694.001/7–1851: Telegram

The Secretary of State to the Embassy in the United Kingdom 1

confidential

419. Art 16 draft Jap Peace Treaty now contains note stating Jap assets in Thailand subj to further consideration. These assets, amounting approx equivalent ten million dols, presently held various ways: in sterling in London, in baht held by Thai pending disposition, in baht in Thailand in US–UK joint custody, and in dols New York in US–UK custody. US and UK have long been considering disposition.2 UK favors disposal some assets for benefit UK and Dominions, with remainder to Red Cross under Art 16. US desires release these assets for Siam’s disposition, thereby equating Siam with liberated countries such as Indonesia which are permitted to utilize Jap assets for own purposes for fol reasons: (1) Thai good record payment US–UK war damage claims; (2) Thailand occupied by enemy and liberated even as Indonesia; (3) Thai strong stand against Communism by providing ground troops Korea, recognizing Vietnam, Laos and Cambodia, opposing Chinese Commie regime and declaring it aggressor, supporting US aims in UN and (4) Thai strategic importance in holding back Communism in SEA.

Necessary to eliminate note to Art 16 and settle this question promptly. In discussions with Dening, US proposed elimination of note to Art 16 and substitution therefor sentence “Owing to its complicated nature, the disposition of assets of Japan and its nationals in Thailand has been determined by an agreement of (blank date) 1951. Japan recognizes such disposition.” Dening, who appeared more appreciative polit importance of Thailand in Southeast Asia than Brit technical people, stated he wld cable suggestion to FonOff. Unless, however, problem brought home on polit level, doubtful Brit reaction wld be favorable. It wld be anticipated that, if suggestion met with Brit favor, US and UK wld, within next few weeks, conclude agreement, which wld be satis informally to Thailand, disposing of various categories of assets. Such disposition, it is anticipated, wld meet Brit and Commonwealth national interests re categories to which they have laid claim. Bulk of assets held by Siamese alone wld be released [Page 1202] to Thailand. Perhaps some contribution by Thailand to Red Cross wld be feasible.

Pls approach FonOff immediately, requesting favorable consideration US proposal, emphasizing necessity at this time maintaining Thailand’s active cooperation with UK and US against Communism.3

Acheson
  1. Repeated to Bangkok as number 170.
  2. Record of previous talks between the United States and the United Kingdom on this issue is not printed. Documentation is contained primarily in decimal files 292.4141, 292.9441, and 694.001, and in Lot 54 D 423.
  3. For the result of the U.S. proposal, see the memorandum by William M. Gibson, Deputy Director of the Office of Philippine and Southeast Asian Affairs, to Mr. Rusk, August 10, p. 1254.