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'1'“; \ tollll‘t lull t l \ ‘3‘ 7 This is to certilg that the thesis entitled presented bl] has been accepted towards fulfillment of the requirements for __A__/vl___degree inwm é.“ a. @2, Major professor llateIM/I / 7;/qr3 (/ V SOME ASPECTS OF THE DEVEIDPMENT OF FREE OOMPEI‘ITIVE ENTERPRISE IN THE RYUKYU ISLANDS By HORACE CLIFFORD KING A THESIS Submitted to the School of Graduate Studiee of Michigan State College of Agriculture and Applied Science in.partial fulfillment or the requirements for the degree of MASTER OFARTS Department of General Business 1953 THE-2913 Q 0.. os- ACKNOl‘lIEDGm T The writer expresses his appreciation to Mr. Edward A. Gee for constructive criticism and guidance in directing this study; and to the directors and staff members or the departments in Headquarters, United States Civil Administration or the Byukyus, whose cooPeration made this study possible. ii “ (K) ‘J‘f'IJ. ‘ QUK.‘} Jij‘sz TABLE OF CONTENTS Chapter Page I. DESCRIPTION OF PROBLEM AND METHOD OF RESEARCH . . . . . . . . 1 II 0 PWAR ECONOLII O O O O O O O O O O O O O O O O O O O O O O O 5 III. RYUKYUAN ECONM, 191.6 0 O O O O O O O O O O O O O O O O O O 15 IV. NATURAL RESOURCES OF THE RYUKYUAN ECONOMY, 19h5-1951 22 t: V. RIUKIUAN INDUSTRY AND PUBLIC SERVICES, 1945-1951 VI. FOREIGN TRADE . . . . . . . . . . . . . . . . . . . . . . . . 56 VII. LABOR AND SERVICES FOR UNITED STATES FORCES . . . . . . . . . 70 VIII. FINANCIAL STRUCTURE . . . . . . . . . . . . . . . . . . . . . 77 IX. SUMMARI-OBSERVATIONS AND RECOMMENDATIONS . . . . . . . . . e 92 APPENDIX A. Okinail: U. 3. Gibraltar of the Pacific . . . . . . . . 102 APPENDIX B. Government And Relief In Occupied Areas (GARIOA) . . . . 113 APPENDIX C. Ryukyuan Dollar Commercial Account (RDCA) . . . . . . . . 123 BIBLIOGRAPHY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 MP w m Rm ISIANIB O O O O 0 O O O O O O O O O I O O O O O O O 138 iii TABLE I. Is. II. III. V. VI. VII. VIII. X. LIST OF TABLES PeralueofForeignTrade............... Ryukyu Islands: Estimated Import Expenditures, Fiscal 1681.1952eeeeeeeeeeeeeeeeeeeeeeee Percentage of Licenses and Letters of Credit-Calendar Tearl951........................ Percentage of Licenses and Letters of Credit, 1st Quarter, 1952(JMetOMRe)eeeeeeeeeeeeeeeeeee Ryukyu Islands: Estimated Commodity Exports, Fiscal Iearal951&1952.................... Exports, 1952 Letters of Credit Negotiated . . . . . . . . Ryukyu Islands: Estimated Balance of Payments, U. S. Fiscal Year 1952 . . . . . . . . . . . . . . . . . . . . . . . . Government And Relief In Occupied Areas Funds For Ryukyus . Statistics-Ryukyu Reconstruction Finance Fund Loans . . . Status of Active Ryukyu Reconstruction Finance Fund Loans . PurpoaeloprprOYedIDanl................ iv PAGE 62 63 6h 67 68 69 8 91 C H A P T E R I DESCRIPTION OF PROBLEM AND METHOD OF RESEARCH The Ryukyu Islands, in which is located the war-famed isle of Okinawa, are located Just South of Japan prOper. The Ryukyu Islands were captured from the Japanese in World War II, and have remained as an occupied area of the United States Government. The United States Civil Administration of the Ryukyu Islands (U.S.C.A.R.), which replaced.lilitary Government in December 1950, has been diligently working to restore the Ryukyuan peOple to self-sufficiency. Basic to the United States' economic plan for the Rinkyu Islands is the assumption that it will be accomplished within a framework of free competitive enterprise. 1. THE PROBLEM This thesis is concerned with some of the aspects of the historical develOpment of free competitive enterprise in the Ryukyu Islands in the postwar period 19h5-1952. The economic objectives of the United States Civil Administration of the Ryukyu Islands, as stated in the directive for United States Civil Administration of the Ryukyu Islands, 5 December 1950, are: to further the establishment of a standard of living comparable to that existing prior to the war to the extent that GARIOA (Government And Relief In Occupied Areas) funds are available: to achieve a condition of self—support at this standard of living: and to stabilize the financial structure of the economy. fl ’1 ‘r’ .l ,1 N A considerable portion of this thesis is devoted to a description of the pm and immediate postwar economy. This background is a necessary introduction to an understanding of the present-day economy. It will be seen that the W Islands have been a deficit economy in modern times. War damage was enormous, destroying such export potential as existed. The consequent critical economic problems existing in the immediate postwar period were aggravated by repatriation, the uncertain political future of the We, the severance of the economic ties with Japan, and the loss of experienced Japanese business managers and governmental administrators. Considering these obstacles, efforts made to rehabilitate the Ryukyus have been reasonably successful. Schools have been rebuilt, utilities and public services restored, a fishing fleet created, and agricultural production substantially increased. Commodity exports have made encouraging gains during 1951 and the trend is sharply upwards. The existence of the U. 8. military base in the Ryukyu Islands is accompanied by a significant reshaping of the eschew-a large wage-earning class has been created which did not exist befone the war. 2. SELmTION OF THE PROBLEM The writer, a member of the Department of Business Education and Secretarial Studies, Michigan State College, was one of five staff numbers that lichigan State College assigned during the academic year 1951-1952 as a visiting professor to their recently "adapted" University of the Ryukyus. This project is a phase of the U. S. reorientation plan to provide a stable econoq and democratic form of government suited to the occupied Ryukyu Islands. The writer's selection of this problem resulted from experiences gained in the securing of information about the economy of the Byuky'u Islands as a preparatory step in the establishment of the Department of Business Administration at the University of the Ryukyus. 3. LIMITATIONS OF THESIS A conscious effort has been made to refrain from revealing any future economic plans or predictions for the Ryukyu Islands since this would be security information of the United States Government. This thesis is concerned primarily with the historical deve10pment of the Rvukyuan economy in the postwar period comencing with the battle for Okinawa in World War II in 191.5 to June 1952. Military information is outside the scape of this thesis, but it indirectly has an impact on the economy of the Ryukyus and the future security of the peOples of the world. To relate to the readers of this thesis a current, comprehensive, view of the thrukyus and their strategic military importance, "Okinawa: U. S. Gibraltar of the Pacific," an article by Hajor General Robert S. Beightler which appeared in the April 1952 issue of Pe us, is quoted in full in Appendix A. Major General Beightler was the Ca-nanding General of the Ryukyus Command from approximately 1948 to 1953. This writer would hesitate to mention the military build-up on Okinawa and our Government's future plans because of his inability to detennine what should be withheld as security information. A. METHOD OF RESEARCH A number of methods were employed in securing information about the Mkyuan econonv. Most of the prewar published information was destroyed during the war. Consequently, mob of the information was obtained by direct interviews. Regarding the ecmomic assistance by U. S. Congressional apprOpriations, and the reestablishment and development of industries, much information was gained from.the numerous interviews with the directors and staff members of’the departments in Headquarters, United States Civil Administration of the Ryukyus. Current problems facing Ryukyuan businessmen were learned by direct interviews and U.S.C.A.R. translations of the daily native newspapers. Much information was gained from.the University of the Ryukyus' Extension conferences held throughout the Ryukyus. Official U. 8. reports on the postwar economy have also been very helpful when available. In CHAPTER II PRE'NAR ECONOMY]- 1. GENERAL The W Islands extend southwest of Japan preper for about 800 miles and consist of eleven major island groups of some 1A0 islands or islets. The present population is listed at 917,AOO by the 1950 census, compared to 759,638 existing in 1940. Natural resources are limited and, in fact, are insufficient to enable the population to be self-supporting. Approximately 25% of the land area was cultivated prewar: the potential, however, being considerably in excess of this figure. Generally, the soil is only moderately fertile. The waters surrounding the Ryukyus are excellent fishing grounds. In the prewar period, these areas were exploited princi- pally by Japanese. Mineral resources are poor and unquestionably are inadequate to support any substantial industrial development. Although a considerable number of LThe published information about the prewar economy of the Ryukyu Islands was largely destroyed during‘Wbrld War II. Because of this lack of publications, the Uhited.States Civil Administration of the Ryukyus (U.S.C.A.R.) has compiled what they believe tofbe a reasonably accurate record of prewar data. Information presented in this chapter'was obtained by direct interviews with the directors and staff members of the following departmentsof U.S.C.A.R.: A. Department of Pregrams and Statistics B. Department of Civil Information and Education 0. Department of Public Health and Welfare D. Department of Finance E. Department of Commerce and Industry F. Department of Agriculture and Forestry G. Department of Communication and Transportation H. Department of Government and Legal minerals exists, only phosphate and coal are comercially exploitable. Unimportant quantities of capper, manganese, sulphur and iron also are found in the archipelago. The only other significant mineral resources extant are the plentiful supplies of ceramic clays and building stone. The prewar economy was predominately of a subsistence agriculture nature. Approximately 75% of the pepulation was engaged in agriculture, 15% in manufacturing, 2% in fisheries, and the remainder in miscellaneous occupations. Moreover, of the 15% in manufacturing, less than 1% was employed in factories of five or more employees, the remainder working in cottage-type industries. Forestry activities were and still are a source of part-time employment for a large preportion of farm families. particularly in the outlying island and northern Okinawa. The crop of greatest value produced prewar was sweet potatoes, al- though it was exceeded in tonnage by sugar cane. Practically no sweet potatoes were grown for sale, however, sugar cane being by far the most important cash crop. Smaller quantities of rice and soy beans were grown, with a number of other crops in relatively small quantities making up the balance of agricultural production. The Ryukyus have been a food deficit area in modern times and from 20 to 25% of the food was imported. Individual farms were very small. In 1939, the average agricultural household worked only 1.6 acres of cultivated land in Okinawa Prefecture. 2. SUGAR INDUSTRY Sugar occupied a highly significant place in the econonw. It was introduced into the Ryukyu Islands from China in 1623. The first centri- fugal sugar plant was established at Kadena in 1912. By 1939 , the following condition had been attained in the Pqukyu Islands: three centrifugal plants were in Operation in Oldnawa, one in the Daito Islands, and one . a s, M Huh. 1:“ .‘Q ‘l 3w *1. \fin IV r! 7 in Itiyako; in addition, six large black sugar plants (30 tons and larger), 2500 small mills, and approximately 7000 households were engaged in the production of black sugar; 1.? ,000 acres, 21.% of all arable land, were planted in cans; and 31,000 metric tons of centrifugal sugar and 86,000 metric tons of black sugar were produced in the 1939-40 season. In the late prewar period, sugar accounted for 65% of all industrial production and exports. Its indirect importance to the Ryukyuan econonw was enormous. The control of sweet potato weevil depended on crop rotation with sugar cane. lining of Daito phosphate era was feasible only because of its interlock with the sugar econom of these islands. The principal feed for livestock was cane fodder. Sugar cane served as wind breaks against typhoon damage for other creps, and above all, it was the farmer's only significant cash crop. In prewar years, the production of sugar in the mkyus was less economical than in Taiwan, Saipan and principal western producing areas. Some reasons -- the fertility of the soil and climate conditions - were basic; other reasons -- imprOper fertilization, inefficient and very de- centralised processing and adverse political. factors - were correctable. The production of centrifugal sugar in the Daito Islands was consistently profitable partially because cane yields were above average, but primarily because the Dai Nippon Sugar Company owned the Daito Islands and exercised absolute authority over the production of sugar and cans . 3. FISHERIES AND RELATED INDUSTRIES The annual seafood catch from Byukyuan waters both by the Ryukyuan owned and Japanese based vessels amounted to £0,000 metric tons. - Ryukyuan vessels accounted for approximately 35% of this total. Costal fishermen using skiffs and employing traditional gear and techniques in small scale operations, of which the indigenous drive-in-net fishing was most important, took about 1.0% of the fish products land at Ryukyu ports. Japanese-based vessels took 85% of the offshore catch of the Ryukyu area, landing their cargoes in Japan. Skipjack (katsuo) accounted for approximately 65% of the entire catch from Byukyuan waters. The total capacity of the Ryulgvuan- owned powered fishing fleet in prewar years is estimated to have been 2,000 gross tone, the majority of which consisted of very small boats of ten tone or less capacity. The total number of small non-powered craft is reported to have been approximately 3,700. As indicated above, a distinct and independent Ryukyuan fishing industry did not exist in prewar years, 65% of the total catch being carried to Japan by Japanese registered vessels. No encouragement, therefore, was given to the deve10pment of a marine processing industry and only limited refrigeration and ice making capacity was required. The four small can- neries which existed until 1939 were primarily engaged in the production of canned meats, vegetables, and fruit. Fish was canned at only one factory. No frozen foods of any type were produced. The most important marine product was katsuobushi (smoked, dried and fermented skipjack) with an annual output of 2,000,000 pounds, 75% of which was exported. Other urine products were fish pastes, dried fish, seaweed, button shall, oysters, and cultured pearls. Five ice plants existed in the Ryukyus with a total monthly capacity of 1500 tons. Cold storage facilities were available only at the Naha plant. Local refrigeration facilities were not developed to meet fisheries needs, most of the fish taken from coastal waters being consumed directly without icing. Boats engaged in offshore fishing generally obtained ice in Japan and occasionally in Formosa. Aquaculture was developed to a modest degree. In okinawa Prefecture there were four carp hatcheries, four oyster farms, 300 acres devoted to pearl culture, and about 100 acres of paddy land used as nurseries for raising eels, mullet, and goldfish. Sponge culture was undertaken on an experimental basis. Government encouragement for fisheries research and extension amounted to {150,000 per year, approximately 50% of which was used to Operate the three fisheries experimental stations at Oshima, Naha, and Ishigald. It is often stated that Wukyuan fishermen operated at great distances from Ryukyuan bases, even as far as the Southern Mandated Islands. From this assertion it has been concluded that the Ryukyuans possessed large vessels for this purpose. While many Byulquan fishermen did fish throughout these Pacific islands, they invariably took up residence in these areas, and none of their catch was included in Ryukyuan production. Thus, the only post-war benefit to be gained from these activities is the skill which these repatriated fishermen are now utilising in local waters. 