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

740.00119 PW/1–3147

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

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[Washington,] February 19, 1947.

In accordance with the instructions of the Secretary of State of February 13, 1947, there is enclosed a statement of United States policy regarding the Principles Under Which Advance Transfers of Japanese Reparations May Be Accomplished, comprising the conclusions of SWNCC 236/24 which was approved by the State-War-Navy Coordinating Committee on January 30, 1947.³⁶

The United States Member is requested to introduce this United States policy into the Reparations Committee of the Far Eastern Commission as a matter of the highest urgency with a view of obtaining from the Commission a policy decision on the subject.

The Secretary of State takes the view that the Far Eastern Commission’s consideration of this policy will take place in lieu of the diplomatic consultations which hitherto have been regarded as necessary preceding its issuance as an interim directive. It is suggested that the United States Member, Far Eastern Commission, may wish to urge the Reparations Committee to remain in continuous session after a reasonable time has been allowed for Governments to provide their representatives in the Far Eastern Commission with instructions. It is hoped that the Far Eastern Commission will reach agreement on this matter by Friday, March 7. In as much as the issuance of a directive to the Supreme Commander for the Allied Powers on this subject is regarded as a matter of urgency, the United States will consider itself in a position to issue an interim directive to the Supreme Commander for the Allied Powers in the event that agreement has not been reached in the Far Eastern Commission by that date. In that event, due consideration will be given to views which have been expressed in the course of Far Eastern Commission deliberations.

The State-War-Navy Coordinating Committee has stipulated that SWNCC 236/24 should not be issued unless accompanied by SWNCC 236/35 regarding Procedures for the Allocation of Japanese Reparations Assets. Upon approval by the State-War-Navy Coordinating Committee, SWNCC 236/35 will be submitted for consideration by the Far Eastern Commission, but the United States Government considers itself in a position to issue it as an interim directive at the same time that SWNCC 236/24 is issued.

The State-War-Navy Coordinating Committee has also stipulated that SWNCC 236/24 should not be issued unless accompanied by SWNCC 236/19 regarding Assured Production Capacity Levels for Japan. SWNCC 236/19 has been under Far Eastern Commission consideration since August 12, 1946.

No other papers are considered relevant to accomplishment of the advance transfer program. Hence, it is not anticipated any delays will be occasioned by consideration of any other papers dealing with reparations problems.

J. H. Hilldring

[Annex]

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Statement of United States Policy Regarding Principles Under Which Advance Transfers of Japanese Reparations May Be Accomplished

It is the position of the United States Government that the Supreme Commander for the Allied Powers should effect immediate delivery of assets within Japan in accordance with the provisions of SWNCC 236/27 [FEC–094/2]³⁷ as advance payment on account of ultimate reparations shares providing:

(1) That such assets fall within categories of Japanese facilities and equipment which have been properly declared as available for reparations transfer by the FEC and designated for removal by the Supreme Commander for the Allied Powers.

(2) That such assets should be declared by the Supreme Commander for the Allied Powers to China, the Philippines, the Netherlands (for NEI) and the United Kingdom (for Malaya and Burma) only;

(3) That such assets should be delivered to a recipient country only after it has supplied evidence acceptable to the Supreme Commander for the Allied Powers, or to some other agent or agency hereafter designated to evaluate and pass judgment on such evidence, that the

(i) immediate and useful employment of such assets is practicable, and

(ii) Employment of rehabilitated, repaired or reconstructed facilities can contribute, directly, to immediate relief and rehabilitation requirements of the war devastated economy of the claimant country or, indirectly, to the relief needs of other parts of Asia devastated by Japanese armed forces;

(4) That no country listed in paragraph (2) should receive delivery of more than 5 percent, excepting China which may receive 15 percent, in quantity or value of any single category of assets available as determined in paragraph (1) above, and authorized for transfer under the provisions of paragraph (3) above.

(5) That assets specified for delivery should represent in their total quantity or value, not more than 30 percent of any single category of available assets as determined in paragraph (1) above.

The SCAP should designate for delivery on advance transfer account such a balanced selection of plants and facilities as will not represent disproportional reduction of value or quality of over-all residual industrial capacities available for later transfer as reparations.

The SCAP should maintain such records as necessary to enable offset for any such advance transfers to be made against ultimate fulfillment of approved and recognized over-all national reparations shares.

36. A copy of SWNCC 236/24, as amended January 22, was sent in instruction 419, February 10, to Tokyo.
37. Brackets appear in the original.