Minister Griscom to the Secretary of State.

No. 257.]

Sir: I have the honor to acknowledge the receipt, on May 11, of the Department’s telegram.

Immediately upon the receipt of the above message I called upon the minister of foreign affairs and made representations to him along the lines set forth in my No. 32 of December 30, 1903. I stated to him that the fact that the Japanese Government, instead of expending the subsidy through its own responsible agents, handed it over to a private association of tea firms whose membership was exclusively Japanese would seem on the face of it to constitute a bounty. I added that there is no public accounting of the expenditure of this money, and foreign firms, being denied membership in the guild, are unable to participate in or have any knowledge of the expenditure. Under the circumstances I stated that the Government of the United States asks that either the subsidy be differently administered or else a public and detailed account of the expenditures be published, so as at once to put an end to any suspicion which may exist in the minds of the foreign tea merchants that the Japanese Government is granting a bounty.

Baron Komura replied that a subsidy of 35,000 yen a year had been granted for the purpose of improving the whole tea trade of Japan, and particularly to help Japanese tea to meet the competition with Ceylon tea in the United States and Canada. The subsidy, he stated, was expended by the tea guild under the supervision of the imperial department of agriculture and commerce, and the Japanese Government were entirely satisfied that the money was properly expended for the general and beneficent purpose for which it was appropriated. He said they were unwilling to make a public accounting of the method of expenditure. Being satisfied with the present method of expenditure, the Japanese Government saw no reason to alter the arrangements unless I could produce conclusive proof that the money was, as alleged, improperly expended for the benefit of individual Japanese tea firms.

I pressed the matter as earnestly as possible and suggested that under the present arrangement the subsidy to all intents and purposes constituted a bounty, and that the burden of proof was on the Japanese Government to show that it did not. Baron Komura remained firm in his position and replied by simply asking me for proof that the subsidy was improperly expended.

The same day I learned that the British minister had a day or two previously made similar representations and received a smiilar reply. * * *

I have, etc.,

Lloyd Griscom.