On the west coast, intense anti-Japanese sentiment developed. U.S. President Theodore Roosevelt did not want to upset Japan by passing laws banning Japanese immigration to the United States, as had happened with Chinese immigration. Instead, there was an informal “gentlemen`s agreement” (1907-8) between the United States and Japan, with Japan ensuring that there was very little or no movement to the United States. The agreements were reached by US Secretary of State Elihu Root and Japanese Foreign Minister Tadasu Hayashi. The agreement prohibited the emigration of Japanese workers to the United States and repealed the segregation order of the San Francisco School Board in California, which had humiliated and angered the Japanese. The agreement did not apply to the territory of Hawaii, which was then treated as separate from the United States. The agreements remained in effect until 1924, when Congress banned all immigration from Japan.  Similar anti-Japanese sentiment in Canada simultaneously led to the Hayashi-Lemieux Agreement, also known as the Gentlemen`s Agreement of 1908, with substantially similar clauses and effects.  A U.S. House of Representatives report detailing its investigation into the United States Steel Corporation stated that, in the 1890s, there were two general types of loose associations or consolidations between steel and steel interests, in which individual companies retained ownership and a high degree of independence: the “pool” and the “gentleman`s agreement.”  The latter type lacked a formal organization to regulate production or prices, or provisions for confiscation in the event of non-compliance.
 The effectiveness of the agreement was based on members` compliance with informal commitments.  In English contract law, the binding of an agreement must be intended to create legal relationships; but in business transactions (i.e. agreements that are not concluded between family members or friends), there is a legal presumption of an “intention to create legal relationships”. However, in the 1925 Rose & Frank Co v JR Crompton & Bros Ltd case, the House of Lords noted that the phrase “This agreement is not. a formal or legal agreement. is only a record of the intention of the parties was sufficient to rebut the presumption in question.  In the worst-case scenario, a gentlemen`s agreement may be entered into to engage in anti-competitive practices such as price fixing or trade quotas. Since a gentlemen`s agreement is tacit – and not bound as a legal and binding contract on paper – it can be used to create and enforce illegal rules. Gentlemen`s agreements, because they are informal and often un written, do not have the same legal and regulatory protection as a formal contract and are therefore more difficult to enforce.