<--PREV Doc #723  |  Memorial Commission Home Page  |  Second Term Table of Contents  |  Presidential Papers Home Page  |  Doc#  |  NEXT--> Doc #725 Document #724; June 4, 1958 To John Foster Dulles Series: EM, AWF, DDE Diaries Series The Papers of Dwight David Eisenhower, Volume XIX - The Presidency: Keeping the Peace Part V: Forcing the President's Hand; June 1958 to October 1958 Chapter 11: "Take time by the forelock"   Memorandum for the Secretary of State: I return herewith without my approval the draft of the letter you recommended that I sign to the Prime Minister of Japan regarding the currency conversion proposed for the Ryukyu Islands.1 This proposal seems to be one of doubtful wisdom, particularly because of its possible effect within Japan. I am sure that the use of American currency in the Islands would be interpreted in Japan as an unexpressed but nevertheless latent ambition of this country to annex those Islands. The mutual friendship and trust that have been built up between our country and Japan are extremely valuable and I do not see why we should chance damaging them in the effort to achieve a greater administrative efficiency. If the Prime Minister of Japan himself recommends the use of American currency because of a favorable effect upon the Ryukyu economy, and would agree that the consideration would in his mind outweigh any fear of possible future attempts on our part to annex the Islands, then I would be ready to give my approval to the project. In the meantime I suggest that Ambassador MacArthur be instructed to lay before Premier Kishi all the anticipated advantages and potential disadvantages of the proposal and to make a complete report to you. After the matter has been so studied and reported on, I will be ready to consider the paper again.2 1 For background on U.S. policy regarding the Ryukyu Islands see no. 646. Discussions regarding the introduction of dollar currency in the islands to replace the circulating B yen (occupation currency) had taken place during Japanese Prime Minister Nobusuke Kishi's visit to the United States in June 1957. At that time, however, State Department officials opposed the measure. They had, instead, proposed a plan whereby the B yen would be backed 100 percent by U.S. currency and therefore freely convertible into dollars (State, Foreign Relations, 1955 - 1957, vol. XXIII, pt. 1, Japan, pp. 265, 436 - 37, 516). In the memorandum to Eisenhower that accompanied the draft letter to Kishi, Dulles had told the President that the prime minister had received a large vote of confidence in the recent Japanese elections and that State and Defense department officials now wanted to proceed with the conversion. Eisenhower had written "I'm doubtful" at the bottom of Dulles's memorandum (Dulles to Eisenhower, June 3, 1958, WHO/OSS: Subject [State Dept.] State Dept.; see also MacArthur to Dulles, May 23, 1958, State, Foreign Relations, 1958 - 1960, vol. XVIII, Japan; Korea, Microfiche Supplement no. 453). In a meeting held on this day Dulles had told Eisenhower that he had misgivings about the conversion and had "only with reluctance" agreed to the plan because of the strong views of the Defense Department. Eisenhower said that he would explain his views in writing and would send a copy to Defense Secretary McElroy (Memorandum of Conversation, June 4, 1958, Dulles Papers, White House Memoranda Series; see also Telephone conversations, Dulles and Robertson, June 4, 1958; and Dulles and Brucker, June 5, 1958, Dulles Papers, Telephone Conversations). 2 U.S. Ambassador to Japan Douglas MacArthur II would discuss conversion with Kishi on June 18 and would tell the prime minister that President Eisenhower wanted "his frank reaction." Although the proposal would create some difficulties, Kishi replied, "he could live with conversion as long as [the] timing was right." He asked that the United States postpone any action until after the Diet had adjourned on July 4 and until the United States had reached a favorable decision on Okinawan land compensation policy. MacArthur would tell Dulles that Eisenhower's handling of the problem had "touched Kishi deeply" and had led him to withdraw his original objection to currency conversion (Dulles to MacArthur, June 16, 1958, State, Foreign Relations, 1958 - 1960, vol. XVIII, Japan; Korea, Microfiche Supplement no. 460; and MacArthur to Dulles, June 19, 1958, ibid., no. 461). For developments see no. 813. Bibliographic reference to this document: Eisenhower, Dwight D. To John Foster Dulles, 4 June 1958. In The Papers of Dwight David Eisenhower, ed. L. Galambos and D. van Ee, doc. 724. World Wide Web facsimile by The Dwight D. Eisenhower Memorial Commission of the print edition; Baltimore, MD: The Johns Hopkins University Press, 1996, http://www.eisenhowermemorial.org/presidential-papers/second-term/documents/724.cfm <--PREV Doc #723  |  Memorial Commission Home Page  |  Second Term Table of Contents  |  Presidential Papers Home Page  |  Doc#  |  NEXT--> Doc #725

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