Department of Defense files

The Joint Chiefs of Staff to General of the Army Douglas MacArthur,62 at Tokyo

War 95604

Interim Directive Regarding Advance Transfers of Japanese Reparations and Reparations Allocation Procedures for Industrial Facilities in Japan

“The following Interim Directive, Serial Number 75, received from the State, War, and Navy Departments, issued under the provisions of paragraph III, 3, of the Terms of Reference of the Far Eastern Commission, is furnished for your guidance.

[Page 377]

Part A

  • “1. The Supreme Commander for the Allied Powers should effect immediate delivery of assets within Japan in accordance with the provisions of the Directive, Serial Number 69, February 19, 1947, regarding the delivery of reparations goods in Japan, as advance payment on account of ultimate reparations shares providing:
    That such assets fall within categories of Japanese facilities and equipment which have been properly declared as available for reparations transfer by the Far Eastern Commission and designated for removal by the Supreme Commander for the Allied Powers;
    That such assets should be declared by the Supreme Commander for the Allied Powers to China, the Philippines, the Netherlands (for Netherlands East Indies) and the United Kingdom for Malaya, Burma and its colonial possessions in the Far East;
    That such assets should be delivered to a recipient country only after it has supplied evidence acceptable to the Supreme Commander for the Allied Powers, or to some other agent or agency hereafter designated to evaluate and pass judgment on such evidence, that the
    Immediate and useful employment of such assets is practicable, and
    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;
    That no country listed in subparagraph b should receive delivery of more than 5%, excepting China which may receive 15%, in quantity or value of any single category of assets available as determined in subparagraph a above, and authorized for transfer under the provisions of subparagraph c above.
    That assets specified for delivery should represent in their total quantity or value, not more than 30% of any single category of available assets as determined in subparagraph a above.
  • “2. The Supreme Commander for the Allied Powers should designate for delivery on advance transfer account such a balanced selection of plants and facilities as will not represent disproportional reduction of value or quality of over-all residual industrial capacities available for later transfer as reparations.
  • “3. The Supreme Commander for the Allied Powers should maintain such records as necessary to enable offset for any such advance transfers to be made against ultimate fulfillment of approved and recognized over-all national reparations shares.
[Page 378]

