necessity requires, civilian supplies may be made the subject of direct relief issue by you or by supply agencies under your supervision or control. PART III 34. In the financial field you will make full application of the principles stated elsewhere in this directive, acting through the Japanese Government to the extent that effective execution of the policies and programs hereinafter enumerated will permit, but establishing administrative machinery not dependent upon Japanese authorities and agencies to the extent necessary to execute or assure the effective execution of such policies and programs. You are specifically directed to establish such independent administrative machinery in order to execute or assure the effective execution of the provisions of paragraphs 40, 41, 45, 46 and 47 of this directive. 35. Japanese financial organizations and the public finance system will be expected to function on the basis of Japanese resources. You will take no steps designed to maintain, strengthen, or operate the Japanese financial structure except in so far as may be necessary for the purposes specified in this directive. 36. You may authorize or require the Bank of Japan or any other bank or agency to issue bank notes and currency which will be legal tender; without such authorization no Japanese governmental or private bank or agency will be permitted to issue bank notes or cur rency. 37. You will require the Japanese authorities to make available to you legal tender yen notes or yen credits free of cost and in amounts sufficient to meet all expenses of your forces including the costs of your military occupation. 38. (a) In the event that for any reason adequate supplies of regular legal tender yen notes are not available you will use supplemental military yen (Type "B") issued pursuant to military proclamation. Supplemental yen will be declared legal tender and will be interchangeable at par without distinction with other legal tender yen currency. (b) Regular yen currency will include currencies which are now legal tender in the area. (c) Japanese military yen issued for circulation in territories occupied by the Japanese will not be legal tender and will not be acceptable nor interchangeable with supplemental yen or regular yen currencies. 39. You will not announce, establish or permit the use or publication, until receipt of further instructions, of any general rate of exchange between the Japanese yen on the one hand the U. S. dollar and other currencies on the other. However, a rate of conversion to be used exclusively for pay of military and naval personnel and for military and naval accounting purposes, namely 15 regular or supplemental yen equal one U. S. dollar, has already been communicated to you. 40. You will remove and exclude from positions of important responsibility or influence in all public and private financial institutions, agencies or organizations all persons who have been active exponents of militant nationalism and aggression or who have actively participated in the organizations enumerated in paragraph 7 of this directive. It may be generally assumed in absence of evidence to the contrary that any persons who have held key positions in any such institutions, agencies, or organizations are active exponents of militant nationalism and aggression. You will also prevent the retention in or selection for places of importance in the financial field of individuals who do not direct future financial effort solely towards peaceful ends. 41. You will close and not allow to reopen banks and other financial institutions whose paramount purpose has been the financing of war production or the mobilization or control of financial resources in colonial or Japanese occupied territories. These include: (a) The Wartime Finance Bank, (b) The National Financial Control Association and its member control associations, (c) Offices, in the area, of the Bank of Chosen and the Bank of Taiwan, (d) The various banks and development companies whose fields of operation have been outside Japan proper such as the Southern Development Company, the Southern Development Company Bank and the Tokyo offices of the Central Bank of Mancheu, Bank of Mongolia, Federal Reserve Bank of China, and Central Reserve Bank of China. You will take custody of all the books and records of these banks and other institutions. 42. You are authorized to take such financial measures as you may deem necessary to accomplish the objectives of your military occupation, specifically including, without limitation, the following: (a) Close banks, other than those indicated in paragraph 41 above, only where clearly necessary for the purposes of introducing satisfactory control, removing objectionable personnel and taking measures to effectuate the program for the blocking of certain accounts and transfers or the determination of accounts to be blocked or for other reasons of military necessity. You should reopen any banks so closed except those indicated in paragraph 41 above, as promptly, as is consistent with the accomplishment of the foregoing purposes; (b) Prohibit, or regulate transfers or other dealings in private or public securities or real estate or other property; (c) Establish a general or limited moratorium or moratoria only to the extent clearly necessary to carry out the objectives of your military occupation; (d) Close stock exchanges, insurance companies and similar financial institutions for such periods as you deem appropriate. 43. You will prohibit the payment of: (a) All military pensions, or other emoluments or benefits, except compensation for physical disability limiting the recipient's ability to work, at rates which are no higher than the lowest of those for comparable physical disability arising from non-military causes; (b) All public or private pensions or other emoluments or : benefits granted or conferred: (1) By reason of membership in or services to 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 or similar organizations, and all Japanese ultranationalistic terroristic and secret patriotic societies and their agencies and affiliates, (2) To any person who has been removed from an office or position in accordance with paragraphs 5 or 40 of this directive, (3) To any person interned in accordance with paragraph 7 of this directive, during the term of his internment, or permanently in case of his subsequent conviction. 44. (a) Any laws, ordinances and regulations or practices relating to taxation or other fields of finance which tend to discriminate for or against any person because of nationality, race, creed or political opinion will be amended, suspended or abrogated to the extent necessary to eliminate such discrimination. The collection of contributions of any kind for nationalistic, imperialistic, militaristic or anti-democratic societies of any kind will be prohibited. (b) You will insure that Japanese public expenditures are consistent with the objectives stated elsewhere in this directive. 