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

740.00119 PW/6–2046

Report by the State–War–Navy Coordinating Subcommittee for the Far East⁶⁰

undated

secret

Final Policy Concerning Restitution of Looted Property From Japan

the problem

1. To determine United States policy with respect to proposals pending in the Far Eastern Commission covering restitution from Japan of ships, industrial and transportation equipment, gold, other precious metals, precious gems, foreign securities, foreign currencies and other foreign-exchange assets, cultural objects, agricultural products, and industrial raw materials.

facts bearing on the problem

2. See Appendix “A”.

discussion

3. See Appendix “B”.

conclusions

4. It is concluded that:

a. The policy statement at Appendix “C” should be adopted as U.S. policy.⁶¹

b. The restitution procedure approved in SWNCC 227/3, paragraphs 5 (a) and (b), should be extended to apply to all categories of items declared subject to restitution in Appendix “C”, and, together with the procedure for restitution of ships approved in SWNCC 227/8, should continue in force except as specifically modified by the provisions of Appendix “C”.

c. The information and suggestions from SCAP contained in Appendix “D” should be conveyed to the Far Eastern Commission.

recommendations

5. It is recommended that:

a. These conclusions be forwarded to the SWNCC for approval;

b. After approval by the SWNCC, the State Department transmit the conclusions to the U.S. member of the FEC as representing in substance approved U.S. policy with respect to restitution policy and procedure.

[Annex 1]

Appendix “A”

Facts Bearing on the Problem

1. In SWNCC 227/3 an interim restitution policy was adopted as follows:

“5. It is concluded that:

• “a. For the time being the government of any of the United Nations at war with Japan should be permitted to take delivery, at a point in Japan designated by the SCAP, of property (with the exception of gold and other precious metals, tin, precious gems, foreign exchange and other securities, and ships and waterborne craft of all kinds) looted from it or from any of its nationals by the Japanese Government, Japanese armed forces or Japanese nationals, provided that:

  (1) Request for such restitution, accompanied by available evidences of ownership, has been presented by such government to the United States Government for transmission to SCAP.

  (2) The SCAP is satisfied (a) as to the identification of such property; and (b) that such claimed items come under the following definition of looted property restitutable from Japan, i.e., that they were removed from areas under occupation by Japanese armed forces subsequent to the date of such occupation (but not earlier than July 7, 1937), and that they were owned by the government or nationals of the claimant nation at the time when the Japanese Government, armed forces, or nationals took possession thereof. The question of payment, if any, by the Japanese at the time of acquisition should be disregarded.

  (3) The SCAP does not deem the employment of such property within Japan necessary for the requirements of the occupying forces or for the accomplishment of the objectives of the occupation.

  (4) Proper receipt has been furnished to SCAP upon delivery, together with an undertaking on the part of the claimant government to make appropriate equitable adjustment and abide by final inter-Allied decision in respect of any conflicting claims to such property that may be made by other nations or their nationals.

• “b. In cases where the SCAP is not satisfied with the conditions set forth in subparagraph a(2) above have been met, he should be authorized in his discretion to withhold disposition of the claimed property pending consideration of the matter by an appropriate inter-Allied agency or by the interested governments.
• “c. The SCAP should be requested to recommend appropriate arrangements to permit representatives of nations occupied by the Japanese to engage in investigations within Japan directed towards location or identification of looted property.
• “d. The SCAP should report to JCS for transmission to the State, War and Navy Departments his action on all requests for restitution.”

2. In SWNCC 227/8 restitution policy and procedure applicable to ships was provided as follows:

“4. It is concluded that:

• “a. The control of SCAP over former Allied vessels recaptured from the Japanese should be extended to authority to use former Allied war and other public vessels and miscellaneous waterborne craft of all types.
• “b. SCAP should be authorized to release all former Allied war or other public vessels regardless of size (except public merchant vessels) and all former Allied waterborne craft of any type of less than 500 gross tons direct to claimant nations when these vessels are no longer needed by SCAP for any task connected with the implementation of the Japanese surrender.
• “c. The CSAB should be designated as SCAP’s agent for the purpose of disposing of former Allied public merchant or privately owned merchant vessels and other privately owned waterborne craft of all types of 500 gross tons and over.”

