Appendix to a secret report by Major-General Matsumuro to the Kwantung Army, dated Jan. 27, 1937, reveals the following passage: "Smug¬gling of Japanese goods into China is a good trick, the aim being to hasten establishment of a special regime in North China under Japanese control . . . . . Through the operation of this policy, large amount of Japanese products would be imported into China; the crisis of over-production would have been eliminated; the market of England and America would be taken. For this purpose, ronins are being trained IPS 4039 1935 TP. 3756. 3757 1936 as the advance guard of the Empire. They pene¬trate deep into intter China and display a spe¬cial activity in order to draw friends of Japan to their side. Moreover, methods such as smuggling, bribery and corruption were being utilized. Japan would continue a policy of threat in order to bring China under Japanese yoke. The Japanese empire could achieve a victory without fighting . . . . ." (This was embodied in Ambassador Trautman's report from Nanking to Berlin Foreign Office) Goette saw Doihara in an interview and attended mock military maneuver with him outside Peking. (Goette's testimony) 1936 File No. 48 IPS 1634 1936 Affidavit of 1938 Mrs. Wu Pei- fu, etc. Doihara made the following public statement: "Japan is seeking to make North China an ex¬perimental ground for actual sign of Japanese rapprochement by means of economic and military cooperation". Japan Weekly Chronicle, Mar. 19, 1936. The Decisions of the Prime Minister, Foreign Minister, War Minister and Navy Minister dis¬close Japan's policy to create and strengthen the puppet regimes. Doihara went to China to influence Wu Pei-Fu (Peking) and Tang Shao-Yi (Shanghai) to head new government. Both died before the realization of his scheme.