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to improve the situation but that the publicity arising out of the American and British démarches had rendered his position difficult and embarrassing because whatever he might now do would be interpreted as done under foreign pressure.

These are opposing points of view but they both carry weight. The Japanese undoubtedly are fearful of facing a united front by the United States and Great Britain but the chauvinist element would be inclined to object to anything that could possibly be interpreted as "truckling" to foreign pressure.

Clive is not aware whether the Germans are interested as reported in the press. The British Counsellor mentioned the situation to the German Chargé d'Affaires merely in casual conversation. The French Ambassador said that nothing could be expected from his Government which at present is in a state of crisis.

The German Chargé d'Affaires told me last evening that his Government is not interested in the smuggling situation in North China since German commercial interests in China lie chiefly in the South. To Peiping by mail.

GREW

793.94/7912: Telegram

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

PEIPING, May 20, 1936—5 p. m. [Received May 20-3:20 p. m.]

252. 1. Embassy's 241, May 14, 2 p. m. According to the most reliable information obtainable from foreign military observers, there are now 2258 Japanese troops at Tientsin, of which 1200 are new arrivals; 738 at Shanhaikwan, of which 500 are new arrivals; 400 at Tungchow, of which 200 are new arrivals; and 700 at Peiping of which 300 are new; that is, there are now 4,096 at these 4 places, of which 2200 are new arrivals. More troops are expected to arrive by the end of May. The retiring commander of the North China Garrison informed his foreign military colleagues on May 13 in writing that the increase in strength would be "about more than double in number." The actual number is apparently still a military secret.

2. Embassy's 217, April 30, 4 p. m. Colonel Mutaguchi who arrived recently and announced that he had succeeded Lieutenant Colonel Hasegawa as Commandant of the Japanese Embassy Guard has now been succeeded by Major General Masakazu Kawabe, who arrived at Peiping, May 16. Kawabe is in command of an infantry brigade which is part of the North China Garrison and one regiment of this brigade forms the Embassy Guard. Mutaguchi continues in command of that regiment. It is not known what the rest of the brigade con

sists of nor where it is to be. Kawabe states that he will reside in Peiping, where quarters have been rented for him.

By mail to Tokyo.

JOHNSON

793.94/7908: Telegram

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

34. Your 143, May 18, noon.

WASHINGTON, May 20, 1936-5 p. m.

1. Referring to paragraph 1 of your telegram, the Under Secretary at the press conference May 16 in response to a question whether this Government had taken any steps to determine whether Japan's action in strengthening its garrison in North China violated the Boxer Protocol replied that in his opinion the Secretary's public statement made on December 5, 1935, covers the situation.

89

2. A translation of the note referred to in paragraph 4 of your telegram does not appear to have been published in the United States. It is suggested that you send by naval radio a summary of the note and forward the text by mail. However, should you consider that the complete text would be of interest to the Department at this time, please send it by naval radio.

HULL

761.93 Outer Mongolia/25: Telegram

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

NANKING, May 21, 1936-9 a. m. [Received 10:50 a. m.90]

148. 1. The Soviet Ambassador yesterday told an American correspondent, not for quotation, that:

(1) The low point in Russian policy in the Far East was the sale of the Chinese Eastern Railway in 1935 as a concession to avoid war with Japan; (2) the Soviet Government subsequently learned that a policy of conciliation was assumed by the Japanese to be one of weakness; (3) Soviet policy vis-à-vis Japan was now one of defiance based on the theory that a strong attitude would be more likely to prevent Japanese aggression and resultant war than a weak; (4) the Soviet Union-Outer Mongolian Pact of March 12 (see our 114, April 30, 11 a. m.) was a direct notice to Japan that there exists a definite limit beyond which Japanese hegemony cannot advance on continental Asia; (5) Soviet policy toward China is one of helpfulness looking to the building up of China as a bulwark against Japan and has no altruistic implications.

"Signed at Peking, September 7, 1901, Foreign Relations, 1901, Appendix (Affairs in China), p. 312.

90 Telegram in two sections.

2. The correspondent gained the impression that Russia's ultimate aims envisage Russian control of Mongolia, Manchuria and part of North China including the coast as far south as Tsingtau which is now the only real ice free harbor on the northern Asiatic coast. 3. To Department. By mail to Peiping, Tokyo, Moscow.

PECK

693.94244/23: Telegram

The Ambassador in Japan (Grew) to the Secretary of State

TOKYO, May 21, 1936-10 a. m. [Received May 21—1:02 a. m.] Evidence is accumulating that

110. Embassy's 109, May 20, noon. the smuggling situation in North China is causing misgivings in Tokyo. The Foreign Office spokesman yesterday completely altered his tone in discussing the subject with the press correspondents and stated that high officials are being sent to China to observe the situation. As the Japanese military authorities in China are apparently adamant in their determination to prevent patrol of the Hopei coast by armed revenue cutters the inference is that Tokyo intends to bring about some sort of compromise that will improve matters.

The general impression is that the American and British démarches have served to focus attention on the issue and to that extent have been helpful.

Repeated to Peiping.

