications that Formosans would be receptive toward United States guardianship and United Nations trusteeship. They fear that the Central Government contemplates bleeding their island to support the tottering and corrupt Nanking machine and I think their fears well founded.”

Chiang’s arrival in Taiwan
Chiang Kai-shek was elected president in March 1948. By the latter part of that year, the tide was turning in favor of the Communists in the Chinese civil war. Chiang gave increasing attention to creating in Taiwan, as he had years before done in Sizhuan during the Second World War, a last resort stronghold from which he could carry on his fight against Mao Zedong. As a preparatory move, Chiang replaced Wei Tao-ming with General Chen Cheng as governor of Taiwan on January 5, 1949. The Chen administration lost no time in reasserting martial law. There followed a wave of arrests and executions of persons charged with being Communist sympathizers. The reign of white terror began.
For more than a month, passengers leaving the Taipei railroad station would see a huge government bulletin pasted on a wall announcing the execution of a score or more Communist traitors every morning. They all faced a firing squad at Machingding (Baba-cho in Japanese), where there used to be a “baba” or racecourse which was then turned into an army training ground. Not a few were falsely accused. Most of them were mainlanders, but quite a few independence activist islanders were executed as Communist sympathizers. Some Taiwanese leaders had to flee. Lin Hsien-tang, the leader of Taiwan’s autonomy movement in the 1920s and 1930s, fled for Tokyo on September 23 never to return. He died there in 1956. His Taiwan Bunka Kyokai or Taiwan Cultural Association, founded in 1921, formed an island-wide united front against Japanese colonial rule during what is known as the “Liberal ‘Twenties” in Japanese history.
Chiang announced his leave of absence from the presidency on January 21, 1949. His vice president, Li Tsung-jen, took over the reins of government to negotiate a truce with the Communists. The negotiations, in which Gen. George Marshall as a special U.S. envoy tried to mediate, broke down and the Communists crossed the Yangtze River to continue sweeping South China. Nanjing fell on April 23. Marshall, later made secretary of state, initiated the Marshall Plan for reconstruction of war-ruined Europe. Shanghai was lost on May 27. On October 1, Mao Zedong proclaimed the People’s Republic of China in Beijing. Canton or Guangzhou fell on October 13. The Kuomintang government moved to Taipei on December 7.
While in leave of absence, Chiang watched the developments with serious concern. Though he stepped down as president, he remained director-general of the Kuomintang, the ruling party. On April 25, he left his home town of Chikow for Shanghai and proceeded to the Chusan Islands. He continued to visit Matsu, Quemoy (Kinmen) and the Penghu Islands before arriving in Taipei on May 6.
In Taipei as head of the Kuomintang, Chiang made his plans of defense against the Communists. He followed Koxinga’s plan, almost to the letter. He kept the Chusans and Quemoy just as Koxinga did after his defeat at Nanjing in the war of resistance against the invading Manchu horde in 1661. Chiang took time out to meet Elpidio Quirino, president of the Philippines, and Syngman Rhee, president of South Korea, to talk about a grand anti-Communist alliance in Asia. On July 12 Chiang paid a fleeting visit to Guangzhou, where the government had been relocated. When Guangzhou fell, the government was moved to Zhongqing, where Chiang visited on November 14. The acting president, Li Tsung-jen, did not go to Zhongqing and instead left for the United States, where he lived until his death in 1976. Zhongqing fell on November 30. Chiang, however, stayed on until December 10. He took off for Taipei from Zhengtu on the Republic of China’s National Day, never to return to China. He vowed never to leave Taiwan before he could recover the mainland of China. He kept his word. He died in Taipei on April 5, 1975.

Chiang Kai-shek in Taiwan
For more than six months Chiang Kai-shek had to rule Taiwan not as president of the Republic of China. On February 24, 1950 the Legislative Yuan petitioned him to resume the presidency. The National Assembly and the Kuomintang’s central standing committee followed suit. Chiang responded to the call and, on March 1, took over the reins of government and became president again.
