811.512394 Shipping/42

The Ambassador in Japan ( Grew ) to the Chief of the Division of Far Eastern Affairs ( Hornbeck )

Dear Mr. Hornbeck: I am sending you herewith a copy of a letter of August 15, 1934,36 from Mr. Kurusu, Chief of the Commercial Bureau of the Foreign Office, to which is appended two memoranda36 concerning a long-standing dispute over income taxes assessed on Japanese shipping companies by the United States Treasury authorities. I understand that the Japanese Chargé d’Affaires had been instructed to present a similar memorandum to the Department. Mr. Kurusu called on me personally and begged me to ask that the case be sympathetically examined by the Department of State from the point of view of equity and a fair and reasonable deal. Although he did not actually say so, I gather that he fears a purely technical decision from the Treasury Department without considering the element of international comity involved through the placing of these Japanese ships at the disposal of the United States in the common cause of the Allied and Associated Powers during the war.

It is impossible for me, in the absence of further evidence, to pass on the justice of the Japanese contention as set forth in these memoranda. However, if the facts are in accordance therewith, I think that the Department might well give sympathetic consideration to the Japanese viewpoint, and in view of the circumstances set forth therein, might feel that it could properly approach the Treasury Department with a view toward re-examination of the assessments made against the Japanese shipping companies.

The Japanese feel that they are not receiving fair treatment in this case, and that our authorities have taken high-handed measures against them. I would urge that the case at least be given full and sympathetic [Page 836] reconsideration, having in mind not only the purely technical factors but also its possible bearing on our general relations with Japan. Please be assured that I am not holding a brief for the Japanese contention and that I merely wish to ensure an eminently fair and equitable decision.

Please note especially the request of the Japanese Government for a prolongation of the period of 90 days grace before payment of the additional amounts of taxes assessed, in view of the geographical distance separating Japan and the United States, and also that no sudden seizure of Japanese ships be carried out prior to settlement as is stated to have been done in the seizure of the Soyo Maru at Los Angeles on April 22, 1934.

Yours sincerely,

Joseph C. Grew
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