740.00119 PW/7–549
The Secretary of State to the Secretary of Defense (Johnson)
My Dear Mr. Secretary: You will recall that paragraph 20 of NSC 13/3,1 “Recommendations With Respect to U.S. Policy Toward [Page 798] Japan”, provides that “there should be no limitation on Japan’s production for peaceful purposes or on levels of Japanese productive capacity in industries devoted to peaceful purposes”. This policy position was announced to the Far Eastern Commission in the statement on Japanese reparations and level of industry read by General McCoy on May 12 and released to the press. It was further announced in the last paragraph of the statement that:
“The U.S. Government plans shortly to submit to the FEC for its consideration proposals for the rescission or amendment of existing and pending FEC reparations and ‘level-of-industry’ policy papers so as to bring FEC policies on these matters, should the proposals be approved by the Commission, into conformity with the position which I have set forth.”
Pursuant to this paragraph the Department of State is currently formulating new proposals on the Japanese level-of-industry question for submission to the FEC. While the above-quoted provision from NSC 13/3 constitutes a clear statement of general policy, it nevertheless becomes necessary to determine whether certain industries, not armament industries but of major value in war, should be restricted in Japan for security reasons. The aircraft manufacturing and shipping and shipbuilding industries should be considered in this connection, and there may be others.
Paragraph 19b of NSC 13/3 provides that “Japan’s industrial disarmament should be limited to the prohibition of the manufacture of weapons of war and civil aircraft …” The last formal expression of opinion by any of the defense departments on the question of restriction of the Japanese merchant shipping and shipbuilding industries was contained in SANACC 236/56, “Reparations Removals of Merchant Shipping From Japan”, submitted by the Department of the Navy in March, 1948.2 The Navy Department stated in this paper, contrary to a position which it had previously taken, that it considered that “the retention of all merchant ships now available to Japan, regardless of tonnage or speed, would not be inimical to the security interests of the United States or any other nation.” The Navy Department did not, however, recommend change in the size and speed limitations on the construction of new ships for domestic use in Japan, and on total permitted shipbuilding capacity in Japan, which it had previously approved in SWNCC 236/43, “Reparations Removals of Industrial Facilities and Merchant Shipping From Japan”, April 7, 1947.3 By the terms of FEC 084/21, “Reduction of Japanese Industrial War Potential”,4 existing FEC limitations (calculated on the basis of the FEC Interim Reparations Removals Decision on the Shipbuilding [Page 799] Industry of May 23, 19465) on total permitted capacity in Japan to build, repair or maintain steel ships of over 100 gross tons will lapse on October 1, 1949. There is no FEC decision limiting the size or speed of merchant ships which Japan may own or build during the occupation, or its capacity to build ships above a given size or speed.
It would be appreciated if you would advise me whether the National Military Establishment considers, in light of U.S. security requirements and our overall strategic planning for Japan, that restrictions should be imposed in the post-occupation period on any non-armament industries in Japan. Particularly, should restrictions be imposed on the aircraft manufacturing industry, or on the size and speed of individual merchant ships constructed by Japan for domestic use, or for export, or on the total volume of merchant ships above a designated size built or owned by Japan. If it is considered that restrictions will be required, I would appreciate learning what in the view of the National Military Establishment the restrictions, and corresponding capacity or other limitations, should be. Our proposals to the FEC, which would have effect, if adopted, only during the period of Allied occupation, will be formulated in light of your reply, so that they will accord with United States long-range thinking on this question.
Sincerely yours,