Foreign Relations of the United States, Diplomatic Papers, 1936, The Far East, Volume IV

611.946/296

Memorandum by Mr. Eugene E. Dooman of the Division of Far Eastern Affairs

[Washington,] May 1, 1936.

Conversation:	The Japanese Ambassador;
	Mr. Seijiro Yoshizawa, Counselor, Japanese Embassy;
	Mr. Sayre; and
	Mr. Dooman.

The Japanese Ambassador began the conversation by saying that he did not bring with him any good news. He stated that he had received on April 28 a telegram from his Government which had crossed the telegram he had sent to Tokyo immediately after his conversation with Mr. Sayre on April 27. The instruction which he had received stated that the Japanese Government is endeavoring to hold exports to the United States to a monthly maximum of 5,000,000 square yards, the Japanese Government’s expectation being that the volume of exports during a certain proportion of the next twelve months would be substantially less than the figure mentioned. The Ambassador stated that the plan proposed by his Government was obviously one which would not be responsive to the wishes of the American Government as explained to the Ambassador by Mr. Sayre on April 27. The Ambassador had therefore immediately telegraphed his Government and requested that the matter be reconsidered in the light of his telegram of the previous day. He had, the Ambassador continued, received today fresh instructions, directing him to lay before Mr. Sayre the Japanese Government’s suggested plan, which, the Japanese Government thought, would probably be satisfactory to Mr. Sayre.

Mr. Sayre stated that the question was not whether the plan would be satisfactory to him: the question was whether the plan would meet the situation now confronting both Governments. He himself had no hesitation in saying that he considered the plan of limiting Japanese exports to a monthly maximum of 5,000,000 square yards would, if made public, result in an outburst and probably lead to some form of Congressional action. He stated that he had been approached within the last day by several prominent Members of Congress in regard to the cotton textile situation, and he could say from personal knowledge that the “situation on the Hill is boiling”.

Mr. Sayre then stated that this Government could not conclude any arrangement with Japan whereby total annual imports from Japan would exceed 36,000,000 square yards; that any amount over that would not “permit a pick-up” in those mills which are most seriously affected by Japanese textile competition.

Mr. Yoshizawa stated that he had been checking with the Japanese Commercial Attaché the figures of imports compiled by the Treasury Department, and he had ascertained that our figure of 36,000,000 square yards of imports from Japan in 1935 included imports into Puerto Rico, the imports into Puerto Rico alone exceeding in many months 1,000,000 square yards. He observed that the Japanese exports to Puerto Rico could not be controlled by the association that had been organized to regulate exports to the United States, for the reason that exporters to Puerto Rico were not included in the association. Mr. Yoshizawa added that, in any event, Japanese textile exports to Puerto Rico consisted for the most part of sheetings, and were not, therefore, of great concern to the American industry.

Mr. Sayre reminded Mr. Yoshizawa that Puerto Rico is within the United States customs area, and that there are no customs barriers between the United States and Puerto Rico. In his opinion, it would be impossible for various reasons to set up a gentlemen’s agreement to be applicable only to imports into the continental United States and to be exclusive of imports into Puerto Rico. It was obvious to him that if such an agreement were put into effect the transshipment problem which we are now having in connection with the Philippine agreement would recur. Furthermore, he did not believe that it would be politically practicable to separate for customs purposes Puerto Rico from the United States.

The Japanese Ambassador asked Mr. Sayre whether it would be possible for us to agree to increasing the maximum Japanese shipments. Mr. Sayre stated that the situation is now so critical that some form of action had to be taken without delay and that, therefore, there is no time for bargaining. He also stated in strict confidence to the Japanese Ambassador that the Executive Committee on Commercial Policy had fixed the maximum at 36,000,000 square yards and he could hold out no hope whatever of the Committee agreeing to any increase in that figure.

Mr. Sayre asked the Ambassador whether his instructions had given him any indication of the attitude of the Japanese Government in regard to the increase in tariff recommended by the Tariff Commission. The Japanese Ambassador said that his Government would prefer that a gentlemen’s agreement be concluded. Mr. Sayre again expressed grave concern over the situation created by the agitation for the taking of action by Congress, and he thought it not unlikely that there might be presented almost any day in Congress a bill aimed at Japanese textiles. The President had granted him an opportunity to arrive at some understanding with the Japanese Embassy, but he (Mr. Sayre) could not affirm with any degree of confidence that the President could hold off much longer the pressure being brought to bear on him by Members of Congress. It seemed to Mr. Sayre that time was of the essence.

The Japanese Ambassador stated that he would at once telegraph to his Government the purport of the present conversation; that a conference is to be held next Monday, May 4, between representatives of the Japanese Government and representatives of the cotton industry, and he expected that he would receive further instructions by Thursday, May 7.