611B.9417/90a
The Assistant Secretary of State (Sayre) to the Appointed High Commissioner in the Philippines (Murphy)85
My Dear Mr. Murphy: It gives me pleasure to address you for the first time as High Commissioner of this Government to the Philippine Islands. I should like to add also that it is my sincere hope that the claims upon you of American politics, as strong and as important as I know them to be, will not end too soon your service in this post. We need you as the representative of this Government in the Islands, at least for a sufficient period of time to establish a firm basis for the [Page 1014] relations between the United States and the new government of the Philippines. After many months of negotiations we were able, as you know, to secure an agreement with the Japanese providing for a voluntary restriction by Japanese exporters of importations into the Philippine Islands of Japanese cotton piece goods. I am enclosing for your information a copy of the memorandum, initialed by the Japanese Ambassador and myself, of our conversation setting forth this agreement,86 a copy of an office memorandum of other points covered in the conversation,87 and a copy of the press release of this Department with respect to the Japanese action.88
You will note particularly the clear understanding between the Ambassador and myself, set forth in the memorandum initialed by Mr. Dooman of our Division of Far Eastern Affairs, that the arrangement which had been formulated did not in any way commit the Philippine Government and that nothing said in the various conversations between the Ambassador and myself was intended to or could preclude in any way full liberty of action on the part of the Philippine Government. Although these two memoranda must, of course, be held in confidence, you may wish to apprise President Quezon of this clear understanding.
You will note also that the voluntary regulation by the Japanese Exporters Association covers all importations into the Philippines of Japanese cotton piece goods. This wording was selected in preference to wording covering merely importations “from Japan”, because of the understanding that the Japanese will have no intention of seeking to evade the clear intent of this voluntary arrangement by transshipping Japanese goods through Hong Kong or any other port.
On the other hand, it was the desire of the Japanese that there should be no public reference to this intention and on our part we were in agreement with respect to this point since we certainly do not wish at any time to give the impression that suspicion is being cast upon the Japanese and that therefore watertight restrictions are being established to prevent evasion of the arrangement into which they have entered voluntarily and in good faith. The same sort of understanding exists with respect to the intention of the Japanese to use Philippine customs statistics in determining the volume of imports of Japanese goods and no public statement has been made of this intention.
As this letter is being drafted information has come to us that there is considerable concern in the Philippines over the possibility of importations into the Philippines of Japanese cotton textiles, transshipped [Page 1015] from Hong Kong, falling outside of the voluntary regulation by the Japanese Exporters Association. The fear in the Philippine market of such a development is being brought to the attention of the Japanese and we feel certain that some means can be found of removing the concern over this matter in the Philippines.
It is our general feeling that the arrangement to which the Japanese have agreed is a rather favorable arrangement from the standpoint of Filipino and American interests and we have been rather agreeably impressed with the willingness of the Japanese to go this far. Consummation of this agreement should be very helpful in continuing friendly and cooperative relations with the Japanese Government, not only respecting commercial questions but also respecting the larger problems of policy in the Pacific.
With respect to the commitment of this Government that so long as annual imports into the Philippine Islands of Japanese cotton piece goods do not exceed the figures stated in the memorandum, the American Government will take no action directed toward securing an increase in the Philippine tariff rates on cotton piece goods to take effect prior to the termination of the two-year period covered by this agreement, I should like to say that we felt this was the only position this Government could take in the circumstances. This is not in any sense a quid pro quo. It is clearly understood by the Japanese that the power of initiating legislation with respect to the Philippine tariff rests with the Philippine Government itself and not with this Government. It is, of course, the hope and desire of the Japanese that their voluntary action shall influence the Philippine Government to refrain from any tariff increases during the two-year period covered by the agreement. This Government has made no commitment to urge such restraint upon the Philippine Government—if the Philippine Government is to follow a policy of not increasing tariff rates during this period, it must do so voluntarily and as a result of a feeling upon its part that such a line of action is desirable in the interests of the Filipino people.
Furthermore, the agreement with the Japanese will not in any way preclude a discussion of this entire subject by the Joint Trade Conference. The single commitment of this Government is that no request will be made of the Philippine Government, either through the trade conference or otherwise, to raise Philippine textile rates before August 1, 1937. It may be desirable to give full consideration in the conference to the entire question of the Philippine textile market and the relation of that market to Philippine economic problems, as well as to the relations between the Philippines and the United States and foreign countries. Undoubtedly the special committees which you have established to study the problems of the conference are going into this question thoroughly and I am sure you will be in [Page 1016] a position to give us helpful advice on the problem. I believe we are in agreement that the conference must not become a bargaining conference with larger protection in the Philippine market for American textiles, or other American products, offered in return for greater protection in the American market for Philippine products, without very careful consideration of all of the other factors involved in the total situation with which we must deal. Our action in this conference must be wise from the standpoint of the Filipino people as a whole and from the standpoint of the United States, with full weight being given to social and political factors as well as to economic advantages. Whether with respect to textiles or any other problem, we must have in mind more than the immediate interests of the Philippines and the United States for the independent Philippine Government will have to live in an international setting and of necessity its relations with the other powers of the Western Pacific must be peaceful and cooperative.
It is gratifying to know that even in the midst of preparations for the inauguration of the Commonwealth Government and of all the political activity connected with the elections of officers of that Government, you have been able to center the attention of Filipino leaders and experts upon the economic problems so vital to the Commonwealth and to the independent government which is to follow it. Once the inauguration is past I am sure that the two governments can move rapidly toward an early meeting of the Joint Trade Conference.
You have always my best wishes and warmest personal regards.
Sincerely yours,