FEC.19.

1. The Committee on basic policy dealt with Part IV economic
policy on 20th November and appointed a sub-committee of United
States, China and Australia to draft a report to be submitted to
the full Commission on 23rd November. The main points in the
discussion were as follows:

Sansom considered the United States document went into more detail
than necessary and considerably further than Potsdam. Evatt agreed
and the report will be based on Potsdam. Sansom also expressed
fear of disruption from the dissolution of Japanese big business.

Blakeslee [1] said that American policy was to bring about
dissolution of big business by the Japanese themselves rather than
direct action by Supreme Commander of the Allied Powers. The
Chinese desire ... [2] the limitation of Japanese standard of
living. Committee's difficulty was to state precise definition.

Sansom said an Allied Reparations Body might be necessary and
detailed statement of reparations policy should, therefore, be
avoided at present.

2. At this meeting Dr. Evatt informed Dr. Blakeslee that he
intended at the next meeting of the Commission to raise the
question of records of Allied prisoners of war in Japan. He
referred to New York 'Times' 18th November report of destruction
on surrender day of 30,000 records and said those responsible were
the equivalent to war criminals.

3. Your 1767, paragraph 4. [3] Owing to the adoption of a direct
approach by means of literal amendments, general statement was not
pursued but new opportunity has now arisen. A statement is being
prepared. Meanwhile, the general line is that of the telegram to
London of 10th August and subsequent telegrams concerning the
Emperor. [4] Other dominions had this, and substance was conveyed
to the United States by Eggleston. On the economic side,
Australian emphasis here has been on tougher treatment of Japan.

[matter omitted]