894.10/12–1752: Telegram
No. 621
The Ambassador in Japan (Murphy) to the Department of State
1945. Garner of World Bank expressed fol views to Emb officers today: Doubts Bank will conclude Japan credit worthy.1 Justifiable [Page 1369] loan of some 20 mil dols futile in encouraging Japan take suitable measures strengthen economy by adequate credit and fiscal control, channeling investment, tax incentives to savings, reducing costs. Credit of 200–300 mil dols regarded as volume necessary enable Bank enforce such measures. Such volume conceivable only in closest coop US Govt on understanding stable friendly Japan must be maintained tho involving calculated financial support by US on grant or procurement basis after present special dollar receipts disappear with further understanding no loans from US Exim Bank.
Emb believes present govt wld hesitate adopt cited measures in view polit commitments against economic controls and insignificance of 200–300 mil dols credit when compared present volume special dol receipts.
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A portion of despatch 1137 from Tokyo, Dec. 16, reads as follows:
↩“On December 9, 1952, Minister Sankuro Ogasawara, Director General of the Economic Counsel Board of the Japanese Government presented a confidential request to Mr. Robert L. Garner, Vice President of the IBRD for a loan to be used for power development. The stated purpose is to increase national income by 20 per cent during the next five years by expanding industrial production from the present index of 135 (1934–6–100) to 170 in 1957, utilizing as a base for the expansion an extensive power development program. A loan of $320 million is requested, the foreign exchange to be utilized in the purchase of raw materials including iron ore, iron scrap, coal, copper ore, rice, sugar, food oils and cotton. As low an interest rate ‘as feasible,’ as long a term ‘as possible,’ and a five year period of grace prior to initial principal repayment is requested.” (894.10/12–1652)