America and the World: The Quarantine Speech, the Panay and the Road to Pearl Harbor

In 1937 the United States had gunboats on the Yangtze, Marines in Shanghai and Beiping, an Army regiment at Tianjin and thousands of missionaries across China, but no intention of fighting for any of them. This chapter follows the American response to the war that began at the Marco Polo Bridge: Roosevelt’s call for a “quarantine,” a conference in Brussels that changed nothing, the sinking of USS Panay above Nanjing, and the slow tightening of trade and money that ran from a “moral embargo” in 1938 to the oil freeze of July 1941 and, on 7 December 1941, to Pearl Harbor.

Why it mattered

Americans date their war with Japan from 7 December 1941. For China it had begun four and a half years earlier at the Marco Polo Bridge, and for most of that time the United States watched from the side. The road from the bridge to Pearl Harbor ran through what Washington decided, and did not decide, about China between those two dates.

In 1937 the American public wanted no part of a war in Asia. Congress had written that feeling into the Neutrality Acts, and polls showed large majorities for keeping out. Yet the United States had real interests in China: treaty rights dating to the nineteenth century, a naval patrol on the Yangtze, troops in three cities, oil companies and banks, colleges and hospitals, and an old commitment, the Open Door, to China’s independence and territorial integrity, which Japan had signed in the Nine-Power Treaty of 1922. Every step Japan took in China tested how much those interests were worth to Americans.

The first answer, in 1937, was “not a war.” The Quarantine Speech went no further than words, the Brussels Conference ended without action, and when Japanese aircraft sank an American warship on the Yangtze the government accepted an apology and a check. But the war in China went on, and as Japan joined Germany and Italy and moved into Indochina, American policy hardened step by step, until Japan’s leaders faced a choice between leaving China and going to war for the oil they no longer had. They chose war.

Americans in China, 1937

The American presence in China in 1937 rested on a century of treaties. Under the “unequal treaties” that followed the Opium Wars, Americans lived in the treaty ports under their own consular courts, and foreign warships had the right to sail China’s rivers. The Boxer Protocol of 1901 gave the powers the right to keep troops at their legations in Peking and along the railway to the sea, the same right under which the Japanese China Garrison Army was stationed near the Marco Polo Bridge in 1937 (see Chapter 2).

The oldest American garrison in the north was the Marine legation guard. Marines had been part of the guard at the American legation in Peking since 1905, with detachments at Tianjin and at the port of Qinhuangdao (Chinwangtao); after the capital moved to Nanjing in 1928 and Peking became Beiping, the diplomatic compound and its Marines remained (USMC University, Always Faithful, ch. 5). The U.S. Army’s 15th Infantry Regiment had been at Tianjin since 17 March 1912, sent under the Boxer Protocol to help keep the railway from Beiping to the sea open (15th Infantry Regiment Association, “Final Sentinel in China”). The regiment, whose motto “Can Do” came from its China years, counted George C. Marshall and Joseph W. Stilwell among its officers in the 1920s.

When the fighting reached Tianjin at the end of July 1937, the 15th Infantry put up barricades around the foreign concessions, ran mounted patrols, posted sentries over American property and helped keep order among the refugees crowding into the concession (15th Infantry Regiment Association). It did not fight. Its orders were to protect Americans, not to take sides.

At Shanghai, the 4th Marines had been stationed in the International Settlement since 1927, when they were sent to protect Americans during the Nationalist advance on the city. In 1932, during the fighting described in Chapter 1, they had held barricades along Suzhou Creek facing Zhabei (Chapei). In July 1937 they built more bunkers, and in August, as the battle of Shanghai began (Chapter 6), the 2nd Marine Brigade, built around the 1st and 2nd Battalions of the 6th Marines, sailed from San Diego to reinforce them. The brigade left again in February 1938, leaving the 4th Marines as the only American unit in the city (USMC University, Always Faithful, ch. 5).

On the rivers, the Asiatic Fleet’s Yangtze Patrol kept a small flotilla of shallow-draft gunboats, among them Luzon, Oahu, Panay, Guam and Tutuila, which could steam a thousand miles inland. Their work was to protect American lives and property, and in the disorders of the 1920s and early 1930s their crews often rode American merchant steamers as armed guards. Firing on river traffic was common. In 1931 Panay‘s commanding officer, Lt. Cmdr. R. A. Dyer, reported that gunboats and merchant ships were fired on so routinely that every vessel on the river expected it (NHHC, Dictionary of American Naval Fighting Ships, “Panay II”). In the summer of 1937 the Commander, Yangtze Patrol, was Rear Adm. Edward J. Marquart, and the Commander in Chief, Asiatic Fleet, was Adm. Harry E. Yarnell, whose flagship, the heavy cruiser Augusta, lay at Shanghai.

Behind the uniforms stood a much larger civilian presence. American missionaries ran churches, schools, colleges and hospitals across China, from Yenching University outside Beiping to Ginling College in Nanjing, whose acting president, Minnie Vautrin, would shelter thousands of women during the massacre described in Chapter 7. The Standard-Vacuum Oil Company ran its own fleet of river tankers on the Yangtze. Americans who shaped opinion at home, from the novelist Pearl Buck to the publisher Henry Luce, had grown up in China as missionaries’ children, and that network gave China a constituency in the United States that Japan did not have.

Neutrality without neutrality: Washington’s first answer

Congress had built the Neutrality Acts to keep the United States out of the next European war, and they fit China badly. The first act, of 31 August 1935, banned the export of arms to nations at war and warned Americans that they traveled on belligerent ships at their own risk. The second, of 29 February 1936, added a ban on loans to belligerents. The third, signed on 1 May 1937, made the arms embargo permanent, forbade Americans to travel on belligerent ships, barred American merchant ships from carrying arms to belligerents, and let the President sell other goods to belligerents on a “cash-and-carry” basis: they had to pay at once and carry the goods away in their own ships (Office of the Historian, “The Neutrality Acts, 1930s”).

