December 11, 1937 a United States gunboat named the Panay was anchored on the Yangtzee River in China. It’s routine duty, under an 80 year old treaty, was o patrol the river and protect American and British citizens and their interests in the area. The vessel was on of several patrol crafts flying the stars and Stripes or the Union Jack, and had been instructed to remain neutral in the conflict between Japan and China.

On board the Panay were some diplomats and newsmen, along with the Skipper, Lieutenant Commander James Hughes. Later that evening Hughes decided that the convoy, with three American oil tankers, should move up river twelve miles north of Nanking, out of danger of Japanese shells and bombs. Japanese officials were notified of the vessel’s new position.

Sunday December 12, 1937 dawned clear and fine. By noon, Hughes had moved the four vessels, up the river another 18 miles. Again Japanese authorities were notified of the location. At approximately 1:35 p.m. the crew aboard the Panay heard the faint drone of aircraft in the distance. More than 20; bombers and fighters were spotted. Then bombs rained upon the vessel, some hitting their intended targets. The tankers were also damaged. The Panay returned fire with its ten 30 - caliber machine guns in a futile attempt to defend the vessel against Japanese onslaught. Half an hour later the order to abandon ships was given. With the Panay settling in the water, two Japanese patrol boats approached and fired on the stricken vessel. The Panay sank soon after 4 p.m. Two crew members had been killed, and thirty wounded.

Through the whole affair Old Glory fluttered horizontally and vertically from masts. The Japanese claimed the incident was an error, a case of mistaken identity. It seems, however, that orders to attack the Panay (British patrol boats on the Yangtzee were also hit) emanated from the commander of an army regiment in the district, a man with a rabid hatred of Western nations. The Japanese naval commander in China knew nothing of the incident until after it occurred.

President Roosevelt voiced America’s shock at the premeditated attack on a neutral vessel. A stiff protest was made against the Japanese government. Japan apologized (at Roosevelt’s request) admitted responsibility and later agreed to pay 2.2 million dollars in compensation. The ordeal was handled by diplomatic means, and nothing became of it.