1.. FOOD SUPPLY Before the war, food consumption was about 2,250 calories per capita per day. The diet was simple but fairly adequate and well balanced. Agricultural production was higher than today and was the main internal as well as export industry. Not only was absolute production higher, but production per capita was much higher than today. Cereals (rice) production, the min part of the food problem, was about 50% more per capita than at present. The situation is similar in other items, such as meat and pulses. In spite of higher absolute food production and a much higher per capita rate prewar, substantial imports were necessary. Cereal (rice) imports into the mkyus were over 60,000 metric tons per year. This, 10 together with indigenous production, provided about 136 kilograms per capita per year, of which it is estimated 115 kilograms were consumed as food. In addition, over 70,000 metric tons of other foods were imported. Other imports were canned food, fresh and processed fruit and vegetables, pulses, candy and sugar, miscellaneous (tea, salt, etc.) , fats, dried food, and condiments in that order of tonnage. At the same time it was possible to export certain food commodities such as crude sugar, molasses, and fresh fruit and vegetables in season, in excess of 85,000 metric tons per year. Food was not rationed prewar and distribution was a minor problem. The Ryulqus were in the trade routes of the Japanese Empire and rice was cheap and plentiful as contrasted with the high prices and critical world food shortages of today. Formosa exported about 700,000 metric tons of rice per year, most of which went to Japan. Since the Ryukyus were in this shipping lane, plenty of rice was available at a cheaper price than in Japan. About 65% of rice imports came from Formosa. In spite of the cheaper prices, rice consumption was still only about 80% of Japan on a per capita basis, reflecting lower living standards and the necessity to eat more sweet potatoes which were even cheaper. Cheap indigenous and Manchurian soybeans were plentiful. Fish was cheap and plentiful in coastal areas as was pork in the interior. The farm population was more self-sufficient prewar with average farm sizes almost two acres compared with an average holding of about one acre of the farmer— consumer today. 5. INDUSTRIAL PRODUCTION The co-existence of modern industrial plants and small household industry establishments which is so common to all parts of Japan was 11 not present in the Ryukyu Islands. Aside from.the five modern centrif- ugal sugar plants, Ryukyuan industry was composed entirely of small factories, over 95% of which were of the cottage-type industry. In 1939, the factories employing five or more workers in the entire Okinawa Prefecture numbered only 75. The sugar industry accounted for two—thirds of all industrial production and 80% of the 2,600,000 square feet of registered industrial building space. The textile industry in the Ryukyu archipelago was second to the sugar industry in importance. It reached its apex in the early 1920's when annual production amounted to approximately ¥15 million. Later this total value fell to E6 or I7 million per year. Tsumugi silk, manufactured in the Northern Ryukyus, accounted for 50% of this amount. Hats, pro- duced chiefly on Okinawa, ranked second, accounting for approximately ¥1 million per year. Jofu cloth, mats, cotton cloth, and miscellaneous articles from.straw complete the list of Ryukyu textiles. Of all handicraft industries, lacquerware was the most important and the most famous. There were approximately 250 factories engaged in this production with a total annual output valued at approximately ¥LO0,000. Factories producing ceramic ware: pottery, tile, pipe, glass, and.brick, numbered approximately 125. Pottery, with an output at approximately ¥200,000 in 1938, was the principal item. 'Wickerwork, such.as baskets, cages, blinds, and furniture from bamboo, willow, and rattan, accounted for only'!50,000 per year. Ryukyuan metal craftsmen were purported.to be among the most skilled in the Far East, however, the absense of production data and the scarcity of mineral resources indicate that this industry was of insignificant value. 12 The total value of all forestry products, including lumber and fuel amounted.to approximately !7 million in 1939. These resources are located principally in the Northern Ryukyus and Yaeyama Gunto. The available data concerning other industries is limited to Okinawa Prefecture. In 1939 there were 828 small woodworking establishments, one leather tannery, two metal factories, and eleven plants engaged in pro- ducing machines and tools primarily for agricultural and food processing use. The total output of these factories for that year was valued at approximately'¥1 million. The production from two industrial alcohol plants amounted to $100,000. Indigo dye was producted by 525 household establishments. The total number of companies incorporated in the Ryukyu Islands was 5h. Of this number, 12 were industrial companies. The very small enterprises are not included. Eleven other companies, incorporated either in Japan or Formosa, had extensive holdings in the Ryukyu Islands. 6. PUBLIC FINANCE The inhabitants of the Ryukyu Islands were subject not only to local and prefectural taxes, but also to direct taxation by the Japanese Government. In return, the Japanese Government made various grants-in-aid to prefectural governments and municipalities and furnished considerable funds for communications, transportation, and military projects. In addition, extraordinary financial assistance was given to repair storm and flood damange. On the whole, substantially more you was returned to the Ryukyus than was taken in the form.of national taxes. 7. FOREIGN TRADE The imports of the Ryukyu Islands consistently exceeded exports prior to the war. A visible trade deficit of about $3 million generally 13 prevailed, except in l9h0, when commodity exports and imports were nearly in balance, at a total trade level of $28 million. The unusual foreign trade activity in 19h0 presumably reflected Japanese mobilization for war. Expressed in current price levels, the trade deficit was at least $5 million. The adverse trade balance was made up by the remittances from.Ryukyuans abroad and various expenditures made in the Ryukyu Islands by the Japanese Government. The main items of import were manufactured goods and rice, while sugar, silk, katsuobushi, and phosphates constituted the major export items. Accurate statistics relative to foreign trade are not available since the Ryukyu Islands were an integral part of Japan. The data presented in the following table, indicating the value of imports and.exports, are the approximate trade pattern. The peak year l9h0 is included to give an indication of potential trade. TABLE I PREVAR VALUE OF FOREIGN TRADE Imports Rice Wheat Soybeans Tea Fertilizer POL Manufactured goods and Experts miscellaneous Total imports Sugar and molasses Silk Katsuobushi Li quor Livestock Panama hats Phosphates Mi scellaneous Total exports Trade deficit Less - Apparent Japanese Government subsidy Tbtal t NOTE: Figures for 19h0 reflect volume achieved under pressures of Japanese Remittances from.abroad rade volume mobilisation activities. In Us Se Dollars Estimated Annual Average 1930-1939 3 2,700,000 300,000 500,000 350,000 800,000 350,000 6,000,000 $11.900,000 8 4,500,000 1,300,000 800,000 200,000 200,000 200,000 400,000 400,000 $ 6.009.900 3 3,000,000 h50.000 2 0 000 $19.9001900 Estimated 1950 3 3,h98.255 350,000 710,000 376,300 796,590 800,000 __121122§ZZ 1A 822 8 6,656,107 1,129,125 #00,855 921,h17 762,975 360,989 13h,039 ..JhflE§LdEfli W 8 169,361 169, 361 O ============ QZBIQZOIZQE c H A P 'r E 3 III RYUKYUAN ECONOMY, 191.6 1. MISSICN OF MILITAEU GOVERNMMT To prevent civilians from interfering with military Operations, to discharge the obligations imposed by international law with regard to treatment of civilian pepulations, and consequently to take whatever measures were necessary to preserve order and to prevent unrest and remediable hardship -- this was the often re-stated mission of Military Government since the inception of the Okinawan campaign. Naturally, as circumstances changed, the emphasis and scape of Military Government has been subject to reinterpretation. In the combat stages Military Government concentrated upon enabling the civilians to survive under conditions which were frequently most adverse. During the period when Okinawa was being deve10ped into a powerful base of Operations against Japan, Military Government endeavored speedily to transplant the population into the Okinawan hinterland and to adjust the people to new and greatly restricted ways of life. With the cessation of hostilities, the vast curtailment of the military development of Okinawa , and the consequent reduction in military personnel, it became feasible and even imperative for Military Government actively and materially to encourage the rehabilitation of the Ryukyus socially, economically, and politically. All early efforts toward rehabilitation, however, were conditioned by uncertainty with regard to the future status of the wukyus and the willingness of the United States government to underwrite a reconstruction program. l6 2. PEOPLE or THE mmsl In 191.6 the pepulation under the control of Military Government, Ryukyu Islands, was approximately h01,500 in the Okinawa group, 105,000 in the Southern Ryukyus, 226,500 in the Northern Byukyus, and 2,500 in the Daitos. With regard to the population of the Okinawa group itself, there were two factors'of particular significance to Military Government. First, 1.0% of the pOpulation were children of pro-school or elementary school age (14.5); as a result of emigration and war, only 7.2% or 29,000 were sales of 21-50, the age group of most importance for labor, with 50- year old men twice as numerous as 21-year olds. Second, at least two- thirds of the able-bodied males are unsldlled agricultural workers, skilled and professional classes being in a decided minority. The Okinawan peeple from the very beginning proved unexpectedly and gratifyingly willing to cooperate and indisposed to Oppose American policies. There have been no proven and few suspected cases of sabotage or obstructionism. There have been few cases in Military Government controlled areas of aid and sympathy for the Japanese. There has been, on the other hand, every evidence of complete willingness and even eagerness of the Okinawans to work in conformity with American policy for the relief, control, and rehabilitation of the Okinawa pepulation. The Okinawans have proved them- selved a tough and resilient people under the most trying of war circum- stances, trustworthy and ungrudging in their performance of duties assigned to them by a conquering force, and cheerful in undertaking the reconstruction of a deeolated society. llnformtion about the "People of the Ryukyus" was obtained by direct interviews with the Director of the Department of Programs and Statistics, United States Civil Administration of the Ryukyus, during the year 1951-1952. 17 The attitude and characteristics of the Okinawans, which have in great measure conditioned all Military Government operations, are subject to complex analytical study. History shows that the Okinawans are but a few independent people with a thousand years' documentary record, the traditions of an oriental state in microcosmnwith their own dynasties of kings, flourishing trade and diplomatic relations with the rest of the Orient, and.an indigeneous and distinctive culture which their neighbors admired and appreciated. Although the island was highly Japanized after it became an imperial prefecture in 1879, it retained local pride and flavor. Politically, the Okinawans were accustomed to managing their local administration with supervision of the Japanese only at the pre- fectural level. Economically, they were fairly prosperous and in one very important respect far better Off than the rest of the Japanese imperial subjects - thewaere independent Operators, not tenant farmers or factory workers; no more than 10% of the pOpulation (as compared with hbz in Japan proper) were tenant farmers and only a few thousand persons were paid laborers. Socially, they had a well-adjusted family system, which was conspicuously free from.consciousness; there were no extremes of wealth and poverty, Of privilege and Oppression. In the course of many centuries the Okinawans had developed a non-hurried sort of rural or semi-urban life, the families living in substantially built homes and sheltered home compounds, being possessed ofaaconsiderable accumulation of furnishings and.tools, producing for themselves or in their communities the large part of their requirements Of food and clothing and building materials, leading a primitive or depressed but - by oriental standards at least - a pleasant and comfortable life. Practically all persons under forty had received six to eight grades of elementary school education, though probably 18 no more than five per cent had gone beyond. Medical facilities were adequate and health and sanitary conditions, for an oriental, were re- markably good. Communications were well developed and the people were surprisingly well traveled. In brief, the people of Okinawa enjoyed a level of life comparable to that of a prosperous rural community in any civilised country. When they became charges of Military Government they had lost everything they had ever possessed, and the problem Of restoring them even to an approximation of their former way of life has been one of the first magnitude not only because their standard of living was rela- tively high - certainly higher than that of the average farmer in Japan -- but also because there is no undestroyed hinterland or reserve upon which the people can draw for their own reconstruction. Dislocation of civilian life on Okinawa as a result of the war was all but complete. At least seventy-five per cent of the pOpulation was removed for a period of some months even from the area of its original domicile, and very few of the rest remained continuously in their own homes. Ninety per cent of the homes and buildings of the island were destroyed altogether and many of the others were badly damaged. Fields were withdrawn from cultivation and farmers, when they did return to the land, most comonly worked land which did not belong to them. As a con- servative estimate, ninety per cent of all household goods were destroyed. In the process of being bombed, refugeeing, and re-refugeeing, the civilians lost practically all of their belongings except those which they could carry on their heads, on their backs, or in their hands, and such items frequently consisted of food and other expendables. Political and governmental organization ceased to exist. Social and comunity organisation Operated only in rudimentary form and on an emergency basis. “I 19 The disruption was islandrwide and months-sustained. It was true not only of the southern third of the island, over which the American forces passed in strength, and the northern third, where few military forces were deployed, but refugee civilians poured in and overwhelmed the origi- nal pOpulation. The disruption of civilian life went through two overlapping stages; first, the period of confused civilian movement consequent upon the war and refugeeing and civilian collection into guarded camps, and second, the period of mass movements from.one area to another occasioned by deveIOp- ment of Okinawa into a military base and the necessity of clearing great tracts of land of civilian occupants. The result was quite naturally that the concern of Military Government was to meet the emergencies of the day, to keep the civilians alive and ambulatory, to provide step-gap solutions to problems of shelter and food and.water and sanitation, in anticipation of the prospect that tomorrow all would be to do again. The end of hostilities and the vast retrenchments ‘with regard.to the base develOpment plan made it possible to undertake a long-range program.of rehabilitation of Okinawa involving return of the civilians to their home areas. Resettlement of civilians meant movement of the persons and their belongings by truck, about twenty persons and their possessions per 2% ton truck, frequently fifty truck loads per day. Advance parties of male workers were sent into the area a week or so before the families moved in: a beginning was.made to clear the area of rubble, standing buildings were re- paired, new buildings were started, and tents‘were pitched. Okinawans themselves managed the details of the resettlement, determining the location and layout of the new settlements, the rate and.timing of resettlement of 20 families, the allocation of land for fanning purposes, the establishment of commity projects such as schools, labor pools, administrative offices, and so on. In general, former village sites were selected, or areas as close as possible to former village sites, availability of water, accessibility by main road, and protection from typhoon winds being major considerations. Provision was made for persons returning to their home areas but not actually to their home villages so that they, too, had a share in the available housing and land. During the year 191,6, civilians from the Marianas and other former Japanese undated islands, other Ryukyus, Taiwan, and Japan were repatriated to Okinawa and resettled, whenever possible, in or near their former muras. These repatriates were brought to Okinawa on naval vessels, accomodated temporarily at a former CB camp, and resettled from there at a rate of as high as 3,000 persons in two-day periods, the program being managed almost entirely by an Okinawan staff. 