611.9417/79
The Ambassador in Japan (Grew) to the Secretary of State
[Received March 9.]
Sir: I have the honor to report that Mr. Dickover of this Embassy had a conversation with Mr. Saburo Kurusu, Chief of the Bureau of Commercial Affairs of the Foreign Office, on February 16, 1936, in which Mr. Kurusu expressed a certain amount of disagreement with the policy of the Department of State in considering seriously the various petitions from American manufacturers for the restriction by informal trade agreements of small items of Japanese exports to the United States. Without attempting to reproduce the entire conversation, which lasted some two hours, a summary of Mr. Kurusu’s argument is given below.
Mr. Kurusu said that formerly, when American manufacturers who might actually represent very insignificant interests wanted protection from the competition of foreign goods, they approached their Congressmen with petitions for higher tariff rates on the competing articles. The Congressmen, obliged to consider the interests of their constituents, usually succeeded in obtaining the tariff increases by the “log-rolling” system, even though only a very small group of people might be benefitted by the tariff increases, at the expense of the rest of the nation. This system, however, naturally resulted in excessively high tariff walls and apparently has been abandoned by the United States, which has substituted trade agreements for tariffs as a means of restricting competition from abroad. American manufacturers now go to the Department of State with their petitions for the restriction of imports of competing goods from foreign countries.
Mr. Kurusu said that the dissatisfaction in Japan now arises because the Department apparently, like the Congressmen in former days, gives consideration to every petition which comes in, even though the industry in question may only give employment to five or six small factories in New Jersey. Therefore the result is the same as it was in the days of tariff legislation. The Japanese are faced with the restriction or prohibition of the imports of their goods, even though the items in question may be small, such as velveteen or woolen gloves, which the Department has brought up recently. The imports of velveteen from Japan into the United States amount only to around a quarter of a million dollars per annum, and the imports of woolen gloves amount only to around $125,000. These are insignificant items as compared with the total foreign trade of the United States, and are especially insignificant when the fact is taken into consideration that the United States has a large excess of exports to Japan over imports from Japan.
[Page 847]Mr. Dickover remarked that the American excess of exports was due largely to the Japanese purchases of American raw cotton, and that it was a well-known fact that the Japanese were searching eagerly, in North China, the Philippines, Siam, Brazil and elsewhere, for other sources of a supply of cotton than the United States. If Japan succeeded in reducing its imports of cotton from the United States, the United States would have to look for other markets for its cotton and would have to conserve its domestic market for cotton textiles. That was one reason why we were trying to protect our domestic markets.
Mr. Kurusu ridiculed the idea, held by many Japanese, that Japan could in the near future find other sources of raw cotton than the United States. The development of cotton growing in North China or Brazil would take twenty years or more. In Japan, however, the restriction of exports of small items to the United States creates present difficulties. Not only are the people becoming restive under the pin-pricks of requests from the Foreign Office for voluntary restriction of their exports to the United States, but the Foreign Office itself is hampered in its work of trying to assist the American manufacturers of and dealers in petroleum products and automobiles. The importation and sale of American petroleum products have already been put upon a quota basis by the Petroleum Industry Law, and the importation of American automobile parts and their assembly in Japan will be restricted as soon as the Diet passes the proposed Automobile Industry Law. He (Mr. Kurusu) has been fighting to obtain more liberal treatment for American oil and automobiles, but now his efforts are being met with the argument that the United States is restricting, or asking the Japanese to restrict, all sorts of Japanese commodities, including cotton textiles, canned tuna, pencils, porcelains, matches, cotton rugs, velveteen and woolen gloves. These are small items, but their restriction is encouraging the Japanese to ask their Government for restriction of large items of exports from the United States to Japan, such as petroleum products and automobiles, the Japanese purchases of which amount to many millions of dollars annually. Mr. Kurusu therefore was of the opinion that if we hoped to obtain more liberal treatment of our large items of export to Japan, we should not irritate the Japanese by asking them to restrict their exports of small items to the United States.
The Asahi of February 15, 1936, contained an article (which may have been inspired by the Foreign Office) to the effect that, although Japanese imports from the United States exceeded Japanese exports to the United States in 1935 by Yen 274,000,000, the United States is trying to check imports from Japan, such attempts having become more and more frequent recently. The Japanese Foreign Office, fearing [Page 848] friction in American-Japanese commercial relations over these minor matters, has been endeavoring to exercise control over the exports of sundry articles, but despite these efforts, the tendency in the United States to restrict imports from Japan is growing stronger. The indications now are that the Foreign Office has decided to adopt the firm attitude of refusing further American demands of this nature, in view of the present excess of imports from the United States over exports to that country. (The article continues with the statement that when Mr. Grew, the American Ambassador, left Japan recently on leave of absence, Mr. Hirota proposed to him an adjustment of trade relations between the United States and Japan, but that the Ambassador returned to his post from leave without having secured any definite opinion from the American Government, as his attention while at home was occupied with the Presidential election which was then taking place!)
There is enclosed a clipping from the Osaka Mainichi and Tokyo Nichi Nichi, English Edition, of February 13, 1936,34 containing an editorial on the subject of American-Japanese trade. The newspaper states that the moves in the United States to restrict the imports of Japanese cotton textiles cannot be understood in Japan, in view of the large excess of exports to Japan over imports from Japan. The newspaper advises the conclusion of a reciprocal economic agreement (presumably similar to that concluded between Japan and British India), whereby in return for guaranteeing the purchase of a stipulated amount of raw cotton, the Japanese will be permitted to sell a stipulated amount of cotton textiles in the United States. Such an agreement is advocated “so as to solve the basic problem and seal forever the sources of American complaint”.
These two articles, taken in connection with Mr. Kurusu’s conversation with Mr. Dickover, indicate a very real and growing resentment in Japan against continued requests from the United States that the Japanese exporters voluntarily restrict their shipments to the United States. The Embassy is also inclined to share the opinion of Mr. Kurusu that it may become increasingly difficult to obtain liberal treatment for American manufactured goods in Japan if we continue to ask the Japanese to restrict their exports to the United States.
Respectfully yours,
- Not reprinted.↩