3. The U.S. in notes to several governments has opposed on principle the restitution of industrial raw materials, as for example in the following excerpt from the note to the U.K. of January 26, 1946:

“The United States Government takes the position that principles of restitution arising from Japanese acts of dispossession must be the subject of careful discussion. Adhering to the Declaration of January 5, 1943, with regard to Axis Acts of Dispossession,⁶² the Government of the United States nevertheless feels that in the Far Eastern Theatre, as in the European, implementation of restitution principles must be carefully worked out. Meanwhile, it appears to this Government that commodity stockpiles, when and if declared surplus by the Supreme Commander for the Allied Powers, must be immediately made available as offsets to necessary imports. Disposition of surpluses in such manner as may be necessary to make proceeds fully available in this manner should be permitted. It is also the view of this Government, that although surplus commodity stocks of such products as tin, antimony and rubber should be available in the manner above stated, inquiry as to the origins of these stocks may be carried forward. The determination of the origin of presently existing stockpiles as a possible basis for a restitution claim, should be made without prejudice as to the final decision as to the priority of claims between such items as restitution, reparation and payment for occupation costs. The United States Government is now working on arrangements to permit inspection of presumably looted material in Japan. Pending completion of these arrangements, it is suggested that your Government may wish to indicate what identifying information might be obtained by the Supreme Commander. The use of stockpiles or their immediate proceeds to pay for necessary imports, however, is a procedures which, hi the view of this Government should be followed regardless of final decision on restitution and related matters.”

4. SWNCC 227/10 sets forth certain information and suggestions regarding restitution procedure received in a message from SCAP, dispatched in response to a cable requesting such suggestions quoted in SWNCC 227/3.

5. The following exchange of cables was made between CinCAFPAC and SCAP, Tokyo, and the War Department:

a. War Department cable to CinCAFPAC, 22 May 1946:

“… Cable in 4 parts.

Part 1.

Subj is restitution. FEC and SWNCC working gps now considering draft proposal for final policy restitution of looted property fr Japan which is substantially as stated in Part 4 below. Request your comments and especially on fol:

1. Re paragraph 2:

A. Whether waiving priority of occupation needs in restitution of Allied vessels presents serious difficulties;

B. Recommend schedule for restitution of Allied vessels;

2. Re paragraph 3: Is priority for repair and restoration of salvageable ships objectionable?

3. Appropriate magnitude and schedules for program repairing and restoring salvageable ships.

Part 2.

Note raw materials subj to restitution confined to those present in claimant country when occupied by Japanese.

Part 3.

Early reply requested since U.S. policy statement to FEC considered imperative.

Part 4.

Condensed draft follows:

