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form of anti-British move in the Orient was accordingly looked for as soon as Japan was less preoccupied with a possible threat from the Soviet.

Sir George Pearce told me that he had never forgotten a conversation he had had during the Washington Conference of 1921-1922 with Prince Tokugawa. The latter had said to him: "There is absolute unanimity in Japan on the proposition that we must expand; but there are two schools of thought as to where we should expand: the first is the Continental school, the second is called the Blue-water school. For the moment, the Continental school has the upper hand, and probably will for years to come, but if ever it should be blocked or thwarted, then it will be a matter of real concern for Australia." Sir George added that he wondered whether each of the two schools of thought referred to was not simultaneously feeling that it was in the ascendant. So long as we are in the Philippines Australia feels fairly safe, believing that it would be suicidal for Japan to move further south leaving the Philippines on her flank. But if and when we withdraw, whether Japan absorbs the Islands or whether they remain under weak native rule, this feeling of security will vanish. There is accordingly an increasing bitterness at our policy of withdrawal from the Philippines as step succeeds step in its realization. Colonel Hodgson told me that according to the information reaching Canberra as to future developments in the Philippines, American army circles were saying quite openly: "At least the United States will never give up a naval and military base in the Islands", while, on the other hand, civilian opinion was reported to be emphasizing the reluctance of the United States to retain any responsibility whatsoever in the Philippines without full authority.

Meanwhile Japan and Australia continue to be "good friends" and Tokyo goes on buying wool from Australia and pressing for a trade treaty. Australia has by now pretty definitely shown Japan what she will and what she won't give in the way of concessions. The Prime Minister told me that the powerful grazier interests were no longer pressing the Government to "buy" favors from Japan, while Colonel Hodgson said with considerable emphasis of manner: "You can rest assured that Japan is going to be very disappointed at what she actually gets from us."

There is some feeling that the invitation to Mr. Hughes," the veteran war-time Prime Minister, to re-enter the Cabinet from which he had been dismissed three months ago, was in part due to his knowledge of the Japanese problem. I was even told by a journalistic friend, although of course I cannot confirm this, that Mr. Hughes'

76 William Morris Hughes.

return was informally suggested to Mr. Lyons" by Downing Street. In any event, the Australian Government while not yet the victim of a "scare" is definitely worried at the turn events are taking.

Respectfully yours,

PIERREPONT MOFFAT

711.94/1059: Telegram

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

TOKYO, February 12, 1936-5 p. m. [Received February 12-7:03 a. m.]

26. Senator Pittman's speech in the Senate has aroused relatively little press comment. Such excerpts as were telegraphed were given a prominent position in the news columns as well as the Secretary of State's speech that he had not been consulted in reference to it. The Asahi, the Nichi Nichi and the Hochi are the only important Tokyo papers as yet to comment on it editorially and they attribute it to anti-Japanism and the Senator's desire to get before the public in election year; they deny the charge that Japan is closing the door in China and regret that a man of Senator Pittman's high position in American public life should be so misled as to make the unfounded charge he does against Japan.

The Spokesman of the Foreign Office has refused to discuss the speech and there is evident a desire in official quarters to minimize its importance.

The Japan Times this evening publishes a reasonable editorial pointing out Senator Pittman's place in the American Government and explaining that he does not represent the Administration.

793.94/7765

GREW

Memorandum by the Chief of the Division of Far Eastern Affairs (Hornbeck) to the Secretary of State

[WASHINGTON,] February 12, 1936.

MR. SECRETARY: The Chinese Ambassador asked me last evening to arrange for an appointment for him with you.

The Ambassador said that he had had instruction from his Government, and that the Chinese Ambassadors at London and at Moscow have similar instructions, to state that the Chinese Government has reason to believe that in the near future the Japanese will renew and augment their pressure upon the Chinese Government for an early diplomatic settlement of certain questions; that the Japanese are in

77 Joseph Aloysius Lyons, Australian Prime Minister since 1932,

sisting upon a negotiation on the basis of the Hirota three-point program (see memorandum attached 78); that the Chinese Government cannot make that program a basis of negotiation; and that the Chinese Government wishes to inquire what, in the event of augmented Japanese pressure upon China, will be the attitude of the American Government.

I have said to the Chinese Ambassador that this is a pretty broad question, and he has admitted to me that it is a "hypothetical question." I have asked him what he might be prepared to reply in case you were to ask him what will be the attitude and action of the Chinese Government. He replied that he was not in position to say, but that he must present to you his Government's case.

May I suggest that an appointment be made for you to receive the Ambassador on Friday."9

793.94/7785

The Ambassador in China (Johnson) to the Secretary of State No. 234

PEIPING, February 12, 1936. [Received March 9.]

SIR: I have the honor to refer to the Embassy's strictly confidential despatch No. 184 of January 17, 1936,80 with regard to the subject of the conflicting policies of China, Japan, and the Soviet Union in Eastern Asia, and to enclose for the information of the Department a copy of an editorial, entitled "Neither Accepted Nor Rejected", published in the Peking & Tientsin Times (British) of January 31 1936,80 discussing the problem of China's present position in the triangle.

[Here follows report on the editorial.]

