611B.9417/121a: Telegram

The Secretary of State to the Ambassador in Japan (Grew)

13. The Japanese Embassy has been informed of the Department’s appraisal and view of the situation explained in Department’s No. 12, January 29. The Department believes the Japanese Embassy considers these views and suggestions reasonable and practicable but apparently the Embassy has not transmitted to the Japanese Government the proposal dealing with February shipments. Contrary to the Department’s understanding, the Embassy merely informed the Foreign Office that it should expect such a proposal from the American Embassy in Tokyo. You are requested, therefore, to seek immediately agreement with the Japanese Government along the following lines: Suspension of shipments of cotton goods to the Philippines until March 1 or control by Japanese exporters of their shipments so that arrivals in the Philippines will not exceed 2 million square meters between February 15 and March 15, such arrangement to be announced by the Japanese Government or, with its consent, by this Government.

It is feared that without some definite limitation, Japanese exporters will be inclined to make heavy shipments beginning February 1, an eventuality which undoubtedly would arouse American and Philippine business interests and which would make it more difficult to carry forward the cotton goods agreement in a satisfactory manner. Announcement of the intention of holding February shipments to moderate levels would serve to allay fear and to create a favorable atmosphere for reaching agreement regarding the entire problem.