Foreign Relations of the United States, 1946, The Far East, Volume VIII

740.00119 PW/5–2146

Memorandum by the State Department Member of the State–War–Navy Coordinating Committee (Hilldring) to the Secretary of the Committee (Moseley)

[Washington, May 15, (?), 1946.]

Subject: Amendments to SWNCC 236/10:³⁷ Interim Reparations Removal Program for Japan

1. The following amendments to SWNCC 236/10 are offered for consideration and approval by the Committee:

(a) Amendment No. 1: Privately Owned Munitions Plants

(i) Insert the following paragraph after the present paragraph 14 in the Conclusions:

“15. Privately-Owned Munitions Plants.

(Definition: Privately-owned plants and establishments primarily engaged in the manufacture of weapons, missiles, ammunition, and military explosives.)

a. All facilities within this category that were originally organized for, or converted through major change in their size and character to the production of munitions should be made available for claim, subject to the following limitation:

(i) Special Purpose Machinery and Equipment.

All machinery, equipment, and accessories, which by virtue of initial design, construction, or major structural change, are, as individual items, special purpose in nature and functionally limited to use in connection with the manufacture of equipment or supplies for war or warlike purposes, should be held pending further instructions concerning their disposition.

b. Decision as to the disposition of facilities other than those covered in a. above should be made by SCAP subject to the limitation a. (i) above.”

Renumber subsequent paragraphs.

(ii) Insert the following new paragraph 19 in the Discussion:

“19. Privately-Owned Munitions Plants.

a. In addition to a well-organized system of government owned arsenals, Japan, at the close of the war, had a substantial investment in privately-owned munitions plants. Such plants had increased in number from 70 in 1930 to approximately 321 in 1945. A survey by SCAP affords some clue as to their size and importance.

Privately-Owned Munitions Plants, Japan, 1945
Size of Plant	No. of Plants	Total No. of Mach. Tools
Over 100 Mach. Tools	19	55,143
500 to 1000 “ “	15	10,803
100 to 500 “ “	188	39,261
Less than 100 Mach. Tools	99	7,170
Totals	321	112,377

b. Two hundred and twenty-one of these plants accounting for 99,000 (88% of total) machine tools appear to have been originally organized for, or through major change in size and character, converted to, the production of munitions. Such plants will have contributed little or nothing to the support of the civilian economy in the past and will have no place in the post-war economy envisioned for Japan in the future. It is believed that these facilities should be made available for claim, subject to the following limitations.

(i) Among the facilities associated with these plants will be some individual items of machinery and equipment so specialized in purpose as to be functionally limited to use in connection with equipment or supplies of an exclusively military nature. Decision as to the disposition of such items is beyond the scope of this Interim Reparations Removal Program. Such items, it is felt, should not be made available for claim pending decision by properly constituted authorities.

c. Decision as to the disposition of the remaining 100 plants should be made by SCAP on the basis of their potential for reconversion to non-munitions production necessary to support the Japanese peacetime economy.”

(b) Amendment No. 2: FEC Agreement.

(i) Insert the following paragraph after the present paragraph 16 in the Conclusions:

“17. If necessary in order to secure agreement to an interim removals program by the Far Eastern Commission without excessive delay, the United States member should be authorized, on behalf of the United States Government, to concur in increases of a moderate character in the interim capacity levels proposed herein for retention in Japan in the following listed industries: ball and roller bearings, shipyards, iron and steel, thermal electric power, sulphuric acid, soda ash, chlorine and caustic soda industries.”

Renumber subsequent paragraphs.

2. The changes suggested above are discussed in Appendix “A”.

J. H. Hilldring

[Annex]

Appendix “A”

Discussion of Amendments No. 1 and No. 2

1. The reasons underlying the changes proposed as part of Amendment No. 1 are as follows:

In the preparation of SWNCC 236/10 no conclusions were developed regarding the treatment to be accorded privately-owned munitions plants under the Interim Reparations Program. This omission was occasioned in part by the fact that Ambassador Pauley’s report made no specific reference to these plants, and in part by the fact that adequate data concerning their natures was not available at that time.

Subsequently, SCAP provided information on which conclusions can be based. In addition, SCAP, members of Ambassador Pauley’s staff, and several members of the FEC Reparations Committee have all indicated their belief that such plants should be disposed of under the Interim Reparations Removal Program.

2. The reasons underlying the changes proposed as part of Amendment No. 2 are as follows:

The object of the proposals contained in SWNCC 236/10 is to make available at the earliest possible date a substantial volume of industrial equipment as reparations, without prejudice to further removals at a later date.

In order to secure prompt agreement within the Far Eastern Commission, it may be necessary for the United States member to accede to certain amendments to the proposals put forward by other governments. It is believed that SWNCC may wish to authorize the United States member, at his discretion, to agree to certain changes on behalf of the United States Government, providing such changes are in the direction of increasing the industrial capacity to be retained in Japan on an interim basis, pending determination of a final reparations program.

37. Ante, p. 493.