Memorandum by Mr. Eugene H. Dooman of the Division of Far Eastern Affairs

Conversation: Mr. Hirosi Saito, the Japanese Ambassador;
Mr. Sayre;
Mr. Dooman.

Mr. Sayre reviewed the conversation which he had several weeks ago with the Japanese Ambassador in regard to commercial problems. He said that this Administration deplored efforts on the part of nations to capture markets from other countries and that its efforts were devoted toward increasing trade all around in order that all countries might share in the increased business. He felt sure that the Japanese Government shared the views of this Government, and that Japan also believed that every effort should be made toward increasing the total volume of world trade rather than merely trying to capture markets from other countries. It would cause this Government satisfaction, he said, if it could feel that both Japan and itself were putting their shoulders to the wheel in a common effort to bring about the aim which this country so much desired. Mr. Sayre stated that there were, as he had observed on a previous occasion, certain focal points of political discussion which, in the interest of promoting friendly commercial relations between the United States and Japan, should be cleared up quietly by friendly discussion between the two countries. It was possible, of course, for this Government to take ex parte action with a view to satisfying the desire of affected interests in this country for protection against competition, but this Government is firmly convinced that it would be possible by cooperative action to adjust the situations giving rise to agitation in such manner as not to prejudice the interests of either country.

One of these focal points was the question of increased imports into the Philippine Islands of Japanese cotton textiles. Mr. Sayre said that he did not have to inform the Japanese Ambassador of the agitation in regard to increased imports of Japanese cotton textiles into the United States. He was very much gratified that the Japanese Government had expressed willingness to enter into a discussion of the possibility of setting up some arrangement by which exports of Japanese textiles to the Philippines might be voluntarily restricted, as he felt that a satisfactory arrangement of this character would have a favorable effect upon the agitation in respect of the increased imports of cotton textiles from Japan into the United States.

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The Japanese Ambassador stated that he supposed that the American Government had probably found the terms of the proposition which the Japanese had made in regard to restricting exports of cotton textiles to the Philippines somewhat difficult. He stated that the Japanese Government had experienced difficulty in dealing with Japanese cotton manufacturers, for the reason that the cotton manufacturers took the position that they purchased a large quantity of raw cotton from the United States and that if their sales of cotton textiles to the United States and to the Philippines were cut down they would not have sufficient credits to maintain their present purchases of American raw cotton. The Japanese Ambassador went on to state that Japan now bought twice as much from the United States as the United States bought from Japan and that therefore it was very difficult to persuade Japanese manufacturers that they should voluntarily restrict exports of their products to American territory.

Mr. Sayre pointed out that, of course, that could not be said of Japan’s trade with the Philippines, with which Japan had a favorable balance of trade. Mr. Sayre went on to say that it was not our desire to deprive Japan of a fair share of the Philippine market, but that the sharp increase in imports of textiles from Japan, together with the wide margin between the price of American and Japanese textiles had tended to demoralize the price structure of the Philippine textile market. He felt certain that the Japanese would wish to cooperate in preventing the development of such a situation and that they would prefer to work with the United States toward maintaining normal and healthy market conditions in the Philippine Islands. The Japanese Ambassador indicated assent.

Mr. Sayre then went on to say that the Philippine Committee would look with favor upon conclusion of an arrangement by which the Japanese would undertake voluntarily to limit exports of textiles to the Philippines. We believe that such an arrangement should extend for two years, with the understanding that the terms of the arrangement might be reconsidered at the end of one year. It was our thought that if economic conditions in the Philippines should materially change during the first year it might be possible to give Japan a larger share of the Philippine trade.

It was our hope also, Mr. Sayre continued, that the Japanese Government might use its good offices to increase or to maintain higher prices for Japanese textiles exported to the Philippines, and that the Association which we understand has been recently formed to control exports of cotton textiles to the United States might be used to regulate exports of textiles to the Philippine Islands.

Mr. Sayre stated that our Government had no authority over the tariff policy of the Philippine Islands. It was our belief that if some [Page 965] arrangement could be made between the American and Japanese Governments of the character contemplated, there would be far less likelihood of the Philippine Government increasing its duties on cotton textiles. If, however, such duties were increased, it would be understood that the Japanese Government would be perfectly free to terminate any arrangement that might be effected.

There then ensued some discussion of the actions of certain Latin American countries toward restricting imports of Japanese goods. The Japanese Ambassador stated that Japanese consuls had been instructed to investigate this matter, and as the result of their investigations it had been definitely established that the restrictive measures of these Latin American countries had in no way been inspired or otherwise brought about by the United States Government.

The Japanese Ambassador said that he was glad to make this acknowledgment. He said that a Cuban official had informed the Japanese Legation in Habana that the restrictive action of Cuba had been brought about by American influence, but the Japanese Government was satisfied that any influence which might have been exercised was not that of the American Government. Mr. Sayre stated that he could positively assure the Japanese Ambassador that the American Government had not only not encouraged any Latin American country to take restrictive action against Japanese goods, but that it had definitely expressed disapproval of American official representatives becoming implicated in any such movement. He said that the matter had first come to his attention in the Autumn of last year, and Mr. Sayre had informed a private American citizen that the State Department would not only not support American citizens who desired that Latin American countries take action against Japan but that it disapproved of such countries taking restrictive measures for the reason that it would be contrary to general trade policies of this Administration, which is to break down trade barriers and otherwise to promote world trade.

The Japanese Ambassador said that his Government entertained no doubt whatever that the American Government is pursuing a liberal trade policy, and that it was a policy which was also being pursued by the Japanese Government,

Mr. Sayre asked whether the Japanese Ambassador desired to discuss with Mr. Sayre the details of the proposed arrangement in regard to imports into the Philippine Islands of Japanese textiles, or whether he preferred that they should be discussed by members of his staff and Mr. Dooman. The Japanese Ambassador stated that he would talk the matter over with the officers of his Embassy, but that he thought it likely that he would assign one or two of his secretaries to look into the matter with Mr. Dooman.

With an exchange of amenities the conversation there ended.