• “1. Immediate steps shall be taken to restore Allied countries objects in 4 categories listed below found in Japan which are identified by SCAP as located in Allied country at time of occupation of that country, and which removed by fraud or duress by Japanese or their agents. The fact payment was made shall be disregarded unless conclusive evidence that fraud or duress did not take place.
  • “A. Industrial and transportation machinery and equipment.
  • “B. Gold, other precious metals, precious gems, foreign securities, foreign currencies, and other foreign exchange assets.
  • “C. Cultural objects.
  • “D. Agricultural products and industrial raw materials.
• “2. Immediate steps shall be taken to restore to Allied countries ships all types and sizes found in Japanese waters identified by SCAP (or his agent) as registered in an Allied country at time of seizure or sinking by Japanese or their agents, or at time of acquisition by Japanese or agents by fraud or duress. The fact payment was made shall be disregarded unless conclusive evidence that fraud or duress did not take place.
• “3. Salvageable ships damaged or sunk and found in Japanese waters, on request of claimant country shall be salvaged, repaired, or refitted to permit return in condition substantially similar to that at time they came into Japanese hands. Costs of necessary salvage, repair and refitting in Japan shall be borne by Japanese Government but shall be applied against reparations apportionment to claimant country.
• “4. Processing of claims for machinery and equipment found in Japan shall not be permitted in general to delay removals of machinery and equipment on reparations account, but no item for which restitution claim has been received by SCAP shall be allocated on reparations account until claim has been acted upon. On other hand, no restitution claim shall be recognized for articles already allocated to particular countries on reparations account.
• “5. Claimant government shall take delivery, at point in Japan designated by SCAP and also undertake to make appropriate equitable adjustment and abide by final inter-Allied decision in respect any conflicting claims to such property made by other claimant governments. Relevant trans expenses within Japan and any repairs necessary for trans including manpower, materials and organization to be borne by Japan and included in restitution. Expenses outside Japan borne by recipient country.
• “6. Restitution claims for property other than ships would be made by government of Allied country from whose territory property claimed was removed; and restitution made to that govt. In case of ships restitution claims should be filed by, and restitution made to, govt of country whose flag vessels were wearing or on whose register of shipping vessels were borne at time of sinking, seizure or acquisition as specified in paragraph 2.
• “7. No items shall be included in Japanese export programs which SCAP considers as probably subject to restitution. If items later determined to be subject to restitution should be exported for purchase, equitable compensation shall be made to country to which items exported should have been restored.
• “8. Without prejudice to other arrangements which may be made between the interested parties, foregoing restitution policies, especially in par 6, not intended to give Allied government concerned right to withhold from a person who is national of another Allied power any property to which he may establish a legitimate title.
• “9. FEC recommends to the govt of those countries within whose territories may be found looted objects, including ships, that bilateral arrangements be drawn up providing for restitution according to these principles.
• “10. FEC requests the US forward this statement of policy through usual channels to states not represented on FEC and within whose territories such looted objects may be found.”

b. CinCAFPAC cable to War Department 28 May 1946:

“… Before submitting detailed comments please clarify following:

Part 2 your radio. Should it be inferred that rubber stocks for example seized by Japanese upon occupation Malaya may be restituted but that such products produced in Malaya during occupation are not subject to restitution?

Part 4 subparagraph 7. Should export balance tin stocks in Japan be deferred as probably subject to restitution or should shipments balance tin stocks continue to go forward for final determination in United States as was done in recent tin case?”

c. War Department cable to CinCAFPAC 29 May 1946:

“… Of rubber stocks found in Japan any identified as seized by Japanese upon occupation Malaya would be subject to restitution but any produced in Malaya during the occupation would not be restituted.

Degree of probability an item is subject to restitution and should be excluded from export programs is and would be matter for SCAP judgment and decision. If probability is low that tin in Japan can be identified “As located in Allied country at time of occupation of that country” such tin may continue to be forwarded and all available evidence possibly bearing on its being subject to restitution should be forwarded here.”

d. SCAP cable to War Department 7 June 1946:

“… Comments are submitted as follows:

Part 1: 1. Waiving of occupation needs in restitution of Allied vessels presents no difficulties. However, considered desirable and equitable to give first priority return United States vessels loaned for purpose of repatriation and maintenance of minimum Japanese economy. Allied vessels subject to restitution and now engaged in occupational employment are: Dutch vessel Reael, Chinese vessel Hsinan, British vessel Jesse Moeller, British vessel Edith Moeller, British vessel Shin Yangtse, Swedish vessel Miramar, Manchuquo vessel Lung Shun. Tentative target date for completion return of foreign vessels is 30 November.

2. Assignment of priority for repair and restoration of salvageable ships is not objectionable.

3. Estimates of appropriate magnitude and schedules for program repairing and restoring of salvageable ships is not practical until it is known what claimants desire to have repairs effected. Lists are being forwarded by mail showing for each vessel extent of damage estimated cost and time to repair with comments on economic feasibility of repair. Work can be started immediately upon receipt of claimants order to proceed.

Parts 2 and 3: No comment.

Part 4.

