316 Makin to Department of External Affairs

Dispatch 68148 WASHINGTON, 28 October 1948

SUBJECT: UNITED STATES POLICY TOWARDS JAPAN

Over the past week interest in United States policy towards Japan has been stimulated by an article in NEWSWEEK of October 25 purporting to give an 'inside' account of a 'new' United States policy.

Reports from Tokyo correspondents of American newspapers indicate that newspaper reports reaching Japan have set off a wave of eager and optimistic discussion by the Japanese. In order to assess the basis for such reports about a 'new United States policy for Japan' it is essential to review the trends which have been in evidence since the visit of George Kennan, director of the State Department policy planning staff in February.

It might be expected that the emergence of a new United States policy might first have been evident from United States actions in the Far Eastern Commission since the latter is the body for formulating policies, principles and standards for the occupation of Japan. Formal United States actions in the Far Eastern Commission, however, give only a limited view of the picture. The details have to be filled in from other sources. It might serve some useful purpose, however, to first review significant United States actions in the Far Eastern Commission during this year which could be regarded as pointing towards a new policy.

On the positive side there are only two points worthy of emphasis.

First was General McCoy's statement in the Far Eastern Commission on 21st January, 1948. [1] This in effect put the Far Eastern Commission on notice that henceforth the United States considered that the economic rehabilitation of Japan was the most important objective of the occupation and that the Japanese Government and people and SCAP should take all necessary steps to bring this about. Notice was also served that Congress would be asked to provide appropriations not only for subsistence items as in the past but also for the procurement of imports of industrial raw materials and spare parts to assist Japan to expand the output of its peaceful industries towards a status of self-support.

Cooperation was also asked from other Far Eastern countries in certain future policies which the United States would place before the Commission.

There has, however, so far been only one policy placed before the Far Eastern Commission by the United States which could be said to fall within the above category. This was a policy on 'Travel Abroad of Japanese Commercial Representatives [2] which has now been passed by the Far Eastern Commission.

The second positive action taken in the Far Eastern Commission was the development by the United States of the thesis that in addition to the authority which the Supreme Commander obtains on the basis of (a) directives issued by the United States Government prior to the existence of the Far Eastern Commission (b) interim directives issued by the United States Government in cases of emergency and (c) responsibility to carry out the terms of surrender, he also derives authority from the fact that as the 'sole executive for the allied powers in Japan' he can do whatever he thinks necessary for the administration of Japan in the absence of a specific policy decision of the Far Eastern Commission.

The United States are apparently determined that their plans for enabling Japan to achieve a status of self-support should be frustrated as little as possible by anticipated objections from other Far Eastern countries and the delays inherent in Far Eastern Commission procedures. At the same time they are reluctant to use their powers of interim directive. They appear to have been setting the stage for permitting the Supreme Commander to develop a wider area of responsibility than it had been assumed he had in the past, so that he could do everything possible considered necessary for the economic recovery of Japan, unfettered by the shackles of the Far Eastern Commission.

Much can be learned from negative action of the United States delegation in the Far Eastern Commission. On most economic questions, particularly those relating to reparations and level of economic life, members of the United States delegation have virtually paralysed the work of the Far Eastern Commission by their inability to state a position on a number of policies which they themselves had originally introduced and which after a long process of detailed technical consideration and ultimate compromise many of the other delegations are now able to accept.

The conclusion can be drawn, purely on the basis of this inaction, that for several months the United States Government has been unable to formulate policies for presentation to the Far Eastern Commission which would solve their dilemma of how to provide for a status of industrial self-support in Japan and at the same time make available as reparations, industrial facilities forming part of Japan's industrial war potential, which the United States itself had at one time considered necessary as a security measure against future Japanese aggression.

As relations with the USSR generally have deteriorated the whole emphasis concerning security from the United States point of view has changed. The prime question of security is no longer considered to be how safeguards can be erected against future Japanese aggression, but rather what is to be Japan's role in combatting the greater immediate menace to the future of world security, the Soviet Union.

These questions of course cannot be discussed openly in the Far Eastern Commission although the action of Ambassador Panyushkin at to-day's meeting of the Far Eastern Commission in asking pointed questions about a reported secret conference to defend Japan against a surprise attack may be an attempt to open up this whole question. The American attitude is nevertheless reflected to some extent by great reluctance to approve any policies which would give the Soviet any advantage in Japan. On the question of 'Access to Technical and Scientific Information' introduced by the Australian delegation [3], constant pressure was necessary before the United States was prepared to state a position and then only after SCAP had satisfied himself that he could set up administrative arrangements which would protect him from the Soviet Union using this policy to indulge in industrial espionage.

The same problem arises in connection with recent United States amendments to their own original proposal on Civil Aviation in Japan. An important question for the United States has been to devise a formula which at face value appears innocuous but which would provide SCAP with the excuse to prevent the establishment of any extensive civil air service operated by the Soviet to Japan (or perhaps of any Soviet air service at all).

