611.003 Lead Pencils/19

Memorandum by the Assistant Secretary of State (Sayre)

On April 2, 1934, the Ambassador of Japan, Mr. Hirosi Saito, accompanied by Mr. Eiji Wajima, Attaché, called at the office of Assistant Secretary of State, Mr. Sayre, who read the following statement:

“Manufacturers of lead pencils in the United States have complained to the Government of the United States that lead pencils are being imported from Japan in such quantities as to threaten the maintenance of their code of fair competition and have requested increased tariff protection against such importations, as provided in Section 3 (e) of the National Industrial Recovery Act. On the basis of a thorough study of these complaints the Government of the United States is constrained to recognize the justification for the apprehensions entertained by these manufacturers. On the other hand, the Government of the United States has viewed with concern the tendencies throughout the world to stifle international trade by means of tariffs, quotas, exchange control and the like, and is extremely reluctant to lend any encouragement to this tendency by adopting any measures, not dictated by absolute necessity, which tend to curtail international trade.

“It is believed that the maintenance of the code of lead pencil manufacturers would not be endangered, and the necessity for the American Government to exercise the authority vested in it by Section 3 (e) of the National Industrial Recovery Act to restrict the importation of lead pencils into the United States would not arise, if direct or indirect exports of woodcased lead pencils from Japan to the United States did not exceed 125,000 gross in any one year, not more than 45,000 [Page 805] gross in any one quarter and not more than 25,000 gross in any one month.

“The American Government hopes that the Japanese Government, with a view to cooperating in this matter, will, on and after May 1, 1934, exercise its authority and its good offices to the end that the direct or indirect exportation of wood-cased lead pencils from Japan to the United States be restricted to the figures above-mentioned. If the export of pencils from Japan to’ the United States during the month of April should exceed the maximum monthly figure of 25,000 gross, the maximum annual amount of 125,000 gross, to be computed from May 1, 1934, shall be reduced by an amount equal to the excess of such exports over the above-stated monthly maximum figure.”

The Ambassador and Mr. Sayre initialed the statement as read, and the initialed statement, retained by Mr. Sayre, is attached hereto and is to remain in the Department’s archives; an uninitialed carbon copy of the statement was given to the Japanese Ambassador and retained by him.

Mr. Sayre explained orally that neither the United States nor Japan considered that a contract was being entered into. Both regarded the matter as simply a gentlemen’s agreement. To this oral statement the Japanese Ambassador acceded.

Mr. Sayre also read to the Ambassador a statement dealing with the duration and scope of the arrangement in the following language:

“If the informal arrangement is not observed by Japanese exporters, it may be terminated without notice at any time. The American Government will endeavor to give favorable consideration, if Japanese exporters do not observe the arrangement, to the possibility of first drawing the attention of the Japanese Government to the situation.

“The arrangement will otherwise continue until April 30, 1935, and thereafter until, on three months’ prior notice, it is terminated on behalf of either the United States or Japan.

“The arrangement will cover exports of Japanese lead pencils to Continental United States, Alaska, Hawaii and Puerto Rico.”

The Japanese Ambassador concurred in this statement as correctly setting forth the intentions which he understood to be those of the two Governments. Mr. Sayre remarked that to place language regarding duration in the written statement which was to be initialed might give such statement the appearance of a contract. It was for this reason that he preferred that any statement regarding duration should be oral only.

Those present at the meeting in Mr. Sayre’s office included besides Mr. Sayre, the Ambassador and Mr. Wajima, Mr. Oscar Ryder of the National Recovery Administration, Mr. Dooman of the Division of Far Eastern Affairs of the Department of State and Mr. McClure, Assistant to Mr. Sayre.

F[rancis] B. S[ayre]