Foreign Relations of the United States, 1948, The Far East and Australasia, Volume VI

740.00119 Control (Japan)/4–948

Memorandum by the Assistant Secretary of State for Occupied Areas (Saltzman), to the Director of the Office of Far Eastern Affairs (Butterworth)

top secret

[Washington,] April 9, 1948.

Mr. Butterworth: There is attached a memorandum of detailed comments on Mr. Kennan’s report, pursuant to the memorandum sent me by Mr. Humelsine.¹

I am in general agreement with the fundamental conclusions of the report. In the attached commentary I have referred only briefly to the many specific recommendations with which I heartily concur. I dwell at more length on the few with which I cannot concur fully or am in disagreement.

As Mr. Kennan says in his memorandum of March 25, these recommendations represent a unified concept. I do not believe, however, that the alterations I recommend, or that might be recommended after the further and more detailed consideration which I suggest in a few instances, will materially alter the concept.

Since our immediate purpose is to establish the State Department’s view of what U.S. policy should be, I do not think that at this stage of our considerations we should be concerned by whether the Army Department or General MacArthur will be in full agreement with our conclusions. Any necessary reconciliation of views with them should be accomplished promptly but as a next step. Similarly, the question of reference to the National Security Council may be considered after a policy paper is finally agreed on.

Charles E. Saltzman

[Annex]

Memorandum of Detailed Comments on the Kennan Report

top secret

This commentary deals with the recommendations and accompanying discussion of Mr. Kennan’s report.

i. peace treaty

1. Timing and Procedure: This recommendation is fully concurred in. It is suggested, however, that a decision should be reached as to whether, granting agreement among the other FEC powers on voting procedure, a conference should be held without the USSR or the USSR and China.

The importance to the long-term stability of Japan of social reform along the principal major lines undertaken should not be lost sight of in our short-term project of rapid economic recovery. This is, of course, not intended to mean that excessive or experimental reforms should be undertaken but rather that basic ones such as now instituted should be completed.

It is agreed to be of basic importance that Japan should not be left without military protection. General MacArthur’s views that remilitarization of Japan would be contrary to our most solemn international commitments and basic principles of SCAP policy, and would be impractical from the military-economic point of view, are agreed with. Other means of protection must be found.

The two-thirds voting rule would appear to be preferable to FEC practice. However, before a final decision on voting procedure is reached, a study should be made of the essential provisions which the U.S. will need in the treaty and the probable effect of either voting rule on our success in obtaining them.

2. The Nature of the Treaty Itself: This recommendation is fully concurred in.

ii. security matters

1. Disposition of our Tactical Forces in the Pre-Treaty Period: This recommendation is fully concurred in.

The suggestion of rotating garrison forces on a combat footing and completely without dependents seems a good one and should be taken up with the Army and CINCFE.

2. Post-Treaty Arrangements: This recommendation is fully concurred in.

In the event we are required to choose between postponing the treaty or permitting Japan to re-arm, the former seems the more practical alternative.

3. Okinawa: This problem has been under discussion in the Department for some time. Although the recommendation may be correct, it is not supported by all the arguments advanced. The fact that they are utterly incapable of their own defense does not necessarily lead to the conclusion that we should volunteer it. It is not clear that only a U.S. trusteeship would give protection to the islanders. It is also not clear that the trusteeship must be strategic in nature in order to protect the islanders. It might be difficult to sustain the position that our responsibility to the inhabitants does not permit us to settle for anything less than a U.S. trusteeship. If we wish to keep the islands we should recognize that our decision is taken in the interest of the U.S., not of the islanders.

In any case, long range plans should be laid for placing the islands on a basis as close to self-supporting as possible. Army Department requests for funds for this purpose should be supported. Temporary local governments should be established, travel restrictions removed, education provided and any possible production for export encouraged. This is consistent with our duty and own interest. Such a program does not necessarily imply permanent tenure.

4. The Navy: The part of the recommendation relating to Japan is concurred in. The part relating to Okinawa would depend on the decision reached on Okinawa.

5. The Japanese Police Establishment: The observation that the existing police forces should be strengthened as necessary to cope with Communist pressures of disorder is, of course, concurred in. The recommendation that they should be strengthened (to an unspecified degree) would presumably depend on detailed study.

The establishment of an effective Coast Guard would be of real economic-value and the recommendation should be carried out.

The recommendation for the establishment of a central organization under American expert supervision along the lines of our FBI is questionable. It is not clear how it would be permanently operated under the direct supervision of qualified U.S. advisers. Recent Japanese history with plain clothes, secret police suggests that even with such supervision, and certainly without it, such an organization would create the greatest danger of re-establishing a police state.

