Sunday, August 25, 2013

Restitution for Reconciliation: The US, Japan, and the Unpaid Assets of Asian Forced Mobilization Victims.7,Matthew R. AUGUSTINE, Kyushu University

Restitution for Reconciliation: The US, Japan, and the Unpaid Assets of Asian Forced Mobilization Victims.7

8.The Journal of Northeast Asian History, vol.8 no.1 (Summer 2011), 5-37

Restitution for Reconciliation:
The US, Japan, and
the Unpaid Assets of
Asian Forced Mobilization Victims
Matthew R. AUGUSTINE, Kyushu University

The Journal of Northeast Asian History
Volume 8, Number 1 (Summer 2011), 5-37
Copyright c 2011 by the Northeast Asian History Foundation. All Rights Reserved.
No portion of the contents may be reproduced in any form without
written permission of the Northeast Asian History Foundation.

Restitution for Reconciliation:
The US, Japan, and the Unpaid Assets of
Asian Forced Mobilization Victims
More than six decades after the end of World War II, the Japanese government has yet to return an estimated \278 million worth of unpaid financial assets owed to Asian victims of forced mobilization for the war effort. During the Allied Occupation of Japan, American authorities directed Japanese officials to deposit these assets in the Bank of Japan for eventual restitution, setting up a custody account in 1946 and a foreign creditor’s account in 1949. However, the outbreak of the Korean War destroyed any chance of restitution, as the US preoccupation over the cold war conflict effectively froze the unpaid assets that still remain in the Bank of Japan. Clarifying the historical record of American involvement in managing these accounts can contribute towards a US-mediated effort to reach regional reconciliation between Japan and its neighbors in Northeast Asia.
Keywords: Forced Mobilization, Financial Assets, Restitution, Allied Occupation of Japan, GHQ/SCAP, Cold War, East Asian Reconciliation.

I. Introduction
Redressinghistorical injustices is hardly ever a straightforward business, as exemplified by recent developments in Northeast Asia. On October 23, 2009 the Nishimatsu Construction Company set up a trust fund worth \250 million, part of which was to compensate 360 Chinese citizens who were forced to build a hydroelectric power plant in Hiroshima Prefecture during World War II. Nishimatsu then set up another trust fund worth \128 million on April 26, 2010, this time to compensate 183 Chinese who were forced into a similar construction project in Niigata Prefecture. However, Chinese plaintiffs from an
1 I would like to sincerely thank the Northeast Asian History Fellowship Program at the Walter H. Shorenstein Asia-Pacific Research Center, Stanford University, supported by the Northeast Asian History Foundation in Seoul, Korea for their generous support for research. I would also like to thank those involved in arranging seminars where I presented earlier versions of this paper: Professor Gi-wook Shin and Daniel Sneider at Stanford University, and Dr. Kim Young-so and Chung Man-young at the Northeast Asian History Foundation. Finally, I am grateful to Kobayashi Hisatomo, William Underwood, and Choi Youngho for their insightful comments. unsuccessful Japanese lawsuit in April 2007 rejected the latter fund, accusing Nishimatsu of ignoring historical facts, denying legal accountability, and imposing an insufficient settlement that belies sincere reconciliation. In a separate case, on July 14, 2010 Mitsubishi Heavy Industries announced that it would begin negotiations to compensate 300 Korean women who were conscripted as teenagers to work at an aircraft factory in Nagoya Prefecture. The ensuing negotiations have been contentious from the start, due to the backlash in South Korea against the Japanese government when it refunded a mere \99 (just over $1) to seven of these women for pension deposits withheld during the war (Jeong and Kim, 2009). The Nishimatsu and Mitsubishi deals have produced mixed results at best, testifying to the complex process of redressing historical injustices.
The central problem with compensatory reconciliation in Northeast Asia is that neither the Japanese government nor the corporations that employed foreign forced labor have ever taken responsibility. When former forced laborers from China and South Korea began appearing in Japanese courts from the 1990s, their lawsuits helped to clarify the historical record of wartime abuse and postwar cover-up. Lawyers, journalists, and researchers supporting the redress movement dug up hidden official documents, including the voluminous report on Chinese forced labor that the Foreign Ministry prepared as a defense against possible war crimes prosecution by the victorious Allies.2 A Welfare Ministry report also revealed that Japanese corporations had deposited the financial assets of Korean forced laborers into an undisclosed account in the Bank of Japan during the Allied Occupation of the defeated nation.
2 According to William Underwood, the purpose of the Foreign Ministry’s “Investigative Report on Working Conditions of Chinese Laborers” was to portray Chinese forced labor in the best possible light before Allied Occupation authorities could undertake their own investigations. Ultimately, the Foreign Ministry did not need to hand over the reports, as the Class B/C war crimes trials in Yokohama were limited to two cases involving Chinese forced labor (Underwood, 2006b).Although the Japanese government refuses to make public any such incriminating evidence, in March 2010 it quietly provided the South Korean government records that confirmed the Bank of Japan continues to hold over \278 million (over $3 billion) in deposits (Yonhap News, 2010).3 Even after this revelation, not one yen has been paid back to the dispossessed victims.
While Japanese records remain largely closed, declassified American records can shed new light on hitherto unanswered questions, including how the United States handled the earliest claims against Japan’s forced mobilization program. This article traces the history of what happened to the unpaid financial assets of forced laborers from the immediate aftermath of the Pacific War to the onset of the Cold War, utilizing official documents of the Allied Occupation of Japan. The most pertinent sources are documents compiled by the Supreme Commander of the Allied Power (SCAP)’s Civil Property Custodian Section, which was in charge of property and assets in Japan, including those belonging to foreign nationals. These primary sources prove that the unpaid deposits in the Bank of Japan not only include the wages of Chinese and Korean forced laborers but also pension benefits owed to Korean and Taiwanese military conscripts. The documentary evidence further reveals that SCAP had set up two custody accounts for collecting these and other funds to be disbursed to the rightful beneficiaries. However, the outbreak of the Korean War destroyed any chance of restitution, as the US preoccupation over the cold-war conflict effectively froze the unpaid assets that still remain in the Bank of Japan. Clarifying the historical record of American involvement in managing these accounts can contribute towards a US-mediated effort to reach regional reconciliation between Japan and its neighbors in Northeast Asia.
