The Counselor of Legation in China (Peck) to the Minister in China (Johnson)82

Sir: I have the honor to refer to my letter of June 18, 1933,83 in which I reported a radical change of view point indicated by Dr. Lo Wen-kan, Minister for Foreign Affairs, toward the policy of resistance to the Japanese. The observations of Dr. Lo reported in that letter showed that he was no longer insisting upon forcible resistance to Japan.

I attended a dinner last night at which Dr. Lo was present and in the course of the evening we had another private talk. I reverted to his earlier remarks and Dr. Lo elucidated his position. He insisted that Chinese sentiment was in no way reconciled to Japan’s oppression or to the loss of Manchuria and Jehol, but simply that the Government faced the reality that China could no longer fight against Japan. He apologized for the use of the colloquial English expression, but said that the best way to describe the position of the Chinese was to admit that “we’re licked”.

I remarked that I had been impressed by the arguments which he had quoted to me that China should desist from attempting to follow the historical precedent of Belgium at the beginning of the World War and should, rather, follow the example of France in regard to Alsace-Lorraine after the Franco-Prussian war, namely, accept defeat and defer the recovery of the lost territory until a suitable opportunity should present itself, even if this entailed waiting for many years. Dr. Lo, with surprising frankness, said that this was “eye wash” and was intended merely to throw a cloak of respectability over the Government’s unavoidable decision.

I said that, things being as they are, the question which pressed for attention was what the next development would be. I said it was unbelievable to me that the situation would remain static, since the population of China constituted a quarter of the world’s people and the Chinese were a nation of persistent and irrepressible activity; every Chinese was continually working at something. Consequently, I inferred that the economic activities of the Chinese would adapt themselves to the present situation and seek to expand under the altered circumstances, thus making these altered circumstances permanent, or there would be another attempt to change China’s relations with Japan. I was very anxious, I said, to give my [Page 366] superiors some indication of the trend of events and of what the next development probably would be. From what direction, I inquired, would the next change in the situation come?

Following this line of reasoning I recalled what Dr. Lo had said to me on the earlier occasion regarding the possibility that the Chinese nation might decide that its advantage lay in working with, instead of against, Japan. Dr. Lo said that he did not feel that this reorientation was inevitable, but only that it was greatly to be feared. I ventured the supposition that Chinese popular feeling might gradually become accustomed to the idea that Manchuria had been lost and might lose its feeling of resentment. Dr. Lo insisted that the resentment would not disappear and that it would tend to prevent Chinese-Japanese coalition. Dr. Lo did not by any means retract his earlier prophecy, but toned it down in such a way that it was clear that he hoped that his pointing out the threatened danger to Ingram84 and me would move the British and American Governments to take some steps to prevent the alinement of China with Japan.

Dr. Lo said that if China were to be dissuaded from following the counsels of despair and following the lead of Japan, there would have to be some indication of assistance from “outside”. He referred again to the recent U. S. $50,000,000 loan for the purchase of American wheat and cotton as an instance of “moral assistance” to China. He observed that international loans were generally of two sorts, one being a mere matter of security offered and interest paid, the other an indication of friendly sentiment. He pointed out that the circumstances under which it was made showed that the American wheat and cotton loan belonged to the second category. The European “war debts” to the United States were, likewise, in the second category. He asked, rhetorically, what it was that won the World War for the Allies? It was not the joint warfare of the Allies, but their joint warfare reinforced by the assistance of the United States. He said that debts in the first category were subject to the ordinary risks of business, whereas debts of the second class were debts of honor and the debtors were in honor bound to make every effort to repay them, whatever the sacrifice involved. He observed that it was not his concern, but he could not approve of the unwillingness of the European debtors to repay loans made to them in the time of their distress.

To make the conversation more concrete, I asked what he thought the Japanese were going to do about the troops of Li Chi-chun in the Luanchow area. He said he thought that the Japanese would leave these troops in that region for the time being, to be utilized [Page 367] as a trading factor in future negotiations with China. He thought that the principal object of the Japanese was to bring about the abandonment of the boycott and that these troops would be retained as trading points to bring about the cancellation of the boycott or to obtain other advantages in a general settlement. He did not think that they would be left in Chinese territory indefinitely.

When I inquired whether Dr. Lo thought the Japanese would continue their incursions into China, he said that that would depend upon circumstances; the Japanese would observe the general international situation and would be guided by it. For instance, the nations are now occupied by the World Economic Conference; consequently, the Japanese are leaving the “Manchukuo” troops in the Luanchow area. If the world situation leaves Japan a free hand in dealing with China, Japan will not modify her past policy.

I asked Dr. Lo what the relations were between Canton and Nanking. He said that Mr. Shih Ying85 and Mr. Tuan Hsi-peng86 had returned to Nanking on June 27, from their mission of conciliation to Hongkong [Canton]. He said he had not been informed definitely what results they had achieved, but he thought that, for the time being, the danger of an independent Government being set up in Canton and of an “anti-Nanking” expedition had been passed. Internal quarrels, Dr. Lo insisted, are merely a matter of “rice bowls” and will adjust themselves. They need not cause apprehension.

Respectfully yours,

Willys R. Peck
  1. Copy transmitted to the Department without covering despatch; received August 15, 1933.
  2. Not printed.
  3. Edward M. B. Ingram, Counselor of British Legation in China.
  4. Mayor of Nanking.
  5. Vice Minister of Education.