280 Ball to Department of External Affairs

Cablegram ACJ15 (extract) TOKYO, 29 May 1946, 3.55 p.m.

IMMEDIATE SECRET

[matter omitted] [1]

Item five was S.C.A.P.'s request for comments on the Japanese Government's proposals for rural land reform. Derevyanko criticised these proposals very strongly. The full text of his statement will be sent by bag when available. I made the following statement:

In the two working days available for the examination of this item on the agenda, I regret that I have not been able to make a careful enough study of the material to enable me to make any confident o[r] [2] final comment. However, I here set down certain observations which represent my first thoughts on the issues raised. I hope they may be of some help to the Council in its discussions.

1. The average maximum area o[f] land which may be held by non- operation owners should be reduced from 5 to 3 cho, or possibly less. (Note: An average holding of 5 cho is high for Japan. The total area of land held by owners possessing more than 5 cho is approximately 1,800,000 cho and if from this area is deducted the land worked by owners plus the permissible maximum of 5 cho per resident non-operating owner, the amount of land actually available for distribution might well be less than 1,000,000 cho or less than one third of the tenant cultivated land. Reduction of the maximum average from 5 cho to 3 cho or less would increase considerably the area of land available for transfer to tenants and avoid the danger of the scheme being substantially ineffective.) 2. The method of arranging the transfer should be such as to protect the tenants' interests equally with those of the landlords. (Note: Under the existing act initial [negotiations are carried out between the] landlord and the tenant. If agreement is not reached, the question is referred, firstly, to the local Rural Land Commission and then to the Prefectural Rural Land Commission.

The tenant's position is so much weaker than the landlord's that there is considerable danger of his being forced into an unsatisfactory agreement as a result of direct negotiation with the landlord. [If] the proposed sale is referred to the local Rural Land Commission the constitution of these Commissions under the Act appears to weight the scales heavily in favour of the landlord's point of view.) 3. The position of tenant farmers should be protected by legislation, designed to enforce the following- 1. Fair rents, 2. Payment of rent in cash if requested by the tenant, 3. Written tenancy contracts.

(Note: [Even] if the reform were completely effective, the problem of tenant proprietor[ship would remain for some] years until all transfer were completed. With a partly effective reform, which must be the reasonable planning assumption, there will still remain a large number of tenants. It is important, therefore, that efforts should be made to improve conditions of tenants.) 4. Reform of rural taxation should be linked with the plan for land reform. (Note: At present farmers are taxed more heavily than merchants and manufacturers. This heavy taxation is a serious obstacle to any substantial increase in the economic stability and standard of living of the rural population.) 5. In order to promote the economic security of farmers it is important to ensure not only stable prices for their products, but price control of essential raw materials, particularly fertilisers. (Note: Fertilisers account, on the average, for 20 to 25% of the cost of production for farmers.) 6. Every possible measure should be taken to foster the development of rural co-operative activities as they are an important factor in stabilising incomes and reducing farm costs.

1 The cablegram reported a meeting of the Allied Council for Japan on 29 May.

2 Material in square brackets has been corrected/inserted from the Tokyo copy on file AA:A5104/2, 1/3/2.

[AA:A1067, ER46/13/24]