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Pofobimi 2 Sif 48 Gascoigne has no official relations with the Japanese Government. These are conducted exclusively by S.C.A.P. The United Kingdom Mission do, however, meet Japanese unofficially, with S.C.A.P.'s entire approval. Some members of the Government and others were invited by Sir A. Gascoigne to meet me, but I was prevented by indisposition from seeing them.

105. With Sir A. Gascoigne, his Service advisers and other members of his Mission, I attended a "briefing lecture at S.C.A.P. Headquarters, given in the absence of General Willoughby (Head of the Intelligence Section of S.C.A.P.) by Lieut.-General Miller, a member of his staff.

106. The lecturer explained the present dispositions of the Soviet and United States Armed Forces in the Far East. The Russians, with forces extending from Dairen through Manchuria to Kamchatka and the Kuriles, have great superiority on land and in the air over the United States forces in South Korea, Japan and the United States bases near to it. In addition, Russia has trained considerable armed forces in North Korea. On the other hand, the Soviet forces depend for supplies and communications mainly on the Trans-Siberian railway, which is at many points vulnerable to air attack.

107. Strategically the United States position is regarded as very unfavour- able, particularly in view of the Communist successes in China, which would, in the event of war with Russia, make available to the Soviet Air Force valuable air bases in China. This could render untenable the United States position in South Korea, Japan, the Ryukus and the Philippines. The lecturer, however, added that there were no signs of any Soviet preparation for war in the Far Eastern area.

108. The lecturer did not draw any conclusions of policy from this analysis, and indeed a similar review of the present military situation in Western Europe would probably not be any more favourable. But the line taken by the lecturer lends point to General MacArthur's remark to me a few days earlier that it was the soldiers, my own flesh and blood," who had been putting ideas into Mr. Royall's head.

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109.

I met General MacArthur twice: once at an intimate lunch at his house and once in his office. Sir A. Gascoigne has already fully reported on these conversations, but I will make a few notes. Like most great public men, General MacArthur has a strong sense of the theatre, and he has it in supreme degree. He is also an indefatigable and unsparing talker. But these idiosyncrasies should not blind one to his really massive if somewhat unsubtle abilities. He is undoubtedly a great figure. He received me most cordially. I believe that he has a sincere admiration for Great Britain, for the part we played in the war and the part we are playing now. Sir A. Gascoigne assures me that the General has treated United Kingdom interests in Japan with scrupulous fairness, if not indeed with some favour. United States business men, who have no Ambassador to represent them, sometimes complain that we are given the better of the deal.

110. The two chief questions which people are asking are: what are the Japanese going to be like after the occupation? and how are the Japanese going to feed or otherwise dispose of their growing population (now increasing by 14 million a year)?

111. As to the first, General MacArthur seems convinced that the brand of democracy introduced under his auspices has come to stay; that the Japanese have seen the error of their ways and understand being made to pay for their misdeeds; and that their policy will be to regain the respect of the world by good behaviour. I found few in Tokyo who shared this optimism. Those who knew most about Japan were the most cautious in expressing opinions. But some of them thought that something good from the occupation period might be retained and bear fruit in the future, though no doubt in a specifically Japanese form. The least optimistic forecast was that the communisation of China would open the way for the resumption of the policy of the greater East Asia Co-Prosperity sphere (which the Japanese had never in their hearts abandoned) under joinRagapanese Chase Communist direction. Thiagok be the only

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basisPagevhich Sin&Sapanese collaboration would Bagossible an48the Japanese would think it worth while going Communist in the hope of achieving it. This forecast was held by some to be unlikely, since Communist régimes are not neces- sarily like-minded, nor a Chinese Communist régime likely to be willing to be led by Japan.

