793.94/8956: Telegram
The Ambassador in Italy (Phillips) to the Secretary of State
[Received July 24—10 a.m.]
347. My 338, July 22 [21], 10 a.m. Foreign Office officials here continue to regard the Sino-Japanese crisis with concern. The impression is that Chiang Kai-shek having lost prestige during the past few months may feel that he must now adopt an intransigeant stand and this attitude combined with the pressure to which he is being subjected by the communistic elements may result in the rejection by the Nanking Government of the local agreement reported to have been reached in the Peiping area. In that event, it is believed here that the Japanese will proceed on their course and that although there may be no actual declaration of war, hostilities will ensue.