893.102 Tientsin/267: Telegram

The Chargé in France (Wilson) to the Secretary of State

1152. The Chinese Ambassador71 said to me that he believed the Japanese action at Tientsin had been undertaken for various reasons:

(1) Since last October the Japanese had won no striking military victories in China; on the contrary in Shansi and the Yangtze Valley they had suffered reverses. Enthusiasm for the war was waning in Japan and it had become necessary to restore prestige at home by some dramatic action.

(2) The Japanese had been denouncing the democracies for some time because of their assistance to China.

The democracies, nevertheless, had continued to assist China and as a result the Japanese had lost face both with the Chinese who are opposing them and with the Chinese puppet regimes. By humiliating the British, the Japanese can recover face.

(3) Since last March Germany and Italy have devoted less attention to Japan. Japan is seeking a way to enhance its value to the Axis while at the same time avoiding a military alliance.

Wellington Koo professes to believe that at bottom the Japanese move at Tientsin is bluff. They are feeling out the British to see how far they can go and if the British react firmly they will find a way to fall back as they have done before when faced with resistance (Wellington Koo naturally would take this line). He states that the situation at Tientsin can spread and become dangerous only in [Page 185] the measure that the British are weak and make concessions which will encourage the Japanese to go further.

With regard to the French Banking credit to support the Chinese currency,72 Wellington Koo said that Reynaud73 had promised that the French Treasury would guarantee a credit of 200,000,000 francs advanced by French banks. This is a little more than 1,000,000 pounds and Wellington Koo is disappointed that he could not obtain the 2,000,000 pounds he had requested from France, particularly since Chinese banks are prepared on their part to put up 2,000,000 pounds. He stated that the credit would be effective only when present complicated negotiations with the British are completed providing for cooperation between the French fund and the British fund and for the extension to the French group of the same guarantees given the British (this information about the credit has been confirmed to me from a French source participating in the negotiations).

  1. V. K. Wellington Koo.
  2. See vol. iii, pp. 636 ff.
  3. Paul Reynaud, French Minister of Finance.