Government be made either in Washington and London or in Tokyo before the holidays-(a) because not having fulfilled the storage promises the foreign oil companies are in the position of lawbreakers and are liable as penalization to have their 1937 sales quotas reduced unless they are supported by diplomatic measures and (b) because the anticipated approval by the Tariff Investigation Commission of the proposed revision of the petroleum tariff should be forestalled. Any discriminatory tariff revision as the Department is aware would be contrary to the oral assurances given the oil companies. It is expected that the 1937 quota will be allotted and the tariff revision examined within the next few days. 2. I shall, however, take no action here without the Department's authorization and unless the British Ambassador takes an approximately simultaneous and similar step. Clive informs me that he is cabling similarly and urgently to London tonight. GREW 894.6363/300: Telegram The Ambassador in Japan (Grew) to the Secretary of State TOKYO, December 23, 1936-7 p. m. [Received December 23-9: 35 a. m.] 266. Embassy's 265, December 22, 8 p. m. 1. My British colleague informs me that he has just received his instructions to the effect that Eden agrees with your views and that Clive is to concert with me and to proceed as soon as possible to joint representations to the Japanese Government. Clive proposes that the two Embassies prepare an identic memorandum to be communicated tomorrow, the 24th, to the Minister for Foreign Affairs, either personally or in some other manner if the Minister cannot see us. 2. Please rush instructions if not already sent. I feel that our representations should be approximately simultaneous and substantially identical not joint and identic. 3. According to the telegram received by Clive, Eden also took advantage of an interview with Yoshida 93 to draw attention to the difficult position of the British oil interests because of the failure of the Japanese Government to live up to its promises. "Shigeru Yoshida, Japanese Ambassador in the United Kingdom. GREW 894.6363/300: Telegram The Acting Secretary of State to the Ambassador in Japan (Grew) WASHINGTON, December 23, 1936-1 p. m. 164. Your 264, December 19, 6 p. m., and 265, December 22, 8 p. m., and 266, December 23, 7 p. m. 1. Department approves of procedures suggested in concluding sentence paragraph 5 of your telegram 264 and you may so proceed if and when your British colleague is prepared to take similar action. For your guidance: The Department has not shared the view of your British colleague that there should be made "strong" diplomatic representations, for the reason inter alia that Standard-Vacuum, we understand, and Shell, we presume, have not decided on a definitive course of action in the event that the assurances desired are not forthcoming. It has seemed to us (see Department's 160, December 17, 2 p. m.) and we continue of that opinion, that circumspection is called for in the tone of representations until the companies are prepared to make such decision. Apparently, however, Department and Embassy are now in agreement as to the tone of the representations which should next be made to the Japanese Government. In view of the foregoing and after further careful consideration of the points raised in your telegrams under reference we do not, at least at this time, favor the making of representations to the Japanese Ambassadors at Washington and London. 2. Your 266, December 23, 7 p. m., just received. You are authorized, as per Department's telegram 160, December 17, 2 p. m., to proceed in accordance with the view expressed in paragraph 2 of your telegram 266. MOORE 894.6363/301: Telegram The Ambassador in Japan (Grew) to the Secretary of State TOKYO, December 24, 1936-6 p. m. [Received December 24-6: 34 a. m.] 268. Department's 164, December 23, 1 p. m. I carried out the Department's instructions in an interview with the Minister for Foreign Affairs this afternoon and after an oral presentation of the details of the situation I left with him an aide-mémoire based on the Department's telegram No. 160, December 17, 2 p. m., paragraph 2. The Minister said that he was unfamiliar with the subject but would study it and would reply as soon as possible. The Minister received 919456-54-57 my representations and the reading of the aide-mémoire in a wholly friendly way and his attitude remained thoroughly cordial throughout the interview. The British Ambassador made similar representations a few moments earlier. GREW TRADE RELATIONS BETWEEN THE UNITED STATES AND JAPAN; FURTHER DISCUSSION OF VOLUNTARY RESTRICTION BY THE JAPANESE OF EXPORTS TO THE UNITED STATES AND THE PHILIPPINES " 611B.9417/159 Memorandum by Mr. Roy Veatch of the Office of the Economic Adviser of a Conversation With the Counselor of the Japanese Embassy (Yoshizawa) [WASHINGTON,] January 7, 1936. 95 Mr. Yoshizawa called to say that the Embassy had received instructions from Tokyo in reply to the Ambassador's 5 cable (dispatched following the Ambassador's conversation with Mr. Sayre " on December 27 97) respecting an adjustment of the agreement covering imports into the Philippines of Japanese cotton piece goods. The Japanese Government had secured the agreement of the exporters to withhold shipments until after the end of January, and the Japanese Government had no objection to announcement of this fact by this Government. The Japanese Ambassador and Mr. Yoshizawa would like to call upon Mr. Sayre and discuss the rest of the instruction which they had received from Tokyo. Mr. Yoshizawa could offer only a hint of the nature of this instruction:-the Japanese Government would urge Japanese exporters to limit their shipments into the Philippines during