6. INTERNATIONAL TRADE AND FINANCIAL RELATIONS

Japan shall be permitted eventually to resume normal trade relations with the rest of the world. During occupation and under suitable controls, Japan will be permitted to purchase from foreign countries raw materials and other goods that it may need for peaceful purposes, and to export goods to pay for approved imports.

Control is to be maintained over all imports and exports of goods, and foreign exchange and financial transactions. Both the policies followed in the exercise of these controls and their actual administration shall be subject to the approval and supervision of the Supreme Commander in order to make sure that they are not contrary to the policies. of the occupying authorities, and in particular that all foreign purchasing power that Japan may acquire is utilized only for essential needs.

7. JAPANESE PROPERTY LOCATED ABROAD

Existing Japanese external assets and existing Japanese assets located in territories detached from Japan under the terms of surrender, including assets owned in whole or part by the Imperial Household and Government, shall be revealed to the occupying authorities and held for disposition according to the decision of the Allied authorities.

8. EQUALITY OF OPPORTUNITY FOR FOREIGN ENTERPRISE WITHIN JAPAN

The Japanese authorities shall not give, or permit any Japanese business organization to give, exclusive or preferential opportunity or terms to the enterprise of any foreign country, or cede to such enterprise control of any important branch of economic acivity.

9. IMPERIAL HOUSEHOLD PROPERTY

Imperial Household property shall not be exempted from any action necessary to carry out the objectives of the occupation.

111. BASIC INITIAL POST-SURRENDER POLICY Directive to Supreme Commander for the Allied Powers for the Occupation and Control of Japan, November 1, 1945 1

1. THE PURPOSE AND SCOPE OF THIS DIRECTIVE

1

(a) This directive defines the authority which you will possess and the policies which will guide you in the occupation and control of Japan in the initial period after surrender.

(b) Japan, as used in this directive, is defined to include: The four main islands of Japan: Hokkaido (Yezo), Honshu, Kyushu and Shikoku and about 1,000 smaller adjacent islands including the Tsushima Islands.

(c) This directive is divided into Part I: General and Political; Part II: Economic and Civilian Supply; and Part III: Financial.

1 The United States Department of State Documents and State Papers April 1948, pp. 32-45.

PART I

GENERAL AND POLITICAL

2. THE BASIS AND SCOPE OF MILITARY AUTHORITY

The basis of your power and authority over Japan is the directive signed by the President of the United States designating you as Supreme Commander for the Allied Powers and the Instrument of Surrender, executed by command of the Emperor of Japan. These documents, in turn, are based upon the Potsdam Declaration of 26 July 1945, the reply of the Secretary of State on 11 August 1945 to the Japanese communication of 10 August 1945, and the final Japanese communication on 14 August 1945. Pursuant to these documents your authority over Japan, as Supreme Commander for the Allied Powers, is supreme for the purpose of carrying out the surrender. In addition to the conventional powers of a military occupant of enemy territory, you have the power to take any steps deemed advisable and proper by you to effectuate the surrender and the provisions of the Potsdam Declaration. It is contemplated, however, that unless you deem it necessary, or are instructed to the contrary you will not establish direct military government, but will exercise your powers so far as compatible with the accomplishment of your mission through the Emperor of Japan or the Japanese Government. In the exercise of your powers you will be guided by the following general principles.

3. BASIC OBJECTIVES OF MILITARY OCCUPATION OF JAPAN

(a) The ultimate objective of the United Nations with respect to Japan is to foster conditions which will give the greatest possible assurance that Japan will not again become a menace to the peace and security of the world and will permit her eventual admission as a responsible and peaceful member of the family of nations. Certain measures considered to be essential for the achievement of this objective have been set forth in the Potsdam Declaration. These measures include, among others, the carrying out of the Cairo Declaration and the limiting of Japanese sovereignty to the four main islands and such minor islands as the Allied Powers determine; the abolition of militarism and ultra-nationalism in all their forms; the disarmament and demilitarization of Japan, with continuing control over Japan's capacity to make war; the strengthening of democratic tendencies and processes in governmental, economic and social institutions; and the encouragement and support of liberal political tendencies in Japan. The United States desires that the Japanese Government conform as closely as may be to principles of democratic self-government, but it is not the responsibility of the occupational forces to impose on Japan any form of Government not supported by the freely expressed will of the people.