The acts took effect only when the President found that a state of war existed. Neither China nor Japan declared war in 1937; Japan called the fighting the “China Incident.” Roosevelt used that gap. He never proclaimed the Neutrality Act in force for the war in China, and so arms and credits could still flow (Powaski, Toward an Entangling Alliance). The reason was practical. China had few arms factories and depended on imports, and it had neither the cash nor the merchant ships to buy on cash-and-carry terms. Japan had both, as well as its own arms industry. An embargo applied evenly to both sides would have fallen almost entirely on China. Isolationists in Congress protested that the spirit of the law was being ignored.

Nor did Roosevelt go all the way. On 14 September 1937 the White House announced that ships owned by the U.S. government would no longer be permitted to carry to China or Japan any of the arms, ammunition and implements of war listed in his proclamation of 1 May; other American-flag ships that tried it would do so “at their own risk.” The Neutrality Act question, the statement said, remained “in status quo,” with policy on a “24-hour basis” (Department of State press release, 14 September 1937, FRUS, Japan, 1931–1941, vol. II). In practice, British and other foreign ships could still carry American arms to China, and American firms kept selling Japan the oil, scrap iron and machine tools its war economy needed, which were not “implements of war” under the law.

There was blood before December. On 20 August 1937 an anti-aircraft shell fragment struck Augusta off the Bund, killing Seaman First Class Freddie J. Falgout, one of the first Americans in uniform killed in the war in China. It moved Washington no further than protest.

5 October 1937: the Quarantine Speech

By the autumn of 1937 the war in China was three months old, the battle for Shanghai was at its height, Japanese aircraft were bombing Nanjing and Guangzhou (Canton), and Italy and Germany were fighting in Spain. On 5 October Roosevelt was in Chicago to dedicate the new Outer Drive Bridge across the Chicago River, in the heart of the isolationist Midwest, home of the Chicago Tribune. He used the occasion for the most outspoken statement on foreign affairs of his presidency to that point.

Roosevelt named no country. He spoke of spreading lawlessness, of civilians killed by bombs from the air, of nations invaded without a declaration of war, and of treaties broken. He warned that America could not count on escaping if such conditions spread elsewhere in the world. “It seems to be unfortunately true that the epidemic of world lawlessness is spreading,” he said, and then came the passage that gave the speech its name (Miller Center, University of Virginia, transcript).

In their words

When an epidemic of physical disease starts to spread, the community approves and joins in a quarantine of the patients in order to protect the health of the community against the spread of the disease.

He went on to say that “the peace-loving nations must make a concerted effort” against treaty violations and aggression. That was as far as he went. The speech proposed no sanctions, no blockade and no change in the law. At a press conference the next day reporters pressed him on what a quarantine would involve, and he declined to define it, describing it as an attitude rather than a program.

The reaction has been argued over ever since. Isolationist papers and congressmen attacked the speech as a step toward war, and for years many accounts described a storm of public hostility that forced him to retreat. Dorothy Borg’s study of the press reaction, published in 1957, found it far more mixed, with many papers supporting the President. Whatever the balance, Roosevelt did not follow the speech with action, and its immediate effect was small (Borg, “Notes on Roosevelt’s ‘Quarantine’ Speech,” Political Science Quarterly, 1957).

In Tokyo it was read carefully. Ambassador Joseph C. Grew reported on 7 October that the Asahi objected that the President had accepted China’s case without examination and that the Nichi Nichi called the address “imprudent.” Foreign Ministry officials argued that the old treaties could not guide relations because “conditions having changed,” and said privately that the real test would be whether Washington went on treating the Far East as a place where, under the Neutrality Act, no war existed (Grew to Hull, telegram 456, FRUS 1937, vol. III).

Geneva and Brussels: the powers talk

China had appealed to the League of Nations in September 1937, as it had over Manchuria in 1931. On 6 October the League Assembly adopted reports finding that Japan’s operations in China could not be justified under existing treaties and recommending a meeting of the parties to the Nine-Power Treaty. The same day the State Department announced that “the action of Japan in China is inconsistent with the principles which should govern the relationships between nations” and contrary to the Nine-Power Treaty and the Kellogg-Briand Pact, conclusions it described as “in general accord” with the Assembly’s (Department of State press release, 6 October 1937, FRUS, Japan, 1931–1941, vol. I). It was the first time Washington had formally named Japan a treaty breaker in this war.

The Nine-Power conference met at Brussels from 3 to 24 November 1937. Its purpose, under the treaty’s provision for consultation, was to consider “peaceable means” of ending the conflict. Japan refused to attend, arguing that its dispute with China lay outside the treaty; Germany also stayed away. China sent a delegation led by Wellington Koo. The American delegate was Norman H. Davis, a veteran of disarmament conferences, with instructions that left him little room: Washington would not commit itself to sanctions or to joint action. The British would not move without the Americans, and the Americans would not move at all.

On 15 November the conference adopted a declaration, approved by 15 states with Italy dissenting, that the conflict concerned all parties to the Nine-Power Treaty and the Kellogg-Briand Pact. Davis reported the “unwillingness of Japan to resort to methods of conciliation.” On 24 November the conference reaffirmed the treaty’s principles, urged a suspension of hostilities, and adjourned, to be reconvened when deliberations could usefully resume (Nine Power Treaty Conference records; FRUS 1937, vol. IV). It never met again. While the delegates talked, the Japanese 10th Army had landed at Hangzhou Bay on 5 November, Shanghai’s defenders had broken, and Japanese columns were racing for Nanjing.

