Office of the Historian

740.00119 PW/11–2045

Mr. H. D. Maxwell, Member of the United States Reparations Mission to Japan, to Mr. Justin R. Wolf of Mr. Pauley’s Washington Office55
[Tokyo,] 17 November, 1945.

CA 54884.56 “Following discussions with the Supreme Commander and his staff we have delivered the following letter57 outlining information needed now for development U.S. reparations policies in Japan:

  • ‘1. As I have already said to you, I deeply appreciate the efficient and constructive assistance which my staff and I have received from your whole organization since our arrival here in Tokyo. You have set a high standard of service and cooperation, and I hope that, in turn, the work of the reparations mission, by clarifying reparations policy as rapidly as possible, may facilitate your work as Supreme Commander. This work in developing the broad aspects of the U.S. reparations policy for Japan consistently with our policies elsewhere is closely related to, and in many ways dependent upon, your responsibility as the Supreme Commander for the Allied Powers in Japan. I therefore doubly appreciate this opportunity of working in complete understanding with you.
  • ‘2. In further development of the matters which we discussed on 14 November, and in order that we may carry out the terms of the [Page 1000] Potsdam and Cairo declarations,58 I wish to ask your headquarters to furnish me the following statements:
    (a)
    It is, as you know, the policy of the government of the United States to eliminate or restrict the productive capacity of Japanese industry which constitutes a war potential. To guide us in developing a reparation program which will help to achieve this end, I will need as much information as can be made available concerning the industrial economy of Japan, including:
    (1)
    A list of plants designed and devoted to the production of arms, ammunition and implements of war, including naval combat ships, aircraft, and aviation engines.
    (2)
    Industry studies covering the following categories: iron and steel, coal, other mining, light metals, other non-ferrous metals, shipbuilding, machine tools, railroad equipment and rolling stock, automotive machinery, electric machinery, other machinery, electric power, chemicals, food processing, petroleum (natural and synthetic), forest products, cement and other building materials, rubber and products (including synthetic), textiles and leather, fisheries products, ceramics, communications and communications equipment, handicraft, cultured pearls, tea, and other items of export significance.
    (3)
    In addition, it would be helpful to me and valuable for the U.S. Government to have any specific recommendations or suggestions which your [you or] qualified members of your staff may care to offer with reference to the methods of getting at and restricting or eliminating those Japanese industries or processing stages which serve to give Japan a position of control in East Asia. In providing these studies, any combination or further division which meets your convenience will, of course, be acceptable.
    (b)
    My second request is for an overall import-export program for Japan proper (excluding imports for occupation forces) for the year 1946, broken down by quarters or in such other way as you find convenient. May I also have the same material for 1947 as soon as this can be assembled? Both imports and exports should be specific, indicating the items as well as the values involved. In preparing this program it will, of course, be necessary to make certain assumptions of a policy nature. To the extent that the statement is prepared for my use, the following guiding assumptions are to be made:
    (1)
    There will be an immediate removal or destruction of all plants to be included in the mandatory removal list referred to in sub[-]para[graph] (a) (1) above.
    (2)
    There is to be no production of iron or steel in Japan for export, though limited amounts will be available for fabrication in light equipment and gadgets for export, with emphasis on products absorbing a large amount of labor. An estimate of annual steel capacity of some two million tons would seem adequate, based on the 1926–1930 average.
    (3)
    Metal working capacity is to be restricted to a basis commensurate with allowed steel capacity.
    (4)
    Japanese living standards in food and textiles consumed domestically are to be computed at figures no higher than those of comparable populations of neighboring allied peoples who were overrun and pillaged by the Japanese.
    (5)
    Imports required to meet such living standards and internal costs of occupation in Japan proper are to be chargeable against available exports ahead of reparations from current production.
    (6)
    Japan is to be given access to raw materials required for the restricted peae[e-]time economic activities contemplated above under rigid control by SCAP.
    (7)
    Japan is to be permitted to export commodities and to establish credits to finance approved imports, under rigid control by SCAP.
    (8)
    There is to be no increase of the Japanese merchant marine by Japanese construction beyond the completion of ships, not to exceed 5,000 tons, designed primarily for inter-island and short haul trade now under construction or available through repair.
    (9)
    Agriculture is to be developed to a maximum with self sufficiency as the objective, allowing for the manufacture of the necessary fertilizers.
    (10)
    In both imports and exports the policy will be such as will, as far as possible, give economic aid to the allied countries injured by Japan and will, at the same time, involve minimum danger of Japanese control over the economies of others.
    The assumptions here listed are for purposes of computation in developing the requested import-export program. The nature of the balance sheet thus developed will serve to guide the final policies determined upon. I shall wish to discuss the import-export picture with you as soon as the approximate figures become available.
    (c)
    My staff reports that your headquarters is already gathering and making available to my mission complete listings of Japanese foreign investments, Imperial assets, and so forth. These are most helpful. In this area I shall need full information concerning the following:
    (1)
    Stocks of gold, silver, precious metals and stones now on hand in Japan and an estimate of the future production of the same.
    (2)
    Foreign currencies and foreign deposits on hand and under control of the Japanese government or its nationals.
    (3)
    As complete and detailed data as possible concerning all property of any nature located outside Japan proper, in which the Japanese Government or its nationals have an interest, direct or indirect.
    (4)
    A complete inventory of the assets of the Imperial household.
    (5)
    All available data concerning the 15 largest Zaibatsu, including, to the extent possible, a physical inventory of their holdings within Japan proper and abroad.
    (6)
    A summary statement (estimated, if necessary) of stocks of industrial raw materials and operating supplies, including fuels, on hand in the home islands as of some recent date.
    (d)
    In order to compute the availability of resources for distribution as reparations, I shall need an estimate or summary of anticipated occupation costs, so classified as to show separate imports of occupational forces, other than munitions, and internal expenditures in Japan other than pay of troops. This material may be arranged in any way most convenient for you.
  • ‘3. Would it be unreasonable to hope for the materials requested above by December 1st? We will appreciate the receipt of material as it is developed, even in tentative form.
  • ‘4. Though I have made this letter comprehensive, you will recognize that it is preliminary in that it reflects my needs as I see them now. If, as I proceed further, additional information becomes necessary, I trust that I may similarly call on you for assistance. If any elements of my requests for information require further clarification, my staff and I are at your service.’ Signed: Edwin W. Pauley.”

Most of this information already available as excellent preparations already made before our arrival.

You should inform SWNCC,59 Edward Martin60 and others immediately concerned.

  1. Copy of telegram transmitted by Mr. Wolf in his letter of November 20 to the Director of the Office of Far Eastern Affairs (Vincent).↩
  2. Quoted portion of this document signed by Mr. Pauley.↩
  3. Dated November 16.↩
  4. July 26, 1945, and December 1, 1943, respectively; see Foreign Relations, The Conference of Berlin (The Potsdam Conference), 1945, vol. ii, p. 1474, and Foreign Relations, The Conferences at Cairo and Tehran, 1943, p. 640.↩
  5. State-War-Navy Coordinating Committee.↩
  6. Edwin M. Martin, Chief of the Division of Japanese and Korean Economic Affairs.↩