3. mousml Any installation bearing a resemblance to a factory was a primary target for American attacks. Marv of the handicraft industries had been carried on in homes. These, too, were destroyed along with the equip-.- msnt such as looms. The aim Of Military Government was and is to establish, revive or expand industries which would provide as many of Okinawa's basis needs as possible. This was greatly hampered for many months by the lack of capital equipment, the concentration of peOple in areas unsuited to the llnformtion about "Industry" in the Ryukvu Islands in l9h6 was ob- tained by direct interviews with the Director of the Department Of Comoros and Industry, United States Civil Administration of the Ryulwus, during the year 1951-1952. 21 development of industries, the lack of freedom of movement for security reasons, and the unavailability of buildings and equipment until no longer needed by the armed forces. It was not until July, 191.5, that any concerted attention was given to industry. In early-established camps small activities had sprung up to meet some urgent needs. Laundries and sewing projects had been started, the laundries to take care of the GI and the sewing projects to make clothes for the refugees. As much effort went into the starting of such activities as into the establishment of a major industry in the States. The reason being the extraordinary difficulty of doing even the most simple thing under combat conditions. However, very soon wooden shoes were being made, as well as other items necessary in daily life: rope, baskets, mats, clothespins, rice mills, simple metal products, and a little salt and charcoal. By September, 1945, tile, bricks and school furniture were being made on a small scale. Early effort at rehabilitating any industry involved practically every phase of Military Government. Since there were no records, information had to be obtained from widely scattered areas, depending upon where one could find an individual who knew something about the subject. This was further complicated by the language barrier. Some of the subjects were of a technical nature beyond the vocabulary or experience of the interpreters. Once information was Obtained, men already skilled had to be gotten to- gether. In many cases, release of the areas suitable for industries had to be obtained from the military. Once this was accomplished, the workers and their families had to be settled, with .11 the problems attendant upon providing living quarters and food. Tools and equipment had to be obtained by salvaging from native and military sources. The histories of some s 'f' :I fits-e n .11 w '4 afi.“ “no. a .«e. '9- .m. a" so. ’0" a“ 22 industries such as the tile, pottery, and mat—making read like a record of Military Government activities. The industry representative on the Okinawan Advisory Council had, by Novemsr, 191.5, built up an organization of the best experts available, gathered considerable data and made recommendations as to rehabilitation of industries. These included: textiles (banana fiber), dyes (indigo), native cement, wood products (gets, furniture, looms), mat-weaving, metal products, chemical products, lacquerware. By June, 191.6, many of these activities were producing sizeable quantities of products. They were equipped with tools, instruments and equipment from decomissioned units of both Army and Navy. At this date nothing had been imported directly for Okinawan industry. While there were any individual blacksmith shOps throughout Okinawa, two major metal pro- ducts factories were established using equipment brought to the island for war purposes. These factories can manufacture anything from a gear to an agriculture implement. They have been turning the materials of war into plows. Raw materials were entirely salvage scrap metal from planes, tanks, jeeps, trucks, boats, tin cans, and shells. Two major wood products factories have been established for the purpose of turning out looms, and benches and furniture for both public buildings and homes. Great emphasis was placed on the projects which would supply housing materials. One of these has been tile, both clay and cement. The former kind has been produced in the greater quantity, since adequate quantities of count for the other are still lacking. In late 191.6 preliminary plans had been made to import cement from Taiwan or to bring a cement factory to Okinawa should investigation reveal that the prOper raw materials are in the Byukyus for cement manufacture. 23 At this period five clay tile factories were Operating with expansion possibilities and additional ones being built. While a tile roof is more expensive initially, it lasts longer. Furthermore, the amount of thatch available for roofing is limited. 50, tile or some other material mst be used. The mat weaving industry was given high priority because in the Orient mats are slept on. So many had been destroyed that the number manufactured found a large demand by the people. The manufacture of pottery was considered important because most household equipment had been destroyed. Fortunately, the ovens used for pottery making were practically undamaged, so that as soon as release was obtained for the area, production started. Salt was formerly manufactured in large quantities on Okinawa. Its manufacture has been resumed, but the process is expensive because of the large amount of firewood required. Other processed foods, such as shoyu, miso, and tea, are now being produced. In 1946 the only fabrics that could be made on Okinawa were those from banana fiber and from silk. Banana fiber can only be used for sumer clothes and can be made only in small quantities because the looms necessary for its manufacture were destroyed. Silk was not produced in any quantity at this period due to the scarcity of silkworms and looms. Okinawans are highly skilled in weaving panama hats and formerly exported them to the United States in large quantities. Native handicraft is offered for sale to the armed forces through military Post Exchanges and Ship's Services. Beautifully woven cigarette cases, handbags, mats, other woven products and pottery offer a possibility for future exports. Sale , to the military was not allowed until late 191.6 because all productive effort and materials were needed to provide for the basic needs of the Zh Okinawans. The raw materials used were limited strictly to those that were noncritical. At this 1946 date, sugar manufacture, the major industry before the occupation, had not been revived on any large scale. The policy of Military Government was to produce in Okinawa only that amount of sugar necessary for local needs. Since the large sugar plants were destroyed, only the small Old-fashioned ones were available for use. The resumption of a monetary economy was a great incentive to production. The needs of the people were so large that the demand far exceeded the supply. Distribution channels were the mura or rural community stores. However, some products such as those for construction purposes were sold direct to the Okinawan Civilian Administration, since housing was a governs ment prOgram. Native industrial enterprises were organized in the form of individual ownerships, co0perativs associations, partnerships, or corporations. In the case of the major metal and wood products factories and a stone quarry, it was determined that they should be Operated by the Department of Industry until such time as private ownership was justified.- In the northern Ryukyus, misc, fishdrying, and sake plants were put into Operation. The famous pongee of O-Shima was not manufactured in this 19h6 period because of the lack of raw silk, which originally came from.Japan. However, silkworms were being bred in order that the pongee may again be woven. Ship-building was resumed on a small scale, but was hampered'by a lack of lumber and other materials. In the southern Ryukyus, ship-building and fishing processing are two important industries that were reestablished. As in the case of all the 25 Ryukyus, materials were and are urgently needed. The raw materials for weaving, a substantial pre-war industry, came mostly from Taiwan. 1.. comm-“(cal until May, l9h6, commerce as it is known in a civilized community was practically non-existent in the Okinawa Gunto. The disaster relief program.of supplying minimum.humanitarian needs required no complicated system.of wholesales, retailers, credits, import-export balances and prices. There was only a certain amount of food and other necessities of life to distribute. This was done on a per capita basis for food and on a need basis for the other items which consisted mainly of clothes. On Okinawa ration boards were set up to serve the population. They 'were placed under the jurisdiction of the Okinawans with supervision of Military Government. Since under the Japanese there had long been rationing, this method of distribution offered no great problem. At first, transpor- tation of goods was mostly by trucks driven by Americans, but as quickly as possible native drivers were found or trained to handle even this aspect of distribution. In December, l9h5, anticipating the time when all produce, both local and imported, would be sold, Military Government District Commanders were directed to convert the existing ration points into stores. In some cases this meant little change, but in others it meant consolidating and re- organizing into more efficient units. Since the population was in a constant state of resettlement, there were steady reduction in the set-up 1.Information about "Comerce" in the Byukyu Islands in 191.6 was obtained by direct interviews with the Director of the Department of Commerce and Industry, United States Civil Administration of the Ryukyus, during the. year 1951-1952. 26 in the North and expansion in the South. At the same time that the order went out concerning the stores, a chit system was put into effect whereby all those who worked received one and a half rations. In addition, a new rationing method was introduced. It was designed to supply as balanced a diet as practical considering the supplies actually on hand, many Of which were surplus GI rations. Its genesis was a study by the Military Government Public Health Department which showed wide-spread malnutrition among the Okinawans. Point values for all foods were determined on a nutritional basis and the information promflgated to the whole populace. While more complicated than rationing on purely a caloric basis, this system was used without great difficulty. It gave people a better diet, but the lack of certain classes of food from time to time kept it from operating perfectly. As the pattern of resettlement became clear, it was found that seven major depots could handle the wholesaling Of supplies. By June, 19%, these were being Operated 100% by the Okinawans. After that data, Military Govern- ment had only two main depots from which to issue supplies. The Okinawan Department of Commerce sent its trucks to those depots and from there on distribution was solely in the hands of the natives. From the Okinawan depots, the food was transported to more stores by truck, native cart, or by hand. Special efforts were made to improve the ration system so that it was uniform throughout the island. This was impeded by the district method of Operation. Since dissolution of districts, one system was island-wide. Each family had a ration card, a duplicate Of which was kept at the store. Entries were made with each sale. Each store kept records sf all trans- actions and these records were available for inspection by Military 27 Government at any time. With the resumption Of the monetary economy, all commodities continued to be strictly rationed. In the case of local products, the producer, whether a cooperative agricultural association, or an individual industry, acted as wholesaler. For imported goods, however, Military Government acted as wholesaler, since there was no other source for such commodities. Retail stores in the villages and towns were Operated‘by and for the profit Of the local mura government, in order to provide a source of ready revenue until such time as other revenue sources were develOped. It was anticipated that eventual ownership would revert to private hands, as in predwar Okinawa, through the sale of the stores or shares in them.to individuals. Retail stores served as commercial outlets for all products, whether imported or locally produced. The only exception was fish. The perishable nature of this commodity made it necessary to arrange that the Fisheries Association distribute the fish to the consumer at the direction of the mura store. 5. LABOR]- The Military Government mission and plan comprehanded the providing of labor for the military forces. Local Iabor was to be, in fact, the principal local resource usable by the military. In the period of economic disruption caused by the battle, military employment was expected to buttress the local economy against complete collapse and to provide one basis for its rehabilitation. 1Information about "Labor" in the Ryukyu Islands in l9h6 was Obtained by direct interviews with the Director of the Department Of Commerce and Industry, United States Civil Administration of the Ryukyus, dnrhmg the M t V: Ie' 28 Four factors conspired to prevent full realization of the estimated labor potential on Okinawa: (1) The percentage of able-bodied males in the total pOpulation was only about nine per cent; (2) The percentage Of skilled and semi-skilled workers was small; (3) During the period April, 19h5, through March, 19h6, the labor supply was removed a considerable distance from.the heaviest potential employing units, and even though resettlement proceeded as rapidly as possible after January, 19h6, there were still but few laborers living within walking distance of employing units; and (A) The resettlement and rehabilitation program consumed labor in competition with military needs. 