740.00119 FEAC/l–1049: Telegram
The Acting Secretary of State to the Acting Political Adviser in Japan (Sebald)
8. Subject is Summary FEC Mtg, Dec 30, 1948.
Review of Jap Constitution ( FEC–326/4)
Retained on agenda at request Sov Member.
Econ Stabilization in Japan ( FEC–329/3)
US Member made fol statement:
“The Australian Member has requested that my Govt explain the relation between para ‘h’ of FEC–329/2, an interim directive sent by the US Govt to SCAP on 10 Dec 1948, and the level of industry problem now being considered by the Commission. Other members of the Comm have associated themselves with this question. Para ‘h’ directs SCAP to ‘increase production of all essential indigenous raw material and manufactured products.’ The level of industry discussions which have taken place in this Commission have been concerned with determination of that industrial capacity in Japan which should be considered available for removal as reparations, it having already been agreed by this Comm that industrial facilities (except those which have been destroyed by virtue of being specialized war-making facilities) required for the needs of a Japanese peace economy should not be removed as reparations. In SCAP’s reports on Japan’s econ development we see that the overall index of Japan’s manufacturing activity, with no adjustments made for population growth, etc., is no more than 65% of 1930–1934 levels. Needless to say, none of this manufacturing activity is of a military character. Raw material shortages and difficulties in finding markets for manufactured output will make it most difficult for Japan to exceed 1930–1934 levels even with maximum effort on the part of the Japanese. Yet, unless those production levels are reached and, even, in some cases surpassed, due to population, technological and trade pattern changes, Japan will not be self-supporting and its deficits will fall upon the US taxpayer. My Govt feels, therefore, that there is no conflict and, in fact, no practical relation between the consideration being given to the level of industry problem by the FEC and para ‘h’ of the directive which the US Govt has issued to SCAP.”
Austral Member stated while his Govt has no real objection to substance of interim directive it was of opinion that FEC should not have been by-passed. He noted need to stabilize Jap economy had been recognized by the Commission and by the Allied Council early in 1947. He pointed that issuance of an interim directive should imply no inference that FEC and Allies generally had been unaware their responsibilities this connection. He felt one inference that might be drawn from issuance of an interim directive might well be that US had little confidence in FEC’s willingness or ability cooperate quickly an emergency situation. He added, however, US must bear considerable aliare of blame in paralyzing Commission in not submitting US positions on many important econ questions. That as result of issuance of interim directive it had been popularly assumed in Jap that objectives of this stabilization program are to be achieved, if necessary, at sacrifice of certain processes of democratization in Jap. He referred to relationship between wage stabilization program and development of healthy trade union movement and stated there was reason fear that possibly Jap Govt itself, under guise this economic stabilization program, might assume they have right go back to authoritarian and anti-labor practices to the subordination of democratic rights. He inquired of US member if it was intention of US Govt that this interim directive supersedes or is to be carried out at expense of democratic policies which have been passed by FEC. In reply to Sov inquiries US member replied the directive is broad statement of policy given to SCAP to work out with Jap Govt under the Constitution and democratic policies.
Trial of Japanese War Criminals ( FEC–314/4)
Neth member stated he now shared views of Phil member that there should not be any target dates and any recommendation in view of fact his Govt now had definite proof there were at least six hundred Japs fighting in Indonesia. The Commission agreed to refer the paper back to the Working Committee.
Labor Policy in Jap ( FEC–318)
USSR member called for vote on his proposal. Austral member requested postponement on grounds he would like to hear first US interpretation of applicability of FEC–045/51 to workers in Govt enterprises. Action postponed.
Under Other Business USSR member referred to reports in US press that Gen MacArthur had sent Wash a report in which it was suggested to re-establish Jap Army and question of re-arming Japan [Page 618] is raised. He added press reports link this plan of re-arming Jap with recent directive by Gen MacArthur to Jap Govt ordering development of a five-year plan for highway construction in Jap and stated his delegation considered it necessary that US member inform FEC on this matter.
Neth member asked for info as to news item which appeared in New York World Telegram that ninety-one Liberty ships are either chartered or are bought outright by Japanese.
- December 6, 1946, Department of State, Far Eastern Series No. 24: Activities of the Far Eastern Commission, Report by the Secretary General, February 26, 1946–July 10, 1947 (Washington, Government Printing Office, 1947).↩