893.51/2142: Telegram

The Minister in China (Reinsch) to the Acting Secretary of State

The funds furnished by Japan to the National Defense Bureau are now in bank to the credit of that organization. The Japanese Government will not stop payment as money technically belongs to the Bureau but Japanese Minister has expressed his opinion to the Chinese Government that it would be well to refuse drawing the money on account of the objections by the majority the Shanghai Peace Conference. British, French, Italian representatives and myself shall adhere to the same opinion. At the meeting of the five representatives today, it was decided that in view of the complaints which have reached [them] from the Shanghai Peace Commission concerning the existence of serious obstacles to peace it is desirable to address to the Chinese Government representations to the following effect:

As the weight of evidence indicates that the armistice has not been observed by Northern commanders in Shensi it is indispensable that the Government should take strong measures to secure the faithful carrying out of the conditions upon which the Conference has relied; and as the continued increase of troops constitutes a great obstacle to peace the first need of the situation is the disbandment of the provincial and Government troops.

The Japanese Minister did not seem to expect that we would take up his recommendations on the loan funds, which he probably made in order [to] clear the record of Japan before Peace Conference rather than in the expectation of definite results. While he personally favors further representations as stated, he has referred the matter to his Government for instructions. The British, the French, the Italian representatives and myself are ready to act under general instructions.

My telegram of February 6th, 10 a.m.36 Peace Conference adjourned on March 2nd, as a protest against the breach of the armistice in Shensi and continued increase in so called National Defense army. Northern delegation had already resigned in order to express its disapproval of the Shensi matter. The Government fears to remove Shensi Military Governor fearing that all Northern military governors standing together would resist such action. It is necessary that the Peace Conference and President should receive strong moral support.

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