Taiwan was given a new identity. The island, still a province, was the Republic of China at the same time. With Taipei as its seat, the government of the Republic of China claimed to represent the whole of China. The country was a founding member of the United Nations and a permanent member of the U.N. Security Council. A few world powers, including the Soviet Union and the United Kingdom, derecognized the Republic of China, but a majority of nations continued to maintain diplomatic relations with Taipei. On the other hand, inasmuch as international relations are concerned, Chiang’s move turned Taiwan into a new nation-state, although that nation-state had existed as the Republic of China since January 1, 1912.
However, none of the powers that still kept diplomatic relations with the Republic of China moved their embassies to Taipei. They were waiting to see if the Chiang government would survive. As a matter of fact, all of them thought the government in Taipei would collapse in no time. The economy was shattered. The troops and the people were demoralized. Inflation was rampant. Consumer prices rose 776 percent in 1947 and 1,144 percent in 1948. The rate was 1,189 percent up to June 30, 1949. Government employees, including schoolteachers, had their pay in arrears to the tune of three to four months. Communist agitators circulated the People’s Liberation Army Journal in mimeograph sheets. College students danced a twist to the popular farmers’ song in rice transplanting time on campus in support of Mao Zedong’s Communist revolution.
Routed government troops evacuated to Taiwan had to occupy schools for temporary accommodation. Schools had to be closed, though the summer vacation was still a couple of months away. Taiwan was ripe for an easy takeover by the People’s Liberation Army. Speculation was rife that it didn’t take an invasion to complete the takeover. All Mao Zedong had to do, many people in Taiwan were convinced, was to have a radio station in Taipei announce the landing of his troops anywhere on the island.
Mao could not unleash his troops to bath Taiwan with blood for the simple reason that he could not take Quemoy and had no sufficient means of transportation to ferry soldiers to the island. Over 17,000 Communist troops landed on Quemoy on October 25, 1949. They had taken small boats and junks or even rafts to cross a narrow strip of waters separating Quemoy and the mainland. They were convinced that they could easily defeat the garrison on the offshore island. In fact, the government forces would either flee or surrender, when attacked. The invaders were mistaken. The Kuomintang forces, with no place to retreat to, made a last-ditch stand on Quemoy, routing the Communist at Kuningtou, a cape on that offshore island. It was the first victory the government forces had won in two years.

Chiang Kai-shek in Taiwan II
One most urgent task facing President Chiang Kai-shek’s government in Taipei was to tame its runaway inflation. On June 15, 1949, Governor Chen Cheng of Taiwan launched a program for monetary reform with the backing of three categories of assets: 800,000 ounces of gold Chiang Kai-shek had sent to the island from China, the property of public enterprises taken over from the Japanese and a loan of US$10 million loan. The new currency, known as New Taiwan (NT) dollars, was backed 100 percent by reserves of gold, silver, and foreign exchange with a ceiling of NT$200 million. The exchange rate was set at NT$5 to US$1, and the old currency, the Taiwan dollar, was called back at the ratio of 40,000 for NT$1. That meant inflation was four million percent in a mere four years.
The battle against inflation continued after Chiang’s arrival in Taipei. By June 1950 the currency ceiling had been reached. The continued government deficit financing required raising the NT$200 million limit by NT$50 million. In February 1951 a power station project called for another limited issuance of NT$95 million. After that there was no limit for note issuance. In the meantime, the wholesale price, with June 1949 as the base (100), surged up to 180 by the end of 1949 and rose to over 240 in the spring of 1950. A series of upward revisions of official exchange rates took place. By July 11, 1950 the rate had risen to NT$10.35 to US$1. The foreign assets of the Bank of Taiwan had been exhausted by the spring of 1951. Inflation, however, was tamed. The battle was won in mid-1953.
But what saved Taiwan was the Korean War, which broke out on June 25, 1950.
