Preparatory Committee for Peace Treaty with Japan

I would like to bring under your notice one or two matters in this
connection.

One of the difficulties we are experiencing in our work on the
Treaty is the question as to the ambit of the Treaty. For
instance, is the Peace Treaty to deal only with Japan or is it to
deal with such questions as the territorial allocations and the
question of Manchuria and Korea? It struck me that in talking to
General MacArthur you might have the opportunity of ascertaining
America's views on the following subjects:-

1. Territorial Allocations

Are these to form part of the Peace Treaty? If so, certain
allocations have already been made, e.g., the Kuriles and Sakhalin
go to Russia, and the Carolines, Marianas, etc. are under
trusteeship to America. There are quite a number of other Islands,
such as the Ryukyu, Bonin and Volcano Islands. Does America expect
to have these? I should say our policy was that she should have
them. I have no ruling on the subject.

2. Manchuria

I think that Russia may want to exclude this from the Peace Treaty
and even China may take the view that it is all fixed up by the
Agreement of 1945. [1] There are, however, one or two things that
still remain unsettled. One is the status of Dairen. Is it to be
handled on the Treaty-port line; is it to be governed by a
Municipal Council; or is it merely to be a port in which freedom
of entry and use to all nations is to be guaranteed by China? I
rather think that the latter is the only arrangement to which
China would agree, but, of course, China cannot be relied upon as
she is not able to enforce anything as against Russia.

3. Korea

We do not know whether it is the intention to deal with Korea in
the Peace Treaty, and I presume that this must wait until
something comes out of the Conference between Russia and America
which is at present sitting. I presume the Americans have some
views on this which would be handy for us to know.

4. Fishing Rights

In dealing with Sakhalin and the Kuriles, it must be remembered
that the Japanese have been accustomed to fishing off these coasts
for hundreds of years, and, during recent years, a big canning
industry for salmon has grown up. Under international law, they
would have no right to land on the territories for the purpose of
obtaining bait or for getting their fish cured. This has always
been a fruitful subject of dispute in history. You will remember
that fishing rights off Newfoundland were first dealt with by the
Treaty of Utrecht [2] and have several times since then been the
subject of International Treaties. I would say that, as fishing
occupies such a large part in the Japanese economy, it would be a
good thing to deal with these matters. While Japan held part of
Sakhalin, she allowed the Russians fishing rights off her coasts.

5. Open Door

At one time, America was very keen about extracting opendoor
undertakings from China and other countries in relation to
Manchuria and other ports of China. There are several treaties or
statements of policy which contain guarantees of this kind. Are we
to say anything about them in the Peace Treaty?

6. Constitution of Japan

The position with regard to this is that we have secured the
decision of the Far Eastern Commission that the Constitution will
be reviewed. Something will have to be said in the Treaty, but an
agreement to revise a thing is not an agreement as to the
substance or the methods of revision. Is the Constitution to go to
referendum, for instance? Or is the Supervisory Council for Japan
to give its consent to a revision of the Constitution?

7. Zaibatsu

We are spending a lot of time in considering how the Zaibatsu can
be liquidated with safety. So far as I can ascertain, the American
view is that they have already been liquidated. In one American
despatch read in the Far Eastern Commission, it was stated that
Colonel Kramer [3] had spent an evening with the Zaibatsu and
everything was arranged for its liquidation. This, of course, is
absurd. We are endeavouring to work out a mechanism for the
liquidation of these monopolies but have no idea as to the views
of other parties.

8. Control

Another important question is the intensity and duration of the
control. Our Economic Advisers in Tokyo and here are quite clear
that Japan is in a state of financial and economic crisis and that
she can only be lifted from this by very stringent economic
controls, such as price-fixing, wage-pegging, the control of
central bank credit, and the nationalisation of industry to a
greater or lesser extent. A good many of these things are contrary
to the American mores. I do not know what the views of other
parties would be as to an elaborate system of control, such as we
feel inclined to suggest.

Then there is the question as to the duration of the control. The
plan on which we are working assumes that military control will go
on while the Supervisory Commission considers it necessary. At
some stage, it may be exchanged for a civilian control. In the
latter case, the Allied nations should retain power to enforce
their control by military means, if Japan shows a disposition to
break the undertakings in the Treaty. For this purpose, some base
nearby should be retained.

9. Rearmament

The Treaty should contain certain guarantees by the Japanese
against rearmament. As far as one can see, the Americans are going
to advocate a relaxation of control from the time of the Peace
Treaty, but nothing is said as to the means by which the
obligations of the Treaty can be enforced if Japan is inclined to
break them. Some base nearby seems necessary. The British also
appear to be in favour of an early relaxation of control.

I am bringing these matters before you because you will probably
be talking with the General and his staff and possibly with the
British Ambassador about various phases of the Peace Treaty, and,
if you can get a line on any of these questions, it will help us
considerably. Otherwise, we might come to the Peace Table with an
elaborate set of our provisions which will be swept aside because
of the unwillingness of America and Gt. Britain to consider them.

If we can get some idea of their attitude as at present, we may be
able to take steps to convince them; an opportunity may arise to
convince Gt. Britain at our Conference at the end of August. In
this way, we may be able to draw up a set of provisions for the
Treaty which would be satisfactory.