For China, Brussels confirmed what Manchuria had taught: the powers would condemn Japan but would not stop it. Chiang Kai-shek’s strategy rested partly on holding out until the Western powers were drawn in, and in late 1937 that day looked far away (Mitter, Forgotten Ally; van de Ven, China at War).

12 December 1937: the sinking of the Panay

USS Panay (PR-5) was built for the Yangtze. Launched at the Kiangnan Dockyard and Engineering Works in Shanghai on 10 November 1927 and commissioned on 10 September 1928, she was 191 feet long and drew only 5 feet 3 inches of water. She carried two 3-inch guns and eight .30-caliber machine guns and a complement of 59 (NHHC, DANFS, “Panay II”). In November 1937, as the Japanese armies closed on Nanjing, American gunboats took most of the embassy staff out of the capital, and Panay stayed behind as station ship, to guard the Americans who remained and evacuate them at the last possible moment. Her commanding officer was Lt. Cmdr. James J. Hughes; his executive officer was Lt. Arthur F. Anders.

On 11 December, with Japanese shells falling near the city, the last Americans came aboard, and Panay moved upriver, away from the fighting. With her went three tankers of the Standard-Vacuum Oil Company, Mei Ping, Mei An and Mei Hsia, carrying the company’s Chinese employees and their families. The Japanese senior naval commander at Shanghai was told of the move before and after it was made (DANFS). On the morning of 12 December the little convoy was again threatened by artillery fire and moved farther upstream. It anchored about 28 miles above Nanjing. Large American flags were spread on Panay‘s awnings and flown from her mast.

Aboard Panay were five officers and 54 enlisted men, four members of the embassy staff, among them the second secretary, George Atcheson Jr., and ten other civilians. Among the civilians were journalists: Norman Alley, a cameraman for Universal Newsreel; Eric Mayell of Fox Movietone; Jim Marshall of Collier’s; Norman Soong of the New York Times; and two Italians, Sandro Sandri of La Stampa and Luigi Barzini Jr. of the Corriere della Sera. An Army officer, Capt. Frank N. Roberts, was also aboard.

That morning, according to the Navy’s history, Japanese naval aircraft were ordered by their Army to attack vessels on the Yangtze above Nanjing; the Navy asked for verification of the order before acting (DANFS). The attack began at about 1327, by the Navy’s official history, or 1338 in other accounts. Three high-level bombers came first, dropping 60-kilogram bombs; two hit Panay. Dive bombers and fighters followed, bombing and strafing at low level. Hughes was badly wounded early in the attack. His executive officer, Anders, was also severely wounded and unable to speak, but kept directing the ship’s defense.

The crew fought back with the machine guns, but the attacks came mostly from ahead, where the guns could not bear. One Navy Cross citation records that the gun crews kept firing “even though these guns could not bear forward from which direction most of the attacks were made” (Navy Cross citation, Gunner’s Mate Second Class John N. Hennessy, Legion of Valor). Storekeeper First Class Charles L. Ensminger was mortally wounded; Coxswain Edgar W. G. Hulsebus was hit in the back and later died. Sandro Sandri, the Italian journalist, was mortally wounded. The ship’s doctor, Lt. Clark G. Grazier, worked on the wounded under fire with what little equipment he had.

By about 1400 Panay was settling, and the order was given to abandon ship. The crew and passengers went ashore in the ship’s boats to the reeds along the north bank, under strafing from the aircraft. Japanese Army motor boats also came up and fired machine guns at the scene; Okumiya later wrote that the Army did not report this at the time. At 1554 Panay rolled over and sank (DANFS). Alley and Mayell had kept filming through much of the attack, and then on the bank as the ship went down.

The tankers fared no better. All three were bombed and set afire. The master of one of them, Capt. Carl H. Carlson, was killed, and an unrecorded number of the Chinese aboard died. The survivors from Panay hid in the reeds and then moved inland with their wounded toward the town of Hexian (Hohsien). Ensminger died there; Hulsebus was carried out alive but died in a Shanghai hospital on 19 December (Navy casualty records, transcribed at HyperWar; Hulsebus service record). The wounded took three days to reach safety aboard the American gunboat Oahu and the British gunboats Ladybird and Bee, which brought them down to Shanghai.

The same day at Wuhu: HMS Ladybird

The Americans were not the only targets. Earlier on 12 December, at Wuhu, upriver from Nanjing, Japanese Army artillery opened fire on the British river gunboat Ladybird. The guns belonged to a unit commanded by Col. Hashimoto Kingoro, a founder of the ultranationalist Cherry Blossom Society (Sakurakai) and a leading figure among the Army radicals of the early 1930s. That afternoon Rear Admiral Marquart reported to Washington that Ladybird had been hit by four shells, with one seaman killed and several wounded, and that HMS Bee had come under direct fire without being hit (Marquart to Leahy, 12 December 1937, FRUS 1937, vol. IV). Other accounts give six hits. Despite that morning, Ladybird and Bee went down the river to help the Americans, and both took Panay survivors aboard.

Apology, film and the Ludlow vote

The news reached Washington on the night of 12 December. Roosevelt and Hull demanded a formal apology, full compensation and guarantees against any repetition. Ambassador Grew delivered the American protest in Tokyo. Foreign Minister Hirota Koki called on Grew to apologize, and Japan accepted responsibility while insisting that the attack had been a mistake: its aviators, it said, had not been able to identify the ships. A formal note accepting the American demands reached Washington on 24 December 1937 (DANFS; Wikipedia, “USS Panay incident”).