Before the war, on January 5, President Harry S. Truman issued a policy statement regarding Taiwan. He said:
“The United States has no predatory designs on Formosa or on any other Chinese territory. The United States has no desire to obtain special rights or privileges or to establish military bases on Formosa at this time. Nor does it have any intention of utilizing its armed forces to interfere in the present situation. The U.S. Government will not pursue a course which will lead to involvement in the civil conflict in China.
“Similarly, the U.S. Government will not provide military aid or advice to Chinese forces on Formosa. In the view of the U.S. Government, the resource on Formosa are adequate to enable them to obtain the items which they consider necessary for the defense of the island. The U.S. Government proposes to continue under existing legislative authority the present ECA (Economic Cooperation Administration) program of economic assistance.”
On the same day, Dean Acheson, secretary of state, commented on the statement to press correspondents in the form of “extemporaneous remarks.” He explained the president’s statement, while containing little that was new, had been prompted by the prevailing confusion abroad arising from the public discussion of the Formosa question in the United States. This discussion, he said, had aroused a great deal of speculation, which if allowed to continue would be prejudicial to American interests. In answer to a question concerning the fact that the president’s disclaimer of an intent to establish military bases in Formosa had been qualified by the phrase “at this time,” Acheson said it was a “recognition of the fact that in the unlikely and unhappy event that our forces might be attacked in the Far East the United States must be completely free to take whatever action in whatever area is necessary for its own security.”

Chiang Kai-shek in Taiwan III
On January 12, Dean Acheson, secretary of state, made an address before the National Press Club in Washington. He outlined the broad considerations on which U.S. policy in he Far East was then being based. He referred to the fall of Chiang Kai-shek’s government despite the “tremendous economic and military support and backing” accorded by the United States. He declared Chiang had in the course of the four years since the end of the Second World War completely lost the support of his own people. Acheson observed communism was the spearhead of Soviet Russian imperialism and its aim was to deprive Asian peoples of their national independence, and charged the Soviets with detaching and absorbing large areas of China.

Acheson then went on to discuss American security in the Pacific.
He defined the defensive perimeter of the United States in those waters as running along the Aleutians to Japan, thence to the Ryukyus and the Philippines. These, he declared, “must and will be held.” “So far as the military security of other areas in the Pacific is concerned,” he added, “it must be clear that no persons can guarantee these areas against military attack. … Should such an attack occur … the initial reliance must be on the people attacked to resist it and then upon the commitments of the entire civilized world under the Charter of the United Nations.”
That was tantamount to an invitation to Kim Il Song to attack South Korea and Mao Zedong to attack Taiwan.
Kim did take the invitation.
Two days after the Korean War had occurred, President Harry S. Truman made an about-face. He issued a statement on June 27, announcing:
“The attack upon Korea makes it plain beyond all doubt that communism has passed beyond use of subversion to conquer independent nations and will now use armed invasion and war. It has defied the orders of the Security Council of the United Nations issued to preserve international peace and security. …
“Accordingly I have ordered the Seventh Fleet to prevent any attack on Formosa. As a corollary of this action I am calling upon the Chinese Government on Formosa to cease all air and sea operations against the mainland. The Seventh Fleet will see that this is done. The determination of the future status of Formosa must await the restoration of security in the Pacific, a peace settlement with Japan, or consideration by the United Nations.”
Taiwan was now secure. No invasion was possible across the “Taiwan Strait. Chiang Kai-shek ordered his naval and air forces to cease attacks on the Chinese mainland.
On July 28 the Department of State announced the assignment to Taipei of a diplomatic representative with the rank of charge d’affaires to replace Ambassador John Leighton Stuart, who had been recalled from Nanjing for consultation in 1949. The U.S. mission in Nanjing had not followed Chiang’s government to Taipei but had remained at Hong Kong. Karl L. Rankin, the newly appointed charge d’affaires, arrived in Taipei on August 10 to open the U.S. embassy. He was made ambassador three years later.

