794.5/10–3150

Memorandum by the Deputy Director of the Office of Northeast Asian Affairs (Johnson) to the Assistant Secretary of State for Far Eastern Affairs (Rusk)

confidential

Subject: Financing of Increased Troop Strength in Japan

There is quoted below the full text of an item appearing in Tokyo’s Weekly Economic Notes of October 131 on the above subject. If the opportunity arises, I recommend that we strongly support, at least, [Page 1343] partial “pay-as-you-go” for the support of our troops in Japan pending the conclusion of a peace treaty.

Plan To Finance Augmented Troop Strength in Japan as Occupation Cost

At recent meetings of top military leaders in Tokyo it has been tentatively agreed that, when the withdrawal of U.S. troops from Korea occurs, a sufficient number should be stationed in Japan so as to provide the complement of troops long called for but not made available; the number would exceed the former totals in Japan by some fifty percent. The important question of local financing for the additional logistic support required has also been discussed. It was decided that to provide separately on a dollar pay-as-you-go basis for the additional troops, supporting only about the original numbers through the currently used Termination of War Account supported by the Japanese Government, would be impracticable. It was accordingly determined that all troops should be provided for through termination of war accounting, as a cost of the occupation. It is reliably estimated that the annual cost to the Japanese Government for support of occupation troops has averaged ¥80–90 billion annually and that the augmentation of troops under the new plan would require an additional ¥30–40 billion annually, making support of occupation troops the largest expenditure in the national budget. Some officials of Economic and Scientific Section (ESS), General Headquarters (GHQ), SCAP, attending the meetings, have stated that this added budget expenditure would not only be a strain on Japanese Government finance, but, from a number of considerations, would at this time seem politically most unwise. Assuming the augmentation of forces in Japan to be a policy and military matter outside their proper jurisdiction, they have suggested that a simpler financial scheme far more acceptable to certain Occupation agencies and to the U.S. Government would include the elimination of GARIOA funds for Japan and, as an offset, placement of all Occupation costs on a pay-as-you-go basis, thereby simplifying accounting procedures and providing an approach far more palatable to the Japanese. It is believed that the Japanese Government would welcome this type of approach and, has, in fact, studied the problem of aid from the United States in the post treaty period in relation to dollar gains to be made from residence of U.S. troops in bases in Japan. Some Japanese officials tentatively estimate that exchange receipts from U.S. Government military outlays in the post treaty period may approximate 70 million dollars. The Mission considers the plan to augment forces in Japan at this time a many-faceted problem deserving, extremely careful scrutiny prior to implementation. It is possible that opposition to these proposals will be expressed in some military quarters of GHQ as they reluctantly accept the inevitability of an early peace treaty with Japan.”2

The foregoing information from Tokyo was transmitted for Department use only and accordingly we must protect Tokyo in making any use thereof with other agencies of the Government.

  1. Not printed.
  2. For further pertinent documentation, see the paper cited in the editorial note under date of October 15.