740.00119 PW/10–2848
The Acting Secretary of
State to the Secretary of the Army (Royall)1
top secret
Washington, October 28,
1948.
Dear Mr. Secretary: I am informed by Mr.
Kennan that he and Mr. Draper have reached substantial agreement on
the enclosed revised
[Page 1036]
policy statement on Japanese reparations. I have reviewed the
statement and, though seriously concerned over the expected
undesirable consequences for our foreign relations of the successive
revisions in the original State proposals, am prepared to urge the
statement’s immediate adoption by the National Security Council.
I understand further from Mr. Kennan, however, that the Department of
the Army now wishes to defer submission of the statement to the
NSC until it has been possible
to consult Congressional leaders in the matter after the elections.
It is the view of this Department that the present proposal amply
protects our domestic, even if not our foreign, interests, and
should be implemented at this time as an executive responsibility.
Therefore, although I am willing to agree that action in the NSC be deferred until the consultations
desired by the Army have taken place, I feel that I must clarify the
Department of State’s position in the matter to the NSC through the enclosed statement for
reading to the Council at its next meeting.
I assume that the Department of the Army will take the initiative in
arranging the proposed consultations with Congressional leaders, but
would appreciate being advised of the arrangements when concluded so
that the Department of State may be adequately represented. I
strongly urge that the consultations be held at the earliest
possible moment following the elections, or before the elections to
the extent feasible, and suggest that the enclosed revised policy
statement be presented to the Congressional leaders as the long
considered view of the State and Army Departments on this highly
complicated problem.
The revision of paragraph 9 of NSC
13/1,2 dealing with the
Far Eastern Commission, which was proposed by the Department of the
Army (copy enclosed) is satisfactory to this Department, and I am
advising Admiral Souers, Executive Secretary of the Council, to that
effect.3
Very sincerely yours,
[Enclosure 1]
top secret
Long Army Proposal on Japanese Reparations
for Incorporation in
NSC 13/1
20. Japanese Reparations
-
a.
- After prior diplomatic discussion with friendly FEC nations the United States
should submit the following proposals on Japanese
[Page 1037]
reparations to
the Far Eastern Commission, unless such extremely strong
opposition is encountered in the diplomatic discussions as
to indicate the need for review or withdrawal of the
proposals. The Japanese reparations interim directive on
advance transfers and allocations procedures (JCS Directive No. 75) should be
rescinded simultaneously with the submission of the
proposals to the Far Eastern Commission, except that it
should remain in effect with respect to allocations of
assets which have already been processed under the
directive.
-
b.
- The aforementioned United States proposals to the FEC should be that:
- (1)
- Japanese external assets located within the
territories of Allied nations on September 2, 1945,
or in former Japanese territories to be transferred
to Allied nations by international agreement, should
be retained by such nations and their value taken
account of as reparations.
- (2)
-
SCAP should be
directed to determine, announce publicly and make
available for reparations claims, within 30 days
after receipt of a directive on this subject,
categories and quantities of industrial facilities
and equipment specified below:
Industry
|
Unit
|
|
Pig Iron |
M.T. |
700,000 |
Steel Ingot |
M.T. |
1,400,000 |
Steel Rollins: |
M.T. |
400,000 |
Shipbuilding |
G.T. |
300,000 |
Nitric Acid |
M.T. |
82,000 |
Synthetic Rubber |
M.T. |
750 |
Aluminum and Magnesium
Fabricating |
M.T. |
50,000 |
Magnesium Reduction |
M.T. |
480 |
Primary War Facilities |
|
All, except as noted below. |
All other |
|
None, except as substituted for
primary war facilities. |
SCAP should use his discretion
in determining particular assets to be made available for
reparations claims in accordance with the quantities specified
above. Industrial facilities and equipment to be determined
available for reparations claims should not include buildings,
nor, in general, accessory equipment not an integral part of
facilities made available for reparations claims nor accessory
equipment essential to the operation of facilities to be
retained in Japan. SCAP may, if
necessary, exercise authority granted him by the FEC in FEC 084/21 to retain particular plants declared
available for reparations. However, all machinery and equipment
(including thermal power units) in primary war facilities (army
and navy arsenals, privately-owned munitions plants and aircraft
plants) should be made available for reparations claim,
excepting that such of this machinery and equipment as may,
within 30 days after his receipt of a directive on this subject,
have been designated by SCAP as
required for the purposes
[Page 1038]
of the occupation may be retained within
Japan and SCAP should furnish
wherever practicable in the light of occupation requirements
replacements as closely similar as can be provided from the
general inventory of Japanese industrial facilities which
otherwise would be retained in Japan. It is the view of this
Government that this provision should be deemed the final
application of paragraph 10 of FEC 084/21 so far as it applies to primary war
facilities.
