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THE 
 REPUBLIC 
 OF 
 
 CHINA 
 
DEPARTMENT OF STATE PUBLICATION 6844 
 Far Eastern Series 81 
 
 Released October 1959 
 
 Public Services Division 
 
 Bureau of Public Affairs 
 
 For sale by the Superintendent of Documents, U.S. Government Printing Office 
 Washington 25, D.C. - Price 25 cents 
 
CONTENTS 
 
 INTRODUCTION . 
 
 TAIWAN 
 
 THE HISTORY . 
 
 THE PEOPLE AND THEIR CULTURE . 
 
 THE GOVERNMENT 
 
 THE ECONOMY 
 
 THE “PEOPLE’S LIVELIHOOD” 
 
 UNITED STATES ASSISTANCE 
 
 U.S.-CHINESE CULTURAL COOPERATION 
 
 FOREIGN POLICY . 
 
 UNITED STATES POLICY . 
 
 Page 
 
INTRODUCTION 
 
 On December 8, 1949, the Government of the Republic of China, 
 as a result of Chinese Communist military successes on the main- 
 land, established its provisional capital at Taipei on the island of 
 Taiwan. It was a government whose political control had been 
 made precarious by military defeat. Its very existence was 
 threatened with internal subversion by Communist agents and by 
 Communist military forces massed only 100 miles away across the 
 Formosa Strait. The armed forces of the Republic of China, al- 
 though numbering an estimated 500,000 men, were in the depths 
 of psychological defeat, ill-equipped and disorganized after their 
 flight from the mainland. 
 
 The Republic of China had assumed administrative control over 
 the island of Taiwan in 1945 following the Japanese surrender. 
 However, during the 1945-49 period the Chinese Government’s 
 resources, depleted as a result of the war against Japan, were 
 being expended on the civil war on the mainland and little could be 
 done to repair the wartime destruction and dislocation on Taiwan. 
 When the National Government established its capital on the is- 
 land, it found the Taiwanese economy still in a state of virtual 
 chaos. Little had been done to rebuild the large sections of the 
 island’s major cities and harbors which had been reduced to rubble 
 by wartime bombing. Industrial production seriously disrupted 
 by the war had not begun to recover. Agricultural production, 
 once sufficient to provide the island’s major exports, was at a level 
 barely adequate to meet the basic needs of Taiwan’s burgeoning 
 population. Transportation and communication facilities, once 
 among the best in the Far East, were in a state of disrepair. 
 Health and welfare services had been exhausted and for the first 
 time in many years cholera and bubonic plague threatened. 
 
 With the Government there came to Taiwan over 1.5 million 
 
 1 
 
men and women, including members of the armed forces, who were 
 refugees from the Communists. These refugees, seeking food, 
 shelter, and livelihood, placed additional pressure upon the 
 weakened economy. The influx of mainland refugees and acute 
 shortages of goods of every kind resulted in runaway inflation 
 which threatened to bring financial ruin to people of every eco- 
 nomic class. Furthermore, the 7 million Taiwan-born Chinese had 
 been made restive by dissatisfaction with the immediate postwar 
 provincial government and looked upon the great influx of 
 mainland arrivals with suspicion and foreboding. 
 
 But the Chinese Government, although faced with these seem- 
 ingly insurmountable problems, had a number of assets. The first 
 was the immeasurable asset of the patriotism of the free Chinese, 
 their will to survive as a free people, and their determination to 
 rebuild their nation. 
 
 The second asset was the economic potential of the island of 
 Taiwan. By no means lavishly endowed with natural resources, 
 it nevertheless contained adequate power and agricultural and 
 mineral resources on which to build a base for free China. 
 
 The third asset was the friendship of the United States, which 
 helped first with emergency relief supplies and then provided 
 capital, equipment, and technical assistance to help rebuild the 
 strength of free China. 
 
 Today, only 10 years later, the Government of the Republic of 
 China can point to remarkable progress. It has grown in strength 
 and stability. Political reforms have been undertaken to eliminate 
 the inefficiency and corruption which came with wartime chaos 
 and dislocation, defeat, and infiltration. Far-reaching economic 
 and social reforms and political measures to promote local self- 
 government mark the Republic’s progress toward democracy. 
 
 The economy has made phenomenal strides. Most prewar pro- 
 duction levels in agriculture and industry on Taiwan have been far 
 surpassed, and these gains are reflected in a marked improvement 
 in the standard of living of the people. 
 
 The Government has acted to prevent a repetition of the ruinous 
 inflation of the early postwar years. Security measures have 
 eliminated the threat of Communist internal subversion. In edu- 
 cation, in public health, and in social welfare, steps have been 
 taken to promote the well-being of the populace. 
 
 Militarily the Republic of China is the second largest non-Com- 
 munist force in Asia. Reorganization, reequipment, training, and 
 a strong sense of mission among members of the armed forces 
 have resulted in a modern fighting force of high morale. 
 
 2 
 
Today the Republic of China on Taiwan is a symbol of the fact 
 that communism has not won a total victory in China. The Re- 
 public of China is the voice of China in the United Nations and is 
 recognized as the legitimate Government of China by 45 free-world 
 governments. (Only 22 non-Communist governments recognize 
 the Chinese Communist regime.) It offers a focus for the loyalties 
 of some 12 million overseas Chinese in the countries of Southeast 
 Asia who retain their sense of Chinese identity. The Republic of 
 China is a bastion of free-world defense in the Far East and its 
 forces are a powerful deterrent to further Chinese Communist 
 military conquest in the area. 
 
 This pamphlet is a description of the present territorial base of 
 free China, its history, and its resources. It is an account of the 
 progress made by the Republic of China since 1949, the problems 
 it has overcome, its situation today, and its prospects for the 
 future. 
 
TAIWAN 
 
 Taiwan has been the Chinese name of the island for many centuries. Six- 
 teenth-century Portuguese sailors, seeing it for the first time and struck by 
 its breathtaking beauty, hailed it as “Ilha Formosa,” or beautiful, island, and 
 since that time it kas been known to the West as Formosa. 
 
 Taiwan is a large, semitropical island lying about 100 miles off 
 the China mainland in the same latitude as the Hawaiian Islands. 
 It extends some 250 miles from northeast to southwest and is about 
 90 miles across at its widest point. Its area of about 14,000 square 
 miles is a little less than the combined areas of Massachusetts, 
 Rhode Island, and Connecticut. The 64 islands of the Penghu 
 (Pescadores) group about 25 miles west of Taiwan and 13 other 
 small, virtually barren islands off Taiwan are administered by the 
 Taiwan Provincial Government. 
 
 The Republic of China also controls two groups of offshore is- 
 lands: the Kinmen (Quemoy) group, approximately 5 miles from 
 the mainland in Amoy Bay; and the Matsu group, about 9 miles 
 from the mainland at the mouth of the Min River. It also controls 
 a number of less significant islands lying off the mainland of 
 China. 
 
 Taiwan is the central link in a chain of islands bordering the 
 east coast of Asia. It commands the heavily traveled sealanes 
 between Japan and the ports of Southeast Asia. In testimony to 
 its strategic location, during World War II it was a major Japa- 
 nese military outpost and a springboard for their attacks on South 
 China, the Philippines, and Southeast Asia. 
 
 The eastern two-thirds of Taiwan is covered by rugged, high 
 mountain ranges running from north to south. Elevations of 
 
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 10,000 feet are common and several peaks exceed 12,000 feet. 
 These mountain regions, characterized by dense evergreen forests 
 and short, swift streams running through deep gorges, give Taiwan 
 the beautiful scenery which inspired its Western name of Formosa. 
 Development of the extensive hydroelectric power potential af- 
 forded by the streams and exploftation of the abundant forestry 
 
 512700 O—59——2 5 
 
resources of this region have been hampered by the rugged terrain 
 and the consequent transportation difficulties. The extent of the 
 mountain region also severely limits the amount of land available 
 for agriculture, and in the arable land in the foothills to the west 
 of the main ranges terracing is necessary and soil erosion is a 
 constant problem. 
 
 While on the east coast the mountains drop precipitously to the 
 sea, the western portion of Taiwan slopes downward to form a 
 low alluvial coastal plain. In this area is concentrated the greatest 
 part of the island’s population of almost 11 million people, most 
 of whom live in small rural villages commonly less than one mile 
 apart. Here virtually every acre of land is intensively cultivated. 
 
 Taiwan’s climate varies from tropical to semitropical, with long 
 wet summers and short mild winters. Rainfall follows the typical 
 monsoon pattern and is abundant over most of the island. How- 
 ever, since precipitation varies greatly both seasonally and locally, 
 much of the agricultural land is dependent upon irrigation facili- 
 ties. Mild earthquakes are common, and violent tropical storms 
 frequently cause much damage. 
 
 The warm climate and abundant rainfall are a boon to agricul- 
 ture and make possible the cultivation of two and sometimes even 
 three crops per year on the same land. Despite the limited amount 
 of arable land Taiwan’s high productivity makes it self-sufficient 
 in most basic foodstuffs. Agricultural products, particularly rice, 
 sugarcane, and pineapples, are the island’s main exports and are 
 the basis for its most important industry, food processing. 
 
 Taiwan is not richly endowed with the mineral resources neces- 
 sary for modern industry. However, because of the relative 
 abundance of hydroelectric power and coal, Taiwan has been able 
 to develop a number of important industries such as petroleum 
 refining, aluminum processing, steel milling, and the manufacture 
 of textiles and chemical fertilizers—all based on imported raw 
 materials. Coal, copper, gold, sulfur, limestone, pyrites, and salt 
 are the main commercially exploited minerals. 
 
 Principal Cities 
 
 Taipei, located in the northeast, has a population of over 800,000 
 and is the provisional capital of the Government. It is the leading 
 city of Taiwan and the political, economic, and cultural center of 
 free China. It is the northern focus of the main rail and highway 
 routes. It has the largest steel mill in free China, and a number 
 
 6 
 
of factories producing consumer goods. Chi-lung (Keelung), 
 Taipei’s port, with a population of over 182,000, handles well over 
 half of the island’s foreign trade. 
 
 Kao-hsiung, in the south, has a population of almost 330,000 
 and is Taiwan’s second-ranking port and leading industrial center. 
 Petroleum refining, aluminum processing, and the chemical 
 industry are concentrated here. 
 
 T’ai-chung, located in the northern portion of the western allu- 
 vial plain, has a population of some 328,000 and serves as a dis- 
 tributing center for many of the agricultural products of the 
 region. The new provincial capital is in a suburb of T’ai-chung. 
 T’ai-nan in the southwest with 262,000 inhabitants is the ancient 
 capital of Taiwan and a cultural center. 
 
THE HISTORY 
 
 In A.D. 605 when Ho Man, a Chinese navigator, reached Taiwan 
 and claimed it in the name of the Sui dynasty, the island was in- 
 habited by fierce, headhunting aborigines. For many years these 
 inhabitants made colonization a hazardous affair. Though Taiwan 
 officially became a protectorate of the Chinese empire in 1206, the 
 successive dynasties maintained only a remote and tenuous control 
 over the island. It was not until the 14th and 15th centuries that 
 colonizers from the southern provinces began to settle the island 
 in large numbers and to bring Chinese culture to Taiwan. 
 
 In the 16th century Western navigators, then beginning to ex- 
 ploit the trading routes to the Far East, came upon the island. 
 During the next several centuries Portuguese, Spaniards, and 
 Dutch made a number of unsuccessful attempts to establish perma- 
 nent trading colonies on Taiwan. Two early Japanese expeditions 
 of conquest likewise ended in failure. 
 
 In 1661 during the Manchu conquest of China, large numbers of 
 refugees and partisans of the Ming dynasty fled from the main- 
 land and established a government on Taiwan loyal to the Ming. 
 Led by General Cheng Ch’eng-kung (known as Koxinga in the 
 West), the Chinese patriots held out against the Manchus for 20 
 years, using Taiwan as a base for raids against the mainland. In 
 1682, when the Manchu dynasty was firmly installed, the Chinese 
 on Taiwan recognized the suzerainty of the Manchu emperors and 
 Taiwan became administratively part of the Chinese coastal 
 province of Fukien. Cheng Ch’eng-kung, the hero of the Ming 
 resistance, is still venerated today by the people of Taiwan. 
 
 Emigration from the mainland and expeditions against the 
 primitive aborigines continued during the 17th, 18th, and 19th 
 centuries. Eventually the primitive tribesmen were driven into 
 
 8 
 
the remote mountain regions and Taiwan flourished as a trading 
 center. When China began to trade with the West after the 1858 
 treaties of Tientsin, two of Taiwan’s ports were of sufficient im- 
 portance to be included as treaty ports. The commercial impor- 
 tance of the island continued to grow and in 1884 Taiwan was 
 separated from the province of Fukien and elevated to a provincial 
 status of its own. 
 
 Japanese Rule 
 
 By the terms of the Treaty of Shimonoseki following the Sino- 
 Japanese War of 1894-95, Taiwan was ceded to Japan. The people 
 resisted this transfer to Japanese control and, led by former Chi- 
 nese officials on the island, declared Taiwan an independent 
 Republic on May 23, 1895, the first ever to be established in Asia. 
 This rebellion was easily suppressed by the Japanese with their 
 superior military force, but for years during the period of Japa- 
 nese rule the populace continued to harass their rulers with 
 sporadic uprisings and acts of sabotage. 
 
