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

740.00119 PW/3–2648

Memorandum by the Navy Member of SANACC ¹

undated

confidential

Reparations Removals of Merchant Shipping From Japan

1. In SWNCC 384 the U.S. Government has stated that much greater effort must be made to bring about the early revival of Japanese economy on a peaceful and self-supporting basis. To this end, the removal of all Japanese merchant vessels from the program of reparations removals appears to be a logical step. Japan has been disarmed and her ability to make war destroyed. The Department of the Navy considers that the retention of all merchant ships now available to Japan, regardless of tonnage or speed, would not be inimical to the security interests of the United States or any other nation.

2. SWNCC 236/43² would make available for reparations removal Japanese merchant ships in excess of an aggregate of 2,000,000 gross tons, subject to the limitation that all vessels of more than 6,000 gross tons which have a speed in excess of 15 knots should be made available for claim.

3. As pointed out in SWNCC 236/48, any reduction in merchant ships available to Japan would, in terms of foreign exchange, be reflected in decreased shipping receipts for the transport of exports from Japan and increased payments to foreign shipping for the transport of essential Japanese imports. Depriving Japan of any merchant shiping now available to her would increase the time required for Japan to reach a self-supporting economy.

4. SCAP has recently reported³ that in addition to the nine merchant ships listed in Appendix “B”, SWNCC 236/52, there are ten additional ships falling into this category with a gross tonnage of 91,701 tons and three salvageable vessels totalling 23,353 gross tons which could possibly be made available for reparations claim. SCAP further urgently recommends that no merchant vessels be distributed as reparations since they are vitally needed for current and future minimum requirements of the Japanese economy.

5. I recommend that SANACC:

a. Approve the deletion in SWNCC 236/43 of the limitations with respect to individual tonnage and speed to be placed on the merchant shipping which Japan shall be allowed to retain. No change is recommended in the limitations to be imposed on the building of new ships or the retention of ship repair facilities.

b. That the U.S. Member of the Far Eastern Commission be informed of this amendment and that he be instructed to seek agreement within the Commission.⁴

1. Circulated to SANACC as SANACC 236/56, March 25.
2. See SWNCC Army member’s memorandum, April 7, 1947, Foreign Relations, 1947, vol. vi, p. 382.
3. Telegram C 59067, March 6, from Tokyo, not printed.
4. In a memorandum of April 2, Maxwell M. Hamilton recommended to the Director of the Office of Far Eastern Affairs that consideration of the Navy paper be deferred until the return from Tokyo of the Under Secretary of the Army whereupon the Department could consolidate its position in the light of the Kennan report and Mr. Draper’s views on Japanese level of industry and reparations. Mr. Butterworth agreed with this recommendation.