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

226. Telegram From the Embassy in Japan to the Department of State¹

Tokyo, September 20, 1957—10 a.m.

862. For Secretary from Herter.² I had a very good and frank talk with Kishi September 18. Following is summary:

Kishi said Fujiyama would present views of GOJ when in Washington but meanwhile he would like touch briefly on Japanese domestic political situation, US-Japan trade, SEA development, return of limited number Bonin Islanders, and Japan’s relationship with Republic of Korea.

Kishi said on his return from US he had carried out cabinet reshuffle, developed new policies and had completed drawing up basic principles for FY 1958 budget. These steps had been taken in hope present government would be able stay in power for long time and thus stabilize Japanese domestic political situation. Special Diet session would be convened November 1 for brief period at which time he would explain new government policies. Following Diet session, Kishi said he hoped make another trip to Southeast Asian countries including Australia and New Zealand for period of about three weeks.

Kishi stated in present domestic political situation primary problem was stabilization of economic situation, particularly international balance of payments. Balance of payments had deteriorated since last year and in late spring government had been forced take measures to stabilize situation. These measures included curtailment imports and “tight” money policy. As of now it appeared steps taken by government have to some extent been successful.

Kishi went on to say another problem in domestic situation was constitutional revision. More than year ago Diet had passed law to establish constitutional revision council. However, because of Socialist refusal to join, council had delayed commencing operations. In July this year he had finally set up council with members chosen from LPD and leading citizens in nongovernmental activities. Council had met once during August, and he hoped its final recommendations could be made basis for constitutional revision.

Kishi stated another problem was matter of labor policy. Since war Japanese labor had been inclined engage in “excesses” which had produced rather difficult situation. He was attempting establish equitable relationship between labor and management, and on this basis was planning take series of steps to curb “labor excesses”. One characteristic Japanese labor problems was large SOHYO organization, similar to American CIO, which was to great extent controlled by leftist elements. Within SOHYO organization there was large group government and public service unions including Japanese Teachers Union which could command majority. Unfortunately SOHYO organization placed primary emphasis on political objectives. Every year SOHYO engaged in national strike campaign in March timed coincide with end of Japanese fiscal year. During SOHYO campaign last spring government took firm position in weeding out those persons who violated labor laws. Government believes labor should confine activities to economic objectives, but political action by labor required government counter-measures. He said SOHYO is complaining against disciplinary action taken by government and he felt firm measures of government are gradually weakening SOHYO power. SOHYO still claims it will launch nationwide strike in October, but there is reason to believe fall campaign will not have support of people.

Kishi said government wanted take corrective action against SOHYO within framework existing laws. In past there had been tendency ignore full implementation existing laws for fear labor would accuse government of unduly repressive measures. Among other things government determined to stop check-off system union dues for government workers which will be done within existing legislation. In addition government also studying possibility amendment labor laws and when this study completed appropriate action will be taken.

With regard to Socialists, Kishi stated this party divided into two—left wing is supported by SOHYO and other by more conservative labor elements. In views of divided situation, Socialists do not have strength to wage long struggle against government. Partly in order compensate for its relative unpopularity and distract people from domestic issues, Socialists are sending two different missions to USSR and US.

Kishi stated JCP was also divided in [to?] such an extent it is now finding difficulty in convening party convention. Government is now prosecuting certain financial sources of JCP in hope of depriving Communists of large part of funds. It suspected that JCP receives financial assistance from Communist China and USSR and government is making careful study of this problem.

On subject of US-Japanese trade, Kishi said it is axiomatic Japan must trade to survive, and he emphasized US is Japan’s largest market for finished goods as well as source raw materials. Any disturbance in this market would have serious effect on Japanese economy. He pointed out Japanese imports from US exceeded exports by considerable margin, thus placing strain on Japanese dollar reserves. Unfortunately, there were various movements within US to restrict Japanese imports; these movements constitute irritant in US-Japan relations. At same time he expressed appreciation for friendly and firm attitude taken on this problem by US Government. Nevertheless, he expressed particular concern since next year is off-election year in US and feared that certain pressure groups might try to bring about restrictions. He stated Japan doing its best to avoid over concentrating on certain types exports to US which were competitive with US domestic industries. Japan was doing its utmost to provide orderly flow exports to avoid further aggravation of situation.

Kishi said restraints in Japanese imports by US would also seriously affect Japan in its trading with other countries since it would encourage other countries to do likewise. For this reason, from Japanese viewpoint US restrictions meant in effect restrictions throughout world which would immediately affect Japan’s economic life and its ability to earn living.

