Statement To Be Made to Far Eastern Commission by United States Member and Transmitted to SCAP for Information and Released for Publication1

The U.S. Government has reviewed the accomplishments of the first two years of the occupation of Japan in the light of the ultimate allied objectives as set forth in the Potsdam Declaration and elaborated in subsequent policy statements.

This review has revealed that in implementation of the basic policy, SCAP has destroyed Japan’s ability to make war on the land, on the sea, and in the air. Exceptional progress has been made in establishing political and economic institutions which will permit the development of a democratic and peaceful Japan capable of assuming the responsibilities of a member of the community of nations. The framework of a democratic Japanese Government has been established in accordance with the provisions of a new constitution adopted by the Japanese people, and a popularly elected government is now in, office.

However, the establishment of a self-supporting economy in Japan, without which the achievements of the occupation cannot be consolidated, has not yet been accomplished. Japanese industry and commerce are not yet sufficient to sustain the Japanese economy; there is not yet final Allied determination of the reparations which Japan will be required to pay; and Japan is not yet in a position to participate [Page 655] fully in world trade and to contribute its part to the rehabilitation of world economy. Economic chaos in Japan has been prevented only at the expense of the American people who have financed the importation of vital food and other materials required to prevent widespread disease and unrest.

It is the view of the U.S. Government that if the fundamental objectives of the occupation are to be achieved, and if there are to be established the conditions necessary to enable Japan to make its proper contribution to the economic rehabilitation of world economy and to take its place in the community of nations, a much greater effort must be made to bring about the attainment of a self-supporting Japan with a reasonable standard of living. To this end, my Government believes that the Japanese Government and people, the Far Eastern Commission and its member states, and the Supreme Commander, recognizing the conditions which now require that more emphasis be placed on such a program, should take all possible and necessary steps consistent with the basic policies of the occupation, to bring about the early revival of the Japanese economy on a peaceful, self-supporting basis.

The Japanese Government, under the supervision of SCAP, must prepare and implement plans under which Japan can become self-supporting at the earliest possible time. Progress has already been: made in this direction. Although the primary responsibility for the preparation and execution of such a plan rests on the Japanese Government and people, SCAP must take the requisite steps to ensure that the Japanese Government and people energetically and effectively discharge that responsibility.

Greater efforts by the Japanese people, coupled with such assistance as the United States Government may be able to provide for a temporary period, should eliminate the burden on the American taxpayer of supporting the Japanese economy. While the American people will not continue indefinitely to subsidize the economy of Japan, the U.S. Government will shortly begin discussions in the Congress of a proposal to provide funds for the fiscal year 1949, in addition to funds requested for subsistence items, for the procurement of such imports as industrial raw materials, and spare parts to assist Japan to expand the output of its peaceful industries toward a status of self-support.

The Far Eastern Commission has already agreed on a number of policies directed toward this goal. For example, it has already declared that measures should be taken or continued to stimulate Japan’s production of goods required for export and to ensure that goods produced are those in demand in countries requiring supplies from [Page 656] Japan.2 It has recently opened Japan to limited private trade3 and authorized the establishment of a revolving fund to aid in financing peaceful foreign trade. The U.S. Government, recognizing that the cooperation of the Far Eastern Commission and its member states is essential to the successful accomplishment of a program for bringing about a self-supporting economy in Japan, requests favorable consideration of future policies to be presented to the Commission toward this end.

  1. SWNCC 384 as revised and approved by SANACC on January 21; the statement was made the same day by Maj. Gen. Frank R. McCoy, U.S. representative and chairman of the Commission, released to the press, and sent the Joint Chiefs of Staff for transmission to SCAP.
  2. FEC–032/26, July 24, 1947; Department of State, The Far Eastern Commission, Second Report by the Secretary General, July 10, 1947–December 23, 1948 (publication 3420, Far Eastern Series 29, U.S. Government Printing Office, Washington; March 1949), p. 31.
  3. See circular airgram, July 22, 1947, Foreign Relations, 1947, vol. vi, p. 257.