Chiang Kai-shek in Taiwan IV
General Douglas A. MacArthur, commander of the U.N. forces in Korea, arrived in Taipei on July 31, 1950 for a conference with Chiang Kai-shek. On the following day, MacArthur said plans had been made to coordinate steps by American and Chinese forces to meet an attack that a hostile force might launch against the island; and he expressed confidence that such an attack would have little chance of success. Chiang announced an agreement has been reached on all the problems that had been discussed and the foundations had been laid for joint defense of Taiwan and for military cooperation between Taiwan and the United States.
The key factors in the shift that took place in U.S. China policy were the state of American public opinion and the outbreak of the conflict in Korea. The Chinese Communist intervention in the Korean War in October further strengthened the American decision that Taiwan should not be permitted to fall in Communist hands. The about-face demarche was complete with an address delivered before the China Institute on May 18, 1951, by Dean Rusk, assistant secretary of state for Far Eastern affairs. He said:
“ … We recognize the National Government of the Republic of China even though the territory under its control is severely restricted. We believe it more authentically represents the views of the great body of the people of China, particularly their historic demand for independence from foreign control. That government will continue to receive important aid and assistance from the United States. Under the circumstances, however, such aid in itself cannot be decisive to the future of China. The decision and the efforts are for the Chinese people, pooling their efforts, wherever they are, in behalf of China.”
That was the equivalent of an announcement that the United States was unqualifiedly supporting the government of the Republic of China.
Prior to President Truman’s announcement of suspension of American military aid to the Republic of China, U.S. weapons and equipment had gone to Taiwan under the US$125 million military aid program provided for by the China Aid Act of 1948. In addition, Chiang Kai-shek’s government transferred to Taiwan considerable quantities of supplies and equipment previously acquired from the United States as a fraction of the procurement costs. In the shipments in 1949 to Taiwan were included 123,000 rifles, 68 million rounds of .38 caliber ammunition, 19 million rounds of .45ammunition, 30 Sherman tanks, 1000 light tanks, 100 scout cars, and 200 AR 6 aircraft.
The armed forces on Taiwan were then greatly improved. General MacArthur, in his testimony before the Senate committees on armed services and on foreign relations on May 3, 1951, described his favorable impressions of the military establishment on Taiwan. He testified:
“There are some 500,000 troops, capable of being made into an excellent force. Their personnel was good and their morale high. Material equipment varied in quality and was deficient in artillery, trucks, and in a great many modern refinements. The Nationalists probably had between 200 and 250 planes, and their pilots were ‘rather good.’ The navy was only a conglomeration of small ships which looked smart but were capable merely of small coastal activities. If properly equipped, the troops would probably be in as good shape as would be possible without combat experience.”

Chiang Kai-shek in Taiwan V
In November and again in December 1950, General Douglas A, Macarthur recommended the use of Chinese forces from Taiwan as reinforcements in Korea. While this recommendation was not accepted in Washington, the Joint Chiefs reached a tentative agreement in January 1951 on a course of action that might be taken in the event that the U.N. forces were driven out of Korea. This plan provided for the use of the Chinese forces on Taiwan in operations against the mainland of China, if feasible, but not in Korea. Later in the same month, a supplementary program for military assistance to Taiwan’s army was approved. Assistance to Taiwan’s navy and air force was approved in February. In March the Joint Chiefs recommended that Washington approve the establishment of a military assistance advisory group and training mission for Taiwan. The Joint Chiefs studied and recommended a program of military aid calling for an expenditure of some NS$300 million for the government in Taipei to be provided in due course.
On April 20 the U.S. Department of Defense announced that there was being sent to Taiwan a military assistance advisory group, comprising 116 officers and men, to be headed by Major General William C. Chase. It was stated that the advisory group would operate as a part of the U.S. embassy in Taipei and would perform usual duties connected with the furnishing of military assistance by the United States to foreign governments. Later it was disclosed that the advisory group would be supplemented by the addition of another 400 to 500 military instructors and advisors. Secretary of State Dean Acheson affirmed at a press conference on April 25 that the assistance to Taiwan represented “no change” in policy toward the government of the Republic of China or the Far East in general. He gave a reminder of the fact that U.S. policy called for the “neutralization of Taiwan” and the U.S. Seventh Fleet had been ordered to carry out that policy.
