accordance with assurances contained in the Potsdam Declaration, the Allies have no intention of imposing conditions which would prevent the accomplishment of these tasks in due time. Japan will be expected to provide goods and services to meet the needs of the occupying forces to the extent that this can, in the judgment of the Supreme Commander, be effected without causing starvation, wide-spread disease and acute physical distress. The Japanese authorities will be expected, and if necessary directed, to maintain, develop and enforce programs, subject to the approval of the Supreme Commander, which are designed to serve the following purposes: a. To avoid acute economic distress. b. To assure just and impartial distribution of available supplies. c. To meet the requirements for reparations deliveries. d. To make such provision for the needs of the Japanese population as may be deemed reasonable in accordance with principles formulated by the Far Eastern Commission in the light both of supplies available and of obligations to other peoples of the United Nations and territories formerly occupied by Japan. Reparations 4. REPARATIONS AND RESTITUTIONS For acts of aggression committed by Japan and for the purpose of equitable reparation of the damage caused by her to the Allied Powers and in the interests of destruction of the Japanese war potential in those industries which could lead to Japan's rearmament for waging war, reparations shall be exacted from Japan through the transfer of such existing Japanese capital equipment and facilities or such Japanese goods as exist or may in future be produced and which under policies set forth by the Far Eastern Commission or pursuant to the Terms of Reference of the Far Eastern Commission should be made. available for this purpose. The reparations shall be in such a form as would not endanger the fulfillment of the program of demilitarization of Japan and which would not prejudice the defraying of the cost of the occupation and the maintenance of the minimum civilian standard of living. The shares of particular countries in the total sum of the reparations from Japan shall be determined on a broad political basis, taking into due account the scope of material and human destruction and damage suffered by each claimant country as a result of the preparation and execution of Japanese aggression, and taking also into due account each country's contribution to the cause of the defeat of Japan, including the extent and duration of its resistence [sic] to Japanese aggression. Restitution Full and prompt restitution will be required of all identifiable property, looted, delivered under duress, or paid for in worthless. currency. 5. FISCAL, MONETARY, AND BANKING POLICIES While the Japanese authorities will remain responsible for the management and direction of the domestic fiscal, monetary, and credit policies, this responsibility is subject to the approval and review of the Supreme Commander, and wherever necessary to his direction. 6. INTERNATIONAL TRADE AND FINANCIAL RELATIONS Eventual Japanese participation in world trade relations shall be permitted. During occupation and under suitable controls and subject to the prior requirements of the peoples of countries which have participated in the war against Japan, Japan will be permitted to purchase from foreign countries raw materials and other goods that it may need for peaceful purposes. Japan will also be permitted under suitable controls to export goods to pay for approved imports. Exports other than those directed to be shipped on reparations account or as restitution may be made only to those recipients who agree to provide necessary imports in exchange or agree to pay for such exports in foreign exchange usable in purchasing imports. The proceeds of Japanese exports may be used after the minimum civilian standard of living has been secured to pay for the costs of non-military imports necessary for the occupation which have already been made since the surrender. Control is to be maintained over all imports and exports of goods and foreign exchange and financial transactions. The Far Eastern Commission shall formulate the policies and principles governing exports from and imports to Japan. The Far Eastern Commission will formulate the policies to be followed in the exercise of these controls. 7. JAPANESE PROPERTY LOCATED ABROAD The clauses herein on reparations and references to this subject are without prejudice to the views of Governments on the overseas assets issue. 8. EQUALITY OF OPPORTUNITY FOR Foreign ENTERPRISE WITHIN JAPAN All business organizations of any of the United Nations shall have equal opportunity in the overseas trade and commerce of Japan. Within Japan equal treatment shall be accorded to all nationals of the United Nations. 9. IMPERIAL HOUSEHOLD PROPERTY Imperial Household property shall not be exempt from any action necessary to carry out the objectives of the occupation. 