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

Conversation: Mr. Tsuneo Hayama, Second Secretary, Japanese Embassy
Mr. Ballantine1
Mr. Veatch

Mr. Hayama called to transmit information just received by cable from Tokyo to the following effect: Although the cotton textile manufacturers and exporters had been opposed to the American suggestion that the arrangement might be continued after August 1, 1937, [Page 796] in the form of a private agreement, the Japanese Government had urged them to reconsider and as a result they are now prepared to negotiate with the cotton textile industry in the United States, probably through a representative who would be sent to this country from Japan as soon as arrangements can be made. The private industry in Japan is strongly of the opinion, however, that some guarantee on the part of the American Government will be necessary to make the agreement work smoothly and efficiently.

Mr. Hayama was asked if members of the Japanese industry had in mind the form which such a guarantee should take. In reply Mr. Hayama indicated that his instructions were not specific on this point.

It was suggested to Mr. Hayama, therefore, that it probably would be more satisfactory for the representatives of the cotton textile industry in the two countries to begin their discussions of details of a private agreement. It might be that the Japanese representatives would then find that there was no reason to fear that the arrangement would not work smoothly under a strictly private agreement. If it appears to the Japanese industrialists that some action or guarantee on the part of the two Governments, or particularly of the American Government, is desirable even after details of a private arrangement have been fully explored, then the matter can be brought to the attention of this Government again. Undoubtedly this Government would be prepared, in such case, to give sympathetic consideration to any practical measures which might be taken.

This reply appeared satisfactory to Mr. Hayama and he stated that he would communicate with Mr. Inouye, Commercial Secretary of the Embassy in New York, so that Mr. Inouye might get in touch with Dr. Murchison, President of the Cotton Textile Institute, and make arrangements for opening the discussions between representatives of the two industries.

  1. Joseph W. Ballantine, of the Division of Far Eastern Affairs.