(b) As Supreme Commander for the Allied Powers your mission will be to assure that the surrender is vigorously enforced and to initiate appropriate action to achieve the objectives of the United Nations.

(c) This directive does not purport finally to formulate long-term policies concerning the treatment of Japan in the post-war world, nor does it seek to prescribe in detail the measures which you are to take throughout the period of your occupation of Japan in the effort to

give effect to the surrender and the Potsdam Declaration. Those policies and the appropriate measures for their fulfilment will in large measure be determined by developing circumstances in Japan. It is, therefore, essential that surveys dealing with economic, industrial, financial, social and political conditions in Japan be constantly maintained by you and made available to your government. These surveys should be developed in such a manner as to form the basis for effecting modifications in the initial measures of control set forth herein as well as for the progressive formulation of policies to promote the ultimate objectives of the United Nations. Supplemental directives will be issued to you through the Joint Chiefs of Staff as may be required.

4. THE ESTABLISHMENT OF MILITARY AUTHORITY OVER JAPAN

(a) Immediately upon the surrender of Japan you will require the Emperor, the Japanese Government and the Japanese Imperial General Headquarters to issue orders to all the armed forces of Japan and all armed forces under Japanese control to cease hostilities and to surrender their arms and to issue such other orders as may be required to give effect to the instrument of surrender and the policies set forth in the Potsdam Declaration. You will require the Emperor and the Japanese Government to take all necessary steps to assure that all orders issued to effectuate the objectives of your mission are promptly and fully complied with by all persons in Japan.

(b) You will occupy the Imperial capital of Tokyo, and the capitals of such prefectures as you deem necessary in order to facilitate your control over the Japanese Government. You will also occupy such strategic places as you may deem necessary. Otherwise you should not occupy any part of Japan unless it becomes essential to impose direct military government therein. However, you may temporarily utilize your forces in any area of Japan as may be required for the fulfilment of your mission. Subject to the provisions of subparagraph 4 (c) below, you will take prompt action to assure the restoration and maintenance of law and order by Japanese authorities or by your forces, if necessary.

(c) Where action is necessary in order to carry out the surrender, you have the right to act directly from the outset. Otherwise, subject always to your right as the Supreme Commander to take direct action in the event of the unwillingness or failure of the Emperor or other Japanese authority to act effectively, you will exercise your supreme authority through the Emperor and Japanese governmental machinery, national and local. The policy is to use the existing form of government in Japan, not to support it. Changes in the direction of modifying the feudal and authoritarian tendencies of the government are to be permitted and favored. In the event that the effectuation of such changes involves the use of force by the Japanese people or government against persons opposed thereto, you as Supreme Commander should intervene only where necessary to ensure the security of your forces and the attainment of all other objectives of the occupation. You may, as circumstances require, exercise your supreme power and authority in the fullest measure including the imposition of direct military government. If it becomes necessary to impose direct military government in any part of Japan, you will immediately thereafter advise the Joint Chiefs of Staff. You will not

remove the Emperor or take any steps toward his removal without prior consultation with and advice issued to you through the Joint Chiefs of Staff.

(d) You will take appropriate steps in Japan to effect the complete governmental and administrative separation from Japan of (1) all Pacific islands which she has seized or occupied under mandate or otherwise since the beginning of the World War in 1914, (2) Manchuria, Formosa and the Pescadores, (3) Korea, (4) Karafuto, and (5) such other territories as may be specified in future directives.

