hoped that, if the Japanese Government should come to that decision, it would make it completely clear to the Japanese public that the American Government had not taken any action without first consulting the Japanese Government. The Japanese Ambassador thanked Mr. Sayre for his efforts toward removing the possibility of misunderstanding over the matter under discussion, and he stated that he would not fail to report fully to his Government the thoughts and circumstances so frankly presented by Mr. Sayre. 611.946/317 Memorandum by Mr. Eugene H. Dooman of the Division of Far Eastern Affairs [WASHINGTON,] June 26, 1936. Conversation: The Japanese Ambassador; Mr. Seijiro Yoshizawa, Counselor, Japanese Em bassy; Mr. Sayre; Mr. Dooman. The Japanese Ambassador stated that he assumed that Mr. Sayre already knew, as a result of informal conversations which Mr. Yoshizawa had yesterday with officers of the Department, what he had been instructed to say with regard to the possibility of there being concluded a gentlemen's agreement on slide fasteners. The Ambassador went on to say that his instructions were to inform Mr. Sayre that, if action is to be taken by the American Government on the basis of section a of paragraph 336 of the Tariff Act, the Japanese Government would not deem it practical to proceed with negotiations such as those proposed, but that if action was to be taken on the basis of section b of the same paragraph, and "American valuation" declared on imports of slide fasteners, the Japanese Government would be prepared to look into the question of voluntarily regulating exports of slide fasteners from Japan. Mr. Sayre replied that the possibilities of reaching a satisfactory agreement had been very carefully looked into by the Department, and that we had reached the conclusion that it would be extremely difficult, if not impossible, to find a basis which would be satisfactory to both sides: that any figures which would be acceptable to the Japanese would arouse the domestic industry, whereas any figure satisfactory to the domestic industry would not be acceptable to the Japanese. He hoped that, if the President should take action to increase duties, the Japanese Government would make it clear to the Japanese public that the American Government had not taken such action arbitrarily but that it had previously consulted with the Japanese Government. The Japanese Ambassador said that he would, of course, not fail to impress upon his Government the necessity of letting the public in Japan know of the facts. He wondered whether Mr. Sayre could not assure the Japanese Ambassador that the President would not declare for "American valuation". Mr. Sayre stated that the Department has legally no part in the procedure laid down for the taking of action under paragraph 336 and that the question of the taking of final action can be decided only by the President. After some discussion, Mr. Sayre said that he would endeavor to let the Japanese Ambassador know in the event that the President should decide to return to the Tariff Commission its report for further consideration. Mr. Sayre stated that during the course of the conversation which he had recently with Mr. Kurusu, Japanese Ambassador to Belgium, Mr. Kurusu had pointed out that once the reports of the Tariff Commission are in the hands of the President, the circumstances are unfavorable for the conclusion of arrangements for voluntary regulation of exports by the Japanese. Mr. Kurusu had suggested that it would be advantageous to have set up a body which would follow trends in shipments from Japan and their effects upon American industries and markets, the body to advise Japanese shippers to regulate their shipments in such manner as to avoid, so far as possible, injuring American interests. Mr. Sayre added that the suggestion with regard to the setting up of a body had been discussed among various officers of the Department, but that it had occurred to him that it might be helpful in the meantime to the Japanese if he were to supply the Japanese Ambassador with a list of Japanese commodities which are now causing trouble, with perhaps a brief memorandum showing the kernel of the problem in each case. He believed that he could have such materials in the hands of the Japanese Ambassador next week. The Japanese Ambassador agreed that it would be extremely helpful to have such information. Mr. Sayre asked Mr. Yoshizawa to express his opinion with regard to the thought which Mr. Sayre had. Mr. Yoshizawa also agreed that it would be most helpful, but he believed that discussions should start as soon as possible with regard to the setting up of a body such as that suggested by Mr. Kurusu. The conversation then turned to press reports with regard to recent incidents in Peiping (See separate memorandum 65). Not printed. 611.003 Oils/79 Memorandum by Mr. Roy Veatch of the Office of the [WASHINGTON,] June 29, 1936. Mr. Hayama called to inform the Department of State of a cable which the Japanese Embassy had just received from the Foreign Office in Tokyo. This cable pointed out the very high tax on perilla oil and rapeseed oil and stated that the cultivating industry and oil industry in Japan have been thrown into confusion because of the fear that the tax will prove to be prohibitive on imports of these oils from Japan. Because of the size of this tax and the extensive value of the exports of these oils from Japan (totaling 30,000,000 yen last year) it is the view of the Japanese Government that the effect of the tax upon Japanese exports to the United States will be much more adverse than the tariff increases on cotton cloth and slide fasteners-it is felt that in fact there is no comparison. The Foreign Office states in the cable to the Japanese Embassy that in view of these circumstances the Japanese Government earnestly hopes that the United States Government will make some allowance for the carrying out of these taxes so as to mitigate the blow which will be given to Japanese exports to the United States, perhaps by means of the regulations which will be promulgated for the enforcement of the Act or by other measures. Mr. Veatch stated that he was sure the Department would receive this request sympathetically and would immediately have an examination made of the possibility of making some arrangements in line with this request. He feared that there was no discretion