740.00119 Control(Japan)/6–1947
The Political Adviser in Japan (Atcheson) to the Secretary of State
personal and confidential
Tokyo, June 19,
1947.
Dear Mr. Secretary: I enclose a copy of a
letter of identic date addressed to the President making report on the
current situation, principally economic, as we see it here. For the
future, I believe that the ultimate success of the Occupation will
depend to a great extent upon economic factors.
I have not entered into any discussion of the question of formulating the
peace. As you may know, the Australian Foreign Minister, Mr. Evatt, is
planning to visit General MacArthur about July 6. This visit is being
made at Mr. Evatt’s instance and as it will occur not long before the
British Commonwealth conference at Canberra, we assume that Mr. Evatt’s
primary purpose is to discuss plans for a peace treaty. While some
exchange of ideas in broad outline may be inevitable, we propose to
confine ourselves chiefly to listening. In the absence of instructions,
I myself shall remain outside of any discussions so far as possible.
My British colleague has several times indicated to me that he is without
instructions as regards United Kingdom plans in connection with the
Canberra conference—which leads to the assumption that the British are
leaving leadership in the matter to the Australians.
Sincerely yours,
[Enclosure]
The Political Adviser in Japan (Atcheson) to President Truman
personal and confidential
Tokyo, June 19,
1947.
Dear Mr. President: We have been
encouraged by recent statements of American officials at home
reflecting growing interest in the development of a peace-time
Japanese economy and in the question of formulating the peace. How
long it will take Japan to become self-supporting no one can say.
Even under the best of circumstances and with considerable foreign
assistance—official and private—the Japanese will meet serious
difficulties in re-vamping their shattered economy. Whether we like
it or not, Japan is at present an economic responsibility of the
United States and it is to our interest to assist in the process of
getting the country on at least a minimum self-supporting basis. The
partial reopening of Japan to private trade on August 15 will start
a process which should be productive of good results in due course.
Plans are under consideration for the setting up of some kind of
self-liquidating revolving fund to finance the import of raw
[Page 232]
materials necessary for
the manufacture of consumer goods to pay for necessary imports.
Materialization of such plan will be of great help.
Defeat left Japan with an unbalanced and broken economy cut off from
the Asiatic mainland with which it had become integrated. There was
little left. Industry lacked workers and raw materials and was at a
standstill. Even before the war the Japanese had to import some 15
per cent of their food. After 21 months of occupation, industry has
now inched its way toward recovery only some 30 per cent of the
1930–34 level. Lack of coal limits all industrial output including
manufacture of needed coal-mining machinery. The rayon industry has
come almost to a standstill. Cotton yarn output is about five per
cent of 1937. Silk is only one–sixth pre-war and exports meet with
poor sales because of the competition of synthetics.
The development of the labor movement has been one of the greatest
democratization processes in this country and has resulted in
raising the cost of labor to the British level. This means that
Japan will not be able to flood foreign markets with cheap goods.
This of course is a good thing in the eyes of many foreign
competitors, especially textile manufacturers, but it is also an
important factor which will militate against rapid economic recovery
here.
Definitive settlement of reparations will give Japanese industry a
considerable impetus, especially if ready means are found of
financing the importation of raw materials. Conversely, some foreign
claimants are unfortunately going to be disappointed in what they
get and there are indications of resentment which is creating
opposition to the recovery of Japanese economy to peace-time needs.
Due to obsolescence, deterioration and other factors the available
internal assets may not reach a roughly estimated basic value of
more than US $625,000,000, with the estimated market value about
one–fifth of that figure. While the external assets in Northern
Korea, Manchuria and formerly occupied China and Formosa had a
locally estimated value of US $27,000,000,000, I am afraid that the
Chinese and others will not let that circumstance modify their
resentment against us—and against Japan—in the matter.
The new Japanese Cabinet has published its economic program and we
are hopeful that it will have definitely good results in time.
Meanwhile the dependents of our Occupation population are increasing
with the constant addition of several hundred a month. This means
that we are taking more and more houses, furniture, etc. from the
middle class Japanese. In Tokyo we have taken most of the houses
suitable under Occidental standards except those belonging to active
Japanese Government officials. There is no question that the burden
on the Japanese economy is increasing, and cannot be readily
absorbed in an
[Page 233]
inflationary situation characterized by lack of goods and resulting
black market control of supplies.
I believe we are coming to a turning point in the Occupation. General
MacArthur has remarked to me several times that there inevitably
comes a time when a military occupation no longer serves its purpose
and becomes a deterrent to its own objectives. We have not yet, of
course, reached that stage. But there are signs that it is
approaching.
Recent remarks of the new Foreign Minister (Ashida) indicating that
the Japanese wish the return of the southern Kuriles and Okinawa
have caused an easily understood resentment in some foreign
quarters. We do not believe Ashida speaks in this matter for the
Japanese masses or even the Japanese Government. It seems to us here
that retention by the United States of Okinawa (under the aegis of
the United Nations or otherwise) is an essential to the maintenance
of our future influence in this general area. Okinawa is of no
economic value to Japan; on the contrary it was an economic
liability. To us it is the western [remainder of text is missing
from the files.]
