Control of Japan exercised by the Supreme Commander for the Allied
Powers is effected by the issue of directives to the Japanese or
the appropriate agency thereof by the Supreme Commander through
the Japanese Central Liaison Office at Tokyo, or Yokohama Liaison
Office. Those Liaison Offices are, it is understood, staffed by
personnel from the Foreign Office. Where action ordered by the
directive is not [1] by the Japanese authorities further
instructions to comply have on occasion been issued and in the
last resort appropriate action is taken by the Army authorities.

2. The Supreme Commander is advised in several spheres of activity
by special sections of G.H.Q. which have been set up by General
Orders and are as follows-
(1) Civil intelligence.

(2) Statistics and reports.

(3) Public health and welfare.

(4) Economic and scientific. [2]

(5) General procurement agent.

(6) Civil information and education.

(7) Legal.

(8) Natural Resources.

(9) Civil communications.

(10) Finance.

Copies of these general orders are being sent by bag. The main
functions of several sections cover the following matters:-

(1) Advice on policy relating to civil public taxation [3]
agencies and conducting investigations relating to compliance with
orders and instructions to the Japanese Government;

recommendations on provisions of Civil police and censorship and
prevention of development of activities or conditions inimical to
the objectives of the occupation forces; apprehension of persons
as directed by the Supreme Commander.

(2) Service as focal point for collection and recording of all
data pertaining to non-military activities of the occupation of
Japan and administration of civil affairs in F.E.

(3) Recommendations on the re-establishment of normal civil health
procedures to meet the minimum human requirements of the civil
population and to protect the health of the occupation forces; for
example production and traffic in Narcotics; liaison with the
Ministry of Health.

(4) Advice on economic and scientific policies to implement the
Potsdam Declaration; preparation of inventories of economic,
industrial, financial and scientific resources of Japan;

recommendations as to imports, exports, production and equitable
distribution of essential goods among the civil population, use of
transportation and public utilities, conversion of Japanese
facilities to production of civilian goods, stabilization of
prices, and as to ultimate form and restoration of Japanese
economy.

(5) Co-ordination of procurement of supplies and facilities by
Allied forces.

(6) Recommendations to effect the information and educational
objectives of the Allied powers, to expedite the establishment of
freedom of worship, opinion, speech, press and assembly; liaison
with the Ministry of Information and Education, press and radio,
educational and social organizations; public opinion surveys;

recommendations to expedite elimination of militarism.

(7) War crimes and general legal matters.

(8) Agricultural, forestry, fisheries and mining surveys and
reports, recommendations on policy for organization and
exploitation as required for rehabilitation within the terms of
the Potsdam Declaration and to meet the needs of the occupation
forces.

(9) Measures to co-ordinate signal system to serve internal use
and requirements occupation forces.

(10) Advice on a policy concerning internal structure of civil
Government in Japan; advice of the Supreme Commander on the
relation of the Japanese Government to Military affairs;

subordinate Government agencies and business; recommendations for
demilitarization, decentralization, elimination of feudal and
totalitarian authority and elimination of relationships between
military [4] and business [5] continue Japanese war potential.

[3.] A set of directives so far issued to the Japanese Government
follows by bag and these documents, with the above mentioned
General Orders, are of basic importance. The general sense of some
of the more important of them is summarized in my immediately
following telegram. [6]

4. A detailed examination of the directives will enable you to
form an opinion as to how far they coincide with Australian
objectives, but of course much depends on how far they are carried
out, supervised and policed. MacDermott, Foreign Office Liaison
Officer, considers that the Americans have done 'an incredibly
good job-just as we would have done it ourselves'.

The Canadian Liaison Officer Norman agrees substantially with this
view but points out that the Japanese Government while conforming
with instructions does not do more than it has to. This attitude
he attributes not only to a certain amount of inertia and absence
of a cooperative spirit but also to a certain grogginess resulting
from blows which some of the directives have dealt.

The abovementioned (small portion omitted in transmission) weeding
out of obnoxious personnel. Norman says that attention is now
being given to this.

6. Norman also considers that G.H.Q. is hampered in giving effect
to directives by a generally insufficient staff and in particular
by a lack of expert staff. For example, detailed reports furnished
by the Japanese Government on instructions cannot be examined and
considered here for this reason.

7. In spite of price fixing there is a black market in food of
which there is a great shortage; press reports state that this
year rice crop will be 20 per cent less than last year and the
lowest for 36 years. Norman considers that the country growers
will be disposed to hoard their crops owing to lack of goods on
which to spend the price.

8. The main general impression drawn from my four days observation
of Tokyo is of orderliness; lack of interest either way in
foreigners shown by the people in the streets who are uniformly
shabby and a few appear [7] attempting to carrying out normal
daily routines so far as conditions allow.