The Navy Department to the Department of State 74

Proposed Financial Directive for the Japanese Mandated Islands in the Central Pacific


The currency to be used in the Japanese Mandated Islands during the period of occupation will be U. S. dollar notes overprinted “Hawaii”, hereinafter referred to as H dollars, and regular U. S. coins. As soon as practicable after the occupation of any area a proclamation will be issued declaring the H dollar legal tender in that area.
The present rate of exchange between the H dollar and any Japanese yen currency will be one H dollar for 20 yen. Transactions at any other rate will be prohibited under penalty applying both to the local population and to the personnel of the Armed Forces.
All foreign financial and foreign trade transactions and all exports and imports of currency will be prohibited, except as permitted under regulations issued by the area commander. Safeguards similar to those now imposed in Hawaii will be imposed in order to minimize the exportation of H dollars to any area other than Hawaii.
All postal savings accounts or other accounts held in financial institutions will be blocked and will remain subject to the control of the area commander. Withdrawals from any such accounts will be effected in dollars at the decreed rate of exchange. Within specified limits individuals may be permitted to withdraw amounts from their blocked accounts for ordinary living expenses. Business enterprises may be permitted at the discretion of the area commander to use their funds for normal local operations. The program will be administered in a flexible manner so as not to interfere with the restoration of financial and commercial activities approved by the area commander.
Accounts and other assets held by, or on behalf of, the following persons will for purposes of safeguarding, pending determination of [Page 1189] future disposition, be impounded and dealt with subject only to instructions issued by an Enemy Property Custodian appointed by the area commander:
Individuals who are not allowed personal freedom, including internees and prisoners of war, and business enterprises owned or controlled by such individuals,
Persons resident in enemy or enemy-occupied territory and enemy agencies or organizations,
Other absentee owners and holders.
Business enterprises controlled directly or indirectly by the enemy, or acting directly or indirectly for the benefit of the enemy.
As soon as practicable all Japanese (yen) currency will be withdrawn from circulation in the following manner:
At the earliest moment, but under no conditions later than 90 days after occupation of an area, all Japanese military scrip or other yen currency within the area will be surrendered. A proclamation to this effect will be issued immediately upon occupation of the area setting forth, among other items, the manner and place of surrender.
For the yen currency surrendered on or before the date specified in the proclamation H dollars will be given at the decreed rate of exchange in an amount decided by the area commander, but in no event to exceed fifty dollars (1000 yen) to an individual. All yen currency surrendered by an individual in excess of the aforesaid maximum will be deposited to a postal savings account, or to an account in any other financial institution, which accounts will be blocked in accordance with the provisions of paragraph 4 above.
If the initial supply of available U.S. coins is insufficient, a proclamation may be issued to authorize temporary local use beyond the date specified of Japanese yen currency in denominations of less than 20 yen. All Japanese currency in denominations of 20 yen and over will be declared not to be legal tender after the date specified, and may be accepted thereafter only under express approval of an authorized officer who should satisfy himself as to the source of the funds or the inability of the applicant to have surrendered the currency prior to the date specified. As soon as practicable all yen currency will be removed from circulation.
The military authorities will have the authority to maintain existing tax law to the extent desirable and to raise such contributions for the administration of the islands as are consistent with international custom and usage. Accordingly new taxes may be imposed and old taxes modified when deemed necessary by the military authorities.
None of the tax receipts or other revenues will be used for the payment of principal or interest on Japanese Government obligations.
The area commander may set up such safeguards and penalties as he may deem advisable to carry out these provisions.
Appropriate records will be kept of all financial transactions.
  1. Handed by a member of the Occupied Areas Section of the Office of Naval Operations to the Chief of the Division of Far Eastern Affairs (Ballantine) on December 23, 1943. Mr. Ballantine consulted other officers of the Department and then replied that the Department perceived no objection to the contents of the directive. It was sent on December 28 to the Commander in Chief, Pacific Ocean Areas (Nimitz) by the Chief of Naval Operations (King).