PROGRESS ON FORMOSA

Visitors arriving at Taipei, capital of Formosa, are presented with an illustrated booklet, compliments of the Nationalist government. The booklet explains Nationalist policy: "It is vital for us to do well in Taiwan [Chinese name for Formosa]. It is not only a desirable end in itself; it is also the basis of hope for an eventual return to the mainland." It is now 30 months since the Nationalists were hurled out of China. Last week TIME'S Hong Kong Bureau Chief Robert Neville, after a tour of Formosa, reported on how the Nationalists are doing there:

THE Nationalists' accomplishments in Formosa tall somewhat short of miracles, but they are very real. The Nationalist administration, though still top-heavy, has been subject to constant overhauling, until today it is an honest and efficient instrument of government.

Gone are the days when high military commanders could write drafts which the treasury had to honor --usually by turning the printing press a few more times. The Nationalists' budget, 37% in the red in 1950, is now close to balancing. Six months ago, one U.S. dollar would buy 30 or more Formosan dollars on the Hong Kong free market; today's rate is around 22.

For the first time in the history of modern China, taxes are levied and collected equitably. The native Formosans, once resenting the intrusion of the Nationalists, have become loyal to Chiang. Last winter, 12,000 young islanders were drafted into the Nationalist army without complaints or repercussions. Formosa's local government, under able Nationalist Administrator K. C. Wu, has become, in the opinion of Americans in Taipei, the soul of rectitude.

The Leader. Generalissimo Chiang Kai-shek and Madame Chiang resent the notion that they are living in exile. Taipei, they insist, is simply the provisional capital of China, just as Chungking was during World War II. Although Chiang's vast domain has shrunk to a mere 14,000 square miles, his icy dignity has, if anything, increased. Nobody is now, or ever was, on back-slapping terms with Chiang. At 65, he lives a Spartan life, eats sparingly, and neither drinks nor smokes.

Chiang, member of the Methodist Church since his conversion to Christianity in 1930, rises at daybreak, and before breakfast will have said his prayers and spent a half-hour in meditation, usually with Madame Chiang, in his private chapel. When interviewers ask the inevitable question about returning to the mainland, Madame Chiang answers: "With faith, there is nothing in the world that cannot be accomplished."

The Troops. The Gimo's chief interest remains where it always was--with his fighting men. Statistically, the Nationalists claim an army of 600,000 men; actually, they can muster no more than 150,000 combat-worthy soldiers, organized in twelve divisions. Man for man, the Nationalist troops are in a fine state of training, well-fed, well-clothed and as pugnacious as terriers. U.S. military observers here are sure that they would give an excellent account of themselves if the Reds attacked Formosa. But at present, and certainly for the next year, the decisive factor in the defense of Free China must remain the U.S. Seventh Fleet, patrolling Formosa Strait.

Speculation about Chiang invading the mainland, however, does the Nationalists disservice, and the expression, "Take the wraps off Chiang," disregards the long, hard period of training, the uphill fight for equipment and most of all, the growing military might of the Chinese Reds. An entirely new element has been added to the military situation during the past year: the acquisition by the Reds of a modern, jet-propelled air force. U.S. officers with long experience in Formosa will tell you that morale in the Nationalist air force has very understandably dropped, now that the pilots feel they are flying obsolete planes (U.S. Mustangs, Lightnings, etc.) which would have no chance against Mao's Russian-built MIGs.

On the whole, however, the Chinese Nationalists have regained their confidence to the point where they are now almost cocky. They are fairly certain that, come what may, there will be no international deal to turn Formosa over to the Reds. Generally, they are not notably grateful to the U.S. "They think we are aiding them only because it's in our own interest to aid them," said an American officer. The Chinese not only have long memories, but are notoriously unsentimental. Perhaps it's just as well that U.S. aid to Formosa should be put on the hard-headed basis of mutual self-interest.

Things Are Humming. Around the island, the impression is unmistakable that things are humming. Warehouses are being repaired, repainted and rebuilt in almost every town. Formosa's textile industry (100,000 spindles) now produces half the islanders' clothing needs. But the most impressive and certainly the most vital improvement has been in rice production. Not only has this small island (an area about equal to Massachusetts and Connecticut combined) fed its own rapidly growing population as well as 2,000,000 Nationalist refugees; it has also kept up its rice exports to Japan, the Nationalists' main source of foreign exchange. No one in Formosa suffers from the Orient's oldest disease: starvation.

The Nationalists' three-pronged agrarian reform program has been largely responsible for fatter harvests. Stage 1 reduced the rents of all tenant farmers from 50% of their cash crop to 37.5%. This has meant a big increase in farm incomes, which in turn has produced a spate of what the islanders now call "37.5% homes" and "37.5% brides."

Stage 2 was the sale, at equitable prices, of the vast public lands once owned by the Japanese. The third stage will be inaugurated next Jan. 1; it will chop up the big estates into individual peasant holdings of not more than two hectares (five acres) of rice-growing land per head. The Nationalists frankly think their land distribution will take the wind out of Mao Tse-tung's agrarian reform sails.

Proper Perspective. This overall improvement needs to be put in proper perspective. First of all, Formosa is infinitely more manageable than the huge mainland. It was already, as a result of 51 years of Japanese rule, much more highly developed than any similar area on the mainland. Formosa's good macadam roads, its efficient railroad system, its fine harbors and its admirable school system, which has given the island's population a literacy rate approaching 80% --all these things have been kept up and in some cases improved by the Nationalists.

Nor would Formosa's improvement have been possible without U.S. economic aid, which, not counting military expenditures, is now running at roughly $100 million annually --certainly a large sum to spend on a small island with a population of 9,000,000.

Unfortunately, the Nationalists' political and military progress has lagged behind economic improvements. Chiang's propaganda to the Chinese mainland, like U.S. propaganda, simply does not ring the bell. And Formosa retains too rigid a state atmosphere to make it a comfortable place for many loyal anti-Communist Chinese.

Yet, when seen against the background of defeat and disgrace which the Nationalists suffered in 1949, and against the lawless tyranny of the Communist-enslaved mainland, Formosa looks good, and it is steadily getting better.

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