Foreign Relations of the United States, 1952–1954, China and Japan, Volume XIV, Part 2

894.00/6–1052

No. 570
Memorandum by the Assistant Secretary of State for Far Eastern Affairs (Allison) to the Under Secretary of State (Bruce)¹

confidential

[Washington,] June 10, 1952.

Subject:

• Organization to deal with Economic and Security Aspects of our Post-treaty Relations with Japan.

Problem

To determine what organizational arrangements are necessary so that the Department of State can deal adequately with economic and security aspects of our post-treaty relations with Japan.

Discussion

On Friday, June 6, I talked with Theodore Tannenwald, Assistant Director and Chief of Staff, Lincoln Gordon, Assistant Director for Policy and Planning, and Richard N. Johnson, Assistant Director for Resources and Requirements, of Mr. Harriman’s office. We discussed the nature of the organization needed to deal with economic and security aspects of our post-treaty relations with Japan. The principal points of interest are summarized briefly below.

1. There is full agreement between us that the central responsibility must rest with the Department of State. The Department of Defense has already accepted this position.

2. The ODMS people still have a somewhat more grandiose conception than we do of the job to be done. They believe that the big problem is to build interest on the part of all other Government agencies and especially of private business firms in the development of the economies of Japan and Southeast Asia, and then to maintain momentum. For this task, they believe that it is essential to have someone of the general experience and caliber of Mr. Dodge, who can contribute “leadership of the very highest order” and who will be able to deal directly with the top levels in other agencies and in business firms.

3. We agreed that Dr. Elliott’s² Interdepartmental Committee on Far Eastern Mobilization should be integrated into the new organizational arrangement and come under the chairmanship of the Department of State. Action in this connection, however, would not be taken until other organizational arrangements are made.

4. The ODMS people recognize that the organizational problem is essentially one for the Department of State to meet and, as a matter of fact, there was some difference of opinion among them. However, tentatively, they seemed to believe that it might be preferable to deal with the problem on the basis of a regional office of some kind within FE, thus tending to de-emphasize the purely Japanese aspects. FE has under active consideration the creation of a regional office and has already received concurrence in principal from A.

As the discussion proceeded, it became apparent that the ODMS people would be satisfied if the Department of State hired someone like Mr. Dodge as a special consultant to the Secretary for a period of three to six months. Reporting to the Secretary through FE, he would assume responsibility for getting the program under way and for making appropriate organizational recommendations for its continuance. The Department of State can not afford to do poorly with this job for any reasons within our control, so we have come to the conclusion that we should accept this suggestion if only to avoid future criticism that things would have gone better if we had only had a man of the proper ability. As to the person, we recognize the great advantage of Mr. Dodge’s experience. On the other hand, in Japanese eyes, he is associated with particular policy lines imposed upon them by the Occupation. In addition, the appointment of Mr. Dodge might seem to other countries in Asia to be an evidence of our intention to place undue stress upon the role of Japan. We would, therefore, prefer to make a strong effort to find someone else of his caliber before finally settling on him.

This course of action and the proper carrying-out of the function as a whole are dependent upon receipt of at least a major portion of the funds requested in your letter of May 6 to Mr. Harriman.³ I understand that there have been technical staff discussions of the way in which funds can be made available and of the exact amount needed, and that it seems likely that ODMS will be able to provide the funds.

Recommendations

Subject to the receipt of the major portion of the funds requested from the Director of Mutual Security in your letter of May 6, 1952,

(1) that the Department of State engage for a period not to exceed six months someone of the general background and ability of Mr. Dodge as a special consultant to the Secretary, reporting through FE, to get this program under way; and

(2) that I be authorized to inform the appropriate officials of Mr. Harriman’s office of the action which the Department of State proposes to take.⁴

1. Drafted by McClurkin.
2. William Y. Elliott.

3. In this letter the Department requested from the MSA, funds not to exceed $530,000 in FY 1953 for a staff, to be located partly within the Department and partly in the Embassy in Tokyo, to coordinate U.S. economic and security programs in Japan. (894.00/5–654) In a memorandum to the Secretary of Apr. 21, Allison in part had explained that although such funds should have come out of the Department’s monies, the proposal was formulated to be included in the normal budgetary process. (894.00/4–1752)

   In a letter to Bruce dated July 17, Tannenwald indicated MSA’s agreement to the proposal, but pointed out that in accordance with intervening discussions between the two agencies the maximum amount would be $250,000.

4. Allison stated, in a letter to Johnson dated July 10, that after considerable thought he had decided to ask Dodge himself to assume the position. (894.00/7–152) Dodge entered on his duties in August 1952, and performed them until his appointment as Director, Bureau of the Budget, in January 1953.