3 This figure of \278 million does not include any interest accrued nor is it adjusted for six decades of inflation.
II. Wartime Mobilization and Postwar Deportation
Investigating the unpaid financial assets owed to foreign victims of imperial Japan’s labor and military conscription requires a brief discussion of their wartime mobilization and postwar deportation. The imperial Japanese military’s use of Asian civilians and prisoners of war (POWs) as forced labor began after the outbreak of the Sino-Japanese War in 1937, and intensified in the wake of the Pacific War beginning in 1941. At the height of imperial Japan’s total war, millions of Asians were conscripted as laborers throughout the Asia-Pacific region, while Chinese and Koreans were brought to Japan. Allied POWs including approximately 25,000 Americans also became forced laborers for Japan’s leading industries (Holmes, 2001, pp. xvii-xviii). Recruitment of colonial subjects into the imperial military was replaced by systematic conscription in 1944, as close to 450,000 Koreans and Taiwanese were drafted into military service. Asian women were also mobilized for the Japanese war effort, such as tens of thousands of so-called “comfort women” recruited to work at military brothels,4 and several thousand more Korean teenage girls were shipped to Japan as part of a “volunteer labor corps.” All these people were doubly victimized.first by their enforced mobilization, then by their deportation without compensation.but the historical record of their unpaid financial assets is most clear for those who were taken to Japan during the war.
The imperial Japanese government implemented two measures that enabled shipping, construction, and mining companies to import Chinese workers, as Japan’s domestic labor shortage became increasingly severe. In November 1942 Kishi Nobusuke, the Minister of Commerce and Industry and future Prime Minister, authorized a cabinet resolution that
4 Historian Yoshimi Yoshiaki estimates that the number of “comfort women” was anywhere between 50,000 and 200,000 (Yoshimi, 2000).led to the trial introduction of over 1,400 Chinese laborers the following year. In February 1944 Kishi authorized another resolution that led to the importation of much larger numbers of Chinese laborers. By the end of the war, thirty-five Japanese corporations were responsible for importing a total of 38,935 Chinese men who were assigned to 135 mines, docks and construction sites throughout Japan.5 Unlike Korean forced laborers in Japan, a large percentage of the Chinese forced laborers in Japan were POWs captured during the Japanese Army’s search and destroy missions in northeast China.6 Others were recruited through deception. Once brought to Japan, they endured extremely harsh working conditions, resulting in high casualty rates, and many more were punished for attempting to escape. The Home Ministry stipulated that these imported Chinese laborers were to receive wages, but most of them never had access to their hard-earned income because their employers controlled their postal savings accounts (Nishinarita, 2002, pp. 71-72).7
The imperial Japanese government enabled corporations in Japan to import Korean workers under coercive conditions in three successive stages: 1) “recruitment” (bosh.) starting in July 1939; 2) “official mediation” (kan assen) from February 1942; and 3) “conscription” (ch.y.) from September 1944. The Korean forced labor program became increasingly systematic and centralized until the labor conscription law in 1944 made it a legal duty for Koreans as Japanese colonial subjects to comply with orders to be shipped off to work in Japanese coal mines and
5 These statistics are based on an official report regarding Chinese forced labor, which was prepared by the Japanese Ministry of Foreign Affairs in 1946. For a published version of the five-volume report, see Tanaka and Matsuzawa (1995).
6 These Chinese forced laborers were never treated as POWs, because imperial Japan did not accord POW status to Chinese nationals. On August 5, 1937, the imperial Japanese government issued a directive to remove existing constraints of international law on the treatment of Chinese POWs, and advised staff officers to stop using the term “prisoners of war” (Fujiwara, 1995, pp. 18-23).
7 According to Nishinarita Yutaka, the Home Ministry proscribed the payment of cash to Chinese forced laborers, so that they could not go very far if they escaped. munition factories. According to the Japanese Welfare Ministry’s Labor Bureau, a total of 667,684 Korean civilians were conscripted into working for private companies in Japan between 1939 and 1945,8 over 286,000 of whom were brought to Japan after 1944. Like Chinese forced laborers, Koreans were at least in principle entitled to wages and other financial benefits. In reality, however, the wages owed to Koreans were mostly withheld during the war and then never paid out afterward. As described by William Underwood, “corporations funneled the bulk of wages into mandatory ‘patriotic savings accounts’ and made regular deductions for the national welfare pension fund” (Underwood, 2006a).
When US Occupation forces first entered Japan in the wake of the war, they were prepared against acts of resistance or violent attacks by various sectors of the Japanese population that never materialized. Instead, the very first monthly Occupation report maintained that the real threat to stability and order in Japan came not from defeated Japanese soldiers and civilians but from liberated Asian laborers. According to SCAP’s Monthly Summation of Non-Military Activities, conflict between Koreans and Chinese coal miners on the one hand and Japanese employers on the other assumed serious proportions. SCAP’s Labor Section explained that the major source of conflict were “strikes by Koreans and Chinese against the working conditions, wages, food rations and discipline of Japanese employers, principally in the coal mining areas of Joban and Hokkaido” (MSNMAIJK 1, 1945). In the northern island of Hokkaid. alone, as many as fourteen disputes reportedly took place between the end of the war and November 1945 (Kosh., 2005, p. 234). Outbreaks of violence were reported and, in some case, the intervention of military police was necessary to restore and maintain order. As the SCAP Summation from October noted, these strikes were
8 This figure does not include the number of female “teishintai” factory workers and other Korean civilians sent to Japan late in the war for defense against an anticipated American invasion (Yamada et al, 2005, pp. 68-74). the instinctive reactions of a liberated people against oppressive labor practices (MSNMAIJK 1, 1945). The SCAP Summation from November went further, reporting, “freed from virtual slavery, in the coal pits, Koreans and Chinese have refused to continue to work and have prevented Japanese from doing so by violence and intimidation” (MSNMAIJK 2, 1945).
