793.94/15421: Telegram

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

557. 1. Since my 493 [495], August 13, 9 a.m.; and 520, September 6, 10 a.m., there have been developments which lead me to the [Page 287] conviction that the Japanese position in China is materially deteriorating.

2. Japan has since the beginning of spring of this year suffered the following defeats and disasters:

(a)
Japanese military failed in efforts to invade Shensi, having suffered military defeats at the hands of Chinese forces [in] Shansi, southern Honan and northern Hupeh.
(b)
Japanese forces were severely defeated by Russo-Mongolian forces at the Nomonhan. This defeat compelled the Japanese to withdraw forces from northern China and to move new troops into Manchuria to reinforce their position in Manchuria against the Russian threat.
(c)
Floods in the province of Hopei have brought devastation to the principal area from which the Japanese military expected returns from their military investment in China. So serious is the situation in that province that a new crop can hardly be expected until 1941. This means that the coming winter and next summer will see serious famine conditions throughout that area with banditry rife and trade stagnant.
(d)
The conclusion of the Russo-German nonaggression pact was a severe blow to the prestige at home of the Japanese military who have controlled Japanese foreign policy since 1931. The resultant enhancement of the prestige of Moscow and Russian successful extension of influence into Poland and the Baltic States has presented Japan with a Russian government with revived interest in restoration of its position in eastern Asia.
(e)
The denunciation of the Japanese-American commercial treaty further damaged the prestige of Japanese military control of Japan’s foreign relations as the Japanese began to appreciate the fact that this action on the part of Japan’s chief customer was the result of Japanese handling of the situation in China.
(f)
The outbreak of war in Europe has shut Japan off from European markets, particularly Germany. The continuance of warfare in China and continued delay in settlement of the “China Incident” with its drain upon Japan’s financial position and industry makes it difficult for Japanese industry to enjoy the commercial benefits in markets hitherto dependent on European industry.
(g)
The Japanese military after jeopardizing an expensive expeditionary force for the purpose of invading Hunan and occupying Changsha have suffered a severe reverse at the hands of the Chinese troops. There seems to be no doubt that the occupation of Changsha, apparently considered an easy matter, was intended to signalize the setting up of a unified Chinese Government at Nanking under Wang Ching Wei and General Nishio. The Japanese Army in China must now make another effort in order to restore the morale of their forces or abandon that plan. Their failure in Hunan accentuated the
(h)
Collapse of plans to inaugurate the unified regime at Nanking and thus lay the basis for a face-saving arrangement between Japan and the Wang Ching Wei regime which could be presented to the public in Japan as the settlement of the “China Incident”.
(i)
Still unexplained is the decision by the Japanese military to retire from Chungshan to initiate the successful and expensive occupation [Page 288] of Shekki. Chungshan, [sic] unless the forces thus withdrawn are for the purpose of assisting in the rehabilitation of the situation arising out of the Hunan defeat.
(j)
The collapse of the plan for the setting up of unified regime in Nanking carried with it plans for the unification of Japanese controlled currency in the occupied areas.

3. Chinese national morale has been buoyed up by these series of Japanese disasters. Chinese determination to continue the struggle confident of their ultimate ability to defeat the Japanese military has increased.

4. To me at this distance from Tokyo and contemplating fallacies purely from the Chinese angle (and with all due deference to better informed opinion in Tokyo) it appears that the recent revolt in the Japanese Foreign Office is symptomatic of the civilian revolt that has? been growing internally in Japan against military domination of Japan’s foreign relations, a domination that has isolated Japan [from?] Japan’s best markets and impoverished her to the point where she can hardly hope to recover ground thus lost. The coming winter may be expected to see Japanese policy turned to appeasement in fields where she has been truculently confident of ultimate military success. It is my conviction that Japan has reached the peak of her military effort in China and that deterioration has begun.

Repeated to Peiping, Shanghai. Shanghai please repeat to Tokyo.

Johnson