 Taiwan remained in Japanese hands for 50 years during which 
 it was developed economically as an integral part of the Japanese 
 colonial empire. It became an important source of agricultural 
 exports to supply Japan’s food needs, and it exported to Japan 
 more than it received. 
 
 The economic development undertaken by the Japanese resulted 
 in substantial benefits for the people of the island whose standard 
 of living was quite high by Asian standards. The Japanese built 
 a transportation and communication network and toward the end 
 of their rule established a number of important industries such as 
 petroleum and aluminum refining. Taiwan became the seat of 
 important Japanese military and naval bases, and during the latter 
 days of World War II the island suffered heavy attack by Allied 
 aircraft. 
 
 At the wartime Cairo Conference in 1943 China, the United 
 States, and Great Britain agreed that “all the territories Japan 
 has stolen from the Chinese, such as Manchuria, Formosa, and 
 the Pescadores, shall be restored to the Republic of China.” At 
 the end of the war in 1945 the Chinese Government received the 
 surrender of the Japanese forces on Taiwan and assumed control 
 of the island as a province of China. It was 4 years later, with 
 the defeat of the Nationalists on the mainland, that Taiwan be- 
 came the seat of the Government of the Republic of China and 
 Taipei the provisional capital. 
 
 9 
 
THE PEOPLE AND THEIR CULTURE 
 
 Population 
 
 Despite 50 years of Japanese rule the people of Taiwan are 
 thoroughly Chinese in language, culture, religion, and race. The 
 only remnants of the non-Chinese population of Taiwan are some 
 150,000 aborigines who still inhabit the isolated mountain regions. 
 
 According to a 1955 estimate about four-fifths of the Chinese of 
 Taiwan were island-born descendants of the mainland Chinese who 
 emigrated from Fukien and Kwantung provinces chiefly between 
 the 16th and 19th centuries. The others were mainland-born 
 Chinese (and their children) who fled from Communist oppression 
 during and after the military conquest of the mainland. 
 
 Though the overall population density of Taiwan is about 710 
 persons per square mile, most of the people live in the one-fourth 
 of the land area which is suitable for cultivation, and here the 
 population density per square mile of arable land is about 2,800 
 persons. One-fourth of the people live in cities of more than 
 50,000 inhabitants, the majority residing in small rural villages. 
 About 83,000 Chinese live in the Pescadores Islands, concentrated 
 in and near the town of Penghu. In addition to the garrison 
 troops, the offshore islands have a population of about 58,000, of 
 which about 47,000 reside in the Quemoy group. 
 
 Taiwan has a high birth rate and, with its relatively high stand- 
 ards of public health, a low death rate. The current rate of popu- 
 lation increase has been estimated at more than 3 percent annually, 
 which, if continued, would result in a doubling of the population 
 within 20 years. 
 
 Language and Culture 
 
 The Chinese of Taiwan share the same strong cultural heritage 
 as their brothers on the mainland. Fifty years of Japanese occu- 
 
 10 
 
pation of the island did little to change the Chinese society there. 
 The Japanese exerted their control through the existing social in- 
 stitutions and customs. In particular, they exerted control through 
 the traditional Chinese pao-chia system, under which family and 
 village groups jointly share responsibility for the conduct of in- 
 dividual members. The conquerors maintained distinct residen- 
 tial areas for their own use and there was very little intermarriage 
 between the two nationalities. 
 
 In the immediate prewar years the Japanese made a serious 
 attempt to spread their culture and ideals among the people of 
 Taiwan in order to develop a sense of loyalty and support for the 
 empire. By 1943 about 70 percent of the children of primary 
 school age were being educated exclusively in the Japanese language 
 and the school system was being used to indoctrinate young people 
 with Japanese cultural ideals. As a result, most Taiwan-born 
 Chinese between the ages of 25 and 40 speak Japanese as a 
 second language. However, this educational program did not last 
 long enough to make any fundamental change in the essentially 
 Chinese outlook of the people. 
 
 In the early postwar years a considerable amount of tension 
 developed between the mainland-born Chinese and the Taiwanese 
 Chinese, culminating in an uprising in 1947. This social conflict 
 stemmed from a number of causes. Most of the mainland refugees 
 came from the cities of China and were of the educated, profes- 
 sional class or engaged in trade and commerce. The Taiwanese- 
 Chinese were largely of rural background and had been denied 
 opportunities for higher education and managerial experience dur- 
 ing the Japanese occupation. There was a language difference— 
 most of the Taiwanese-Chinese speaking the Fukien and Hakka 
 dialects of their ancestors who had migrated from the southern 
 Chinese provinces, and the majority of the new arrivals from the 
 mainland speaking Mandarin, the national language. 
 
 The policies of an inept and harsh provincial governor, at a 
 time when the Central Government in Nanking was preoccupied 
 with the civil war, further contributed to the estrangement of 
 many Taiwanese-Chinese, who came to feel that they were being 
 treated unfairly. 
 
 Measures undertaken by the Government since that time have 
 greatly changed this situation. Land reform has done much to 
 improve the welfare of the largely Taiwan-born rural population. 
 There has been a considerable growth in local self-government, 
 giving villagers a greater voice in deciding their own affairs. The 
 
 11 
 
Government has adopted a policy of equal privileges for all in the 
 civil service, and an increasing number of Taiwan-born are hold- 
 ing important posts. Primary education is now uniform and free 
 and all have the same opportunities for higher education. In addi- 
 tion, the Government’s “Speak Kuo Yu” (the national language, 
 “Mandarin”) program, begun in 1946, has proved successful in 
 eliminating difficulties in communication. Today virtually every 
 youth under 20 speaks Mandarin and an adult education program 
 has spread the use of Mandarin among older elements of the popula- 
 tion as well. 
 
 Religion 
 
 With the exception of a minority of Christians and Muslims, most 
 of the people on Taiwan are Buddhists, although their religious 
 beliefs also include an amalgamation of the traditional Chinese 
 practices of ancestor veneration, Taoism, and the philosophy of 
 
 The Spring and Autumn Pavilion at Kao-hsiung, a tribute to 
 General Kwan Yu, historical hero of Taiwan. 
 
Confucianism. This amalgamation lacks a generally accepted 
 ecclesiastical hierarchy. Many of the festivals of China are basi- 
 cally religious in nature, commemorating the feast day of popular 
 deities or celebrating seasonal occurrences. One of the most im- 
 portant elements of the popular religion is the respect for and com- 
 memoration of departed ancestors, a natural outgrowth of the 
 tradition of filial piety and respect for elders. 
 
 The basis of traditional Chinese morality and ethical ideals is 
 to be found more in the family system and the training in tradi- 
 tional Chinese conduct given each child in his home than in any 
 institutional religious instruction. 
 
 The official policy of the Republic of China is to accord freedom 
 and toleration toward all religions. Well-established government 
 policy provides for the separation of church and state and pro- 
 hibits the teaching of religion in the public schools. 
 
 Education 
 
 One of the strongest and most firmly established traditions of 
 Chinese culture is a respect for scholarship and learning and a 
 recognition of the importance of education. The government has 
 placed considerable emphasis on improving and extending the 
 educational facilities on Taiwan and on further raising the literacy 
 rate which is already as high as 60 to 70 percent. Government 
 policies provide that public school education shall have a strong 
 ideological content, emphasizing the teaching of the doctrines of 
 Dr. Sun Yat-sen and exposing the fallacies of Communist doctrine. 
 
 Education has expanded markedly on Taiwan since the island 
 was restored to Chinese control. Today primary education is free 
 and compulsory for all children between the ages of 6 and 12, and 
 a government program has as its 1961 goal the extension of the 
 period of compulsory education for another 3 years. To achieve 
 this goal, school construction and teacher training have received 
 special attention. 
 
 Prior to 1946 there were less than 200 students enrolled at the 
 National Taiwan University, then the only university on the island. 
 Total enrollment in institutions of higher learning 10 years later 
 was over 22,000. The National Government maintains two uni- 
 versities; the provincial government maintains two universities, 
 two colleges, and four specialized institutions on the college level. 
 There are, in addition, a number of private colleges. To encourage 
 
 512700 O—59—3 13 
 
higher education many government grants and scholarships are 
 made available to qualified students, and facilities for college and 
 university education are being expanded. However, at the present 
 time existing higher education facilities are insufficient to meet the 
 demand for them; thus the competition for entrance to college is 
 intense. 
 
 The Government has developed an adult education program in 
 which over 170,000 students had enrolled in 1955. 
 
 The Press 
 
 The highly literate population of Taiwan supports 28 daily news- 
 papers, including two English-language dailies, and over 400 
 periodicals. There are 32 radio stations and 5 motion picture 
 laboratories which produce documentary and educational films. 
 
 While many of the important information media on Taiwan are 
 controlled by the Government or by the Kuomintang Party, inde- 
 pendent newsmen have considerable freedom to express their 
 opinions. There are a number of private independent newspapers 
 and magazines, some of which express opposition to many govern- 
 ment policies. 
 
 Because of the immediacy of the Communist threat to Taiwan 
 the Government feels it is of vital importance to encourage national 
 unity. However, since the general sentiment of all elements of 
 the population is strongly anti-Communist, censorship is not neces- 
 sary to assure press support for the Government’s basic anti- 
 Communist goals. There is no prepublication censorship of the 
 press on Taiwan, and the postpublication controls which exist have 
 permitted the expression of differing opinions on matters of 
 Government policy. 
 
 14 
 
THE GOVERNMENT 
 
 The Republic of China had its origins in the revolt against the 
 Manchu dynasty, which began in 1911 and was led by Dr. Sun 
 Yat-sen. The aim of Dr. Sun’s followers was to substitute for the 
 monarchy a republic based on the San Min Chu-I or “Three Prin- 
 ciples of the People,” propounded by Dr. Sun. These were the 
 Principle of Nationalism, the Principle of Democracy, and the 
 Principle of the People’s Livelihood. 
 
 Three Principles of the People 
 
 These Three Principles of the People established the objectives 
 of the young Republic’s national policy. They continue to guide 
 the present Government and have acquired new significance in the 
 course of world events. 
 
 The Principle of Nationalism established the goal of the inde- 
 pendence and liberty of the Chinese nation. As a corollary it 
 preaches the ideal of universal brotherhood and world peace. It 
 has guided the Republic’s policy of encouraging united international 
 action against aggressor nations. 
 
 Under the Principle of Democracy, Dr. Sun advocated that the 
 people should have adequate power to control their government. 
 This principle is reflected in the constitution, which gives to the 
 people the rights of election and recall of officials, initiative, and 
 referendum. 
 
 The Principle of the People’s Livelihood teaches that social 
 justice depends upon economic security. It states that the people 
 have the right to be supplied with basic needs such as food, cloth- 
 ing, shelter, and the means of communication, and advocates 
 nationwide economic planning to produce wealth and capital for 
 
 15 
 
all the people. In fulfillment of this principle, the Government 
 has undertaken far-reaching measures to equalize land ownership 
 and has engaged in economic planning to develop China’s resources 
 for the public benefit. 
 
 Three Stages of the Chinese Revolution 
 
 The first task which faced the Chinese revolutionaries and their 
 party, the Kuomintang, was the overthrow of the Manchu regime 
 and the monarchical system and the achievement of national unity 
 in China. There was after 1911 a long and bitter struggle against 
 warlords who ruled large areas as though they were independent 
 nations. Until 1928 military objectives were paramount and the 
 Kuomintang governed through a military administration. 
 
 With much of the Chinese nation under the nominal control of 
 the Kuomintang, the revolution entered upon its second stage— 
 that of political tutelage under the party. This period of one- 
 party rule was essential, in the eyes of the revolutionaries, to 
 undertake the tremendous task of building a modern nation and to 
 prepare the Chinese people for constitutional government. This 
 period was prolonged during World War II, when the Chinese 
 nation was fighting for its very existence against the Japanese 
 invaders, and later by the struggle against Communist insurrection 
 and subversion. 
 
 The period of Constitutional Government, the third and final 
 phase of the revolution, began in 1946 when President Chiang 
 Kai-shek’s wartime pledge was fulfilled by the calling of a nation- 
 wide multiparty Constituent Assembly of 1381 delegates at Nan- 
 king to formulate and adopt a constitution for the Republic of 
 China. 
 
 The Constitution 
 
 The constitution which was adopted by the Assembly came into 
 effect in 1948. It provides for a strong central government con- 
 trolled ultimately by the people. Though the constitution reflects 
 the influence of European and American institutions, it also em- 
 bodies traditional Chinese features. 
 
 In accordance with Dr. Sun’s theories, the constitution reserves 
 to the people the four powers of election, recall, initiative, and 
 referendum and makes the infringement of these and other rights 
 
 16 
 
by public officials punishable under civil and criminal law. All 
 citizens, both men and women, over the age of 20 have the right 
 to vote. A broad bill of rights guarantees freedom of domicile, 
 speech, correspondence, religion, and assembly. It provides for 
 equality before the law and the right to prompt trial. Economic 
 and social clauses guarantee the right to work and the right to 
 hold property, and they commit the Government to the enactment 
 of public health, social insurance, and labor legislation. 
 