The claim of mistaken identity was hard to square with the evidence. The attack had lasted more than an hour in clear weather, the flags were large and spread on the awnings, and the low-flying aircraft had passed close enough for the crew to see the pilots. The strongest proof was on film. Alley’s and Mayell’s footage showed aircraft diving and strafing at low altitude. Universal’s newsreel was shown in American theaters a few weeks later. Several accounts say that the studio, at the White House’s request, cut the frames showing the aircraft most clearly, to keep the crisis from growing; the historian Richard B. Frank has called the footage potent evidence against the Japanese explanation (as summarized in Wikipedia, “USS Panay incident”).

The Japanese side of the story was told after the war by Okumiya Masatake, a naval aviator who led a squadron of dive bombers in the attack. Writing in the U.S. Naval Institute’s Proceedings in June 1953, he said that Capt. Miki Morihiko, commanding the 12th Air Group, ordered all available aircraft to attack after Army intelligence reported Chinese troops escaping upriver in merchant ships; that 24 aircraft took part (three high-level bombers, twelve dive bombers and nine fighters); and that the pilots, relying on the Army’s report, did not check the ships’ identity closely. He called the attack a terrible mistake and denied that the Army had deliberately misled the Navy, while criticizing Hashimoto’s shelling of Ladybird (Okumiya, “How the Panay Was Sunk,” Proceedings, June 1953). His account is a participant’s, written long afterward, and historians have weighed it against the American evidence. Whether the attack was ordered by officers who knew the ships were American has never been settled.

Roosevelt considered stronger measures for a time, but there was little public appetite for anything that might lead to war, and Japan’s quick apology made a settlement easy to accept. On 22 April 1938 Japan paid an indemnity of $2,214,007.36, and the incident was officially closed (DANFS; Wikipedia, “USS Panay incident”).

The isolationist response came in Congress. Representative Louis Ludlow, an Indiana Democrat, had been pressing since 1935 for a constitutional amendment that would require a national referendum before a declaration of war could take effect, except when the United States or its territories were invaded. The resolution had been bottled up in the House Judiciary Committee, but at the end of 1937, in the weeks around the Panay sinking, enough members signed a discharge petition to force a vote. Gallup polls in 1937 found 73 percent of Americans in favor of the idea (Wikipedia, “Ludlow Amendment,” citing Gallup). Roosevelt fought it hard. Speaker William B. Bankhead read the President’s letter to the House before the vote; it called the amendment “impracticable in its application” and warned that it would cripple the conduct of foreign relations and encourage other nations to violate American rights. On 10 January 1938 the House voted 209 to 188 against bringing the amendment to the floor (Council on Foreign Relations, “TWE Remembers: The Ludlow Amendment”). The margin was only 21 votes.

Navy Cross · 26 awards

Lt. Arthur F. Anders and the crew of USS Panay

The Navy Cross went to 24 Americans for the action of 12 December 1937, among them the executive officer, Lt. Arthur F. Anders, whose citation records that he carried on “although severely wounded, suffering from loss of blood and unable to speak”; the medical officer, Lt. Clark G. Grazier; Chief Boatswain’s Mate Ernest R. Mahlmann; Gunner’s Mate Second Class John N. Hennessy; Coxswain Edgar W. G. Hulsebus, posthumously; Fireman First Class John L. Hodge; and the Army’s Capt. Frank N. Roberts. Two Royal Navy officers, Vice Adm. Lewis G. E. Crabbe and Lt. Cmdr. Harry D. Barlow, received it for the rescue of the survivors.

Navy Cross roll, 1937 onward →

The incident still left a mark. Americans had seen their flag attacked and chosen not to fight, and the same weeks brought the fall of Nanjing on 13 December and the first reports from American missionaries there of the massacre that followed. Together the two events did more than any speech to turn American opinion against Japan, even as most Americans still wanted to stay out of the war.

1938–1939: credits, a moral embargo and the end of a treaty

The American garrison in North China shrank first. On 4 February 1938 the War Department ordered the 15th Infantry home. The regiment sailed from Qinhuangdao at midnight on 4 March 1938 aboard the Army transport Grant, bound for Fort Lewis, Washington, after 26 years in China (15th Infantry Regiment Association). A small detachment of Marines from the legation guard moved into its old barracks at Tianjin. The 4th Marines stayed in Shanghai, now an island in Japanese-occupied territory.

The war moved inland. In 1938 the Japanese took Xuzhou in May and Wuhan in October, and the Nationalist government withdrew up the Yangtze to Chongqing, above the Gorges. China lost its coast and its main cities but did not surrender. The war was settling into the long stalemate described in Chapter 9, and the question for Washington became whether China could be kept in the fight, and whether the United States should keep selling Japan the materials it used to fight it.

The first measure was moral rather than legal. On 1 July 1938 the State Department wrote to American manufacturers and exporters of aircraft and aircraft parts that the government was strongly opposed to the sale of airplanes and aeronautical equipment to countries whose armed forces were bombing civilians. It had no force in law, but the department refused export licenses where it could, and nearly all firms complied. In December 1939 Roosevelt extended this “moral embargo” to the plans and processes for making high-quality aviation gasoline (FRUS, Japan, 1931–1941, vol. II, index of documents on the moral embargo, 1 July 1938 and 2 and 20 December 1939). The country it named without naming was Japan, whose aircraft had bombed Chinese cities since 1937.

The second was money for China. In December 1938 the Export-Import Bank extended a $25 million credit to China, to be repaid in shipments of tung oil, a Chinese export used in paints and varnishes. It was a commercial transaction in form and a political one in substance: the first American loan to the Nationalist government in its war with Japan. More credits followed in 1939 and 1940, backed by Chinese tin and tungsten.

