Foreign Relations of the United States Diplomatic Papers, 1935, The Far East, Volume III

611.9431/94

Memorandum by the Ambassador in Japan (Grew) of a Conversation With the Chief of the Commercial Affairs Bureau, Japanese Foreign Office (Kurusu)⁶⁵

[Tokyo,] July 17, 1935.

Mr. Kurusu came to see me this morning, at his request, and in the course of conversation he brought out the following points concerning the trade relations between Japan and the United States:

1. He said that although Mr. Hirota⁶⁶ was familiar with trade questions as he had formerly occupied the position now held by Mr. Kurusu, nevertheless he was accustomed to leaving these matters and the general commercial policy of the Government in Mr. Kurusu’s hands. Mr. Kurusu said that his own policy coincided very closely with that of Mr. Hull for the breaking down so far as possible of trade barriers in the shape of high tariffs, quotas and other restrictions and the settlement of each question by direct negotiation and compromise. Particularly with the United States he desired to maintain the most friendly trade relations and he said he had no doubt that this could be done if the public agitation in the United States against certain categories of Japanese goods would be met by friendly negotiation with the Japanese Government instead of the arbitrary raising of tariffs or other restrictions. Mr. Kurusu said that in the main our trade was complementary rather than competitive (obviously cotton and silk) and that the more textiles Japan could ship to the United States the more cotton she would buy from the United States. He fully realized the difficulties which our Government had to face in the public agitation of certain industrial interests against the importation of Japanese low grade goods. Naturally there was a market for both high grade textiles and low grade textiles, but in all these cases involving any commodity he was always ready to effect a fair and reasonable compromise by handling the matter at this end so long as these matters were brought up for friendly negotiation and were not met by arbitrary action in the United States.

2. Mr. Kurusu then turned to the difficult question of Japan’s trade with third countries, especially the countries of Central and South America where he said that the British and American industrial interests were taking active steps to crowd out Japanese trade. On my asking him the method of procedure adopted by these industrial interests he said that they tried to bring pressure on the local government to erect restrictions against Japanese goods. I told Mr. Kurusu that it was very difficult for our Government to influence either the local governments concerned or to control the American industrial interests involved. He said he realized this but hoped that the United States by setting the example of Mr. Hull’s trade policy in general would be able at least to affect this situation.

3. The third point raised by Mr. Kurusu was the argument advanced by these and other countries in favor of a balance of trade. In his opinion this was an unsound argument and he knew that in this respect he was in agreement with Mr. Hull. International trade should be based on a perfectly free flow of goods and should not be arbitrarily restricted with the purpose of precisely balancing the trade between any two countries. He realized that questions of exchange were here involved but he thought that the principle at issue was of paramount importance.

Mr. Kurusu then turned to the pending textile negotiations concerning Japanese trade with the Philippines and he said that on the basis of the spirit of cooperation and compromise which has already been manifested, he thought the question was going to work out satisfactorily.

In reply to my specific inquiry concerning Japanese trade relations with Canada, Mr. Kurusu said that the retaliatory measures would probably be placed in effect on July 20, or as soon as the matter could be submitted to the Emperor. The new tariff measures would involve principally lumber, wheat and pulp. He saw no reasons why similar measures should be taken against the United States and he repeated that his efforts were constantly directed to the maintenance of friendly trade relations with us on the basis of cooperation and fair compromise. I referred to Mr. Hull’s various speeches on the general subject of trade relations, Mr. Phillips’ speech at San Diego and my own address before the America–Japan Society last week. He said that he had read all or most of these speeches and was thoroughly in accord with the principles laid down. He added that his own difficulties in Japan were perhaps as great or greater than the difficulties of the Department of State; that he was constantly under fire and criticism from various Japanese industries and other sources; that he was obliged to show considerable courage in dealing with them.

Turning to Japanese trade relations with Great Britain he said that in connection with the Crown Colonies the British had made the mistake of crowding out Japanese goods to such an extent that a vacuum had been raised which could not be filled and they were now obliged to turn once more to Japanese goods.

Mr. Kurusu referred to his conversation with me in Karuizawa last year concerning the question of certain shipping taxes at issue between the United States and Japan and said that in view of the fact that the Japanese interests had now offered a compromise he hoped very much that the matter could be speedily settled.⁶⁷ I said that I would be glad to look into it in Washington and that I would also bring directly to the attention of the Secretary of State the various points which he had raised in our conversation.

J[oseph] C. G[rew]

65. Copy transmitted to the Department by the Chargé in Japan in his despatch No. 1409, July 25; received August 10.
66. Koki Hirota, Japanese Minister for Foreign Affairs.
67. See Foreign Relations, 1934, vol. iii, pp. 827 ff.