1. Restoration to all Allied countries of objects in the four categories presents the following problems:

A. Priority must be maintained to retain in use for purposes of the occupation. With few exceptions this machinery and equipment removed to Japan has now deteriorated to point of being of little value.

B. Only a negligible quantity of these items has been identified. Under the circumstances of looting, storage and lack of proper accounting by Japanese, it is nearly impossible to identify the greater part of the gold, other precious metals and precious gems.

C. There are records of a few cultural objects which have been looted and brought to Japan. These will be restored upon request and after positive identification.

D. Looted agricultural products consist almost wholly of foodstuffs. These have already practically been consumed by the Japanese. The amount of conclusive identification of industrial raw materials has been negligible. A large percentage of metal imports consisted of unidentifiable ore and concentrate. In view of previous commitments involving tin, lead, antimony, copper and rubber, consider inadvisable make further inroads on present stocks Japan. Such procedure would impair present approved manufacturing programs and have a deteriorating effect on industrial economy of Japan.

2, 3, 4, 6, 7, 8, 9, 10: No comment.

Part 5: Request SCAP be given authority to deliver vessels to Western Pacific points outside of Japan at his discretion in order to facilitate delivery.”

6. The following reservations with regard to the restitution of property looted prior to certain dates were introduced in the Far Eastern Commission (FEC SC 014):

a. Canada “The Canadian Government feels that it would be undesirable to provide for the presentation to Japan of claims regarding property seized prior to September 18, 1931.”

b. China “In principle, the Chinese Delegation sympathizes with the Soviet position that restitution should apply to objects looted during previous periods of aggression on the part of Japan. However, in view of the practical administrative limitations of SCAP under the present circumstances, the Chinese Delegation is of the opinion that the date September 18, 1931, which marks the beginning of the recent conflict, should be taken as the date of application in the case under discussion. This is without prejudice to Chinese claims for restitution of objects looted prior to that date and the Chinese Government reserves the right to seek the subsequent restitution of such objects through peace with Japan or by other diplomatic means.”

c. Union of Soviet Socialist Republics “In so far as, at one of the last meetings, the representative of the Government of the United States on Committee No. 1 put the question of whether the Soviet side would insist upon an earlier date in relation to questions of reparations, and in so far as the representative of New Zealand expressed his opinion that in case the Soviet side would not use, as precedent, the deleting of the words ‘during the recent conflict’ from CI–002/4 (Restitution of Looted Property), he would agree with such a deletion, I may at the present time bring to the attention of Committee No. 1 that the Soviet side has no intention of insisting upon the earlier date, say 1918, in discussing the question of reparations.

“Since the question about the date is very clear now, I ask you to strike out the above mentioned date or to indicate an earlier date, say 1918. In the case no period be mentioned, that, in general will be acceptable to us; this would mean that any side may present claims for restitution of property looted by the Japanese in the period prior to 1937 or 1931.”

d. United Kingdom “In the opinion of the United Kingdom, restitution should be confined to property looted from an Allied territory after the outbreak of the last war in the Pacific, i.e., after July 1937 in the case of China and after December 1941 in the case of other Allied territories.”

[Annex 2]

Appendix “B”

Discussion

[Here follows summary of modifications effected in Appendix “C”.]

8. Arrangements for restitution between Allies are not within the scope of FEC jurisdiction, and hence only a suggestion that they be made can be incorporated in the proposed FEC document. It is not believed that this proposal raises any policy questions of interest to the U.S.

9. It is believed that Appendix “C” in substance will be acceptable to all other governments on the FEC. No wording which does not at least leave open to the USSR the right to secure restitution from SCAP of cultural objects looted by the Japanese during their occupation of Siberia from 1918 to 1922 will be accepted by the USSR, though the Soviet representative has stated that his government has no intention of insisting on the same date in the field of reparations. The amounts involved are believed to be minor. The major issues are whether the FEC can properly fix a policy which provides for restitution of objects looted by the Japanese prior to the present war and whether the U.S. can without too serious embarrassment agree to the restitution of objects removed in the course of a military operation in which the U.S. participated. On balance it is believed that the issues are not of sufficient importance to justify further efforts to reach a compromise solution other than the one here proposed and that the policy in the conclusions should be adopted. In agreeing to restitution of objects looted prior to outbreak of this war, it is proposed to avoid any commitment for reparations payments for damage inflicted by the Japanese prior to this war.

