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

740.00119 Control (Korea)/2–2346: Telegram

The Chief of Staff, United States Army (Eisenhower), to General of the Army Douglas MacArthur, at Tokyo

secret

[Washington,] 23 February 1946.

War 98337. Reference Cax 57461 and Tflig 669, CinCAFPAC please pass to CG USAFIK.

Sale of Jap property to Koreans is subject. The following proposed directive to you is up for urgent consideration by State, War and Navy. All agreed except on matter of legality of “Sale” of property as against “Transfer”. State Department Legal Adviser⁵⁴ is objecting to use of word “Sale”. Here is proposed directive to you quoted in full:

• “1. Your Cax 57461 approved except insofar as in conflict with policy outlined below. Japanese still in Korea will not be permitted to sell property but such property may be sold or leased by the Military Government in accordance with approved policy below.
• 2. Reference Tflig 669 from Commanding General USAFIK. You may authorize military Government in US Area of Korea to sell and give title on Japanese-owned property of the following classes:

  a. Farmland

  b. Urban residences

  c. Small business holdings.

• You should, in your public statement announcing availability of property for sale, state that all sales are outright so far as Military Government is concerned but of course will be subject to subsequent confirmation by the Korean Provisional Government (to be established pursuant to the Moscow Communiqué) in participation with the Joint Commission. View here is that action by Provisional Government will be general confirmation with such exceptions by category as may be found necessary.
• 3. Authorization to make sales does not at present extend to industrial property or large wholesale businesses.
• 4. For your information only, it is now contemplated that United States members of the Joint Commission will not be authorized to give final approval of such sales:

  (a) Until agreement has been obtained from other members of the Reparations Commission to support the United States view with respect to the disposition of such property (steps have already been initiated) and

  (b) Until you have required the Japanese Government to divest its Nationals of property in Korea, if the Far Eastern Commission determines such a procedure to be necessary.

• 5. Plans suggested in Paragraphs 2 and 7 of Tflig 669 are agreed to for small business holdings as well as farms and urban dwellings subject to qualifications above. All sales should be screened to prevent cloaking transactions and transfers to undesirable persons. General policy announcements suggested in Paragraph 4(a) and 9(a) may be drafted and announced in Korea at an appropriate time.
• 6. This message is not to be construed as an over-all policy statement referred to in War 96606 which is still under consideration.⁵⁵ This message is sent to give at once necessary authorization to make certain land reforms with respect to Japanese-owned property.
• You will note from Paragraph 4 above that there are certain legal questions to be finally surmounted with respect to passing clear title to these properties. In placing your program into effect, you should give consideration to the possible attacks on it from the Soviets should your plan conflict with that which they may have already instituted in their area. Desirability of prior consultation with or notification to the Russians will be at your discretion.”

State Department Legal Adviser’s objections and proposed amendments are as follows:

“The proposed directive to General Hodge should not be issued unless:

1. The word ‘Transfer’ be substituted throughout the proposed directive for the word ‘Sale’.

2. US Military Government, Korea, purport to act vis-à-vis the Korean people, and the specific recipients of the land in particular, on the basis of administering some kind of possessory interest rather than ownership.

If these changes were made, General Hodge might be advised to take local Korean legal advice, and to proceed with his program of transfer by issuing ‘Certificates of transfer’ or by means of rental agreements but always without assertion of US title to the property or its out-right sale.”

Request comments earliest. Are proposed amendments satisfactory?⁵⁶

[WARCOS]

54. Green H. Hackworth.
55. On March 6 the Department in instruction 9 to Seoul transmitted a copy of SWNCC 265 on “Disposal of Japanese Property in Korea”, not printed.
56. Notation by the Deputy Director of the Office of Far Eastern Affairs (Penfield): “Reply (CX 58255, 26 Feb) stated ‘no objection to State Dept amendments substituting word “transfer” for “sale”.’ JKP”.