Foreign Relations of the United States, 1949, The Far East and Australasia, Volume VII, Part 2

740.00119 FEAC/2–349

Memorandum by the Assistant Secretary of State for Occupied Areas ( Saltzman ) to the United States Representative on the Far Eastern Commission ( McCoy )

confidential

Washington , February 3, 1949.

Subject: Soviet Statement Regarding Economic Stabilization Program for Japan.

1. At the January 27th meeting of the Far Eastern Commission Ambassador Panyushkin made a statement to the Commission, the three essential points of which seem to be:

a. That issuance of the United States interim directive of December 10th¹ unilaterally modified the regime of control in Japan;

b. That this action was in violation of the terms of reference of the Far Eastern Commission; and

c. That the United States directive, by virtue of making no mention of the democratization of Japan, constituted an abandonment by the United States of that objective.

2. You are authorized to make the following statement at the next meeting of the Far Eastern Commission:

“At the January 27th meeting of the Far Eastern Commission the Soviet Member made a statement on the interim directive issued by the United States Government on December 10, 1948 regarding the economic stabilization of Japan.

“On behalf of my Government, I wish to comment on several points which the Soviet Ambassador made. It was suggested that by issuing the 10 December directive the U.S. Government modified unilaterally the regime of control in Japan. In our view the directive in no way affects the regime of control for Japan which consists of the authority in Japan of SCAP, the chain of command to SCAP, and the policymaking authority in Washington, Far Eastern Commission and the United States Government operating within the terms of reference in the Far Eastern Commission. Far from violating in any way the regime of control, the United States Government exercised its authority, clearly recognized by the terms of reference of the Far Eastern Commission, to take unilateral action on matters of urgency.

“It was suggested further that because the 10 December directive did not mention specifically the democratization program for Japan, the United States Government had ceased to be concerned in that objective. My Government was fully aware that policy decisions previously adopted by the Far Eastern Commission on the democratization of Japan were in existence. Since they are controlling, it was considered that there was no need to refer to them in this directive. In this connection, it seemed to go without saying that the major objective of an economic stabilization program for Japan is to create an economic environment in which genuine democratization can take place.

“My Government regrets that the Soviet Ambassador failed to understand the purposes of the recent directive to SCAP on economic stabilization for Japan and regrets particularly that the Soviet Ambassador’s mistaken understanding of the directive was made public before it could be corrected.”²

3. In addition to the above statement for the record, it would be appropriate for you to indicate once more that the United States Government will make available to the Far Eastern Commission full reports from SCAP on the economic situation developing there and on steps being taken to achieve the objectives set forth in the interim directive of 10 December.

Charles E. Saltzman

1. For U.S. Government statement of December 10, 1948, on the stabilization program for Japan, see Foreign Relations, 1948, vol. vi p. 1059.
2. This statement was made at the FEC on February 3 and quoted in the Department’s press release of February 17; Department of State Bulletin, February 27, 1949, p. 271.