The third was legal, and it mattered most. The United States and Japan had traded since 1911 under a Treaty of Commerce and Navigation that guaranteed each side’s goods and merchants equal treatment and limited Washington’s freedom to restrict trade. On 26 July 1939, with Congress debating resolutions for an embargo on Japan, Hull gave Japan the required six months’ notice that the United States would end the treaty. It lapsed in January 1940; the State Department’s own index gives both 25 and 26 January (FRUS, Japan, 1931–1941, vol. II). In Tokyo the Foreign Ministry announced that day that Japan and America were left “without a treaty” (Grew to Hull, FRUS, Japan, 1931–1941, vol. II). Nothing changed at once, but from then on the President could restrict trade with Japan at any time, and both sides knew it.

1940–1941: from scrap iron to the oil freeze

The fall of France in June 1940 changed the war in Asia as much as in Europe. With France and the Netherlands defeated and Britain fighting for its life, their colonies in Southeast Asia, French Indochina, the Dutch East Indies with their oil, British Malaya with its rubber and tin, lay open. Japan moved to close China’s supply routes. Under Japanese pressure, Britain closed the Burma Road, China’s last land link to the outside world, for three months from July 1940, and the French authorities in Indochina closed the railway from Haiphong to Kunming.

Congress gave Roosevelt the tool he needed in the Export Control Act of 2 July 1940, which authorized him to license or forbid the export of materials needed for national defense. On 26 July 1940, by Proclamation 2417, he placed petroleum products, tetraethyl lead and iron and steel scrap under export control (FRUS, Japan, 1931–1941, vol. II). The highest grades of aviation gasoline were soon refused to Japan. On 22 September 1940 Japanese troops crossed into northern French Indochina after the French authorities accepted their demands under an ultimatum. Four days later, on 26 September, the administration announced an embargo on the export of iron and steel scrap to any destination outside the Western Hemisphere except Britain, a measure aimed at Japan. On 27 September Japan signed the Tripartite Pact with Germany and Italy, binding the war in China to the war in Europe (Office of the Historian, “Japan, China, the United States and the Road to Pearl Harbor, 1937–41”).

Aid to China grew with each Japanese move. On 30 November 1940, the day Japan formally recognized Wang Jingwei’s collaborationist government at Nanjing, Washington announced a further $100 million in credits for Chiang Kai-shek’s government. In his “Arsenal of Democracy” address of 29 December 1940 Roosevelt spoke of aid to those resisting aggression. The Lend-Lease Act of March 1941 was written chiefly for Britain, but on 6 May 1941 Roosevelt declared the defense of China vital to the defense of the United States, and Lend-Lease supplies began to move to China over the Burma Road. In the summer of 1941 an American Military Mission to China under Brig. Gen. John Magruder was organized to oversee the program.

Less openly, the administration allowed the formation of a volunteer air unit. Claire Lee Chennault, a retired Army Air Corps captain who had been Chiang Kai-shek’s air adviser since 1937, recruited American pilots and ground crew through a private contractor, the Central Aircraft Manufacturing Company, with Roosevelt’s approval. The American Volunteer Group bought 100 Curtiss P-40 fighters, of which 99 were delivered, and about 100 pilots, 60 from the Navy and Marine Corps and 40 from the Army Air Corps, with some 200 ground crew. Formally civilians in Chinese service, they trained at Toungoo in Burma; the press would call them the Flying Tigers. They first fought on 20 December 1941, twelve days after Pearl Harbor, intercepting Japanese bombers attacking Kunming (Wikipedia, “Flying Tigers,” citing Ford, Flying Tigers). The group was replaced by the 23rd Fighter Group of the U.S. Army Air Forces on 4 July 1942.

In Tokyo, the choice between north and south was settled in 1941. After signing a neutrality pact with the Soviet Union in April, Japan’s leaders decided at an imperial conference on 2 July 1941 to advance into southern Indochina even at the risk of war with Britain and the United States. Vichy France accepted the Japanese demands in late July, and Japanese troops began landing in southern Indochina on 28 July; the airfields and harbors there, including Cam Ranh Bay, put Malaya, Singapore, the Dutch East Indies and the Philippines within reach (Wikipedia, “Japanese invasion of French Indochina”).

Washington had been reading Japan’s diplomatic codes and knew the move was coming. On 26 July 1941, by Executive Order 8832, Roosevelt froze all Japanese (and, at China’s request, Chinese) assets in the United States (FRUS, Japan, 1931–1941, vol. II). Britain and the Dutch East Indies followed. Every Japanese purchase now needed a license and the release of frozen funds, and in practice the licenses for oil were not granted. By August American oil exports to Japan, which had supplied most of its needs, had stopped. By most estimates Japan’s stocks would last about two years in peacetime, and much less in war.

The Hull note and the road to Pearl Harbor

The freeze left Japan’s leaders three choices: give up the war in China and accept American terms, find oil elsewhere, or take it. The nearest oil was in the Dutch East Indies, and seizing it meant war with Britain and the Netherlands and, the Navy believed, with the United States. On 6 September 1941 an imperial conference decided to complete preparations for war while negotiations continued. Prime Minister Konoe Fumimaro, who had led Japan into the China war in 1937, sought a meeting with Roosevelt that never took place. When the Army minister, Gen. Tojo Hideki, refused to consider withdrawing troops from China, Konoe resigned on 16 October, and Tojo succeeded him.

China was the knot that could not be untied. Japan’s Army would not give up what it had won since 1937; the United States would not accept a settlement that left Japanese armies in China (Office of the Historian, “Road to Pearl Harbor”). In November Japan made two proposals through Ambassador Nomura Kichisaburo and a special envoy, Kurusu Saburo. The second, presented on 20 November, offered to leave southern Indochina in exchange for American oil, but required Washington to stop aiding China. Hull’s staff drafted a three-month modus vivendi in reply; China and Britain objected strongly, and it was dropped.

