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 hold the major cities and rail lines of North China. But the Communists ruled the countryside. They had the best chance to gather North China's summer crops. The Government could not even protect at night some of the villages it controlled by day. Near Peiping last week, a 70-year-old Chinese farmer complained that the Communists had come by night, three times in the past month, to collect "taxes." Had he reported this? "Heavens, no," said the old man, "the Communists would cut my throat the next night."

This was the theater-by-theater picture:

In Shans? province, walrus-mustached old Governor Yen Hsi-shan (once known as the "Model Governor" because he suppressed the opium traffic) had enough forces to defend his dilapidated capital, Taiyuan. But he could not move against the Communists who now held almost three-fifths of the province. A lot of Communists had filtered into rich south Shansi when the Government withdrew troops for the attack on Yenan. "We traded a fat cow for a skeleton," say bitter men in Taiyuan. Shansi people used to admire

Yen Hsi-shan because he fought his wars in the enemies' provinces. That time has passed. Last week, a TIME correspondent asked Yen what would happen if the Government cannot relieve Taiyuan.

Yen's answer was a masterpiece of Coolidgean understatement: "In that case many people will be poorly dressed." Yen added: "There will be no salt, and that is bad for the bones."

In Shantung, the Nationalists had set out to obliterate large Communist forces. It looked as though the Communists had been driven back into the Shantung hills, but five times this spring the Communists had struck back hard.

In Manchuria, the Government's hold was weaker than at any time in the 19 months since General Tu Yu-ming's troops recovered control from the Japanese. General Tu still held Mukden and Changchun (the capital), but the Communists camped on his line of communication with the south. Manchuria's great seacoast city of Dairen was still in Russian hands. There was little chance that General Tu could take Dairen if Russia did leave. General Tu's men were busy digging trenches and even medieval moats around the cities they still held, not looking for more cities to conquer.