 The National Assembly 
 
 The highest organ of government is the National Assembly 
 which, according to the constitution, “exercises political power on 
 behalf of the people.” Delegates are chosen by popular election 
 and are of two types: those elected by district on the basis of popu- 
 lation and those elected to represent various groups such as over- 
 seas Chinese, occupation groups, or women’s organizations. 
 Though the constitution provides for elections every 6 years, 
 Communist control of the mainland has made the holding of na- 
 tionwide elections impossible, and the present Assembly of 3,045 
 delegates has been in office since 1947. The National Assembly 
 elects, and can impeach, the President and the Vice President and 
 is empowered to amend the constitution. 
 
 The Presidency 
 
 The constitution provides for a strong chief executive whose 
 powers include those usually accorded to the chief of state of a 
 republic. The President represents the nation in foreign relations, 
 is commander-in-chief of the armed forces, and appoints and re- 
 moves most high-ranking civil and military officials. 
 
 Because of the crisis situation caused by the Communist take- 
 over, President Chiang Kai-shek was granted special emergency 
 powers by the first session of the National Assembly which elected 
 him first Constitutional President of the Republic in 1948. When 
 President Chiang was reelected by the second session of the assem- 
 bly in 1954 these powers were extended. Asa result of the Assem- 
 bly’s mandate President Chiang is empowered to govern by virtual 
 decree, and some of the civil liberties provided in the constitution 
 have been temporarily suspended in the interests of national 
 security. 
 
 17 
 
In part, the personal prestige and authority of President Chiang 
 are responsible for the degree of power wielded today by the 
 President. As Director General of the Kuomintang since 1938 
 and as leader of the Chinese nation through the days of revolution, 
 war, and reconstruction he has, through his faith, courage, and 
 determination, become recognized as the leader of all anti-Com- 
 munist Chinese. 
 
 The legal successor to President Chiang is the Vice President, 
 Chen Cheng, who has had a long and distinguished career as a 
 military and government official. He also holds the important 
 and influential position of President of the Executive Yuan, or 
 Prime Minister. 
 
 The Five Yuan 
 
 The five branches of the Chinese National Government are in 
 the form of independent councils or Yuan. 
 
 The constitution defines the Executive Yuan as the highest ad- 
 ministrative organ of government. The President of this Yuan, 
 who is generally known as the Prime Minister, is appointed by the 
 President of the Republic with the consent of the Legislative 
 Yuan. 
 
 The Executive Yuan directs the work of eight ministries: For- 
 eign Affairs, National Defense, Finance, Education, Interior, 
 Justice, Economic Affairs, and Communications, as well as the 
 Mongolian and Tibetan Affairs Commission and the Overseas 
 Chinese Affairs Commission. The heads of the various ministries 
 and commissions are appointed by the President upon the nomi- 
 nation of the Prime Minister and together form the Executive 
 Yuan Council or Cabinet. 
 
 The Legislative Yuan is a popularly elected unicameral body of 
 over 700 members which is constitutionally empowered to adopt 
 laws, review budget estimates submitted by the ministries, ratify 
 treaties, and declare war. This Yuan also has the right to interpel- 
 late members of the Executive Yuan Council and can force the 
 resignation of the Prime Minister. Its members are in theory 
 elected for 3-year terms and are eligible for reelection. However, 
 because it has been impossible to hold a nationwide election since 
 the Communist conquest of the mainland, the present members 
 have been in office since the last national election in 1948. 
 
 The organization of the Judicial Yuan embodies the concept of a 
 separate and independent judiciary. The control of the judicial 
 
 18 
 
system is divided between this Yuan and the Ministry of Justice 
 under the Executive Yuan, which regulates the system of courts 
 throughout the nation. Under the Judicial Yuan are four agencies: 
 (1) a Council of Grand Justices, which renders decisions on the 
 interpretation of the constitution and resolves conflicts between 
 local and national law; (2) a Committee for the Discipline of 
 Public Functionaries; (3) the Administrative Court, which deals 
 with charges against government agencies; and (4) the Supreme 
 Court, which is the court of final appeal for civil and criminal 
 cases. 
 
 The Control Yuan and the Examination Yuan reflect traditional 
 Chinese theories of the function of government. ‘The Control 
 Yuan has the power to audit government accounts and to investi- 
 gate and impeach government officials who can then be prosecuted 
 through the court system. The Examination Yuan administers 
 the system of civil service examinations for the selection of gov- 
 ernment officials. This examination system, deeply rooted in the 
 earliest history of China, has been modernized to include testing 
 for modern technical and management skills. 
 
 Provincial and Local Government 
 
 The Government of the Republic of China has continued to main- 
 tain.the provincial and local levels of government on Taiwan. In 
 practice the authority of the strong central government operating 
 under emergency powers has tended to limit the degree of local 
 autonomy which under normal circumstances would be exercised 
 by local bodies under the provisions of the constitution. In 1950 
 and 1951 the Central Government took steps to improve this situ- 
 ation, and since that time popular elections have been held regularly 
 for local officials. 
 
 The Taiwan Provincial Government, headed by a presidentially 
 appointed Governor, administers civil and local affairs such as 
 education, police, health, agriculture, and forestry. Participation 
 of Taiwan-born citizens in government affairs is steadily increas- 
 ing. At the present time more than 50 percent of the executive 
 positions in the Provincial Government are held by people born on 
 Taiwan. The executive Provincial Council of 21 members is ap- 
 pointed by the Central Government, while the legislative body, the 
 Provincial Assembly, is composed of 57 popularly elected repre- 
 sentatives. The Assembly reviews important Provincial Govern- 
 ment measures, audits expenditures, receives petitions from the 
 
 19 
 
people, and decides on regulations concerning the rights and obli- 
 gations of citizens. It can initiate proposals to the Provincial 
 Government and interpellate the government’s: members. 
 
 On the local level free elections are now held regularly for the 
 selection of county and municipal councilors, magistrates, and 
 mayors. 
 
 Political Parties 
 
 The Kuomintang or Chinese National People’s Party, founded 
 by Dr. Sun Yat-sen, has been the leading political influence in 
 China since the early days of the revolution. Almost all officers of 
 the Government today are members of the Kuomintang or adher- 
 ents of its fundamental principles, and the party program forms 
 the basis for the Government’s national and foreign policies. 
 However, in recent local elections there have been increasing num- 
 bers of successful independent and non-Kuomintang candidates. 
 
 The political doctrines of the Kuomintang are based on the teach- 
 ings of Dr. Sun and the basic writings of President Chiang. Its 
 policies are formulated by the President in his role as party leader, 
 assisted by a 10-man standing committee which includes Vice 
 President Chen Cheng and other high-ranking government officials. 
 The basic operating organ of the party is the Central Party Head- 
 quarters, directed by a Secretary General. 
 
 The vigorous and active party organization places special em- 
 phasis upon broadening its support among farmers and workers 
 and maintains close contact with many professional and women’s 
 organizations and youth groups. It is active among the overseas 
 Chinese, particularly in Southeast Asia. Its widespread publicity 
 program, conducted through all the major information media, gives 
 strong support to the Government’s anti-Communist activities. 
 
 A party reform movement in 1950 carried out a program to 
 reinvigorate the party, eliminate factionalism, and tighten party 
 discipline over members. Membership has grown to an estimated 
 350,000. 
 
 There are two other political parties on Taiwan, the Democratic- 
 Socialist Party and the Young China Party. Neither has a wide 
 popular following nor possesses substantial political influence. 
 Both are strongly anti-Communist, although in opposition to some 
 of the domestic policies of the Kuomintang. They are represented 
 in both the National Assembly and Legislative Yuan. 
 
 20 
 
THE ECONOMY 
 
 General Characteristics 
 
 Taiwan has an agricultural economy. Well over one-half of the 
 labor force is engaged in farming, forestry, or fishing. Industry, 
 which engages 9 percent of the working population, is concen- 
 trated in food processing and light manufacturing and has a sec- 
 ondary but growing role in the economy. In 1957 agricultural 
 crop production accounted for 28 percent of the gross national 
 product of almost $1 billion ; 23 percent was accounted for by man- 
 ufacturing output. 
 
 Since the end of World War II, the Taiwan economy has been 
 characterized by rapidly rising levels of production in almost every 
 field. Spurred by government planning and American economic 
 aid, the overall production increase between 1950 and 1958 has 
 been approximately 80 percent. 
 
 While the agricultural resources of Taiwan are well developed, 
 with almost every acre of arable land under cultivation, the in- 
 dustrial potential is far less developed. Gains in industrial pro- 
 duction have been much higher than those in agriculture and hold 
 greatest promise for the future. In the 1953-56 period of the 
 first 4-year plan, the value of manufacturing output rose by 57 
 percent while agricultural crop production rose only 18 percent. 
 The current 4-year plan, to be completed in 1960, aims at a rise 
 of 104 percent in the value of industrial production over 1956 
 levels and an increase of 19 percent in agricultural production. 
 
 In addition to its role in national economic planning, the Gov- 
 ernment of the Republic of China is also an important entrepreneur 
 in the Taiwan economy. When the Government assumed control 
 of Taiwan in 1945, most of the enterprises formerly controlled by 
 
 512700 O—59-—4 21 
 
the Japanese were reorganized into public corporations. At the 
 present time government enterprises control or dominate a num- 
 ber of the important sectors of the economy—sugar refining, fer- 
 tilizer manufacture, petroleum refining, transportation, utilities, 
 financial facilities, and foreign trade. Government enterprises 
 are also important in other fields. However, government control 
 over many businesses is being gradually liquidated. It is the estab- 
 lished policy of the Government to encourage the development and 
 growth of new private enterprises and to sell out government in- 
 terests in public corporations to private investors. As a result of 
 measures taken to this end, private enterprise has supplanted 
 government as the major producer and today accounts for the 
 greater part of the annual gross national product. 
 
 Economic Problems 
 
 Though Taiwan today has a rapidly expanding economy which 
 supports a standard of living second only to Japan in the Far East, 
 the island has a number of major economic problems. 
 
 Because of the ever-present threat of Communist invasion from 
 the mainland, the Republic of China, as a matter of national sur- 
 vival, is forced to maintain a large military establishment. This 
 defense effort annually absorbs a very substantial portion of the 
 entire national budget. It removes a substantial portion of the 
 labor force from productive work. It prevents the accumulation 
 of large amounts of capital which could be channeled into the de- 
 velopment of the civilian sector of the economy. As a consequence, 
 under present circumstances Taiwan is not economically self- 
 sufficient. Substantial amounts of American aid are necessary 
 both to supplement the Government’s own military defense efforts 
 and to bolster the civilian economy so that it can support the 
 defense establishment. 
 
 A second cause of Taiwan’s economic problems is its rapidly 
 rising population which is placing increasing pressure upon a 
 limited resource base and a limited amount of arable land. Despite 
 the rapid natural population growth and the influx of the mainland 
 refugees, the phenomenal production gains of the past 10 years 
 have caused the per capita gross national product to continue to 
 increase. However, to maintain the present living standards for 
 the people of Taiwan, free China must continue to expand pro- 
 duction, utilizing the island’s agricultural, mineral, and power 
 resources to the fullest extent. 
 
 22 
 
If Taiwan’s production gains are to continue to keep pace with 
 its rapid population growth and if it is to develop industries which 
 will further alleviate its trade deficit, large amounts of investment 
 capital will be required to expand existing production facilities 
 and develop new ones. An estimated $807 million in investment 
 capital will be required to achieve the production goals of the 
 current 4-year plan. While the Government has taken measures 
 to encourage domestic private investment and investment by over- 
 seas Chinese and foreigners, extensive borrowing and utilization 
 of aid funds will be necessary if the goals of the plan are to be 
 achieved. 
 
 Despite these problems, the economy of Taiwan shows promise 
 of continued large-scale improvement. There is every reason to 
 believe that the Government and people of free China, with U.S. 
 assistance, can continue to raise production levels in both industry 
 and agriculture and improve the island’s capacity for self-support. 
 
 Agriculture, Forestry, and Fisheries 
 
 Agriculture 
 
 Despite a basic shortage of farm land, Taiwan’s agricultural 
 resources are capable of further development. Reclamation meas- 
 ures will be able to bring at least some additional land under 
 cultivation. For example, a project is now underway to study the 
 possibility of utilizing some 135,000 or more additional acres of 
 tidelands bordering the Formosa Strait. The completion of the 
 cross-island highway, scheduled for 1959, will open additional 
 mountain land for potential development for farming and grazing. 
 
 Another encouraging factor is that not all of Taiwan’s farm- 
 lands are yet producing their maximum yields. By careful selec- 
 tion of crops, improvement of seed, increasing the irrigation 
 facilities, and the adoption of modern farming techniques, these 
 yields can be brought to their potential peak. Irrigation facilities, 
 already servicing over 60 percent of the farmland, are scheduled 
 for extension and improvement. The completion of the Shihmen 
 reservoir project, about 40 kilometers south of Taipei, is expected 
 to yield water for an additional 135,000 acres of land and increase 
 rice production by as much as 69,000 metric tons. 
 
