Saltzman today handed 17 page aide-memoire to Ambassador concerning recent representations to State Department and in FEC  concerning tendency on part of SCAP to resolve unilaterally matters properly within jurisdiction of FEC. Full text sent air mail. Following is summary of main points.
It is clear sense of function of FEC and of SCAP as set out in terms of reference that FEC is to determine general policy according to which Japan is to carry out its obligations under terms of surrender but SCAP is to bear continuing direct responsibility, guided by Directives of FEC, in all matters on which such Directives have been issued for effectuation by Japan of terms of surrender. Would be manifestly undesirable and impracticable for an 11 nation body in Washington to attempt to no more than set broad framework within which Japanese occupation could proceed. Conversely necessary that SCAP should have a broad discretionary power to take action regarding problems arising in Japan which must be promptly and decisively dealt with if occupation proposals are to be successfully accomplished. SCAP's status as a sole executive authority for allied powers in Japan empowers him, pending a policy decision of FEC, to take action in any instances when administrative necessities of occupation require it although he has received no controlling directive expressing policy decision, SCAP is not only within his rights in taking action in such circumstances but it is incumbent on him to do so.
2. In the light of the above considerations the following questions are commented on-
(a)Japanese Whaling. Views of United States Government have been conveyed in a separate communication (see our telegram FEC 97).
(b) SCAP press release of March 31st. This has never been released in Washington as a statement of United States policy. SCAP's message was for use in presentation by Army Department of its budgetary requirements. State Department confident that it not view of SCAP, as it is not view of United States Government, that FEC should be deprived of opportunity to exercise its proper functions and responsibilities respecting occupation of Japan as defined in terms of reference or that United States Government or SCAP should take actions contrary to provision of Moscow agreements. What SCAP doubtless had in mind was continued failure of FEC to adopt policy decision governing travel of Japanese Commercial Representatives abroad and possible necessity, if FEC action to remove this restriction was not soon forthcoming of his acting on his own authority to permit such travel, a possibility of which FEC had already been formally advised.
(c) Japanese coastal patrol. United States Government cannot agree that SCAP acted without due regard for authority of FEC and reports position taken by United States representative in FEC.
(d) Travel of Japanese abroad. Reference is made at length to many statements of United States representatives in FEC on this question. Australian Government has therefore been fully apprised of the United States position namely that SCAP has both right and duty under previous broad policy decision of FEC in light of administrative necessity, pending policy decision of FEC, to permit Japanese to travel [to] the countries desirous of receiving them for cultural or commercial purposes. Fact that United States submitted three proposals to FEC is in no sense grounds for assumption that United States consider that matter was one requiring FEC approval before Japanese could be permitted to travel abroad. Submission of proposals to FEC was not inconsistent with the United States view that under previous broad policy decision of FEC and in light of administrative necessity of occupation SCAP had full authority to act pending adoption by FEC of these or similar proposals. If travel of Japanese nationals abroad should in each case require approval of FEC this would be an invasion of administrative responsibility of SCAP and likely so to obstruct and retard carrying out of the exchange programme as greatly to reduce benefits which may otherwise be expected to follow from it. In view of special interest of Australian and other Governments, United States Government has already instituted appropriate procedures for keeping Governments of nations represented on FEC adequately informed regarding travel of Japanese abroad.
(e) Japanese Fishing. Reference is made to long standing position of United States Government in FEC on this question. United States currently sh[oulde]ring full burden of expenditures from Japanese food deficit which could be materially reduced by enlargement of Japanese fishing catch. United States does not consider it necessary or practicable to make question of extension of fishing area in cases where such an extension accept[able] to SCAP, and to country near whose shores the extension is to be made, a matter of decision by FEC. As far as pearling fishing is concerned United States Government not aware that Japanese pearl fishing operations are being conducted outside Japanese waters. Yet United States Government can conceive no adequate reason why Japanese should not be permitted to pearl fish outside Japanese waters in the area permitted for catching of food fish. Regarding reports that Japanese may be permitted to fish in vicinity of former Japanese mandat[ed] islands draft policy paper now before FEC specifically includes trust territory of Pacific. United States Government fully mindful of its own responsibilities regarding security of Pacific areas but considers as administering authority for trust territory, it is in a position to determine whether presence of Japanese fishing vessels undesirable for security reasons.
(f) Importation of Bauxite. Although FEC policy decision of interim reparations removals permits removal of all primary aluminium production capacity this decision relates purely to availability of capacity for reparations and it is wholly in accord with existing directives that SCAP should now be allowing certain of these facilities to be operated for purposes of extraction. The broad purposes of occupation, dependent on revival of Japanese productive activity. Interest of American taxpayers and alleviation of present world acute shortage of aluminium products, all dictate necessity of utilising idle aluminium capacity pending final decision regarding removal for reparations.
Approximately half of aluminium produced from imported bauxite will be exported in response to specific requests received from several western nations thus helping to meet their requirement and to provide needed foreign exchange for purchase of essential imports for Japan.
3. United States Government hopes Australian Government will, in light of all above considerations, be able to move with United States towards solution of problems discussed here in manner which United States Government has outlined which it firmly believes is in accord with Moscow agreement and conducive to success of occupation in which both Australia and United States so greatly interested.