File No. 694.119/51
The Ambassador in Japan ( Morris) to the Secretary of State
[Received December 29.]
Sir: I have the honor to report that I have observed since my arrival a growing unrest and irritation because of the delay in the negotiations in reference to the United States embargo on steel. I feel that I am not exaggerating when I state that almost one-half of the persons, resident Americans and Japanese, who have called upon me during the last four weeks, have inquired as to the possibility of some satisfactory adjustment of this matter. In all cases I have disclaimed any knowledge of the negotiations, which it is generally understood are being conducted by the Japanese Ambassador in Washington. If the Department deems it advisable, I should be glad to receive advices as to the present status of these negotiations, for my own confidential information.
I was informed by those familiar with Japanese conditions that the Government had been vigorously suppressing any public comment [Page 714] on the steel situation, in the hope that some adjustment could be reached that would allay the growing feeling of irritation. I was assured, however, by the same persons, that the feeling among Japanese business men, and even among Government officials, was very intense.
Then unexpectedly on November 18 the Department of Communications issued to the press an extended statement on the steel situation. I am attaching a careful translation of this statement made by Mr. Ballantine, Japanese Secretary of this Embassy. It reviews the progress of the negotiations, giving the three successive proposals made by Japan and the counter-proposals made to each by the United States. It explains that the acceptance of any of these proposals, notwithstanding the fact that Japan was prepared to make great sacrifices for the common cause of the Allies, would have jeopardized the standard that was necessary to safeguard Japan’s existence as a nation, and therefore it regretted that in view of these circumstances there was nothing else to do but break off negotiations. The result of official investigation as to how far Japan could supply its own shipbuilding material was also included in this report, which showed that it would require an additional 18,000 tons to construct 149 vessels, with an aggregate displacement of 590,000 tons.
Newspaper comment followed and translations of characteristic editorials are also attached.1 The Osaka Mainichi considers it very fortunate that America did not accept Japan’s offer, which was altogether too liberal, and calls attention to the imperative duty of reforming Japan’s industrial system. The Tokyo Mainichi is convinced that America never intended to lift the embargo on steel, inasmuch as the strides Japan is making in its merchant marine on the Pacific are viewed with alarm and jealousy. It thinks that the embargo will give an impetus to domestic manufacture. The Sekai, however, hopes that the negotiations will be revived, for it would not hurt the United States, rich in shipbuilding material, to permit the unconditional export of 175,000 tons of material.
Very few of those who have called upon me to discuss this question, have offered any constructive suggestions. I understand, however, that recently a number of American and Japanese business men have been endeavoring to organize a movement entirely apart from any diplomatic negotiations, and which they hope may result in the tender by private firms and individuals, of a large amount of immediately available tonnage to the Shipping Board, at reasonable prices, in consideration of the issuance of a license by our Government to export a certain amount of steel plates at present American prices, [Page 715] which will be used only for the construction of ships in the interest of the Allies. The thought of these men is that they shall persuade the Japanese Government to discontinue the diplomatic negotiations, which they are confident can reach no satisfactory conclusion, and then open negotiations with American firms, tendering ships at prices to be agreed upon, and obtaining steel by Government license.
I merely report these facts to the Department for its information, but am not sufficiently familiar with the negotiations to express any opinion as to whether such a plan would be practical.
I have [etc.]