Air Assault near Shanghai, China
On December 12, Japanese naval aircraft were ordered by their Army to attack "any and all ships" in the Yangtze above Nanking. Knowing of the presence of Panay and the merchantmen, the Navy requested verification of the order, which was received before the attack began about 1327 that day and continued until Panay sank at 1554. Three men were killed, 43 sailors and 5 civilian passengers wounded. ... A formal protest was immediately lodged by the American ambassador. The Japanese government accepted responsibility, but claimed the attack unintentional. A large indemnity was paid 22 April 1938 and the incident officially settled. However, further deterioration of relations between Japan and the United States continued, as did provocations, many of them stemming from the Japanese Army whose extremists wished war with the United States.