[Title] Speech by Kenneth C. Royall, Secretary of the Army, on the United States Policy for Japan

To many American citizens--including myself--the most surprising development--and one of the most disappointing aspects of our victory over Germany and Japan has been the responsibility and cost which have been placed upon us in the matter of occupation. There were few who originally recognized the extent of this burden. And today every citizen of our country is justified in asking the "what" and the "why" of our occupation policies.

On this occasion I will speak specifically of Japan. Immediately after the surrender, the objectives of our policy were stated to be, first, "To insure that Japan will not again become a menace to the peace and security of the world," and, second, "to bring about the earliest possible establishment of a democratic and peaceful government which will carry out its international responsibilities, respect the rights of other states, and support the objectives of the United Nations."

The underlying idea was the prevention of future Japanese aggression--direct prevention by disarmament and indirect prevention by creating a type of government unlikely to develop again the spirit of aggressive war. The real well-being of Japan--or her strength as a nation--was decidedly a secondary consideration--secondary to protection of ourselves against Japan, and secondary to payment of reparations to the victorious Allies for the damages inflicted upon them.

This attitude is clearly shown by the emphasis in the original directive, which stated in part : "Japan shall be permitted" (not encouraged but permitted) "to maintain such industries as will sustain her economy and permit the exaction of reparations …but not…enable her to rearm…Access to, as distinguished from control of, raw materials shall be permitted. Eventual Japanese participation in world trade…shall be permitted."

It is clearly understandable--and it was fully in accord with the then feelings and opinions of our people--that in 1945 the main purpose of occupation should be protection against an enemy which had viciously attacked us and which had committed brutal atrocities against our troops and our private citizens.

Since then new conditions have arisen--in world politics and economics, in problems of national defense, and in humanitarian considerations. These changes must now be fully taken into account in determining our future course, but it should be remembered that these developments arose in large part after the original policies were set.

These original policies were promptly carried out. Within a few months after the end of hostilities, all Japanese tactical units had been dissolved and all implements of war destroyed or insulated. The top Japanese military organizations, as well as the infamous secret and terroristic societies, were abolished. Those who formulated the Japanese policies of conquest and aggression were removed from important political and economic positions.

War-making industries were marked for removal and reparation. This included arsenals, private munitions plants, aircraft factories, military research laboratories, synthetic rubber and oil plants, shipbuilding installations, and certain chemical machine tool, precision bearing, thermo-electric, and metal factories ferrous and others. Commitments were made to other nations for payment of reparations with those plants.

Other steps followed, including those leading to the dissolution of concentrations of property ownership and economic power. At the end of the war--and for a long period before the war--land ownership had been in the hands of a comparatively small part of the population. The system was analogous to the feudal system of past centuries, and in Japan the "land barons" used their power to encourage war.

In the business field, the Zaibatsu, or "money cliques, " dominated completely and ruthlessly the Japanese economy--through holding companies and monopolies. A dozen families controlled over 75% of the country's commerce, industry and finance.

The influence over the Japanese Government of these and other monopolies was almost unbounded, and they were linked inseparably with the militarists. This joint group over a course of years--and particularly in the year and a half before Pearl Harbor--encouraged Japan toward war and destruction.

Steps were taken to break both types of concentrations. Under a directive issued by the Supreme Allied Commander, the Japanese Diet enacted in the Fall of 1946 a Land Reform Law under which, through local land commissions the 5 1/2 million Japanese farm families could acquire land from the present owners at a reasonable price and pay for it over a period of years. This program will be completed by the end of 1948. Just as in America the small land-owner is symbolically and factually democracy in practice, so we expect that in time the strength of Japanese democracy will find roots in similar soil.

Action against the Zaibatsu has proceeded vigorously, and its control has now been virtually abolished. Sixty-seven holding companies, with 4,000 subsidiaries and affiliates, have been marked for liquidation. The two largest holding companies--Mitsubishi and Mitsui--have been closed. Others of the larger ones have been almost wholly liquidated.

