611.943 Gloves/28
Memorandum by Mr. Roy Veatch of the Office of the Economic Adviser
Mr. Yoshizawa telephoned Friday evening, January 31, to say that the Embassy had received instructions from Tokyo with respect to the possibility of voluntary restriction by Japanese exporters of their shipments of wool-knit gloves and mittens to the United States. It was then too late for him to prepare a statement to bring to the Department but he wished to call upon Mr. Sayre late Saturday morning. When it was learned that Mr. Sayre would not be in the office again until Monday, Mr. Yoshizawa suggested that he bring the statement to Mr. Veatch so that the Department might study it before he saw Mr. Sayre on Monday.
Mr. Yoshizawa presented a typed statement to Mr. Veatch (copy attached)16 and explained briefly the situation in which the Japanese manufacturers found themselves.
It was his understanding that the industry had been created largely, if not entirely, to supply the American market; there was no considerable demand as yet for wool-knit gloves in Japan, although the vogue of winter sports had created recently a small demand. The possibility of supplying wool-knit gloves and mittens to the American [Page 826] market had been brought to the attention of the Japanese by American jobbers and the prospect of a good market in the United States had led the Japanese to install new machinery and, in fact, to create a new industry in Japan. As a result, these manufacturers and their workers (the industry is carried on largely on a household basis although evidently small machines must be installed in the household) would be faced with great losses.
Mr. Veatch commented upon this situation as a good example of the desirability of checking such rapid expansion of production primarily for the American market when it is almost certain to create unusual difficulties with American manufacturers already supplying that market and thus give rise to strong agitation against Japanese trade. Some method should be found of warning Japanese manufacturers in time to prevent investment in equipment which in all probability could only be used a short time due to the almost certain agitation in the United States for restriction against such destructive competition.
Mr. Yoshizawa agreed that it was desirable to find a means of doing this. The difficulty at present is that individuals or small concerns are drawn into enterprises of this nature by the promise of an attractive American market and they have no way of knowing the conditions in that market other than the reports given them by the American dealers who urge them to supply that market. Ordinarily American jobbers appeal to small manufacturers and bring great pressure upon them to cut prices and enter into competition with each other. Without organization, the individual manufacturers do compete strongly with each other and drive prices down to the lowest possible level with the result that quality also is very low. An effort has been made in the manufacture of wool-knit gloves to organize the industry and to make it possible for them to improve prices and quality with the hope that the American market could be stabilized.
- Infra.↩