Even before these reports were compiled, the Japanese government and military feared that the disturbances in the regional coal mines might spread to industrial and urban areas where much larger numbers of Koreans and Chinese were concentrated. The first memorandum that the Liaison Commissioner for the Imperial Japanese Army and Navy sent to the SCAP in September 1945 concerned specifically the problem of how to deal with Chinese laborers who were looting food, clothing, and other supplies from corporate warehouses. In other words, Japanese authorities were uncertain whether they had jurisdiction over liberated Chinese nationals. SCAP responded immediately, clarifying its policy that the Japanese civil police were responsible for the preservation of law and order. When incidents could not be properly controlled, the civil police were to make an immediate report to the nearest United States Armed Forces headquarters for assistance (SCAPIN 61, 1945).
The fact that Chinese laborers were singled out in the Japanese liaison’s first memorandum is of significance that requires further explanation. Shortly after defeat, the imperial Japanese government ordered corporations to stop using Chinese and Allied POWs who were forced to work at coal mines and munitions factories during the war. Since China was a part of the victorious Allied powers, most Chinese nationals were released to avoid war crimes prosecutions for their use as forced laborers. Koreans, on the other hand, were Japanese colonial subjects, many of whom directly or indirectly abetted the Japanese war effort against the Allies. Many corporations initially took advantage of the ambiguous status of Koreans in postwar Japan and tried to force coal miners to continue coal production in order to maintain the engine of Japanese industry and transportation. However, violent incidents broke out from mid-September, as Korean miners reacted angrily to the fact that Chinese miners were released from conscription, even while they were forced to continue working under harsh conditions (Kim, 1997, pp. 131-132).
American Occupation forces were dispatched to quell such disturbances and to resolve disputes involving Korean forced laborers. In most cases, however, they only exacerbated the problem, as SCAP’s initial policy coincided with the Japanese government’s efforts to keep Korean miners on the job. According to Edward Wagner, who was employed by the US Army Military Government in Korea (USAMGIK), the urgent need for coal production was not only to supply Japan but also to meet southern Korea’s minimum requirements (Wagner, 1951, p. 49). The US policy of retaining Korean forced laborers in Japan was a premeditated plan based on wartime recommendations made by the Office of Strategic Services (OSS) as part of its report called “Aliens in Japan.” The OSS report devoted considerable attention to Koreans, who comprised ninety percent of the foreign population in Japan, assessing the history of their immigration and living conditions before recommending:
It would be most desirable to assemble the Koreans in a few designated coal mining areas if it is necessary to produce coal for the Allied armies and in areas where Koreans could be used for heavy labor, such as construction of roads or work in railroads. Since Military Government will need labor for military purposes, it would be desirable to use as much Korean labor as possible. They would be inclined to resist the Allies less than the Japanese and are more accustomed to heavy manual labor (OSS, 1945, p. 21).
The Occupation policy of continuing to use Korean forced laborers, based on the assumption that they would cooperate with the Allies, miscalculated their overwhelming desire for immediate liberation and repatriation. On October 18, 1945, for example, Occupation authorities from the US Eighth Army’s 105th Infantry Division in Fukushima Prefecture entered the J.ban mines, and explained to the Korean miners there that refusal to work would constitute a violation of SCAP’s orders. Eleven days later, the Commander of the 105th Infantry Division disbursed a large crowd of Korean strikers, admonishing them not to be distracted from producing as much coal as possible (Kim, 1997, pp. 147-148). The continuation of strikes by Korean miners in J.ban and other mines in Hokkaido forced SCAP finally to recognize the need for repatriation, as Koreans were subsequently returned to their liberated homeland as quickly as possible. SCAP’s Summation in November reported that an estimated 130,000 Korean and Chinese miners had been repatriated (MSNMAIJK 2, 1945), and the Summation in January 1946 noted that their repatriation was largely accomplished (MSNMAIJK 4, 1946).
Repatriating forced laborers from Japan was not as straightforward as summarized in the SCAP Summations. Instead, regulating the return migration of forced laborers was a complex process that took time to implement and involved the Japanese government and corporations that brought them to Japan in the first place. The manner in which forced laborers were repatriated was in reality more akin to collective deportation. Forced laborers were deported only after their employers exploited them for as long as possible, in some cases for months after the war ended. Many pressing issues remained unresolved, such as what to do about their unpaid wages and mandatory savings and pensions. By deporting Asian subjects who were forcibly mobilized for the war, the Japanese corporations and the government alike avoided taking responsibility for reaching any settlement over these issues. Throughout the occupation period to the present, Koreans and Chinese who returned home have challenged the Japanese state for its unjust handling of such deportations.
An important actor involved in the earliest effort to demand compensation for returning Korean forced laborers was the League of Korean Residents in Japan (Zai Nippon Ch.senjin renmei, in Japanese or Joryeon [朝聯, The Korean Federation of Korean Residents in Japan] in Korean), established on October 15, 1945. As an ethnic organization representing Koreans throughout Japan, Joryeon’s early agenda was dedicated to helping Korean compatriots return home safely while protecting those who remained in Japan. Outraged by the Japanese government’s deportation scheme, Joryeon attempted to reach what might be called a “postcolonial settlement” with companies that exploited Korean conscript laborers without paying their due wages. For example, Kim Du-yong [...], a Korean communist leader of Joryeon, journeyed to the J.ban mines in October 1945 to negotiate terms of compensating the Korean conscripts for their forced servitude (Nagasawa, 1978, pp. 17-28). While contentious negotiations ensued, a similar incident followed in November when Joryeon began demanding death and disability payments for Koreans at the Ashio copper mine in Tochigi Prefecture (Kosh., 2005, p. 235). In both instances, US Occupation forces had to be called in to contain the turbulence and to mediate a compromise, resulting in the repatriation of the Korean laborers concerned.
Joryeon’s executive members initially attempted to ingratiate themselves with SCAP, but their confrontational approach towards Japanese mining corporations did not help win American sympathy. Furthermore, SCAP’s Counter-Intelligence Corps (CIC) began investigating Joryeon’s leadership and was aware that many of them advocated communism (Kim, 1997, pp. 177-178). By the time Joryeon intervened on behalf of Korean conscript laborers at the J.ban and Ashio mines, SCAP interpreted their actions as communist-inspired labor activism, the solution for which was deportation rather than compensation. Since SCAP initially supported the Japanese government’s effort to retain Korean miners to maintain the production of coal (Wagner, 1951, p. 60), it was disinclined to recognize Joryeon’s involvement as a legitimate struggle against colonial injustice.