112. As regards the food problem, the Economic Adviser to the United Kingdom Mission observed that Japan will in years to come need to import increasing quantities of rice. There is little margin for increased home production. Exports will have to be increased by five or six times the present amount. This is bound to mean increased competition with United Kingdom exporters. The United States are unlikely to agree to any long-term fixing of the level of industry. They are already pressing for relaxation as regards ship- building and ocean shipping. At present, United Kingdom firms are doing good business. Their properties are being gradually returned and there is less discrimination against them and other Allied firms in favour of the Japanese. Banking, insurance and shipping got away with a good start. Export and import business came along later. Sir A. Gascoigne told me that he thought they were adapting themselves well to the new situation and showing a spirit of enterprise and collaboration among themselves.

113. The war has not solved the Japanese population problem, and no one can suggest any solution except increased industrial production and exports in order to feed them. There are no substantial outlets for emigration. Japanese are even less wanted abroad than Chinese. Yet the population pressure from both is bound to assert itself in the long run. This is one of the great question marks of Far Eastern politics. There can be little doubt that the Japanese will again do their utmost to establish predominant economic influence, to put it no higher as a first step, over those areas which they seized in 1941 and 1942 as being necessary to their economic existence, and, which they were unable to hold against Allied counter-attack. The facts of their economic situation have been burned into their consciousness.

114. General MacArthur's view, from what he said to me, seems to be that for the solution of the problem of raising the Japanese standard of living, which will soon become among the most pressing of our time, continued foreign assistance will be needed, and that less assistance would be needed to produce decisive results than in Europe. But at the same time he seemed to be opposed to any separate appropriation for rehabilitation, as distinct from supplies to prevent disease and unrest, and to think that the latter should be progressively reduced, in order to stimulate the Japanese to help themselves.

115. General MacArthur spoke to me about the Far Eastern Commission in Washington. Though he still professes to regard it, and not the United States Government, as the framer of the policies which he executes, he thinks that once it has settled the policies as regards reparations and level of industry, it should go out of commission. Policy should then be settled by Governments through the diplomatic channel. Until this was done, there would be no policy to speak of. The United States Government had not framed theirs and were inprovising from day to day. It had never been intended that S.C.A.P. and the F.E.C. should continue so long or that a peace treaty should be so long delayed. Even now, he did not think it impossible to reach agreement with the Soviet Union.

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116. The absence of a policy in Washington was confirmed Sir A. Gascoigne by Mr. Max Bishop of the State Department, who accompanied Mr. Secretary Royall on his recent visit.

117. It looks, however, as though developments in China and increasing demands on United States resources, economic and military, throughout the world might now bring the United States Government to take stock and establish priorities on a world-wide scale. Mr. Royall's alleged lucubrations in Tokyo (the general sense of which, namely possible United States withdrawal from Japan in case of war, General MacArthur strongly repudiated to me) and the fact, which the General volunteered to me, that he would probably have soon to go to Washington to testify before Congressional Committees about the Far East,

some pipaveldur suggested game sugg geview of policy may be in progress41 gene nad MacArthur, for his part, agrees that the Far East would be a secondary theatre in the

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event of warp but he maintains that it should be held. Topmake no attemat to do so would be an unnecessary strategic surrender and an immense gain to the enemy.

It would, therefore, be a mistake to denude the Far East and concentrate all military measures on Europe.

118. If so, it is Sir A. Gascoigne's view that an attempt should be made to co-ordinate British and American policies in Japan, the Far East and South-East Asia. In this he echoed the views of Mr. Keswick in Shanghai. As a first step, he suggests a visit by Mr. Malcolm MacDonald or one of the Commanders-in-Chief at Singapore to General MacArthur. The General will not discuss strategic matters with him or any of his advisers. He might open. up a little more to a visitor from Singapore. Sir A. Gascoigne also suggests that he or someone from Tokyo should attend the next conference of His Majesty's Representatives at Singapore. This would help us to see the Far East and South-East Asia as a whole (the presence of the High Commissioners at Delhi, Colombo and Karachi would also tend to the same result) and he thinks this essential if we are to have a coherent policy suited to our interests and resources and to the conditions that now prevail in those areas. With this suggestion, I close the present record.

Over the Mediterranean,

27th February, 1949.