Instead, on 26 November 1941 Hull handed Nomura and Kurusu an outline of a general settlement. Among its ten points, it asked Japan to withdraw all military, naval, air and police forces from China and Indochina; to support no government in China other than the Nationalist government at Chongqing; and to join a multilateral non-aggression pact. In return the United States would unfreeze Japanese assets and negotiate a new trade agreement. The document was marked “tentative” and set no deadline (FRUS, Japan, 1931–1941, vol. II; Wikipedia, “Hull note”). In Tokyo, Tojo told his cabinet that it was an ultimatum.

The Japanese carrier striking force had already put to sea from the Kuril Islands on the morning of 26 November, Tokyo time, which was 25 November in Washington. It could still have been recalled. On 1 December an imperial conference gave the final decision for war. On 6 December Roosevelt sent a personal message to Emperor Hirohito appealing for peace. The next morning, Hawaii time, Japanese carrier aircraft struck the Pacific Fleet at Pearl Harbor, and within hours Japanese forces attacked Malaya, Hong Kong, the Philippines, Guam and Wake Island. On 8 December Roosevelt asked Congress to declare war on Japan. China, which had been fighting Japan alone since July 1937, formally declared war on Japan, Germany and Italy on 9 December 1941.

Some of the Americans whose presence in China opened this chapter were caught by the war. The 4th Marines had sailed from Shanghai for the Philippines in late November 1941; they would fight on Bataan and Corregidor. The Marines of the legation guard and the detachments in North China, just over 200 men, had orders to leave on 10 December but were surrounded on 8 December, China time, and taken prisoner. Of the 204 Marines and sailors captured, 184 came home (USMC University, Always Faithful, ch. 5). At Shanghai the river gunboat Wake was seized.

Timeline

America and the China war, 1937–1941

1. 7 Jul 1937Marco Polo Bridge Incident; fighting begins near Beiping.
2. 13 Aug 1937Fighting begins at Shanghai; the 2nd Marine Brigade sails from San Diego that month.
3. 14 Sep 1937Government-owned ships barred from carrying arms to China or Japan; the Neutrality Act is not invoked.
4. 5 Oct 1937Roosevelt’s Quarantine Speech in Chicago.
5. 6 Oct 1937League Assembly condemns Japan’s operations; State Department finds Japan in breach of the Nine-Power Treaty.
6. 3–24 Nov 1937Brussels Conference; Japan refuses to attend.
7. 12 Dec 1937USS Panay sunk above Nanjing; HMS Ladybird shelled at Wuhu.
8. 13 Dec 1937Nanjing falls.
9. 10 Jan 1938House rejects the Ludlow Amendment, 209–188.
10. 4 Mar 1938The 15th Infantry sails from Qinhuangdao, leaving China after 26 years.
11. 22 Apr 1938Japan pays the Panay indemnity of $2,214,007.36.
12. 1 Jul 1938The “moral embargo” on aircraft sales begins.
13. 26 Jul 1939Notice given to end the 1911 commercial treaty; it lapses in January 1940.
14. 22–27 Sep 1940Japan enters northern Indochina; scrap embargo announced (26 Sep); Tripartite Pact (27 Sep).
15. 6 May 1941China made eligible for Lend-Lease.
16. 26 Jul 1941Japanese assets frozen; oil exports to Japan stop.
17. 28 Jul 1941Japanese troops begin landing in southern Indochina.
18. 26 Nov 1941Hull’s note to Nomura and Kurusu; the Japanese carrier force sails (Tokyo date).
19. 7–8 Dec 1941Pearl Harbor and the attacks across the Pacific; the United States declares war on Japan.
20. 20 Dec 1941The American Volunteer Group’s first combat, over Kunming.

People

Franklin D. Roosevelt (1882–1945), President from 1933, sympathized with China but moved cautiously, using the gaps in the Neutrality Acts to help China without provoking Japan. The Quarantine Speech was his first public warning; the oil freeze of July 1941 was his decisive act.

Cordell Hull (1871–1955), Secretary of State from 1933 to 1944, defended the Nine-Power Treaty to the end, negotiated with Nomura through most of 1941 and delivered the note of 26 November. He received the Nobel Peace Prize in 1945.

Joseph C. Grew (1880–1965), ambassador to Japan from 1932 to 1942, delivered the protests over the Panay and reported Japanese opinion closely throughout. He worked to the last to avoid war and was interned in Tokyo after Pearl Harbor until exchanged in 1942.

Lt. Cmdr. James J. Hughes commanded Panay and was seriously wounded in the attack. Lt. Arthur F. Anders, his executive officer, kept the ship’s defense going though severely wounded and unable to speak; he received the Navy Cross.

Norman Alley, Universal Newsreel’s cameraman, filmed the attack and the sinking with Eric Mayell of Fox Movietone. Their footage was the most widely seen evidence of what happened on the Yangtze that afternoon.

Okumiya Masatake (1909–2007), a Japanese naval aviator, led a squadron of dive bombers against Panay. After the war he co-wrote books on Japanese naval aviation with American authors and published his account of the attack in the U.S. Naval Institute Proceedings in 1953.

Col. Hashimoto Kingoro (1890–1957), whose artillery shelled HMS Ladybird at Wuhu, had founded the Cherry Blossom Society in 1930 and plotted with Army radicals in the coup attempts of 1931. After the war the Tokyo tribunal convicted him of conspiracy to wage aggressive war and sentenced him to life imprisonment; he was released on parole in the 1950s.

Louis Ludlow (1873–1950), a former newspaperman, represented Indiana in the House from 1929 to 1949. His war referendum amendment failed to reach the House floor by 209 votes to 188 in January 1938.

Claire Lee Chennault (1893–1958), a retired Army Air Corps officer and fighter tactician, went to China in 1937 as Chiang Kai-shek’s air adviser, organized the American Volunteer Group in 1941, and later commanded the Fourteenth Air Force in China.

