893.811/1080: Telegram

The Consul General at Shanghai (Gauss) to the Secretary of State

70. I returned yesterday afternoon from my trip with the Admiral3 to the Yangtze River ports of Chinkiang, Nanking and Wuhu. The trip was without incident. There are numerous military transports and supply ships passing up and down the river, there are huge stores of military supplies at the several ports, but no troop movements were noted. The Japanese garrisons at the river ports and towns are understood to be small and they seldom venture far outside the ports. Lines of communication from the ports to interior places are understood to be subject to frequent interruption. In short, while the Japanese forces hold the river and the towns and ports on the river they have not penetrated deeply into the country off the main lines of communication, the interior of the area has largely been shut off from ready access to the towns and ports, and the situation is more or less at a standstill.

Chinese are gradually returning from the countryside to the towns and ports and the population is now estimated at about two-thirds of normal at such places. Many have returned because of lack of means longer to support themselves in the interior; others, because of the increasingly disturbed conditions in the countryside due to bandit and guerrilla operations. Puppet municipal regimes under Japanese supervision have been set up and are commencing to function and to provide limited police and other services. Shops and minor business activities are resuming on a small scale; but there is no substantial trade and the residents of the ports are living a more or less hand to mouth existence. Communications with interior places are disrupted or restricted, there is little outward movement of crops, and practically no inward movement of stocks for sale. At Nanking and Wuhu there are a number of small Japanese shops established with stocks of cheap Japanese goods, no thriving trade and there is little evidence of commercial activity or preparation on the part of the Japanese or the Chinese looking to early operations on a substantial scale at the river ports.
Outside of our officers and two American Oil Company representatives at Nanking, the Americans resident at the three ports visited are missionaries engaged principally in medical work and refugee relief activities, other mission work having largely been suspended. There are about 20 adult Americans at Chinkiang and 22 at Wuhu. At Nanking there are about 46. They must have Japanese military passes to reside and to come and go outside the ports but they [Page 778] are generally free to move about within the non-military areas of the ports and to carry on their mission work without interference. There have been occasional minor instances of friction with the Japanese but on the whole the situation is stated to have improved and is now not unsatisfactory.
While there appears to be no good reason why foreign flag merchant vessels should not be permitted to ply at least as far as Wuhu and perhaps up to Hankow, I am convinced that it will be many months before it will be possible to carry on trade in any substantial volume on the river. The military situation in the vast areas back of the river ports and towns must be solved before crops can move freely from the interior to the ports and stocks be distributed throughout the areas back of the ports. Even if trade with the river ports were now permitted it would be a small trade with communities leading a more or less hand to mouth existence. I do not believe that foreign firms would find it advisable to move any large stocks to the river ports or to try to distribute them from such ports further into the interior.
Reports on conditions in the interior areas are conflicting. There are indications that in some sections so-called guerrilla operations have degenerated into bandit activities. Competent observers comment on the fact that the reportedly large guerrilla forces left in the area behind the Japanese lines in this area have apparently inflicted so far little damage on the Japanese positions, lightly held and vulnerable.

By mail to Tokyo and Tokyo [Peiping?].

  1. Adm. Harry B. Yarnell, Commander in Chief, U. S. Asiatic Meet.