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  4. Document 21

21. Memorandum From Secretary of State Dulles to President Eisenhower 0

Washington, August 11, 1958.

SUBJECT

  • Introduction of Dollar Currency in the Ryukyu Islands

In accordance with your June 4 memorandum to me,1 Ambassador MacArthur discussed the Ryukyuan currency question with Prime Minister Kishi and laid before him the anticipated advantages and the potential disadvantages of the proposal. Ambassador MacArthur’s telegraphic report of his discussion is enclosed.2

Although Prime Minister Kishi did not recommend the introduction of dollar currency, he said that he understood the reasons which led us to desire the currency conversion. He believed that, although the conversion would create an adverse reaction in Japan and some difficulties, nevertheless, in view of the importance we attached to it, he could live with it if the announcement could be delayed until a reasonable interval after the adjournment of the Diet. He pointed out that a conversion announcement made while the Diet was in session would be picked up by the Socialists and would risk inflaming again the entire Okinawan issue. He assumed that prior to the announcement of conversion there would be a favorable decision by the United States on the Okinawan land compensation policy and perhaps on other constructive measures. He also expressed a desire to see the draft currency announcement reasonably in advance of its issuance.

With regard to the points raised by Prime Minister Kishi concerning the timing of the announcement: (1) The Diet is presently not in session but will reconvene on September 20. If an announcement on currency conversion is to be made, it should be made before the first of September. Otherwise we will run a chance of trouble with the Diet. (2) The Departments of State, Defense and Army have agreed on the outline of a new land compensation program which should prove acceptable [Page 51] to the Ryukyuans.3 The details of the program will be worked out in discussions in Naha between United States officials and Ryukyuan leaders.

While we recognize certain difficulties and disadvantages inherent in the currency conversion, now that we have Prime Minister Kishi’s understanding of the problem, I concur with the Department of Defense in recommending that we proceed with the announcement on conversion as soon as our new land program becomes public knowledge in the Ryukyus.

I recommend that you sign the enclosed suggested letter to Prime Minister Kishi,4 which we could forward by cable to Ambassador MacArthur for delivery. Ambassador MacArthur would be requested to discuss with the Prime Minister the exact timing and the form of the announcement of the currency conversion.

JFD
  1. Source: Eisenhower Library, Whitman File, International File. Secret. Another copy indicates that the memorandum was drafted by Charles J. Little and Charles H. Pletcher, both in FE/NA, on July 29. (Department of State, FE Files: Lot 60 D 90, Japan–Ryukyu)↩
  2. Document 13.↩
  3. Telegram 3349 from Tokyo, June 19. (Department of State, Central Files, 894C.13/6–1958) Also pertinent are telegrams 2699 to Tokyo, June 16, and 3452 from Tokyo, June 26. (Ibid., 894C.13/5–2658 and 894C.13/6–2658, respectively) All included in the Supplement.↩
  4. Documents concerning the new Ryukyuan land program include a July 2 memorandum of conversation between McElroy and Dulles on June 30; Department of State, Central Files, 794C.0221/6–3058. A July 2 memorandum from Robertson to Herter; ibid., 794C.0221/7–258. A July 11 memorandum from Parsons to Dulles; ibid., 894C.16/7–1158. A July 16 letter from MacArthur to Robertson; ibid., 794C.0221/7–1658. An August 21 letter from Robertson to MacArthur; ibid., FE Files: Lot 60 D 90, MacArthur, Douglas II. All included in the Supplement. High Commissioner Moore announced the new policy in Okinawa on July 30. (Telegram 26 from Naha, July 30; Department of State, Central Files, 894C.16/7–3058)↩
  5. Not found attached. The President’s August 12 letter was transmitted in telegram 215 to Tokyo, August 13. (Ibid., 894C.131/8–1358) See Supplement. In telegram 337 from Tokyo, August 15, MacArthur reported that when he delivered the President’s letter to Kishi, the latter expressed “deep appreciation” to Eisenhower for the consideration he had given to Kishi’s desire to postpone the announcement. (Department of State, Central Files, 894C.131/8–1558) See Supplement.↩