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

740.00119–Control (Japan)/5–1949

Memorandum by the Director of the Office of Far Eastern Affairs (Butterworth) to the Under Secretary of State (Webb)

secret

[Washington,] May 19, 1949.

Subject: Situation in Japan; Japan Policy Problems

The occupation of Japan will soon enter its fifth year. Although the occupation has in many respects been an outstanding success, it began to approach the point of diminishing returns almost two years ago, not long after our proposal of July, 1947, for a peace conference. Although there has as yet been no active resistance to the occupation, and little passive resistance directed specifically against the occupation itself, the Japanese people, who in our own estimation were ready for a peace treaty two years ago, have become increasingly restive under conditions of indefinitely continued military occupation, and desire for a peace settlement is widespread. Partly as a result of these feelings, the Japan Communist Party increased its representation in the Diet from 4 to 35 in the general elections last January. Although the Communists still constitute a small proportion of the total population the Communist threat in Japan is a real one.

Coincident with, and a partial cause of, the gradual souring of popular attitudes toward the occupation in Japan has been the disappointingly slow revival of Japanese production and trade. Production is still only 65 per cent of the 1930–34 levels, when the population was some 15 million smaller. Annual U.S. aid requirements for Japan have increased rather than diminished, and the production increases which have been achieved in Japan have been based almost entirely on this aid and deficit financing by the Japanese Government. It was accordingly necessary for the U.S. Government in December, 1948, to direct the institution of a comprehensive stabilization program to place the Japanese domestic economy on a sound basis. Although substantial progress has been made in implementating this program it will be some time before its objectives can be achieved, and even longer, optimistically 1954 or 1955, before Japan can hope to regain a self-supporting status. The United States on May 12 announced its opposition to the removal of any further reparations from Japan in order that the Japanese might devote their full energies and resources to the stabilization objective.

In March, 1948, Mr. Kennan made a trip to Japan and on his return submitted recommendations for the progressive adjustment of occupation policies to permit continuation of the occupation pending a peace treaty without jeopardizing the gains achieved up to that time.¹ Basically these recommendations, subsequently incorporated in NSC 13/3,² were that SCAP should shift responsibility as rapidly as possible to the Japanese, with a corresponding reduction in SCAP personnel, that the Japanese should be permitted to proceed in their own way with the assimilation of the reform programs, and that the psychological impact of the occupation on the Japanese should be reduced to a minimum. Unfortunately these recommendations have been only partially carried out. The developing situations in Japan and in the Far East, and the necessity for both political and economic reasons for putting the Japanese on their own responsibility, have caused the Department to give renewed consideration to the conclusion of a peace settlement. A letter has been prepared from Secretary Acheson to Secretary Johnson requesting information regarding implementation of NSC 13/3, and a memorandum has been sent to Admiral Souers of the NSC requesting a strategic evaluation of U.S. security needs in Japan.

Leading Japanese policy problems at the present time may be listed as follows:

1. Conclusion of a Peace Settlement. Study of this matter is proceeding within the Department.

2. GARIOA and EROA Appropriations Request. The Department is supporting the Army Department’s appropriation requests for the coming fiscal year for Japan before the Appropriations Committees of Congress.

3. Reparations. We are attempting to win the widest possible acceptance by other FEC nations of our reparations position announced in the FEC on May 12.

4. Level of Industry. The United States announced its position on May 12 that there should be no restrictions on Japanese peaceful production or levels of productive capacity in industries devoted to peaceful purposes. Efforts are now being made to arrive at an agreed position within the Department on a precise definition of what should be considered “peaceful industries” and what should not. Immediately a Departmental position has been arrived at on this point consultations are planned with the Army and Navy Departments, the Maritime Commission, and other interested agencies and organizations before submission of appropriate policy proposals to the FEC.

5. Japanese International Relations. The United States has submitted to the FEC a policy proposal providing for broadening of Japanese international contacts under SCAP’s guidance to hasten Japan’s resumption of a more normal position in the world community. This proposal has met with a disappointing response from other FEC Member Governments.

6. Japanese Labor Legislation. The Australian Representative on the FEC has submitted a policy proposal on this subject which has received considerable support from other Members. If adopted, this proposal would overrule SCAP in the position which he has taken on the rights of Japanese workers in Government enterprises. The Department is endeavoring to work out with other interested agencies and with SCAP a position which will appear reasonable to other FEC Governments but which will not embarrass SCAP. We may, however, be forced to veto the Australian proposal.

7. Strengthening of Japanese Civil Police. The State and Army Departments are endeavoring, thus far unsuccessfully, to obtain SCAP concurrence in certain measures for strengthening of the Japanese civil police, pursuant to the decision on this point in NSC 13/2. Strengthening of the police in Japan is extremely important before U.S. troops are withdrawn.

1. March 25, 1948, Foreign Relations, 1948, vol. vi, p. 691.
2. May 6, p. 730.