Part B

  • “1. The following procedures should govern SCAP implementation of those aspects of the Japanese reparations program providing for the removal from Japan of industrial facilities and equipment.
    In accordance with provisions of directives to SCAP regarding availability for reparations transfer of categories of Japanese industry, SCAP should be responsible for final selection of those particular industrial facilities and equipment to be made available for removal from Japan as reparations.
    SCAP should be responsible for preparing an inventory of individual Japanese industrial facilities selected under a above. This inventory shall include any available information which would aid a prospective claimant in determining the utility of the individual facility, such as technical specifications, make, age and condition.
    SCAP should be responsible for assigning monetary valuation to industrial facilities selected and listed under a and b. Procedures for uniform monetary valuation should be determined by SCAP. Valuations should be in sufficient detail to permit charges to be made for parts of plants which may be allocated separately. Values assigned to reparations assets referred to in a and b above need have no relation to any other values as long as these values are consistent among the reparations assets comprised of industrial facilities and equipment.
    SCAP should submit to representatives of countries, members of the FEC the inventory provided in b, and the valuation provided in c.
    Upon receipt of the inventories and valuations mentioned herein, a country, member of the FEC may lodge with SCAP claims for the allocation to it of particular industrial facilities.
    Upon receipt of directives indicating the over-all shares assigned to each country, SCAP should set up appropriate reparations accounts for recipient countries. The value of the facilities received by any one country should not exceed its percentage share of the total value of the industrial facilities selected and valued by SCAP for removal as reparations. As provided in the Directive, Serial Number 69, February 19, 1947, regarding the delivery of reparations goods in Japan, a recipient country will make a commitment to accept a specific facility at the time allocation is made. SCAP should likewise agree to reserve the accepted facility for the claimant country. At such time SCAP will make an initial charge of the monetary value assigned to the facility (in accordance with 1 c) to the reparations account of the recipient country. When the final title is taken by a recipient country to an individual facility aboard ship, a final charge shall be made against the reparations account of the recipient country, taking into account, if necessary, any unforeseen loss of value.
    From those items of industrial facilities and equipment declared available for reparations removals SCAP should allocate particular industrial facilities to each country on the basis of claims submitted by that country. To the extent that claims of two or more countries are In conflict, he will work out what seems to him the most reasonable allocation, taking into primary consideration the proportion of each country’s allocation still unfilled. After taking into account this primary [Page 379] consideration, consideration should be given the following four items in stated order of priority:
    Claims for whole plants and related facilities, as opposed to claims for portions thereof.
    Claims for parts of plants or related groups of items which can be integrated with the existing industrial pattern of the claimant country.
    The extent to which the claimed item or items would replace property which was destroyed, damaged or looted in the war, or requires replacement because of excessive wear incident to prosecuting the war against Japan.
    The extent to which the claimant country depended in prewar years on imports from Japan of the item or items (or products thereof) claimed.
    In making allocations as provided by subparagraph g, SCAP should, to the extent practicable, give consideration to striking a fair and equitable balance as between all claimant countries of items:
    In integrated or consolidated units.
    Of modern and efficient design and manufacture.
    In good working condition.
    Each country represented on the FEC should be permitted to have a Reparations Technical Mission in Japan. These missions should be afforded full opportunity for inspection of plants declared available, and should be kept fully informed by SCAP of all designations and allocations. They should be authorized by their governments to receive inventories, valuations and other communications from SCAP relating to reparations, to lodge claims, to make commitments to accept title to plants selected, to accept final title to industrial facilities on reparations account, and to make all necessary arrangements with SCAP including scheduling the required shipping for the actual removal of allocated facilities in accordance with the principles laid down in the Directive, Serial Number 69.
    SCAP should organize a Reparations Technical Advising Committee (RTAC) composed of the heads of the above Reparations Technical Missions located in Japan and chaired by a representative of SCAP appointed by SCAP. The function of this committee should be to assist SCAP, in an advisory capacity, in the development of technical and administrative procedures to assure an orderly removal of reparations goods from Japan, and in the settlement of conflicts between claimant countries arising over claims for particular facilities. In the event of disagreement between SCAP and a member country concerning the allocation of a particular facility by SCAP, if a formal protest is made to SCAP by two-thirds of members of RTAC, SCAP, who has final authority in such matters, may, in his discretion, refer the dispute to the U.S. Government.
    Claims for individual facilities must be filled [filed?] with SCAP by a claimant country within 6 months after the fixing of a claimant country’s final reparations percentage share, or receipt from SCAP of a final inventory and valuation of the facility, whichever is the later date.
    Each claimant will arrange for transportation for its reparations goods at the port and will be prepared to accept transfer of title no later than 2 years after the designation of the goods for application to that country’s reparations account, providing that such goods have been delivered to the loading point at the port within a reasonable time before the end of that period.
    Industrial facilities, machinery or equipment (other than specialized war-making equipment) declared available for reparations, but either
    unclaimed for application against recognized reparations claims on Japanese assets from within Japan, or
    unaccepted as prescribed by 1 l above, should not be destroyed or otherwise disposed of by SCAP pending receipt of further directives.
    The provisions of this paper shall apply to any country not a member of the FEC which may be declared eligible to receive reparations from Japan in industrial facilities, except that no country not a member of the FEC shall be a member of the RTAC.
  • “2. The provisions of paragraph 1 c and d requiring a monetary valuation for industrial facilities shall not operate to delay delivery of goods under the provisions of Part A of this directive. As soon as recognized and approved national reparations shares have been determined and announced by directive to SCAP all of the provisions of Part B of this directive will govern and provisions of Part A of this directive will be rendered inoperative.”
  1. Copy received by the Department of State from SWNCC with its memorandum of April 9, and forwarded to the Far Eastern Commission on April 11. The draft had been sent to SWNCC on April 3 by General Hilldring who referred to his memorandum of March 24 (p. 374), which provided that if the Far Eastern Commission had not agreed within a brief but reasonable period of time to the adoption of policy decisions on the subject, an interim directive would be sent to SCAP (894.60/4–347).