Foreign Relations of the United States, 1946, The Far East, Volume VIII

740.00119 P.W. 5–1646

Memorandum by Mr. Robert W. Barnett, of the Division of Japanese and Korean Economic Affairs, to Mr. John D. Sumner, of the Office of Financial and Development Policy

[Washington,] May 16, 1946.

Subject: U.S. Policy Regarding Reparations

Mr. Pauley’s letter to General MacArthur and press statements emanating from Tokyo regarding his current views on reparations³⁸ are as much news to us as to you.

As you know, in the United States proposal for the establishment of an Allied Reparations Committee “absorptive capacity” was mentioned as one of the possible criteria for making reparations allocations. When the U.S. proposal came up for study by the FEC there was an instant and almost unanimous disapproval of the inclusion of any such criterion. I believe that two things now can be said: (1) JK will not press for making “absorptive capacity” a criterion for apportionment; (2) if the United States is asked by claimant countries for aid in determining types of assets particularly suitable for transfer and useful employment in the receiving country, JK would strongly favor arrangements being made to provide such assistance.

38. For report on Ambassador Pauley’s letter to General MacArthur and press conference in Tokyo, see the New York Times, May 12, 1946, p. 23, col. 1.