Foreign Relations of the United States, 1947, The Far East, Volume VI

894.50/8–1147

The United States Member of the Far Eastern Commission (McCoy) to the Assistant Secretary of State (Hilldring)

Washington, August 11, 1947.

Dear General Hilldring: During our last conference, on July 23, you may remember that you raised the question of the desirability of obtaining an early policy decision on The Level of Economic Life in Japan (FEC–218). You wished to have this policy decision before August 15 when you would be leaving the Department, even if it should be necessary to issue a U.S. interim directive for this purpose. I presented the views which I have long held, that a situation may arise which would justify the U.S. in issuing an interim directive, but that this should be done only in cases of genuine urgency and as a last resort.

Now that the date of your departure is approaching I have been giving careful consideration to this paper and have been pondering the question whether it would be advisable for the United States Government to send the paper to SCAP as a U.S. interim directive.

I have reached the conclusion that for the following reasons it would be inadvisable for the United States Government to issue an interim directive on this subject at the present time:

1. There appears to be no urgency in sending this policy decision to SCAP at this time. I believe that the next step in executing reparations policy is to put into effect the previous U.S. interim directive on Advanced Transfers of Japanese Reparations.⁴⁷ This directive was sent to SCAP over four months ago, but as yet no delivery of reparations has been made, and, I am informed that it will probably be several weeks before deliveries will begin. Until these advanced transfers have been completed there would seem to be no real need of this pending paper on the complete Level of Economic Life in Japan.

I am also informed that the immediate and serious obstacles to the revival of Japanese industry are not to be found in the absence of a final determination of the levels of Japanese industry, but in the shortage of coal and raw materials, which will continue for some months to come.

2. The Far Eastern Commission has worked hard on this paper and has it now under continuing consideration. There is a good prospect that the Commission will reach an agreement on it in normal course.

Already it is evident that a majority of the Commission wish to modify the provisions of the paper in certain respects. Under these circumstances, if the United States Government should send the original U.S. policy proposal (FEC–218) as an interim directive, it would be acting in opposition to the expressed views of a majority of our colleagues on the Commission.

3. The immediate issuance of a U.S. interim directive on this subject would be resented by the other states on the Far Eastern Commission and would arouse an antagonism on the part of some of the other Governments which would be unnecessary and would be prejudicial to the United States in the coming Peace Conference. The states on the Far Eastern Commission are opposed to U.S. interim directives except when issued as a matter of urgency and, possibly, as a last resort.

4. The problem whether the United States Government should send the pending paper to SCAP at the present time as an interim directive raises a fundamental issue regarding international cooperation. The United States Government strongly supports as a basic policy the principle of international cooperation. It would appear to be inconsistent with this policy and this principle for the United States, after taking over a year to formulate its own views on this subject, to send this paper as an interim directive when the Far Eastern Commission has been studying it for only four months and before the final views of all the other states on the Commission have been received.

In view of these considerations I believe that it will best serve the interests of the United States to postpone the issuance of an interim directive and to avoid interrupting the work of the Far Eastern Commission looking toward an agreement on a policy decision on this subject in accordance with its normal procedure.⁴⁸

Yours sincerely,

Frank R. McCoy

47. Serial 75, April 4, to SCAP, p. 376.
48. General Hilldring’s successor, Charles E. Saltzman, replied to General McCoy on September 9 that the Acting Secretary of State had met with the Secretary of War (Royall) on August 26, when it was agreed that both the War and State Departments would increase their efforts to obtain an early Far Eastern Commission decision establishing a level of economic life in Japan (894.50/8–1147).