Alarmed by Joryeon’s increasing influence in securing compensation for the deported Korean laborers,9 the Japanese government began blocking unauthorized settlements with corporations. By early 1946 the Japanese Home Ministry was instructing police agencies nationwide to crack down on Joryeon, which continued to press for redress. The Welfare Ministry rejected Joryeon’s repeated requests to negotiate a comprehensive settlement with corporations on the grounds that Joryeon was not a legally recognized union. The Japanese government also prevailed upon SCAP to criminalize Joryeon’s confrontational intervention at numerous worksites (Underwood, 2006a). Having coordinated the deportation of the forced laborers, Japanese and American officials cooperated in removing Joryeon from any involvement in disputes over Korean assets.
III. Two Custody Accounts and the Restitution of Assets
The question of what to do about the unpaid wages and savings owed to forced laborers failed to command the attention of US Occupation authorities until it was recognized as an international issue. In the face of increasingly vociferous calls from deported laborers in China and especially Korea demanding compensation from Japanese corporations, SCAP decided to mediate by collecting the assets for eventual repayment. On March 1, 1946 American Occupation authorities established the “Custody Account of the Supreme Commander for the Allied Powers” with the Bank of Japan in Tokyo and ordered corporations to begin depositing unpaid funds into this account. In addition, currency
9 By October 1946, Joryeon managed to settle 340 cases involving 43,314 workers (Kosh., 2005, p. 238).exchanged for foreign repatriates and other funds in Japan belonging to public and private persons overseas were to be deposited into this account.10 The management of the SCAP Custody Account was entrusted to the General Headquarters’ Civil Property Custodian (CPC) Section, which was established on March 8, 1946. The CPC’s main responsibility was to advise SCAP on the disposition of property and assets in Japan belonging to the Allied powers, enemy nations and former Japanese colonies, which included the SCAP Custody Account (Takemae, 2002, p. 196).
The best example that demonstrates how American Occupation authorities attempted to collect the unpaid wages, savings and pensions owed to forced laborers can be found in the case of Hokkaid. prefecture. The Hokkaid. funds are also the best-kept records that exist in the archives of official SCAP documents. On May 5, 1946, the Headquarters of the 74th Military Government Company transmitted to the Commanding General of the US Eighth Army a report on the unsettled accounts of Korean laborers who were repatriated from Hokkaid.. The report described the history of the funds:
At the close of the war most of the 108,400 Koreans in Hokkaido were slave laborers who revolted en masse against Japanese domination, organized in sundry unions, and engaged in wage disputes with their former employers. Whenever these disputes delayed the evacuation program ... the Koreans were evacuated in some cases forcibly with the understanding that a later settlement would be handled through representatives of a Korean Government.11
10 Furthermore, all funds seized from former enemy nationals, from Japanese Army and Navy installations, and from illegal organizations of various kinds were also deposited into the SCAP Custody Account (MSNMAIJK 6, 1946).
11 74th Military Government Company to Commanding General, Eighth Army, “Funds Consisting of or Pertaining to the Unsettled Accounts of Koreans who have been Repatriated from Hokkaido,” 5 May 1946, p. 2. RG 331, Box 3713, NARA.
The 74th Military Government’s report included an itemized list of 21 checks that were impounded from companies and government agencies that employed Korean laborers in Hokkaid.. While a majority of these funds were collected from mining and electric companies, two checks were from the Japanese Demobilization Bureau to cover funerary expenses and the delivery of ashes belonging to Korean laborers who were killed. Some companies also wrote checks covering death benefits, while others covered injury compensation, back wages, and bonuses for laborers who had been repatriated to Korea. The 74th Military Government continued to collect funds owed to Korean forced laborers until the total amount reached over \2.6 million by March 1947.12
What happened to the Korean funds from Hokkaid. after the 74th Military Government deposited them into the SCAP Custody Account in Tokyo? The payment of these funds to the rightful beneficiaries depended on SCAP’s ability to cooperate and coordinate effectively with the US Army’s 24th Corps, which was in charge of USAMGIK. On May 27, 1946, Lt. Col. McDiarmid from SCAP’s Economic and Scientific Section (ESS) visited representatives of USAMGIK in Seoul to discuss the formulation of a policy for transmitting the funds. A general agreement was subsequently reached whereby USAMGIK’s Department of Finance would pay Korean beneficiaries in Bank of Joseon notes, as soon as the original records listing individual addresses and amounts owed were received from Hokkaid..13 Based on these arrangements, on May 31 SCAP directed the 24th Corps to pay the collected sum of savings and allotments owed to repatriated Korean laborers. The 24th Corps was then expected to inform SCAP when payment was effected, so that the SCAP Custody Account could be debited accordingly.
12 The total amount of \2,631,448.70 is listed in a CPC document, “SCAP Custody Account . Bank of Japan, Koreans (Repatriated).” CPC-17939, NDL.
13 Memo for the record regarding subject, “Funds Consisting of or Pertaining to the Unsettled Accounts of Koreans Who Have Been Repatriated from Hokkaido.” Undated. CPC-08855, NDL.
However, the SCAP Custody Account was never debited because the 24th Corps failed to disburse the funds to the rightful beneficiaries in Korea. More than a year after SCAP’s disbursement directive, an official from the CPC’s External Assets Branch visited Korea to discuss the matter with representatives of USAMGIK. The only person with any knowledge of the subject, Edward Wagner, promised to investigate why the payment of Korean funds had not been effected in Korea. In a subsequent letter revealing the reluctance of USAMGIK to pay back money owed to Korean forced laborers, Wagner requested SCAP’s response to an important question: Was it really advisable to settle the claims of Korean repatriates from Hokkaid. without definite assurance that payment of hundreds of other claims, identical in nature, would be authorized?14 Although posed as a question, Wagner was essentially warning SCAP that the disbursement of the Hokkaid. funds could open up the floodgates of individual claims that USAMGIK was not prepared to handle.15 The unpaid wages, savings, and pensions of Korean forced laborers thus remained in the SCAP Custody Account.
