Report by the State–War–Navy Coordinating Subcommittee for the Far East10
Interim Reparations Removal Program for Japan
1. To prepare for submittal to such inter-Allied reparations authority for Japan as may be appropriate, U.S. recommendations with respect to the categories and amounts of industrial equipment to be subject to removal from Japan under an Interim Reparations Removal Program.
facts bearing on the problem
2. See Appendix “A”.11[Page 494]
3. See Appendices “B”11a and “C”.
4. In accordance with the recommendations submitted by Ambassador Pauley to the President, with modifications as provided for in SWNCC 236/4,12 paragraph 5 (c)(1), the action specified below should be taken with respect to facilities identified in the ten listed categories of Japanese industry. Such action, under the Reparations Removal Program, should be taken without prejudice against further removals that may be ordered under a final reparations program.
5. Machine Tool Industry
(Definition: “Plants and establishments primarily engaged in the manufacture of non-portable, power-driven machines designed to shape metal by the progressive cutting away of stock in the form of chips or shavings, or by abrasive action.”)
a. That portion of Japan’s capacity for the production of machine tools that is in excess of a balanced type-size aggregate of 27,000 units annually, should be made available for claim.
6. Army and Navy Arsenals
(Definition: “Plants and establishments owned and operated by the Japanese Army or Navy engaged in the development, production, maintenance, testing, or storage of equipment or supplies for use in war or warlike purposes. (Arsenal as defined herein embraces a broad category of facilities distinguished by their ownership rather than by the nature of the operation and departs from the more usual connotation of ordnance manufacture.)”)
a. All facilities within this category should be made available for claim, subject to the following limitations:
- Special Purpose Machinery and Equipment
- All machinery, equipment and accessories which by virtue of initial design, construction or major structural change are, as individual items, special purpose in nature and functionally limited to use in connection with equipment or supplies for war or warlike purposes, should be held pending further instructions concerning their disposition.
- Shipbuilding and ship repair facilities should be disposed of in accordance with the recommendations contained in paragraph 9.
- Non-armament Facilities
- These facilities which have been engaged in the production of military supplies essentially similar in character to such consumer goods as textiles, clothing, processed foods, fertilizers, fuels, pharmaceuticals and related and dependent industries should be left for disposal under [Page 495] the final reparations program, and not be made available for claim under the interim program, in order that they may be operated to supply the essential needs of areas under military control, if such is desirable in the judgment of the Supreme Commander for the Allied Powers. (Note: Privately-owned facilities that would fall in this category except for the ownership qualifications will be treated in a separate paper.)
7. Aircraft Industry
(Definition: “Plants and establishments primarily engaged in the manufacture or assembly of finished aircraft, airframes, aircraft engines, and aircraft propellers, or in supplying fabricated materials, semi-finished or finished parts, components, or accessories, (exclusive of arms and armaments, instruments and communication equipment) especially designed for incorporation in finished aircraft.”)
- All facilities in plants and establishments originally designed, constructed and equipped, or converted through major change in the nature of installed machinery and equipment to serve in this category should be made available for claim.
- Plants and establishments within this category, other than those covered in a above, the use of whose products by the aircraft industry, represents merely a diversion without major change in character of product from peacetime civil consumption, or in the nature of installed machinery and equipment, should not be made available for claim pending Allied decision as to the final disposition of the industry with which they are normally associated.
8. Ball and Boiler Bearing Industry
(Definition: “Plants and establishments primarily engaged in the manufacture or assembly of complete ball and roller bearings, or their major component parts, namely, balls, rollers, races, and cages.”)
a. That portion of Japan’s capacity for the production of ball and roller bearings that is in excess of 32.5 million yen (based on 1943–1944 average prices) per year, should be made available for claim. Facilities selected for removal should include all plants and establishments whose products are specifically adapted to use in aircraft or other war material.
9. Shipbuilding Industry
(Definition: “Shipyards, including all facilities, plants and establishments located within their confines, primarily engaged in the building, repair, or maintenance of steel ships over 100 gross tons”). The term “merchant shipping” when used in this report should be construed to include steel cargo and passenger vessels and tankers over 100 gross tons.
- All facilities located in naval shipyards whether publicly or
privately owned, that were originally organized or were converted
[Page 496] through major change
in the original structure or in the size and volume of installed
machinery and equipment to build, service, or repair naval combat
vessels or specialized naval auxiliary ships should be made
available for claim under the Interim Reparations Removal Program
subject to the following limitations:
- Special Purpose Structures, Machinery and Equipment
- All structures, machinery, equipment and accessories which by virtue of initial design, construction, or major structural change are, as individual items special purpose in nature and functionally limited to use for purposes of an exclusively military nature, should be held pending further instructions concerning their disposition.
- No facilities should be made available pending certification by the SCAP that they are not necessary for purposes of the occupation.
- That portion of Japan’s shipbuilding capacity, located in
shipyards other than those covered in a.
above, in excess of that necessary to build 150,000 gross tons of
merchant shipping annually and to service and repair a merchant
fleet aggregating 3.0 million gross tons, should be made available
for claim subject to the following limitations:
- No facilities should be made available for claim until such time as Japan’s merchant fleet is restored to a level which, in the judgment of SCAP, is sufficient to meet the needs of the occupation and Japan’s immediate merchant vessel requirements.
- Two 20,000 ton dry docks should be retained for purposes of servicing foreign ships touching at Japanese ports.
10. Iron and Steel Industry
(Definition: “Plants and establishments primarily engaged in the production of pig iron or steel ingot.”)
