Foreign Relations of the United States: Diplomatic Papers, 1945, The British Commonwealth, The Far East, Volume VI

Tokyo Embassy Files, 711.9

Statement by Mr. Edwin W. Pauley, Personal Representative of the President on Reparations⁵²

[Washington,] October 31, 1945.

U. S. Reparation Policy for Japan

(Preliminary Statement)

All Eastern Asia has been damaged, and set back in its economic progress, as the result of a war started by Japan. All Eastern Asia needs to be put back on the road to political stability and peaceful progress. This requires a tolerable economic life, capable of further improvement. While Japan should have the last priority in getting back on that road, Japan is not to be barred from getting back on it.

To put it the other way round, we, as a nation, are concerned to see that Japan is not to be pauperized, but neither is Japan to be allowed to rehabilitate her economic life in a form which will allow her to gain control, or to secure an advantage, over her neighbors.

The American policy will therefore be:

(a) Industrial disarmament of Japan to insure that Japan will not again become a menace to the peace of the world;

(b) Allocation to countries entitled to reparations of Japanese industrial plants which will help them round out their own economies in accordance with a broad and consistent economic program for East Asia. In such a program Japan will not be left with any plant which represents a key phase in the processing of the raw materials of any of her neighbors;

(c) Japan will be left with industries which do provide her with a minimum of export goods, for the purpose of obtaining exchange for necessary and approved imports, such as food; and

(d) Emphasis will be given to the diversification and increase of food production and food processing in Japan.

To sum up: the problem of Japanese reparations is a problem of contributing to the economic stabilization and thereby to the political stabilization of East Asia as a whole. It is therefore not the main purpose to get a postwar dividend, in the form of compensation, out of a defeated Japan. For America, anything that Japan could pay in money, goods, industrial plants or services would not compensate for the lives expanded [expended] in the common effort to put an end to Japanese militarism, once for all. Consequently, in the American view, we must aim at the rehabilitation of East Asia. In a rehabilitated Asia there will be a place for Japan, though no longer a place of leadership or control.

52. Parenthetical notation at top of paper: “Pauley policy statement approved by President”.