On December 12, the last remnants of the Kuomintang army fled the city. That same day, Japanese bombers attacked the American naval warship Panay, which was anchored on the Yangtze and loaded with refugees. Three American sailors and scores of Chinese civilians were killed. Although the Japanese claimed that the attack had been unintentional and sent a formal apology to Washington along with an indemnity of $2.2 million, US code breakers had intercepted Japanese communications and learned that the pilots had been under clear orders to sink the ship. Not wanting to tip off Tokyo that America
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