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(3) Anglo-Japanese Relations.
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41. There were persistent rumours during February, as during January, that Great Britain was planning a loan to China to stabilise the Chinese currency. Despite these rumours, the Japanese press remained remarkably calm.
(4) Incident at Kowloon.
42. On the 21st February some Japanese aeroplanes, engaged on bombing the town of Chamshun, on the Hong Kong Canton Railway, a short distance outside British territory, crossed the frontier, which is clearly marked, and dropped several bombs, doing considerable damage. A train was attacked, and the casualties included one Sikh policeman and several Chinese, all British subjects. The attack was witnessed by British troops encamped nearby.
43. What at first appeared to be a deliberate attack was later shown to be due to that negligence on the part of the Japanese military authorities which has led to similar, if less serious, incidents in the past. In this case, however, the Japanese authorities readily admitted themselves to be in the wrong, and on the 23rd February the Minister for Foreign Affairs addressed a note to His Majesty's Ambassador expressing profound regret, stating that disciplinary action would be taken against the offenders, offering compensation for the damages inflicted and assurances that measures would be devised to prevent the recurrence of such incidents. Sir Robert Craigie replied in a note dated the 25th February that His Majesty's Government regarded the matter as settled on these terms. In subsequent negotiations on the spot the amount of compensation was fixed at 20,000 Hong Kong dollars and paid.
(5) Tientsin.
44. The Japanese authorities in Tientsin on the 8th February somewhat relaxed the barrier restrictions erected at all the entrances to the British and French Concessions. The improvement did not, however, last for long, and on the 16th February the Japanese Special Service Mission were already threatening that, if certain members of the British municipal police force were not removed, the restrictions would be renewed with increased severity. No evidence in justification of this demand has been produced, but the Japanese military authorities have, in fact, tightened up the restrictions, erected further barbed- wire entanglements and surrounded the concessions with live wire.
45. Further measures by the Japanese to isolate the concessions include the construction of a bridge connecting the Italian and Japanese Concessions. This scheme will obviate the reliance of the Japanese on the International Bridge, one end of which is controlled by the French authorities, for the transport of troops from the station to the Japanese Concession. It is understood that the Italian Consul disapproved of the bridge-building scheme, but was overruled by his Government.
(6) Shanghai.
46. Terrorism at Shanghai was worse during the first half of February than it has been for a long time, and it culminated on the 19th February, the Chinese New Year, with the assassination of Mr. Chen Lu, head of the Foreign Affairs Section of the (Nanking) Reformed Government. These attacks were made on Chinese who had accepted positions under the Japanese, or who were suspected of co-operating with them, and were all part of the Chiang Kai-shek régime's policy of rendering Chinese co-operation with the Japanese futile.
47. The Japanese authorities in Shanghai (.e., the military, the naval and the consular authorities, in that order of importance) presented a note to the municipal council, demanding the suppression of this organised terrorism and stating that they would take steps themselves if the municipal council found itself unable to cope with the situation. The council replied, with justification, that it was largely owing to the refusal of the Japanese puppet authorities to co-operate that these murders took place. Chen Lu, for example, was not attacked in the settlement itself or on one of the extra-settlement roads where the municipal police exercise authority, but in a side street off an extra-settlement road, down which the municipal police are not allowed to penetrate. (It was also felt that it was foolhardy on the part of the Chinese in question to venture into an obvious danger area with inadequate protection.)
45.
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Discussions between the Japanese authorities and the council were still proceeding at the end of the month, the former, supported by questions in the Diet and a campaign in the Japanese newspapers, demanding greatly increased Japanese representation in the Shanghai municipal police and enlarged oppor- tunities for Japanese intervention in the settlement in pursuit of Chinese suspects. An early reply from the council to these demands was requested.
(B)-United States of
merica.
49. On the 23rd February the House of Representatives rejected the Bill providing for the fortification of Guam Island at a cost of 5 million dollars. Isolationist sentiment amongst the Congressmen and actual mishandling of the Bill prompted this decision, which was hailed in Japan as evidence of America's common sense "and deplored in certain circles in the Philippines as a further indication of America's desire to withdraw completely from the Far East.
.
(C)-France.
50. Japan's occupation of Northern and Central China and her seizure of the island of Hainan has caused the French much anxiety. Hence it is natural. that she should be taking measures for the protection of her Far Eastern possessions. The vice-chairman of the Naval Commission of the Chamber of Deputies, who has been on a three-month inspection trip of Indo-China, is said to have recommended the concentration of a large fleet of cruising seaplanes, gunboats and submarines along the Indo-China coast, and the immediate strengthening of the fortifications of Haiphong, Tourane and other strategic points. A big air base is being constructed at Tourane and Camranh Bay is to be fortified. Conversations, attended by army officers, have taken place between the Governors of Indo-China and the Straits Settlements.
(D)-Italy.
51. On the 9th February, commemorating the opening of relations between Rome and Hsinking, the Manchukuo Government announced that it was decorating Mussolini with the Grand Cordon of the Orchid Flower, Ambassador Auriti with the Cordon of the Auspicious Cloud and Vice-Minister Bastiani with the Cordon of the Mainstay of the State.
(E) U.S.S.R.
52. The fisheries dispute was expected to come to a head on the 15th March, the date set by the Soviet authorities for the sale by auction of the fishing lots previously reserved by agreement for exploitation by Japanese interests. Consequently, the question loomed heavily on the horizon during the month of February.
53. The Soviet Government has insisted throughout that the settlement of this question is contingent upon the payment by the Manchukuo Government of the last instalment of 5 million yen due in respect of the sale of the Chinese Eastern Railway. When Manchukuo defaulted, the Soviet Government claimed that Japan should make good the default, to which the Manchukuo Government replied by refusing to bring Japan into the picture at all. Negotiations, however, continued, but were finally broken off on the 3rd February, the effect of the rupture being naturally to give the fisheries dispute, in view of the Soviet attitude, a more serious turn.
54. In the Diet on the 14th February a member demanded temporary occupation of the Kamchatkan fishing grounds, and even of North Sakhalien, if such steps could preserve Japanese rights and interests.
The House adopted unanimously a resolution which reads as follows:-
Whereas pressure by the Soviet Government against Japanese rights and interests has grown markedly severe of late and is threatening their very existence, let it be resolved therefore that the Government shall take swift and appropriate action for the protection of these rights and interests, leaving nothing undone toward that end."
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