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

611.946 Rag Rugs/155

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

[Washington,] May 22, 1936.

Conversation:	Mr. Tsuneo Hayama, Third Secretary of the Japanese Embassy; and
	Mr. Otoshiro Kuroda, Attaché of the Japanese Embassy;
	Mr. Veatch.

Mr. Hayama and Mr. Kuroda came to the Department on May 20 to receive the reply of this Government to the request which they presented on April 14, 1936, for an extension of the existing agreement covering the export of cotton rugs from Japan to the United States. Mr. Veatch informed them that he was authorized to say that after a study of the market conditions in the United States and after discussions with representatives of the American manufacturers and of the importers, the Government of the United States agreed to the Japanese proposal, namely, that Japanese exporters will limit their shipments of cotton rugs to the United States during the twelvemonth period June 1, 1936 to May 31, 1937, to the following amounts:

(1) Chenille rugs wholly or in chief value of cotton—700,000 square yards.

(2) Hit-and-miss rag rugs wholly or in chief value of cotton—3,350,000 square yards.

(3) Rugs wholly or in chief yalue of cotton (except grass and rice straw), other than chenille, imitation oriental, and hit-and-miss rag rugs—4,070,000 square yards.

Mr. Hayama expressed his pleasure at this response of the American Government.

Mr. Veatch called attention to the fact that grass and rice straw rugs chief value of cotton are excluded from limitation in this agreement under category No. 3 in spite of the fact that they were included in the third category when the agreement was first reached in 1934. It was his understanding that imports of rice straw rugs chief value of cotton had reached considerable proportions and he merely took this opportunity of mentioning the fact that although the American Government had no intention now of asking that rice straw rugs be included in the limitations upon shipments of cotton rugs, it was conceivable, of course, that if rice straw rugs were pushed in the American market and entered into competition directly with domestic cotton rugs, it would be necessary to discuss the inclusion of rice straw rugs in connection with extension of the rag rug agreement. At the present time there was no particular reason for fearing this eventuality and it was to be hoped that it would not arise.

Agreement was then reached upon the text of a press release to be handed out before the end of the month. Mr. Hayama took the original of this draft with him (copy attached).⁵⁴ He said he was sure that there would be no objection to anything included in the draft.

On May 21 Mr. Hayama telephoned Mr. Veatch to say that he had transmitted to his Government a statement that the American Government had agreed to the Japanese proposal and also the text of the proposed press release. In response he had received the acknowledgment of this information by the Foreign Office. His Government had found no objection to the press release but had suggested that the release should be made a few days later.

54. Not printed; for text released to the press, see Department of State, Press Releases, May 30, 1936, p. 556.