794.5 MSP/8–1854
No. 784
The Chief of Staff, Far East Command
(Magruder) to the Economic
Counselor of the Embassy in Japan (Waring)
Dear Mr. Waring: Reference is made to my letter of 24 July 1954, in which I indicated concurrence in principle with Mr. Meyer’s report, “An Economic Program for Japan” dated July [Page 1696] 19541 and offered some preliminary comments thereon. In my previous letter I mentioned that in my opinion the report implies that the program for offshore procurement and industrial mobilization is farther advanced than it really is. I confirm this to be the case.
The description of Japan’s economic problem and her current economic condition appears accurate and the measures recommended to correct Japan’s economic ills are soundly conceived. There is, however, a fundamental omission from the report which I, having listened to your own words of wisdom on this subject, feel should be mentioned:
United States execution of a program for economic aid to Japan should be contingent upon and related to Japan’s own performance of an acceptable complementary program. Our experience with foreign aid programs in other countries supports the conclusion that failure to establish reciprocal measures to be required of the recipient country leads to pyramiding demands for further United States aid rather than maximum self assistance. Our experience with Japan with respect to military aid has been that whereas the United States Army secured the funds and was prepared, to furnish the equipment for a 10–division army, the Japanese have shown no willingness to form more than half such a force. The 10 old type divisions are equal to 15 new type divisions, of which the Japanese may raise 7⅓ by 1956. At the same time, Japan has been asking for more offshore procurement orders.
It is noted that the Mission refers to the loss of colonial resources as irreparable. This may be true in an absolute sense but it is my belief that this problem is economically solvable by the development of greater trade in non-strategic materials with China, greater trade with Southeast Asia and closer integration of the Japanese economy with those of Formosa and Korea.
Sincerely,
Lieutenant General, General Staff
- A copy of this report is attached to a letter dated Aug. 5 from Stassen to Dulles, neither printed. (894.10/8–554) For a brief summary of the report, see Robertson’s memorandum to the Secretary, Document 794.↩