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6. It will be recalled that, when the subject was discussed by the Cabinet on 23rd April (C.M. (51) 30th Conclusion, Minute 4, and paragraph 5 (i) of C.P. (51) 104), the Chancellor of the Exchequer said that he was not in favour of abandoning at the outset our claim to a share in the stocks of Japanese gold; we might have to agree to this in the end, but our representatives should not concede it without argument. This view was endorsed by the Cabinet. Our representatives in Washington put our case as strongly as possible to the Americans, but were unable to move them, and it will be seen that they therefore reserved this point on behalf of His Majesty's Government. (Please see note at end of article 15 of the draft at Annex A, referring to article 23 of the United Kingdom draft.) The United States representatives on their side explained that the gold, which is worth about $200 million, while it would be of no appreciable use in meeting the claims of all the belligerent countries against Japan (altogether apart from the practical problem of its distribution) would be of great and immediate value to Japan in bolstering up her external financial position.
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7. As will be remembered, the United States Government had previously stated in their aide-mémoire of 14th March that they must insist that, should Japanese gold be made available as reparations, the whole of it should be made over to the United States as a part repayment of the $2,000 million aid given to Japan in the last five years.
8. There are, therefore, two questions for consideration: first, whether or not the stocks of gold and precious metals under the control of the Supreme Commander in Japan should be made available as reparations; and, secondly, if they are to be made available, whether His Majesty's Government can succeed in securing a share of them.
9. To deal with the second point first, it now seems clear that, if the gold were made available as reparations, it would be impossible, in view of the attitude of Congress, for His Majesty's Government to resist the United States claim to receive it all as a very small set-off against the aid she had given to Japan during the last five years.
10. If, therefore, as seems certain, His Majesty's Government cannot hope to secure a share of Japanese gold, the question remains whether the Japanese should be allowed to retain it. Morally, there are strong arguments for requiring the Japanese to make this small if inadequate reparation for the great damage they caused in Asia during the war. It will be recalled that the Government of Australia has been insistent that Japan should be made to pay some reparations. On the other hand, it is also clear that the United States Government are determined that this gold should remain in Japan, and it would therefore seem unwise for His Majesty's Government to court unpopularity in Japan by insisting that, even though they themselves would not receive a share of it, Japan must, nevertheless, be deprived of it.
11. It is evident that, in spite of the forceful and repeated exposition of our view in the course of the talks in Washington, the United States Government are not going to be moved from their position on this point. In the circumstances it is recommended that, in the talks with Mr. Dulles, our representatives should be authorised to agree with the United States view that the matter should not be mentioned in the Treaty, which would have the effect of returning the gold and precious metals concerned to the Japanese Government when the Treaty comes into effect.*
Japanese Assets in Neutral Countries
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12. On 2nd January, Ministers approved C.P. (50) 323 which contained a pro- posal (paragraph 8 (d) 2) that “ Japanese overseas assets (both official and private) should in no circumstances be returned to Japan or to their Japanese owners Japanese assets in neutral countries
are in most cases under the joint control of the representatives of China, the U.S.S.R., the United States and the United Kingdom, on behalf of the Far Eastern Commission. However, the only practical way of making those assets available at all would be to propose that they should be liquidated and divided amongst those of the four controlling Powers for
NOTE. It has not been possible to secure agreement with the Treasurpatothe officialf lege
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on this recommendation.
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