611.946/346
Memorandum by Mr. Eugene H. Dooman of the Division of Far Eastern Affairs
| Conversation: | Mr. Lawrence Richmond and Colonel Howlett, representatives of the American cotton velveteen industry; |
| Mr. Sayre;84 | |
| Mr. Dooman. |
Mr. Richmond thanked Mr. Sayre for the opportunity which had been given the representatives of the American cotton velveteen industry to call on Mr. Sayre and lay before him recent developments with regard to certain conversations which had been held between the American and Japanese cotton velveteen interests. He referred to the hearing which was held on December 15 by the Tariff Commission on the velveteen complaint, and he said that, following that hearing, representatives of the two industries had met together and had worked out a plan to regulate imports into the United States of Japanese velveteens. An outline of this plan had been initialed, and a formal agreement embodying the plan had now been formulated by the counsel for the American industry. Mr. Richmond then handed to Mr. Sayre the outline, as initialed, and the draft of the formal agreement.85
Mr. Sayre stated that he was appreciative of the trouble taken by Mr. Richmond and Colonel Howlett in coming to Washington and [Page 781] informing him of recent developments. He said that, of course, he had been kept informed of the discussions between the American and Japanese industries, and that he knew in a general way the purport of the agreement which had been reached.
Mr. Sayre then gave a brief review of the administration’s general economic policy and of its economic policy vis-à-vis Japan. With regard to the former, he said that it was the earnest desire of the Department to increase the foreign trade of the United States, and with that end in view this Government has striven earnestly to remove barriers to international trade. With regard to the trade with Japan, Mr. Sayre pointed out that Japan is the most important purchaser of American raw cotton, that it bought much more from the United States than the United States bought from Japan, and that any movement toward substantially decreasing Japanese imports would have an unfavorable effect upon international relations. Fortunately, he continued, the trade between the United States and Japan is largely complementary in character, but there is a narrow range of goods imported into this country from Japan which is competitive in character. The introduction of these goods had created sharp problems, and this Government has sought, in collaboration with the Japanese Government, to adjust these problems in a friendly and satisfactory manner. It had been increasingly felt, however, that greater benefits could be derived by collaboration between the American and Japanese industries affected by such a problem than by efforts toward regulation by the American and Japanese Governments; and it was for this reason that Mr. Sayre had been gratified to learn that the conversations which had been initiated between the American and Japanese cotton velveteen industries were developing favorably.
Mr. Sayre then stated that it was his expectation that the American velveteen industry would do nothing which might be regarded as illegal, but that, out of an abundance of caution, he took this opportunity to express his concern that nothing be done by the industry which might warrantably be construed as violating laws in restraint of trade.
Mr. Richmond said that he and his colleagues had been guided all along by legal advice. He said that the industry had engaged Mr. Max Steuer as a counsel, that Mr. Steuer had carefully studied the Wilson Act86 and other similar acts, and that Mr. Steuer (in whose office the draft agreement had been drawn up) had advised that the agreement would not be illegal. The responsibility with regard to the legality of the agreement would, therefore, have to be placed on Mr. Steuer.
[Page 782]Mr. Richmond went on to say that it was his hope, and that of his colleagues, that Mr. Sayre would indicate his approval of the purposes of the arrangement with the Japanese by initialing the agreement.
Mr. Sayre replied that it was not within the province of this Department to express an opinion with regard to the legality of the agreement: that would be within the province of the Department of Justice. Nor could the Department of State express any opinion with regard to the question whether the substance of the agreement would be fair and equitable to all concerned. He could say, however, that he viewed with approval this effort on the part of the American and Japanese industries to adjust in a spirit of goodwill problems of common concern.
Mr. Sayre stated that this Government had sought to reach an understanding with the Japanese Government on the question of imports of Japanese cotton piece goods into the United States. An agreement had been practically worked out but it could not be completed because of the refusal of the private Japanese interests to fulfill certain requirements of the Japanese Government. Mr. Sayre went on to say that we had felt that if the cotton piece goods negotiations had been carried on between the American and Japanese interests, instead of between the American and Japanese Governments, a complete and satisfactory agreement could have been reached. He felt that it was a matter for gratification that, in the case of cotton velveteens, the private interests had been able to work out a plan which each side considered to be fair and equitable.
At Mr. Richmond’s request, Mr. Sayre read through the draft agreement. Mr. Sayre then stated that he could not, of course, express any opinion with regard to the legality of the document. He stated, however, that it would be closer to the facts if a phrase indicating that the agreement had been concluded “with the approval and consent” of the State Department be corrected to read “with the knowledge” of the Department. Mr. Richmond said that he would be glad to have the correction made.
Mr. Richmond reviewed briefly the efforts during the past two years of the American cotton velveteen industry to obtain protection against Japanese competition. He referred to the fact that an officer of this Department had, a few months ago, expressed to him (Mr. Richmond) the opinion that the most satisfactory protection against Japanese competition would be a voluntary undertaking on the part of the Japanese interests to restrict their exports to the United States. The American industry was somewhat skeptical of the benefits of any such arrangement, but it had nevertheless gone into the matter and had finally succeeded in working out an arrangement with the Japanese. [Page 783] Mr. Richmond said that the indications which he had received from Mr. Sayre of the American Government’s viewing with favor this effort to work out in friendly cooperation with Japanese industry a solution of a common problem would be received with gratification by him and by his colleagues. He felt sure also that the Japanese interests would appreciate receiving, after the agreement is signed, further expression of Mr. Sayre’s approval.
Mr. Sayre said that he would repeat that this Government would view with approval efforts on the part of American industry to work out with the Japanese any plans which would tend to stabilize American market conditions, instead of having recourse to measures which might lead to complete exclusion of imports from Japan. He did not think it wise, however, for him to initial the agreement or to express his approval in writing, for the effect of either of these two methods would be to convert the arrangement, which is intended to be a purely private arrangement, into a governmental arrangement—and that was the thing which it would be desirable to avoid.
At this point Mr. Sayre left the room in order to fulfill an engagement elsewhere.
Mr. Richmond then outlined to Mr. Dooman his plans to complete the agreement. He said that he and Colonel Howlett would return to New York and would endeavor to obtain the signatures to the contract of the other members of the American group. The contract would then be signed by the Japanese representative. Mr. Richmond said that, as soon as the contract is completed, representatives of the American and Japanese groups, respectively, would call at the Department and at the Japanese Embassy for the purpose of giving notification that the agreement had been completed and to leave copies of the contracts at the Department and at the Japanese Embassy. Mr. Richmond hoped that it might be possible for him and his colleagues to return to Washington on or about January 11.
The conversation ended with an exchange of amenities.