Adm. Nomura Kichisaburo (1877–1964), a retired admiral and former foreign minister, was sent to Washington as ambassador in 1941 because he knew Roosevelt and was thought acceptable to the Americans. He and Kurusu Saburo were still negotiating with Hull when the bombs fell on Pearl Harbor.

Losses and uncertainty

The Panay incident is one of the best documented events in this collection, and still the sources disagree on details. The Navy’s official ship history counts three dead, and 43 sailors and five civilians wounded, a total of 48 (NHHC, DANFS). NavSource’s page on the ship, drawing on other accounts, gives three dead and 27 injured. The Navy’s own casualty lists, compiled for the damage claim against Japan, name eleven men seriously injured, 32 slightly injured and 14 suffering from shock and exposure; some men moved between categories from one list to the next (Navy casualty lists, HyperWar).

Who counts among the dead also varies. The Navy’s lists name two sailors, Ensminger and Hulsebus. Hughes’s report adds the Italian journalist Sandri and the tanker master Carlson. Most published accounts give three killed, meaning the two sailors and Sandri; counting Carlson makes four. Hughes’s report places Carlson aboard Mei Hsia, while other accounts put him in command of Mei An. The Chinese killed aboard the three tankers were never counted. Sources also disagree on when the men died: the casualty list gives Ensminger’s death at Hexian on 13 December and Hulsebus’s in Shanghai on 19 December, while some accounts say Hulsebus died the night of the attack.

By the numbers

Who was aboard USS Panay, 12 December 1937

People aboard when the attack began

Enlisted men54

Other civilians (incl. journalists)10

Officers5

Embassy staff4

The times differ: the Navy’s history says the attack began “about 1327” and Panay sank at 1554; NavSource gives 1338 and 1545, and Okumiya disputed Hughes’s timeline altogether. The number of Japanese aircraft is twelve (three bombers and nine fighters) in some summaries and 24 in Okumiya’s account. For Ladybird, Marquart’s same-day report counts four shell hits; later accounts give six.

The awards are counted differently, too. Wikipedia’s article on the incident names four Navy Cross recipients: two Americans and two British officers. The Home of Heroes roll of Navy Cross citations lists 26 awards for 12 December 1937: 24 to Americans (23 Navy officers and men, including Hulsebus posthumously, and the Army’s Captain Roberts) and the two to British officers. This chapter follows the fuller roll.

The indemnity is precise: $2,214,007.36, paid on 22 April 1938. Beyond the Panay, the human cost of the years covered here was carried overwhelmingly by China, whose wartime dead are commonly estimated at 14 to 20 million or more; those figures are discussed in Chapter 9.

Questions readers ask

Was the attack on the Panay deliberate?

Japan said it was a mistake: its aviators, acting on an Army report of Chinese troops fleeing upriver, did not identify the ships. The American evidence makes that hard to accept. The attack lasted more than an hour in clear weather, the ship carried large American flags, and the newsreel footage showed aircraft attacking at low altitude. Japanese Army boats also came up and fired at the scene, and the same day Hashimoto’s artillery shelled British gunboats. Many historians conclude that at least some Japanese officers knew or should have known the ships were neutral. No document has proved that the attack was ordered from above as an attack on American ships.

Why didn’t the United States go to war over the Panay?

Because the public did not want war and Japan apologized quickly and paid. In January 1938 the House voted only 209 to 188 against taking up an amendment that would have required a national vote before any declaration of war.

What did Roosevelt mean by a “quarantine”?

He never said. The image suggested that peaceful nations might act together to isolate aggressors, perhaps economically, but he proposed no program and declined to define it when reporters asked the next day.

Why didn’t the Neutrality Act apply to the war in China?

The act took effect only when the President found that a state of war existed, and neither China nor Japan declared war. Roosevelt chose not to make that finding, because an arms embargo on both sides would have hurt China, which depended on imported arms, far more than Japan, which had its own arms industry and could have bought other goods on cash-and-carry terms.

Were the Flying Tigers part of the U.S. military?

No. Its pilots and ground crew were recruited from the U.S. armed forces with the administration’s approval, but they resigned to join, were employed by a private company and served under Chinese authority. The group first fought after Pearl Harbor and was replaced by a U.S. Army Air Forces unit in July 1942.

Did the oil embargo or the Hull note cause Pearl Harbor?

They brought the crisis to a head, but the cause lay in the war that began at the Marco Polo Bridge. Japan’s leaders decided in July and September 1941, before the Hull note, to prepare for war if diplomacy failed, and the carrier force sailed before the note was delivered. The freeze left Japan a choice between leaving China and seizing the oil of Southeast Asia; Japan’s Army would not leave China, and Washington would not settle without it.

How it connects

This chapter follows the war in China from the outside. The fighting that brought it about is told in the chapters before it: the night at the bridge in Chapter 3, the escalation of July 1937 in Chapter 4, the fall of Beiping and Tianjin, where the 15th Infantry and the Marines watched, in Chapter 5, the battle of Shanghai around the International Settlement in Chapter 6, and the fall of Nanjing, the day after Panay was sunk upriver, in Chapter 7. The long war that followed, and how it is remembered, is the subject of Chapter 9.

The road traced here ends where two other collections on this site begin. The Pearl Harbor collection tells the story of 7 December 1941 itself, and its chapter on the road to war, 1937–1941 follows the same years from Washington and Tokyo. The Wake Island collection tells how the Marines, sailors and civilian workers on Wake held out for sixteen days after the same Japanese offensive struck there on 8 December. The Atlantic side of America’s road to war, from the destroyers-for-bases deal to the Reuben James, is in the Battle of the Atlantic collection.