General Chase’s group entered upon its duties in “Taiwan in the spring of 1951. Chase arrived in Taipei on May 1. Later in the month ‘General Omar Bradley, chairman of the Joint Chiefs of Staff, expressed the view that the more the United States strengthened Taiwan, the greater would be the confidence developed there and better would the Chinese there be able to improve the mobility of their reserves. He also expressed the opinion that the concentration of Chinese Communist troops opposite Taiwan at that moment was not so formidable as it had been a year earlier. This, he explained, did not mean that they could not invade Taiwan but to do so successfully they would have to build up their forces considerably. Since many of the ships of Taiwan’s navy were inoperable because of a lack of ammunition and for want of spare parts and repairs, the U.S. Navy developed a program to remedy these defects, in the expectation that within a few months after the program was implemented the condition of the island’s naval forces would be greatly improved. New jet fighters were also provided for “Taiwan’s air force, while its army was totally reorganized with the firepower nearly doubled.

Chiang Kai-shek in Taiwan VI
The U.S. military assistance advisory group, which was later expanded to include over 10000 officers and men, had one more contribution. American military aid boosted Taiwan’s morale. Both the military forces and the civilian population of Taiwan now had a growing belief in a better future. Taiwan was accorded an opportunity to make further progress, already begun, toward political reorganization and economic rehabilitation.
U.S. economic assistance began at the same time. With Chiang in Taipei, Taiwan inherited the residue of the China aid program of the United States, the current basis of which was the China Aid Act of 1948. That act had authorized US$338 million, which the later appropriation reduced to US$275 million, to be applied under the applicable provisions of the Economic Cooperation Act of 1948, together with a further appropriation of US$125 million for additional aid to Taiwan through grants, on such terms as Washington might determine, without reference to the provisions of the 1948 Economic Cooperation Act. This additional appropriation was intended to enable Taiwan to purchase military supplies and equipment wherever it wished.
One of the aid achievements which had a direct bearing on Taiwan’s economic development was to build infrastructure to foster agricultural and human resources, leaving the industrial development largely to private enterprises. The improvement of transportation and communications facilities and the provision of adequate and inexpensive electric power were prerequisites to rapid industrialization. The benefits of building multipurpose dams for irrigation and power generation went beyond the supply of electricity for household and industrial needs.
About 25 percent of the economic aid went to investment in human resources. It is a common shortcoming in thinking that development is too large in terms of investment in concrete things and too little in terms of investment in people. This shows itself especially in the deficiency in public health and education. Measures of the improvement of diets and for the elimination of debilitating diseases increased considerably Taiwan’s productivity.
With American aid, Taiwan was able to tide over the difficult decade of economic trouble. U.S. economic assistance was important, among other reasons, to the industrial development of Taiwan because the program of aid was shaped in accordance with the urgent needs of the time. Take the provision of foreign exchange to finance the trade deficit as an example. Industrial projects as a whole required more capital equipment. In view of the limited resources of the island for the manufacture of capital equipment, Taiwan, like the other underdeveloped areas would have to import a large portion of such equipment. The question of capital provision is consequently not merely a matter of savings; it is also a problem of the balance of payments. The inflow of foreign capital was extremely limited in the 1950s, averaging US$2.5 million a year for 1952-1959. Thus it is not possible to suppose that the difficulty can be overcome by the inflow of external capital. The amount of capital accumulation that can be financed from the domestic savings is liable to be more limited than would be apparent if one considers saving potential alone.

