Page images
PDF

length of the State Railways (controlled and operated by the South Manchuria Railway Company) as 6,671.6 kilometers. It will thus be seen that the subsidiary has grown to six times the size of the parent and managing company. While the South Manchuria Railway Company financed most of the railway construction in Manchuria, the nominal ownership by "Manchukuo" of six-sevenths of the railways of Manchuria naturally gives the Kwantung Army considerable voice in railway affairs. Of course, the abolition of extraterritoriality will go far towards solving the problem of the South Manchuria Railway Company for the Kwantung Army. The right of "Manchukuo" to tax the South Manchuria Railway Company will destroy the independent position of that company and give "Manchukuo" an effective voice in its management.

It is interesting to note that the army already has sufficient influence over the South Manchuria Railway Company to cause it to work for the destruction of its independence. An instance of this was the election on March 29, 1936, of nine councilors of the Japanese Residents' Association of Harbin. The Japanese Residents' Association is a quasi-municipal enterprise which looks after the interests of the Japanese community. Its main activities consist of the operation of schools for Japanese children and the conduct of measures of sanitation. It also makes representations in matters affecting Japanese interests generally. It is governed by 18 councilors whose term of office is two years; the election of half of this number takes place every year. Shortly before the election the State Railways Office (which is under the control of the South Manchuria Railway) surprised the Japanese community by suddenly putting forward five members of its staff as candidates, besides one former South Manchuria Railway It is said that the members of the railway staff were required by the railway management to vote for the railway candidates. About half of the independent voters refrained from voting as a protest against the railway candidates, the stated objection being that most of these candidates were newcomers to Harbin and had little connection with the affairs of the Japanese community. Four of the five railway candidates were elected, and amongst the other five elected was one who was until recently connected with the railway and who is looked upon as a railway man as far as the Council is concerned.

man.

There appears to be little doubt in the minds of local Japanese that the councilors elected by the South Manchuria Railway will use their influence to hinder Japanese civil opposition to the abolition of extraterritoriality.

In connection with the progress of the plans of the army to obtain control of the South Manchuria Railway, I beg to invite attention

to Consul Grummon's excellent despatch of April 6, 1936, to the Embassy in Tokyo, entitled "Reorganization Plans of the South Manchuria Railway Company" 58 The matter was summed up by Consul Grummon in the statement that the South Manchuria Railway is now in the process of being absorbed by its creature, the State Railways, so that it may, according to army plans, function as an instrument of national policy.

The Kwantung Army has steadily pursued its policy of severing all connections between "Manchukuo" and Japan, excepting the link which the army itself affords. Insofar as the general administrative structure of the Japanese Government is concerned there is something to be said for the claim that "Manchukuo" is an independent country. The beginning of the Kwantung Army's levies upon Manchuria was extremely moderate. In the fiscal year 1934-1935 the "Manchukuo" government's contribution to the expenses of the Kwantung Army was stated to be $9,000,000. For the current fiscal year that contribution was fixed at $19,500,000. When the measures which the Army has initiated for increased revenues for "Manchukuo" become effective, it may be expected that the contribution of "Manchukuo❞ to the expenses of the Kwantung Army will increase rapidly.

It seems that the situation outlined in this despatch is worthy of careful future observation because, with its further development, it may in the course of a few years materially affect happenings in Japan as well as in Manchuria and China proper. I believe that the astonishingly rapid progress which the Kwantung Army is making towards the realization of its aim for an independent position on the continent of Asia is, from a political viewpoint, possibly the most important development that is occurring in Manchuria and north China.

Respectfully yours,

WALTER A. ADAMS

893.00/13478: Telegram

The Counselor of Embassy in China (Peck) to the Secretary of State

NANKING, April 29, 1936-9 a. m. [Received April 29-7:30 a. m.]

110. Although there has existed some suspicion that the strenuous efforts of the National Government to improve its military position are being exerted primarily to meet criticism of southwestern and other leaders that Chiang Kai Shek does not intend to resist foreign aggression, there is increasing evidence here that preparations for actual warfare are being seriously undertaken. For example, the 58 Not printed.

Nanking Embassy learns from an authoritative source that the [National] Health Administration for the past 10 weeks has been expending monthly $1,000,000 for the purchase of bandages, cotton, surplus medicines, materials for manufacture of artificial limbs, and other articles required to equip the Chinese Army Medical Corps; 120 trucks have recently been purchased for use as ambulances; 2 recently completed hospitals at Nanchang have been reserved for anticipated use by wounded soldiers; and the military authorities have been discussing a proposed purchase of an electric light plant sufficient to operate all branches of its local establishments.

2. From another reliable source it is learned that an airplane factory similar to that described in my 60, March 21, 9 a. m.59 is to be constructed at Loyang with assistance of the Eurasia Company, engines to be 1000 horsepower hornet type manufactured in Germany; the Nanking arsenal is working night and day on 3 shifts and has increased its output of heavy machine guns to 120 per month. Woodland, mountain and most elevated places in vicinity of Nanking and as far as Chinkiang have been made military reservations closed to the public; it is understood that they are being utilized for gun emplacements, chiefly anti-aircraft.

3. According to several reliable sources, the principal railways operating in or through the Yangtze Valley region have been ordered to acquire 1 year's supply of fuel and maintenance equipment including couplers, wheels, and similar articles.