 Because of the practice of multiple cropping, the farmland of 
 Taiwan must be heavily fertilized to maintain its productive 
 capacity. In addition to large quantities of night soil and other 
 
 23 
 
A Taiwan farmer smiles as he holds up a sample sheaf of rice from his fields. 
 
 organic fertilizers, 600,000 tons of chemical fertilizers are required 
 annually to maintain present production levels. The application 
 of additional quantities of these fertilizers can be expected to raise 
 production. Imports of fertilizers are today the largest single 
 item in Taiwan’s foreign exchange budget, but the projected in- 
 creases in domestic production will help to diminish reliance on 
 foreign supplies. 
 
 Another factor which has limited Taiwan’s production is that of 
 crop pests and diseases. Estimated losses from crop pests amount 
 to an estimated 15 percent of the rice crop and 25 percent of the 
 sugar crop. Recently the banana weevil destroyed about one-half 
 of the banana plantations in central Taiwan within a 2}-year 
 period. The Chinese Government, with U.S. assistance, has under- 
 taken a major campaign to eliminate these losses by educating 
 farmers in the proper techniques for controlling pests and diseases 
 and by making available the necessary implements, insecticides, 
 and other chemicals. 
 
 24 
 
Over 80 different crops are grown in Taiwan but only a few are 
 of significant commercial importance. Rice and sugar alone earn 
 almost 75 percent of the foreign exchange and produce 75 percent 
 of the value of all farm crops. Together with sweet potatoes, tea, 
 tobacco, peanuts, and bananas, they account for more than 90 
 percent of the total farm crop value. 
 
 Over one-half of the total acreage of farmland is devoted to at 
 least one crop of rice, the principal diet staple and an important 
 export item. In the prewar period an average of 30 percent of 
 Taiwan’s annual rice crop was exported to Japan. In recent 
 years, with a greater population to feed and increased rice con- 
 sumption per capita, only a small portion of the record-breaking 
 crop has been available for export. 
 
 Cane sugar is still the most important export crop, though the 
 current production is only 70 percent of the average in the prewar 
 years, when Taiwan supplied almost all of Japan’s sugar. Today, 
 because of Taiwan’s increased grain needs, less land is devoted to 
 
 Old and new meet. A water buffalo eyes the small power tiller 
 destined to replace him. 
 
raising sugarcane. Taiwan’s own sugar consumption has also in- 
 creased and a smaller percentage of the crop is available for export. 
 
 Formerly a diet staple for farm families, sweet potatoes are 
 now most important as a livestock food. Because they have a 
 short growing season they are widely planted as a second crop. 
 Citrus fruits, bananas, and pineapples are important fruit crops, 
 the last having the highest commercial value. More than 10,000 
 tons of tea are produced annually, mostly for export. Another 
 important crop is citronella grass which is used to make the popular 
 insect repellent. Taiwan produces 60 percent of the world’s supply 
 of citronella oil. 
 
 Other important crops are wheat, peanuts, cassava, soybeans, 
 jute, and tobacco. 
 
 Livestock, principally hogs and poultry, ranks second in value 
 to rice among agricultural products. Hogs alone provide an esti- 
 mated one-sixth of the average farmer’s income. Draft animals, 
 principally the water buffalo, are the principal source of farm 
 power. There has been a shortage of draft animals and efforts 
 are being made to replace them with small power cultivators. 
 
 Forestry 
 
 Despite its enormous potential in forestry resources, Taiwan 
 is not now self-sufficient in all types of wood products. Develop- 
 ment and production costs are high, because of the inaccessibility 
 of the mountain forest regions. Timber production reached a post- 
 war peak in 1958, and with the opening of the new cross-island 
 highway in 1959 further production gains can be anticipated. An 
 important forestry product and export crop is natural camphor, in 
 which Taiwan has a virtual world monopoly. However, the 
 world market for natural camphor products has decreased con- 
 siderably with the development of synthetic substitutes. 
 
 Fisheries 
 
 Fisheries products are an important source of diet protein for 
 Taiwan’s people. The island’s fishing fleet, with financial and 
 technical assistance from the United States, has expanded con- 
 siderably in recent years. Further gains in fisheries production 
 are scheduled in the current 4-year plan, chiefly by expansion of 
 the deep-sea fishing fleet. 
 
 26 
 
Production Gains 
 
 Taiwan’s agricultural, forestry, and fisheries production has 
 been rising rapidly since the end of the war. In 1958 the produc- 
 tion of rice, sweet potatoes, peanuts, wheat, soybeans, inshore 
 fisheries, and hogs reached an alltime high. Production of 
 tea, pineapple, citrus fruits, timber, and deep-sea fish ex- 
 ceeded that of any year since the end of the war. These 
 production gains would not have been possible without the 
 hard work and efforts of the Chinese people and the programs 
 undertaken by the Chinese Government to channel the efforts of 
 the rural population into the most effective undertakings. In this 
 effort to improve the agricultural sector of Taiwan’s economy, the 
 work of the Chinese-American Joint Commission on Rural Re- 
 construction (JCRR) has been of vital importance. 
 
 The JCRR 
 
 The Joint Commission on Rural Reconstruction had its origins 
 in the immediate postwar period when the United States and 
 China established a joint agricultural mission to investigate various 
 phases of the agricultural problems of China. On the basis of 
 extensive studies of the land and water resources of China, this 
 mission concluded that agricultural production could be greatly 
 increased by the application of modern knowledge and methods. 
 
 The U.S. China Aid Act of 1948 authorized the creation of the 
 JCRR and directed it to “formulate and carry out a program for 
 reconstruction in rural areas of China, which shall include such 
 research and training activities as may be necessary or appro- 
 priate.”” The Commission was established in October 1948 with 
 its headquarters in Nanking, and in 1949 after the takeover of 
 the mainland by the Communists, its headquarters was moved to 
 Taiwan. 
 
 Two of the JCRR directors are appointed by the President of 
 the United States and three by the President of China. Its pro- 
 gram is designed to bring about maximum improvements in rural 
 Taiwan for a minimum expenditure of American dollars. As was 
 explained in the first report of the Commission: 
 
 One point which cannot be overemphasized ... is that the program was 
 not an aid program in the ordinary sense. It was a program which was 
 directed toward assisting the people to help themselves. It was directed to 
 
 release those latent, inert impulses of the rural people to find their own 
 solutions, to work out their problems as their needs dictate. 
 
 The operations of the Commission are only partially financed 
 
 27 
 
A young girl, her face, arms, and legs protected from insects and sunburn, 
 helps with the pineapple harvest. 
 
 with U.S. aid dollars. For example, during the 1957 fiscal year 
 JCRR’s contribution to 480 different projects on Taiwan amounted 
 to 40 percent of their total cost, and the various agencies in Taiwan 
 which sponsored the projects provided 60 percent of the funds 
 needed. Of the portion provided by the JCRR, only 6 percent was 
 in U.S. dollars. The remaining 94 percent was in counterpart 
 funds—in Chinese currency generated by the sale of U.S. mate- 
 rials in Taiwan. 
 
 The JCRR is not an operating agency which carries out programs 
 for rural improvement. It merely furnishes technical and financial 
 
 28 
 
aid to projects undertaken by the people of Taiwan themselves 
 which are deemed to be worthy of support. More than one-half of 
 the JCRR aid is given directly to the lower levels of government 
 and groups such as local farmers’ associations and fishermen’s 
 associations, which actually undertake the programs, while the 
 remainder is channeled through the central or _ provincial 
 government. 
 
 The projects assisted by the JCRR include programs designed 
 to increase crop production, control crop and livestock diseases, 
 improve livestock, extend irrigation facilities, improve the health 
 of the rural population, increase the utilization of forest resources, 
 minimize soil erosion, and strengthen agricultural education 
 programs. 
 
 One recent JCRR project was designed to eradicate hog cholera 
 in one county of Taiwan. Quarantine stations were established 
 to prevent the entry of infected animals, and all hogs in the county 
 were vaccinated. This program was so successful that it is being 
 used as a model for similar programs in other areas. Another of 
 the Commission’s projects was an investigation by trained engi- 
 neers to determine the economic and technical feasibility of build- 
 ing a new reservoir for power and water control purposes. 
 
 The JCRR has also assisted the development of a 4—H program 
 on Taiwan. Since 1952 this rural youth movement has grown to 
 a total of about 1,200 clubs with over 10,000 members. 
 
 Some of the most spectacular results of JCRR’s work have been 
 achieved in the Kinmen (Quemoy) and Matsu island groups, about 
 100 miles west of Taiwan and within sight of the Communists on 
 the mainland. Agricultural and livestock production have been 
 boosted through the introduction of pest and disease controls and 
 the application of modern methods. Health centers have been 
 established and bubonic plague, once a dreaded disease on the 
 islands, has been eliminated. 
 
 Land Reform 
 
 One of the most important programs which the J CRR has as- 
 sisted is the land reform undertaken by the Chinese Government. 
 This program was undertaken in three stages marked by the 
 enactment of three basic measures: reduction of farm rent, the 
 sale of government lands to farmers, and the land-to-the-tiller pro- 
 gram. Its outstanding success can be attributed in part to the 
 painstaking preparation which was made for each stage, largely by 
 the JCRR, and to the extensive educational campaign undertaken 
 
 512700 O—59——_5 29 
 
by the Government and the JCRR to acquaint individual farmers 
 with their new rights. 
 
 The land tenure system found on Taiwan after the war spelled 
 poverty for the average farmer. Though accurate records are 
 lacking, it has been estimated that about half of all the farmland 
 was worked by tenants who were forced to pay as much as 60 or 70 
 percent of the yield of the main crop in annual rent. Most rental 
 contracts were merely verbal agreements, and the farmer had 
 little protection for his right to till the land. After the farmer had 
 paid his rent and had bought seed, fertilizers, and other necessities, 
 he had little left over to use for making improvements on his land. 
 And since his tenure rights were insecure, he had little incentive 
 in any case to devote any extra money which he might have to 
 make permanent improvements on his rented farm. 
 
 Farm Rent Reduction. The first phase of the land reform pro- 
 gram was the adoption of regulations to establish the maximum 
 percentage of the annual main crop yield which could be charged 
 as rent by landlords. In 1949, after extensive surveys by the 
 JCRR, the Government adopted a series of regulations regarding 
 land tenure and in 1951 passed an act to reduce farm rent to 37.5 
 percent. This act also provided for written rental contracts with 
 2 minimum term of 6 years. The Government and the JCRR 
 began a widespread educational campaign to acquaint the farmers 
 with the terms of these laws and the procedures by which they 
 could obtain their benefits. 
 
 The rent reduction program bore immediate fruit. With added 
 income the farmer was able to make improvements on his land, 
 and with his tenure rights protected he had the incentive to do so. 
 
 Sale of Government Land. The second stage of land reform was 
 the sale by the Government of publicly owned land. More than 
 half of the 256,359 acres of public tenanted land was offered for 
 sale to the farmers tilling it. A portion of the public land was 
 retained by the Government for water and soil conservation or for 
 public enterprises. By early 1955 a total of 151,049 acres had been 
 sold to 121,953 farm families. One-fourth of all of Taiwan’s 
 tenant farmers were able to acquire at least some of the land they 
 were tilling. 
 
 Land-to-the-Tiller. The ultimate objective and the final phase 
 of the Government’s land reform policy was the land-to-the-tiller 
 program. Even after the sale of public lands about 613,581 acres 
 of farmland were in the hands of landlords and there were still 
 some 300,000 tenant families. One of the basic principles of the 
 
 30 
 
Aerial view of typical farm houses and paddy fields of Taiwan. 
 
 program was that these farmers would be allowed to buy the land 
 they tilled without assuming a heavier financial burden than the 
 annual 37.5 percent rent. In contrast to Communist “land reform” 
 methods, fair consideration was given to the rights and interests of 
 the landlords who had acquired their holdings legally under the 
 prevailing land tenure system. 
 
 To implement this program, the Chinese Government bought 
 land from the landlords and sold it to its tillers at a price which 
 was two and one-half times the annual yield of its main crop. 
 The landlords received 70 percent of their payment in commodity 
 bonds carrying 5 percent interest, redeemable in 5 years. The 
 remaining 30 percent of the price was paid to them in shares in 
 public corporations. Thus the landlord was protected against the 
 effects of inflation since he was assured payment in terms of com- 
 modities rather than in currency. The portion of the payment 
 
 31 
 
made in shares in public corporations helped to promote private 
 ownership and channeled capital from agriculture into industry. 
 
 By 1957 the total tenanted land in Taiwan had been reduced 
 to 16 percent. Today about 75 percent of Taiwan’s farmers own 
 all or part of the land they till. With more income, farmers are 
 making improvements on their land. They can afford better seed 
 and modern farm implements. And with improved economic and 
 social status the farmers are taking a greater interest in com- 
 munity affairs and are assuming a larger share of responsibility 
 for managing local government. 
 
