Foreign Relations of the United States Diplomatic Papers, 1940, The Far East, Volume IV

811.20 (D) Regulations/156

Memorandum by the Assistant Chief of the Division of Far Eastern Affairs (Ballantine)²¹

[Washington,] July 22, 1940.

Participants:	Mr. Morito Morishima, Counselor of the Japanese Embassy
	Mr. Grady
	Mr. Ballantine

Mr. Morishima referred to press items (he mentioned the Washington Times-Herald and the New York Her odd-Tribune) to the effect that it is now planned to include scrap iron and scrap steel in the list of commodities to be subject to license under the National Defense Act. He alluded in this connection to a statement made (on June 8) by Mr. Berle to the Japanese Ambassador to the effect that so far as Mr. Berle was aware the imposition of restrictions on export of scrap iron and scrap steel was not for the present being considered. Mr. Morishima asked whether there was any change in the situation. Mr. Grady stated that he did not know what the basis was for the statements in the press regarding scrap iron and scrap steel. He knew of no decision involving the inclusion of those items in the list of commodities which would be made subject to the licensing system, but he did know, however, that this list was gradually being extended and might continue to be extended as the survey of the Advisory Commission to the Council on National Defense progressed.

Mr. Morishima then asked whether Mr. Grady could not undertake to make inquiry as to whether consideration was being given to restricting the export of scrap iron and scrap steel. Mr. Grady replied that he assumed that study was being given to the national defense needs in respect to a large variety of commodities and that for all he knew the question of scrap iron and scrap steel may have come up. He could not, however, undertake to make any inquiry such as Mr. Morishima suggested, as the deliberations of the Council were in confidence and as the divulgence of advance information in regard to the Commission’s plans might have unfortunate effects in various ways, such as, for example, encouraging speculation in the markets by brokers. He said, however, that he could assure Mr. Morishima that administration of the National Defense Act was being governed strictly in accordance with the national defense needs and decision as to the inclusion of any particular commodity on the restricted list would be based upon our national defense requirements. Mr. Morishima said that the Japanese Government attached great importance to scrap iron and scrap steel and that the Japanese Ambassador felt that non-inclusion of iron and steel scrap in the restricted list would make for better American-Japanese relations. Mr. Grady emphasized that this Government had been forced by the world situation to take steps to strengthen its national defense and that our national defense needs must be our first consideration and he added that in any case the decision on what commodities are to be included in the restricted list is not a matter for the Department but for Col. Maxwell²² who receives advice from the Advisory Commission to the Council on National Defense.

21. Initialed by the Chief of the Division (Hamilton) and by Assistant Secretary of State Grady.
22. Lt. Col. Russell L. Maxwell, U. S. Army, appointed Administrator of Export Control on July 2; see press release issued by the White House, Foreign Relations, Japan, 1931–1941, vol. ii, p. 216.