4. The Ministry of Industries is reliably reported to have purchased an electric plant for its own use in emergency. Other Government departments, including the Ministry of Finance, have formulated plans for the removal of archives and equipment in case of necessity. 5. Some officials express with apparent sincerity fear that Nanking will be attacked (see paragraph 4, my 91, April 16, 2 p. m.50); others scout such possibility and it does not seem reasonable to anticipate any incident here unless one should be caused in order to exert pressure upon the Chinese Government in connection with some serious incident elsewhere. In this connection, a well-informed Chinese who is the confidential assistant of a ranking official of the Government recently stated to an officer of the Embassy that an enemy blockade of the Chekiang, Kiangsu or Shantung coast would definitely result in Chinese resistance from the air. This official anticipated the possibility of an incident at Tsingtau and according to him and other Chinese and foreign sources it is learned that two of Chiang Kai Shek's best divisions have been despatched to the vicinity of Tsingtau, (1) in preparation for possible foreign aggression in Shantung and,

59 Not printed.

(2) in case Han Fu Chu should deviate in his loyalty to the Government (see paragraph 3, Nanking Embassy's 91, April 16, 2 p. m.). 6. To Department. By mail to Peiping and Tokyo.

PECK

793.94/7874: Telegram

The Ambassador in China (Johnson) to the Secretary of State

PEIPING, April 29, 1936-3 p.m. [Received April 29-1: 20 p. m.]

213. 1. Reference paragraph 1 of Embassy's 201, April 20, 2 p. m., Sung Che Yuan and his self-seeking civilian subordinates are conferring at Tientsin with Japanese military leaders. Available information indicates that Sung is being urged to sign an anti-Communism agreement which is designed for strategic purposes with regard to Soviet Russia, for further separation of the Sung regime from the National Government, and for further extension of Japanese influence in North China. Details are not obtainable.

2. Japanese advisers suggested recently to the Foreign Affairs Committee of the Hopei-Chahar Political Council that Japanese nationals be granted the privilege of free residence in North China. All of the Committee except the chairman, allegedly a member of the Kwangsi clique of the Kuomintang and opposed to Chiang Kai Shek, disapproved of the suggestion, which has been referred to Sung Che Yuan. Acceptance of the suggestion would facilitate Japanese penetration and activities as, for example, it might be used as an excuse to bring in additional Japanese police and courts.

3. According to Chinese officials, it has been definitely decided by the Hopei-Chahar Political Council to construct a railway from Shihkiachwang on the Pinghan Railway to Tsangchow on the Tsinpu Railway. (Reference page 3 of Embassy's despatch 2897, August 10, 1934.61) Apparently the project has the approval of the National Government as the Ministry of Railways has appointed the "chief of the engineering bureau of the Tsangchow-Shihkiachwang Railway". It is not known what Japanese interests are involved.

4. The Japanese military are constructing new barracks at Kupeikou to the south of the north gate, apparently on a fairly extensive scale. At present there are about 100 Japanese troops at Kupeikou.

5. It is reliably reported that all construction of roads, railways, and the like in Jehol Province has ceased since the Tokyo assassinations. There is a news report about Hsinking, indicating an economy program with regard to Manchukuo.

[blocks in formation]

6. Major General Tada, commander of the North China Garrison, and Major General Itagaki, Chief of Staff of the Kwantung army, have been promoted to the rank of lieutenant general.

7. An unconfirmed report is current in Peiping today that the form and personnel for an autonomous Mongol government under Japanese direction is ready for inauguration "at a suitable time" with Prince Teh as the head and Panhofen in western Chahar as the capital. By mail to Peiping.

JOHNSON

793.94/7876: Telegram

The Second Secretary of Embassy in China (Atcheson) to the Secretary of State

NANKING, April 30, 1936-10 a. m. [Received April 30-7:50 a. m.]

113. My 92, April 16, 5 p. m., and 103, April 22, noon.

1. Foreign Office has given to the press official denial of press reports from Peiping that Sung Che-yuan has entered into an agreement with the Japanese military for Sino-Japanese cooperation against Communism.

2. In an informal private conversation last evening a responsible official of the Foreign Office stated to me positively that no such agreement had yet been made. He indicated, however, that he feared Sung eventually would have to meet Japanese wishes in this respect, stated that Japanese military officers had recently been pressing Sung for such agreement, and intimated that Sung is bargaining for the best terms possible and is attempting as a quid pro quo to obtain the abolition of the East Hopei regime and the inclusion of the East Hopei area in the territory under the jurisdiction of the Hopei-Chahar Council. 3. Except for threats of a military démarche, which he indicated are not being employed by Japanese officers at this time, the principal lever in the hands of the Japanese to force acceptance of the proposal in the Hirota program relating to joint Sino-Japanese action against Communism appears to be the situation arising out of the smuggling through the demilitarized zone of large quantities of Japanese goods (estimated by some to amount in value from two to three hundred million Chinese dollars per annum and to cost the customs daily from ten to twenty thousand in revenues). He feels that the smuggling constituted an attack upon the Customs Administration which might later be directed against the customs at other places and eventually destroy its effectiveness as the Government's chief and most reliable revenue-producing agency. The seriousness of the Chinese predicament in this respect, he intimated, might cause Sung to capitulate if

« PreviousContinue »