740.00119 FEAC (Info)/8–2047: Telegram
The Acting Secretary of State to the Acting Political Adviser in Japan (Sebald)
333. FEC 26. Reduction of Japanese Industrial War Potential (FEC–084 series). Policy paper of above title with long and tortuous history adopted by FEC Aug 14.34 Original paper introduced in FEC by US member one year ago. After various amendments in Economic and Steering Committees and in Commission paper was almost ready for final approval in April 1947. At this juncture War Dept, which feared that phrase “during the period of the occupation” in para 9 b might be interpreted in future to cover any period when Japan is under any form of control, with approval of State Dept had US member introduce amendment to para 9 as follows: “The provisions of this policy decision will apply until Jan 1, 1949, or until the end of the present phase of the occupation, whichever is the earlier.” This amendment not acceptable to majority of FEC countries which suspected that US working toward removal of all economic controls over Japan in near future. Meanwhile US Govt adamant in insisting on insertion in para 9 of some sort of limiting clause. Chinese representative on July 8 submitted list of 10 questions in effort to ferret out US reasons for insisting upon limiting clause and upon date of Jan 1, 1949. US replies indicated clearly that purpose was “to forestall and prevent the possibility of a situation arising in which any X part of the Japanese economy might inadvertently be kept within a straitjacket” and that date was selected to make it clear that provisions of 9 b would apply only to short period. Explanation not entirely satisfactory to several members of Commission who still suspected hidden motive in US amendment and who opposed approval of paper with amendment. Chinese member then received instructions [Page 427] from his Govt to endeavor have date changed to 1950 but on own responsibility compromised on Oct 1, 1949. This date accepted by US Govt and paper finally approved with several members expressing for the record dissatisfaction with inclusion of any date. Chinese and Filipino members also read into record statements to effect that any rehabilitation of Japanese industry after Oct 1, 1949 should not interfere with previously planned reparations removals. Soviet and UK members had no comment.
Reparations Shares. With submission August 13 of official Philippine schedule of percentage shares of industrial assets available for reparations, FEC now has nine official schedules, New Zealand and Australia being only countries not submitting some sort of official schedule. USSR also submitted revised schedule to bring it more in line with general trend of thought in Commission.
- See ibid., p. 25. The decision was embodied in a directive, serial 87, August 23, by the Joint Chiefs of Staff to SCAP, sent as War 84940 on August 23, and a copy of the directive was sent to the Far Eastern Commission on September 4 by the Department.↩