894.60/10–2947
Memorandum of Conversation, by Mr. Noel Hemmendinger, of the Office of the Assistant Secretary of State (Saltzman)
- Participants:
Mr. Saltzman stated that he desired if possible to have Department of the Army approval of the reparations shares proposal. The issue seemed to be principally with respect to whether approval of reparations shares should await report by Overseas Consultants Inc. Mr. Saltzman and Mr. Martin pointed out that the levels of industry for [Page 436] interim reparations removals had been worked out by State, War and SCAP more than a year ago and approved by FEC. The levels under consideration in FEC 218 would make slightly more reparations available. FEC 218 was approved by State, War and the Strike Group, which in conferences held at that time withdrew recommendations inconsistent with the paper as finally approved. There should not be any prospect of reconsidering the levels of the interim program since FEC 218 was the frame of reference against which Overseas Consultants had been instructed to report. Mr. Martin stated that a reconsideration of the levels involved economic judgments which were outside the province of engineers.
General Draper referred to the experience in Germany, where levels which he and others approved as proper were soon found to be entirely inadequate. He said he had the feeling and others in Tokyo had the feeling that the same situation might easily exist in Japan, particularly with respect to power. Two members of Overseas Consultants were economists who were intended to deal with the overall economic judgments involved. He conceded that the main purpose of Overseas Consultants was to examine the listings, pursuant to the agreed levels, but stated that it was their secondary mission to make any other recommendations which their experience led them to think appropriate.
Martin suggested that Overseas Consultants had been indoctrinated to reach certain conclusions and had gone out with preconceived ideas. This was rejected by General Draper, Col. Pixton and Mr. Fahey. General Draper said that various people in Tokyo believed that some reparations would be appropriate.
Mr. Fahey observed that so far as reparations shares were concerned, the work in Japan made certain that in any case deliveries would not be made until there was opportunity to consider the report of the Overseas Consultants. Mr. Saltzman stated that the State Department was also of that opinion, and considered it a sufficient reason why the Army Dept need not oppose a decision on reparations shares at this time. General Draper agreed, but observed that while most of Overseas Consultants expected to finish their work by about December 1, the two economists referred to above might not finish until after the first of the year.
Mr. Saltzman read the proposed statement by General McCoy. General Draper withdrew his objection to its being made at this time provided the next to the last paragraph be omitted. Mr. Saltzman agreed. General Draper urged, but not as a condition of the withdrawal of his objection, that a statement be made at the same time that the U. S. did not intend to use any of its remaining shares for its own benefit. State members agreed that a statement along those lines ought probably to be made at the same time.
[Page 437]General Draper also suggested that a definite period be set for the FEC adoption, at the end of which the proposal would be withdrawn. Mr. Saltzman agreed to consider it.
New Subject: General Draper read a proposed draft cable to SCAP on the subject of the issuance of an interim directive to SCAP based on SWNCC 236/43.45 The cable stated that the paper was making slow progress in FEC and that the Army Dept considered it undesirable to press for an interim directive in the circumstances. It further stated that it was the “view here” that approval of paper on levels of reparations available should not be sought until after the report of Overseas Consultants. Mr. Saltzman said that he could not concur in that without serious consideration in the Department. General Draper referred to a conversation had by him with Mr. Lovett at which Mr. Lovett had indicated general approval of the idea. Mr. Saltzman said that he would discuss the matter in the Department, and would advise General Draper further.
General Draper asked whether the Department of State really would be prepared to go ahead with substantial deliveries before considering the report of Overseas Consultants. Mr. Martin replied that he thought the question could not arise because of the time schedule involved in listing and allocating plants.