Mr. Sherman to Mr. Hoshi.
Washington, June 2, 1897.
Sir: In accordance with my promise made to you some weeks ago, I now address you more fully respecting the recent legislation of Japan granting a bounty to the exportation of silk by natives and the relation of that matter to our pending treaty matters. That I have not done so earlier is due to the circumstance that I was awaiting further information on the subject from Japan.
Toward the end of the recent session of the Imperial Diet a bill was introduced and passed on the last day of the session of March 24, which, as amended, provides by article 1 that Japanese subjects or commercial companies, of which the shareholders are all Japanese subjects engaged in the direct export (choku yushutsu) of raw silk produced in Japan or bearing a duly registered trade-mark, shall receive bounties for the encouragement of such export under the provisions of the said law, and by article 2 it is provided that the amount of the bounty and the classification of the silk shall be determined by Imperial ordinance. Articles 3 and 4 provide penalties to be enforced against any persons or companies fraudulently obtaining the bounty contemplated by the law or attempting to obtain the same. By article 6 it is provided that this law shall go into force from the 1st day of the fourth month of the thirty-first year of the Meiji (April 1, 1898), and shall remain in force for seven years thereafter.
Not only does this provision of law contemplate a discriminatory treatment against American exporters of Japanese silk, as well as [Page 443] against the exportation of such silk, in the manner usual in the commercial intercourse of the two countries, but it appears to directly contravene the letter and intent of the treaty between the United States of America and the Empire of Japan signed at Washington November 22, 1894, and of which the ratifications were exchanged March 21, 1895. Article VI of that treaty provides that “the citizens or subjects of each of the high contracting parties shall enjoy in the territories of the other exemption from all transit duties and a perfect equality of treatment with native citizens or subjects in all that relates to warehouses, bounties, facilities, and drawbacks.”
That treaty does not take effect, according to the provisions of its nineteenth article, until the 17th day of July, 1899, that date having been assigned in order that it might go into operation simultaneously with the similar treaties concluded by Japan with Great Britain and other powers. After that date it is to remain in force for the period of twelve years certain, and thereafter until regular notice of termination shall have been given by either party. While, therefore, this Government may not be in a position to invoke precise treaty rights in the premises between the 1st day of April, 1898, and the 17th day of July, 1899, it is proper to call earnest attention to the fact that in the interim great injury may be inflicted upon a trade which has been gradually built-up between the two countries and in which considerable American capital has been invested to the mutual benefit of the United States and Japan.
The act in question is, in my judgment, opposed to the provision of treaty which I have cited. The purpose of the sixth article is evidently to protect foreigners against any unfavorable discrimination in matters of commerce and to insure their being placed on a footing of precise equality with the natives, while the object of the subsidy now proposed is to create a reserved export trade for Japanese subjects or for trading companies of which the shareholders are all Japanese subjects. That this is its purpose is further evidenced by the limitation of the bounty to Japanese subjects or companies engaged in the “direct export” of silk, for the phrase would seem to exclude any export transaction effected through foreign merchants purchasing or shipping silk in Japan. I would be loath to think that this peculiar qualification, by which the bounty is limited to directly exported silk, was framed with the intent of evading the obvious purpose and intent of the sixth article of the treaty, which was accepted by us in good faith as safeguarding all legitimate rights of commerce now existing and developing between the two countries, and I am quite sure that had the possibility of such a condition as would now seem to be contemplated been understood at the time of the negotiations this Government would not have acquiesced in the proposal. A moment’s reflection will show that the extension of the proposed scheme to other articles of export would operate to destroy other branches of legitimate foreign trade with Japan and that the professed equality which the sixth article appears to confer upon foreigners as compared with native citizens or subjects might be made illusory as to all the enumerated privileges.
The law in question is, moreover, distinctly antagonistic to the spirit if not the letter of article 2 of the convention between the United States and Japan of November 22, 1894, in that it impairs reciprocal freedom of commerce between the territories of the two parties, and prevents citizens of the United States from enjoying the same treatment in matters of commerce as citizens or subjects of Japan.
The subject, it seems to me, is one of much importance, for if it should [Page 444] really prove to be the purpose of Japan, by legislation adopted subsequent to the ratification and exchange of the commercial treaty, but prior to its taking effect, to render some or any of its most important provisions nugatory, and to destroy its effect when it shall become operative, this Government may well be constrained to consider whether it will be bound for its part to put that treaty in operation when the prescribed time shall come, or whether it may not then be entirely absolved from its reciprocal obligations by the repudiatory act of the other contracting party. To my mind, not only is there danger of the destruction of a large and growing trade between the two countries, but I can foresee the extremely unfavorable effect such action by Japan would have upon the mind of the Congress of the United States and the possibility of that body feeling constrained to adopt appropriate legislation in view of the contingencies thereby presented.
Fortunately, the long interval before the Japanese silk export bounty law is to take effect affords ample opportunity for the temperate examination and discussion of the matter, and, I hope, for the complete removal of the seriously objectionable features of the law so far as the interests of this country and its pending treaty engagements are concerned.
Accept, etc.,