Statement by Ambassador Edwin W. Pauley, Personal Representative of the President of the United States and Head of the United States Reparations Mission to Japan

(For advance transmission to editors of A.P., U.P., I.N.S. and Reuters, for release in morning newspapers of December 7, 1945, west longitude date.)

Four years ago today Japan attacked Pearl Harbor. America will never forget the attack. Japan will never forget the consequences.

The civilized world now faces two duties with regard to Japan. First, we must make impossible a militaristic comeback. There must never be another Pearl Harbor. Second, a way must be opened up for the development, in the future, of a self-respecting Japan, economically stable and committed politically, without reservations, to a democratic way of life. The work of the reparations mission entrusted to me by President Truman has been directed to the achievement of these two aims.

General MacArthur has thrown open to me all the material available. After study of this material, consultation with members of his staff, and extensive personal observations by myself and my staff, I have come to some firm conclusions.

First and foremost, it is necessary to recognize that the equipment built up in Japan during the past generation consisted of plants for the purpose of waging wars of aggression. It was further overexpanded during the aggression in China, and was finally turned loose against the United Nations four years ago today.

In the course of the war, we damaged these war plants sufficiently to force Japan to surrender unconditionally. Because Japan surrendered without a last ditch stand, many people have assumed that she is now helpless industrially. The superficial appearance of many bombed cities encourage[s] this easy view. The fact is that Japan’s industrial equipment was overwhelmingly designed for war. Despite all the destruction, Japan still retains, in workable condition, more plant and equipment than its rulers ever allowed to be used for civilian supply and consumption even in peaceful years. That surplus must be taken out. To complete the demilitarization of Japan by taking it out will not mean the complete deindustrialization of Japan. I want to be very emphatic on that point. Figures concerning one key industry will show what I mean. In steel, and in machine tools and other machinery made from steel, Japan’s own figures show that she [Page 1008] still has, in workable condition, more than twice the facilities that she had when she invaded Manchuria in 1931.

The removal of this surplus, especially to neighboring Asiatic countries, and also to other countries whose war effort and sacrifice entitle them to reparations, will help to raise their living standards without depressing the standards of Japan, since only excess capacities are in question. Lowered standards in Japan are primarily a question of political and administrative disorganization naturally resulting from a thoroughly deserved military defeat. It is up to the Japanese to elect themselves a government which will clean up that part of the mess.

In reparations, I am recommending to President Truman an interim program of removals, to be begun as soon as apportionment and shipment can be supervised by Allied observers. These interim removals will probably be below the total sum which the Allied Governments will eventually allocate to reparations. The interim removals should remove all doubts on the subject of policy, and set the pattern for implementing action.

I am recommending that the following quantities of plant and equipment, in the following categories, be designated for interim removal:

Machine tools

1. Half the capacity for the manufacture of machine tools.

2. All equipment in all Japanese Army and Navy arsenals (except for equipment useful solely for making arms, ammunition, and implements of war, which will be destroyed), in the entire aircraft industry, in all plants making ball bearings and roller bearings, and in all plants making aircraft engines. I estimate that the interim plan will remove from Japan between 350,000 and 400,000 machine tools.


3. All equipment and accessories in 20 shipyards to the extent it is not needed for the repair of shipping essential to the occupation.


4. All steel working capacity in excess of 2,500,000 tons per year. Japan’s admitted present steel capacity is in excess of 11,000,000 tons, as compared with 1930 when Japan produced 2,300,000 tons of ingot and consumed only 1,700,000 tons of finished steel.

Electric power

5. Half of the coal-burning electric generating plants in Japan. This will leave enough for stand-by use to supplement hydro-electric plants.

Chemical industry

6. All contact process sulphuric acid plants, except those necessary to recover waste gases from zinc, lead, copper and other heavy metal smelters; the most modern of Japan’s four large Solvay process sodaash plants, and 20 out of 41 of the most modern large plants for the production of caustic soda.

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Light metals

7. All capacity for producing magnesium and alumina, and for the reduction of alumina to aluminum, except facilities for processing scrap, and all strip mills, rolling mills, extrusion presses, etc., used in finishing magnesium and aluminum.

I have also made several other recommendations to President Truman, listed below:

External assets

8. Deprive all Japanese, including the Japanese Government, the Emperor and the Imperial Household, and the Zaibatsu, of the ownership or control of any assets located outside Japan proper, including Formosa, Korea, the Manchurian and other provinces of China, Malaya, and the Netherlands East Indies, as well as other Allies and neutral countries. All Japanese financial and economic penetration of other countries must be wiped out.

Gold and precious metals

9. The bulk of the gold and other precious metals now amassed in Japan should be shipped to the United States Mint in San Francisco, to be held in custody pending decision as to its disposal. The shipment of this treasure will not prejudice any later decision as to its use to pay for occupation costs, imports, reparations, or restitution.

10. To aid in carrying out the policies which General MacArthur has announced for destroying the big holding companies or zaibatsu, I have recommended that in reparations removals from Japan priority be given properties owned or controlled by the zaibatsu. Other factors being equal, a plant owned or controlled by one of the zaibatsu should be taken in preference to one owned by independent private enterprise. When this job has been completed, it will contribute materially to the rehabilitation and stabilization of Eastern Asia as a whole. This program will also open to the Japanese people themselves an honorable, industrious, and peaceful future. We must always remember, however, that in comparison with the people she has overrun, Japan has the last priority.

The above press release was delivered to official press representative for release December 7, Washington time.