A central, uniformed gendarmerie or central constabulary comparable to the French Guard Mobile or the State police of a number of American States would seem both desirable and suitable. However, a secret police system should not be re-instituted in Japan without the most careful consideration.

iii. the regime of control

1. SCAP: This recommendation is concurred in as written. But the rate of SCAP withdrawal from the activities of the Japanese Government to a position of “general observation” should be cautious and carried out in a manner leaving minimum over-all control.

It is highly important that intervention on the part of SCAP personnel in the Japanese administration should be removed where it represents interference and obstructionism. However, participation by U.S. personnel is not necessarily either interference or a crutch. In our own interest, as well as theirs, we are requiring the Japanese to undertake a program with which their officials are not necessarily sympathetic. We are requiring them, and in the future will increasingly require them, to prepare and carry out planned programs of economic recovery. It is believed that they have never had a sufficient number of governmental personnel competent to undertake such programs efficiently. It is to our very great financial, as well as long-run strategic interest that they be completed successfully. Under these circumstances the suggested surgical incision should be done cautiously and not with a broad axe in the dark.

Concerning this activity representing hundreds of millions of dollars of direct investment by the U.S., and so vital to its future interests, it might be wise to carry out the sort of detailed operating study which would be regarded as essential in any small industrial or governmental organization which planned to curtail certain of its activities. SCAP should be encouraged to undertake such a survey and should be advised that technical assistance could be made available from the appropriate departments in Washington if he wished it. Advisory and even participating activities should be continued where they will contribute to the successful completion of SCAP’s programs. In other cases the SCAP staff should withdraw to a position of supervision and review. The relationship in each area of activity should be reviewed at regular intervals until the complete withdrawal to a position of supervision and review at a high level can be achieved.

2. FEC: The main recommendation not to terminate the FEC is concurred in.

The procedure outlined in these recommendations is in all essential respects the existing procedure. The policy-making powers of the FEC have always been considered to be limited to the carrying out of the Terms of Surrender. It would seem that reparations, not mentioned in the list on p. 17, should logically be construed as one of the Terms of Surrender.

It is not believed that the practice of obtaining FEC approval in important occupation policies has delayed or obstructed occupation. On the contrary the FEC has shown in nearly all instances a full appreciation of the primacy of the U.S. in Japanese policy and has accepted U.S. proposals with only comparatively minor amendments. The general effect of the use made of the FEC has been distinctly advantageous to the U.S.

It is fully agreed that SCAP should be encouraged in the broader use of his existing authority. To this purpose close liaison should be established between the U.S. Government and SCAP. The recommendation contained in V, below, could be useful in this respect. There has already been used in a number of instances a formula by which expressions of U.S. view have been given to General MacArthur without reference to FEC. Some question exists as to whether such expressions of view should be sent to CINCFE or to SCAP. The specific recommendation that directives on matters not within the Terms of Surrender be given to CINCFE is open to question since matters dealing with “the occupation and control” of Japan fall within the power of SCAP, not of CINCFE. This general question should be resolved in consultation with the Legal Adviser.

In instances where the U.S. wishes to present to the FEC broad policies of considerable importance, the usual FEC discussion should be preceded by direct approaches to the governments of as many member states as would seem appropriate.

Undoubtedly greater use must be made of the interim directive in cases where the USSR appears to be a sole obstructor. It should not be overlooked, however, that the U.S. views are frequently not in accord with those of a majority or a considerable minority of FEC members. Except in extreme cases, the interim directive power should not be exercised unless the votes or private consultations with the FEC members indicate substantial concurrence with the U.S. point of view. Since the economic recovery of Japan does not lie wholly within the power of the U.S. but depends upon the willingness of Far Eastern countries to trade with her, it should not be overlooked that the price of unilateralism of action in starting Japan firmly along the path of economic recovery and internal stability may be excessive, unless the proposed course of action is taken in consultation and agreement with the members of FEC whose trade with Japan is essential.

It should not be overlooked that in some instances, such as trade relations, it may be to the advantage of the U.S. to handle policy questions in the FEC rather than unilaterally, even though from the point of view of the legal jurisdiction of the FEC the U.S. would not be required to submit such questions to it.

3. Allied Council: This recommendation is concurred in.

iv. occupational policy

1. Relations with the Japanese Government: This recommendation is essentially the same as that under III., 1. SCAP, p. 15, and the general comments are the same. It is fully agreed, however, that SCAP should not use its power to push bills through the Japanese Diet nor to force the reversal of Japanese court decisions in order to exclude individuals from political influence. SCAP’s authority to require Japanese compliance with SCAP policies and to exclude any person from a position in government or private life important to the success of the occupation, should be unquestioned and should be exercised directly.