While American Occupation authorities stalled on disbursing the Korean funds, Japanese officials prevented the Hokkaid. case from setting a national precedent. On October 12, 1946 the Welfare Ministry ordered corporations to deposit all unpaid wages and other financial assets of Korean laborers into bank accounts administered by the attorney general’s office in prefectural governments (NAJ, 1946). By scattering these assets into regional bank accounts, the Welfare Ministry avoided the same funds from ending up in the centralized SCAP Custody Account for eventual disbursement to Korea. The Japanese government’s
14 CPC External Assets Branch, “Conference Report,” 22 September 1947. CPC-08856, NDL.
15 The 24th Corps also experienced considerable difficulty in locating beneficiaries in Korea based on the reports provided by the Japanese coal mine operators. See CPC memo for the record, subject: “Deposits of Korean Coal Miners in the Bank of Japan,” 6 December 1946. RG 331, Box 3660, NARA.wage deposit program ultimately proved to be more effective than the American deposit program; the Korean assets in the SCAP Custody Account never exceeded \2.6 million, whereas the total amount of the prefectural government deposits grew to over \96 million.16
Most Japanese corporations retained the forced labor assets for as long as they could and only reluctantly complied with the government’s deposit program. The resistance of these corporations was in part due to the fact that they portrayed themselves as victims of Japan’s unsuccessful war effort. Within months after the Japanese defeat, the Construction Industry Association led other industries in demanding state compensation for alleged “losses” incurred by the termination of the forced labor program. This united corporate front prevailed in its sustained campaign, as the Japanese government in March 1946 agreed to pay large sums of indemnification fees. As a result, over \56 million of state compensation was paid out to all thirty-five corporations that used Chinese forced labor, while many of the laborers never received their hard-earned assets (Nishinarita, 2002, pp. 462-467). SCAP in August terminated such compensations since these same corporations were targeted for dissolution and reparations.
Between 1947 and 1948, Japanese war reparations emerged as an important diplomatic issue that overshadowed the unsettled forced labor assets. In August 1947 the Far Eastern Commission (FEC), the Allied representative body ostensibly responsible for overseeing the occupation of Japan, decided that only members of the Allied nations would receive reparations. Since Korea was not a member of the FEC, this meant that no reparations would be allotted to Korea. Instead, the FEC decided that Korea should be satisfied with Japanese assets that were left behind in Korea after the war (Cheong, 1991, p. 55). Meanwhile, the United States
16 The Welfare Ministry compiled a report in December 1949 in which it listed \96,741,510.90 in unpaid wages. This figure was included in a later report compiled by the Ministry of Finance (NAJ, 1953). independently reversed its reparations policy towards Japan. In March 1948 the State Department’s Policy Planning Chief George Kennan returned from a visit to Japan and engineered a policy shift away from reparations and zaibatsu dissolution that had characterized SCAP’s early economic program (Takemae, 2002, pp. 458-459). The National Security Council drew up a revised set of Kennan’s recommendations, NSC-13/2, which represented a new set of cold war policies aimed at containing the spread of communism in Japan.
The Cold War consumed the minds of American policymakers who came to view Japan as a bastion of democracy and capitalism in Asia. According to historian John Dower, from 1949 onwards, the United States pursued a “hard” cold war policy designed not only to keep Japan out of the Soviet orbit but also to make it an active partner in achieving US global objectives (Dower, 1993, pp. 179-189). An important part of this policy was to completely do away with punitive reparations. With the adoption of NSC-13/3 in May 1949, the US unilaterally rescinded the advance transfers of Japanese war reparations that it had initiated earlier, and primary war facilities were henceforth to be reserved for economic recovery. The US overrode opposition from the FEC, a move that was bitterly denounced by Dr. W. K. Lee, representative of Nationalist China, who noted that the US reversal would do “gross injustice” to the victims of Japanese aggression (Takemae, 2002, p. 475).
A secret memo circulated within SCAP’s General Headquarters (GHQ) reveals General Douglas MacArthur’s position on various Korean and Chinese claims against the Japanese government. According to the memo, the Commander in Chief wished to avoid any compensation claims from reaching the Department of Army in Washington for clarification and interpretation on the subject. The reason stated was that, “should it be decided to award amounts for these claims, the payment thereof would be a definite deterrent to the economic rehabilitation of Japan at the present time.” Instead, the memo instructed the relevant GHQ sections to reply to the diplomatic missions that the claims would be considered at the “proper time” in accordance with the provisions of the negotiated treaty between the Allied Powers in Japan.17 In other words, MacArthur refused to deal with compensatory claims, just as he did with war reparations.
The issue of national war reparations must be differentiated from individual restitution of personal assets. Reparations primarily refers to a defeated nation’s indemnity payment for damages caused by war, whereas restitution is defined as an act of restoring to the rightful owner something that has been taken away, lost, or surrendered.18 SCAP recognized this distinction, even though restitution in occupied Japan usually meant recovering property and assets that belonged to Allied nationals. Nevertheless, in May 1949 the CPC responded positively to the Korean Diplomatic Mission’s request for an investigation and settlement of individual claims against the Japanese government, while rejecting its request for war reparations. On June 7, CPC directed the Ministry of Finance to investigate and report in detail on the funds held in Japan of certain categories of Korean nationals, including not only forced laborers but also those who were conscripted into Japanese military service.19 The next day, an internal CPC memo made the case for creating a new depository for yen and security funds payable to non-resident foreigners. According to the memo, these foreign creditors would include nationals of former Japanese colonies and occupied territories, including Korea, Taiwan, and China, among other areas. This
17 C of S memo to CPC and DS, subject, “Interpretation of Korean and Chinese Claims,” 31 May 1949, RG 331, Box 3943, NARA.
18 Elazar Barkan explains that restitution is a useful concept that includes legal, political, and cultural attempts to rectify historical injustices, contrasting it with war reparations defined as enforced retribution (Barkan, 2000, pp. xviii . xxvi).
