Lot 54D423

Memorandum by Mr. Robert A. Fearey of the Office of Northeast Asian Affairs


Minutes—Dulles Mission Staff Meeting February 6, 9:30 A M

Treaty Paraphrase

Ambassador Dulles said that copies of the treaty paraphrase1 had been handed Messrs. Iguchi and Nishimura2 the previous day. They had appeared quite pleased with it, and seemed especially happy over the fact that Japan would retain territory down to 29 instead of 30 degrees north latitude. He said that we might expect trouble with the Philippines over our proposal that Japan pay full compensation for damage to Allied property in Japan. The Philippine Government would say that the United States and Britain, which had fairly extensive properties in Japan, were receiving full compensation while the Philippines were getting negligible reparations. Ambassador Sebald noted that General MacArthur was opposed to such compensation in principle, largely because of the opposition it might occasion in the Philippines and other countries.

Garrisoning Agreement

Mr. Johnson said that the paper3 which Mr. Allison and the Defense representatives were about to hand the Japanese representatives was more an editing job than a rewrite. A number of things had been put back in the paper which the Japanese had wished to delete. Everything hinged on whether the Japanese accepted the idea of an administrative agreement.

Pacific Pact

Ambassador Dulles said that in thinking of the problem of a Pacific Pact he had been struck by the analogy between the British attitude [Page 862] today and their attitude in connection with the Monroe Doctrine. The British had desired to participate in the Monroe Doctrine as an equal partner the same as they desire to participate in the proposed Pacific Pact.


Ambassador Dulles mentioned that he would be meeting with a group of lady members of the Diet at 3:15, and that he had prepared a short statement to read to them. At 4:00 he was seeing the leaders of the Ryukufukai and at 6:00 he planned to call on General MacArthur. It was decided that Ambassador Dulles should meet with the Prime Minister the following day to provide him with a clear resume of the conclusions to which the Mission had thus far come.

Surplus Property Agreement

Ambassador Sebald read a portion of the Surplus Property Agreement,4 involving some $14,000,000, in which it was stated that this claim would be dealt with as a part of the Japanese peace settlement. It was pointed out that the proper place to handle the matter might be in a financial and property agreement, already under consideration, to be signed simultaneously with, or shortly after, the treaty. It was agreed that Mr. Sebald would write a letter to Ambassador Dulles giving his recommendations in the matter and that the matter would be further considered in Washington.

Compensation Problem

The question was raised of whether Mr. Dodge in expressing the opinion that Japan could support a forty billion yen compensation burden had considered the impact of this item on the budget. Ambassador Dulles said that he was sure he had. General Magruder said that the more government funds that were used to satisfy claims the less would be available for rearmament, and that the two uses therefore had to be weighed against each other. It was pointed out that the current year’s Japanese budget totalled almost seven hundred billion yen. Ambassador Dulles further noted that the compensation would in effect be in blocked yen which would consequently be used in major part for local investment. Also, it was expected that total claims would be less than forty billion yen, many property owners having written off their losses for tax purposes. It was suggested that the only important danger was a possible appreciation of the value of the yen, but it was not felt that this was a serious danger.

General Magruder said that the Japanese count on using for defense in the coming year what they are now spending on the Police Reserve plus the reduction in the termination of war expenditures expected as [Page 863] a consequence of pay-as-you-go, totalling about 106 billion yen. General Magruder thought that this amount would be sufficient to double the present strength of the Police Reserve (75,000), leading to establishment of four additional divisions. Ambassador Dulles did not believe that a maximum of ten billion yen a year for compensation for damage to Allied property would necessitate a very important reduction in funds available for Japanese security.

  1. The provisional memorandum of February 3, p. 849.
  2. Kumao Nishimura, Director, Bureau of Treaties, Ministry of Foreign Affairs.
  3. Unidentified.
  4. Unidentified.