Peace with Japan
On October 20, 1950, Wellington Koo, ambassador in Washington, met U.S. Secretry of State John Foster Dulles at Lake Success where the U.N. General Assembly was in session. From Dulles Koo learned of the contents of the draft treaty of peace with Japan. In it, there was an article that had direct bearing on Chiang Kai-shek’s government in Taipei. That article provided that the status of Taiwan, the Pescadores, the Kurile Islands and southern Sakhalin was to be determined by Great Britain, the Soviet Union, China and the United States.
This, it seemed to Taipei, was in contravention of the Cairo Declaration of November 1943 and reaffirmed in the Potsdam Proclamation of July 1945. When Koo met Dulles again on December 19, he pointed out that inasmuch as the status of Taiwan had already been determined, there was no point in raising the question in connection with the peace treaty with Japan. On January 22, 1951 the government in “Taipei formally expressed its readiness to participate in the peace conference, which was scheduled to be held in San Francisco in September.
Meanwhile, Great Britain had extended diplomatic recognition to the People’s Republic of China. Several Asian countries, including Burma and India, followed suit. In mid-April Great Britain proposed that Beijing be invited to take part in the peace conference with Japan. In May and again in June the Soviet Union proposed that a meeting of the foreign ministers of he United Sates, the United Kingdom, the Soviet Union and the People’s Republic of China be held to discuss the question of the peace treaty. Dulles journeyed to London in June to consult with British Foreign Secretary Herbert Morrison on the issue, and they agreed upon a compromise solution: neither the Republic of China on Taiwan nor the People’s Republic was to be invited to the peace conference and Japan was to be allowed to make its own decision as to which of the “two Chinas” it should establish relations with after the peace treaty had gone into effect. Dulles told Koo of this decision and assured the latter that Japan would rather sign a peace treaty with Taipei than with Beijing. Dulles gave Koo a copy of the final draft of the peace treaty on July 6. The name of the Republic of China was not mentioned in the draft.
The peace conference opened in San Francisco on September 4, 1951. In addition to Japan, 51 of the 55 Allied countries participated. India, Burma and Yugoslavia refused to take part because they did not approve of the contents of the drat treaty. On September 7 Prime Minister Shigeru Yoshida of Japan expressed regret that the “Republic of China was not in San Francisco to participate in the conference. Yoshida condemned the Communist aggression in Asia, and said collective aggression should be met with by collective security arrangements.

Peace treaty with Japan II
On September 8 the peace treaty with Japan was signed by 48 of the 51 countries participating in the San Francisco conference. Since it was clear that Japan would henceforth be a member of the free world community, the Soviet Union took strong exception to the document and, together with Poland and Czechoslovakia, abstained form signing. Concurrent with the peace treaty, the United Sates and Japan signed a mutual security agreement. The purpose was to provide for the security of Japan against armed attacks by allowing the United State, in effect, to take over responsibility y for its defense, now that Japan was deprived by the peace treaty of the right to have its own military forces other than those necessary for the maintenance of internal order.
Since Dulles had assured Koo that Japan would sign a bilateral peace treaty with Taipei, the Republic of China on Taiwan expected that Tokyo would soon make known its intention to do so. On September 17, Karl L. Rankin, U.S. charge d’affaires in Taipei, informed George Yeh, foreign minister, that Washington had urged Tokyo to send as soon as possible a representative to Taipei to discuss the question of the peace treaty and that Tokyo had agreed to do so.
Actually, however, Tokyo was dragging its feet. It preferred to sit tight and avoid any hasty decision on the question, while watching developments. On October 30 Yoshida, in reply to a question put to him by a member of the Diet, said Japan had the right to choose with which side it should conclude a treaty of peace. “As to how this right should be exercised,” he added, “we shall have to take into consideration the objective circumstances and he Chinese situation in relation to the future of Japan. We should not make hasty decisions.”
Taipei was surprised at Yoshida’s statement. Yeh called the attention of Rankin to the statement, and asked for a clarification. Meanwhile, hostilities in Korea had reached a critical stage following the massive entry of Chinese Communist forces into the conflict. American had feelings toward Beijing ad become extremely hostile. Consequently, the question of whether Japan would choose Taipei or Beijing for the conclusion of the peace treaty became a matter of serious concern to the United States.
