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

501.BD–Asia/10–2447

The Acting Political Adviser in Japan (Sebald) to the Secretary of State

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No. 1348

Tokyo, October 24, 1947.

Sir: I have the honor to refer to the Department’s telegram No. 393 of October 7, 1947⁸⁷ and to report that Dr. P. S. Lokanathan, Executive Secretary of the Economic Commission for Asia and the Far East, and Colonel James Keen, Executive Assistant of that organization, have completed a series of consultations with General Mac Arthur and members of his staff. These United Nations officials were warmly welcomed, and offered wholehearted cooperation in the exchange of information and advice on matters concerning the relationship between the economies of Japan and the other countries of Asia and the Far East.

Dr. Lokanathan and Colonel Keen stated that during their interview, General MacArthur expressed great interest in the commission and indicated his approval of the suggestion that the Supreme Commander for the Allied Powers send representatives to the next conference of ECAFE which is to be held at Baguio, beginning November 24, 1947. As the Department will recognize, this is a substantive change from the first conference at Shanghai in June 1947 at which representatives from this Headquarters acted as advisers to the American delegation. This change is believed to be a logical step, in view of the Allied character of the Supreme Commander for the Allied Powers. Dr. Lokanathan has submitted a formal request (copy enclosed)^87a that this Headquarters be represented in an appropriate capacity.⁸⁸ While the provisional agenda and papers relating to the session have not yet been received, discussions with Dr. Lokanathan indicate that representation will be desirable from the Economic and Scientific Section of this Headquarters.

Dr. Lokanathan and Colonel Keen conferred with members of this Mission as the Diplomatic Section of General Headquarters, Supreme Commander for the Allied Powers, and conferences were also arranged and attended by an officer of this Mission with members of the Economic and Scientific Section and of the Government Section of this Headquarters. Both ECAFE officials stated they were greatly pleased at the enthusiastic and sympathetic reception accorded them by General MacArthur and other members of this Headquarters. They were further encouraged by the willingness and frankness with which questions were answered, and at the realization of the wealth of data available upon the economy of Japan, especially in contrast with that available in other areas of Asia and the Far East.

The conferences with the Economic and Scientific Section covered the present status of Japan with emphasis upon the major problems confronting this country in efforts being made to promote its economic recovery. Foreign trade, raw material requirements, and industry in Japan were of special interest. Officials of the Economic and Scientific Section were in agreement with the ECAFE representatives that the recovery of Japan is inextricably bound up with the economies of other areas of the Far East. Dr. Lokanathan declared that there could be no recovery of the economies of the rest of Asia without the economic recovery of Japan. The officials of the Economic and Scientific Section expressed the opinion that Dr. Lokanathan had come to Tokyo at an opportune time, because the need for finding ways of meshing the economy of Japan with the economies of Asia and specifically the Far East is now an important aspect of their planning.

The opening of Japan to limited private foreign trade and the lack of raw materials have accentuated this realization. The present dependence upon the United States for the major portion of imports into Japan and the restriction of exports to areas which can pay in dollars was stated to be abnormal and temporary, as present thought is focused upon eventual integration of the economy of Japan with the economies of Asia and the Far East rather than with the economy of the United States. Dr. Lokanathan is confident that despite handicaps Japan will rise again economically, because the Japanese have determination and ability, provided they are given access to raw materials and markets. After a tour of Tokyo, small villages, and agricultural areas, Dr. Lokanathan indicated confirmation of his belief that the standard of living in Japan, even at the present time, is higher than in China and India.

A conference with officials of the Government Section was held primarily because Dr. Lokanathan had many questions concerning the efforts being made by that Section in democratizing the Japanese. He expressed the conviction that political stability in Japan as well as in the rest of Asia is of vital importance to economic recovery. He was not only interested in Japan’s new constitution, but also in how its provisions are being implemented. His long study of Oriental and other peoples has convinced him that reforms are lasting only if fully desired by the people concerned.

Dr. Lokanathan raised the question of Japanese representation at meetings of international organizations, such as ECAFE. It was pointed out to him that the United States favors the attendance of Japanese as observers, but that other members of the Far Eastern Commission do not share this view. Although representatives of the Supreme Commander attending international conferences are familiar with Japanese views, it would appear preferable to have Japanese in close touch with international affairs in preparation for their eventual assumption of international responsibilities.

This initial consultation between this Headquarters and ECAFE officials was devoted to obtaining as broad a picture of the present status of Japanese economy as the limited time allowed. Should occasion arise, it would be desirable for ECAFE representatives to come to Tokyo to consult upon specific problems with particular Sections and divisions of this Headquarters. It is also anticipated that experts in certain fields might at some future date be requested to confer at the Headquarters of ECAFE when their advice would be particularly helpful, as, for example, textile experts. In response to a request of Dr. Lokanathan, efforts will be made to ensure a steady flow of economic data on Japan to ECAFE as it becomes available. ECAFE in turn has agreed to forward pertinent data to SCAP.

Officials of this Headquarters were impressed at the penetrating nature of Dr. Lokanathan’s questions and his appreciation and knowledge of the role which Japan should play in the economic recovery of Asia and the Far East. It is believed that an auspicious beginning was made during this first visit for consultation.

As of possible interest, a copy of the press release approved by General MacArthur concerning the visit of Dr. Lokanathan and Colonel Keen is enclosed.⁸⁹

Respectfully yours,

W. J. Sebald

87. Not printed.
88. Not printed.
88. Despatch 1368, November 4, from Tokyo, reported that SCAP accepted the invitation to the second session of ECAFE, and Dr. Sherwood M. Fine, Economic Adviser of the Economic and Scientific Section, GHQ, SCAP, was designated as his representative (501.BD Asia/11–447). In a statement made before the Commission on December 3, the chief U.S. delegate (Monnett B. Davis) stated that the U.S. delegation favored establishment of adequate consultative arrangements between ECAFE and control authorities in Japan and Korea, for their mutual assistance (501.BD Asia/12–447).
89. Not printed.