6. FINANCEI The currency for the Ryukyus has been that Of the mainland of Japan both before and since the occupation. At the time Of the invasion of Okinawa, notes of the Bank of Japan, the Bank of Taiwan, and the Bank of Chosen were legal'tender. These continued to be recognized as such and at the time of the invasion were declared legal tender on a 1-for-1 basis with American Type B Military yen. Japanese "military'yen" was declared ggt legal tender. However, none ever appeared in the Ryukyus, undoubtedly because these islands were an integral part of the Japanese Empire. Prior to the invasion, Military Government was appointed custodian and funding agency for the armed forces in the Okinawan theater. In this capacity it was authorized to supply not only the needs of the armed fOrces but also those Of Military Government. The Military Government 1Information about "Finance" problems in the Ryukyu Islands in l9h6 was obtained by direct interviews with the Director and staff members of the Department Of Finance, United States Civil Administration Of the Ryukyus, during the year 1951-1952. .e: ile- u‘ 9" L. 29 teams who came ashore with the first waves of combat brought small quantities Of currency in case it might be needed. This proved unnec- essary as there were no payments involved. The Currency Supply Officer arrived with considerable Type B Military Yen on 15 April, l9h5, during the campaign. The nearly total destruction Of buildings made storage a problem. Before removal to an improvised vault at Military Government Headquarters, the currency was placed on the beach where it excited a considerable furor because all the boxes were labelled "Toy Horse" in an effort to conceal the nature of the shipment. Such a provocative label in the midst Of battle only served to give rise to rumors that Military Government was bringing in toys for enemies when shipping space was insufficient to bring in such vital supplies as ammunition and food. No Type B Military yen could get into the hands of Okinawans legitimately until 1 May 1946. This was helpful in preventing black market Operations between natives and the armed forces. Imperial yen continued to circulate among the Okinawans, but only on a relatively minor scale. There was little need for money because the minimum.necessities were available in such small quantities that distribution was entirely on a need basis. In the small outlying islands, as Kume and Iheya, economies were much less disrupted so that money continued to be in use. In contrast to Okinawa, there was an uninterrupted monetary economy in.the northern and southern Ryukyus. The northern Ryukyus (O—Shima Gun) were an integral part Of Japan until 3 February 19h6. The Branch Administration followed closely the directives and policies dictated by Tokyo. As a result, the economy resembled that Of the Empire with all the inflation that had taken place there. The southern Ryukyus were always closely tied to the economy 30 of Taiwan so that they reflected conditions there. The limitation of goods brought on the same inflationary picture as in the northern Ryukyus. 7. RESUMPTION OF MONETARY ECONOMY]- During the early stages Of the occupation, it was taken for granted by many that wages would be paid and that something like a normal economy would Operate despite the fact that a war was going on. The course of Operations proved to be such that Military Government activities continued to be confined largely to disaster relief until 1 May 1946. However, as early'as May, 19h5, plans were being considered as to how to Operate an economy on Okinawa and in the Ryukyus. One island in the Kerama Retto group was used as an experimental laboratory. This continued until October, l9h5, when it was decided to resume the method of disaster relief being used throughout Okinawa. During that time, valuable data was obtained concerning the accept- ability of Type B Military yen, wage and price levels prior to American occupation, labor classifications, rationing, relief and other economic matters. Planning for a resumption Of money economy on Okinawa was the responsibility Of Military Government and a subcommittee of the Okinawa Advisory Council. The Economic Committee consisted Of members Of‘thO Council representing all economic fields. It compiled data, discussed and suggested plans and in general worked closely with Military Government. As a result a plan was submitted to CinCPac in January, l9h6, and approved in February. 1Information about the "Resumption Of Monetary Economy" in the Ryukyu Islands was obtained by direct interviews with the Director and staff members of the Department of Finance, United States Civil Administration. of the Ryukyus, during the year 1951-1952. 31 Once the approval was received, every effort was bent toward making it an actuality. ‘With the creation of governmental departments in March and April, 19h6, culminating in the appointment Of the Chiji on 2h April, the Economic Committee evolved until its members consisted of the Chiji as chairman and the heads of the following departments: Finance, Labor, Commerce, Industry, Fisheries, General Affairs, Agriculture, and Public Works. This committee became responsible for putting the detailed plans into Operation. Before inaugurating any plan, it was believed necessary to complete a substantial resettlement of the native pOpulation from the northern to the southern parts of the island, to reestablish certain basic industries and to cultivate most Of the land available to the native populace, in order to assure the presence Of at least a minimum of exchangeable goods and services. In large measure these conditions were met by May, 19A6. Premature restoration'would only have accentuated any tendencies toward inflation and black markets. During the first month, May, time records for pay purposes were kept. With the payment Of the first wages on 1 June, more stores started selling merchandise instead of rationing it free. Despite the civilian adminis- tration being new and still in the process of organization, Military Govern- ment being transferred from Navy to Army, and Navy personnel being reduced drastically, the return to a monetary economy was accomplished with a minimum.of confusion. CHAPTER N NATURAL RESOURCES OF THE RYUKYUAN ECONOMY, 1945-19511 1. AGRICULTURE Agriculture has continued to be the principal industry of the Ryukyu Islands in the post-war are. This does not mean that it was affected to a lesser degree than other industries by war damage and post-war dislocation. On the contrary, the adverse economic conditions which have existed in the Ryukyus since 1945 can be attributed primarily to wartime destruction and attrition and very severe dislocation Of agriculture in the post-war period. After the war, most Of the land held by the military forces in the outlying guntos was released for cultivation. Some of this land could not be cultivated because of permanent alterations which had been made by the Japanese Army during the war. Practically all of the alien owned land in Miyako and Yaeyama Guntos and a portion of this type of land in other guntos continued to remain idle. In general, no alien owned land has been effectively'cultivated; farmers have been reluctant to make necessary improvements because of their inability to Obtain titles to this land or even assurance of its use for a long period. On Okinawa the agricultural situation has been much more severe than in other guntos. A11 growing crOps and practically all agricultural facilities in the southern part Of the island had been destroyed when 1Statistical information presented in this chapter about the natural resources of the Ryukyuan economy, 1945-1951, was Obtained from Headquarters, United States Civil Administration Of the Ryukyu Islands. Eyukyu Islands Economic Statistics, Department Of Programs and Statistics, Bulletin Number 10, January-March 1951. 33 hostilities ended. Nearly all Of the inhabitants of this region were evacuated to the northern part Of the island. In early 1946 they were restricted from erecting dwellings within one mile or military billeting areas housing 100 or more personnel. This restriction was removed in late 1949. Actual cultivation of land in the Ryukyus, especially in the post-war era, has depended upon other factors in addition to the suitability Of the soil. The custom of living in.villages rather than on or adjacent to the farm.plots results in ineffective use of some fertile land. Since many farmers engage in fishing, proximity to the coast influences their choice in land cultivation. In Yaeyama Gunto entire villages and the surrounding land were deserted before and during the war because Of malaria. Some of the conditions described above have been corrected to the extent that circumstances would permit. In a few cases, notably the re- settlement Of’non-alien owned.land.in.!aeyama Gunto, accomplishments to date have been below earlier expectations. The notable decline in land cultivation in this post-war period cannot be attributed entirely tO the conditions mentioned above, nor can the additional factor Of land used by military establishments, which amounted to only 8,000 acres taken out of actual cultivation in 1951, account for this decrease in land use. It must be concluded that the availability of low priced import foods tOgether with the purchasing power generated by income received from Occupation sources has had an adverse effect upon land utilization and domestic food production. To remedy this situation, imported staple food is now priced into the domestic market at the Official.exchange rate of I120 to $1. Construction of dams to impound irrigation water was started in 1947. The sum of ¥89 million was made available for land improvement in 1951. 34 Three dams were completed, capable of furnishing water for 274 acres of land. Thirteen other dams were under construction in 1951. Eleven additional projects have been approved for construction in 1952. Eighty land improvements projects have been prOposed by native agencies, 60 of which would be dams to impound irrigation water. There is evidence that a pronounced change in the cropping pattern has taken place since the war in that production has shifted from.sugar cans to staple foods. This proportional change is attributed to a great decrease in sugar acreage rather than any significant increase in planted acreage Of staple foods. Quite naturally, sugar cane land is being used for the production of upland food crops, principally sweet potatoes. Like- wise, some land which was formerly used for these food crOps is now idle. Ryukyuans will return to the prewar crOpping pattern if the export market for sugar is maintained. This is evidenced by the rapid increase in sugar cane cultivation which has occurred in the past two years. In 1945 the number of meat animals (cattle, hogs and goats) had de- clined to 30% and horses to 18% of the 1940 population. The number of meat animals in 1951 had reached 77% of the 1940 level. This progress can be attributed to a gradual increase in feed, principally sweet potatoes and the importation Of a small number Of hogs, goats, horses, and cattle for'breeding purposes. In addition, approximately 1500 United States Cavalry remounts for work purposes were received. In 1951 horse numbers were 38% of the 1940 population. During the early years Of'the Occupation commercial fertilizers were not available. Because of the depletion Of livestock the supply Of organic fertilizers has been severly reduced. The maximum.use of these types of fertilizer and the prOper use Of commercial fertilizers are being r‘ 35 encouraged through extension service educational programs. A careful survey of fertilizer requirements by type and quantity has been made for all principal agricultural crOps. Based on this investigation the present total requirements per year in terms of contained plant nutrients are: 4000 metric tons of Nitrogen (100% N), 3000 metric tons of phosphate (100% P2 05), and 3000 metric tons Of potash (100% Kg 0). Three new permanent type warehouses for the bulk storage of fertilizer were com- pleted in early 1951. The use Of agricultural chemicals to control insects and diseases has been an established practice in advanced countries. Because of the mild climate and continuous crOpping this problem is much more serious in the Ryukyus than in comparable areas in colder climates. These insec- ticides and fungicides have never been produced in the Ryukyus and conse- quently must be imported. Since 1949 these items have been imported in type and quantities to meet the needs of the Ryukyus. Entomologists from. the university Of Hawaii and U. S. Department of Army conducted detailed surveys Of the sweet potato weevil problem.in all parts of the Ryukyus. As a result of these studies, control measures have been instigated and life history studies and insecticide tests are planned to find additional control measures. In some areas of the Ryukyus sweet potato virus has caused a serious decrease in sweet potato production during the recent seasons. Preper quarantine measures for those areas have been put into effect and pathologists from.Japan have assisted in the eradication of this disease. It is expected that this problem will become much less serious as sugar cane production and consequent crOp rotation.with sweet potatoes are increased. 36 The use of improved.varieties of seed is an important means of increas- ing yields and quality of agricultural products. The importation of seed was one Of the first steps taken to rehabilitate agricultural production. Under the Fiscal Year 1949-50-51 GARIOA (Government And Relief In Occupied Areas) program, adequate quantities of white potato, vegetable, and small grain seed to meet current agricultural needs were imported. Post-war recovering of sericulture has been slow because of the total loss of egg-producing establishments and breeding stock. In 1950 three Ryukyuan.technicians were sent to Japan to study improved methods of production, secure breeding stock, and arrange tentative export contracts. Later three representatives of the Japanese sericulture industry surveyed Ryukyuan resources and assisted with the establishment of production facilities. Tentative arrangements have been made to secure additional Japanese seri- culture technicians to advise Ryukyuan sericulturists. 2. FISHERIES By the end of 1943 the fish catch from.Ryukyuan waters had fallen to one-half of prewar production. At the end of the war all land based facilities on Okinawa and the entire fishing fleet with the exception of a few small vessels had been destroyed or removed. The damage in other islands was less severe. Even though the fishing fleet was reduced and all facilities suffered from.1ack Of maintenance, the boatyards in these islands were not destroyed. Although reliable data on the fish catch during 1945-47 is unavailable, it can be assumed that the annual fish catch did not exceed 6,000 metric tons considering the meager facilities and petroleum, Oil, and lubricants available. The fish catch for 1948-49-50-51 was 8,000, 11,000, 14,000, and 18,000 metric tons respectively. 1!. 1 «v- . A) w.‘ L: ’I I ‘l ‘3- ‘ l 7' . n': x. M A 1. 