98756-50- 43 113. ACTIVITIES OF THE FAR EASTERN COMMISSION, JULY 10, 1947-DECEMBER 23, 1948 Second Report by the Secretary General 1 REVIEW 1 2 A year and a half has passed since the first public report on the activities of the Far Eastern Commission made its appearance. That document summarized developments in the Commission from its inception on February 26, 1946, to July 10, 1947. During that year and a half a total of 41 formal decisions on matters relating to Allied policy for the occupation of Japan were adopted. Since July 10, 1947, 13 more policy decisions-some on matters previously reported as under discussion, some on issues not then mentioned-have been approved. Still other matters previously reported as under discussion have not as yet been finally settled by Commission action. The broad policy objectives to which the work of the Far Eastern Commission must of necessity conform are set forth in the Potsdam Declaration. Roughly, they are three-disarmament, democratization, and the determination of a self-sustaining economy for Japan. Except for the Basic Post-Surrender Policy for Japan, which was a general statement of Allied policy covering a variety of points, Commission decisions previously reported have generally fallen under one or another of these three main headings. Disarmament, for example, although not yet the subject of a separate policy decision last year, was touched upon in the Basic Post-Surrender Policy. In addition, several decisions on reparations and economic matters had distinct disarmament implications in so far as they placed limitations on Japanese industrial capacity. With respect to democratization, the Commission's accomplishments included policies relating to Japan's new Constitution, educational reform, and the development of trade-union activity. Commission activity in the field of economic readjustment and recovery included an "interim" reparations removal program, the designation of the period 1930-34 as a yardstick for determining Japan's proper peacetime standard of living, and several policies looking toward the revival of Japanese trade. Outside the scope of these three main headings the Commission's work also touched on a number of miscellaneous subjects, including war criminals, aliens in Japan, and the prohibition of Japanese research in atomic energy. Also mentioned in a very general way in the earlier report were several subjects still under consideration; specifically, these included disarmament, reduction of industrial war potential, a revised policy on the restitution of looted property, percentage reparations shares, and peacetime levels for certain specified Japanese industries. DISARMAMENT OF JAPAN Of the 13 policies adopted by the Far Eastern Commission since July 1947, several represent agreement on subjects previously reported as under consideration. This is true in the case of disarmament, the first of the three major headings under which Commission action can Department of State Documents and State Papers, January 1949, pp. 615-622. 2 Activities of the Far Eastern Commission, Department of State publication 2888 (1947). still be most easily considered. A policy decision on disarmament, entitled "Prohibition of Military Activity in Japan and Disposition of the Japanese Military Equipment," was adopted on February 12, 1948.1 Under the terms of this decision, possession by Japanese of arms, ammunition, and implements of war is prohibited, except that the Supreme Commander for the Allied Powers (SCAP) may authorize the use of small arms by Japanese civil police agencies. In addition, the development, manufacture, or exportation of arms, ammunition, and implements of war is prohibited, and the importation of such items is restricted to the number and kind required by Japanese civil police. Manufacture of aircraft and naval vessels and reconversion of commercial vessels for military purposes are prohibited. Japan is forbidden any military or "para-military" organizations, including, of course, a ministry of war. Provisions against the subsequent revival of Japanese military activity are also included; any revival of the "Japanese Army, Navy, gendarmerie, secret police and their administrative organs" is banned, and military records are to be "confiscated and transferred to the Supreme Commander for the Allied Powers for subsequent destruction. No further records of this nature should be compiled or maintained by the Japanese." All organizations of a military or ultra-nationalistic nature are forbidden and their "revival or establishment in any form, including a disguised form,' prohibited. This provision is intended to apply as well to "any other associations composed wholly or substantially of ex-officers of the Japanese Army and Navy and gendarmerie, ostensibly created for legitimate purposes, but which are, in reality, disguised forms of military or para-military organizations, or which have some other disguised subversive purpose. Military drills or similar training in schools are prohibited and career officers are barred not only from public office but also from teaching, except in so far as SCAP may otherwise specifically authorize. In connection with disarmament, mention might also be made of a policy adopted on August 14, 1947, on "Reduction of Japanese Industrial War Potential," another subject previously reported as under discussion. This policy, which will be handled in detail below, lays the framework for the destruction or reduction of those portions of Japan's industries which contributed to her war-making strength. ATTENDANCE AT INTER-GOVERNMENTAL CONFERENCES A policy decision adopted on June 9, 1948, entitled "Attendance at Inter-Governmental Conferences," has a direct bearing on the occupation objective of democratization. This decision, incidentally, is on a subject not mentioned in the previous report. It permits members of SCAP's staff, upon appropriate invitation, to serve as observers at inter-governmental conferences, provided their attendance is considered to be in the interest of the occupation, and also makes it 1 DOCUMENTS AND STATE PAPERS, May 1948, p. 99. ? Department of State Bulletin of September 14, 1947, p. 513. ATTENDANCE AT INTER-GOVERNMENTAL CONFERENCES (FEC Policy Decision, 9 June 1948). 