 These land reform measures adopted by the Republic stand in 
 sharp contrast to the Communist-style “land reform” carried out 
 on the mainland. There the Communists ruthlessly liquidated 
 the “rich peasant” class and temporarily redistributed its land to 
 the tillers. But the hapless farmers soon found that the Com- 
 munist “reforms” meant forced collectivization of farms and 
 compulsory deliveries to the state of far more of their produce 
 than the landlords had ever demanded. Collectivization was fol- 
 lowed by the even more oppressive agricultural commune policy, 
 which completely divorced the peasants from the land and turned 
 them into mere “production units” which could be used for what- 
 ever tasks the state saw fit. 
 
 Industry 
 
 Only a small part of Taiwan’s industrial potential has been 
 developed. Production gains in most of the major industries 
 during the past 9 years have been phenomenal, and continued large- 
 scale gains can be anticipated for the future. 
 
 Power and Fuels 
 
 A key to past and future growth of the industry of Taiwan is 
 to be found in the development of the island’s electric power re- 
 sources. Steep mountain streams and heavy rainfall give the 
 island a hydroelectric potential estimated as high as 3 million 
 kilowatts annually, only about 10 percent of which has been de- 
 veloped. Because of the problems involved in developing these 
 hydroelectric resources—variable rainfall, lack of adequate storage 
 sites for water, silting of reservoirs—hydroelectric generating 
 facilities must be supplemented with thermal generating plants 
 which burn coal and use steam to generate electric power. For- 
 
 32 
 
tunately, Taiwan’s coal resources are sufficient to supply the 
 needed thermal facilities. 
 
 Taiwan’s current 4-year plan has established a 1960 goal of a 
 generating capacity of about 600,000 kilowatts from hydroelectric 
 and thermal plants. The Chinese are well on their way to achiev- 
 ing this goal, largely because of the substantial investment of U.S. 
 aid funds—over $63 million—in the rehabilitation and expansion 
 of those power plants built during the Japanese occupation, in the 
 construction of new hydroelectric and thermal generating stations, 
 and in the improvement of the electric power transmission and 
 distribution system. Reinvestment of the earnings of the Govern- 
 ment-owned Taiwan Power Company and sizable U.S. private 
 loans have also made important contributions to financing power 
 developments. 
 
 Today Taiwan has 36 generating stations, 25 of which are hydro- 
 electric plants. In the Far East the island is second only to Japan 
 in power production. Power rates are among the lowest in the 
 world, and a high percentage of the rural as well as the urban areas 
 is supplied with electricity. Industry, particularly aluminum re- 
 fining and the manufacture of chemical fertilizers, is the major 
 consumer. 
 
 One of the major hydroelectric undertakings now in the con- 
 struction stage is the multipurpose Shihmen Dam, with a generat- 
 ing capacity of 120,000 kilowatts. The Government is also explor- 
 ing the possibility of constructing nuclear power facilities. 
 
 Taiwan’s coal production is sufficient for the island’s current 
 needs, and there is a small exportable surplus. Almost all of the 
 island’s estimated 100-200 million metric ton reserve is in bitumi- 
 nous coal and occurs in characteristically thin seams which are 
 difficult and costly to mine. U.S. assistance has been devoted to the 
 exploration and development of new mines and the modernization 
 of present equipment and methods. 
 
 The geological structure of the island gives Taiwan a good 
 potential for being a petroleum producing area, and surveys of 
 oil resources are now underway. Current production, however, is 
 very small. Natural gas production is of greater importance, 
 supplying a significant portion of domestic fuel requirements. 
 
 Minerals and Mining 
 
 Aside from coal mining, the extraction of minerals is a relatively 
 minor factor in the island’s economic development. Copper is the 
 most important industrial metal produced; however, the large 
 
 33 
 
domestic demand exceeds current production by between 10 and 20 
 percent annually. Limestone is the most abundant and the most 
 widely exploited mineral. Taiwan also produces sufficient quanti- 
 ties of the basic construction materials such as sand, gravel, clay, 
 building stone, and glass sand to meet all of its own requirements. 
 It also produces all or the bulk of its requirements for gold, silver, 
 pyrites, sulfur, and serpentine and some of its requirements of 
 asbestos and tale. Solar salt is produced in quantities sufficient for 
 export. 
 
 Manufacturing and Processing 
 
 Taiwan has over 14,000 separate manufacturing and processing 
 enterprises. Over 40 percent of the U.S. project assistance is in- 
 vested in the development of this sector of the economy, particu- 
 larly in the fertilizer, paper, and chemical industries. Smaller 
 amounts of American aid have been used to develop other indus- 
 tries, including cement and ceramics production, wood products 
 and logging projects, and metal production and processing. 
 
 A section of the Taiwan Aluminum Corporation in Kao-hsiung, which produces 
 aluminum ingots, machine parts, bus bodies, electric cables, and many other 
 important products. 
 
Stacks of bagasse board, widely used in construction, await shipment from 
 the Changhua mill of the Taiwan Sugar Corporation. Bagasse, left over from 
 sugarcane after pressing, was formerly considered and used only for fuel. 
 
 The largest earner of foreign exchange for the Taiwan economy 
 is the sugar industry which is responsible for about 14 percent of 
 the total industrial output. This industry is dominated by the 
 Government-owned Taiwan Sugar Corporation, which was formed 
 by consolidating five of the sugar companies developed by the Jap- 
 anese. In addition to sugar, this corporation also produces molas- 
 ses, yeast, alcohol, and bagasse board. Pineapple canning is also of 
 high commercial importance and efforts are being made to expand 
 the export market for pineapples. 
 
 The production of fertilizer is the most important of Taiwan’s 
 chemical industries, and, because the farming population is so 
 dependent upon adequate supplies of reasonably priced fertilizers, 
 it is regarded as a public utility by the Government. Next to power 
 the fertilizer industry has received the largest amount of American 
 
 35 
 
aid for plant expansion. Development projects underway will 
 make the island nearly self-providing in nitrogenous fertilizers, 
 though smaller amounts of phosphate and potash fertilizers will 
 still have to be imported. 
 
 Relatively small amounts of American aid have been invested 
 in the textile industry which ranks second to food processing and 
 accounts for about 16 percent of the total value of factory produc- 
 tion. Developed almost entirely since the end of the war with 
 refugee capital and machinery brought from the mainland, the 
 industry’s $100 million production in 1958 filled domestic require- 
 ments and provided some exports to Asian markets. Con- 
 centrated in cotton today, the industry started production of rayon 
 in the latter part of 1957. 
 
 Production of basic metals, metal products, and machinery ac- 
 counted for about 9 percent of all manufacturing in 1958. Metal 
 production is mostly for the local market, though there are signifi- 
 cant exports of aluminum ingots. In 1957 Taiwan produced more 
 than half of domestic requirements for steel sheets, galvanized iron, 
 and tinplate and about half of her total requirements for iron and 
 steel products. The raw materials for most of these industries 
 must be imported. 
 
 Production of machinery of all types has been expanding con- 
 siderably. Taiwan now produces threshing machines, jeeps and 
 light trucks, tool-making machinery, refrigerators, electric fans, 
 and light bulbs. Current development plans call for increased ex- 
 ports in this category as markets are developed in Asia. 
 
 Petroleum refining, concentrated in a Government-owned estab- 
 lishment at Kao-hsiung, utilizes imports of Middle Eastern oil. At 
 the end of 1958, refining capacity was about 27,000 barrels daily. 
 Fuel oil, gasoline, kerosene, and asphalt are produced, and pro- 
 duction of high octane aviation gasoline was begun in 1958. 
 
 Other important industries are cement, plastics, wood and wood 
 products, paper and paper products, rubber, jute processing, ship- 
 building, and ship repair. 
 
 Transportation and Communications 
 
 The railroad, highway, and telecommunications systems built 
 by the Japanese during their occupation of Taiwan were second 
 only to their own in the Far East. These facilities were heavily 
 damaged during the war, and repair and replacement of equipment 
 was grossly neglected. Since 1950 U.S. aid funds have been used 
 
 36 
 
to repair and extend these facilities which are today better and 
 more efficient than ever before. 
 
 With the exception of a scenic highway running along the high 
 cliffs of the east coast, the major railroads and highways are 
 concentrated in the western lowlands. The first major cross-island 
 highway is to be completed in 1959. 
 
 Railroads are the most important means of freight and pas- 
 senger travel. The main rail system is operated by the Taiwan 
 Railroad Administration, an agency of the Provincial Govern- 
 ment. Its equipment, largely of Japanese manufacture, is old, 
 though in excellent condition, and extensive modernization is 
 underway. The system is now operating at near-capacity levels 
 and is being expanded to keep pace with Taiwan’s industrializa- 
 tion and growing population. 
 
 A dense network of highways and allweather roads supplements 
 the rail lines and serves the increasing number of motor vehicles— 
 there were 11,000 in 1956. Beasts of burden, carts, and human 
 porters are still used extensively, particularly for the transporta- 
 tion of agricultural products. 
 
 Telephones are the most important communications medium, 
 supplemented by telegraph and microwave radio links to remote 
 areas. Radio broadcasting reaches all parts of the island. 
 
 Trade and Balance of Payments 
 
 Requirements for military defense and economic development 
 necessitate imports of capital goods and raw materials beyond the 
 capacity of Taiwan’s export earnings. A government control 
 policy has placed limitations upon the imports of consumer goods 
 and nonessential items and over the past several years imports 
 have been held at a fairly stable level. 
 
 Taiwan’s most important trading partner is the United States. 
 About 40 percent of Taiwan’s total imports—between $80 and 
 $100 million annually—come from this country. Machinery, ve- 
 hicles, chemicals, drugs, lubricating oil, certain foodstuffs, soy- 
 beans for animal feed, raw cotton, and tobacco leaf are among our 
 principal exports to Taiwan. Since the United States buys only 
 about $4 to $6 million worth of Taiwan’s goods each year—largely 
 citronella oil, tea, straw hat bodies, and crude feathers—Taiwan’s 
 imports of U.S. goods are largely financed by U.S. aid dollars. 
 
 Taiwan’s second most important trading partner is Japan, which 
 in 1957 supplied one-third of the island’s imports. Under a barter 
 
 37 
 
agreement with Japan, imports and exports are kept roughly in 
 balance, though imports exceeded exports by $5 million in 1957. 
 Japan is a major source for Taiwan’s imports of steel-mill products, 
 machinery, and chemical fertilizers. The bulk of Taiwan’s exports 
 to Japan are in sugar and rice, though bamboo, canned pineapple, 
 hat bodies, and dried vegetable products are also important. 
 
 Most of Taiwan’s requirements of crude oil for petroleum refin- 
 ing are imported from Middle Eastern countries, while Malaya is 
 her most important source of latex and crude rubber, bauxite, tin, 
 iron, and iron ore. Exports from Taiwan to these countries are 
 largely in sugar and sugar products. 
 
 The future of Taiwan’s trade will depend upon the ability of the 
 Government to decrease dependence upon imports, expand produc- 
 tion of export products, and develop its world markets. Great 
 advances are being made in some fields. Many consumer products 
 such as wheat flour, cotton textiles, and window glass, once im- 
 ported in significant quantities, are now export items. And a wide 
 variety of the products of Taiwan’s industries are beginning to 
 take their place in world markets. 
 
 Despite a rapidly rising population which must be provided for, 
 there unquestionably will be some improvement in Taiwan’s trade 
 position as industrialization continues. However, so long as Tai- 
 wan is compelled by the Communist Chinese threat to support a 
 defense effort of present proportions, the island will continue to 
 have a trade deficit which will have to be met by foreign assistance 
 and loans. 
 
 38 
 
THE “PEOPLE’S LIVELIHOOD” 
 
 Dr. Sun Yat-sen, in establishing the principles guiding the Re- 
 public of China, emphasized the Government’s responsibility to 
 concern itself with the basic needs of the people and their social 
 welfare. In keeping with this principle the Chinese Government 
 has evidenced an active concern in improving the living standards 
 of its people and, despite the sacrifices necessary to maintain its 
 defense effort, has promoted vigorous social welfare programs. 
 
 Standards of living in Taiwan today are high by Far Eastern 
 standards. An average per capita income of $100 per year, in an 
 economy where basic foodstuffs are cheap, is sufficient to provide 
 at least the necessities of life for the great bulk of the population. 
 Wages, particularly for industrial workers, have been rising faster 
 than living costs, and welfare services of all kinds have been 
 steadily improving. 
 
 Labor 
 
 While unemployment is negligible in Taiwan, there is a serious 
 problem of underemployment, a portion of the labor force earn- 
 ing its livelihood through seasonal or self-provided occupations. 
 At the same time there is a shortage of skilled workers and tech- 
 nicians to meet the needs of the growing industrial sector of the 
 economy. 
 
 Under the technical assistance program the United States has 
 been assisting China to develop facilities in the field of vocational 
 and technical education and has provided training in the United 
 States and other free countries for specialists in various categories. 
 
 39 
 
Cooperative arrangements have been established between such 
 institutions as Pennsylvania State University and Taiwan Pro- 
 vincial Normal University, and Purdue University and Cheng Kung 
 University to assist the Chinese institutions in developing their 
 technical curricula and expanding their teaching facilities. U.S. 
 specialists have worked with the Taiwan Highway Bureau, the 
 Taiwan Power Company, and the Taiwan Telecommunications Ad- 
 ministration, assisting them to develop their own programs for 
 inservice training for the skilled workers they need. The United 
 States has also assisted in the development of model community 
 schools which provide instruction in skills directly related to the 
 immediate problems of the community which they serve. 
 