(e) By appropriate means you will make clear to all levels of the Japanese population the fact of their defeat. They must be made to realize that their suffering and defeat have been brought upon them by the lawless and irresponsible aggression of Japan, and that only when militarism has been eliminated from Japanese life and institutions will Japan be admitted to the family of nations. They must be told that they will be expected to develop a non-militaristic and democratic Japan which will respect the rights of other nations and Japan's international obligations. You will make it clear that military occupation of Japan is effected in the interests of the United Nations and is necessary for the destruction of Japan's power of aggression and her war potential and for the elimination of militarism and militaristic institutions which have brought disaster on the Japanese. With this end in view, and to insure the security of the troops, a policy of nonfraternization may be applied in Japan if and to the extent that you may deem it to be desirable. Your officers and troops, however, should so treat the Japanese population as to develop confidence in the United States and the United Nations and their representatives. (f) You will require the Emperor to abrogate all laws, ordinances, decrees and regulations which would prejudice the achievement of the objectives set forth in the Potsdam Declaration or which conflict with the instrument of surrender or with directives which may be issued to you through the Joint Chiefs of Staff. You will, in particular, assure the abrogation of all laws, orders and regulations which established and maintained restrictions on political and civil liberties and discriminations on grounds of race, nationality, creed or political opinion. Agencies or parts of agencies charged specifically with the execution of legislation abrogated or to be abrogated shall be abolished immediately.

(g) You will establish such military courts as may be necessary with jurisdiction over offenses against the forces of occupation and over such other matters as are consistent with the implementation of the surrender. You will, however, except as otherwise deemed necessary by you assure that Japanese courts exercise an effective jurisdiction over cases not of direct and predominant concern to the security of your troops.

(h) Representatives of civilian agencies of the United States Government or of other United Nations governments shall not participate in the occupation or function independently within Japan except upon your approval, and subject, as to purpose, time and extent, to decisions communicated to you by the Joint Chiefs of Staff.

5. POLITICAL AND ADMINISTRATIVE REORGANIZATION

(a) Local, regional and national agencies of governmental administration, excluding those with functions and responsibilities inconsistent

with the purposes of the occupation, will be permitted to continue to function after the removal of officials who are unacceptable as described in paragraph 5 (b) below, or who are ascertained to be unreliable. Such agencies and their personnel will be held responsible for the administration of government and will be charged with the execution of your policies and directives. At all times, however, and in all circumstances you are empowered yourself to take direct action if and to the extent that Japanese authorities fail satisfactorily to carry out your instructions.

(b) Except as indicated in paragraph 7 (c) below, in no circumstances will persons be allowed to hold public office or any other positions of responsibility or influence in public or important private enterprise who have been active exponents of militant nationalism and aggression, who have been influential members of any Japanese ultra-nationalistic, terroristic or secret patriotic society, its agencies or affiliates, who have been influential in the activities of the other organizations enumerated in paragraph 5 (g) below, or who manifest hostility to the objectives of the military occupation.

(c) You will assure that at all times, so long as the present form of government is retained, the posts of Lord Privy Seal, Privy Council, Prime Minister and Cabinet members are held only by persons who may be relied upon to further the purposes of your mission. You will require the immediate abolition of the Ministry of Greater East Asia but may retain such of its machinery and personnel as may be necessary to carry out the separation of colonies provided for by paragraph 4 (d) above. You will progessively disband and eliminate the Ministries of War, Navy, and Munitions during the process of disarmament and demobilization.

(d) Local responsibility for the local enforcement of national policy will be encouraged.

(e) Ordinary criminal and civil courts in Japan will be permitted to continue to function subject to such regulations, supervision and control as you may determine. As rapidly as possible, judges and other court personnel who are unacceptable under the provisions of paragraph 5 (b) above will be removed. Such officials will be replaced with acceptable and qualified successors. Full power of review will be retained by you over all courts which are allowed to function. You will veto all decisions which are inconsistent with the purpose of your mission. You will take all practicable measures to cause the release of persons held in custody solely under laws or regulations of the type to be abrogated under paragraph 4 (f) above.

(f) Criminal and ordinary police agencies, and such others as you may consider proper to be retained under appropriate supervision, must be purged of undependable and undesirable elements, in particular, of members of ultra-nationalistic, terroristic and secret patriotic societies.

(g) Throughout Japan you will assure the dissolution of the Political Association of Great Japan, the Imperial Rule Assistance Association (Taisei Yokusankai), the Imperial Rule Assistance Political Society (Taisei Seijikai), their affiliates and agencies or any successor organizations, and all Japanese ultra-nationalistic, terroristic and secret patriotic societies and their agencies and affiliates.

(h) You will direct the Japanese Government to recall such Japanese diplomatic and consular officials and other agents abroad as the