The Battle of Reform

Last week the Chinese War Ministry announced "the most brilliant military feat of the entire war," with the capture of the outposts of the city of Nanchang and the destruction of 20,000 out of 56,000 Japanese troops. But it was neither so brilliant nor so bold a victory as Generalissimo Chiang Kai-shek won in his own capital, Chungking.

There in a plenary session of the ruling Kuomintang the Generalissimo stood up and scolded his Party heartily for losing the confidence of the people, for doing a slipshod administrative job, for playing into Japan's hands.

Chastened, the Kuomintang went into an executive huddle, emerged with a set of specific reforms and a manifesto of new intentions. It agreed to form additional local Political Councils. This in itself was a long step toward persuading the doubting Chinese people that the Kuomintang was working for democracy and not for its own perpetuation in power. The Kuomintang also agreed that the National Government would take over the whole job of distributing food and other necessities, thereby doing away with hoarding which has resulted in coolies starving while rich men speculated. It further agreed that the Government would henceforth collect taxes on real estate (hitherto a perquisite of the local governments) under an ingenious system by which landowners will make their own assessments, with the Government reserving the right to buy the land if the assessments are considered too low. This will bring to the central Government revenue which it badly needs. It should put the burden of taxation on the class which can best afford it--the landlords, who have been virtually tax-exempt because they control the local governments, who do most of the speculating in grain and who force their peasantry to pay as much as 60% of their crops for rent (including "protection").

Back of these reforms, letter and spirit, one of the strongest influences was the U.S., represented by the bespectacled face of Lauchlin Currie, economic aide to President Roosevelt. Currie went to Chungking early this year, at the invitation of the National Government, to try to unravel its snarled finances, set up a working budget. But his mission developed into a high-powered diplomatic errand.

In Chungking Currie went everywhere, saw and talked to everyone. To Chiang Kai-shek and the Government, uncertain of President Roosevelt's Far Eastern policy, the very presence of one of Roosevelt's right-hand men was a stimulant. Still more so were his suggestions about land taxes.

One of the gravest dangers to Chiang Kai-shek's Government has long been the rival influence of his Communist allies--whose Army he had recently to discipline (TIME, Feb. 3). If Chiang and the Communists get to fighting, Free China's goose is cooked. The Communists undermine his power by promising to free the peasants from the oppression of the landlords. Why not, Currie suggested, raise needed revenue and undercut Communist influence by taxing the landlords while feeding and pleasing the peasants?

It was an attractive reform but it needed courage to carry it out. U.S. prestige weighed heavily in favor of it as a democratic measure. The Chinese had had fine words and good advice from the U.S. before. This time Chiang got something more. Four days after Currie returned to Washington, President Roosevelt announced his plans under the Lease-Lend Act; and by Currie's advice China was promised cash and planes. It was more than a coincidence that when the U.S. gave China a place next to Britain in the democratic front, Chiang set his face on the democratic road to liberty, equality and homeland.

At the same time an overdue Government house cleaning was started. In as Foreign Minister for the National Government went Dr. Quo Taichi, who won his Phi Beta Kappa key at the University of Pennsylvania and has been China's Envoy to the Court of St. James's for ten years. Dr. Quo's appointment was symptomatic of the growth of a London-Washington-Chungking Axis. To the London post went a veteran diplomat, Dr. V. K. Wellington Koo, from Vichy.

A more significant appointment had already been made. To whip up lagging traffic on the Burma Road, Chiang had appointed Dr. John Earl Baker, Director of the China International Famine Commission as the Road's Director General.

Of the 20,000 tons of freight that the Burma Road can theoretically carry each month, a scant 6,000 tons currently starts out, only about 2,000 reaches the terminus at Kunming. Reasons: bombing, grafting, lackadaisical administration, irresponsible drivers who simply dump their loads just over the Chinese border.

An employe of the Chinese Government for 25 years, Dr. Baker has licked the biggest administrative problems that China has ever had: feeding 20,000,000 victims of the Yangtze floods of 1931; rebuilding the Yangtze dikes the next winter with the aid of 1,500,000 destitute peasants, whom he fed in exchange for their work. To the Burma Road he plans to bring the rigid organization of an American railroad with a block system, proper relief for drivers, careful dispatching, coordinated inspection and repair depots.

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