The Minister in China (Johnson) to the Secretary of State
[Received March 20—3:45 a.m.]
265. 1. Situation today is as follows: Chinese hold defensive line along inside the Wall controlling Chinese end of passes at Hsifengkow. There is apparently no present intention on the part of the Chinese to attempt to invade Jehol.[Page 243]
2. Having acquired Jehol and extended their control to the Wall Japanese Government has stopped. Elimination of Jehol and of Chang Hsueh-liang deprives Japanese of any excuse for sending military expeditions into Peiping-Tientsin area south of Wall. Situation now hangs on question of value to Japanese of negotiations and ultimate settlement. Chinese are determined not to negotiate and they seem to believe that negotiations and settlement are of sufficient importance to Japanese to force Japanese to enter this area in the hope that Chinese will be compelled to negotiate.
3. I doubt whether importance of negotiation and settlement to Japanese is sufficient to outweigh expense and difficulty of conducting campaign in this area which would have to be extended as far as Yellow River and therefore believe that situation will continue stalemated for some time.