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

611B.9417/105½

Memorandum by Mr. Roy Veatch of the Office of the Economic Adviser

[Washington,] December 14, 1935.

Conversation:	The Japanese Ambassador;
	Mr. Seijiro Yoshizawa, Counselor of the Japanese Embassy;
	Mr. Sayre;
	Mr. Veatch.

Mr. Sayre cited that part of the agreement covering the statistics to be used as a measure of imports into the Philippines of Japanese cotton piece goods and read the following sentence from the memorandum of conversation which had been initialed by the Japanese Ambassador and himself:

“The Ambassador further stated that the statistics of imports compiled by the Philippine Customs will be used as the basis of determining the volume of imports of Japanese cotton piece goods.”

The Ambassador and Mr. Yoshizawa both expressed their assent to this statement.

Mr. Sayre then handed the Ambassador and Mr. Yoshizawa copies of two statements and a table of statistics (copies of which are attached⁶) and read the two statements with some explanatory comment. He stressed the point that he wished to act as a gentleman with respect to this agreement and that this Government was therefore not prepared to insist upon the strict letter of the agreement because it felt this would be a hardship on the Japanese. Rather than following what would be a “legal” interpretation of the agreement, requiring the withholding of further shipments from Japan for many months, he was suggesting that shipments might be resumed the 1st of February so that the connections between the Japanese exporters and retailers handling their goods in the Philippines might be maintained without interruption.

Mr. Sayre suggested that if the Japanese Government could make a statement to the effect that shipments which had been discontinued on November 16 would not be resumed until the end of January, then the Embassy and the Department would have time to go into the detailed problems with the purpose of reaching agreement upon an adjustment of the statistical basis of the agreement and of the limitation set by the agreement, which would be equitable and mutually satisfactory.

Mr. Sayre then called attention to what he characterized as the “bulge” in the exports of Japanese cotton cloth to the Philippines during the five months preceding the effective date of the agreement, a bulge which he estimated to be approximately 14,000,000 square meters since shipments during those months this year exceeded shipments during the same period last year by that amount. One of the problems which would require discussion would be the distribution of this bulge. Mr. Sayre was of the opinion that some adjustment should be made regarding this.

The Ambassador asked if his understanding was correct that in any case, less than 14,000,000 square meters would have to be included in the quota. Mr. Sayre replied in the affirmative.

6. Not attached to file copy.