FOREIGN RELATIONS, 1934, VOLUME III



dinates. I am now informed that the Japanese military have come
to an agreement with the Chinese authorities by which General Yu
will retain his position while some of his subordinates distasteful to the
Japanese military will be removed. According to my informant, the
Japanese agreed to the non-transfer of General Yu because none of
the possible successors suggested by the Chinese authorities were as
satisfactory in the Japanese viewpoint as General Yu, unsatisfactory
though he is. Although the Japanese military may have agreed to the
retention of General Yu, it is doubtful if they are pleased with the
arrangement.
  The desire of the Japanese military to see Japanese interests de-
velop North China economically in order that Japan may be helped
financially is not being realized with any rapidity. As far as the
Legation knows, the only important solutions reached in Sino-
Japanese relations affecting North China have been the establishment
of through passenger traffic on the Peiping-Liaoning Railway and the
establishment of five Chinese customs houses and one sub-office at
passes, other than Shanhaikuan, along the Great Wall. It is now
understood that an agreement for the reestablishment of postal com-
munications between Manchuria and North China will be made public
in the near future. Japanese efforts to persuade the Chinese author-
ities concerned to use Japanese money for the construction of certain
railways in North China, (Legation's despatch No. 2906 of August 16,
1934) are said to have been unavailing so far. According to a usually
reliable Japanese source, conversations in this regard are not now in
progress as the Japanese have come to realize that the Chinese author-
ities cannot at present do anything definite in this regard without
arousing such a clamor on the part of the Chinese people as to endanger
the position of the Chinese authorities. The progress of Japanese
economic penetration into North China does not appear, therefore, to
be as yet very extensive.
  Another indication of dissatisfaction with the situation is to be
found in a Japanese daily newspaper published in Tientsin (Tenshin
Nippo), an organ of the Japanese military. Complaints appear fre-
quently in this paper of alleged anti-Japanese activities existing in
North China.
  From the foregoing it may be seen that, although there is no con-
clusive evidence that any action affecting Chahar and Hopei Provinces
in the near future is contemplated by the Japanese military, there is
evidence to show that the Japanese military is discontented with the
present situation and is in an irritable mood. When the Japanese
military is discontented, it is capable of taking matters into its own
hands. One can only surmise what the purpose of possible future



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