2. The Reform Program: This recommendation is generally disagreed with.

The discussion here and elsewhere in the report seems to be based on the concept that reform and stability are inconsistent. The basic objective of the U.S. in world affairs is to maintain a situation in which our people may live in individual freedom. The U.S. and its people are irrevocably entwined in the destinies of other nations, at least the major nations and their people. To maintain individual freedom at home there must be stability abroad. Unless this stability rests upon the democratic liberty of the people of the major nations it is hollow and untrustworthy. Japan has been and will be a nation of some consequence in the world. Unless her people have political rights and economic interests which give them a stake in the maintenance of a free government they will inevitably, and probably sooner rather than later, be seduced by one or another of the dynamic concepts of fascism or communism which will promise them great economic gains. Democracy is not just a pattern of words but must rest upon a pattern of acts providing social and economic institutions and rights, meeting the needs and just demands of the people. As we have seen in Czechoslovakia the establishment of such institutions and rights will not necessarily preserve free government. On the other hand their absence in a modern, industrial area will inevitably lead to totalitarianism.

It is true that the reforms instituted to date under SCAP are based almost exclusively on western ideas. It is apparently overlooked, however, that Japan has already avidly absorbed many western ideas and at the time the occupation commenced had a western system of industrial economy, with many western style legal and commercial institutions, a western style form of government, and, generally speaking, a completely feudalistic social pattern. Unfortunately, in copying the western economic and political style Japan had used many of the wrong models. The purpose of the current U.S. reform program has been to substitute better models and to bring the feudalistic aspects of Japanese society up to date.

Although some of these reforms may not be entirely applicable to existing Japanese conditions, the real question is whether they are important to the kind of conditions we wish to establish. A general fear that they may unseat older institutions which corresponded to specific (but undefined) Japanese needs without replacing them with anything that can be easily or practically absorbed by Japanese society, is the sort of thing that could block all progress anywhere. Our basic purpose in the occupation of Japan is to unseat many such older institutions as the feudal land control, the nationalistic state religion, the dominance of the secret police, the supremacy of the military, the feudal family economic control, the Prussian style constitution, the system of kept politicians, the suppression of labor, and the control of speech, press and thought.

The completion of the essential elements in the reform program should be fully encouraged. This will unquestionably require continued supervision by SCAP personnel. For example, it is questionable whether in the land reform program the land already purchased by the government will be properly distributed unless upon constant pressure by SCAP. The same is true of the shares now held by the HCLC under the deconcentration program.

The result of the essential reforms should be to create greater and long-lasting stability. Any temporary disequilibrium must, of course, be overcome and stability achieved before Japan is entrusted to her own devices. This has been the intention since the drafting of the earliest directive.

3. The Purge: The earliest possible completion of the purge is important. The recommendations made are in general desirable. The purge program in all its aspects should be reviewed by the government and General MacArthur informed of the conclusions.

4. Occupation Costs: This recommendation is fully concurred in and regarded as of great importance. A full report should be requested of CINCFE and of SCAP on all activities representing a charge on Japanese economy. Subject to facts disclosed by such a report, it should be planned to direct CINCFE to pay dollars for certain types of construction not strictly essential to the occupation. Consideration should be given to dollar payments for such construction since the beginning of such occupation. Personal services to occupation personnel should also be paid for in dollars. Payments of dollars into the Army troop-pay account to cover its yen balance should be examined and limited strictly to the President’s policy decision.

5. Recovery: It is agreed that positive efforts for economic recovery should be emphasized. It should be constantly borne in mind, however, that economic recovery is not in itself an intrinsic objective but that its dual purpose is to support a democratic people and, as much as possible, to relieve the U.S. of the burden of occupation costs. A long-term aid program has, in fact, been prepared. U.S. government agencies have continuously been anxious to cut away obstacles to the revival of Japanese trade. In the main, however, these Obstacles have been raised by the Far Eastern countries recently at war with Japan or are inherent in the system of government trading developed by poor economies. The reluctance of the U.S. to allow Japanese sales other than for dollars and to permit sales in the U.S. have been contributing factors in the slow revival of trade. All of the specific measures proposed are good. Some of them are under way, others are under consideration. They should all be accomplished as early as possible.