- (3)
-
SCAP should be directed to
receive reparations claims from Far Eastern Commission
countries within a reasonable period and should determine
the final date for submission of such claims. This date
should not be earlier than 90 days subsequent to his receipt
of a directive on this subject.
- (4)
- allocations of available and claimed reparations should be
made by SCAP in accordance
with national percentage shares, substantially as herein
stated, and in accordance with the provisions set out in
Part B of JCS Directive No.
75 to the extent that such provisions are not inconsistent
with the policies adopted herein.
- (5)
- Actual allocations and deliveries should be made by SCAP as soon as possible after
issuance of the directive embodying this position in order
that recipient nations may have the benefit of facilities
and equipment as soon as possible and in order that
reparations deliveries may be completed within eighteen
months after issuance of the directive.
- (6)
- Claimant countries should be required to enter into
agreements with SCAP
establishing specific schedules for the removal of allocated
reparations facilities. SCAP should be instructed to arrange these
schedules with a view to minimizing the possibility of
dismantlement being rendered useless by any failure of
recipient countries to remove equipment from Japan. Should
any country fail to remove facilities on schedule, SCAP shall be empowered to
revise or suspend schedules for dismantling and delivery to
dockside of facilities previously allocated that country.
Although claimant governments should be informed that
no reparations deliveries will be permitted after the
eighteen months period, SCAP should have discretion to determine
whether assets delivered to dockside in accordance with the
above-mentioned agreements but not removed within this
period should be delivered or returned to the Japanese
economy.
-
c.
- An FEC or U.S. interim
directive to SCAP embodying
the above proposals should be accompanied by a U.S.
Government public announcement that in its view Japanese
reparations should be limited to the relinquishment of title
to and ownership of external assets outside Japan on 2
September 1945 and to the removal of the quantities of
industrial facilities and equipment from Japan specified in
the directive.
-
d.
- If, after reasonable consideration in the Far Eastern
Commission, the position in subparagraph b above cannot be agreed upon in the Commission,
the United States should consider the desirability of
issuing a unilateral directive to SCAP. The desirability of issuing
[Page 1039]
such a directive
should be considered in any event not later than February 1
if the Commission has by that time been permitted at least
one month’s consideration of our proposals.
-
e.
- Industrial reparations under the above proposal should be
made available to member countries of the Far Eastern
Commission in accordance with the following schedule of
percentage shares. The United States Government for its own
part should hold 18 of its 23% share of industrial
facilities for redistribution among those Far Eastern
countries which approve the schedule and which desire
increments to industrial facilities which they are entitled
to receive by their share. The United States Government
should allow a period not to exceed one month for
negotiation among countries wishing to participate in the
redistribution of this 18%, in which these countries can
seek a mutually acceptable redistribution of that share. If
no agreement is reached within this period, the said 18% for
redistribution should be divided among participating
countries in proportion to the percentage shares shown
below.
Australia |
8% |
Canada |
1 |
China |
30 |
France |
2½ |
India |
5 |
Netherlands |
5 |
New Zealand |
1 |
Philippines |
8 |
USSR |
4 |
United Kingdom |
12½ |
United States |
23 |
[Enclosure 2]
Statement by the Acting Secretary or State
to the National Security Council on Japanese
Reparations
top secret
The Council will recall that it was decided at the Council
meeting on September 304 that the State, Defense and Army
Members should attempt to resolve the remaining differences of
view regarding the action on Japanese reparations in NSC 13/1, “Recommendations with
Respect to U.S. Policy Toward Japan”, and to present an agreed
draft for consideration by the Council.
I wish to report that the Department of State has informed the
Department of the Army, following consultations between
representatives of the two Departments that it is willing to
accept the Army
[Page 1040]
amendments to paragraph 20 of NSC 13/1, with minor modifications understood to be
agreeable to the Army, in order that a definite reparations
policy may be decided upon and implemented without further
delay. The amendments were accepted with greatest reluctance
because of the anticipated unfortunate consequences of the
revised policies on our foreign relations. It is understood,
however, that the Army Department now wishes to postpone final
action on the Japanese reparations problem until it has been
possible to consult Congressional leaders in the matter after
the elections. It is the view of the Department of State that
the present State–Army proposal amply protects our domestic,
even if not our foreign, interests, and should be implemented at
this time as an executive responsibility. The Department of
State is nevertheless willing, having thus clarified its
position to the Council, to defer action until the consultations
desired by the Army have been held, urging that they be held
with the minimum possible additional delay.