19 Other categories included Korean nationals employed in Korea by the Korean Government General and Korean nationals employed in Japan by the Japanese Government. Colonel E. C. Miller, Jr., Deputy Custodian of the Civil Property Custodian to the Ministry of Finance, Japanese Government, subject: “Claims from Korea,” 7 June 1949. RG 331, Box 3943, deposit account was to be separate from the SCAP Custody Account, and was partially designed to counteract the Japanese government’s deposit program. SCAP disapproved the fact that Japanese corporations had deposited large amounts of Korean assets into bank accounts in prefectural governments, because the central government could confiscate the funds if they were not disbursed within five years.20 In order to protect foreign property in Japan, on July 19 SCAP directed the Japanese government to establish a “Foreign Creditors’ Yen Deposit Account” in the Bank of Japan. This meant that Japanese officials had to deposit credits belonging to foreigners employed by the imperial government before the end of the war and to submit monthly reports to SCAP showing the progress of these financial deposits (SCAPIN 2030, 1949).
As a result of numerous conferences and reports, the CPC ascertained that there was approximately \237 million of funds in Japan earmarked as back salaries for Korean nationals who were conscripted into military and labor services. An internal memo of the CPC noted that it was contemplating the release of these funds to the Korean Mission, as soon as it could devise a plan for proper delivery of the funds to the appropriate persons.21 In the mean time, on January 16, 1950 the CPC directed the Ministry of Finance to immediately begin depositing these funds into the Foreign Creditors’ Yen Account. The CPC also required the Ministry of Finance to submit a more complete report, including the category of funds, monetary amounts, and the names of beneficiaries, vital information that was required for the restitution of these assets.22
20 JFC memo for the record, subject, “Foreign Creditor’s Yen Deposit Account,” 8 June 1949. RG 331, Box 8489, NARA.
21 CPC Memo for the Record, January 10, 1950. NARA.
22 Memorandum for the Ministry of Finance, Japanese Government from Colonel E. C. Miller, Jr., Deputy Custodian of the Civil Property Custodian, subject: “Funds Earmarked for Korean Nationals,” January 16, 1950. RG 331, Box 3943, NARA.
As a part of SCAP’s renewed effort to address the unsettled accounts, the Diplomatic Section raised the issue of the Japanese government’s condolence payments to families of deceased Korean soldiers. According to the Diplomatic Section, in 1947 and 1948 the Japanese government made two shipments to USAMGIK of 8,000 funeral urns containing the ashes of Koreans who died in the military service of Japan. Approximately 2,000 additional funeral urns remained in a warehouse in Tokyo, but their shipment was prevented by the refusal of the Korean government to accept the urns until the Japanese government made condolence payments. Japanese government regulations stipulated that ex-Japanese military personnel were entitled to \1,500, which was usually used for covering funeral expenses. The Korean government therefore demanded \15 million for each of the 10,000 families concerned. According to ESS, provision of \15 million in condolence payments was available in the 1949-1950 fiscal year budget. Diplomatic Section recommended that these payments be made to Korean families as they had been made to the families of deceased Japanese soldiers, since “these Koreans were both Japanese subjects and soldiers at the time of their death.”23 In other words, American authorities considered such payments a part of standing Japanese policies, which were to be made without regard to the nationality of the Korean families concerned.
In compliance with SCAP’s directives, the Japanese government slowly began preparing for the restitution of financial assets owed to former colonial subjects conscripted into the imperial military. The first step was taken on February 28, 1950 when the Ministry of Finance ordered unpaid financial benefits for Korean and Taiwanese military servicemen to be deposited with the state. More than four months later,
23 Check Sheet from Diplomatic Section to Chief of Staff, 16 February 1950. RG 331, Box 3943, NARA.the Ministry of Finance sent SCAP a report on the status of the Korean funds in the Foreign Creditors’ Yen Deposit Account. According to the report, the Demobilization Bureau24 informed the Ministry of Finance that the total funds earmarked for Korean and Taiwanese nationals conscripted by the Japanese Army amounted to approximately \150 million, while those conscripted to the Japanese Navy was another \75 million. These funds were to include salary arrears for former military servicemen, as well as condolence payments for families of deceased servicemen. The report noted that the Demobilization Bureau failed to include the funds in its 1950 fiscal year budget, but promised to appropriate those funds relative to the Japanese Army and Navy in the budget for the next fiscal year. As of June 15, 1950, the Bureau was reportedly liquidating the funds to be transferred to the Foreign Creditors’ Yen Deposit Account, a process that was expected to take some six months to complete.25
IV. The Cold-war Freeze
The outbreak of the Korean War on June 25, 1950 destroyed the groundwork laid for the restitution of forced mobilization victims’ assets from the Pacific War. Shortly after the North Korean invasion, the Republic of Korea’s Mission in Japan requested that the Korean funds in SCAP’s Foreign Creditors’ Yen Account be transferred to its possession. SCAP delayed responding to this request for months while various sections within GHQ debated the issue. The Legal Section maintained that the division of Korea into two nations at war made compliance with the ROK Mission’s request improbable. As the Legal Section pointed
24 The Demobilization Bureau was established after the war to replace the Japanese Ministries of Army and Navy, which were dissolved.
25 Ministry of Finance to GHQ/SCAP, “Funds Earmarked for Korean Nationals,” 15 July 1950. RG 331, Box 3943, NARA.out, many of the funds belonged to residents of North Korea. Until the country was reunited, any funds that the Japanese government turned over to the South Korean government could not be expected to reach these North Korean residents.26 Another practical problem was how to determine the whereabouts of individuals to whom the money was due, given the chaotic conditions of the raging war. On October 21, 1950 SCAP’s Diplomatic Section informed the ROK Mission that of the \237 million earmarked for Korean nationals, only approximately \3 million was available in the Foreign Creditors’ Yen Account. The Diplomatic Section explained that the transfer of such a small amount was “premature,” and that the Japanese government should therefore continue depositing the funds into the Account.27
The US preoccupation over the first full-blown cold-war conflict in Korea effectively froze up Korean, Chinese, and Taiwanese assets in the Bank of Japan. The cold-war policies of NSC-13/3 were now in full effect, as American officials concentrated on efforts to establish a US-Japan security alliance aimed at containing the communist threat. At the same time, the US government was negotiating a peace treaty with the Japanese government in which an agreement was reached to waive war reparations all together. John Foster Dulles, the chief negotiator of the peace treaty, made it abundantly clear that all monetary claims against the Japanese government had to be dropped, much to the dismay of other Allies and Asian nations alike. Under such circumstances, SCAP’s CPC Section did not insist on the restitution of forced mobilization victims’ assets in the Bank of Japan. After the San Francisco Peace Treaty was signed in September 1951, both the SCAP Custody Account and the Foreign Creditors’ Yen Account were
