THE FAR EASTERN CRISIS



should be kept in mind that the United States Fleet is now no longer
in the Pacific Ocean (Note: It is now possible for the jingoes and
chauvinists of the Navy faction in Japan to be, if they choose, more
audacious than at any time since the spring of 1932).
  2. There should be kept in mind the facts that the U. S. cotton and
wheat "loan" to China and the extensive sale to China of American
airplanes, together with employment by China of American aviation
instructors, have figured prominently among the developments in
China which the Japanese have viewed with misgiving and of which
they complain. The "loan" was made during the present Administra-
tion, by the R. F. C.,42 without the approval of the Department of
State; and the Far East personnel of the Department went on record
at that time with warnings in regard to it. The sale of airplanes to the
Chinese and employing by the Chinese of American aeronautic per-
sonnel were actively promoted under the Hoover Administration, by
the Department of Commerce, notwithstanding indications of mis-
giving by this Department and definite expressions of opinion advising
against it by Far Eastern personnel of this Department.
                                       S [TANLEY] K. H[oRNBEcK]

893.811/926: Telegram
The Acting Secretary of State to the Minister in China (Johnson)

                              WAsHINGTON, April 24, 1934 4 p. m.
  125. Your 184, April 20, noon and 187, April 21, 3 p. m., in regard to
the Liao River Conservancy. As the record now stands, we are in ac-
cord with the French suggestion that objection should be registered
but differ' in regard to suggestions for procedure for so doing; the
British on two occasions have indicated that they are unwilling to ap-
prove the suggestion; and the Germans do not wish to take any initia-
tive but are prepared to join other powers in some action.
  The Department will defer further consideration of the matter until
it receives word from you that the French, in the light of the existing
situation, desire to pursue the matter further.
                                                        PHILLIPS

793.94/6592: Telegram
The Acting Secretary of State to the Ambassador in Japan (Grew,)

                              WASHINGTON, April 24, 1934-6 p. m.
  55. Your 73, April 21, 9 p. m., and previous., Department has still
had no communication from any Japanese source with regard to this
matter and has made no comment. We are informed that Sir John

42Reconstruction Finance Corporation.



129