The Japanese Government has been directed to prepare legislation prohibiting international cartels. Stringent anti-trust and deconcentration legislation has been prepared and passed in part. A Holding Company Liquidation Commission has been established and is functioning in the supervision of the entire program.

While these various steps were being taken, new developments were arising, and old factors were changing in importance. Japan had never been able to provide all of its own food--nor to produce enough of many other necessities of life. Seventy-eight million Japanese occupy an area smaller than California, and of that area only 16% is capable of cultivation.

The population is still growing at an enormous rate. It is expected to reach 84 million by 1951. The current troubled condition in Asia leaves practically no food available for import into Japan, even if the currency and Japanese export situation would make food purchases possible--which they would not.

And yet without food and other necessities, Japan would be faced with widespread starvation and disease--would seethe with unrest and disorder and hopelessness. Even aside from the simple principles of humanity, we could not, under such conditions, accomplish our original objective of a peaceful Japanese government. Nor could we hope that Japan would be other than susceptible to totalitarian demagogues from within and without. Without help the country would become a prey to non-democratic ideologies of aggression.

To meet this situation America has supplied Japan with food and other necessities. This assistance has given the country a base upon which to build, and it has been possible to supplant totalitarianism and Shintoism with democracy, to begin to replace educational regimentation with academic freedom, and to build the foundations for a peace-loving government of the people.

For this and other achievements in Japan, great credit must be given to General MacArthur and his staff. America was indeed fortunate that for this vital task, it had an outstanding--leader who could bring the Japanese to a complete realization of their defeat and at the same time obtain their full cooperation in forming a free and stable government.

But the Department of the Army and the Department of State--which shares the policy responsibility of occupation--both Departments realize that for political stability to continue and for free government to succeed in the future, there must be a sound and self-supporting economy, and General MacArthur in command of the occupation can be depended upon to implement these policies.

We also realize that the United States cannot forever continue to pour hundreds of millions of dollars annually into relief funds for occupied areas and that such contributions can end without disaster only when the occupied countries can pay for their own necessities with their own production and exports.

These factors have resulted in efforts to improve in many fields the economic situation in Japan. And with this increasing economic approach there has arisen an inevitable area of conflict between the original concept of broad demilitarization and the new purpose of building a self-supporting nation.

In the case of agriculture the two purposes do happen to run practically parallel. The breaking down of feudal holdings has ended a war-making influence. At the same time the wider division of lands tends to produce incentive on the part of the larger number of landowners and thereby to increase overall production.

But it is a different situation with manufacturing. The destruction of synthetic rubber or shipbuilding or chemical or nonferrous metal plants will certainly destroy the war potential of Japan, but such destruction may also adversely affect the peace potential.

The dissolution of the Zaibatsu may present in itself no serious economic problem, but at some stage extreme deconcentration of industry, while further impairing the ability to make war, may at the same time impair manufacturing efficiency of Japanese industry--may, therefore, postpone the day when Japan can become self-supporting.

Such is our dilemma. It is clear that Japan cannot support itself as a nation of shopkeepers and craftsmen and small artisans any more than it can exist as a purely agricultural nation. We can expect a continuing economic deficit in Japan, unless there is at least some degree of mass industrial production.

Another borderline situation between demilitarization and economic recovery is presented in the case of personnel. The men who were the most active in building up and running Japan's war machine--militarily and industrially--were often the ablest and most successful business leaders of that country, and their services would in many instances contribute to the economic recovery of Japan.

What should we do about them now? We cannot afford to leave the Japanese war system intact nor forget that there is danger in retaining in power leaders whose philosophy helped bring on World War II. On the other hand we cannot afford to sterilize the business ability of Japan.

Nor can we believe without qualification individual Japanese protestations of war innocence or of peacetime reformation. One Senator said to me in Germany shortly after V-E Day: "I have inquired everywhere, and I have not yet found a single Nazi in Germany," to which could perhaps now be added, "Nor a war lord in Japan."

