611.946/277
Memorandum by Mr. Roy Veatch of the Office of the Economic Adviser
At Mr. Sayre’s direction, Mr. Veatch asked Mr. Yoshizawa to come to the Department to receive the latest United States statistics of imports of cotton piece goods from Japan and to discuss the information which Mr. Yoshizawa had placed before Mr. Veatch on March 30, 1936.43
[Page 874]When Mr. Yoshizawa arrived, he said that he had brought with him a translation of the points contained in the despatch from the Foreign Office which he had discussed with Mr. Veatch on March 30 and also a table of Japanese exports of cotton piece goods to the United States in January and February 1936 and monthly during 1935 (copies attached).44 These statements he left for the Department’s files.
Mr. Veatch then handed Mr. Yoshizawa a statement (copy attached)44 regarding this Government’s statistics of imports of cotton piece goods from Japan during the same period, pointing out that the American statistics were considerably higher during January and February 1936 than the Japanese export statistics for the months of December 1935 and January 1936. He called attention to the second paragraph in the statement which he had handed to Mr. Yoshizawa, which apparently gave the full explanation of this discrepancy.
Mr. Yoshizawa asked a number of questions regarding shipments of Japanese goods directly to Puerto Rico, and Mr. Veach showed him statistics of the Japanese shipments directly to Puerto Rico, statistics taken from Japanese reports, which indicated that direct shipments had increased considerably during the last two or three months. Mr. Veatch said that we were looking into this trade and that he would hazard a guess that considerable amounts of Japanese goods which were used in the embroidery trade in Puerto Rico and shipped to the United States in manufactured form had formerly been secured through New York and were now being brought in directly, possibly due to improvement in Japanese freight service and marketing in the Caribbean area. Mr. Yoshizawa agreed that the fact that a portion of Japanese exports to the United States went to Puerto Rico, most of it then coming into continental United States in manufactured form, did not change the importance of this trade since Japanese goods in Puerto Rico evidently supplanted American goods. Mr. Veatch made it clear that American statistics had always included imports into any area inside the United States customs system and that our import figures included imports into Puerto Rico and Hawaii as well as into continental United States.
Mr. Veatch said that Mr. Sayre had been of the opinion that neither the figures cited in the despatch from the Foreign Office which Mr. Yoshizawa had translated for Mr. Veatch on March 30 nor the United States statistics of imports during January and February 1936 could afford a basis for any release or any action on the part of this Department designed to allay the alarm over increased importations of [Page 875] Japanese cotton goods. Mr. Yoshizawa said that he had to admit that personally he agreed with this conclusion and that he had been of the opinion that even the statistics cited in his instructions, not including shipments to Puerto Rico and Hawaii, did not warrant a statement on the part of the American Government that the Japanese Government was living up to the assurances given this Government on December 21, 1935.45 He recognized the importance of the fact pointed out by Mr. Veatch that statistics of imports into the United States for consumption were the important figures and that these statistics for January and February 1936 showed total imports exceeding the imports for consumption for the first three months of 1935, months when imports were the highest on record at that time. He recognized the alarm of the American industry in view of the fact that imports during these two months were at the rate of over 75,000,000 square yards a year.
Mr. Veatch then mentioned again the extent of the pressure which was being placed upon this Government and the embarrassment in which we were placed in that we were not yet able to give any assurance to the American industry that the Japanese exporters were going to be able to control the situation satisfactorily. We had made an effort to delay or discourage the development of demands for restrictive action by this Government on the score that the January increases in imports had been brought to the attention of the Japanese Government, that the Japanese Government was giving serious consideration to the situation and that a reply to our representations was expected soon. In spite of these efforts the agitation was growing and already pressure was being brought for restrictive action of one sort or another by this Government.
Mr. Yoshizawa asked Mr. Veatch if he would describe to him in some detail the character of this agitation so that he might include this information in his despatch to Tokyo and therefore emphasize the necessity for action. In response to this request Mr. Veatch detailed the way in which the Cotton Textile Institute, representing the entire industry, was taking the lead in the movement for protection against increasing imports from Japan. This movement was likely to be much stronger this year than last because the industry in the South was joining with the New England industry in supporting the demand for action. He referred to the letters which were being sent out by the Cotton Textile Institute and to the activity of other groups, such as the National Association of Cotton Manufacturers, in bringing the situation to the attention of members of Congress and also various departments of the Government. Mr. Yoshizawa said that it would be helpful if he could get a copy of the letters being circulated by these [Page 876] groups. Mr. Veatch said that Senator Walsh46 had read into the Congressional Record on March 27 the text of the letter which the National Association of Cotton Manufacturers had addressed to members of Congress and also the text of the very full letter and of tables sent out by the Cotton Textile Institute.46a Mr. Yoshizawa recalled these letters and said that he would make use of them in preparing his despatch to Tokyo.
Mr. Veatch emphasized the fact that the drive against importations of Japanse cotton textiles apparently was only in its early stages. Leaders of the cotton textile industry had indicated to the Department that they wished to cooperate with the Department and would not press for restrictive action by this Government if the situation could be handled voluntarily by the Japanese. In view of the fact that importations in January and February have been so completely out of line with the assurances given by the Japanese Government on December 21 and that the State Department had not been able to announce any new assurances or any adjustment of the situation by the Japanese exporters, the movement was now getting under way to demand other action. First, there was now pressure upon the Tariff Commission to get out as quickly as possible the report on its investigation of the cost of production of bleached cotton goods in Japan and the United States, the investigation inaugurated under Section 336 of the Tariff Act of 1930. Second, the Department of Agriculture was being approached (as evidenced by the letter from the Cotton Textile Institute read into the Record by Senator Walsh) with the purpose of securing restrictions upon the quantities of cotton textiles which might be imported from Japan, and finally, of course, the whole problem was being placed before members of Congress and in recent days Senator Walsh and Representative Martin47 have brought the problem onto the floor and into the Record.
After further discussion, Mr. Yoshizawa reviewed the points which he intended to place before his Government, including the following:
- (1)
- The statistics for the first two months of 1936, even the Japanese statistics of direct shipments to continental United States, do not form a basis for discouraging agitation for restrictive action by the American Government.
- (2)
- Japanese exports for February indicate that United States statistics of imports for March will again be heavy.
- (3)
- Imports for consumption are the important matter to be watched and this would require not only control of shipments from Japan but also control of sales from existing stocks in bonded warehouses in the United States, which total over 11,000,000 square yards.
- (4)
- Unless some action can be taken or definite assurance of action [Page 877] given by the Japanese Government very soon, the movement for direct action by the American Government will gain such headway that it will be difficult to handle. In view of the fact that the assurances given by the Japanese Government on December 21 have turned out to be very poorly founded, some more definite action or assurances of some more definite form are now needed if the American textile industry is to be impressed.