740.00119 P.W./3–546: Telegram

The Secretary of State to the Chargé in the Soviet Union ( Kennan )

392. Please advise the Soviet Govt substantially as follows:

The concern of the US Govt over reports of discussions as to the disposition of Japanese industrial enterprises in Manchuria was communicated to the Soviet Govt on (here insert date of your note on this subject).

A similar expression of concern was communicated to the Govt of China. A reply has now been received from the Chinese Govt. In this reply the Chinese Govt states (1) that the Soviet Govt informed the Chinese Govt on Jan 21, 1946 that all Jap enterprises in Manchuria which had rendered services to the Jap Army were regarded by the Soviet Govt as war booty of the Soviet forces; (2) that the Chinese Govt considers the claim of the Soviet Govt as far exceeding the scope of war booty as generally recognized by international law; (3) that therefore the two Govts have not been able to reach a unanimity of views on the fundamental principles involved; (4) that in a memorandum presented to Chinese Headquarters in Changchun the Soviet Govt declared that it proposed to hand over to China a part of the Jap enterprises which the Soviet Govt regarded as war [Page 1114] booty while remaining enterprises, including specified coal mines, power plants, iron and steel industries, chemical industries and cement industries, were to be jointly operated by China and the Soviet Union; and (5) that the Chinese Govt has found it impossible to agree to this Soviet proposal because it goes beyond the provisions of the Sino-Soviet Agreements of August 14, 1945 and is contrary to the stand of the Chinese Govt regarding Jap properties and enterprises in China.

No reply has been received from the Soviet Govt to the inquiry of the Govt of the US. On the basis of the information contained in the reply from the Chinese Govt, the Govt of the US wishes to express its full concurrence in the position taken by the Chinese Govt, and to re-emphasize the position taken in its previous note on this subject. This Govt does not accept any interpretation of war booty to include industrial enterprises, or the components thereof, such as Jap industries and equipment in Manchuria, and it therefore cannot accept the assertion made by the Soviet Govt, as reported by the Chinese Govt, that these industrial enterprises are subject to consideration as war booty. As stated in this Govt’s previous note, the ultimate disposition of Jap external assets such as the industries of Manchuria is a matter of common interest and concern to those Allies who bore the major burden in defeating Japan. The US, as a major participant in the war against Japan, cannot recognize any final disposition made of Jap external assets, including industrial property, either by the Soviet Govt or by agreement between the Soviet and Chinese Govts, without its prior approval; and it cannot agree to the removal of industrial properties from Manchuria as war booty and if any such properties have been so removed it will expect to receive a full accounting thereof.

The Govt of the US cannot and would not interpose objection to free discussion between the Soviet Govt and the Chinese Govt in regard to the future industrial development of Manchuria but it is firmly convinced that these discussions should only take place after the Chinese Govt has been able to resume administrative control over Manchuria and the governments and individuals of other nations are also in a position to discuss with the Chinese Govt industrial development in Manchuria. Only thus can the principles of the Open Door and equality of opportunity be preserved with respect to Manchuria.

In conclusion, the Govt of the US expresses its sincere hope that the views expressed by this Govt, and by the Chinese Govt, are being given consideration by the Soviet Govt in the spirit of international cooperation which, in fact, prompted their enunciation, and that the US Govt may receive assurances from the Soviet Govt that it does not desire to press for a solution disregardful of these views.

Byrnes