37 While some progress was made in restoring fishing boat capacity and establishing four'boat yards on Okinawa with the aid of Army surplus equip- ment and materials, significant rehabilitation did not begin until 1950. During 1949 and 1950 approximately $1,500,000 in GARIOA assistance was provided for the fishing industry. These funds have been used to construct 65 new fishing boats ranging in size from 15 to 150 gross tons, to purchase fishing gear and materials for other fishing boats, to expand and improve boatyards and other land based facilities, and to purchase equipment for five new ice plants. Further assistance has been provided from.Army surplus equipment and construction materials purchased under other GARIOA projects. Until the new fishing boats referred to above were completed, 200 Army craft, totaling approximately h,000 gross tons, were loaned to Okinawan fishermen. The maximum.number of these craft, available at any given time, was equivalent to no more than 1,000 tons of fishing vessel capacity. While Ryukyuan boatyards are not extensively equipped, they are adequate both from the standpoint of craftsmanship and facilities to meet the needs of fishing vessels up to 150 gross tons capacity. The largest yard is located at Toguchi, Okinawa, on the site of a former Japanese and later United States Naval installation. During the winter of l9h9-50, eight 30-ton vessels and thirteen lS-ton vessels were built simultaneously in this yard. An interesting feature of this yard is a small foundry, fashioned from salvaged materials and capable of casting most small vessel fittings and most hot bulb diesel engine parts up to 25 horsepower. The port of Naha, the most important harbor in the Ryukyus, is used chiefly for handling military vessels and cargo, and at present is closed 38 to fishing vessels. When the improvements now underway are completed at Tomari, this port will be capable of accommodating any of the present fishing fleet at dock side. Taguchi, the second largest port in Okinawa, is too distant from.major population centers to be considered as an adequate fishing port. All other harbors listed above lack one or more of the essential characteristics of depth, protection, and dock side facilities which are essential for a first class fishing port. Very little progress has been made in improving fishing techniques. One of the factors limiting the catch of skipjack, the principal Ryukyuan fish, is a shortage of bait. Angling is the only method used for catching this type of fish in the Ryukyus. The purse seine technique for catching skipjack has been used successfully by Japanese fishermen. Tentative plans have been made to have an experienced crew come from.Japan, with three boats and gear, to instruct Ryukyuan fishermen. Representatives of this Kyushu fishing group have visited the Ryukyus to make a preliminary survey. As yet no agreement with the local fishing industry has been reached for the beginning of this activity. Two Japanese experts are conducting a survey of Ryukyuan resources to determine their suitability for sponge and pearl culture. They are also investigating precious coral fishing which was formerly carried on in the Amami Oshima area. Thus far the find- ings of these technicians have been encouraging. With the exception of a small establishment in Amami Gunto, there are no fisheries experimental stations, or laboratories in the Ryukyu Islands. The combined capacities of 65 new boats totaling 2&45 gross tons, equivalent to 36% of the entire Ryukyuan powered fishing fleet, were constructed by Civil Administration (formerly Military Government) and turned over to Ryukyuans equipped for fishing. These new vessels were sold 39 to fishermen as replacements for the obsolete Army craft which had been used temporarily as a fishing fleet. An examination of the record indicates that the results obtained thus far are below prewar accomplishments and are not commensurate with the considerable assistance which has been provided. Regardless of other responsible factors, until November 1950 a critical shortage of ice made an increase in fish catch impossible. During the peak fishing season of 1950, boats in Okinawa were required to wait as long as three weeks to obtain an allotment of ice for one short fishing trip while in the southern Ryukyus no ice was available. Ryukyuans report that the practice of dynamiting fish was engaged in frequently during the war and even in post- war years, hence the supply of fish in coastal waters has been limited. In prewar years, Japanese vessels did not depend on Ryukyu source for bait for offshore fishing Operations. Fishing vessels are often used for transportation and other purposes rather than for fishing. When no ice was available, or during an unseasonal period such actions were not inimical to the interest of fishing. Even with.an adequate supply of ice it is expected that this practice will continue to some extent as convenience of cargo and passenger movement among islands within gunto areas makes this activity very profitable and frequently necessary to move goods associated with fishing operations. Also some boats which were never intended to be used primarily for fish- ing are registered as fishing vessels because the ease of obtaining petroleum, oil, and lubricants for the fishing industry provides a more certain supply of these items. The 1951 fishing season began in March. This was the first post—war season in which a critical shortage of ice had not existed and adequate #0 gear of all types had been available. That this increase in availability of ice and fishing gear is contributing to the industry is evidenced by the fact that for the first time since the end of the war boats delivered fish to Okinawa from.the southern Ryukyus. Representatives of the fishing industry are confident that, allowing for the inadequate reporting system, the estimate of 18,000 metric tons was fully realized. 3. FORESTRY Subsequent to 1935 Japan's extended preparation for war placed great pressure on the forest resources of the Ryukyus, reaching a peak in the year 19h0. Although production sharply declined thereafter, the cut continued to exceed growth until the end of the war. Destruction directly attributed to battle is estimated to have completely removed the forest cover from.3,464 hectares of forest lands. Forest production reached a low point in l9h5-46 when transport was disrupted and inter-island trade was at a standstill. Thereafter the influx of repatriates and the return of inhabitants to war-devastated areas gave rise to a steadily increasing cut. With the lifting in 1950 of the "one-mile limit" building restriction, cutting reached a peak greatly in excess of any of the post-war years. The major problem from the beginning of the Occupation has been the necessity of conserving a critically inadequate forest resource in the face of an equally critical postwar requirement for contruction lumber and forest fuels. After the war, the Ryukyus were completely deprived of customary import sources of supply for construction purposes, throwing the full brunt of consumption on the indigenous resource. No substantial imp ports were received until 19h9, and the amounts imported were far less then the civilian requirement. Resultant deficits made enforcement of conservation a wellrnigh impossible task. The problem.was further hl complicated by the absence of an effective governmental forest adminis- trative organization and applicable forest laws to direct and control cutting. Decentralization effected under the Occupation resulted in weak provisional government forest sections staffed with inadequate personnel. While Japanese forest law technically remained in effect, it was practicably inapplicable, primarily due to the fact that it vested administrative authority with officials of the Japanese Ministry of Agriculture and Forestry, and the no-longer existent prefectural governments. Under these conditions, production of indigenous forest products continued in quantity greatly in excess of the sustained yield capacity of the forest resource, with the most accessible forest lands receiving the greatest abuse. The present situation with respect to Ryukyuan forest resources is set forth in the summary below. The species are predominatly hardwoods (85% of sub-tropical broadleaf species utilized for fuelwood, house frames, roofing poles, and railway ties). Approximately 15% of the total volume is softwood, almost all of which is Ryukyu pine (Pinus Luchuensis). The present forest volume of 7,261,000 cubic meters clearly reflects the heavy attrition 0f prewar and post-war years. This is borne out by a comparison with the volume currently available in Japanese forests. The volume on an average forest acre in Japan is 27.2 M3 as contrasted with a volume of lho8 M3 per average forest acre in the Ryukyus. Thus, there is available from the average forest acre in the Ryukyus only slightly more than half of the volume available from.the average forest acre in Japan where the forest resource is currently deemed to be incapable of meeting indigenous requirements. This situation is being further aggravated by a current cutting drain of 262,000 M3 annually which exceeds the estimated current annual growth of 108,915 M3 by 2.1. times. #2 Little emphasis was placed on the implementation of a forestry pregram under Military Government until early 1949. Since that time, the following measures have been taken: In February 1950, a centralized Ryukyu Forestry Agency was organized and staffed with the best available technical forester personnel. Administrative responsibility over 127,000 acres of former Japanese State Forest and Prefectural forest lands under the jurisdiction of the Custodian of Pr0perty and amounting to 26% of the total forest area of the Ryukyus has beent:ransferred to the Forestry Agency. A draft Ryukyu Forest Law applicable to the present political situation was promulgated 13 August 1951. This law is designed to control cutting and effect sound conservation practices. A program.of economic development and rehabilitation financed with Ryukyu Yen Budget funds has been underway since 1 April 1950. This program, which is being planned and implemented by the Forestry Agency, has thus far included: (1) operation of eleven forest nurseries, the seedlings from which have been used to carry out reforestation projects designed to restore the depleted growing stock; and (2) an access road and trail program, the prime objective of which is to increase production from. the inaccessible well-stocked forest land and to relieve the pressure of over-cutting on accessible forest lands. Also in progress under'the sponsorship for the Forestry Agency are: (1) a program of public education designed to improve cutting practices in private and community lands; (2) a program.of forest research which places emphasis on improvement of nursery and planting practices and.the improve- ment of ferest composition through the introduction of species of high economic value; and (3) a program of vocational and professional forestry training and education designed to fill the void of trained foresters created by postwar repatriation of Japanese technicians. #3 C H A P T E R V RIUKYUAN INDUSTRY AND PUBLIC SERVICES, 1945-1951 1. GmIERAL INDUSTRYl By the termination of hostilities in 1945 virtually all commercial and industrial establishments of any significance in the Ryukyu Islands were destroyed. It can be said that there did not exist anywhere in the four guntos an industrial establishment that did not require substantial rehabilitation. This destruction extended to the cottage-type industry through the loss of a high percentage of the homes where these industries existed. The usefulness of those escaping physical destruction was seriously impaired by obsolescence and poor maintenance during the war years. In addition to the loss of physical facilities a substantial portion of the skilled labor and management which had Operated these facilities had disappeared. The more significant industrial establishments were managed by Japanese who were repatriated subsequent to hostilities. Plans for the rehabilitation of such industry as existed in the Ryukyus before the war were delayed because of the unavoidable uncertainty with respect to the future status of the Ryukyus. Nevertheless, a start was made in 1945 to rehabilitate those industries and handicrafts which were essential to the physical well-being of the pe0p1e. Through 1948 the 1Information about "General Industry" in the Ryukyu Islands, 1945‘ 1951, was obtained by direct interviews with the Director and staff members of the Department of Commerce and Industry, United States Civil Administration of the Ryukyus, during the year 1951-52. 45 great majority of the materials made available for this purpose had their source in military surplus stocks. A good many machine tools and miscel- laneous metal working equipment were made available to the Ryukyuans. Despite the fact that this equipment was not designed for use in such a primitive econonw, the Ryukyuans did demonstrate remarkable ingenuity in putting it to practical use. The greatest source of raw materials was the tremendous quantities of s crap metal, both ferrous and non-ferrous, which resulted from the battle on Okinawa. There are now 160 small metal-working plants in Operation. One of the first industries revived was the lumber industry. Several sawmills which were imported and combined with hand tools from military surplus stocks were effective in reviving the woodworking industry to a considerable degree. In 1949 the efforts to restore the industrial potential in the Ry'ukyus was accelerated. Machinery and equipment for the native brick and tile industry were imported from Japan and this industry now has sufficient productive capacity to satisfy indigenous needs. In 1950 large quantities Of woodworking equipment were ordered from Japan. With this equipment installed and Operating, Ryukyuans are self-sufficient in the production of such wood products as wooden footwear and furniture. The rehabilitation of the Tsumugi silk industry was delayed because of Japanese restrictions on its import arising from Japan's stringent foreign exchange position. In July, 1950, however, Tsumugi silk was exempted from the high Japanese customs duties and plans were initiated at that time to revive the industry. Short term bank loans for the pur- chase of imported materials, long term loans for the restoration of small weaving plants, and technical assistance were provided. The results of these efforts, though discouraging at first, have shown marked improvement with the export of approximately $115,000 of Tsumugi cloth during the autumn of 1951. The principal impediment to the develOpment Of this export trade and the expansion of this industry continues to be the diffi- culty in travel of businessmen between Japan and.the Ryukyu Islands. The processing of applications for travel has heretofore required from.one to three months. Recently this procedure has been simplified but still is inconvenient for Tsumugi buyers who must come to Amami Gunto and select the cloth at its source. Very little has been accomplished in the reestablishment Of the Adamba hat weaving industry. There has been little effective foreign demand for this product. The two industrial alcohol plants which existed in Okinawa prior tO the war were completely destroyed and it is not contemplated that they will be reestablished. One salt plant of 5 tons daily capacity with equipment for evaporation and purification and numberous small salt making establishments are in operation. The output from these is adequate to meet all local require- ments for edible and industrial salt. Mining as well as industria1.activities were at a complete halt in 1945. All above-ground installations of the mining industry were completely destroyed. Through lack of maintenance and Operators, underground workings caved in. The problem.0f prOperty rights delayed early rehabilitation. The Kite Daito Jima phosphate mine was reactivated in 1947 in an effort to Obtain phosphate rock for sale to fertilizer producers in Japan. This action was taken under agreement to furnish Japan with phosphate rock in return for super-phosphate. Some 16,000 tons