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And AIT Taipei for USMG HQ, 1600 Penn Ave, DC



( JCS 1651


United States Government had no objection to Chinese action
confiscating on behalf of the Chinese Government Japanese private and
public property physically located in Chinese territory formerly occupied by the Japanese which would return to Chinese jurisdiction;
that at the time of final settlement of reparations the United States
Government would assume the position that Japanese assets confiscated by China should be credited against the Chinese
reparation claims; and that, therefore, account should be kept of the
value of the property so confiscated.
3. In view of the legal opinions expressed in paragraph 1 above,
the position of the United States outlined in paragraph 2 above is

to be applicable to Formosa as well as other Chinese territory

occupied by the Japanese which has now returned to Chinese
4. Above is for your information. The disposition by the Chinese
of Japanese property in Formosa and the national status of residents
of Formosa (as distinguished from the operational task of repatriation of Japanese) are considered to be political matters which may
best be handled through normal diplomatic channels.)

5. Treatment of Japanese Property
The military authorities in their treatment of Japanese property in
Formosa, both Government and private, should apply the Rules of
Land Warfare of the Hague Convention of 1907.64 Private Japanese
interests should be respected. The military government should assume stewardship of all Japanese Government properties pending
final settlement. (PWC-187, 188, 196).65 It is recommended that
in principle the Japanese Imperial Household properties be treated
as though they were Japanese Government property (PWC-191 66).

I have also made several other recommendations to President Truman, listed below:
External assets
8. Deprive all Japanese, including the Japanese Government, the
Emperor and the Imperial Household, and the Zaibatsu, of the
ownership or control of any assets located outside Japan proper, including
Formosa, Korea, the Manchurian and other provinces of China,
Malaya, and the Netherlands East Indies, as well as other Allies and
neutral countries. All Japanese financial and economic penetration
'of other countries must be wiped out.