Memorandum by the Secretary of State

The Japanese Ambassador called and handed to me the attached memorandum36 pertaining mainly to Japanese trade and supposed trade rights in South and Central America. After the Ambassador had read the memorandum, I stated to him that his Government was entirely in error in its complaints and in all of the implications of the memorandum as they related to any purpose remotely on the part of the United States to interfere with Japanese trade anywhere, much less in South and Central America. I stated that, since the London Conference,37 this Government has been supporting a broad, comprehensive economic program for the restoration of international finance and commerce to a nominal volume; that this program was unanimously [Page 943] adopted at the Montevideo Conference;38 that this Government is supporting it now and is not interested in such narrow and bartering trade methods as are being conducted by most countries today with disastrous results to international trade. I said that we in the State Department had never mentioned Japan, much less discussed the Japanese trade policies and interests, with any government in Latin America or anywhere else while discussing trade agreements with them; that we never even thought of Japan any more than other remote countries.

I then pointed out to the Japanese Ambassador just what the Montevideo economic program meant in the way of a broad, liberal and comprehensive program for economic recovery that all nations could consistently support. I said that it was based primarily upon the doctrine of equality of commercial and industrial rights and opportunities among nations in accordance with the favored-nation principle; that this Government recognized that the world is going from bad to worse economically, under the narrow, short-sighted bartering and bargaining trade methods and devices that are being practiced everywhere; that Europe, with Germany a special example, is keeping international trade there pressed down to the lowest level of the panic solely through the operation of these narrow bilateral methods which exclude that vast volume of international trade which is carried on through triangular, four-cornered and multilateral methods. I said that this Government is not interested in the narrow, bilateral method by itself with discriminations as the governing principle, but that it is paramountly concerned in carrying forward the Montevideo program which will bring back some twenty-five billions of dollars of international trade in addition to the almost nominal amount that exists today under the narrow methods of trading which include retaliation more than reciprocity.

I said that it is in these circumstances that my Government has a right to appeal to the Government of Japan and to other governments, instead of complaining upon the mistaken theory that we are in any remote sense interfering with Japanese trade in Latin America, to get in behind the Montevideo program and actively conduct educational activities among the important nations in its support; that in no other way can my country or his country or other countries of the world hope to get back anything like a satisfactory volume of international trade that would be at all certain or stable. I stated that, with due respect, it was really humorous for his Government to intimate that the United States is interfering with Japanese trade opportunities in Latin America and to cite a New York Times report about the American textile manufacturers’ seeking successful trade [Page 944] opportunities in Latin America through the United States Government, when the unvarnished truth is that my Government is both preaching and practicing the unconditional favored-nation doctrine to the fullest extent possible in the circumstances, which is calculated to give all countries equality of trade opportunities not only in Latin America but in every part of the world. I again urged the Ambassador to urge his country to get in and assist in this vast undertaking.

I then pointed to our recent trade agreement with Brazil,39 in which both this country and Brazil was generalizing to all other countries in the world, including Japan, the tariff and trade concessions they were extending to each other, and I said that these benefits were not costing Japan one red cent; that only in the case of Cuba, where very special relationships exist, is there any preferential trade relation on the part of my Government and another, and that even in the case of Cuba we had not gone out of our way to assist any particular industry in this country to get any undue advantage over a similar industry elsewhere.

In conclusion I said that the Japanese Government has got completely reversed the objects and purposes of the Government of the United States with respect to its commercial policy; that I was glad thus to correct the entirely erroneous view of the Japanese Government as contained in the Ambassador’s memorandum; that the one paramount purpose of the United States Government is to restore the operation of triangular and multilateral trade methods and to oppose any and all attempts to limit trade to the narrow, bilateral bargaining and bartering devices; that this, upon the theory that no country of any importance will be benefited materially by international trade unless and until the broad program adopted at Montevideo with the unconditional favored-nation doctrine as its corner stone, shall be carried into effect by the important countries of the world, including Japan; and I again appealed to him to urge his country to get in and cooperate in support of the Montevideo program. I fully explained that we were moving as rapidly as public sentiment would permit and that, at best, our progress was very gradual; that it could be much improved if other countries would awaken and catch step with mine; that we cannot hope to have anything like satisfactory economic relationships between nations under the existing narrow, retaliatory methods of trading. The Ambassador seemed to be a little disillusioned and made no attempt to controvert or to argue any statement I made. I stated that I would be glad to send him a memorandum if he desired, and he expressed the desire that I should do so.

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The Ambassador referred to the obstruction, to a more or less extent, by this Government of certain Japanese imports, such as matches, pencils, certain rubber goods, etc. I stated to him that we were seeking to advance the Montevideo economic program and to induce other countries to do so simultaneously; that this program contemplated rates that would not permit domestic price monopoly on the one hand or unreasonable or excessive imports on the other; that until we can proceed further with the general program of more liberal commercial policy and get it adjusted to our country and also educate and organize sufficient public sentiment behind to support and sustain it, we naturally would not be supported by public sentiment if we should allow an unreasonable and excessive amount of imports to come in without any disposition or steps to adjust the tariff rates to a reasonably competitive basis so that only a reasonable amount of such imports could be brought in. I said that this is a matter that is still ahead and that in the meantime we have requested the Government of Japan to cooperate by a gentlemen’s agreement in the manner and to the extent that these excessive imports have been dealt with.

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  1. Infra.
  2. For correspondence concerning the London Economic Conference, see Foreign Relations, 1933, vol. i, pp. 452 ff.
  3. See Foreign Relations, 1933, vol. iv, pp. 1 ff.
  4. Signed at Washington, February 2, 1935, vol. iv, p. 300.