The USS Panay Incident was a Japanese attack on the Navy gunboat USS Panay while she was anchored in the Yangtze River outside of Nanjing on 12/12/37. Japan & the USA weren't at war at the time. The Japanese claimed they didn't see flags painted on the deck of the gunboat, apologized & paid an indemnity. Nevertheless, the attack & the subsequent Allison incident in Nanjing caused opinion to turn against the Japanese.