26 Check Sheet from LS to DS and CPC, subject, “Funds Earmarked for Korean Nationals,” 22 August 1950. NARA.
27 Letter from Diplomatic Section, SCAP to Korean Diplomatic Mission, October 21, 1950. RG 331, Box 3943, NARA.transferred to the Japanese government,28 which continues to possess these assets to this day.
This cold-war freeze of forced mobilization victims’ assets was solidified as the US government prepared to end the Allied Occupation of Japan in April 1952. Abandoning SCAP’s earlier stance that the unpaid funds should be paid back to individual victims, the US Department of State decided to extricate the United States from the responsibility of resolving this issue. In July 1951, the State Department expressed its view that Korean claims to property in Japan were a bilateral problem, the settlement of which was “a matter of direct negotiations between the Korea and Japan.”29 In order to reach a settlement between the two American allies, the State Department brokered a series of official meeting. But these meetings were contentious from the first conference for negotiating the normalization of relations between the Republic of Korea and Japan, which commenced on February 15, 1952. Conflicting priorities surfaced immediately, as the Korean representatives put financial claims at the top of the list, while their Japanese counterparts tried to limit the discussion to the nationality problem of Korean residents in Japan. Because of the endless debate over the Korean claims and Japanese counterclaims, the Japanese government refused to discuss specific problems such as wages due to Korean conscripts and the reimbursement of Koreans holding Japanese postal savings books (Cheong, 1991, pp. 110-113). These personal assets originally slated for individual restitution thereafter became treated as a state-to-state diplomatic issue of reparations.
28 As of the end of November 1951, the Foreign Creditors’ Yen Account contained \67,735,994.08 in Korean funds, \12,257,123.45 in Chinese funds, and \9,917,591.60 in Formosan funds. Ministry of Finance, “Monthly Report on Foreign Creditors’ Yen and Security Deposit Account,” 17 December 1951. RG 331, Box 8489, NARA. The Korean funds in the SCAP Custody Account amounted to \2,631,448.
29 State Department Comment on JAPQ D-2/7, “Korean Claims Under Korean Vesting Decrees to Property in Japan,” 3 July 1951. CPC-38049, NDL.
Throughout the cold-war period, the US and Japanese governments upheld the view that the San Francisco Peace Treaty had settled Japan’s obligations to pay war reparations, including individual claims for redress. In reality, however, the unpaid financial assets owed to victims of imperial Japan’s forced mobilization was not settled but overlooked. When the Republic of China normalized relations with Japan in 1952, the two governments agreed to ignore such problems as the unpaid pensions of Taiwanese military servicemen that remained in the Bank of Japan. Then in 1965, under heavy pressure from the US government, the Republic of Korea agreed to normalize relations with Japan despite intense domestic protests. The bilateral peace treaty helped solidify the US-led Cold War bloc in Northeast Asia and provided the ROK with substantial Japanese economic aid, even though Japan denied that it constituted reparations.30 This pattern of providing economic assistance in place of reparations was repeated again in 1972 when Japan normalized relations with the People’s Republic of China. The rightful claims of Chinese forced laborers, like the Korean forced laborers, were completely ignored. In each case, historical reconciliation was overlooked in reaffirming the San Francisco Peace Treaty’s reparations waiver, thus also denying the possibility of restitution of the frozen assets owed to victims of Japan’s forced mobilization.
V. Conclusions
Nearly six decades have passed since the San Francisco Peace Treaty ended the occupation of Japan, but Asian victims of forced mobilization still have not received one yen of the wages and pensions that belong to them. Their financial assets remain frozen in the Bank of Japan, nearly
30 Gi-wook Shin, “Historical Disputes and Reconciliation in Northeast Asia: Can the United States Play a Role?” Professor Shin shared with the author in 2009 this earlier draft of an article, which was later published in Pacific Affairs in December 2010.two decades since the thawing of the cold-war conflict. The Japanese government’s continued inability to come to terms with its imperial and wartime past has long been criticized for this and other historical disputes with its Northeast Asian neighbors. However, the historical record examined in this paper reveals that American officials also contributed to the problem in at least three ways: First, by failing to ensure the return of financial assets owed to forced laborers when they were repatriated; second, by retaining a large portion of these assets in two custody accounts, only to turn them over to the Japanese government; and finally, by conflating restitution with war reparations, thereby denying individual compensation. SCAP’s responsibility in mishandling this problem has been compounded by the post-occupation US policy of protecting Japan from redressive claims throughout the cold-war era to this day.
Japanese redress lawyers and their researcher teams first unveiled their government’s defaults on overdue restitution by assiduously compiling official documents that were long hidden from public purview. A number of organizations including the Lawyers Group for Chinese War Victims’ Compensation Claims have helped clarify this historical record.31 More than seventy lawsuits seeking redress have been filed in Japanese courts since 1991, many of which demanded compensation from the government and the state for civilian and military conscription. Some corporations have admitted in court that the plaintiffs’ wages were deposited with the state shortly after the war, shifting the responsibility of restitution on the Japanese government. Although all these lawsuits ended with legal claims being rejected, the evidence produced in these courts has set the record straight on the fact that the Bank of Japan still possesses these unpaid wages and pensions. Furthermore, in some
31 Due to the efforts of the lawyers group, Ch.gokujin Sens. Baish. Seiky. Jiken Bengodan in Japanese, dozens of decisions in Japanese courts have established the basic historical facts in cases involving not only forced labor in Japan but also comfort women and the Nanjing massacre, among others (Underwood, 2006c)rulings judges have acknowledged the illegality of the defendants’ conduct and have recommended a legislative resolution (Arimitsu, 2009),32 which may be a more effective means of ensuring restitution than through litigation.
