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

740.00119 PW/11–2647

Memorandum by Mr. John A. Bailey, Administrative Officer of the Division of Occupied-Area Economic Affairs⁵⁵

[Washington,] November 26, 1947.

Subject: Review of U.S. Reparations, Restitution and Restoration Delegation to date.

The function of the U.S. Reparations, Restitution and Restoration Delegation to Japan is to represent the interests of the U.S. Government in the following major fields: (a) the distribution of reparations from Japan, (b) the restitution to claimants of property looted from their territory by Japan, and (c) the restoration of property owned by U.S. citizens to its rightful owner.

A separate U.S. mission to accomplish these purposes is necessary because the American forces under General MacArthur are in Japan as an Allied Occupation Force, representing the interests of all allied powers, and not the direct interest of the U.S. Government as such. As a consequence, General MacArthur has invited the United Nations with paramount Far Eastern interests, who compose the Far Eastern Commission, namely, Australia, China, France, India, The Netherlands, Canada, New Zealand, The Philippines, UK, USSR, and the U.S. to appoint official missions to perform the above mentioned general functions in Japan. All eleven countries have accepted the invitation and now have missions actively operating in Japan. These missions act both as spokesman and claimant for their respective governments and as advisors to SCAP in the development of mutually acceptable procedures for the solution of these problems. Jointly the eleven missions form the Reparations Technical Advisory Commission to SCAP and will shortly be organized into a similar agency concerned with problems of restitution and restoration.

Accomplishments:

The accomplishments of the first 6 months of the operation of the mission may be summarized under the following heads:

(a) Reparations. The U.S. mission has participated actively in the organization of the Reparations Technical Advisory Committee in Tokyo. This eleven nation inter-allied body, in consultation with SCAP, has been responsible for the development of specific procedures which will govern the selection and distribution of reparations facilities in Japan. The U.S. member, both because of the position of the U.S. in the administration of Japan and because of his personal acquaintance with the activities of the Far Eastern Commission and its basic policies governing Japan, has exerted a considerable influence upon the policies of the RTAC. In addition, the U.S. member, for the foregoing reasons, has frequently been able to negotiate points of conflict between other nations and SCAP with mutual benefit to both parties and considerable benefit to U.S. foreign relations in this field. During this period basic procedures have been adopted, the first allocation of reparations under the advance transfer reparations program of the U.S. has been made and additional removals of facilities will begin in the near future. The first actual reparations from Japan, consisting of some 20 thousand machine tools, have recently been allocated and are now being packaged for removal. While the U.S. is not a recipient of any of these advance reparations, the prompt receipt and use of them by such nations as the Philippines, China, N.E.I. and Malay–Burma, is of direct concern to the basic policies of the U.S. Government in assisting in the rapid post-war recovery of these areas and in lessening consequent requirements for U.S. dollar assistance.

(b) Restitution. The direct concern of the U.S. in the restoration of looted property has been minor, since very little American territory has been actually occupied by the Japanese. The principal activities of the U.S. delegation in this field has been concerned with the revision of existing policies and procedures, in consultation with SCAP and the Department of State, in order to expedite the restitution of property owned by other countries. An example of the work of the mission in this field has been the success of the Chief of the Delegation in obtaining SCAP approval of a broad revision of basic policy under consideration by the Far Eastern Commission.

(c) Restoration. The most direct U.S. interest of the activities of the delegation is in the prompt restoration of U.S. owned property in Japan to its rightful owners. The U.S. delegation has invited all major U.S. interests with property in Japan to send representatives, as technical aides to the delegation, for the purpose of inspecting their properties, recommending steps necessary for their adequate protection while under the custodianship of SCAP, and formulating a decision as to the time and conditions under which they desire a return of that property. To date, some 15 representatives of such American concerns as I.T. & T., Ford Motor Company, Singer Sewing Machine, Otis Elevator, Libby Owens Ford, and Socony Vacuum Oil Company have availed themselves of this opportunity. The U.S. delegation has also been actively concerned in developing, with SCAP, detailed policies and procedures for the actual restoration of this property, for its exemption from Japanese war-time tax burdens, and its treatment under Japanese corporate re-organization policies.

In addition to the foregoing official functions, it should be recognized that the U.S. delegation is the only fully independent representative of the State Department in Tokyo and as such it has been of great service to the Department in consulting with SCAP on various proposed U.S. economic policies requiring SCAP approval and also in reporting to the Department developments within Japan which would effect basic policies under consideration in the Department, or in the Far Eastern Commission.

Future Activities:

The activities of the past six months have been largely preparatory to a greatly increased flow of reparations, of restituted looted property and the actual restoration of U.S. property in Japan, all of which, it is anticipated, will reach a peak with the next 6 months. The best estimate of the Department of the duration of the activities of the mission, with regard to these matters, is that it will require a further period of 2 years for completion. This estimate is based upon the policies adopted by the Far Eastern Commission for the removals of restorations work and identification of looted property.

The foregoing discussion of the functions of the delegation indicates clearly the technical nature of the problems involved. It has also been the experience of the delegation during the past 6 months that the technical competence of its personnel and their intimate acquaintance with the policies of the Far Eastern Commission has been of major significance in their negotiations with other delegations in Tokyo. When the delegation was originally formed, it was staffed by personnel temporarily detailed to it from their regular assignments dealing with these same matters in the Department in Washington. At that time it was hoped that it would be possible to employ an eminently qualified person, either in or out of the government, to become permanent Chief of the Delegation. However, over a period of 6 months it has not been found possible to obtain a person from outside sources with the requisite technical knowledge and experience. It has, therefore, been necessary to ask Mr. Charles L. Hodge, who has been serving as Chief of the delegation on a detail basis from OE, if he would be willing to serve as permanent Chief of the Delegation. He has agreed to accept the position providing the Department would grant him reemployment rights, allow him to maintain his Civil Service Status, and provided his family could join him for the duration of his stay. He also expressed the need for a qualified technical assistant if he was to do the job expected of him by the Department.⁵⁶

55. Addressed to Dr. Warren Kelchner, of the Division of International Conferences. The memorandum was drafted by Rufus Burr Smith who had originally headed the reparations mission in Japan.
56. In despatch 1482, December 29, the Acting Political Adviser in Japan reported on the operations of the Reparations and Restitution delegations in Japan and submitted a list of the personnel of 11 delegations. The Reparations Technical Advisory Committee had held 16 meetings since June 2, and a Restitution Advisory Committee was being planned. (800.515/12–2947)