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

740.00119 PW/10–246

Memorandum by the State–War–Navy Coordinating Committee to the Secretary of State

secret
SWN–4795

Washington, 2 October 1946.

By informal action on 2 October 1946 the State–War–Navy Coordinating Committee, after amending, approved SWNCC 236/24, a copy of which is enclosed.

It is requested that the State Department transmit the conclusions of the approved paper to the U.S. Member of the Far Eastern Commission with the recommendation that it be used as a basis for a Far Eastern Commission policy statement.¹⁹

For the State–War–Navy Coordinating Committee:

Ernest A. Gross

for

J. H. Hilldring

Chairman

[Annex]

Report by the State–War–Navy Coordinating Subcommittee for the Far East²⁰

Principles Under Which Advance Transfers of Japanese Reparations May Be Accomplished

the problem

1. To formulate the principles under which advance transfers of Japanese assets available for reparations may be accomplished prior to final determination of over-all national percentage shares.

facts bearing on the problem

2. See Appendix “A”.²¹

discussion

3. See Appendix “B”.

conclusions

4. It is concluded that:

a. It is the position of the United States Government that the Supreme Commander for the Allied Powers should effect immediate delivery of assets within Japan as advance payment on account of ultimate reparation shares providing:

(1) That such assets fall within categories of Japanese facilities, equipment or property which the Far Eastern Commission has declared as available for reparations transfer;

(2) That such assets should be delivered by the SCAP only to those countries—

(a) whose productive or transportation facilities, other than deep sea shipping, have suffered heavy damage as a direct result of Japanese hostilities, and

(b) which provide evidence that the immediate and useful employment of such assets is practical, and

(c) which provide evidence that the employment of rehabilitated, repaired or reconstructed facilities can contribute, directly, to immediate relief and rehabilitation requirements of the war devastated economy of the claimant country or, indirectly, to the relief needs of other parts of Asia devastated by Japanese armed forces;

(3) That no single country should claim or receive delivery of more than 5 percent in quantity or value of any single category of available assets as determined in paragraph (1) above, and authorized for transfer under the provisions of paragraph (2) above.

(4) That assets specified for delivery should represent, in their total quantity or value, no more than 15 percent of any single category of available assets as determined in a, above.

b. The SCAP should maintain such records as necessary to enable a reparations agency for Japan to account for any such advance transfers as offsets against ultimate fulfillment of approved and recognized overall national reparations claims.

c. If above percentages for relief transfers prove to be inconsistent with final allotments from various specific categories of assets available for reparations, a reparations agency for Japan should make the necessary adjustments or offsets in quantity, or value.

recommendations

5. It is recommended that after approval by the SWNCC, the conclusions of this paper be transmitted by the State Department to the United States Member of the Far Eastern Commission with the recommendation that it be used as the basis for a Far Eastern Commission policy statement.

[Subannex]

Appendix “B”

Discussion

Introduction

1. Considerable pressure has been developed both by Ambassador Pauley and by representatives of several countries, members of the Far Eastern Commission, to secure adoption by the Far Eastern Commission of a policy under which immediate advance transfers may be accomplished of Japanese assets available for reparations.

2. Only those assets which the Far Eastern Commission has declared available for reparations transfer should be delivered to claimant countries. The Far Eastern Commission has made its determination of availability of facilities in terms of various categories of industries. It is suggested on the one hand that no more than 15 percent of any single category be delivered under the formula proposed for advance transfers and on the other hand that no more than 5 percent of any single category be alloted to any single claimant country. The categories of industry already determined as available for interim removal are such that comparatively small unit transfers are feasible. For example, the recommendation for iron and steel removals provides that first consideration should be given to electric furnace capacity made up as far as possible of furnaces of individual charge capacity of 1½ tons or less. The recommendation for thermal-electric power removals would allow transfer of small power units within the two million kilowatts, more or less, declared obviously excess.

3. The United Kingdom has taken the stand that interim deliveries on reparations account cannot begin until over-all national reparations shares have been determined. It is believed that this position has been taken by the United Kingdom because of determination to prevent the U.S.S.R. from receiving any reparations allotment out of assets from within Japan. Mr. Pauley, on the other hand, considers deliveries of Japanese assets on advance account an operation which would serve to meet immediate relief requirements of war devastated areas and to expedite completion of the reparations settlement as a whole.

4. It has been proposed, therefore, that delivery of Japanese assets available for reparations on advance account be made to countries whose eligibility would depend upon whether or not they had suffered damage as a direct result of Japanese hostilities. All member countries of the Far Eastern Commission except the U.S.S.R. suffered from Japanese attacks upon their shipping. Hence, a limitation is introduced specifying that it is transporation other than deep sea shipping which is being referred to. It is believed that only China, the Philippines, the N. E. I., and British colonial possessions such as Burma, New Guinea, Malaya, and islands in the Indian Ocean and United States Pacific possessions should be eligible. This limitation would meet Mr. Pauley’s desire to help those who have suffered and the British desire to exclude at least the Russians and possibly the French from submitting claims for advance deliveries.

It is proposed that advance transfers would not be authorized unless sufficient evidence could be produced that the employment of facilities rehabilitated, repaired or reconstructed as a result of immediate delivery of Japanese assets would contribute directly to urgent relief requirements of war-devastated portions of claimant countries, or the relief needs of other parts of devastated Asia. It is proposed, moreover, that before delivery can be made, sufficient evidence should be provided that immediate and useful employment of transferred assets is practical.

The above provisions make it perfectly clear that the policy being recommended is one enabling the employment of surplus Japanese facilities, equipment or property for urgent relief purposes in Asia.

5. Responsibility for the implementation of the policy should rest with the Supreme Commander. In explaining this policy proposal to the Far Eastern Commission, the United States member should make it clear that claimant countries likely to receive favorable action upon their claim should facilitate action by requesting equipment which is likely to be found together within Japan, facilities which are inter-related and juxtaposed, and not present demands for trifling scattered items whose packaging and transportation would impose undue burdens upon the administrative agency. The Supreme Commander should maintain adequate records which would enable a reparations agency for Japan to account for advance transfers as offsets against ultimate fulfillment of over-all reparations shares subsequently recognized and approved. It is possible that 5 percent of any single category of available assets would exceed a recipient country’s pro rata share of assets across the board, but if such should be the case, a reparations agency for Japan could make necessary adjustments and deduct quantity or value accordingly from some other category of Japanese assets which might otherwise have been allotted to a claimant country. Though possibly doing violence to the symmetry of a future final settlement, such an adjustment could and should be justified in terms of its urgent relief value.

19. This was done on October 7.
20. SWNCC 236/24, September 17, was approved by SWNCC as revised October 2.
21. Not printed.