White House authority should not be necessary to bring about the required cooperation since the several interested government agencies have been working in full harmony on an over-all program for more than a year. Completion of this program has been delayed by the excessive amount of attention which the Department of State and Department of Army personnel have been required to give during the last nine months to vaguely generalized attacks on the reform program.

6. Reparations: This recommendation is regarded as too general and cannot be concurred in without more detailed study.

Much of what is said about the confusion of the reparation program is correct. However, the basic principle of the program is overlooked: that in certain war industries and war-supporting industries the Japanese economy was completely out of balance and had, and now has, capacity in excess of predictable needs. Although the removal of this capacity from an economy which could use it would unquestionably represent an economic loss, its removal from Japan would not represent any loss. If its establishment in a recipient country is beneficial then the general Asiatic economy will be improved.

It is argued that the removal of such capacity will retard Japanese recovery and therefore be a burden on the U.S. Since the capacity is by definition unnecessary to the Japanese economy, it is difficult to see how this can be true. On the contrary, the existence and use of uneconomic capacity would unnecessarily burden Japanese recovery.

It is easy to say that the U.S. should confess its error and has the right and duty of changing its mind. However, the countries insisting upon their rights and desires to receive reparations from Japan will not be so free to confess error. Since these countries participate in the joint occupation of Japan, since their cooperation is essential to Japanese trade revival and since their goodwill is vital to a satisfactory peace settlement for Japan, the U.S. is not in a position to take an arbitrary attitude.

No generalized conclusion may be intelligently reached on the reparations program without a full and careful consideration of its political and economic factors. This consideration, which is being undertaken in connection with the Strike report, should be completed and a reparations policy decided as promptly as possible in the light of conclusions reached—including our legal position.

7. Property Matters. The first and second recommendations are fully concurred in. The third recommendation is questioned.

Although it would appear prima facie desirable to tally the value of Japanese external assets retained by reparations claimants, such a procedure to fit appropriately into a general reparation scheme would require a quantitative total reparations claim by each claimant nation. The possibility of such a statistical approach has been considered from the beginning of work on the reparations problem. It has been generally considered, however, that the present theory is more practical: that the external assets in each claimant country shall be retained in that country without computation, that the Japanese internal assets which may be made available for reparations will be pooled and that individual claimant nations will claim percentage shares in such pool, the percentage in each case being determined on a “broad political basis”, taking roughly into account all relevant factors including, of course, retained external assets. There is, of course, no reason why this general policy conclusion should not be reviewed. It may be questioned, however, whether a different conclusion would result.

8. Information and Education: The recommendations made in this section are extremely valuable. They are on a vital subject recently submerged by concentration on economic matters. Preoccupation with recovery has tended to eclipse interest in the basic objective of freeing the minds of the Japanese.

It is fully agreed that censorship should be lifted on incoming literary materials and that pre-censorship should also be lifted and post-censorship limited to matter directly endangering achievement of the purpose of our occupation.

SCAP should indeed be directed and enabled to publish U.S. books for which copyright privileges have been obtained and an intensive program should be instituted to increase the publication and circulation of important literature. Funds for newsprint should be included in the 1949 budgets unless availabilities are adequate. The suggestion of using an off-shore transmitter to beam programs to Japan seems useful. However, it is felt that there should be no hesitancy in using stations in Japan to broadcast programs which will fundamentally, if not in detail, counteract Soviet broadcasts.

It is highly desirable that the recommendation on the interchange of persons be implemented at once. It is unnecessary to issue an interim directive to SCAP authorizing bilateral agreements, since he has already been informed by cable that he may make such arrangements. The U.S. should begin this program by establishing a large exchange program. There are many indications that American universities and personnel in the educational field would be anxious to participate. It lies with SCAP and the Government to put such a program into effect at once.

The recommendation that the Japanese be permitted to allocate a higher proportion of the national budget to educational purposes is vital. The “bread and butter” outlook which has developed in Army administration in the occupied areas, has tended to neglect the fundamental objective of re-educating the people.

9. War Crimes Trials: The recommendation is concurred in, subject to comment from the Legal Adviser.

The argument in the discussion is not fully concurred in. The discussion on pp. 39–40 is, in part, inconsistent with the basic purpose of the trials and the principles they are intended to establish. It should be fundamentally revised in the final report.

v. state department representation

This recommendation is fully concurred in, with the qualification that it should be taken up with General MacArthur as soon as possible for institution during his tenure. The idea of adopting it regardless of his wishes should not be excluded. As noted above (III, 2.) the existence of such a channel would facilitate fuller mutual understanding of this Government’s and SCAP’s views.

1. Carlisle H. Humelsine, Director of the Executive Secretariat, Office of the Secretary of State.