While the conclusions concerning the trend of United States policy towards Japan which can be drawn from formal actions in the Far Eastern Commission are significant but limited, there is much evidence outside the Commission of the general direction in which United States policy is heading.

The State Department itself has made no public statements on policy towards Japan worthy of mention. However that other important agency of the United States government sharing responsibility for formulation of occupation policies, the Department of the Army, has been extremely vocal.

Nothing could be more misleading, however, in assessing United States policy than to imagine that when the formulation of policy is shared between interdepartmental groups and committees, responsible officials of any one agency, in their public utterances, speak with the full force and authority of the United States Government. This has been particularly true of the Truman administration where the various agencies have often had wide differences of opinion and President Truman has not exercised that central judgment and decision which in the American system of government only the President can provide.

In the case of Japan, the Department of the Army has virtually embarked on a public relations campaign to influence public opinion and Congress towards their point of view. The views of the Department of the Army have accordingly been generally well-known.

The Strike Report contains recommendations of a mission to Japan sponsored by the Department of the Army. [4] The visit of the Johnston (Draper) Committee to Japan was mainly for the purpose of presenting a report to Congress during hearings on appropriations which would support the Army's requests for an economic recovery programme for Japan. [5]

There was much in these reports with which the State Department agreed. They also contained, however, recommendations which in effect meant that the United States should go back on certain existing international commitments concerning reparations and the reduction of Japan's industrial war potential. The Department of the Army had no inhibitions about making these reports public.

State Department officials, however, have in their private conversations clearly indicated that such tactics were a considerable source of embarrassment to them. In fact while their own original views on these questions had changed there was a very wide difference of opinion between State Department views and those of the Army Department which would have to be resolved before any official United States position could be formulated.

Exactly how wide the area of the controversy has been they have however never been prepared to say.

In fact State Department officials who have been traditionally frank with our FEC delegation have for a long time displayed an unusual reticence to discuss details of the issues involved in their disagreement with the Army. This has been particularly true as the controversy has moved up above the members of the State Department at the working level.

On the wider issues in an overall policy towards Japan, Allison, head of the North East Asian Affairs Division of the State Department, as long ago as April, indicated just after the return of Kennan from Japan that the United States Government was engaged in reviewing their overall policy in the light of two years of occupation and that when thinking had been concluded would wish to have diplomatic talks with us and certain other Far Eastern Commission countries. Saltzman, Under-Secretary of State for Occupied Areas, again in May stressed the intention to hold diplomatic talks when the United States had developed its thinking. He stressed that the United States was concerned to see that Japan should be allowed to develop and maintain free democratic institutions free from the blandishment of any other country with a different system of government.

During the months which have elapsed, all enquiries as to when such talks might be expected have regularly produced the response that the United States was on the verge of agreement internally and would be ready to discuss these problems in 'a few weeks'.

[matter omitted]

In discussing the future role of the Far Eastern Commission Allison said quite frankly and informally that the United States government after having given considerable thought to this problem had come to the conclusion that the Far Eastern Commission, irritating and frustrating as it was to the United States on occasions, was not an easy body for them to get rid of It had been set up to formulate policies to implement the terms of surrender which had mostly been carried out. As time went on it was to be anticipated that there would be fewer policies. Such policies should in any case be of a broader nature than in the past and the Far Eastern Commission should not attempt to formulate policy in detail. The Far Eastern Commission could continue as a useful forum for discussion of Japanese problems in a general way.

Allison was prepared to speak frankly and in some detail on the United States position regarding a Peace Treaty. The State Department felt, he said, that while there were certain obvious advantages to be derived from a Peace Treaty, there was good reason for 'dragging the feet' on it until it became clearer how the cold war against the Soviet would progress. The fact had to be realised that there was a power vacuum in Japan and if the United States didn't fill it, the Soviet would. If left to itself Japan having no army, navy or air force would be defenceless.

While the United States would probably not object to holding a peace conference if all other Far Eastern Commission countries were advocating it, before starting to negotiate a peace conference they would wish to have prior diplomatic discussions with certain countries including Australia in order to first be convinced that whatever suggestions they had to offer would solve the problem of the power vacuum in Japan and would not in effect mean abandoning Japan to the Soviet Union.

The United States now felt that the USSR was anxious for a peace conference in order to get the United States occupation forces out. He felt that the USSR would continue to express general statements designed to give the impression that there were no real differences to prevent the holding of a peace conference.

When the time should prove appropriate for a peace treaty the United States felt that control should be as simple as possible, e.g. by a council of Ambassadors, combined with close control at the ports over importation and stock piling of strategic raw materials.

[matter omitted]

1 See Document 290.

2 See Document 315, paragraph (d).

3. 26 November 1947.

4 The Strike Report, dated 26 February 1948 and made public on in March 1948. It recommended against the removal of productive facilities, except primary war products, from Japan as reparations 3 The Johnston Report, dated 26 April 1948, released on 19 May 1948, was produced by a commission of businessmen who had accompanied William H. Draper, Under-Secretary of the Department of the Army, on a visit to Japan in March 1948.

[A1838/264, 250/10/4/4, iv A]