Memorandum of Conversation, by the Assistant Chief of the Division of Far Eastern Affairs (Ballantine)

Participants: Mr. Sayre
Mr. Suma, Counselor of the Japanese Embassy
Mr. Ballantine

The exchange of memoranda providing for the continuation of the Philippine cotton textile agreement for one year from August 1, 1938, having been effected,40 the texts of the documents exchanged were compared with the texts of the drafts originally agreed upon. In handing Mr. Suma the Department’s note, Mr. Sayre observed that our Government had at the instance of the Japanese Government agreed to the omission of the phrase “from all sources” in the second paragraph of our note on the basis of Mr. Suma’s oral assurance that notwithstanding the omission of this phrase it was clearly intended that the agreement applied to imports into the Philippines of Japanese piece goods from all sources. Mr. Suma assented to this interpretation. Mr. Sayre further observed that in drafting this agreement we had been ever mindful of the desirability of retaining its character as a gentleman’s agreement and therefore we had avoided defining its terms too narrowly. Mr. Sayre pointed out that even without violating the letter of the agreement it might be possible for Japanese exporters to flood the Philippine market by utilizing large carry-overs from previous quarterly periods to bunch heavy shipments in subsequent quarters. Mr. Sayre said that it was quite apparent that such a procedure would be entirely contrary to the spirit of the agreement, the underlying purpose of which was to ensure against any sudden dislocations or disturbances of the market and that it was therefore desirable that shipments be distributed as evenly as possible through the four quarterly periods. Mr. Suma said that he would particularly impress upon his Government and upon the Japanese exporters the importance of this point, the force of which he appreciated, in order to avoid any detrimental influence upon Japanese-American trade relations.41

There was then discussed a draft of a proposed press release. Mr. Suma demurred to the giving out of any details regarding the modifications made in the substance of the agreement but finally agreed to submit to his Government for approval the following draft of a proposed press release:

[For press release issued by the Department on July 27, see Department of State, Press Releases, July 30, 1938, page 69.]

  1. Supra.
  2. On January 7, 1939, Mr. Ballantine noted that “Japan is far behind her allotted quota under the agreement”. (611B.9417/307)