794.5/6–254
No. 764
The Chargé in Japan (Parsons) to the
Ambassador to Japan (Allison)1
Dear John: At today’s meeting of the Consultative Group, General Magruder2 expressed his personal view that the present situation in Washington with respect to defense appropriations and defense production make our policy of promoting the re-establishment of Japan’s defense industries out of date. It was my impression that General Magruder was speaking on the basis of his background in the Pentagon, which he left some eight months ago, rather than on instructions from the Defense Department.
General Magruder pointed out that the policy to develop the Japanese mobilization base was originally formulated in the expectation of imminent war with Russia and as a result of the then inadequacy of the U.S. mobilization base. While the policy is still on the books, developments over the past few years make it no longer valid. In the first place, the U.S. mobilization potential has been greatly increased and there is no longer any urgency about developing defense facilities outside the U.S. Furthermore, with the present cut-backs in American defense production, there is no justification now for expending funds to promote a defense production base in Japan. General Magruder pointed to one other factor which, in his view, argued against the likelihood of an effective program to promote development of Japanese defense production. The U.S. program for promoting Japanese defense production was based on a 10–division force, for which the U.S. would place in Japan the initial orders for much of the original equipment with the thought that the Japanese would then take over the procurement [Page 1651] of equipment from the Japanese plants. However, the Japanese were unwilling to build up the defense forces to such levels and to make any large appropriations for material and equipment for their forces. Therefore, the only way to stimulate Japanese defense production would be through placement of U.S. orders for end items. Defense appropriations projected for U.S. fiscal year 1955 do not envisage any such large-scale procurement in Japan, and, in the present mood of Congress, it would be virtually impossible to justify further appropriations to stimulate Japanese defense production unless the Japanese show they are willing to build up their forces and expend far larger sums for defense.
In sum, General Magruder confirms the Embassy’s impression that the prospective volume of U.S. contract awards in Japan will not be sufficient to permit an appreciable development of Japan’s mobilization base. He said that the military would continue to explore every possibility for offshore procurement here and that FEC had recently addressed letters to the three services along this line. Nevertheless, he feels, as we do, that special dollar receipts will continue to decline and that Japan for balance of payments purposes can not rely on any upturn in such receipts in the absence of large-scale hostilities in which the U.S. is involved.
I thought General Magruder’s remarks worth passing to you at once in view of the several points that were novel, if depressing, to all of us. I’m afraid he is correct in his judgment.
Sincerely yours,