2IO CHINA INCIDENT

On the 17th we had information which indicated that the
incident was even more serious than we first thought because
evidence was coming in from Shanghai and the most important
piece of evidence was that after the ship had been bombed it was
machine-gunned at close range, as well as the survivors who were
taking refuge in the reeds. At least one aeroplane came down
low and machine-gunned them. There was also the statement
made that the Panay was machine-gunned by Army launches.
These statements added to others presented to the Shanghai Court
of Inquiry made the incident appear very much worse than we had
first thought.

That is the situation at present. My Government does not want
to enter into controversy with the Japanese Government over the
details because such controversy would tend merely to obscure
the main issues and on those issues the substantial facts are clear
and undisputed and about them there can be no doubt what-
soever. There can be no doubt that our ships were on the river
by right; that the fact that they were there and their approxi-
mate location were known by the Japanese military authorities ;
the ships were clearly marked with American flags both in vertical
•and horizontal positions ; the ships were bombed by Japanese
naval planes at low altitude; they were approached by Japanese
surface crafts, fired upon, and the Panay was boarded but had
already been abandoned; and the survivors were machine-
gunned by Japanese planes ; there can be no doubt but that the
Japanese armed forces have committed offences which have fully
warranted the representations made by our Government and for
our expectations that full amends will be made.

I should like to say once again that I appreciate very much the
apologies that have been made, the expressions of regret, the
efforts to get at the facts, the reports that have been made to me,
and the assurance as to indemnities. I think that the most important
thing, however, is that the most drastic measures shall be taken
to make it utterly impossible for this sort of thing to happen again.
I am terribly afraid that another similar incident would bring about
the most serious results. So now the next step is that we shall await
a reply to our formal note as well as the findings and evidence of
the Court of Inquiry in Shanghai, and after that we shall be able
to see our way clear.

THE PANAY INCIDENT IS CLOSED

December 26, 1937

This was an eminently happy day and it showed that wisdom and
good sense of two Governments swhich refused to be stampeded into
potential war in spite of the tendency of the one side to " save face "
at almost all costs, and in spite of an outrageous affront offered to