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

894.5151/12–1147

Extract From Circular No. 9 Issued by the Supreme Commander for the Allied Powers, Tokyo, August 15, 1947

Tokyo, August 15, 1947

Establishment of Occupied Japan Export-Import Revolving Fund

1. There is hereby created an Occupied Japan Export-Import Revolving Fund (hereinafter referred to as “The Fund”). The Fund is established as a means of financing, primarily on a self-liquidating basis, Japanese imports and exports of commodities and services which are required for the achievement of the objectives and policies of the Occupation and for the mutual benefit of the United Nations and Japan.

2. The Fund shall be managed and operated by a Controller designated by the Supreme Commander for the Allied Powers. The Controller shall have such deputy or deputies as may be similarly designated.

3. The Controller shall be responsible and accountable to the Supreme Commander for the Allied Powers for the safe custody, management, operation and control of The Fund. He shall have authority to make all collections of moneys due The Fund, to make disbursements from The Fund, to make any commitments, allotments, allocations or incur obligations involving The Fund, to borrow monies on the credit of The Fund, and to perform all other acts which he shall determine to be necessary, appropriate or convenient to accomplish the purposes for which The Fund is created.

4. The Fund shall consist of the following:

a. Gold and its equivalent in the approximate value of one hundred thirty-seven million ($137,000,000) dollars, made available to the Supreme Commander for the Allied Powers for the purpose stated herein.

b. The export proceeds of all products, including textiles, manufactured from materials the import of which was financed by The Fund, or by credits based thereon.

c. The export proceeds (in excess of the amount necessary to liquidate CCC1 and CCC2 accounts) derived from the sale of textiles manufactured from cotton imported under CCC1 and CCC2 contracts.

d. Any monies otherwise accruing from any operation of The Fund.

e. That proportion of the total export proceeds as the respective value of the material purchased through the use of The Fund bears to the total value of all materials used, when any material, the import of which into Japan is financed through the use of The Fund, is mixed with any other material not acquired through the use of The Fund.

f. Other assets as may be designated by the Supreme Commander for the Allied Powers.

g. Any monies borrowed on the credit of the foregoing assets.

5. The Fund shall be used for the payment of the following only:

a. Fidelity and surety bond premiums of the Controller, any deputy Controller and such other employees as may be deemed necessary.

b. Materials imported for the purpose of directly deriving goods for export therefrom, which will, in the judgment of the Controller, have an anticipated value in excess of the cost of such materials realizable within one year after the date of arrival in Japan of such materials.

c. Raw materials, processing materials or operating supplies needed for the production of such exports.

d. Services and general imports of machinery or machine parts, supplies, or other materials deemed necessary by the Supreme Commander for the Allied Powers for the general Japanese economy; provided that any funds advanced for these purposes shall not exceed fifteen percent (15%) of the value of the assets of The Fund specified in Paragraphs 4 a, 4 c, and 4 f, above.

e. Monies borrowed and interest and other charges in connection therewith.

f. Fees, service or other charges arising out of any transaction specified in Paragraphs 5 b, 5 c, and 5 d, above.

6. The Fund shall be subject to the following special restrictions:

a. No obligation arising out of the operation of The Fund shall be secured by a special lien on any of the assets thereof; but those to whom The Fund is so obligated shall have a first claim against the assets thereof, prior to any other claim against such assets.

b. The Fund shall not be expended or obligated unless after such expenditure is made or obligation is incurred, a cash reserve consisting of gold and its equivalent, dollars, and freely convertible currency is equal to 30 percent (30%) of the initial value of the assets specified in Paragraphs 4 a, 4 c, and 4 f, above, or of the outstanding liabilities, whichever is greater; provided, however, that the foregoing restriction shall not apply to expenditures made to discharge obligations previously incurred within such limitations.

c. In the event he deems it necessary to export and sell any of the assets referred to in 4 a to obtain currencies to pay obligations of The Fund, the Controller shall, prior to making the sale, first offer to sell such assets to member nations of the Far Eastern Commission for currencies required to discharge such obligations of The Fund.

7. Subject to the terms and provisions of Paragraphs 5 and 6, above, at such times as the net worth of The Fund exceeds forty percent (40%) of the total liabilities as reflected by the last current statement of the status of The Fund then, and in that event, and in that event only, the Supreme Commander for the Allied Powers may, at his discretion, withdraw from The Fund any amount so long as such withdrawals do not reduce the net worth of The Fund to less than forty (40%) percent of the total liabilities. For the purposes of this Paragraph 7:

a. In addition to assets described in Paragraph 4, above, assets shall include, but shall not be limited to, all of the following resulting from the operation of The Fund,

(1) Receivables arising from firm forward export sales,

(2) The value of raw materials at cost or market (whichever is lower),

(3) Goods in process at the value of the raw materials, and,

(4) Finished goods at their export market value or forward sales value.

b. Liabilities shall include, but shall not be limited to, the initial value of Paragraphs 4 a, 4 c and 4 f, above, plus all accounts payable and commitments made.

8. The Controller shall render a monthly statement of the status of The Fund to the Supreme Commander for the Allied Powers within thirty (30) days after the last business day of the month for which such statement is rendered. Copies of such statement will be made available to such parties as the Supreme Commander for the Allied Powers may direct, or as may be entitled thereto pursuant to the terms of any contract approved by him.

9. In the event of a transfer of authority prior to a peace treaty or upon the proclamation of a peace treaty to which the United States Government and the Japanese Government are signatories, the Controller upon the occurrence of either of the stipulated contingencies shall liquidate, as soon as may be practicable, all proper claims (including commitments) arising out of the operations of The Fund against the assets of The Fund. The balance of The Fund shall be retained for appropriate ultimate disposition in accordance with controlling directives.