Office of the Historian

740.00119 P.W./9–347: Telegram

The United States Reparations Delegate in Japan (Hodge) to the Secretary of State

secret
priority
Tokyo, September 3, 1947.

OE No. 19. From US Reparations and Restitution Delegation to US Department of State—For Martin and Barnett:

(a)
SCAP chairman of RTAC submitted to RTAC for consideration and advice following document entitled “Interpretation of Provision for Economic Justification of Claims in Interim Directive Regarding Advance Transfers”.
(b)
Document reads as follows:
  • “1. The directive puts basis of allocation on the rehabilitation, repair or reconstruction of facilities which can contribute directly to the immediate relief and rehabilitation requirements of the war damaged claimant or indirectly to the relief needs of other parts of Asia devastated by Japanese Armed Forces.
  • 2. The words used preclude the allocation of facilities whose purpose is to start a new industry not essential to rehabilitation, repair or reconstruction of facilities. The facilities thus rehabilitated, repaired or reconstructed must have existed in claimant country prior to Japanese occupation.
  • 3. Restoration of certain industries to satisfactory operating condition may require items not available in the claimant country and formerly imported, but which can be provided by allocation of certain facilities from Japanese reparations. Such allocation would in effect form the basis of a new industry in the claimant country, but its primary purpose would be restoration of pre-existing industry. It is therefore [Page 428] justified under the provisions of the directive. Any narrower interpretation of the directive would to a considerable extent defeat the obvious purpose of the advance transfer directive. The statements of Major Plimsoll (Australia, Chairman of FEC Reparations Committee) and Mr. Burr Smith (then US member of RTAC) in the fourth RTAC meeting indicate that the interpretation advanced above is that intended by the US Government and so understood by the FEC.
  • 4. Therefore claimants for advance transfer must admit evidence that a claimed facility will either serve to rehabilitate, repair or reconstruct a previously existing facility which can contribute to relief as described in the advance transfer directive”.
(c)
Please advise if US member RTAC should support or seek modification above interpretation. Personally favor broadest possible interpretation consistent with FEC intent, particularly since countries entitled only 5 percent would otherwise get practically nothing but few machine tools under present SCAP procedure of making only 30 percent of limited segments each category of industry available rather than 30 percent of all surplus above interim levels. For your information, unofficial personal conversations with French and Australian delegations indicate no strong feeling or interpretation quoted above. New Zealand representative thinks interpretation not broad enough. Those entitled to advance transfers of course favor broadest possible interpretation.

Hodge