10. If Appendix “C” is adopted by the FEC, it becomes appropriate to extend the restitution procedures approved in SWNCC 227/3 to apply to all categories of items listed in Appendix “C” and to continue these procedures, together with those prescribed in SWNCC 227/8, except as they are specifically modified by the provisions of Appendix “C”. These modifications have already been indicated in paragraph 1 of this “Discussion”.

11. Appendix “D” presents certain supplementary information and suggestions from SCAP regarding restitution procedure. These should be conveyed to the member governments of the FEC. Certain other suggestions by SCAP, contained in SWNCC 227/10, are deemed to be inappropriate for inclusion here, for they deal with restoration of Allied property impounded or sequestered in Japan, a subject dealt with in a separate SWNCC paper.

[Annex 3]

Appendix “D”

[Information From SCAP for the FEC]

1. The United States member wishes to convey to the Far Eastern Commission certain information and suggestion based on a recent communication from the Supreme Commander for the Allied Powers regarding procedures to be followed in securing the return of Allied property found in Japan and subject to restitution. These proposals supplement the procedures already laid down in FEC 011/7 and FEC 047, which will continue in force until such time as they may require modification in the light of restitution policies approved by the Commission.

2. Requests for restitution of particular items should take the form of claims endorsed by the claimant government and forwarded through the channels prescribed in FEC 011/7. It is suggested by the Supreme Commander that, accompanying the “endorsed claim”, should be a description of the property, proof of ownership, the circumstances surrounding seizure and such other information as would obviate the necessity of further recourse to the claimant. In order to facilitate action, it is important that claims be in complete and standardized form. The Supreme Commander will forward detailed suggestions regarding a desired form which it is hoped will be employed by claimant governments.

3. The Civil Property Custodian Section of SCAP will handle restitution matters for the Supreme Commander, including investigation of claims and requiring the Japanese Government to transfer title to the claimant government.

4. In recognition of the desire of claimant governments themselves to conduct inquiries for restitution purposes in Japan, it is suggested by the Supreme Commander that each member nation of the Far Eastern Commission desiring to do so establish in Tokyo an accredited permanent representation to operate under the executive authority and operational control of the Supreme Commander. Such representation should not exceed 5 individuals from each represented government and should be capable of acting on routine matters pertaining to reparations removals, restitution or any other matter which would otherwise require the visit of individual missions. A principal purpose of establishing such a body would be to obviate the necessity, except in extraordinary cases, of individual missions which are objectionable because of recurring clearance, transport and billeting problems and the difficulty of establishing adequate control over their activities. A permanent accredited body if established would overcome or at least minimize these objections. In an extraordinary case pertaining to restitution which cannot be handled adequately by permanent representatives in Japan, the “endorsed claims” as submitted to the Supreme Commander should contain a request for clearance of an individual mission for an expressed purpose. It is contemplated that the foreign representation described above would render such assistance as required in obtaining restitution and accepting delivery on behalf of claimant governments. In view of the fact that the Civil Property Custodian Section of SCAP has only recently been established, it is requested by SCAP that special missions or permanent representatives for the above purpose not arrive in Japan prior to July 1, 1946.

60. SWNCC 227/13, June 14, was approved by SWNCC on June 20 and transmitted the same day with SWN–4439 to the Department. The “conclusions” and Appendixes C and D were transmitted by the Department on June 24 to General McCoy “as representing in substance approved United States policy with regard to restitution policy and procedure”. SWNCC 227/13 was sent to Tokyo in instruction 187, June 25, for the Political Adviser in Japan (Atcheson).
61. For text of Appendix C on “Restitution of Looted Property”, adopted by the FEC on July 18, see Activities of the Far Eastern Commission, p. 80.
62. Foreign Relations, 1943, vol. i, p. 443.