740.00119 FEAC/2–1549: Telegram
The Secretary of State to the Acting Political Adviser in Japan (Sebald)
55. Meeting Steering Com Feb 8 cancelled.
Summary FEC meeting Feb 10 follows:
Economic Stabilization Japan ( FEC–329/3)
NZ member informed Comm his Govt entirely adopted views he expressed Steering Com Dec 21, 1948. He added his Govt regrets course action taken in matter and hopes Comm will discuss terms directive issued, as Comm entitled to. He concluded his Govt entirely concurs with point of view expressed by Mr. Bullock behalf Australia Dec 30, 19481 in which, amongst other things, he expressed an apprehension lest this attempt—this very proper attempt—at stabilization might preclude some of objectives which Comm has been aiming at in past.
French member called attn Comm to three fundamental conditions according to which, in conformity with Art 11 of Potsdam Declaration, Jap economy shld be rehabilitated: a) fixation of levels for econ life; b) suppression war industries; c) exaction of reparations. Altho Fr del was aware importance helping Japan become capable satisfying its own needs as soon as possible, it felt obliged emphasize fact that interests must [not] take precedence over those of nations which not so long ago were victims Japanese aggression and must not set aside right to reparations of countries which until now have recd no compensation. Fr del attached particular interest to FEC 242/32 which however imperfect had merit to determine for number of categories of essential industries, activity of Japanese econ life consistent with security safeguards which Allied Powers must impose on Japan. By authorizing only number of peaceful industries on one hand (FEC [Page 650] 242/32) and by suppressing war industries on other, Comm would have to certain extent complied with first two aforesaid conditions for restoration Jap economy in conformity with Potsdam Declaration.
Furthermore, it was view Fr del that levels econ life cannot be rationally and definitely estab without final div shares for reparations among legitimate beneficiaries. In mind of Fr Govt determination of levels econ life in Japan and settlement of reparations claims were obviously linked. Neither questions had recd any settlement in FEC debates. Besides, it also seemed clear Jap industrialists and traders were anxious learn how both questions were going to be solved and in absence of any such settlement general uneasiness prevailed in several fields of Jap economy.
On consideration of above Fr Delegation emphasizes necessity of review of whole problem:
- “a) by a careful study of measures taken or to be taken by SCAP in conformity with directive FEC 329/2 issued by the US Govt on Dec 10 1948, with reference to the economic stabilization in Japan, as compared with the proposed levels for economic life included in document FEC 242/32;
- b) by drafting simultaneously a final division of the reparations shares to be distributed among the countries members of the Far Eastern Commission.”
UK member referred para 3 FEC 329/2 and inquired of US member when program was initiated.
Policy Toward Patents, Utility Models and Designs ( FEC 284/14)
Indian member stated he still had no instrs. Chi member proposed deletion fol phrase in first sentence: “as he would have been entitled to under arrangements existing with Japan immediately prior to the outbreak of hostilities.” Australian member was of view meaning of sentence would disappear if reference to pre-war priority were omitted. Further discussion postponed.