811B.011/10
The Secretary of State to the Secretary of War (Dern)
My Dear Mr. Secretary: I refer to my letter of March 7, 1935,77 with which there was enclosed a copy of a memorandum of a conversation on March 4, 1935, between the Japanese Ambassador and the Under Secretary of State, together with a copy of a memorandum left by the Japanese Ambassador at the Department wherein the Japanese Government offers observations in regard to those provisions contained in the Draft of Constitution for the Government of the Commonwealth of the Philippine Islands which relate to the development and exploitation of natural resources in the Philippine Islands.
I enclose a copy of an informal memorandum, dated March 19, 1935,78 which was handed on March 21 by an officer of the Department to the Counselor of the Japanese Embassy in reply to the memorandum above-mentioned of the Japanese Ambassador.
It is suggested that you may care to inform the Governor General of the Philippine Islands in regard to the question raised by the Japanese Ambassador.
I assume that the Philippine authorities have given thought to the bearing of the provisions of Article 12, Section 1 of the Draft Constitution (requiring that at least 60 per cent of the capital of corporations or associations engaged in the “disposition, exploitation, development, or utilization” of the natural resources of the Philippine Islands shall be owned by citizens of the Philippine Islands) upon the future development of the Philippine Islands, and to the question whether those provisions would effectively serve the interests of the Philippine people. I am therefore not inclined at the present time to suggest that this matter be brought to the attention of the Philippine authorities. In the event that at some future time these constitutional provisions should appear, in the judgment of the Philippine authorities, to restrict unduly the entry of foreign, especially American, capital, the matter may present itself for discussion.
Sincerely yours,