 Labor-management relations in Taiwan are good, being gov- 
 erned for the most part by traditional Chinese practices which 
 clearly define the rights and duties of each party. The few labor- 
 management disputes-which do oceur are quickly settled by ad hoc 
 government arbitration. There are an estimated 220,000 labor 
 union members. 
 
 Social Security 
 
 About 375,000 workers are now covered by a comprehensive 
 government labor insurance scheme providing benefits for disa- 
 bility, injury, death, old age, maternity, and disease. Social secu- 
 rity is also provided by a number of private organizations such as 
 the merchant guilds, rural cooperatives, and professional organiza- 
 tions. These measures, together with the strongly ingrained 
 traditions of family cooperation in time of distress provide the 
 people of Taiwan with a high degree of economic security. 
 
 Nutrition and Health 
 
 Standards of nutrition are good and there is no shortage of basic 
 foods for anyone. The traditional “poor man’s food” of Taiwan, 
 the sweet potato, has now been replaced by rice as the main diet 
 staple. 
 
 Though Taiwan still has its health problems, many of the most 
 dreaded diseases such as cholera, plague, and malaria have been 
 entirely or virtually eliminated. Because of the lag in improve- 
 ment of environmental sanitation, diseases such as tetanus, tra- 
 choma, and skin and enteric disorders are still common, and 
 
 40 
 
tuberculosis is a serious problem. However, basic health facilities 
 are increasing rapidly and the outlook for improvement is 
 excellent. 
 
 Taiwan now has 12 general hospitals and a number of branch 
 hospitals and specialized institutions. There is an excellent net- 
 work of rural health stations developed with the assistance of the 
 JCRR, and basic health education is included in the curricula of 
 primary and secondary schools. The shortage of doctors is being 
 alleviated by the encouragement of medical education in Taiwan 
 and abroad. 
 
 Housing 
 
 The influx of two million mainland refugees to Taiwan created 
 a drastic shortage of housing facilities which has not yet been 
 eliminated. Even families in the middle income group are often 
 forced to accept substandard living accommodations. 
 
 With the assistance of the U.S. International Cooperation Ad- 
 ministration, the Chinese Government has developed a self-help 
 low-cost housing program to enable workers to build their own 
 homes, and has encouraged housing development by the enactment 
 of regulations conducive to investment in housing and through 
 demonstration projects in home construction. 
 
 Al 
 
UNITED STATES ASSISTANCE 
 
 The basic purposes of U.S. aid to the Republic of China are to 
 assist that country to build the military strength and economic 
 stability necessary for its continued independence and freedom, 
 and to increase its economic productive capacity for self-support. 
 The tremendous efforts of the Government and the people of free 
 China, along with U.S. aid, during these critical years on Taiwan 
 enabled them to attain their present degree of military strength 
 and security and to achieve their present record-breaking produc- 
 tion levels in agriculture and industry. 
 
 Changing Conditions 
 
 The U.S. economic aid program for free China has been modified 
 over the years to suit the changing conditions of the island’s econ- 
 omy. During the early period when the economy was in a state of 
 virtual chaos due to the destruction and dislocation of war, the U.S. 
 program was one of relief and rehabilitation. Foodstuffs, medical 
 supplies, textiles, and fuels were shipped to Taiwan to meet the 
 immediate needs of the population. 
 
 By the middle of 1951 the situation had been somewhat alleviated. 
 A program of repair and replacement of basic industries began to 
 get underway, and a large portion of U.S. aid was used for the re- 
 habilitation of power production facilities, the transportation sys- 
 tem, and the chemical fertilizer industry. 
 
 In 1951 the United States enacted the Mutual Security Act which 
 sparked a program of greater financial and technical assistance to 
 China, particularly in the field of industry. Additional assistance 
 was also provided to implement programs in public health, educa- 
 tion, and public administration. By 1952 the efforts of the Chinese 
 
 42 
 
Government and the U.S. aid program had brought a measure of 
 stability to the island’s economy. Thethreat of inflation had abated 
 and rehabilitation had been substantially completed. The economy 
 of Taiwan moved into a new phase of development and free China 
 began the task of expanding production facilities and developing 
 new industries. 
 
 During the 1951-57 period U.S. economic aid to the Chinese 
 Government averaged $90 million annually. For the fiscal year 
 ending in June 1958 it was $60 million, reflecting a general cut in 
 U.S. aid funds throughout the world. 
 
 Economic aid is administered by the International Cooperation 
 Administration, which works closely with the Chinese Council for 
 U.S. Aid. 
 
 Military Assistance 
 
 Since 1951 the United States has provided free China with a 
 substantial amount of direct military assistance in the form of mili- 
 tary equipment and materials for her defense forces. Under this 
 program a U.S. Military Advisory Group has worked closely with 
 Chinese military officials in reorganizing and training the Chinese 
 armed forces. This military aid is administered by the Department 
 of Defense. 
 
 Defense Support 
 
 To support her great defense effort Taiwan must have a stable 
 and progressive economy. The island must produce enough food 
 for its civilian as well as its military population. A modern defense 
 structure requires a modern and efficient transportation and com- 
 munications system. Taiwan’s industries must produce not only 
 materials directly needed for defense but also consumer goods and 
 export goods. 
 
 The major portion of current U.S. economic aid to the Chinese 
 Government—$70 million of the $73 million appropriated for fiscal 
 year 1959—is classified as “defense support.” This aid is given for 
 the development of power production and expansion of industry, 
 for the improvement of agriculture, and for building and improving 
 transportation and communications facilities. While its primary 
 purpose, as its name indicates, is to support free China’s defense 
 effort, it results in considerable long-range benefits to Taiwan’s 
 civilian economy. 
 
 43 
 
President Chiang Kai-shek and Madame Chiang inspect a temporary suspension 
 bridge during construction of the cross-island highway. 
 
 Technical Assistance 
 
 Technical assistance—the sharing of knowledge, techniques, and 
 skills—has been an important adjunct to our defense support pro- 
 gram. The $3 million allocated to this type of assistance for fiscal 
 year 1959 has been used to train Chinese specialists in such fields 
 
 44 
 
as agriculture, health, education, industry, labor, transportation, 
 housing, engineering, public administration, and similar fields 
 directly related to economic development and improvement of 
 standards of living. Also under this program American techni- 
 cians and specialists have been sent to Taiwan to advise the Chinese 
 on particular development projects or to conduct training pro- 
 grams for Chinese technicians. 
 
 Under the current program about 60 U.S. Government-employed 
 technicians are on Taiwan as technical advisers or as instructors. 
 In addition, more than this number are on Taiwan under contract 
 arrangements with private industries and institutions. For ex- 
 ample, the J. G. White Engineering Corporation has about 25 
 specialists on Taiwan as advisers on basic industrial development 
 problems. Another American firm is providing engineering 
 services for the construction of the Shihmen Dam. 
 
 Since the beginning of the technical assistance program over 
 1,000 Chinese have come to the United States or have been sent 
 to other countries for specialized training, particularly in the fields 
 of agriculture and natural resources, industry and mining, educa- 
 tion, and health and sanitation. 
 
 Development Loan Fund 
 
 U.S. aid to the Republic of China is also given on a loan basis 
 through the Development Loan Fund established by Congress 
 under the Mutual Security Act of 1957. Such aid provides a means 
 of financing long-range economic development. A total of $300 
 million was appropriated by Congress for the initial operation of 
 this fund for all underdeveloped countries. By June 30, 1959, loans 
 totaling over $39.5 million had been approved for Taiwan, includ- 
 ing loans to the Shihmen Development Commission, to the Taiwan 
 Railroad Administration, to the privately owned Asia Cement 
 Corporation, and to the Taiwan Land Bank for expansion of the 
 deep-sea fishing fleet. 
 
 Counterpart Funds 
 
 In addition to American dollar funds, there are the so-called 
 “counterpart” funds—local currency generated by the sale of com- 
 modities furnished through U.S. assistance. These funds belong 
 to the Chinese Government, but their use must be approved by the 
 
 45 
 
U.S. Government to assure consistency with mutual security 
 program objectives. 
 
 Surplus Agricultural Commodities 
 
 U.S. aid which is not allocated for use in specific development 
 projects in Taiwan has been provided increasingly in the form 
 of surplus agricultural commodities, mainly cotton and wheat. 
 The local currency sales proceeds from these products are used to 
 meet part of the local costs of military construction, training, and 
 supply projects, the balance to be devoted to essential projects in 
 the civilian economy. 
 
 46 
 
U.S.-CHINESE CULTURAL 
 COOPERATION 
 
 There is a long tradition of cooperation in education and cultural 
 affairs between the United States and China, and since the early 
 19th century many American private institutions have engaged in 
 activities to promote understanding between the two countries. 
 On the official level, the United States in 1924 decided to devote the 
 remaining Boxer Indemnity Funds, paid by China, to assist Chi- 
 nese students to obtain education in the United States. Some 2,000 
 Chinese came here to study under this program. During World 
 War II the United States used $800,000 of the President’s Emer- 
 gency Fund, together with a like amount provided by the Chinese 
 Government, to enable over 1,700 Chinese students to complete 
 their education in the United States. 
 
 After the end of the Second World War Chinese students came 
 to the United States in large numbers. At the beginning of the 
 1948-49 academic year over 3,900 were studying in the United 
 States, supported mainly by private Chinese funds. With the 
 Communist takeover of the mainland, many of these students found 
 themselves in serious financial difficulties since they were no longer 
 able to receive support from their homes. 
 
 Many of the American institutions at which these students were 
 enrolled gave what financial assistance they could in the form of 
 scholarships and grants, but it soon became evident that private 
 sources would be unable to provide all the money needed. The 
 United States, therefore, instituted a Program of Emergency Aid 
 to Chinese Students. When this program ended in June 1955, a 
 total of $7.9 million in U.S. funds had been used to assist 3,641 
 students to complete their education in the United States. 
 
 47 
 
Educational Exchange 
 
 A limited program of educational exchange between the United 
 States and the Republic of China was carried on under an agree- 
 ment signed in 1947 under the terms of the Fulbright Act. This 
 program became inoperative when the Chinese Government moved 
 its seat to Taiwan. In 1952 exchange activities were resumed 
 under the terms of the Smith-Mundt Act, which authorizes the 
 expenditure of U.S. funds to promote exchanges of American and 
 Chinese students, teachers, lecturers, research scholars, and 
 specialists. 
 
 On November 30, 1957, the United States and China signed an 
 agreement reactivating the exchanges under the Fulbright pro- 
 gram. This agreement provides for the expenditure of Chinese 
 currency in an amount equivalent to $750,000 for the exchange of 
 students, teachers, lecturers, and research scholars. during a 3- 
 year period. This Chinese currency becomes available as a result 
 of the sale of U.S. surplus agricultural commodities to Taiwan. 
 Thus the program of educational exchanges in the future will be 
 able to draw on Chinese currency as well as the American dollar 
 funds appropriated under the Smith-Mundt Act. Since 1952 over 
 150 Chinese have come to the United States under these programs 
 and about 25 Americans have visited Taiwan. 
 
 Cultural Presentations 
 
 In 1954 the United States inaugurated a program to provide as- 
 sistance and encouragement to American cultural and athletic 
 groups to undertake tours in countries abroad to demonstrate the 
 cultural interests, developments, and achievements of the United 
 States. Arrangements for such presentations are made through 
 normal private channels and U.S. funds are used only to make up 
 any deficit which the groups may incur as a result of their tours. 
 Since 1955 a number of musical and athletic groups have had very 
 successful engagements in Taiwan. These include the Los Angeles 
 Philharmonic Orchestra, the Westminster Choir, the San Francisco 
 Ballet, and the San Francisco Chinese-American basketball team. 
 Several presentations are planned for the coming year. 
 
 48 
 
U.S. Information Program 
 
 The United States conducts an information program in free 
 China to explain American policies and foster better Chinese under- 
 standing of U.S. institutions. 
 
 Chinese and English language programs, beamed at the China 
 mainland and Southeast Asia for 1914 broadcast hours a day, are 
 heard also on Taiwan. In addition, other brief daily U.S. broad- 
 casts are carried over the Broadcast Corporation of China, the 
 Voice of Free China, and a number of commercial stations on 
 Taiwan. 
 
 Six U.S. libraries and reading rooms in key centers have ex- 
 tensive circulating collections of English- and Chinese-language 
 books. In fiscal year 1959 a total of 169,084 readers visited these 
 libraries and circulation of books reached 103,244. The United 
 States also sponsors translations into Chinese of books which are 
 intended to promote sympathetic understanding of the United 
 States. 
 
 The United States arranges exhibits, such as the very popu- 
 lar one on atoms for peace, in the major cities of Taiwan, and small 
 traveling photo displays are shown in smaller centers. 
 
 A U.S. bimonthly publication featuring stories about American 
 life and Chinese-American cooperation has a circulation of 30,000 
 per issue, larger than any other similar magazine on Taiwan. 
 