On December 10 Dulles made another trip to Tokyo and warned Yoshida that if Japan failed to confirm it would establish diplomatic relations with Taipei, the ratification by the U.S. Senate of the San Francisco Treaty and other related agreements would be placed in jeopardy. It was, therefore, imperative that Japan make known its intention concerning this question prior to final congressional action on the San Francisco pact. On December 24 Yoshida wrote a letter to Dulles to clarify the issue. Yoshida pointed out in the letter that since Beijing had been condemned by the United Nations as an aggressor in Korea and since Japan was in agreement with the U.N. action, the Japanese government was ready to enter into negotiations with Taipei for the peace treaty.
Thereafter Tokyo acted with dispatch to carry out the intentions expressed in the Yoshida letter. On January 30 Isao Kawata, aformer minister of finance, was appointed Tokyo’s plenipotentiary to conclude the peace treaty. Kawata and his delegation arrived in Taipei on February 7. On February 20 the peace conference was called to order at the Ministry of Foreign Affairs. The treaty was signed on April 28 and came into effect on August 5.

Peace Treaty with Japan III
Japan renounced Formosa and the Pescadores or Taiwan and the Penghu Islands in the Peace Treaty of San Francisco in 1951. However, it did not specify to whom Taiwan and the Penghus would be returned. That was repeated in the peace treaty between Japan and the Republic of China on Taiwan signed in 1952. That gave rise to an argument that Taiwan’s status has not been decided.
But the fact that Japan chose Chiang Kai-shek’s Republic of China over Mao Zedong’s People’s Republic to sign the treaty of peace is proof that sovereignty over Taiwan and the Penghus belongs to his government and its successor. President Harry S. Truman said in his June 27, 1950, statement “The determination of the future status of Formosa must await the restoration of security in the Pacific, a peace settlement with Japan, or consideration by the United Nations.” All three conditions were fulfilled when the treaty of peace was signed in Taipei.
There are three articles in the San Francisco peace treaty that are relevant to the status of Taiwan. Article 23 provided that the treaty should come into force when instruments of ratification had been deposited by Japan and by a majority, including the United States as the principal occupying power, of the 14 states specifically listed. China was not included in the list for the reason that no arrangements could be made for that country to participate in the negotiations and become a signatory to the treaty.
Article 25 stipulated that, for the purpose of the treaty, “the Allied Powers shall be the States at war with Japan, or any State which previously formed a part of the territory of a State named in Article 23, provided that in each case the State concerned has signed and ratified the Treaty.” Article 26 provided that Japan would be prepared to conclude with any allied power, as defined in Article 25, that had not become a signatory to the treaty, a bilateral treaty of peace on the same or substantially the same terms as those provided in the present treaty.
The last article means that, although China – represented by either claimant regime – was excluded as an original signatory to the treaty, Japan was free to conclude a separate treaty of peace with either of the governments in Taipei and Beijing. Moreover, in the treaty of Taipei, Japan recognized the claim to ultimate authority of Chiang Kai-shek’s government by referring to the territory now under its control but to territories “which may hereafter be” under the control of that government.
In an exchange of notes between the plenipotentiaries accompanying the treaty there was confirmed the understanding reached that the terms of the treaty “shall, in respect to the Republic of China, be applicable to all the territories which are now, or which may hereafter be, under the control of its government.” Japan regarded Chiang’s government as having the claim to ultimate authority over China.
Besides, uti possidetis enables Chiang’s Republic of China to claim sovereignty over Taiwan and the Penghus. Under uti possidetis – a principle in international law – a conclusion of treaty of peace between belligerents vests in them respectively a absolute property the territory under their actual control and the things attached to it and movables then in their possession except as otherwise stipulated (as by treaty). No such treaty was signed. The government under Chiang Kai-shek was in actual and full control of Taiwan when the treaty of peace was signed in Taipei.

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