894.00/12–2151
The Officer in Chargé of Economic Affairs in the Office of Northeast Asian Affairs (Hemmendinger) to Mr. Frank Waring, Economic Counselor in the Office of the United States Political Adviser to SCAP
confidential
Dear Frank: We have had two conversations during the past week with Mr. Russell Hale, Director of Foreign Trade in ESS, who is in Washington on temporary duty.
[Here follows a discussion of Mr. Hale’s view that Japan–China trade in the immediate future would not be of significant volume.]
[Page 1451]We feel that, in the aggregate, the possible volume of Japan–China trade is very great indeed, even in the short run, and that the limiting factor is more with Japan’s unwillingness to export the goods China needs than with the lack of availabilities in China. We have a great deal of respect for Hale’s judgment, however, and therefore are reluctant to toss aside his assessment of this situation. It would be a serious mistake, of course, to underestimate the potentialities of this trade.
Hale told us that in his opinion there would be no difficulty in getting the Japanese to go along with the United States in controlling exports to China and the rest of the Soviet Bloc in the post-treaty period. He indicated that the Japanese are anxious for our advice and guidance on this problem. This view surprised us somewhat since we have been conditioned by the press clippings which indicate considerable support in Japan for expanded trade with China. We realize that much of this agitation comes from certain Osaka business men and that the Liberal Party itself has been generally noncommittal. Yoshida’s recent statement relative to the possibility of setting up an overseas agency in Shanghai and his suggestion to Mr. Sebald (urtel 1279, December 14)1 that “Japan might be able to play an important role in weaning China away from domination by Soviet politburo,” make us question Hale’s analysis of the situation. Here again, it would be unfortunate for us to underestimate the problem. Since this question is a very active one at the moment, we should appreciate any information and analysis your people can send us concerning it.
[Here follows a discussion of the Department’s economic reporting procedures.]
Best regards from all of us,
Sincerely yours,