- That portion of Japan’s capacity for the production of steel ingot that is in excess of 3.25 million metric tons annually should be made available for claim.
- That portion of Japan’s capacity for the production of pig iron that is in excess of 1.75 million metric tons annually should be made available for claim.
11. Light Metals Industry
(Definition: “Plants and establishments primarily engaged in the production of alumina, primary or secondary aluminum and magnesium, and in the rolling and drawing of aluminum and magnesium and their alloys.”)
- All facilities identified within this category should be made
available for claim, subject to the following limitations:
- No facilities engaged in smelting light metal scrap into secondary ingot should be made available for claim.
- In cement plants converted to produce alumina from clays or shales, only the equipment introduced to effect such conversion should be made available for claim.
12. Thermal Electric Power Industry
(Definition: “Plants and establishments primarily engaged in the production of electric energy through the use of fuel (coal) as the basic energy source.”)
a. That portion of Japan’s installed thermal electric generating capacity that is in excess of 2.1 million kw, should be made available for claim.
13. Sulphuric Acid Industry
(Definition: “Plants and establishments primarily engaged in the production of sulphuric acid.”)
a. That portion of Japan’s capacity for the production of sulphuric acid that is in excess of 3.5 million metric tons annually, should be made available for claim. All facilities made available for claim should be of the contact process type, as distinguished from the lead chamber type, but should not include any contact plants, when they are serving as integral functional units in
- a non-ferrous metal smelting plant;
- a fertilizer manufacturing establishment in which the contact process plant is not supported by a lead chamber plant of at least equivalent capacity.
14. Soda Ash, Chlorine, and Caustic Soda Industry
(Definition: “Plants and establishments primarily engaged in the production of soda ash (sodium carbonate), chlorine and caustic soda (sodium hydroxide).”)
- That portion of Japan’s capacity for the production of chlorine and caustic soda in electrolytic plants which is in excess of about 60,000 metric tons of chlorine and about 66,000 metric tons of caustic soda, should be made available for claim.
- That portion of Japan’s capacity for the production of soda ash that is in excess of 500,000 metric tons, should be made available for claim. Removal of this excess soda ash capacity should be accomplished by seizure of one large modern soda ash plant, together with its integrated facilities for conversion of soda ash to caustic soda.
15. Preference for Zaibatsu Facilities
a. Among the criteria to be employed in the selection of individual plants and items of equipment for removal should be the principle of reinforcing the occupation objective of destroying Zaibatsu wealth and influence.
16. Assured Production Capacity Levels
- A program of assured production capacity levels for the ten industrial categories cited above, should be drawn up by SWNCC for submittal to, and approval by the appropriate inter-Allied authority.
- Such a program will be designed to provide authorization for SCAP to designate specific plants among those retained in Japan [Page 498] under the Interim Program that will not be subject to removal, even under the final reparation program. The purpose of such designation will be to eliminate the threat of removal and thus contribute to restoring the initiative of Japanese industrialists, the flow of capital into these enterprises, and the production of goods necessary to support the peacetime economy.
- The assured production capacity levels so established should be in all cases below the capacity levels now under discussion in the United States Government for retention under the final program.
17. It is recommended that:
- The State–War–Navy Coordinating Committee, after securing the comments of the Joint Chiefs of Staff from a military standpoint, approve the “Conclusions” in paragraphs 4 through 16.
- This report be transmitted for information to the Joint Chiefs of Staff, State, War and Navy Departments, and the United States representative on the Far Eastern Commission for his information.
- The “Conclusions”, paragraphs 4 through 15,13 with supporting data from Appendix “B” of this report, (to be put into appropriate form by the State Department) be transmitted to the appropriate inter-Allied reparations authority, when constituted, for action as a matter of priority.
- No parts of this document be made available for public release.
SWNCC 236/10, April 25, as revised April 30, was approved by SWNCC on May 9 subject to qualifying remarks made by the Acting Navy Department member (in SWNCC 236/16) as follows:
- “3. Before this Government is too firmly committed to a reparations policy, it would appear essential that a reasonably firm estimate of the cost of occupation should be prepared. This cost of occupation, in my opinion, should be presented as a first charge against all available Japanese assets, and this charge should be subtracted before this Government engages in any proceedings of a reparations commission.
- “4. Certainly as far as the value of capital goods is concerned, this country has little to gain in material value from those available in Japan. We have, however, much to gain in insuring that there is sufficient removal to bring Japan down to a post-war minimum compatible with requirements for adequate demilitarization. We must at the same time insure that Japan has sufficient capacity to support no more than a minimum economy sufficient to relieve us from the possibility of having to assist in supporting her.
- “It therefore appears that production capacity level for the various industries in Japan should be established as early as possible in the light of requirements for demilitarization, and for the support of a minimum economy.
- “5. Subject to the above remarks, I approve”.
In SWN–4214, May 15, the Secretary of State was informed that SWNCC 236/10 as amended had been approved and was being transmitted for information to the Joint Chiefs of Staff, the Departments of State, War, and Navy, and the U.S. member of the Far Eastern Commission (McCoy). (740.00119 PW/5–1546)↩
- Not printed.↩
- Not printed.↩
- January 8, not printed, but see memorandum by the State–War–Navy Coordinating Committee, January 14, p. 472.↩
- Paragraph 15 later became paragraph 16; change made in SWN–4357, May 29, to the Secretary of State, not printed.↩
- For Ambassador Pauley’s Report of December 18, 1945, to President Truman, see enclosure to his letter of the same date, Reference 1–a, in his Report on Japanese Reparations to the President of the United States, November 1945 to April 1946.↩
- Omission indicated in the original.↩