left by the language of the Act with respect to the collection of the tax on these oils but there might be some other way in which this Government could assist the Japanese Government in reassuring the industry in Japan with respect to the probable effect of the tax upon the trade in rapeseed oil and perilla oil. He was quite sure that the tax would not prove to be prohibitive and that the industry in Japan might not be as hard hit as was anticipated, although he recognized that planters in Japan and Manchuria must be very uncertain as to the future demand in the United States and therefore as to the supply which will be required from Japan. Mr. Veatch stated that he would see that information was sent to the Japanese Embassy as soon as possible with respect to whatever measures, if any, this Government would be able to take in order to mitigate the disruptive effects which the Japanese oil industry might feel as the result of the imposition of the new excise taxes or as a result of the fear which these taxes may have engendered. The Revenue Act of 1936 was approved June 22; 49 Stat. 1648. 611.9417/145 Memorandum by Mr. Roy Veatch of the Office of the Economic Adviser [WASHINGTON,] July 6, 1936. Conversation: Seijiro Yoshizawa, Counselor, Japanese Embassy; Toyoji Inouye, Commercial Secretary, Japanese Embassy; Tsuneo Hayama, Third Secretary, Japanese Embassy; Mr. Inouye spent July 6 in Washington at the suggestion of Mr. Yoshizawa in order to have a final discussion on a number of questions before his departure for Japan on July 9. He had spent most of the morning with Mr. Fox 67 discussing the possibility of an agreement between the American cotton textile industry and the Japanese cotton textile industry with respect to the American Market. Mr. Yoshizawa suggested an informal discussion with Mr. Veatch at luncheon and during the afternoon on a number of points so that the views of Mr. Inouye and of the Japanese Embassy might be made known to the Department of State. PROPOSED JOINT COMMITTEES ON JAPANESE-AMERICAN TRADE Mr. Inouye and Mr. Yoshizawa were both particularly interested in a further discussion of the possibility of creating joint JapaneseAmerican committees to attack the trade problems in which the two governments and the two peoples are interested. Mr. Yoshizawa said that he and the Ambassador had gained the impression when they talked with Mr. Sayre on the subject that Ambassador Kurusu had not left with Mr. Sayre a clear understanding of the Japanese suggestion that the two governments join in creating special committees to discuss and to advise upon the best means of handling actual or potential trade conflicts between the two nations. It was Mr. Yoshizawa's suggestion, therefore, that this question be discussed in greater detail.68 Mr. Veatch explained that he had written a rather complete memorandum upon his conversation with Mr. Inouye, Mr. Hayama and Mr. Kuroda on June 11, 1936, setting forth in some detail the specific proposals which Mr. Inouye had made regarding the creation of joint official committees in Washington and in Tokyo for the purpose of exchanging information regarding trends in Japanese-American trade and particularly with regard to potential conflicts. He stated that Mr. Sayre had requested that a study be made of this suggestion in 67 A. M. Fox, director of research, U. S. Tariff Commission. 68 Notation by the Economic Adviser: "I think this deserves encouragement. H[erbert] F[eis]" the interested divisions of the Department of State and he understood that some action would soon be taken upon the matter in the Department. Undoubtedly Mr. Sayre would be in a position to discuss the subject with Mr. Yoshizawa and the Japanese Ambassador in the near future. Mr. Inouye pointed out that his proposals would in effect merely continue in a somewhat more definite form the actual practice that has already been followed, since representatives of the Embassy and of the American Government have met frequently in Washington to exchange information and to discuss trade problems, and that similar conferences had been held between representatives of the American Embassy in Tokyo and the Japanese Government. He felt that it was most important, however, to regularize this procedure and particularly to make an effort through such committees to place information in the hands of the Japanese regarding potential conflicts arising out of United States imports from Japan. He himself always made an effort to secure whatever information he could from the Tariff Commission and the Department of Commerce regarding trends in the trade but he felt it would be much easier if this information could be prepared by the American Government and brought to the attention of the Japanese Government at regular intervals. Mr. Inouye dislikes the necessity of having to ferret out information himself and he also feels that when he alone on his own responsibility presents this information to his Government there is not a ready disposition to treat the information as important and as calling for action. If this sort of material could be gone over by the joint committee in Washington and that committee could counsel some action by the two governments in order to meet the situations disclosed, then he felt that the Government in Tokyo would be much more inclined to give serious consideration to the problems presented. Mr. Inouye discussed at some length his conviction that all of the trade problems in which the two governments were interested should be brought before the proposed official committees and that all information which could be secured from the trades regarding these problems should be collected by the respective governments and brought to the attention of these committees. Mr. Yoshizawa felt, however, that there were many problems affecting Japanese-American trade relations which required attention and action by private agencies before any appropriate action on these problems could be taken by the two governments. He said that it was well known that the American Government did not exercise great control over industry and business. He said it was also true that the Japanese Government frequently was unable to exercise any considerable control over industry and business in spite of the popular idea that the Japanese Government did have the power to control trade as it pleased. It was his feeling, therefore, |