What happened afterward

Pearl Harbor made China an ally. In January 1942 Chiang Kai-shek became Supreme Commander of the China Theater, and Joseph Stilwell, once of the 15th Infantry at Tianjin, went to Chongqing as his American chief of staff. The Japanese conquest of Burma in the spring of 1942 cut the Burma Road, and for the next three years American supplies reached China mainly by air over the Himalayas, “the Hump.” Chennault’s volunteers became the core of the China Air Task Force and then the Fourteenth Air Force.

The treaty rights that had put American gunboats on the Yangtze and Marines in Shanghai ended during the war. On 11 January 1943 the United States and Britain signed treaties with China giving up extraterritoriality and their concessions and garrison rights under the Boxer Protocol, ending the “unequal treaties” a century after they began. In December 1943 Congress repealed the Chinese Exclusion Acts. At Cairo in November 1943 Roosevelt, Churchill and Chiang declared that Manchuria, Taiwan and the Pescadores would be returned to China.

The Navy later named a destroyer escort, USS Falgout, for the seaman killed aboard Augusta in August 1937. The incident that the United States settled for a check in 1938 came to be remembered as an early sign of the war it could not avoid in 1941.

Walking the ground today

The places in this chapter are scattered across two continents, and few carry markers. In Chicago, the Outer Drive Bridge, where Roosevelt gave the Quarantine Speech, still carries Lake Shore Drive (renamed DuSable Lake Shore Drive in 2021) across the mouth of the Chicago River. Nothing on it recalls the speech.

The Franklin D. Roosevelt Presidential Library and Museum at Hyde Park, New York, holds Roosevelt’s papers and covers the years of neutrality and the road to war. The National Archives hold the State and Navy Department records quoted here, much of it published online in the FRUS volumes, and the Universal Newsreel collection, which includes the Panay footage.

In China, the reach of the Yangtze where Panay went down lies above Nanjing, near Hexian in Anhui province, on one of the busiest rivers in the world; there is no memorial on the bank. In Nanjing, the Memorial Hall of the Victims in Nanjing Massacre and the former residence of John Rabe tell the story of the foreigners who stayed in the city (see Chapter 7). In Shanghai the Bund and the former International Settlement can still be walked, and in Beijing the old Legation Quarter east of Tiananmen Square keeps many of its foreign buildings, among them the former American legation.

The end of the road is at Pearl Harbor. The Pearl Harbor National Memorial and the USS Arizona Memorial in Honolulu are described in the Pearl Harbor collection. Check opening hours and access rules before visiting any of these sites.

Sources and further reading

• Franklin D. Roosevelt, “Quarantine Speech,” 5 October 1937, audio and transcript, Miller Center of Public Affairs, University of Virginia; FDR Presidential Library, “This Week in Roosevelt History: October 1–7.”
• U.S. Department of State, Papers Relating to the Foreign Relations of the United States: Japan, 1931–1941, vols. I and II, Office of the Historian: press release of 6 October 1937; press release of 14 September 1937; Grew telegram on the end of the 1911 treaty; index of documents, 1937–41; and Norman H. Davis’s statement at Brussels, 13 November 1937.
• Foreign Relations of the United States, 1937, vols. III and IV: Grew to Hull on Japanese reaction to the Chicago speech; Marquart to Leahy, 12 December 1937, on Panay and Ladybird.
• Office of the Historian, Milestones: “Japan, China, the United States and the Road to Pearl Harbor, 1937–41” and “The Neutrality Acts, 1930s.”
• Naval History and Heritage Command, Dictionary of American Naval Fighting Ships, “Panay II (PR-5)”; HyperWar, USS Panay casualty lists and claims correspondence; NavSource Online, “USS Panay (PR-5)”.
• Masatake Okumiya, with Roger Pineau, “How the Panay Was Sunk,” U.S. Naval Institute Proceedings, June 1953.
• Navy Cross citations: Home of Heroes, “Navy Cross, Other Conflicts, 1937–Present”; Legion of Valor, John N. Hennessy; Together We Served, Clark G. Grazier and Edgar W. G. Hulsebus.
• Marine Corps University Press, Always Faithful, chapter 5 (the Marines in China); 15th Infantry Regiment Association, “Final Sentinel in China” (1938).
• Council on Foreign Relations, “TWE Remembers: The Ludlow Amendment”.
• English Wikipedia summaries consulted for dates and figures, with their cited sources: “USS Panay incident,” “HMS Ladybird (1916),” “Ludlow Amendment,” “Neutrality Acts of the 1930s,” “Nine Power Treaty Conference,” “Flying Tigers,” “Japanese invasion of French Indochina” and “Hull note” (consulted October 2026).
• Books and articles: Dorothy Borg, The United States and the Far Eastern Crisis of 1933–1938 (Harvard University Press, 1964) and “Notes on Roosevelt’s ‘Quarantine’ Speech,” Political Science Quarterly 72 (1957); Ronald E. Powaski, Toward an Entangling Alliance (Greenwood, 1991); Rana Mitter, Forgotten Ally: China’s World War II, 1937–1945 (Houghton Mifflin Harcourt, 2013); Hans van de Ven, China at War (Harvard University Press, 2018); Mark Peattie, Edward Drea and Hans van de Ven, eds., The Battle for China (Stanford University Press, 2011); Jay Taylor, The Generalissimo (Harvard University Press, 2009); Peter Harmsen, Nanjing 1937 (Casemate, 2015); Daniel Ford, Flying Tigers: Claire Chennault and His American Volunteers (rev. ed., HarperCollins/Smithsonian, 2007); Hamilton Darby Perry, The Panay Incident: Prelude to Pearl Harbor (Macmillan, 1969); Herbert Feis, The Road to Pearl Harbor (Princeton University Press, 1950).

Photographs: U.S. Navy (Naval History and Heritage Command), U.S. National Archives, National Park Service and Library of Congress (Harris & Ewing collection), via Wikimedia Commons; public domain or no known restrictions.