 49 
 
FOREIGN POLICY 
 
 A primary consideration underlying the policies of the Govern- 
 ment of the Republic of China is the firm belief that all of China 
 shall one day be free of Communist control. The policies of the 
 Government are designed to further this end by building up the 
 military, political, and economic strength of free China and by 
 exploiting whatever opportunities may arise to weaken the Chi- 
 nese Communist regime and create a situation favorable to the 
 reestablishment of the Republic on the mainland. 
 
 In 1958 President Chiang Kai-shek stated that the Republic’s 
 leaders had “‘never conceived the struggle with the Communists in 
 the form of a war whereby the armed forces of one country are 
 pitted against the armed forces of another country each backed 
 by its own people. The people on the mainland are no enemy. 
 They are our own people, and we know definitely that they are 
 absolutely opposed to the Communists .. . this is a revolutionary 
 struggle for their deliverance from Communist tyranny, and we 
 shall use 30 percent military strength and 70 percent political 
 strength to attain our objective.” 
 
 In the Sino-American joint communique issued October 23, 1958, 
 the Chinese Government asserted that its mission of restoring 
 freedom to the people on the mainland is to be accomplished 
 principally by carrying out the ‘‘Three People’s Principles” of 
 Dr. Sun Yat-sen and not by the use of force. 
 
 Were the Chinese Communist regime to take a similar stand, 
 the situation in China would be like that in Germany, Korea, and 
 Viet-Nam—all divided countries, where neither side is attempting 
 to overthrow its adversary by force. However, the Chinese Com- 
 munists adamantly refuse to renounce force against Taiwan and 
 
 50 
 
the offshore islands and insist that they have a so-called right to 
 attack the Republic of China whenever they choose. 
 
 The policy of the Government is to maintain its identity as the 
 sole legitimate government of China and to build friendly relations 
 with other free-world anti-Communist nations. It encourages 
 collective defense efforts and opposition to Communist aggression 
 - wherever it occurs and seeks to develop its own position as a lead- 
 ing anti-Communist nation of Asia. It maintains its position as 
 the sole representative of China in the United Nations and par- 
 ticipates actively in the Security Council, the General Assembly, 
 and a number of specialized agencies. 
 
 The Government also seeks to retain to the highest possible 
 degree the good will of the Chinese people in overseas Chinese com- 
 munities. To this end it has taken measures to encourage overseas 
 Chinese students to come to Taiwan for their education and has 
 adopted regulations encouraging overseas Chinese to invest in 
 enterprises on Taiwan and to support free China’s economic devel- 
 opment. It also strives to secure the support of the population of 
 mainland China and conducts a vigorous information campaign 
 aimed at the mainland Chinese through shortwave radio and 
 leaflets. 
 
 Conscious of the present limited resource base of free China and 
 its dependence upon external aid, the Government relies upon the 
 United States for considerable military and economic assistance. 
 A recognition of the community of many interest: of the Republic 
 of China and the United States and of our joint stake in preserv- 
 ing the security of Taiwan and in building up free-world strength 
 in the Pacific in the face of militant Communist expansionism has 
 been the basis for cordial and friendly relations between the two 
 Governments. United as allies in World War II, the United States 
 and free China are again associated in a close and friendly alliance 
 against the forces of tyranny and aggression. 
 
 Attitudes Toward the United States 
 
 When in May of 1957 rioting broke out in Taipei resulting in 
 damage to American Government buildings, the event was inter- 
 preted by some as an indication of widespread anti-American 
 sentiment among the people of Taiwan. 
 
 Such is not the case. It has been established that the unfortu- 
 nate incident was a spontaneous emotional outburst sparked by the 
 acquittal by a U.S. Army court-martial of an American soldier 
 
 51 
 
who had shot and killed a Chinese citizen. The Chinese Govern- 
 ment expressed profound regret over the damage done to American 
 property and took immediate measures to punish those hoodlum 
 elements which were primarily responsible. It is generally recog- 
 nized that the United States is widely respected and admired by 
 the people of free China, who are aware of the importance of our 
 assistance in preserving Chinese independence and of the long 
 history of good relations between our Governments and peoples. 
 
 52 
 
UNITED STATES POLICY 
 
 The United States has consistently supported the Government of 
 the Republic of China as the government of China and as the only 
 government entitled to represent China in the United Nations. 
 We have consistently opposed attempts to unseat representatives 
 of the Chinese Government and seat representatives of the Commu- 
 nist regime. With regard to the Communist regime, which holds 
 power on the mainland by means of force and repression, it is U.S. 
 policy to abstain from any act which would enhance that regime’s 
 ability to realize its expansionist ambitions. We do not recognize 
 the Communist regime, we oppose its seating in the United Na- 
 tions, we maintain a strict embargo on all trade with mainland 
 China, and we do not sanction cultural exchanges with the Peiping 
 regime. 
 
 Our fundamental policies toward China today enjoy strong sup- 
 port in both major U.S. political parties. By virtually unanimous 
 votes the Congress on a number of occasions has expressed its firm 
 approval of our present policy of opposition to seating the Chinese 
 Communist regime in the United Nations, and has by specific reso- 
 lution endorsed our defense commitments to the Republic of China. 
 
 The reasons for continued U.S. recognition of and support for 
 the Republic of China are many. This policy, while stemming 
 primarily from considerations of the highest national interest of 
 the United States, is also rooted in principle. 
 
 Among the most important considerations underlying our China 
 policy are the security interest of the United States and that of the 
 free nations of Asia, which is a part of our own security. Taiwan is 
 a Vital link in the free world’s island chain of defense in the Pacific. 
 If it should fall into Communist hands, Japan, the Philippines, and 
 all of Southeast Asia would be more vulnerable to Chinese Commu- 
 nist aggression. At the present time the strong defense forces of 
 the Republic of China and our defense commitment to that Govern- 
 
 53 
 
ment constitute a deterrent to further military aggression by the 
 Peiping regime and are important to the security of the Pacific area. 
 
 Were the United States to abandon its ally, the Republic of 
 China, the other free nations of Asia who seek to remain free of 
 Communist enslavement would feel that they could no longer rely 
 on the United States. Without the assurance that the United 
 States is ready to stand by its commitment to defend Taiwan, they 
 would be under strong pressure to make the best of the situation 
 by seeking some form of accommodation to Peiping. 
 
 Another important consideration underlying our policy is the 
 long-range interest of the Chinese people themselves. Free China 
 on Taiwan is an important symbol and a rallying point for Chinese 
 everywhere who seek an alternative to the harsh repression of the 
 Communist regime. It offers an alternative focus for the loyalties 
 of those overseas Chinese in Southeast Asia who have retained 
 their sense of Chinese identity. Were these overseas Chinese to 
 become automatically citizens or “wards” of Communist China, 
 many of them could be placed under pressure to serve the interests 
 of that regime in the countries of their residence and would have 
 a dangerous potential for subversion. 
 
 It is a fundamental assumption of U.S. policy that communism 
 is not “the wave of the future” and that in the long run free 
 governments will prevail. As former Secretary of State John 
 Foster Dulles said: 
 
 We can confidently assume that international communism’s rule of strict 
 conformity is, in China as elsewhere, a passing and not a perpetual phase. 
 We owe it to ourselves, our allies, and the Chinese people to do all that 
 we can to contribute to that passing. 
 
 The Communist regime of China, by its declared intentions and 
 by its actions has branded itself as an international outlaw and 
 has destroyed any claim it might have had to membership in 
 the society of nations. Also in the words of Mr. Dulles: 
 
 Internationally the Chinese Communist regime does not conform to the 
 practices of civilized nations; does not live up to its international obliga- 
 tions; has not been peaceful in the past and gives no evidence of being 
 peaceful in the future. Its foreign policies are hostile to us and our Asian 
 allies. Under these circumstances it would be folly for us to establish 
 relations with the Chinese Communists which would enhance their ability 
 to hurt us and our friends. 
 
 It is for similar reasons that the United States opposes the seat- 
 ing of Communist China in the United Nations. Secretary Dulles 
 summarized our policy on the matter as follows: 
 
 The Republic of China is entitled to a permanent seat and veto power in 
 
 b4 
 
the Security Council. Should a regime which in 7 years has promoted five 
 foreign or civil wars—Korea, Indochina, Tibet, the Philippines, and Ma- 
 laya; which itself has fought the United Nations and which today stands 
 condemned by the United Nations as an aggressor; which defies the United 
 Nations’ decision to reunify Korea, and which openly proclaims its con- 
 tinuing purpose to use force—should that regime be given a permanent 
 seat, with veto power, in the body which under the charter has “primary 
 responsibility for the maintenance of international peace and security?” 
 
 Background of U.S. Policy 
 
 In June of 1950 the invasion of the Republic of Korea by Com- 
 munist forces posed a military challenge to the whole free-world 
 position in East Asia and had an inevitable effect on U.S. policy. 
 Our Government determined that under the circumstances the 
 security of Taiwan was of such importance to the United States 
 that the U.S. Seventh Fleet should be deployed in its defense. 
 President Truman explained this development in our policy in a 
 statement of June 27, 1950, when ordering U.S. air and naval forces 
 to give the forces of the Republic of Korea cover and support in 
 resisting the Communist invasion. He said: 
 
 The attack upon Korea makes it plain beyond all doubt that communism has 
 passed beyond. the 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. In these circumstances, the occupation of Formosa by Communist 
 forces would be a direct threat to the security of the Pacific area and to United 
 States forces performing their lawful and necessary functions in that area. 
 
 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 Gov- 
 ernment on Formosa to cease all air and sea operations against the mainland. 
 The Seventh Fleet will see that this is done. 
 
 U.S. aid to the Republic of China was increased considerably in 
 1951 to help that Government to build up its self-defense capacity 
 and to assist it to achieve economic stability. A U.S. Military As- 
 sistance Advisory Group was sent to Taiwan to work closely with 
 Chinese defense officials in reorganizing, reequipping, and training 
 the Chinese armed forces and increasing their combat effectiveness. 
 
 Orders to Seventh Fleet Amended 
 
 In his first state of the Union address on February 2, 1953, 
 President Eisenhower declared that U.S. policy with regard to 
 
 ay) 
 
China would be further strengthened. Referring to President 
 Truman’s orders to the Seventh Fleet which, in effect, had neutral- 
 ized Formosa, Mr. Eisenhower said: 
 
 . since the date of that order the Chinese Communists have invaded 
 Korea to attack the United Nations forces there. They have consistently 
 rejected the proposals of the United Nations Command for an armistice. . 
 
 Consequently there is no longer any logic or sense in a condition that re- 
 quired the United States Navy to assume defensive responsibilities on behalf 
 of the Chinese Communists... . 
 
 I am, therefore, issuing instructions that the Seventh Fleet no longer be 
 employed to shield Communist China. Permit me to make this crystal clear: 
 This order implies no aggressive intent on our part. But we certainly have no 
 obligation to protect a nation fighting us in Korea. 
 
 The First Crisis in the Offshore Islands 
 
 The Korean Armistice, concluded on July 27, 1953, brought the 
 fighting in Korea to a halt, but in no way lessened the Chinese 
 Communist threat to Taiwan. It was still the avowed purpose of 
 the Peiping regime to take Taiwan by any means, including armed 
 force. In July of 1954 the Chinese Communists launched an in- 
 tensive propaganda campaign in support of this objective. In Sep- 
 tember the island vf Quemoy was subjected to the heaviest bom- 
 bardment in the 5 years since the Communist takeover of the main- 
 land. In November the Peiping regime announced the sentencing 
 of 13 Americans to long prison terms. Eleven of them were airmen 
 of the United Nations Command in Korea who were held in clear 
 violation of the Korean Armistice Agreement. The Communists 
 by word and deed revealed their blatant hostility to the United 
 Nations and the United States and their determination to use 
 armed force if they believed that it would achieve their aggressive 
 ends. 
 
 Mutual Defense Arrangements 
 
 It was against this background that the United States and the 
 Republic of China concluded their negotiations for a treaty of 
 mutual defense. The treaty, signed in December of 1954, is defen- 
 Sive in purpose. In it the parties agree that they “separately and 
 jointly by self-help and mutual aid will maintain and develop their 
 individual and collective capacity to resist armed attack and com- 
 munist subversive activities directed from without against their 
 territorial integrity and political stability.” 
 
 56 
 
Under the terms of the treaty, “Each Party recognizes that an 
 armed attack in the West Pacific Area directed against the terri- 
 tories of either of the Parties would be dangerous to its own peace 
 and safety and declares that it would act to meet the common 
 danger in accordance with its constitutional processes.” 
 
 The treaty further provides that any such armed attack and all 
 measures taken as a result thereof ‘“‘shall be immediately reported 
 to the Security Council of the United Nations. Such measures 
 shall be terminated when the Security Council has taken the meas- 
 ures necessary to restore and maintain international peace and 
 security.” 
 
 The area covered by the treaty is defined as Taiwan, the Pesca- 
 dores, and the island territories in the west Pacific under the 
 jurisdiction of the United States and “such other territories as 
 may be determined by mutual agreement.” However, former 
 Secretary Dulles assured the Senate Foreign Relations Committee 
 that the treaty area would not be extended without the consent of 
 the Senate. 
 