1. Upon receipt of an appropriate invitation SCAP may appoint members of his staff as observers at possible for technical personnel of Japanese nationality to accompany these observers if their presence is necessary and if the country acting as host to the conference in question has no objection. PRINCIPLES FOR JAPANESE FARMERS' ORGANIZATIONS 1 A second policy decision, adopted on December 9, 1948, also bears on the objective of strengthening democratic tendencies. Entitled "Principles for Japanese Farmers' Organizations" it specifies that Japanese farmers are to be "encouraged to form themselves into farmers' organizations, including unions and cooperatives of all kinds, for their mutual economic and social benefit, and for the purpose of preserving and improving conditions of agricultural work and otherwise assisting the legitimate interests of farmers." This policy further provides that Japanese farmers' organizations "should be assured of and encouraged to observe in the conduct of their operations the 1 PRINCIPLES FOR JAPANESE FARMERS' ORGANIZATIONS (FEC Policy Decision, 9 December 1948) General principles 1. Japanese farmers should be encouraged to form themselves into farmers' organizations, including unions and cooperatives of all kinds, for their mutual economic and social benefit, and for the purpose of preserving and improving conditions of agricultural work and otherwise assisting the legitimate interests of farmers. 2. Farmers' organizations and their members should be assured of and encouraged to observe in the conduct of their operations the fundamental freedoms guaranteed by Chapter III ("Rights and Duties of the People") of the Constitution of Japan. 3. Any existing laws or parts thereof which are contrary to the provisions stated in this policy should be abrogated, and any organizations established thereunder abolished. 4. This policy should be put into effect gradually, due regard being paid to the immediate economic needs of the country and the need to prevent avoidable dislocation of food control measures. Farmers' Cooperatives 5. Farmers' cooperatives should be a means whereby those who are actively concerned in obtaining their living by working on the land or in pursuits closely connected therewith can combine for their mutual advantage. 6. The right of farmers to organize themselves into cooperatives should be assured and protected by law and the freedom of farmers to join or abstain from joining cooperatives should be provided by law. Any farmers' cooperative should have the power to make rules admitting to membership any person who is not a genuine farmer, which rules may or may not exclude non-farmers from voting. Measures should be taken, however, to prevent cooperatives becoming controlled by any banking, trade, industrial, or other nonfarmer companies and interests. 7. Farmers' cooperatives should not be subject to any adversely discriminatory taxation, nor to any discriminatory restrictions upon their engaging in any economic activity related to their own agricultural pursuits and for the benefit of members. 8. Farmers' cooperatives should be subject to the laws relating to juridical persons, but should not, in their internal management and operation, be subject to any control, interference, or supervision by any administrative organ of the Japanese Government, nor should they be subject to dissolution by administrative order. Where it is alleged that cooperatives have violated the law, or their articles of incorporation or by-laws, remedial action should be sought and taken through the courts of law and not through government decree or administrative decision. 9. Farmers' cooperatives should be free from any obligation to take part in, or from any resonosibility for, the enforcement of government measures, except that they should comply with government measures to the same extent as any other Japanese national or organization under Japanese Government jurisdiction. 10. Farmers' cooperatives should be encouraged and assisted by the Japanese Government in providing education for their members, both generally in an understanding of democratic processes and particularly in cooperative practices and agricultural techniques. The Japanese Government should, as far as possible, assist cooperative officials in obtaining information on cooperative activities in other countries. These objectives should be given due weight when allocations of paper supplies and import of foreign publications are made. 11. Japanese should be free to choose the forms of organization of their cooperatives. Cooperatives should be allowed to associate themselves in regional or national bodies, with representation in such bodies in proportion to the membership of the individual cooperatives. Emphasis, however, should be placed on the importance of a solid local basis for the future of cooperative activity in Japan. 12. The director and officials, other than administrative officers, of farmers' cooperatives should be elected at regular stated intervals by the farmers concerned by secret ballot and democratic methods. Each member should have one vote. It should be the responsibility of the cooperatives to ensure that all their activities are democratically conducted. 13. No member should hold office in a cooperative if (1) he is engaged in activities which are likely substantially to compete with the activities of the cooperative, or (2) he is subject to the purge directive of January 4, 1946, or subject to subsequent purge directives by the Supreme Commander for the Allied Powers. 14. The Japanese Government, in so far as practicable, should make available to farmers' cooperatives technical advisory and other services and should ensure that credit is available to them on reasonable terms. 15. Farmers' cooperatives should be encouraged to participate in voluntary measures to promote the objectives of the occupation. Farmers' Unions 16. The Principles for Japanese Trade Unions (FEC-045/5) should, with the necessary modifications, be applicable to farmers' unions. |