45. You will impound or block all gold, silver, platinum, currencies, securities, accounts in financial institutions, credits, valuable papers, and all other assets within the categories listed below: (a) Property owned or controlled directly or indirectly, in whole or in part, by any of the following: (1) The Japanese national, prefectural and local governments, or any agency or instrumentality of any of them, including all utilities, undertakings, public corporations or monopolies under the control of any of the above; (2) The Governments, nationals, or residents of Germany, Italy, Bulgaria, Rumania and Hungary, including those of territories formerly occupied by them and by Japan; (3) The Japanese Imperial Household; (4) The Political Association of Great Japan, the Imperial Rule Assistance Association, the Imperial Rule Assistance Political Society, their affiliates and agencies or any successor or similar organizations, and all Japanese nationalistic, terroristic and secret patriotic societies, agencies and affiliates and their officials, leading members and supporters; (5) The National Shinto; (6) All organizations, clubs or other associations prohibited or dissolved by you; (7) Absentee owners of non-Japanese nationality including United Nations and neutral governments and Japanese outside of Japan; (8) Any person or concern in any area under Japanese control at any time since 1894, except the islands of Honshu, Hokkaido, Kyushu, Shikoku and whatever minor islands are left to Japan; (9) Persons subject to internment under provisions of paragraph 7, and all other persons specified by Military Government by inclusion in lists or otherwise. (b) All Japanese (public and private) foreign exchange and external assets of every kind and description located within or outside Japan. (c) Property which has been the subject of transfer under duress, wrongful acts of confiscation, dispossession or spoliation, whether pursuant to legislation or by procedure purporting to follow forms of law or otherwise. (d) Works of art of cultural or material value of importance, regardless of ownership. You will take such action as will insure that any impounded or blocked assets will be dealt with only as permitted under licenses or other instructions which you may be issued. In the case particularly of property blocked under a (1) above you will proceed to adopt licensing measures which will [while] maintaining such property under surveillance would permit its use by you or by the licensees in consonance with this directive. In the case of property blocked under (c) above, you will institute measures for prompt restitution, in conformity with the objectives of this directive and subject to appropriate safeguards to prevent the cloaking of militaristic and other undesirable influence. You will require from the Japanese Government such reports as you deem necessary to obtain full disclosure of all assets mentioned in (b) above. 46. You will seek out and reduce to the possession or control of a special agency established by you within your command all Japanese (public and private) foreign exchange and external assets of every kind and description located within or outside Japan. 47. All foreign exchange transactions, including those arising out of exports and imports, will be controlled with the aim of preventing Japan from developing a war potential and of achieving the other objectives set forth in this directive. To effectuate these purposes you will: (a) Prohibit, except as authorized by regulation or license, all dealings in gold, silver, platinum, foreign exchange, and all foreign exchange transactions of any kind. (b) Make available any foreign exchange proceeds of exports for payment of imports directly necessary to the accomplishment of the objectives of this directive, and authorize no other outlay of foreign exchange assets without specific approval of your government through the Joint Chiefs of Staff. (c) Establish effective controls with respect to all foreign exchange transactions, including: (1) Transactions as to property between persons inside Japan and persons outside Japan; (2) Transactions involving obligations owed by or to become due from any person in Japan to any person outside Japan; and (3) Transactions involving the importation into or exportation from Japan of any foreign exchange asset or other form of property. (d) You will provide full reports to your government with respect to all Japanese foreign and external assets. 48. No extension of credit to Japan or Japanese by any foreign person, agency or government will be permitted except as may be authorized by your government through the Joint Chiefs of Staff upon your recommendations. 49. It is not anticipated that you will make credits available to the Bank of Japan or any other bank or to any public or private institution. If, in your opinion, such action becomes essential, you may take such emergency actions as you may deem proper, but in any such event, you will report the facts to your government through the Joint Chiefs of Staff. 50. You will maintain such accounts and records as may be necessary to reflect the financial operations of your military occupation and you will provide the Joint Chiefs of Staff with such information as it may require, including information in connection with the use of currency by your forces, any governmental settlements, occupation costs, and other expenditures arising out of operations or activities involving participation of your forces. [NOTE: This directive from the State, War, and Navy Departments was approved on November 1, 1945, and was dispatched on November 8, 1945, to the Supreme Commander for the Allied Powers, General of the Army Douglas MacArthur, by the Joint Chiefs of Staff.] 112. BASIC POST-SURRENDER POLICY FOR JAPAN, WHEREAS on September 2, 1945, Japan surrendered unconditionally to the Allied Powers and is now under military occupation by forces of these Powers under the command of General of the Army Douglas MacArthur, Supreme Commander for the Allied Powers, and WHEREAS representatives of the following nations, namely, Australia, Canada, China, France, India, the Netherlands, New Zealand, the Philippines, the U. S. S. R., the United Kingdom, and the United States of America, which were engaged in the war against Japan, have on the decision of the Moscow Conference of Foreign Ministers met together at Washington as a Far Eastern Commission, to formulate the policies, principles and standards in conformity with which the fulfillment by Japan of its obligations under the Terms of Surrender may be accomplished; THE NATIONS COMPOSING THIS COMMISSION, with the object of fulfilling the intentions of the Potsdam Declaration, of carrying out the instrument of surrender and of establishing international security and stability, CONSCIOUS that such security and stability depend first, upon the complete destruction of the military machine which has been the chief means whereby Japan has carried out the aggressions of past decades; second, upon the establishment of such political and economic conditions as would make impossible any revival of militarism in Japan; and third, upon bringing the Japanese to a realization that their will to war, their plan of conquest, and the methods used to accomplish such plans, have brought them to the verge of ruin, RESOLVED that Japan cannot be allowed to control her own destinies again until there is on her part a determination to abandon militarism in all its aspects and a desire to live with the rest of the world in peace, 1 Department of State Bulletin, August 3, 1947, pp. 216-221. Adopted on June 19, 1947, by the Far Eastern Commission, which gave final approval to a set of fundamental principles which had been under continuing examination since the organization of the Commission. The Commission's basic post-surrender policy for Japan will be effective until such time as the treaty of peace comes into force. A directive based upon this policy decision has been forwarded to the Supreme Commander for the Allied Powers for implementation. |