IMMEDIATE

Japanese Coal Mining Industry.

1. We concur in United Kingdom view that the Allied Council should
examine the plan prepared by the Japanese. From your reports it
does not appear that you have been provided with details of the
Japanese plan. In these circumstances discussion in Allied Council
on Wednesday should be general. You should request the necessary
information before governments you represent are committed to
approval of a definite scheme.

2. Nationalisation. In discussion you should support the principle
of nationalisation of the Zaibatsu mines along the lines of the
United Kingdom views mentioned in your 19 [1] with which we are in
accord. However, as this is a question of policy on which FEC has
not reached a conclusion you should take the line that the other
governments who are directly concerned with occupation policy for
Japan, i.e., all members of FEC, should have an opportunity to
discuss this principle and therefore you should recommend that
while the Allied Council should assist General MacArthur by
stating its views final decision should await a statement of
policy by FEC. For your own information we intend to take up this
question at once with FEC.

3. Management. As SCAP was authorised in the general directive
issued to him by the President (vide FEAC 3 [2]) to take all
necessary action to see that production was effectively organised,
it would be appropriate for the Allied Council to advise on
implementation of this policy. We favour a government organisation
for management of all the mines. The principle in paragraph 4 of
your 19 is therefore approved but limitation to a specific period
might raise difficulties.

4. Supervision. SCAP is also required to supervise Japanese
operation of industries where necessary and it would appear from
your 17 [3] that this should be carried out in coal mining
industry. As United Kingdom paper recommends Japanese should bear
costs of supervision. We would make the following comment for your
guidance. Dominion's Office inform us that they have asked UKLM
[4] to draw your attention to United Kingdom memo on future
organisation of Japanese economy. We note that this suggests
'United Nations' supervision. We do not disagree with the
principle but feel that it would be more appropriate at present to
discuss the question in terms of 'Allied' supervision. Our reasons
are
(A) ACJ is not an appropriate body for discussion of long term
i.e. post occupation policy
(B) It would be competent for ACJ to advise on arrangements for
'Allied' supervision which in practice would mean supervision by
SCAP
(C) 'Allied' supervision would not prejudice subsequent adoption
by appropriate international procedure of post occupation United
Nations supervision.