740.00119 PW/1–2248
The Assistant Secretary of State for Occupied Areas ( Saltzman ) to the Under Secretary of the Army ( Draper )
Dear Mr. Draper: There are two comments upon the OCI interim report on primary war facilities in Japan which appear important enough to make without awaiting the comments of SCAP which, it is understood, the Department of the Army has requested.
OCI recommends the retention in Japan for the benefit of the Japanese economy of sixty-seven plants which OCI acknowledges are properly classified as primary war facilities. If permanent retention is intended, this is, of course, quite contrary to agreed U.S. and FEC policy, and cannot be accepted by SCAP as a basis for implementation of the policies he is now executing. If temporary retention is intended, pursuant to FEC 084/21 which authorizes SCAP to except such facilities temporarily from destruction or removal in order to meet the needs of the occupation,1 there arises a serious question of policy whether it [Page 947] is not much, better to stimulate instead rehabilitation and operation of those plants which, under existing policy, are certain to continue as a part of the Japanese peacetime economy. Plants retained temporarily under this authority must remain subject to reparations claim.
OCI observes that the fact that the plants in question are now in operation is a reflection of imagination, aggressive leadership or productive skill, and that the plants ready, willing and able to produce are the ones that can contribute expeditiously to Japanese economic recovery. Since shortage of raw materials and fuel rather than lack of productive capacity is the principal impediment to Japanese economic recovery, it is possible that the owners of the plants in question have in effect attempted to get the Allied authorities to give them special consideration with a view to obtaining decisions which are not consonant with the policies of the occupation authorities. The Department of States does not believe that this Government can defend in the FEC a course of conduct directly contrary to announced FEC policy on the ground that the Japanese have, since the war, created a fait accompli which must be recognized.
The second comment is with respect to the OCI recommendations for the deletion of a large group of plants on the general grounds that they do not conform to the criteria for primary war facilities laid down in SWNCC 236/43. If these recommendations are accepted, there will undoubtedly be many questions raised by the governments claiming reparations. It is suggested that OCI be informed of the necessity of providing justification for the recommendations in sufficient detail to enable SCAP to support each deletion.
Sincerely yours,
- See paragraph 10, The Far Eastern Commission, 2d report, p. 30.↩