 In an exchange of notes signed a few days later it was agreed 
 that any use of force from any of the territories under the Republic 
 of China’s control, including the offshore islands, would be a matter 
 of joint Sino-American agreement, except for action of an emer- 
 gency character which is clearly an exercise of the inherent right 
 of self-defense. 
 
 Between the time of the signing of the Mutual Defense Treaty 
 and its entry into force on March 3, 1955, the situation in the west 
 Pacific area became even more acute. Large-scale bombardment 
 against the offshore islands continued. Menacing concentrations 
 of Chinese Communist forces on the shores of the Formosa Strait 
 gave indication of an immediate threat to the security of the Re- 
 public of China. Attacks were launched and on January 21, 1955, 
 the island of Ichiang fell to the Communists. In early February 
 with American assistance the Tachen Islands were evacuated as 
 being impractical to defend. All but 19 of the island’s 14,500.popu- 
 lation, offered a choice of evacuation to Taiwan or remaining in 
 their homes, chose to go to free China. 
 
 On January 24 the President sent a message to the Congress 
 pointing out the strategic importance of Formosa to America’s 
 security and calling for prompt congressional action to discourage 
 Communist aggression against the island. The President stated 
 that, “In unfriendly hands, Formosa and the Pescadores would 
 seriously dislocate the existing, even if unstable, balance of moral, 
 
 57 
 
economic, and military forces upon which the peace of the Pacific 
 depends. It would create a breach in the island chain of the West- 
 ern Pacific that constitutes, for the United States and other free 
 nations, the geographical backbone of their security structure in 
 that ocean. In addition, this breach would interrupt north-south 
 communications between other important elements of that barrier, 
 and damage the economic life of countries friendly to us.” 
 
 The President pointed to current Chinese Communist provocative 
 political and military actions which established “a pattern of ag- 
 gressive purpose ... the conquest of Formosa.” The Presi- 
 dent took note of the heavy attacks being made upon the offshore 
 islands and called attention to the fact that “The Chinese Commu- 
 nists themselves assert that these attacks are a prelude to the con- 
 quest of Formosa.” Mr. Eisenhower indicated that the United 
 States believed that it would be appropriate for the United Nations 
 to take action to end these hostilities. 
 
 He added: 
 
 Meanwhile, the situation has become sufficiently critical to impel me, without 
 awaiting action by the United Nations, to ask the Congress to participate now, 
 by specific resolution, in measures designed to improve the prospects for 
 peace. These measures would contemplate the use of the Armed Forces of 
 the United States if necessary to assure the security of Formosa and the 
 Pescadores. 
 
 The joint resolution as adopted by the Congress by an almost 
 unanimous vote states that ‘“‘the secure possession by friendly gov- 
 ernments of the Western Pacific Island chain, of which Formosa is a 
 part, is essential to the vital interests of the United States and all 
 friendly nations in and bordering upon the Pacific Ocean.” It 
 specifically authorizes the President to employ the Armed Forces 
 of the U.S. for the protection of Formosa and for “the securing and 
 protection of such related positions and territories of that area 
 now in friendly hands and the taking of such other measures as he 
 judges to be required or appropriate in assuring the defense of 
 Formosa.” 
 
 This resolution was not designed to enlarge the defense obliga- 
 tions of the United States beyond the terms of the treaty then 
 awaiting ratification. Nor was it intended to enlarge the scope of 
 the treaty area itself. The congressional resolution was intended 
 to discourage Communist aggression by making clear beyond any 
 doubt that the United States was prepared ‘“‘to fight, if necessary, 
 to preserve the vital stake of the free world in a free Formosa.” 
 
 Passage of the resolution immediately brought about an improve- 
 
 58 
 
Life goes on in the offshore islands despite Communist attack. A woman 
 prepares a meal in the ruins of her home on Quemoy. 
 
 ment in the military situation in the Formosa Strait. The intensive 
 Communist military activity ceased, at least temporarily. How- 
 ever, the Communists continued to threaten that they intended 
 to take Taiwan, by force if necessary. 
 
 59 
 
While the United States was taking these measures to insure 
 the security of Taiwan, within the United Nations diplomatic 
 consultations were underway looking toward U.N. action on the 
 situation. After rejecting a fraudulent Soviet accusation against 
 U.S. “aggression” and “intervention” in Taiwan, the United Na- 
 tions Security Council discussed the question of arranging a cease- 
 fire agreement with regard to the Formosa Strait. However, the 
 Chinese Communists refused to accept the invitation of the Security 
 Council to participate in such discussions, on the grounds that the 
 matter was an internal one not within the competence of the 
 United Nations. This led to an impasse and the Council adjourned 
 without taking action. 
 
 Efforts to Achieve a Cease-Fire 
 
 In August of 1955 the United States began a series of discus- 
 sions on the ambassadorial level with representatives of the Chi- 
 nese Communist regime at Geneva, to discuss the repatriation of 
 American civilians illegally held on the mainland and ‘other prac- 
 tical matters now at issue.” At the beginning of these discussions 
 the United States made clear that they did not imply any recogni- 
 tion on our part of the Communist regime. 
 
 On September 10 the Ambassadors issued an agreed announce- 
 ment containing statements by both sides that civilian nationals 
 would be permitted to return to their own countries. The Chinese 
 Communist statement said in part: 
 
 The People’s Republic of China recognizes that Americans in the People’s 
 Republic of China who desire to return to the United States are entitled to 
 do so, and declares that it has adopted and will further adopt appropriate 
 measures so that they can expeditiously exercise their right to return. 
 
 Though the Communists alleged otherwise, at that time there 
 was no resident in the United States who had evidenced a desire to 
 go to Communuist China and who was being prevented from doing 
 so. That was the case before the beginning of the ambassadorial 
 talks and has continued to be the case to the present time. 
 
 The Communists ceased to honor this pledge within a few 
 months of the time it was made. Since December 1955 no Ameri- 
 can prisoner has been permitted to leave Communist China until 
 he had served his full sentence. Five Americans are in Communist 
 jails today. 
 
 After this agreed announcement had been made, the two sides 
 proceeded to discuss “other practical matters at issue between 
 
 60 
 
them.” The U.S. negotiator, Ambassador U. Alexis Johnson, 
 pointed out that progress in further discussions could not be ex- 
 pected in the face of continuing Communist threats to take Taiwan 
 by military force, and suggested that both sides agree to announce 
 that they renounced the use of force generally, and particularly in 
 the Taiwan area. The United States made clear that this renunci- 
 ation of the use of force was not designed to commit either side 
 to renounce the pursuit of its national objectives by peaceful means 
 nor would it deprive either side of the right of individual and 
 collective self-defense. 
 
 The Chinese Communists flatly rejected any proposal which 
 made mention of the Taiwan area and the recognition of the right 
 of self-defense. In essence, the Chinese Communist position was 
 that they were willing to renounce the use of force only if the 
 United States first agreed that it would not oppose their use of 
 force against Taiwan. This was tantamount to asking the United 
 States to denounce its mutual defense treaty with the Republic of 
 China and was, of course, wholly unacceptable to the United 
 States. 
 
 Renewed Attack on the Offshore Islands 
 
 In August 1958 the Chinese Communists once again began in- 
 tensive military activity in the Formosa Strait area. The 
 islands in the Quemoy group were subjected to intensive bom- 
 bardment by Chinese Communist artillery. At the same time the 
 official Peiping radio repeatedly announced that the purpose of 
 these military operations was to take Taiwan as well as the off- 
 shore islands by armed force. These Chinese Communist objec- 
 tives were strongly supported by their ally, the Soviet Union. 
 
 In the face of this Communist military threat, the United States 
 rendered substantial logistical assistance to the forces defending 
 the offshore islands and made clear that we would stand by our 
 commitment to defend Taiwan. A statement made by Secretary 
 Dulles on September 4, after reviewing the situation with the 
 President, included the following points. 
 
 Neither Taiwan (Formosa) nor the islands of Quemoy and Matsu have ever 
 been under the authority of the Chinese Communists. . . . The United States 
 is bound by treaty to help to defend Taiwan .. . from armed attack and the 
 President is authorized by Joint Resolution of the Congress to employ the 
 armed forces of the United States for the securing and protecting of re- 
 lated positions such as Quemoy and Matsu. Any attempt on the part of the 
 Chinese Communists now to seize these positions or any of them would be a 
 
 61 
 
crude violation of the principles upon which world order is based, namely, that 
 no country should use armed force to seize new territory. 
 
 Referring to the authority of the President, under the 1955 con- 
 
 gressional resolution on Taiwan, to employ U.S. forces to defend 
 the offshore islands as well as Taiwan, the Secretary went on 
 to say: 
 .. . the President has not yet made any finding under that Resolution that 
 the employment of the Armed Forces of the United States is required or 
 appropriate in insuring the defense of Formosa. The President would not, 
 however, hesitate to make such a finding if he judged that the circumstances 
 made this necessary to accomplish the purposes of the Joint Resolution. 
 
 The United States, the Secretary declared in a later speech, “will 
 not retreat in the face of armed force.” At the same time the 
 United States is ready, he said, to settle the Formosa Strait dis- 
 pute “in such a manner that international peace and security and 
 justice are not endangered.” As the Secretary pointed out, the 
 stakes involved in the offshore islands dispute are “‘not just some 
 square miles of real estate. What is involved is a Communist 
 challenge to the basic principle of peace that armed force should 
 not be used for aggression.” The United States would find ac- 
 ceptable any arrangement which “on the one hand did not in- 
 volve surrender to force and, on the other hand, eliminated from 
 the situation features that could reasonably be regarded as 
 provocative.” 
 
 During the height of the crisis the forces of the Republic of 
 China put up a heroic and resolute defense. The garrison on the 
 Quemoy islands held out despite the intensive Communist fire 
 and attempts to interdict their supplies. The Chinese Air Force 
 ran up an impressive record of victories in combat with the Com- 
 munist Air Force. The United States, in deploying powerful naval 
 and air forces to the Western Pacific during the crisis, demon- 
 strated clearly the speed and effectiveness with which it was able 
 to come to the support of free-world allies threatened by aggression. 
 
 This strong defense by the Republic of China, together with 
 the firm and determined policy of the United States, deterred the 
 Chinese Communists from pressing home their attacks, and on 
 October 6 they announced a self-imposed cease-fire. Although 
 they subsequently renewed their attacks on Quemoy, they finally 
 settled down to a pattern of alternate-day firing which they have 
 continued in desultory fashion up to the time this pamphlet went 
 to press. 
 
 The ambassadorial-level talks between the U.S. and Chinese 
 Communist representatives, which had been suspended since De- 
 
 62 
 
cember 1957, were resumed at Warsaw on September 15, 1958. 
 In a report to the American people on September 11 the Presi- 
 dent expressed America’s hope that the issue would be settled by 
 negotiation and diplomacy. The Communists, however, have 
 adamantly refused to agree to any arrangement for tranquilizing 
 the situation in the Taiwan Strait. They have also repeatedly re- 
 fused to accept the mediation of any third power or reference of 
 the offshore island situation to the United Nations. They have 
 made it plain that they are not interested in the offshore islands 
 for themselves. They insist that they must be permitted to seize 
 Taiwan, the Pescadores, and the offshore islands ‘‘as a whole” and 
 that the United States withdraw its forces from the Taiwan area. 
 
 In October 1958, Secretary Dulles and other American officials 
 went to Taipei for consultations with President Chiang Kai-shek 
 and other members of the Chinese Government. In the joint 
 communique issued at the conclusion of the talks the two Gov- 
 ernments recognized that ‘under the present conditions the de- 
 fense of the Quemoys, together with the Matsus, is closely related 
 to the defense of Taiwan and Penghu.” The communique re- 
 affirmed the solidarity of the two Governments in the face of the 
 Chinese Communist aggression then manifesting itself in the bom- 
 bardment of the Quemoys and declared: ‘‘This aggression and 
 the accompanying Chinese Communist propaganda have not di- 
 vided them, as the Communists have hoped. On the contrary, it 
 has drawn them closer together.” 
 
 This communique also states that the Republic of China con- 
 siders that “the restoration of freedom to its people on the main- 
 land is its sacred mission.” As has been mentioned, the Chinese 
 Government also stated that the principal means of successfully 
 achieving this mission is ‘‘the implementation of Dr. Sun Yat-Sen’s 
 three people’s principles (nationalism, democracy, and social well- 
 being) and not the use of force.” 
 
 The Government of the Republic of China in 10 years on Taiwan 
 has demonstrated its capacity for progress and growth and has 
 manifested an active concern for the welfare and happiness of 
 the Chinese people. As the trend toward economic growth and 
 political progress continues, the Chinese Government will stand 
 in increasingly favorable contrast to the ruthless and oppressive 
 regime on the mainland. As time goes on, it will increasingly 
 act as a magnet for the loyalties of the mainland Chinese who be- 
 come disaffected with the Communist regime and it will continue 
 to gain in stature as the Government which represents all of the 
 Chinese people who desire freedom. 
 
 63 
 
 U.S. GOVERNMENT PRINTING OFFICE:1959 O—512700 
 
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