The initiative, as heretofore, rests with the Japanese. As emphasized by Ambassador Grew in his confidential despatch No. 1630 of January 7, 1936,81 the moderate group in Japan is loath to have the Japanese Army undertake any adventures on the Asian continent that might check the substantial improvement of economic conditions now being experienced in Japan. The Army, stressing the political aspects of the situation more heavily than the economic, is convinced of the need of establishing the Japanese position in Asia on so strong a base that the Japanese Empire would be free from threat from any quarter, but it recognizes the strength of the argument that a China thrown into disorder would be to the disadvantage of Japan both

78 Not printed; it was based on reports from the Embassy in China.

79 See memorandum of February 15, by the Chief of the Division of Far Eastern Affairs, p. 60.

80 Not printed. 81 Post, p. 706.

919456-54

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economically and politically. It is probably primarily because of this realization that the Army has endeavored to achieve its ends in North China and Nanking by the exercise of steady pressure and threats to force acquiescence from the Chinese side without open conflict between the two countries.

The policy of attrition, however, is necessarily slow, and in China forces seem to be gathering which threaten to decrease the pace still further. Japan can hardly view with equanimity the growing radicalism in student circles, weakness of the economic structure, obduracy toward the Japanese program in even "pro-Japanese" officials, and growing strength of Chinese Communism, which threaten to bring the whole thing down upon the Japanese Army's head. And on "Manchukuo's" frontiers, the strength of the Soviet Army grows appreciably from month to month.

In those circumstances, the question would seem to be how long the patience of the Japanese militarists can last under a strain that is increasing. The border incidents arising out of clashes between Japanese-"Manchukuo" and Soviet Russian and Outer Mongolian forces have of late been increasing in number and intensity, and there is now reported in the press the advance of augmented "Manchukuo" forces to the Buir Nor region which has been the scene of frequent pitched battles. (An informed Russian newspaperman states that both Soviet Russian and Mongol sources report that the presumably hostile troops have not yet appeared on the border, and he suggests that the Japanese have perhaps in this case been more interested in creating an alarm than in actually going into action. Consul General Adams of Harbin in his despatch No. 192 of January 27, 1936,82 also gives evidence indicating that Japan does not contemplate major hostilities with the Soviet Union in the immediate future.) As regards North China, there exists substantial evidence that the Japanese are pressing hard on the local Chinese militarists for a definitive settlement along autonomous lines and that, in the absence of such a settlement, Yin Ju-keng's East Hopei regime and other "autonomous" organizations may be expected to constitute the spearhead of a new Japanese thrust into North China. It is reported by the Military Attaché's Office that Yin Ju-keng is now expanding his military cadres, which were built around the former Peace Preservation Corps, into five divisions of troops totalling 27,000 men; Japanese advisers and instructors are said to have been engaged. At Changpei in Chahar the "Manchukuo" forces of Li Shou-hsin are already in controland Changpei District extends to Kalgan and includes that part of the city lying northwest of the river traversing its area, so that Kalgan, important both strategically and commercially, would probably

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fall without a blow. Abandoned to their fate by the National Government, the Mongols of Inner Mongolia in Chahar are apparently being forced into a position which will give them no choice but to throw in their lot with the Japanese, for reasons of self-preservation. In a well informed quarter in Peiping it is held that the Japanese Army would not dare force war with the Soviet Union prior to the establishment of control firmly in North China; however, as regards the Outer Mongolia-"Manchukuo" border incidents, the same authority stated that it is quite possible that the Japanese Army is preparing at this time to open "the Outer Mongolia problem", and to make an initial test of the Soviet Union's attitude toward the question of that country's defense, by launching a strong attack westward on Ulan Bator (Urga). A simultaneous Japanese advance into Suiyuan, he pointed out, would facilitate a flank attack on the same objective.

In this connection, the recent visit to Moscow of Premier Genbun of Outer Mongolia and the popular importance attached to the visit to the Kremlin of a delegation from the Buriat-Mongolian A. S. S. R. at the end of January may be of significance and are facts attesting to the Soviet Republic's interest in this situation. It is improbable that the Russians view Outer Mongolia indifferently, especially inasmuch as the control of that territory by Japan would not only put the Soviet Union at a grave strategic disadvantage militarily but would result in a serious loss of Soviet prestige both at home and abroad. According to a statement made by a local Russian to a resident British banker, the Soviet Union's attitude regarding Outer Mongolia can be discovered from a careful reading of the speech made on foreign relations by Molotov, Chairman of the Council of People's Commissariat of the Union of Soviet Socialist Republics, at the meeting on January 11 of the Central Executive Committee. This speech, it is said, was meant to be a clear warning to Japan. (There is enclosed, for the ready reference of the Department, a copy of that section of the speech which deals with the Far East, as reported by the Tass News Agency.83)

The military conferences at present taking place in Tokyo are therefore of more than usual significance. Major-General Isogai (Japanese Military Attaché in China), Lieutenant-General Sugiyama (Vice-Chief of the Tokyo General Staff), Minister of War Kawashima, and other important Japanese militarists are said now to be considering the whole matter of the future of Sino-Japanese relationships. There is enclosed, in English translation, a copy of a news item 83 appearing in the Yachou Min Pao (Asia People's Voice, Japanese Chinese-language newspaper, Peiping) of January 31 which purports to give the agenda of the discussions. If this report is cor8 Not printed.

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