of ore were shipped to Japan; however, because of its poor quality (only 22% phosphorous pentoxide 47 and the high alumina-iron content of 20%) it was not satisfactory for the manufacture of super-phosphate in Japan and additional shipments have not been made. Mining Operations at Kits Daito Jima were suspended in August 1950. About 35,000 metric tons of phosphate rock were stockpiled on Kits Daito Jima at a convenient shipping point in anticipation of out-loading the material fOr Japan or elsewhere and approximately 30,000 metric tons are fairly accessible at the mine site. The labor and.sxpense of trans- porting the latter quantity from.mine site to shipping point, however, would be almost equivalent to that of an original mining Operation. During 1951 the machinery, equipment and construction materials, consisting of lumber, cement, galvanized roofing, etc., were removed from.Kita Daito Jima in slow stages because of generally unfavorable sea conditions and sold. The last lot representing USCAR's (United States Civil Administration of the Ryukyus) capital investment in the phosphate mining project was disposed of in November, 1951. ‘Within recent months, some interest in the purchase of Kite Daito Jima phosphate rock has develOped in Japan and Okinawa in spite of its known low quality for super-phosphate. Those interested believe it can be used to make a fused phosphate of high alkalinity and other desirable qualities by a method tested and developed successfully in the United States during WOrld war II. It is too early to predict that the present interest will result in action to enable dis- posal of the stock-piled 35,000 metric tons Of phosphate rock at Kita Daito Jima but efforts are being made and will continue for translation of this interest into favorable action. In 1948 the representatives of SOAP (Supreme Command Allied Powers) recommended that coal mines on Iromote Jima, Yaeyama Gunto, be exploited in an effort to obtain fuel from indigenous sources. Machinery and 48 equipment were ordered from.the United States early in 1949 and plans were made to reOpen mines in the area to produce a total of approximately 30,000 tons of coal per annum. During the past two years developmental work has continued on this project. One of the earlier Obstacles to increased pro- duction, the transportation of the coal from.the mine to the loading point, has been solved by the construction of a pier and a railroad to the pier. Under the provisions of Ordinance NO. 55 promulgated 26 November 1951, all owners of rights approved by the Japanese Government prior to military occupation of the Ryukyus by the United States are encouraged to apply for resumption of their former rights. Tentative applications have so far been received for operation of manganese mines in Amami-Oshima. Other tentative applications for original mining or prospecting rights for copper, sulphur, gold, iron and lead as well as manganese in.various locations of the Ryukyus have been received. All are being investigated for prompt action as to the wisdom of issuing mining and prospecting rights for some areas of apparently only marginal value even when all other factors are favorable. Prospective develOpers must be reasonably protected against over-Optimism.which would cause a waste of time and financial strength due to the uncertain or small commercial value of some known mineral deposits. 2. SUGAR INDUSTRYI The Ryukyuan sugar industry was destroyed during the war. All centrif- ugal plants and large black sugar mills were ruined. Practically all small 1Information about the "Sugar Industry" in the Ryukyu Islands, 1945-1951, was obtained by direct interviews with the Directors and staff members of the Department of Commerce and Industry, and the Department Of Agriculture and Forestry, United States Civil Administration of the Ryukyus, during the year 1951-1952. ' 49 mills disappeared or were dismantled. Sugar cane acreage in the 1945-1946 season was negligible. During the early years of the Occupation no definite policy was estab- lished.with respect to the sugar industry. In view of the uncertainty of the sugar market it was recommended that land be used to‘grow'food crops rather than to produce sugar cane. As a result, no assistance was provided for the rehabilitation of this industry until 1951. 'When Headquarters, Military Government was established in 1949, the recommendations of the Agricultural Mission to the Ryukyus, November 1949, were adopted as a policy. These recommendations were to neither encourage nor discourage the production of sugar cane, allowing the crop to be produced on its economic merits. In the absence of agricultural controls the Ryukyuan farmers have pro- vided the answer to this question. Sugar cane production has increased from a negligible figure in 1946 to 19,000 acres. In.the 1950-51 milling season, 7,500 acres were harvested with a production of 11,000 metric tons of black sugar. The number of small black sugar mills has reached 1,100. The production of sugar was accelerated by the decision of the Japanese Government in July, 1950, to exempt black sugar from import controls. Prior to this decision the illegal export market and the inflated local market were the incentives for black sugar production. The effect of the above decision has been to legalize and expand this heretofore illegal export trade. Thus, by August, 1950, the consideration of whether land should be used for sugar cane was a moot question. The real problem.faced at that time was how should this cane be processed: by the present small inefb ficient black sugar mills only; or by supplementing these mills with one or more large plants capable of producing centrifugal type sugars as well as black sugar. 50 In.February, 1951, GARIOA funds were made available for the construction Of one centrifugal sugar plant in southern Okinawa subject to the ability of Ryukyuan private enterprise to secure cash and other assets equivalent to 15% of the estimated total cost and to develop a plan of establishment which was financially and technically sound. The private promoters of this project, which included 16,000 farmers as majority stockholders, complied with these requirements, and equipment and buildings of two Hawaii sugar plants were purchased and transported to Okinawa to construct one plant of 750-ton (cane per*day) capacity. Construction of this plant has begun under the supervision of a Japanese contractor and the target date of complete erection of this plant is on or before 30 November, 1952, prior to the harvesting of the 1952-53 sugar season. The construction Of a large (ZOO—ton) black sugar plant, capable of producing centrifugal sugar, at Minami Daito will'be completed during the current sugar season. In the same manner as with the larger plant referred to above, this factory is being established and financed by Ryukyuan private enterprise, assisted only by a long term bank loan of i4,000,000. During 1950-51, a small amount of GARIOA assistance was provided for the purchase of equipment to improve the efficiency of existing black sugar mills. 3. meme AND AGRICULTURAL PROCBSINGI The only refrigeration and marine processing facilities which had not been removed or damsged.beyond repair at the end of hostilities were one small ice plant in Amami Gunto and a few katsuobushi factories in the 1Information about "Marine and Agricultural processing" in the Ryukyu Islands, 1945-1951, was Obtained by direct interviews with the Directors and staff members of the Department of Commerce and Industry, and the Department of Agriculture and Forestry, United States Civil Administration of the Ryukyus, during the year 1951-1952. 51 southern and northern islands. The four small canneries which Operated during the 1930's had been dismantled before the end of the war. NO land based facilities of these types existed on Okinawa in 1945. Because of the lack of equipment and building materials and the very reduced fish catch, no marine processing or refrigeration plants were reestablished during the early postwar years. In 1948 one l5-ton per day ice plant was constructed at Motobu, Okinawa from.surplus equipment received from the United States Navy. It was not until 1950 that signifb icant progress was made in the rehabilitation of these industries. As a result Of the GARIOA assistance provided in 1949-50 and the considerable amount of surplus equipment Obtained from.the United States Army, the following facilities were completed and put into Operation: six 15—ton per day ice plants at principal fishing ports throughout the Ryukyus, four large and.spproximately twelve small katsuobushi plants with facilities for other marine processing, and a few small fish paste and miscellaneous marine plants. An additional 15-ton per day ice capacity with provisions for subsequent freezing-cold storage facilities are being installed in one of these plants. Army excess equipment sufficient to meet a part of the requirements for 60 additional tons per day ice making capacity or cold storage space at existing ice plants has been sold.to Ryukyuan fishing interests. The large refrigeration plants at Naha will be made available to Ryukyuan private enterprise. The construction of this latter plant was partially financed with $1 million of 1949 GARIOA funds which had been appropriated for refrigeration for the Ryukyuan fishing industry. It was agreed.at the time these funds were transferred that this plant would be made available for fishing use as soon as other capacity was constructed 52 for Army requirements. When completed in the spring of 1952, the Naha plant had the following capacities: ice making, 30 tons per day; ice storage, 12,825 cubic feet; fish freezing, 27,788 cubic feet; and cold storage, 70,800 cubic feet. Exports of processed marine products since the end of the war have been negligible. With the very limited fish catch and.sxtremely high price no significant surpluses can be exported. Katsuobushi is the only exportable processed seafood produced since the end of the war, a small quantity of which was exported in 1950. However, because of the high price of locally processed katsuobushi, this product has recently come into the Ryukyus as an import from.Japan. In the case of other marine products, the results have been more encouraging. During 1951, exports of shells and kaijinso were $404,094 and $239,954 respectively. The facilities for*agricultural processing in prewar years consisted of four small canneries, ten alcoholic beverage plants, and the remainder as cottage-type industry establishments. In a food deficit area such as the Ryukyus the develOpment of these industries as a means of effective utilization of resources or maximum.food production is necessary. Because of the critical shortage of marine and agricultural raw materials, the lack of equipment, and the need for rehabilitation of basic resources, very little progress has been made in.the reestablishment and expansion of these industries. In early 1951, 23 small oil presses, 200 rice hulling and polishing machines, 25 small flour mills, noodle making equipment, tea processing machinery, equipment for two small soy sauce plants, and three sets of experimental canning equipment were received. Additional equipment for agricultural and marine processing as well as alcoholic beverages, tobacco products, confectioneries, soft drinks, 53 leather, and miscellaneous foods has been imported directly by Ryukyuan private enterprise with Ryukyuan Dollar Commercial Account funds. One modern and efficient factory equipped for the production of wheat flour, edible oil, and misc and soysauce from the soybean cake residue has been constructed and put in Operation. Eight other soysauce-misc processing plants, one noodle-vermicelli plant, and one tobacco products plant has been established. Aside from.the production of these plants and the alcoholic beverage factories, all agricultural processing is carried out by the small cottage industry type establishments. 4. PUBLIC SERVICES]- War damage to public services, that is, transportation facilities, communications, public roads and bridges, harbor facilities, and public utilities varied from complete destruction to serious deterioration through inadequate maintenance. Considering the Obstacles the prOgress made in the restoration of public services since the war is one Of the most encouraging aspects of economic rehabilitation. Land transportation suffered virtual complete destruction on Okinawa and serious deterioration on the outlying guntos. The rail line was destroyed and only a few Japanese military vehicles survived the war years. About 750 U. S. military vehicles were made available by Military Govern- ment to meet the most urgent transportation needs. These vehicles were Operated by the provisional governments until mid-1950. The first ship- ment of Japanese commercial vehicles arrived in December 1949, by which 1Information about "Public Services"in the Ryukyu Islands, 1945-1951, was obtained by direct interviews with staff members of the Department of Communications and Transportation, United States Civil Administration of the Ryukyus, during January, 1952. 5h time private enterprises were establishing companies to perform.motor vehicle transportation services. By September 1950, practically all U. S. militarybtype vehicles were removed from public service and returned to the military. Since December l9h9, private enterprise has purchased over 2,000 commercial-type trucks, busses and trimobiles of Japanese manufacture. Public roads and bridges on Okinawa suffered more direct damage than those in outlying guntos. Bailey bridges replaced the destroyed bridges and few have been replaced with permanent structures. Roads and bridges must now serve substantially more traffic than in prewar on Okinawa, and maintenance has not reached a satisfactory permanent level. River, port, and harbor facilities throughout the Ryukyus suffered considerably during the war due to deferred maintenance, war damage, silting, etc. Piers and docks were bombed and burned, vessels were sunk in the harbors and their approach channels and irrigation and flood control works on the rivers were destroyed. For river works (dams, flood control, etc.,) rehabilitation is considered 70% complete. Harbor facilities and sea walls suffered serious damage from typhoons during 1951. Harbor rehabilitation is considered to be 50% complete. During 1951, inter-island passenger and cargo transportation was assumed entirely by Ryukyuan private commercial auspices, eliminating services previously provided by the Military Government. Power plants throughout the Ryukyu Islands were either partially or completely destroyed during the war. On Amami and Okinawa, which had the bulk of the plants, the destruction was almost complete, either through war damage or long-deferred maintenance. Miyako and Yaeyama with approxi- mately'20% of the total, lost about one-half of their power potential. 