894.60/11–2047
The Under Secretary of the Army (Draper) to the Under Secretary of State (Lovett)
Dear Mr. Lovett: Some weeks ago you, Secretary Royall52 and I discussed at lunch the reparations studies that are being made in Japan by the Overseas Consultants Inc. Overseas Consultants Inc. as their first priority assignment are determining the capacities of the several reparations industries, and in addition were asked to point out any errors in the contemplated levels of industry which they consider should be modified.
I mentioned to you that General Saltzman and I had had lunch with General McCoy a few days before and had discussed the desirability of no action being taken by the Far Eastern Commission on reparations levels until after the Overseas Consultants’ report and its recommendations were available for study here. My recollection is that you agreed with this suggestion and also you did not think it necessary to withdraw the present SWNCC paper now before FEC, inasmuch as action would be unlikely anyway and General McCoy could appropriately delay action if necessary.
On the 25th of August an agreement was reached between the State and Army Departments that after the lapse of 60 days a decision [Page 442] would be made as to whether or not a unilateral directive based on SWNCC 236/43 would be issued to General MacArthur. General MacArthur was informed of this agreement. On 25 October when no final decision on this subject had been made, the following cable for General MacArthur was drafted and was sent to the State Department for concurrence:53
“CinCFE
- “1. Re ourad W–85285 (Aug) policy decision by FEC on content of SWNCC 236/43 has not been possible by 25 Oct and there is little prospect for substantive reparations agreements in near future.
- “2. In view of present OCI expert study now being made we will not press further for final policy decision on reparations levels until after the OCI report and its recommendations are available, the view here being that a final U.S. position would be unwise until OCI recommendations can be given consideration.”
This draft cable was sent to the State Department shortly after our conversation. I have since been informed that the State Department does not wish to send this cable and that the State Department would not oppose FEC finalizing the reparations levels pending receipt of the report in question.
The Department of the Army considers that such action would be contrary to the best interests of the United States, since there is a real question whether the proposed levels could result in a self-supporting Japanese economy and that, in any case, no final action should be taken or even considered until the report and its recommendations are available. I had thought your views were in accordance with ours in this matter and would appreciate your comment on it. We still believe that some such cable should be dispatched.54
Sincerely yours,