GREW

693.94244/27: Telegram

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

NANKING, May 22, 1936-10 a. m. [Received May 23-6: 28 a. m.o1]

149. Department's 34, May 20, 5 p. m.

1. The note, dated May 15, would lose character by being summarized. Translation as furnished the press by the Foreign Office is as follows:

2. "In regard to the unwarranted interference to which the Customs Preventive Service has been subjected by the Japanese military at Chinwangtao and the protection afforded to the Japanese and Korean smugglers, the Waichiaopu has had the honor of addressing to you several notes of protest, to which, however, no satisfactory reply has hitherto been received from the Japanese Government. I wish now to reiterate that in taking appropriate measures to prevent smuggling the Chinese Maritime Customs are exercising function inherent in their

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duties of safeguarding the integrity of the state revenue and that the exercise of such powers of prevention admits no interference from any

source.

As clearly pointed out in the previous notes, in which the Waichiaopu requested the Japanese Government to take effective steps to restrain their military authorities from further unwarranted and illegal interference with the preventive functions of the Chinese Customs, there is no reference in the Tangku Agreement 2 to the question of armed customs vessels, nor can any article of the said agreement be construed as imposing any restrictions on the antismuggling activities of armed customs patrols or preventive vessels." 3. Section 2 follows.

4. "The repeated requests made by the Chinese Government on the ground of China's sovereign rights and for the protection of legitimate trade interests, both Chinese and foreign, have, however, been ignored by the Japanese Government with the result that smuggling has increased to the extent of impairing the integrity of the Chinese national revenue.

According to information received by the Foreign Office, Japanese and Korean smugglers, taking advantage of the serious impairment of the efficacy of the Customs Preventive Service in consequence of Japanese interference, have during recent months engaged in large scale smuggling by sea. A large number of junks and motor driven vessels, some as large as 500 tons, have been employed for smuggling along the coast from Lutai to Chinwangtao, while the landing and transportation of smuggled goods have been carried on without the fear of seizure by the customs. By means of the railways illicit goods have been shipped southward and dumped on the various markets.

As regards the smuggling situation on land, immense quantities of smuggled goods from Chinwangtao have been brought to Tientsin and various places in the interior via Peiping-Liaoning Railway, and a large percentage of these goods have also reached the southern ports via the Tientsin-Pukow Railway. At Shanhaikwan and other places the audacity of armed Japanese and Korean smugglers has been amazing, numerous cases having occurred in which customs officers were attacked with impunity and goods already seized by the customs were recovered by force. As a result of such smuggling, it is estimated that the loss of revenue suffered by the maritime customs from last August to April this year amounted to over 25 million dollars, while the figure for the month of April alone was no less than 8 million dollars, thus indicating the rapid deteriorating of the position."

5. Section 3 follows.

6. ["]The unprecedented seriousness of the situation has been the cause of grave concern to Chinese and foreign traders, as well as far-sighted observers in Japan. As failure to take immediate steps to curb such illegal activities would result in further increase of smuggling, with the consequences of reducing the revenue of the Chinese customs and impairing the national finances of China, the Chinese

"Signed May 31, 1933; Foreign Relations, Japan, 1931-1941, vol. 1, p. 120.

Government is constrained to lodge a further protest with the Japanese Government.

I, therefore, ask you to be good enough to transmit to your Government the above views with the request that immediate steps be taken to restrain the Japanese military authorities from further interference with the preventive functions of the customs and to withdraw the protection hitherto enjoyed by Japanese and Korean smugglers. I further request that such smuggling concerns as the 'Shih Ho Transportation Company' mentioned in the previous notes of protest be immediately dissolved and that other prompt measures be taken for the effective suppression of Japanese and Korean smugglers at Chinwangtao and other places".

7. To Peiping by mail. Copy of translation sent to Peiping and Tokyo with copy of this office's despatch to Department, No. 165, May 20,93

РЕСК

693.94244/26: Telegram

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

NANKING, May 22, 1936—11 a. m. [Received May 22-9:30 a. m.]

150. Department's 117, May 14, 5 p. m. to Peiping.

1. I communicated the Department's message to the Minister for Foreign Affairs during private conversation after a dinner given May 21, 8 p. m., by the Soviet Ambassador. The Minister for Foreign Affairs told me that the smuggling situation is still very serious and that the Chinese Government is now attempting to suppress smuggling through three measures: (1) inflicting severe penalties, (2) control of transportation through permits and (3) control through cooperation with Chamber of Commerce and similar organizations.

2. At this point the Soviet Ambassador joined us and the conversation turned on Japanese activities. The Ambassador expressed the view to the Minister for Foreign Affairs that "Japan is saber rattling". He said that his Government had discovered that the Japanese misunderstood conciliation as weakness and that boldness was probably the best preventive of war. (Compare my May 21, 9 a. m., paragraph 1, points 2 and 3). Referring to Manchurian border incidents, he said that his Government had denied to the Japanese Government the contention of the latter that boundaries were vague and had said that if any military parties crossed them into Soviet territory military action would result; that the Soviet Union would be glad if Japan did not regard such border incidents as casus belli but if Japan made them pretext for war then the Soviet Government "could not help it".

93 Not printed.

919456-54--17

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