55 A central thermo power plant is under construction at Machinato, Okinawa, and major rehabilitation work is in progress in the larger cities through- out the Ryukyus. Water supply systems, particularly in larger municipalities, suffered war damage. The cities of Naha and Nago on Okinawa were the only two cities to have prewar municipal water works and these served only limited portions of their areas; both were badly damaged as a result of war. However, since most municipalities receive their water supply from.rivers and wells, either hand-carried or moved by vehicle (both animal drawn and motor), the disruption was reflected in means of transport. Largely through the expedient use of old equipment, surplus military equipment or even generators from.ships, Okinawa has restored its power to a reasonably satisfactory level. C H A P T E R VI FOREIGN TRADE 1. IMPORT REQUIREMENTS Until February 1951, imported goods were purchased on a government basis almost entirely with GARIOA funds. The considerable rise in dollar earnings during 1951 from.the sale of items and services to the military establishment and the export of commodities has made possible a substantial reduction in GARIOA economic aid funds and the development of foreign trade on a private basis. Allocations of Ryukyu Dollar Commercial Account (RDCA) funds for the purchase of imports by private traders have increased pro- gressively. The pattern of the private trade is indicated by the import licenses issued for various categories of commodities during the period 21 February - 31 December 1951, the first ten months that RDCA funds were available for private use:1 Food, principally processed items 8 7,670,598 Alcoholic beverages, soft drinks, and tobacco products 1,284,087 Cosmetics, soap, toilet articles, and notions 926,800 Textiles, clothing, and footwear 4,042,291 Drugs and medical supplies 555,109 Publications, stationery, newsprint, and film 861,120 Clocks, watches, and sewing machines 199,000 Toys, musical instruments, etc. 198,000 lHeadquarters, United States Civil Administration of the Ryukyu Islands. Ryukyu Islands Economic Statistics, Department of Programs and Statistics, Bulletin Number 16, February, 1952, pp. 28-29. 57 Chinaware, kitchenware, and hardware 562,700 Bicycles and parts 215,673 motor vehicles and parts 2,148,101 Miscellaneous articles (principally consumer goods) 1,511,000 Construction materials 874,153 Industrial materials, equipment, tools, and other capital goods g;504,281 TOTAL $21,553,018 Rice and other staple foods, POL fertilizer and other agricultural items, most public service and communication items, and some fisheries and industrial requirements have not been procured by private import. As the RDCA fund increases and GARIOA aid diminishes, more and more of these items will be procured by private import. The estimated annual import expenditures, by categories, for the Fiscal Year 1952 are listed in an accompanying table. In estimating these eXpenditures the following factors were considered: a. The allocations of RDCA funds for privately purchased imports for the period February 1951 to July 1952 and the pattern of expenditure of these funds. b. The increased consumer purchasing power and consequent increased demand for ready made articles not available from local sources as a result of the constant increase in dollar income from the military establish- ment. c. The policy of free trade and the encouragement of private trade with the minimum of foreign exchange and import restrictions will be continued. d. The minimum requirements of staple food, POL, and fertilizer, DOW being purchased With GARIOA funds, will be procured with RDCA funds 58 after GARIOA has been discontinued. e. Dollar expenditures for public services and comnications will decrease appreciably each year as these programs progress to completion. f. No significant dollar expenditures, beyond that necessary for operation and maintenance of present facilities, will be made by Ryulquen private enterprise for industry and fisheries. g. The normal increase in population. A discussion of each major category of imports for the Fiscal Year 1952 is presented below. 2993 It is estimated that the staple food purchases Iill be supplemented with approximately 39 ,350,000 of processed foods procured by private in— port. This processed food will consist of noodles, flour, edible oils, tea, canned foods, oriental style seasonings, and confections procured from Japan and refined sugar purchased from other countries. Each year after 1953, it is expected that the import of these items, especially refined sugar, will decrease at a rate considerably in excess of the rise in demand caused by population increases, because of increased local production and processing of foodstuffs. In view of the continued increase in employment in other activities as a result of the expenditures by the military establishment, a greater increase in basic agriculture and urine production cannot be expected. Imported staple food requirements are based on minimm nutrition levels and are rationed at fixed amounts and prices which are uniform through the Pqukyus. Since December 1951 rice imports have been planned to provide a consumption level of 100 kilogram per capita per year. Rapidly increasing costs of staple food imports is requiring substantially greater expenditures than earlier 59 anticipated. In the case of rice, the import cost was estimated at $132 per metric ton (Naha) in 1951, while in January 1952 the estimate for future procurement was 8174. Consumer Goods These items are now being purchased at a rate of $9.0 million per year and normally would be expected to increase considerably each year. When the use of RDCA funds for the import of consumers goods was per- mitted in 1951, stock in the possession of each household and individual was at the "bottom of the barrel" as a result of approximately ten years restriction on the supply of these items. In the near future it is expected that basic needs for many of these items will have been satisfied and purchases will level off at a normal rate. Furthemore, as the Government of the Ryukyu Islands tax plan is implemented many sci-essential con- eumer items will be the first assessed and at the highest rates. For these reasons it is believed that overall dollar expenditures for imports of consumers goods will not increase in spite of increased purchasing power and population. Industrial lashinerz and Sung» The principal industrial material to be imported is thrown silk for the mufacture of Tsumgi cloth. The large refrigeration plant and one centrifugal sugar plant have been completed. The large 750 ton sugar plant will be constructed and in operation by Rovewer 1952. Consideration is still being given to the construction of a phosphate fertiliser plant, a flour mill, and a cotton weaving factory, however the private interests promoting these projects have yet to demonstrate that they can raise the minimum of private capital required to finance these undertakings. 60 Construction Materials These expenditures will be for the reconstruction of public buildings and general construction use. Recently the Japanese Government has per- mitted the export of lunber to the Ryukyus. Because of lower unit prices and cheaper transportation costs, this will result in a considerable re- duction in expenditures for this category of imports than was previously estimated. Automotive Vehicles and Parts Prior to the opening of the RDCA, there were few privately owned vehicles and bukyuan Government agencies depended on the military es- tablishment for most of their transportation. The condition with respect to motor vehicles as similar to that of consumers goods. After initial purchases were made imports declined without restriction. The importation of passenger cars for private use is now restricted. Minimum demands for col-on carriers has been met and future purchases will be primarily for replacemnte. Fertiliser laterial and Seeds Theoretical requirements for fertiliser based on economical use for optimum agricultural yields amounts to approximately $2,000,000 per year. Based on past experience, Ryukyuan farmers will not use even one-half of this amount unless the purchase of this item is heavily subsidised or very liberal credit is provided. As a temporary masure, some fertiliser will be priced to farmers at {90/31 during 1952. Dollar expenditures for seeds and other agricultural items will be small. Petroleum, Oil, and Lubricants Expenditures for transportation of POL and the operation of the power plant are not included in the estimates for this category. The procurement 61 of these its. by normal private import is not permitted; likewise the distribution within the Ryukyus is controlled. Transpgrtation This category consists of stevedoring, port handling, and transportation costs not elsewhere included. The stevedoring and port handling expenditures by the military will be recurring and will require reimbursement regardless of whether imports are purchased by RDCA or GARIOA. Transportation costs for purchase of staple food on f.o.b. basis is also recurring. When procurement is transferred from GARIOA to RDCA commercial shipping will be required; unit rates will be higher than by Military Sea Transportation Service. Miscellaneous This category consists primarily of consumrs goods and other items of private import not included in the above categories. Invisibles Consists of expenditures for technical services procured from sources outside the mukyus and the travel of mulquans abroad. Slight but progeesive increases in these expenditures are anticipated in view of more freedcn granted Ryukyuans to remit out and travel to Japan and other countries . TABLE 13 RIUKTU ISLANDS: ESTIMATED IMPORT EXPENDITURESl Fiscal Tear 1952 (In Thousands of U. S. Dollars) Commoditz Categogz Food Consumers Goods Industrial.lachinsry'&.Supplies Including Marine, Public Service and Communication Items Construction.lhterials lbtor‘vehicles & Parts Fertiliser and Agricultural Items POL Transportation not included.ebove liscellaneous Invisiblee TOTAL lIbid., pp. 26-27. 23:9hh 9.0h5 3,597 2:435 1,060 1,270 186 #3gh37 62 63 m8 «no So an «3 new mom “fomfiw 339: no u “d.§.$ a >m~.omn c4a.¢so oom.amo moa.npo.~ and.smm.m pan.m~4.¢ pwm.nna.o . 0.0 .5958 no mmmg Anna :3 .23 .55.. .3 ~35: 5.....de :35 mood 85.3».3 . mac 93.3“ «.6 33.8 moo Hmnafia ufi $4.3...m man 8133 mum ooa.oa>.4 mom ma~.noh.> o 3 8383 atom-H do n 8953 ”an: a mafia 38a Snaofificoo H3355 Safifififio 5H3 83.75 Com . 330.330 . eon-53m encased 3.2 o5 8:.»on .333.» 38: nodes. ea- 3:88 :88 alumnae 75:6 68a .3. «a II .350 .3 mg and amen ho mag HH ands 6h mooa mm 88 us “no mum new man “0.0mm“ epthaH no u Shana.» » qummdl Koran maa.mmu «8.3m «Na.uem.a 3.654 “3&3.” a mum anmmo mo mamahmu 4.0.8 .& .mnfi .3. a: .334 .53. .5 8a.; 5:35 .633» moon 35.3..» o mum mwflmmml moo Nnm.mmo mac 45.93 m8 43.02. mom 8%an mom moa.man.~ mow poo.nam.~ o 3 8289.3 3.3.! no m 8255 A4903 Snfifitnoo anaefl Satan-:8 333m excdna anew .eeauenem«o .eewenehem odaonooa< eunem one eeaohodm .eeaednep nose: 3.33.8. us. 9.238 euooa nuisance degeneo eves» HH< a HHH mqm.«4H 00m.m0H 000.00 00e.H0 000.? 000.4» 00H.0> 000.0“ 000.Hm 000.“ 000.“ 000.4 oeboammeedn am0.m>n «No.0aa 005.nsa 8.12 mm0.0an 0am.0nm 000.0“: 000.40m 00m.onn 00>.0eu 00m.0- 00~.~ma 08.09 000.HHH 000.ms Bar} 00m.mm ooa.¢~ 00m.na 004.HH 00n.0 espeamm< «anon mama I moHHmHa mqmoz henbpoo «Because one»: has» 05:. as:, anaa noun: mundaneh synonym Hwfin aenaeoea aeneeboz heneaoo 0me Dean new no announces economem apnea-d span-Haaso 80.0 000.0 0.00.0.3. 000.00 000.04 000.000 000.0 00w.0 N00.w0 08.wm 000.00 ”00.000 0000 30.0 0.00:0 000.30 000.00 000.00 80300 0000 00 00 000.00 00 00 000.00 0000 08:00 0000.0 80.0 0.00.0 000.03 08.00 000.04 000.00.. 0880.0 80.0 000.0 000.000 000.00 80.00 80.000 0.3050. _ now no .0582: 0&0 08. 08.0 08.000 80.00 80.00 08.000 03.880 08.0 08.0 08.000 80.00 08.00 80.000 000582 000.0 000.0 80.000 80.0 80.00 000.000 000080 000.0 000.0 000.000 80.0 80.0 80.000 3003.000 00.0.0 000.0 000.000 80.0 000.0 000.000 0303 000.0 000.0 000.000 000.0 000.0 000.000 0.03. 000 000 30.00 000.0 000.0 03.00 .50 0.3 000 00.0.00 .000 . 000.0 80.00 00: 0.00 00 0 000.3 05 05 03.0.. 00.000 000 000 000.00 000 000 000.00 :20: 000 000 000.00 000 000 03.00 0.32.0.0 00 00 000.00 00 00 08.00 .9350 0wm0 00 00 000.00 00 00 80.00 03580 00 00 000.0 00 00 000.0 000.882 00 00 000.0 0 u 000.0 .8038. mm». 0380000 0050 $80.08 038008 0933: 0.83.00 3.0 000.00an £09035" 303.0 303.0 053 3.7320 059.0 0000 .00 0.3.30.0 no .0 new 00 005306. 0200.0 .0000 .. 05.0.00 .00 00.2.0.0 . 03.8000 3830 20000.30 NH 393. 91 ”mo onvaoOhom M00600 m0m0m0u 000.00 000.000 0.0.0 000.000 anuoad 0000 .00 0.3.3.0 00 2 mzonmm< now no nus-300B. 03000.0 358.0 30000350 C H A P T E R IX SUWARI—OBSERVATIWS AND RECOMMENDATI 0N8 Basic to the United States' economic plan for the W Islands is the assmnption that it will be accomplished uthin a framework of free competitive enterprise. This thesis has been concerned with some of the upsets of the historical development of free competitive enterprise in the W Islands in the postwar period 191.5-1952. - 1. SW The W Islands extend southwest of Japan proper for about 800 miles and consists of some 150 islands or islets. The present population is. approxintely 917,1.00 as compared to 759,638 existing in 191.0. Natural resources are limited. Approximtely 25% of the land area was cultivated prewar, the potth however, being considerable in excess of this figure. Generally, the soil is only moderately fertile. The waters surrounding the Ryukyus are excellent fishing grounds. In the prewar period, these areas were exploited principally by Japanese. llineral resources are poor and unquestionably are inadequate to support any substantial industrial development. Although a considerable nufier of minerals exist, only phosphate and coal are comeroislly exploitable. Unilportant quantities of copper, manganese, sulphur and iron also are found in the archipelago. The only other significant mineral resources extant are the plentiful supplies of ceramic clays and building stone. 93 The prewar economy was predominately of a subsistence agriculture nature. Approximately 75 per cent of the population was engaged in agriculture, 15 per cent in manufacturing, 2 per cent in fisheries, and the remainder in miscellaneous occupations. Moreover, of the 15 per cent in manufacturing, less than 1 per cent was employed in factories of five or more employees, the reminder working in cottage-type industries . Forestry activities were and still are a source of part-time employmt for a large proportion of ram families, particularly in the outlying islands and northern Okinawa. The crap of greatest value produced prewar was sweet potatoes, although it was exceeded in tonnage by sugar cane. Practically no met potatoes were grown for sale, however, sugar cane being by far the most important cash crop. Smaller quantities of rice and soy beans were grown, with a number of other crops in relatively small qtmntities making up the balance of agricultural, production. The Ryukyus have been a food deficit area in modern times and from 20 to 25 per cent of the food was imported. Individual farms were very smll. In 1939, the average agricultural household worked only 1.6 acres of cultivated land in Okinawa Prefecture. At the termination of hostilities in 191.5 virtually all comercial and industrial establishments of any significance in the Ryukyu Islands had been destroyed. In addition to the loss of physical facilities a substantial , portion of the skilled labor and management which operated these facilities disappeared. The more significant industrial establishments were managed by Japanese who were repatriated subsequent to hostilities. Industrial production in the Ivukyus has always been predominately of the family-shop or cottage type. While in some instances these establish- ments represent the only feasible method of production and provide an effective utilisation of resources, they are often inefficient as to quality, 9h productivity, and costs. The physical plant of such industrial capacity as had existed was completely wiped out in the war. Even the household type of production was disrupted by the devastation of homes and equipment, the separation of families, and the elementary pressures for subsistence. With the help of Government And Relief In Occupied Areas (GARIOA) funds and utilisation of Am surplus and salvage materials, however, a direction of energies toward the revival of native arts and crafts became possible. Aw sweeping pregram of industrialisation does not , however, appear practicable in the inediate future. Because of the lack of private capital and technolOgical know-how, industrial reconstruction even to the exceedingly mdest prewar levels can only be slow and difficult to achieve. Ice nking is new