793.94/14367: Telegram

The Ambassador in China (Johnson) to the Secretary of State

550. During a short conversation November 16, 11 a.m., with General Chang Chun, formerly Minister for Foreign Affairs and now Chiang Kai Shek’s representative in Chungking, Peck inquired concerning the present state of the conflict with Japan and the following is a summary of his appraisal:

As a thorough student of Japanese institutions, informant did not think Japan financially capable of continuing present military expenditures indefinitely nor on the other hand is Japan financially exhausted. He thought the gold reserves of Japan probably amounted to not more than 300 million yen whereas military expenditures in the last 2 years had been between 10 and 20 billion but Japan has not exhausted such extreme measures of finance as nationalization of wealth and forced conversion of all Japanese foreign investments and further use of note reserves. He thought that restrictions on foreign trade had lowered the national income to a dangerous level. Japan’s vulnerable point therefore is reached through foreign economic pressure. China’s threefold need is for men, money and munitions. The supply of men is inexhaustible and given financial support and munitions China can fight indefinitely and is sure of ultimate victory. China has sufficient rifles and ammunition, hand grenades and such materials to last over an extended period but desperately needs other equipment in which it is lacking. Japan’s aim in the present war is as much to eradicate foreign interests and influence in the Far East as to subjugate China. This fact as well as the repeated official expressions of sympathy and approval on the part of foreign powers leads China to regard foreign assistance in the struggle as logical and deserved. He thought an international conference say under the Nine-Power Treaty would afford an effective method of approach to the matter and recalled that the Chinese Government had suggested this.

China is not afraid to do the fighting but without money and munitions its advantage in man power is nullified. If foreign assistance were to be forthcoming, informant thought it would be necessary for the United States and Great Britain to take the initiative singly or jointly. He deplored apparent inability of these two countries to work together in this crisis. France obviously feels great fear of Japan and is now refusing even to permit the disembarkation of non-military motor vehicles in Kwangchou while transportation of munitions over the Yunnan Railway is severely restricted. Informant expressed no resentment against Germany or Italy but irritation [Page 384] at the failure of Great Britain to grant China a loan. He thought the plea of the British Government that Parliamentary approval of a loan would have to be obtained did not carry weight because Great Britain had granted to Czechoslovakia without any hesitation a loan similar to the one asked for by China and moreover the Government has a clear majority in Parliament. He expressed appreciation of the moral support given to China by the present administration in the United States and the hope that since the recent elections had left the administration with a strong majority in Congress this moral support might soon be accompanied by material support in the forms indicated. Informant said Japan’s military man power is known exactly to the Chinese Government and is not inexhaustible but he emphasized that even with superior human resources China stood in great need of foreign aid in finances and munitions if victory against the attack on China and on European and American interests in China were to be assured. He asked that Peck report his observations and said he was to receive the British Ambassador the same morning and would make similar statements to him.

Repeated to Peiping, Shanghai. Latter repeat to Tokyo.