Your telegram D.447. Private trade with Japan and fixing of yen rate.
1. We are in full agreement with your views that single commercial rate of exchange for the yen is most desirable and should be established, if possible, before private trading is resumed. We also agree that it would be preferable to place responsibility for recommending an appropriate rate on the Japanese Government.
2. American proposal appears to contemplate that S.C.A.P.
commodity experts would in effect determine differing exchange rates commodity by commodity or even transaction by transaction.
As you point out, this would present great practical difficulties and, in addition, it seems to us that the power to determine different exchange rates could be used by S.C.A.P. to interfere unwarrantably with normal competitive trading.
3. However, the case for immediate establishment of a single rate appears to us to be prejudiced to some extent by the precedent which has been established in the Anglo-American Zone of Germany where different rates for the mark are being fixed by the Joint Export-Import Agency. This has been recognised as a stop-gap arrangement only, but the Americans can use the same arguments to support postponement of establishment of a single rate for the yen. We should be glad of advice as to how the interim arrangements made for Germany are working out in practice and nature and extent of administrative difficulties which have been encountered.
4. We realise that an important difference between the current situation in Germany and the American proposals for Japan is that joint control is exercised in Germany whereas provision for control by S.C.A.P. in Japan means in effect that control would be entirely in American hands.
5. We have received a copy of Percival's  letter of 20th May to Whitman  pointing out that the yen exchange rate question has been left in an unsatisfactory position and seeking a full statement of the United States proposals and the reasons for them.
. We are repeating this telegram to our Representatives in Washington with instructions to them to act in concert with your representatives in pressing for establishment of single rate before private trading is resumed.