740.00119 Control (Japan)/12–246
Memorandum by Mr. Robert A. Fearey of the Division of Japanese Affairs
Subject: Twentieth Meeting of the Allied Council for Japan, November 27, 1946.66
The meeting was businesslike and instructive, unmarred by trouble of any kind.
Mr. Atcheson opened by informing the Council that “the Supreme Commander has directed the Government Section of General Headquarters to investigate the allegations made at the last meeting by the Soviet Member (regarding 17 Diet members allegedly liable under the January 4 purge directive) and to initiate such action thereon as the facts developed may call for.” Mr. Sebald, who was present, says that the Government Section had reinvestigated the seventeen before the meeting and found them blameless, but that Mr. Atcheson had not wished to risk further dispute by announcing the fact. It is debatable, however, whether it was better to let General Derevyanko get away with his charges, or to have made the results of the investigation available as a matter of routine to the Council and public.
The Council then turned to a list of nine questions submitted by the Soviet Member regarding “the progress of handling the dissolution of Zaibatsu67 concerns by the Holding Company Liquidation Commission”. The answers read by Major Cooper, Chief of the Liquidations Branch of the Anti-Trust and Cartels Division of the Economic and Scientific Section of SCAP, and subsequent discussion, provide a useful picture of the present stage of the dissolution program, as summarized, for reference, below:
- 1.
- Forty-five holding companies have been designated for dissolution by the Holding Company Liquidation Commission. The Commission has already taken over the securities, valued at over 2 billion yen and representing an effective control over more than 250 operating subsidiaries, of the “Big Five”—Mitsui, Mitsubishi, Yasuda, Sumitomo and Fuji Industrial. Dissolution of the remaining 40 holding companies, owning securities in excess of 4 billion yen and representing an effective control over more than 800 operating subsidiaries, is proceeding on the pattern of the Big Five. The total assets of these 45 holding companies exceed 28 billion yen, and their assets, combined with those of their 1200 or so subsidiaries (comprising the list of [Page 378] “restricted concerns”), total approximately 186 billion yen. The corporate affairs of all these concerns are being actively supervised by the Commission pending liquidation and resale of their shares.
- 2.
- The Chief of the Liquidation Branch, Anti-trust and Cartels Division, (presently Major Cooper) serves as an official observer at Liquidation Commission meetings and supervises the activities of the Commission.
- 3.
- The Commission is engaged in appraising the assets and earnings of the subsidiaries controlled by the 45 holding companies in order to fix a valuation for the public sale of the holding companies’ shares. A coordinating committee is being set up by the Japanese Government to establish policies for the rapid, permanent and widespread distribution of these shares. No shares have been sold yet. Purged individuals and members of Zaibatsu families will be among those not permitted to purchase the shares, while employees of the operating concerns, cooperatives etc., will be given first opportunity to buy. The speed with which it will be possible to dispose of the shares will depend upon the purchasing power in the hands of the people it is desired to have buy them, though the intention (as I understand it) is to sell the shares at as low a price as may be necessary to dispose of them over a fairly brief period of time—it is desired that the Liquidation Commission divest itself of the shares, and attendant control of a major portion of Japanese industry, as soon as practicable.
- 4.
- Zaibatsu family members and other large shareholders in the dissolved holding companies will receive as compensation government bonds of a non-negotiable and non-transferable nature to mature in not less than ten years. Small individual shareholders will receive negotiable government bonds. (Under a recent directive the assets of members of the Zaibatsu families, apart from their corporate holdings, will also be converted into non-negotiable government bonds with a maturity of not less than ten years.) The expenses of dissolution and liquidation will be charged against the Zaibatsu-held assets before their conversion into government bonds. These bonds will be subject to the impending capital levy, which will reduce net payments substantially.
- 5.
- There is at present no prohibition against foreign nationals purchasing shares of dissolved holding companies, but the question of whether foreign nationals will actually be allowed to purchase such shares has not been decided.
At the end of the meeting General Derevyanko recommended that, in view of the importance of the liquidation program to the democratization of Japan, representatives of the Allied Powers represented on the Allied Council should be admitted as observers of the work of the Holding Company Liquidation Commission. He could have had little hope that such a request would be granted, and probably made it for the propaganda value of the refusal, since SCAP has made it a practice to communicate his acceptance or rejection of Council members’ recommendations to the Council.