Memorandum by the Assistant Secretary of State (Grady) of a Conversation With the Commercial Secretary of the Japanese Embassy (Inouye)

Mr. Inouye called this morning by appointment. He stated that he had spent more than one-half of his life in the United States and had devoted his energies during most of that time to the building up of trade between his country and ours and that with the termination of the American-Japanese treaty the result of these efforts would seem to be lost. He said that he sympathized with the complaints which our Government had made regarding the treatment of American business interests in China and that he himself had made efforts to correct certain matters concerning which we had made representation. He referred to tung oil and handkerchiefs. He said that it was his sincere belief that conditions would steadily improve with reference to the treatment of our interests but that the time was rather short in which to correct the situation fully before the six-month period for the abrogation of the treaty expired.

Mr. Inouye said that the complaints we had made were based on army activities and were not confined to our trade and nationals but were general, affecting all foreign interests in China, including Japanese trade interests. In a word, he took the position of agreeing with our position but pleading for patience on our part while efforts which his Government was making would have time to bear fruit.

I replied that I hoped there would be a rapid and satisfactory improvement in the treatment of our trade and nationals; that we had spent many years in building up our trade in China and did not intend to withdraw; and that independent of complaints which our Government had made, I personally had heard on the Pacific Coast from business firms of my acquaintance that they were being gradually pushed out of China in the interest of Japanese firms.

He said that he would like to have us feel that he was at our service to present any facts to his Government regarding the experiences of our nationals. I told him that I thought his Government was fully supplied with facts.

He said he was anxious to build up good will between the two countries, and I replied that that would be a fairly simple matter if the Japanese authorities would see that our trade interests were adequately protected in the carrying on of their legitimate activities.

He was clearly concerned as to what we would do when the treaty ceases to exist, but I made no comments whatever on this point. The discussion was very friendly but very frank.

H[enry] G[rady]