CHINA: Gloom

China's situation was the darkest in many months. The Government had lost face because its promises had not been fulfilled. When Nationalist armies captured the old Red headquarters town of Yenan last March, Nanking had predicted that remaining Communist armies would be swept from the field in three months. Nanking had made promises about economic recovery too. But last week, just three months after the fall of Yenan, inflation was worse than ever, and the Communists seemed to be winning the war north of the Yellow River.

Midnight Taxes. The Nationalists did...

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