Evening star., 1937-07-01
Litvinoff Cancels
Appointments to
Meet Crisis.
4.BILLION-RUBLE 4
LOAN is FLOATED
''Evasion" Protests Are
Rejected-Blame for
Clash Is Denied.
Py the Associated Press.


MOSCOW, July 1-Soviet Foreign
CommlSsar Maxim LitvinofT Cancelled
every other diplomatic appointment
today to deal with Japans Ambassa-
dor on Far Eastern border crisis
that already has exploded into un-
official military action.
At the same time the Soviet gov
eminent Unexpectedly foated a de-
fense loan of 4,0OO,OOO,0O0 rubles
$500, 100000 at the Official exchange
rate). 1t was expected to be over
subscribed Immediately.
The bonds will pay per cent in
terest and the money will be used for
consolidation Of national defense"
The Far Eastern situation may be
used to popularize the loan.
japanese Ambassador Mamoru
Shigemitsu and LitvinoH began their
new conference with the japanese
envoy pressing forcefully for evacua-
ton Of Russian armed forces from
Amur River islands, which Manchu-
kuo JapaneSe-sponsor state, con-
tends are hers
Friction IN the area brought an
armed clash between Soviet gunboats
and ap-Manchukuoan border troops.
Earlier. Japan's protest about Soviet
invasion of the islands had been
tentatively rejected on the grounds
there was no reason to believe that
Soviet armed forces provoked yester-
days conflict.
japanese here we're not inclined to
discuss what might happen should
the Soviet government refuse Japans
demand for the withdrawal OF troops
from the Amur River islands.
However, it was known that the
negotiations Of the two governments
we're being carried on in a concilatory
tone.
Tie japanese Ambassador was said
to be bending all efforts to prevent
trouble.
The Japanese insist that the Soviets
provoked the gunboats-troops clash
which the japanese say took place on
June 30. The soviets say the clash
occurred June 29.
~ cd tInIANrV NNS4LIltQ " ftlepl Ille
Soviets' refusal of their first protest
and continued to press for immediat.
recognition of ManChukuos claim Of
sovereignty over the islands.
Control River Channel.
1t Is recognized in Moscow that the
islands involved have no great value
except in that they control the Amur
River channel. to which the Japa-
nese demand Manchukuo's unhindered
right to navigation
The handling of the situation by
the Soviet press made it clear that
the SoyIets regarded the matter as a
delicate one, No provocative editorial
comments have appeared.
United States Ambassador Joseph
Z. Davies called on the japanese AM
baSSadOr to learn the latest develop
ments and express his hope that the
situation would be localized and not
developed seriously.
Davies expects 10 see Foreign Com
mlssar Lltvinof tomorrow for the
first formal. call since his recent re-
turn from the United States.
Observers recalled. as having an
important bearing on the crisis, the
often-repeated statement of Josef
Stain. secretary general of the Com
munist party:
The Soviet Union does not want an
inch of any ones territory and will
not yield an inch of its own"
A midnight conference was un-
derstood to have ended when Stom-
onlakof told Shigemitsu he vas not
empowered to deal with the question
of troop evacuation.
The japanese Ambassador repeated
(See MOSCOW, Page A-5)