All these matters present questions of degree, and the decisions are matters of judgment. These decisions are not difficult at a cocktail party or from an easy chair or on a rostrum, if made by those who have no responsibility for the decisions or their results. It is somewhat different when you must live and suffer with any errors that you might make.

The Departments of State and Army are trying to draw the lines in the right place. And in doing so they are giving--and will give--full weight to the changes in political and military and economic considerations which have occurred since the initial days of occupation.

We realize that deconcentration must stop short of the point where it unduly interferes with the efficiency of Japanese industry. Earlier programs are being reexamined--as for example the details of the program stated in the paper submitted some months ago to the Far Eastern Commission, and recently given wide publicity as FEC-230.

We are not averse to modifying programs in the interests of our broad objectives. A bill recently submitted to the Japanese Diet setting up procedures for deconcentration of excessive economic power was changed before its final enactment--changed with a view of giving added weight to the economic needs of Japan.

In the case of plant dismantling and reparations--in addition to the matter of disarmament--we are bound by certain agreements with other nations--agreements which must be carried out unless breached by those others or altered by consent. However, since last summer we have had a competent group of industrial engineers in the Pacific selecting the specific plants which, consistent with our obligations, can be dismantled with the minimum of detriment to Japanese economic recovery. The report and recommendations of this committee should reach the Department of the Army during this month.

I would not leave the impression that questions of demilitarization or reparation or deconcentration or disqualification of personnel are the most immediate obstacles to Japanese recovery.

The principal difficulties arise from the destruction which war brought to Japan and to the chaotic condition which has existed in the Far East since V-J Day.

The flimsy nature of Japanese construction and the concentrated population centers made these islands most vulnerable target for our incendiary and other missiles. Even aside from the effects on Hiroshima and Nagasaki of the atomic bombs, many Japanese cities were largely destroyed. I believe that on a percentage basis greater Tokyo--with about 7 million peoples as of 1940--was as badly damaged as any enemy city in the entire world.

Japan has long been dependent on the rest of Asia not only for foodstuffs but for raw materials needed in their manufacturing and business life, and it has relied largely on general commerce with China and other neighbors. With the war and its aftermath these sources of import and export become largely non-existent.

Many affirmative steps have been and are being taken to meet these and other difficulties--and to promote recovery and thereby hasten the day when Japan will cease to be a financial burden to the United States. I wish that time permitted me to discuss in detail our activities in many fields, including those of finance and credit and foreign trade.

Some results of our efforts are apparent. Overall Japanese industrial production has risen from 18 per cent of the 1930-34 level in January 1946, to 40 per cent in August 1947. In the case of coal--basically needed for business recovery--the present production is 86 per cent of the 1930-34 level. Fertilizer has increased four-fold during occupation. One-fourth of the war-destroyed houses in Tokyo and vicinity have been replaced. Six hundred thousand acres of land have been reclaimed for cultivation, and a million more should be added by 1950.

In this whole picture of Japan do not forget that we are supervising an entire Government--and one disorganized by an unsuccessful war. We have all the many normal policy and operating problems of a stable and successful Government plus the added ones produced by the unusual and distressing conditions peculiar to present-day Japan.

The differences from our own country are such that we cannot expect to impose on the Japanese people an exact reproduction of American democracy. It follows that often there is no precise precedent for our problems, and the Departments must do as our forefathers did in the early days of our own government, reach the best results we can by trial and error.

The lines to be drawn are, of course, not always easy to draw, and as in the case of all decisions of importance one cannot be too dogmatic. There can be--and are likely to be--differences of opinion among sincere and informed people. Nor do I have any illusion that everything we do will be perfect.

But I can assure you that our decisions will be made with realism and with a firm determination of doing all possible to prevent Japan from again waging unprovoked and aggressive and cruel war against any other nation. We hold to an equally definite purpose of building in Japan a self-sufficient democracy, strong enough and stable enough to support itself and at the same time to serve as a deterrent against any other totalitarian war threats which might hereafter arise in the Far East.