Foreign Relations of the United States, 1947, The Far East, Volume VI

740.00119 PW/11–1447

The Assistant Secretary of State (Saltzman) to the Under Secretary of the Army (Draper)

secret

Washington, November 14, 1947.

Dear Mr. Draper: It would be appreciated if the attached draft cable could be sent to SCAP to correct an apparent misapprehension with respect to the intent of the Advance Transfers Directive on Japanese reparations.⁴⁸

By letter of August 18, 1947 from General Eberle,⁴⁹ copy of which is attached,⁵⁰ the Department of the Army declined to send a cable along similar lines. The matter was not then pressed by the Department of State pending receipt of the actual minutes of the RTAC meeting and discussion between you and myself on the overall reparations problem.

The answers to the objections previously raised are as follows:

1. Although the Advance Transfers Directive is a unilateral directive and the United States cannot be charged on its account with failure to implement a FEC decision, it was communicated to the FEC and described by the United States Government in FEC 216 and in statements in the Reparation Committee of the FEC as a measure designed to give immediate relief to the four recipients. Failure to carry it out will reflect on the sincerity of this Government.

2. The 30% of assets is based upon 100% of the facilities and equipment declared available by the FEC and transmitted to SCAP in directives governing interim reparations removals. Accordingly it is feasible to designate facilities as Advance Transfers without awaiting the determination of final levels for reparation removals by the FEC.

3. By the terms of its contract, Overseas Consultants Inc. takes into consideration the Advance Transfers Directive, which is based on the FEC policies for interim reparations removals. The Department is aware that Overseas Consultants Inc. may not be able in the immediate future to conclude its survey of all industrial categories in the interim program. It is believed, however, that it can proceed in such a manner that 100% listings can be expedited for a number of categories, thus permitting smooth scheduling of reparation allocations and removals before its final report is completed.

Since the point was not raised in the letter of August 18, it is assumed that the Department of the Army accepts the interpretation of the Advance Transfers Directive set forth in the draft cable. Since no more than 30% of any category can be made available as Advance Transfers, it is necessary to apply the directive as nearly as possible across the board in order to give the immediate relief intended by the Directive.

Sincerely yours,

Charles E. Saltzman

[Enclosure]

Draft Cable for SCAP

confidential

In view certain statements made by SCAP representative in RTAC meeting re interpretation Advance Transfers Directive (ourad War 95604 Apr, JCS Serial No. 75)^50a following clarification offered re intent this Directive:

In reply to Australian question 2 (minutes, 3rd RTAC meeting), SCAP representative stated that it is “within the discretion of SCAP to designate such categories as he may desire or may find proper.” Interpretation by U.S. representatives in FEC has uniformly been in terms of advance transfers pool aggregating 30 per cent of assets declared available under interim reparations program. Since paragraph 1d limits advance transfers from any single category to 30 per cent, program covering full 30 per cent from all categories required except where impracticable under terms of paragraph 2 of Directive. In paragraph 10, JCS Directive 87⁵¹ (ourad War 84940) SCAP has full authorization retain temporarily facilities required meet needs of occupation, but such retained facilities not exempt from designation for removal. Since differences between interpretations offered in FEC and RTAC may leave question in minds of representatives other countries as to U.S. sincerity and intentions, we suggest SCAP consider further clarifying in RTAC statement quoted above. Re Australian question 3 same meeting, we agree with SCAP comment that 100 per cent listing required to protect interests countries not sharing 30 per cent advance transfers.

48. Serial 75, April 4, p. 376.
49. Brig. Gen. George L. Eberle, then Acting Chief, Civil Affairs Division, War Department.
50. Not printed.
51. Ante, p. 376.
51. August 23; see footnote 34, p. 426. For paragraph 10 of FEC policy decision FEC–084, August 14, see The Far Eastern Commission, pp. 25, 30.