740.00119 FEAC/10–649: Telegram
The Acting Secretary of State to the Acting political adviser in Japan, (Sebald)
485. [FEC mtg, 9/29:]1
Restitution of Looted Property ( FEC 011/55)
Re Phil amendment Para 8 of FEC 011/51, Chi member stated that he favored extension of date of distribution of secured fund, but wld vote against proposal to effect that distribution schedule shld be agreed upon among seven countries directly concerned on grounds that such countries shld discuss matter first. After consultation with Chi Rep Phil Rep stated that his proposal did not intend to discard method of distribution specified in policy decision as it stands but only to widen scope of clause so as to include other possible methods. First phrase of Phil proposal wld therefore read: “The secured fund shld finally be distributed among the countries herein specified in accordance with the percentage mentioned above, or in accordance with a schedule of shares to be agreed upon by such countries …” US Member stated he cld not agree with motion as proposed at this time but cld vote on question of date alone. Comm accepted last sentence Phil proposal which reads: “The secured fund shall be made available for distribution to the recipient countries not later than 1 Apr 1950,” by vote of 9 in favor with 2 abstentions (Neth and USSE).2
Jap Reparations and Level of Industry ( FEC 340)
Indian member made statement favoring US position on Jap reparations. Pertinent sections fol:
“Successive estimates have tended to modify the surplus industrial capacities in Jap considered available for distribution as reparations. We appreciate the growing anxiety on the part of the US to limit accordingly reparations removals from Jap to the minimum consistent with Jap’s peaceful needs.
“We have a good deal of sympathy for the Amer taxpayer who has to bear the burden of the cost of balancing the deficit economy of Jap for the past four years, and we feel that, if the position in Jap is as critical as has been stated in the US statement, there is a good case for allowing Jap to retain higher industrial capacities which will be devoted to production for peaceful purposes.
“We have never been actuated by a desire to suppress Jap’s standard of living to a level which will retard the attainment of the Allied objectives as set forth in the Potsdam Declaration and the Basic Policy of the FEC. We have consistently been of the opinion that for the [Page 875] successful functioning of a viable democracy in Jap the standard of living of her people shld be maintained at the level agreed upon by the FEC. We feel that the Allies, in their own enlightened self-interest, shld waive the claims for reparations from Jap’s industrial facilities, the removal of which may jeopardize her attainment of a self-sustaining economy within a reasonable period of time and thus open up the possibility of a growing unrest and a resurgence of Jap’s militarism.
“We are at the same time anxious, like our colleagues around the table, that efforts shld be made to prevent Jap from reviving her war-making capacity. We are glad to note the assurance in the statement of the US Govt that in no circumstances such a possibility wld be allowed to materialize. In order to achieve this objective—that is to eliminate from Jap the possibility of a military resurgence—we wld like the Supreme Commander to exercise general supervision of all Jap’s industries to ensure that none is diverted to war-like purposes.
“Turning now to the economic results of the retention in Jap of her industrial capacities, we feel that steps shld be taken to ensure that Jap does not again resort to such devices as currency depreciation, exchange manipulation, excessive economic concentrations which restrict competition, or unfair labour practices to produce goods which may endanger the standard of living of her neighbours. We suggest it shld be the duty of SCAP to exercise the necessary supervision in the matter.
“The US Govt has suggested that Jap’s external assets in the FEC countries shld be retained by these countries. This proposal is acceptable to us and I hope it wld be acceptable to other countries as well.
“However, I wld like to raise the question of the disposition of assets in neutral countries. There is, I understand, a proposal now before the Steering Comite which will permit marshalling of Jap’s assets in some neutral countries. I notice from the draft policy of the FEC that there is no proposal for the disposition of such assets. I wld urge the Comm to proceed to determine the nature of the ultimate disposal of such assets as early as possible. I wld venture to suggest that such assets shld be available for distribution to the countries eligible for reparations and that concrete steps shld be taken to achieve this objective.
“Finally, I understand that the question of the disposition of Jap assets in Siam has not yet been taken up in the Comm. I wld suggest we proceed to an early examination of this matter.”
Level of Econ Life in Jap ( FEC 242/32, FEC 297/10)
Substance of discussion transmitted SCAP in W–94950, Sep 29, 1949.
Under Other Business. USSR Member reiterated request for full text of conservation program and not just titles of some measures. USSR Member also referred to inquiry re fisheries inspection fleet.