121 Department of External Affairs to Ball

Cablegram 106 CANBERRA, 17 September 1946, 10.25 p.m.

IMMEDIATE

Japanese Coal Mining Industry.

1. We concur in United Kingdom view that the Allied Council should examine the plan prepared by the Japanese. From your reports it does not appear that you have been provided with details of the Japanese plan. In these circumstances discussion in Allied Council on Wednesday should be general. You should request the necessary information before governments you represent are committed to approval of a definite scheme.

2. Nationalisation. In discussion you should support the principle of nationalisation of the Zaibatsu mines along the lines of the United Kingdom views mentioned in your 19 [1] with which we are in accord. However, as this is a question of policy on which FEC has not reached a conclusion you should take the line that the other governments who are directly concerned with occupation policy for Japan, i.e., all members of FEC, should have an opportunity to discuss this principle and therefore you should recommend that while the Allied Council should assist General MacArthur by stating its views final decision should await a statement of policy by FEC. For your own information we intend to take up this question at once with FEC.

3. Management. As SCAP was authorised in the general directive issued to him by the President (vide FEAC 3 [2]) to take all necessary action to see that production was effectively organised, it would be appropriate for the Allied Council to advise on implementation of this policy. We favour a government organisation for management of all the mines. The principle in paragraph 4 of your 19 is therefore approved but limitation to a specific period might raise difficulties.

4. Supervision. SCAP is also required to supervise Japanese operation of industries where necessary and it would appear from your 17 [3] that this should be carried out in coal mining industry. As United Kingdom paper recommends Japanese should bear costs of supervision. We would make the following comment for your guidance. Dominion's Office inform us that they have asked UKLM [4] to draw your attention to United Kingdom memo on future organisation of Japanese economy. We note that this suggests 'United Nations' supervision. We do not disagree with the principle but feel that it would be more appropriate at present to discuss the question in terms of 'Allied' supervision. Our reasons are (A) ACJ is not an appropriate body for discussion of long term i.e. post occupation policy (B) It would be competent for ACJ to advise on arrangements for 'Allied' supervision which in practice would mean supervision by SCAP (C) 'Allied' supervision would not prejudice subsequent adoption by appropriate international procedure of post occupation United Nations supervision.

1 Dispatched 14 September, it stated in paragraph 4 that, despite the desirability of nationalisation of all Zaibatsu mines, the present problem was to 'improve management' rather than to change ownership.

2 See Volume VIII, Document 427.

3 Dispatched 12 September. Ball had recommended that the coal mines be managed by a government organisation for a limited period.

4 U.K. Liaison Mission in Japan.

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