Foreign Relations of the United States, 1955–1957, Japan, Volume XXIII, Part 1

224. Letter From the Assistant Secretary of Defense for International Security Affairs (Sprague) to the Assistant Secretary of State for Far Eastern Affairs (Robertson)¹

Washington, September 18, 1957.

Dear Walter: Thank you for your letter.² It has served to focus our attention on the pressing Japanese problem. A Defense proposal for the U.S. position on this subject is being prepared. I am taking this opportunity to respond to the subject matter of your forwarding letter.

The talks which Jack Irwin and Charley SHUFF had with Admiral Hoshina, Mr. Uemura and Mr. Kaihara in June centered around the prospects of increased U.S. orders for Japanese industry, at their suggestion. During these talks many problems were discussed with Mr. Uemura, as a representative of Japanese industrial interests, ranging from U.S. funds available for MAP and OSP to the balance of Japanese defense efforts, requirements and capabilities. Various ways and means were also discussed which might lead to a Japanese proposal for the solution of these problems. While all of the subject matter was in consonance with the basic U.S. policies for Japan, the framework of our discussions was such that no U.S. proposal was or could have been made.

For some years now, you have shared our concern that Japan has not been willing to contribute more than 1½% of its GNP to its defense effort especially, as indicated in your letter, when the future portends a continuous reduction in Military Assistance appropriations. In view of our concern for the best interest of Japan’s military effort, as well as other countries in a similar fix (short of dollars), we proposed legislation, which Congress passed, that will permit them to procure their military requirements with local currency. This legislation would enable Japan to buy her military requirements under Section 103(c) of the MSA as amended, for 1958, should she wish to do so.

This concept as outlined in your letter is not new; it has been discussed with staff members within the Department of State, ICA, Treasury, and the BOB since November 1956, and was forwarded to the Department of State as a Department of Defense position paper for the Kishi talks.³ Also last June when returning to Washington from the “Quantico Weekend,” I had the opportunity to discuss this idea with Mr. Dulles, who appeared quite interested in its possibilities.⁴

We believe you will agree that since U.S. legislation allows Japan, or any other country for that matter, to procure military requirements for local currency, it behooves the U.S. to utilize the generated local currency to its best advantage. A yen fund could be used to procure other MAP Far East requirements in Japan, thereby enhancing its military production base, providing jobs for the thousands being laid off because of the withdrawal of U.S. forces and introducing Japanese products to other Asian countries.

We know of no change in MAP policy toward Japan; however you are quite aware that there is a $500,000,000 reduction in MSA appropriations for FY 1958, and when the U.S. apportions its limited resources to the most urgent world-wide defense priorities, Japan, in view of its expanding economic and industrial capability, can hardly expect that prior levels of U.S. aid will be maintained. In view of these same considerations, Defense is seriously considering the possibility of offering military assistance to Japan on a reimbursable aid basis.

Consequently, it would appear to be particularly opportune when Fujiyama and Ichimada visit Washington next week, to establish a climate that might elicit a Japanese proposal along the line we have suggested, particularly since it is known that they have been giving this matter serious consideration.

It is hoped that this letter relieves your concern and that we can further discuss the broad aspects of this concept personally before Fujiyama visits Washington next week.⁵ It is suggested that our position be developed after we have had an opportunity to discuss this matter with you.⁶

Sincerely yours,

Mannie

1. Source: Department of State, Central Files, 794.5–MSP/9–1857. Confidential.
2. See footnote 10, supra.
3. Not found.
4. Reference is to the “Secretaries’ Conference” held at Quantico, Virginia, the weekend of June 15–16.
5. No indication that such discussions took place has been found in Department of State files.
6. See Document 234.