The Ambassador in China (Johnson) to the Secretary of State
[Received March 24.3]
88. Tokyo’s 76, February 4, 3 p.m.4 confirms a belief which I have long entertained that an essential part of plans of Japanese military is to set up at Shanghai independent of the International Settlement a Japanese régime which would control trade and industry in the [Page 2] interest of Japan. With docking facilities nearer deep water than at present offered in the Whangpoo off the International Settlement, Japanese controlled area between International Settlement and Woo-sung would soon kill International Settlement. Business within International Settlement would no longer be able to afford present expensive administrative machinery and that machinery could fall into less expensive Japanese control. These Japanese plans if carried out would give control over entire trade of Yangtze Valley which would have to pass through their hands.
Repeated to Shanghai. Shanghai please repeat to Tokyo.