740.00119 PW/4–3046

Memorandum by Ambassador Edwin W. Pauley to the Assistant Secretary of State for Economic Affairs ( Clayton )

In connection with my pending trip to investigate the implementation of our programs of reparations from Germany and Japan there are certain matters which I feel should be called to your attention at this time.

I am very much discouraged by the progress which has been made to date in implementing such programs. I am particularly concerned about the following:

(1) On December 18, 1945 I submitted a report to you, entitled “Reparations from Japan—Immediate Program”,20 and shortly thereafter you transmitted this report to the Secretaries of State, War and Navy with your recommendation that it be implemented. The recommendations contained in this report included programs for removals of industrial machinery from Japan proper; depriving Japan of all external assets; shipping gold and precious metals to the U.S.; and using the reparations program to destroy the Zaibatsu.

It has only been within the last few weeks that the program for removal of industrial machinery from Japan has been presented to the Far Eastern Commission for their consideration, and then it was only presented on an informal basis.

No action whatsoever has been taken on the other recommendations which were contained in my interim report, namely: (a) The recommendation [Page 507] that a vesting decree be issued by General MacArthur which would completely divest the Japanese of all external assets; (b) The recommendation that the gold and other precious metals now in custody of U. S. Forces in Japan should be shipped to the United States Mint at San Francisco to be held in custody pending decision as to its disposal; and (c) The recommendation for using the reparations program in breaking up the Zaibatsu.

Edwin W. Pauley
  1. This was the same report as that submitted to President Truman.