the second six months period of the agreement to a total of 19,000,000 square meters rather than the 23,500,000 square meters which the exporters felt they were entitled to ship during this period (the Government's figure of 19,000,000 square meters is arrived at by subtracting the total of arrivals in the Philippines during the first four months of the agreement from the normal total of 45,000,000 square meters for the year, whereas the exporters' figure of 23,500,000 is 94 For previous correspondence, see Foreign Relations, 1935, vol. II, pp. 940 ff. 95 Hirosi Saito. *Francis B. Sayre, Assistant Secretary of State. "For memorandum of December 27, 1935, see Foreign Relations, 1935, vol. III, p. 1045. arrived at by subtracting the 26,000,000 from the maximum of 49,500,000 for one year, including a transfer of 10 percent from the second year.) As he left, Mr. Yoshizawa asked if any particular thought had been given to the problem of transshipments via Hong Kong and Shanghai, and he gave the impression that the Japanese exporters are still anxious about this part of the arrangement since they cannot control such shipments and in their opinion they threaten to upset the allotment of their total quota among the members of the Exporters Association. I replied that apparently it was impossible to find any way to handle this problem or the parallel problem of possible increases in imports into the Philippines of cotton goods from Shanghai mills without special quota legislation in the Philippines. I asked if Mr. Yoshizawa saw any other method and he replied in the negative. I then asked what his Government would think of action by the Philippine Government setting up quotas for all countries other than the United States, the Japanese quota to be based upon figures established by the voluntary agreement. Mr. Yoshizawa expressed his own opinion that his Government would have no objection to such an arrangement and would, in fact, favor it. He was of the impression that earlier instructions to the Embassy, stating that his Government would favor action by the Philippine Government to prevent the importation of Japanese goods transshipped via other ports, was intended to cover also the possibility of like action by the Philippine Government respecting imports of goods manufactured in Chinese ports. It was his opinion, and he was sure also the opinion of his Government and Japanese exporters, that increasing shipments from Shanghai mills, whether Chinese-owned or Japanese-owned, would be harmful to Japanese interests and to the successful working of the agreement. In order to be certain of the point, I asked if Mr. Yoshizawa was of the opinion that his Government would agree to such action by the Philippine Government (placing quotas upon direct shipments from all countries and transshipments of Japanese goods) if it were requested for an opinion. In reply Mr. Yoshizawa said that such action was clearly within the power of the Philippine Government and he saw no reason why it should not take such action independently and without any reference to Tokyo. I then put the question in another way and said that if action of this nature were contemplated the Embassy might be asked to inquire if the Japanese Government had any objection to such action, and he said that he was sure no objection would be raised. He then reiterated his belief that his Government and Japanese exporters do now favor such action and he made it particularly clear that he included direct shipments from Shanghai mills in this judgment. Japanese exporters have no more control over exports from these mills than they do over transshipments of their goods from other ports and they would like to have some arrangement made which would remove these complicating factors. 611B.9417/116 Memorandum by Mr. Roy Veatch of the Office of the Economic Adviser [WASHINGTON,] January 9, 1936. Conversation: The Japanese Ambassador, Mr. Seijiro Yoshizawa, Counselor, Japanese Embassy, Mr. Turner, 98 Mr. Veatch. The Ambassador called to deliver the response of his Government to the problem placed before the Ambassador by Mr. Sayre in their conversation of December 27, 1935. First, he was authorized to say that exports of cotton piece goods to the Philippines would not be resumed by Japanese exporters until after the end of January and an announcement to that effect might be made by the American Government. He was further authorized to say that the Japanese Government had secured the agreement of the Exporters Association to limit their quotas of shipments to the Philippines for the second half of the agreement1 period to a total of 19,000,000 square meters. This agreement represented a concession on the part of the exporters, since they considered it to be their right to export a total of 23,500,000 square meters during this period, taking advantage of the allowable transfer of 10 percent of the quota for the second year. Mr. Sayre expressed the opinion that this arrangement apparently represented no concession on the part of the Japanese from their position that the entire quota should be measured by arrival statistics only. He asked whether the Ambassador had received any response to the Ambassador's suggestion that 14,000,000 square meters should be deducted from the quota for the rest of the two year period and the Ambassador replied that his Government had made no mention of his proposal in its cable. Mr. Sayre referred again to the statistical basis of the agreement, i. e., the Philippine customs statistics of imports, based on liquida William T. Turner, of the Division of Far Eastern Affairs. "For memorandum of December 27, 1935, see Foreign Relations, 1935, vol. III, p. 1045. 1 1 For agreement, see memorandum of October 11, 1935, ibid., p. 1007. |