Kishi said Japanese business circles believed it might be desirable establish nongovernmental consultative committee composed of US and Japanese businessmen to iron out differences and take proper preventive measures to prevent these differences from coming to head. He understood such committee had been established between US and Canada. He said govt is carefully studying matter and he felt strongly such committee could make valuable contribution in alleviating problem.

Mr. Kishi went on to say that, although it might be small matter, Japanese businessmen were trying to fix price and quantities of exports to US to avoid creating problems in American market. He understood these efforts might run counter to anti-trust laws in US. He realized these laws could only be amended by legislation, but wondered if possibly they could not be so administered as to allow Japanese businessmen to stabilize in this way exports to US.

Turning to subject of SEA development, Kishi stressed need for social and political stability in this area. These countries must have firm economic basis if they are not to fall prey to Communists. He emphasized he would like to do his utmost to this end. Important problem for these countries was to provide necessary capital and technicians to develop their resources. During his visit to Washington he had set forth cerain thoughts on SEA development fund and technical training centers, and had requested US to make study. He was well aware some capital flows into these countries through World Bank and US economic assistance but, perhaps because of Communist propaganda, these countries are suspicious of receiving aid from one country and lack proper understanding of US goodwill. At same time, this area is not attractive for investments from private capital. It was his opinion that possibly satisfactory solution would be some kind of multilateral arrangement on mutual basis to provide necessary investment funds. With regard to technical training centers, he stated he believed Japan could establish these, but would be compelled to depend to great extent upon US financial assistance for necessary capital to develop economies of these countries.

On Bonin Islands he said these former residents had been moved out of islands at end of last war, and for long time have been very anxious to return. He pointed out US has already permitted certain number of residents of Caucasian origin to return. In his talks last June with Secretary latter had indicated US might be able give some favorable consideration to problem. Govt was not asking for return of all of residents but if US would agree to return of limited number, govt would be very careful in selecting appropriate individuals and would be ready to provide whatever financial assistance needed in paying for return journey and getting them established. The fact that only persons of Caucasian origin had been allowed to return was very sensitive matter and had caused real resentment in Japan as form of racial discrimination. He sincerely hoped US would agree to limited return since this issue was real impediment to long term development of stronger Japanese-US relations.

On Japan–ROK relations Kishi said it was unfortunate in this part of free world that two countries were at loggerheads. This was type of situation which could be exploited by Communists. He emphasized he was doing his best normalize relations and that he was deeply concerned because of 700 unfortunate Japanese fishermen who were being detained in Pusan. These fishermen were captured by ROK for alleged violation of the so-called Rhee line and imprisoned for varying periods. Even when their sentences were completed they were still detained by Koreans. He said this was serious domestic problem. Govt had conducted series of talks with ROK authorities which have now bogged down because Koreans always demanded additional Japanese concessions. GOJ has conceded as much as it could. Big question in negotiations has been property problem. Japan agreed to use US interpretation of Article IV of peace treaty as basis for settlement, but at last moment ROK changed its mind and question has been left pending. He hoped US would study problem and give whatever assistance it could to bringing about successful solution by providing appropriate advice to both sides.²

I expressed deep appreciation for PriMin’s clear and frank exposition. I assured him US very conscious of Japanese economic situation particularly necessity to correct present imbalance in international trade payments. US was very sympathetic in problems Japan faces with regard to exports to US and I was pleased to hear Japanese are striving for greater diversification in their US exports. I pointed out, however, that US also has similar problems with other countries. With regard to SEA development, I said a special committee in US Govt is studying problem. On Bonin Islands I said I was well aware Ambassador was very conscious of difficulties and he was doing everything possible to assist in solving problem. On Japan–ROK relations I emphasized this problem was of course primarily matter between Japan and ROK. However, since PriMin was requesting good offices of PE, we would do best we could to help if appropriate occasion presented itself and where it would not in any way be infringement on internal affairs of two countries.

MacArthur

1. Source: Department of State, Central Files, 794.00/9–2057. Confidential; Priority.
2. From August 23 to September 22, Herter and Ambassador James P. Richards, former Chairman of the House Foreign Affairs Committee, traveled to East Asia primarily to attend the Malayan independence celebrations, August 29–31. During the trip they also visited Manila, Saigon, Rangoon, Bangkok, Hong Kong, Taipei, Okinawa, Seoul, and Tokyo (August 18–20). Documentation on the entire trip is ibid., Conference Files: Lot 62 D 181, CF 899 through 905A. The report on their stop in Japan is in despatch 344 from Tokyo, September 20. (Ibid., Central Files, 110.12–HE/9–2057)
2. See Document 255.