894.044/12–348

The Assistant Secretary of State for Occupied Areas (Saltzman) to the Under Secretary of the Army (Draper)

confidential

Dear Bill: As you know, it is our hope that a statement will be made as soon as possible by the United States Representative on the [Page 1055] Far Eastern Commission clarifying the position of the United States with respect to FEC–230. This statement will almost inevitably lead to a certain amount of discussion regarding the deconcentration program in Japan, in the course of which information will probably be requested regarding the role of the Deconcentration Review Board in the deconcentration program. Although General MacArthur’s telegram No. C–65098 of November 3 provides considerable material on this point, it omits one piece of information which, as I have pointed out previously, we lack in Washington and which is very likely to be requested, namely, the precise terms of reference of the DRB. I believe it would be a source of considerable embarrassment to General McCoy and to this Government if we were forced to admit in the FEC or before a Congressional committee that we did not know what this body’s terms of reference are. Consequently, it seems essential that we learn whether the terms of reference of the Board remain precisely as stated in General MacArthur’s telegram (CM–IN 59642) of January 26, in which he recommended that the Board be set up, or whether they have been altered in certain respects, as has been reported, and if so, what those alterations are. It is therefore requested that you obtain this information for the State Department.

There is one other respect in which information available in Washington regarding the Board’s activities is believed insufficient. Although it is stated in General MacArthur’s above-cited telegram of November 3 that the Board has submitted recommendations on a half dozen or more cases which were the subject of orders by the Holding Company Liquidation Commission, I believe that there is not enough information regarding the situations with which the HCLC and DRB were dealing in these cases for us in Washington adequately to understand the significance of their respective actions. It would seem necessary if businessmen in Japan and abroad are to obtain a reasonably clear idea of the bearing of the deconcentration law upon their enterprises, that they should have a reasonable indication of what types of enterprises will be affected by the Deconcentration Law and what types of dissolution plans are considered appropriate or inappropriate by the Board, and the reasoning relating to the Board’s recommendations on each case. You may recall in this connection the complaint registered last July by Mr. Herrod of the International General Electric Corporation regarding the present uncertainty on the part of American businessmen in Japan as to the effect of the Deconcentration Law on their enterprises.

It is requested that you obtain for the State Department the essential information as to the background of the action taken by the HCLC and DRB in these and subsequent cases so that we may know the manner in which the deconcentration policy and law are being administered. It is suggested, for example, that this information should [Page 1056] be obtainable from an examination of the dissolution plans and DRB rulings relative to each deconcentration case.

Sincerely yours,

Charles E. Saltzman