Often working together with redress lawyers, independent researchers and grass-roots activists in Japan have assisted in further clarifying the historical record. Building upon earlier publications that included primary sources on the Chinese forced labor program, numerous research findings were published in the 1990s as a part of the emerging reparations movement.33 At the same time, members of a research group on Korean forced labor produced a series of publications, making extensive use of official records as evidence of the wartime conscription program and the postwar cover-up of the wage and pension deposits.34 These publications are the product of the work of dozens of local, national, and international organizations dedicated to investigating records relating to forced mobilization. The aptly named Truth-Seeking Network for Forced Mobilization, in particular, has been one of the strongest advocate groups in Japan calling on its government to address the problem of compensating victims. Compiling a wealth of documentary evidence on the unpaid financial assets in the Bank of Japan, the Truth Network argues for restitution as the most straightforward solution to this problem (Kobayashi, 2010, pp. 30-37).35
The Truth Network’s stated mission is to redress victims of Japan’s
32 Arimitsu Ken, director of the Association of Lawyers and Citizens Seeking Legislative Solutions for Postwar Redress, also supports a legislative solution.
33 The earliest publications include Ch.goku Junnansha Meibo Ky.d. Sakusei Jikk. Iinkai (1960 and 1961). Publications from the 1990s include Tanaka et al (1990) and Tanaka and Matsuzawa (1995), among others.
34 The series of publications include Yamada and Tanaka (1996); Kosh. et al, (2000); and Yamada et al, 2005).
35 Kobayashi is an executive member of the Truth-Seeking Network for Forced Mobilization, or Ky.sei shins. ky.mei nettowaaku, in Japanese. wartime and colonial injustices through international cooperation, thereby achieving sincere and lasting reconciliation. The original impetus for forming the Truth Network in 2005 was to facilitate the investigative work that had just been launched by the South Korean government’s Truth Commission on Forced Mobilization under Japanese Imperialism. The joint cooperation between the Korean commission and its grass-roots counterpart in Japan produced tangible results when the South Korean parliament passed a law in November 2007 to compensate former conscripts and family members. One month later, the Japanese government responded by delivering to the South Korean government a report on the unpaid financial deposits of Korean military conscripts, followed in March 2010 with another report on the deposits of Korean forced laborers.a total of \278 million in the Bank of Japan (Kang, 2010). The discovery and dissemination of irrefutable evidence thus led to monetary compensation for Korean citizens listed in these reports, even though the Japanese government still refuses restitution of the original assets in question.
Redress and restitution for victims of imperial Japan’s forced mobilization is not exclusively a Northeast Asian issue but is also an American concern. Former US POWs who toiled in Japan without due pay have common cause with former Chinese and Korean forced laborers in demanding restitution of their financial assets. The link between these American and Asian victims is evident in at least two ways. First, like the slew of litigation in Japanese and Korean courts, former Allied POWs seeking unpaid wages and compensation for damages have sued in US courts nearly sixty Japanese companies that employed them as forced laborers (Tokudome, 2001). Second, the US courts in nearly every case sided with the federal government’s stance that the companies bore no legal responsibility to compensate, consistent with the litigation deadlock in Japan. The US government has also resisted compensating its own citizens who were POWs, making it one of the only former Allied nations not to do so.36 Greater recognition of the common plight between American POWs and Asian forced laborers is required to enhance cooperation among various organizations that advocate redress for each group.
The transnational redress movement has the potential of opening the way for meaningful reconciliation if it can expand beyond Northeast Asia to encompass North America. Asian American activism, in particular, is key to this trans-Pacific support for restitution. Cultural anthropologist Lisa Yoneyama astutely observes that the recent adjudication of Japanese war crimes within the US judicial system was urged by Asian immigrant-citizens and their growing importance in American representative politics (Yoneyama, 2003, p. 60). For example, Chinese, Korean, and Filipino communities in the US have managed to mobilize international attention and support for redressing former “comfort women.” They were instrumental in organizing the mock Women’s International War Crimes Trial in 2000,37 and the passage of the US Congress House Resolution 121 in 2007. Spearheaded by Japanese American Congressman Mike Honda, House Resolution 121 called on the Japanese government to explicitly apologize to former comfort women but stopped short of requesting compensation. The growing strength of the transnational activism to redress comfort women should encourage other victims of Japanese forced mobilization, as Asian American citizens with close ties to Northeast Asia can similarly exert political pressure on the Japanese and American governments.
Clarifying the historical record of Japan’s wartime forced mobilization
36 The US government’s War Claims Act of 1948 did provide $1.50 a day for lost wages and $1.00 for missed meals, but former POWs have long argued that this minimum amount hardly constituted adequate compensation for their suffering. Meanwhile, Great Britain, Holland, Australia, New Zealand, and Canada have decided in recent years to compensate their citizens who were POWs of imperial Japan. See Tokuome (2001, pp. 2-5) and Holmes (2001, pp. 137-138).
37 This mock tribunal in Tokyo judged Emperor Hirohito guilty of “both individual and superior responsibility” for “knowing participation in a criminal system which cultivated and sustained a system of rape and sexual slavery” (Gluck, 2007, p. 71).and postwar cover up is a critical first step towards validating the legitimate claims of those individual victims who have thus far been denied redress. More than sixty-five years after the end of World War II, we are only now beginning to understand how the financial assets of Asian conscripts were deposited into the Bank of Japan and remained frozen there for decades. As mounting evidence has recently forced the Japanese government to acknowledge the existence of these unpaid deposits, the ultimate solution is the restitution of personal assets to the rightful owner and their family. The US government can and should support restitution as the key to historical reconciliation, particularly since it relates to American POWs who have not been properly compensated, either. At the same time, the proactive involvement of the Japanese and US governments is contingent upon increasing networks of trans-Pacific cooperation to achieve redress and reconciliation.
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Restitution for Reconciliation:
The US, Japan, and the Unpaid Assets of
Asian Forced Mobilization Victims1
Matthew R. AUGUSTINE, Kyushu University

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