The State Departoient to-day received a report that Commanders of the Chinese and Japanese forces inthe Shanhaikuan area were negotiating a settlement of the issue growing out of the New Year's clash there, 'The report came from the American Consulate-General. in' Tientsin and quoted United States Army observers in Chinwangtao as saying that the negotiations were begun yesterday.
The report was immediately Menied by: the Chinese. Legation here, which issued a statement saying that reports of guch negotiations had been spread by Japanese in an apparent desire to cause the Chinese to delay. their defensive plans. There is evidently a pi Afoot, the Legation said, to Full the Chinese into a feeling of security, Should the Chinese rely on these Jocal reports from the North, their plans for increasing their defences might slow down and the Japanese would be able to place their rei foreements in advantageous po!
ins, the Legation asserted, 'The statement' said further that the Chinese will be able to resist any further aggression in that area, 'The State' Department received another report from sources China. described as "very reliable," that Marshal Chang Hsveh-liang: has arranged to meet General Chiang Kai-shek on" the Peking-'Hankow Railway midway between the two cities and" discuss plans for defence against further Japanese advances into North China United Pres:
Text read from the printed page and cleaned; old type leaves the occasional error.