approximately three times prewar activity. A large modern ice plant at the port of Naha was completed in March 1952. Since the export intention of this plant is in the type of fish needed in the United States, there is opportunity for direct dollar export. A 750 ton sugar refining plant near Naha in southem Okinawa was recently completed. It is estimated that by 1955‘ the Ryukyuau sugar industry will have attained 60 per cent of its prewar position. In addition, within a relatively short period of time it is expected that new plants for the following types of operations will be canpleted: soap manufacturing, textile finishing and straw weaving, rattan and wood- working , saw mill and dry kiln, pharmaceutical manufacturing, pearl and sponge culture, and food processing. The sale of labor to the Army and Air Forces and to private contractors filling construction contracts for the U. S. Government is by far the 95 W' largest "export." In addition to the dollars earned in this way, benefits will redound to the native economy in the form of increased technological knowledge and the building up of a pool of trained workers. These secondary benefits, if properly developed, my prove to be more valu- able to the future of the nation than the mediate dollar eamings. Occupation-generated employment (i.e. , in military establishments and construction projects, domestic workers in clubs, billets, and private homes, employees of foreign traders, etc.) was estimated at 72,000 in 1952. Since the year 191.7 millions of U. 8. dollars have been apprOpriated for economic assistance. This money has been used to procure food, lumber, cement, petroleum products, fertilisers, etc. A counterpart fund was established in April 1951 for the deposit of funds obtained from the sale of CARIOA supplies and dollars obtained through you sales to the Occupation forces for labor, goods, and services. This fund is used to finance grants- in-aid to the various Gunto Governments and to the Government of the W Islands, as well as for industrial and individual loans. Other financing facilities established in the postwar period include: The Bank of the We, located at Naha and comprising 11.. branch banks throughout the islands; the Ryukyus Reconstruction Finance Fund, for long- term loans; a postal savings system; fire insurance and work-en's com- pensation. In the interests of maintaining the Islands' financial structure on a sound basis, procurement has been placed on a cash basis and all credit facilities have been concentrated in the Bank of the Ryukyus and are administered on customary comercial terms. Ewen though adequate foreign exchange is available, Wan private enterprise is finding it difficult to meet credit requirements for the establishment of enterprises which 96 represent considerable capital investment and from which profits are slow to be realised. Instead, Ryukyuans with accumulated capital have quite understandably invested in comercial companies trading in imported consumer goods at a quick and profitable turnover. The great bulk of imports consist of processed foods and light consmner goods, rather than raw materials and equipment for productive enterprise. The potential economic dis- location inherent in this situation is obvious. However, at this stage in the introduction of the principles of free enterprise, it has not been considered desirable to adopt such direct remedial courses as imposition of comprehensive import controls or government subsidization of industry. Another impediment to the develOpment of local private enterprise production, not only in industry but in the fields of agriculture and fisheries as well, is the demand for labor and services by the military establishment. Employment on military projects appears to be a more attractive means of earning a livelihood than submarginal farming, fishing, or other productive activities. The present foreign trade position, supported almost entirely by the artificial "export" of labor and services, met be regarded as precarious. While achievement of a balanced trade is not a practical goal for an economy of scarcity like that existing in the We, it is desirable to undertake a program that will lead toward a narrowing of the gap between imports and exports, and away from dependence upon employment by the military forces in order to accomplish this. Continuous effort must be exerted to increase the volume of comedity exports and reduce imports, particularly imports of those consular goods which can be produced in the We 97 The leading export conmodity is black sugar, which in 1951 accounted for nearly 60 per cent of total'exports. Items presently exported generally follow the prewar pattern, except that production and markets for two prewar specialties, adamba hats and tsunmgi silk, have been slow to revive. Trade agreements have been concluded with Japan and Formosa. Prac- tically all exports have gone to Japan, but there has recently been unusual interest in trade with Formosa. Under the liberal policy established by the Ryukyus Command of encouraging competition and affording equal Opportunities and treatment to comercial entrants, approximately 30 foreign firms have been licensed to supply services on a commercial basis. These are distinct from concessionnaires of the Army Exchange Service. Facilities rendered include banking, insurance, automotive and electrical repair, air and sea transport, and commications . In addition, U.3.C.A.R. has granted import-export licenses to commercial entrants to trade. All but two of these ship at their own risk and credit, and store their goods in Ryulquan warehouses for future sale to Ryukyuan importers who have valid import licenses granted by the Board of Trade. Co-odities include textiles, clothing, beer, processed food, textile machinery; most of these imports originate in Japan. Exports by these firms have been negligible, but it is anticipated that the volume will increase upon the rehabilitation of industries, completion of the modern sugar mill, etc. Foreign investment interest in mineral deposits of nnganese, sulphur, capper, phosphate, gold, and ilmenite have recently shown an increased activity. However, no foreign investment will be permitted until it has been shown that native skills or capital are not sufficient to create an equivalent industry. Controls for the remission of profits earned in foreign exchange have been kept at a minimum. 98 2. OBSERVATIONS AND RECOWDATIONS The nature of the economy is undergoing an inevitable change from a simple subsistence agrarian economy to one in which wage earners constitute a highly significant element. This has several implications: a large class of Wukyuans is learning a wide variety of skills; wide contact with Americans is producing notable cultural changes; the tastes of the wage-earner will vary from that of the simple farmer in that a greater variety of manufactured goods will be demanded; finally, the economy of the Byukyus has become dependent upon the continued existence of the military establishment for a very considerable portion of its income. It has been generally felt that the Byukyuans have not to date taken advantage of the business Opportunities which are practicable of develOpment and which will be absolutely essential to meet domestic requirements in the future, when the present artificial sources of direct aid and foreign exchange have been reduced. Rather, they have tended to restrict their investments and talents to activities which, though yielding quick returns, do not materially contribute to the national product. Investment in such profitable activities as trading and entertainment is understandable; yet . some means mat be found for providing assistance and the incentive that will encourage entrepreneurs to increase production in present industries and to seek promising fields of expansion. Investments in industries that will produce for domestic consumption and possible export is a necessary step in the achievement of a sound economy. At this stage in the introduction of the principles of free enterprise, Civil Administration has not generally considered it desirable to take direct remedial measures to relieve this situation, such as placing restrictions on private comercial imports, or governmental subsidisation of selected industries. 99 It is the aim of the Civil Administration to give concrete technical and managerial advice and assistance, while being watchful to eliminate influences which may tend to produce a situation of undue dependency. From this point forward, the widest latitude will be given the Ryukyuan population in managing their own affairs. This should be increasingly feasible as the peOple gain confidence in technolOg1cal and managerial know-how. As a result of business and economic questions raised by Ryukyuans during a series of conferences conducted throughout the islands by the University of the Ryukyus in 1951-1952, it has become increasingly evident that there is a need to get the basic business information out to the pe0p1e. So often the Ryukyuans are familiar with words such as "free enterprise," I'1etter of international credit," "competition," "credit sales ," and so on; but they generally need just a little more information to realise the full significance of the definitions. The main so-called interest-group in the islands is generally the family group which sometimes extends to the village level. Usually one family or one village will not be particularly interested in what some other group is doing in the Ryukyus. An efficient transportation and commication system connecting the islands would help considerably in developing this appreciation of what is going on throughout the Ryukyu Islands. Mention has been made of this problem of lack of interest and participation on the part of most Ryukyuan families and villages in their national affairs, because it has a direct affect on business and economic g conditbns. The Ryukyuans have been criticized for not taking full advantage \ of business opportunities which are practicable of developmentkesnd which i: will be absolutely essential to meet domestic requirements in the future. \. 100 It mist be remembered that these people are not familiar with the potential of the Ryukyus. These people need information describing what the economic potential is throughout the Ryukyus and how a division of labor and an exchange of products between the islands are essential to a higher standard of living. This information might serve to stimulate peeple to develOp a broader economic perspective, as well as stimulate imagination and action on the local level. Invisible exports, most of which consist of the export of labor to the Military, are the source of about 80 per cent of the total dollar earnings. It is this fact which will make possible the achievement of the substantial degree of Ryukyuan self-support contemplated. However, labor requirements of the armed forces in the future are very uncertain. It is essential, therefore, to develOp productive skills, crafts, abilities, and services which will uphold the economy when the artificial occupation supports have been withdrawn. To consider an immediate benefit to our government, the training of Ryukyuans to assume positions in the military establishment would allow for the replacement of military personnel, Department of the Army civilians (DAC's), and Philippine labor. This replacement by Ryukyuan personnel would represent a significant dollarusaving in comparatively high wages presently paid to "imported" employees. under General Hebert S. Beightler, Commanding General of the Ryukyus Command and Deputy Governor of the Ryukyu Islands, made the following statements during a speech delivered at the inauguration of the Ryukyuan legislature on 1 April 1952 at the University of the Ryukyus, Okinawa. "Over the past six.years I consider that advancements have been made in all fields of our relationships. In some fields rapid and lengthy forward strides have been made, while in others, 101 progress has not come up to the expectations. Perhaps the problem which should be considered most seriously at this time is the economic one... The goal of the new Government should be toward a self-sufficient economy. More exports must be developed. Local manufacture and production must be increased for both export and to reduce imports. Complete economic dependency mat not be placed on one or two commodities such as at present in the case of sugar. It is both unsound and unstable. DevelOpment in other fields should be your objective. Al- though your islands are not blessed with any considerable amount of valuable resources the maxim develOpment of this limited potential should be made.“ The future course of the Ryukyuan economy will be detemined largely by the type of management, both industrial and governmental, which develops within the next few years. Parallel maturity of these two groups, as well as their complete cooperation are essential. Past efforts of Civil Administration have been absorbed almost completely in providing basic production facilities. Attention must henceforth be directed to the training and develOpment of management skills. APPENDIX A OKINAWA: U. S. GIBRAETAR OF THE PACIFIC By Major General Robert S. Beightler 103 OKINAWA: U. S. GIBRALTAR OF THE PACIFIC By Major General Robert S. Beightler A typhoon-lashed island formed of Jagged coral crags and weathered limestone escarpments, Okinawa currently is being built into a key American defense base in the Far East. Captured from the Japanese in World War II, Okinawa's strategic location was emphasised when trouble started brewing in the Orient follow- ing the Commist seizure of China. Recognising the island's importance to the defense of the free world, the U. S. , late in 19h9, began a multi- million dollar construction and rehabilitation program designed to build the island into one of the most powerful advance bases in the Pacific. This program, which now has lasted over two years, is more than half com- pleted. Oldnawa primarily is a bomber base. The Army's mission, in addition to providing logistical support for the Air Force, is to defend the island, to help stabilise the Ryukyuan econonw and to guide the people toward democratic self-government. From Okinawa, U. 3. bombers can dominate every potential target area on the East Asian land mass. Island based B-29's, present "work-horse" medium bomber of the U. S. Air Force, are within striking distance of all Southeast Asia, the whole of modern China, the Lake Baikal industrial region, Eastern Siberia and the southern tip of the Kamchatka peninsula. Airfields on the island now can handle the U. S. Air Force's largest strategic long-range bombers as well as the latest Jet fighters and bombers . 101, The build-up of Okinawa has been given a high priority in military plans and spending in the Far East. Already more than 250 million dollars has been expended to make the island outpost one of the strongest ones out- side the continental United States . Another 100 million has been appropri- ated to see the Job through. To understand the reasons behind the tremendous building program, all that is necessary is a quick glimpse at the map. Okinawa, largest island of the mukyu chain, which stretches in a 790-mile are from the southern coast of Japan to the seas off Formosa, lies midway between Japan and the Philippines. It is 350 miles east of Taipeh and less than A00 miles from Shanghai and the shores of Red China. As a strategic U. S. advance base in the Far East, Okinawa acts as a powerful deterrent to further columnist expansion in the Orient which light threaten the security of Southeast Asia, the Philippines or Japan. Both of the latter countries now are linked with us in mutual security pacts. Prior to April 1, l9h5, when American combat troops landed on the island's reef-protected beaches under cover of an intense air and naval bombardment, few people had ever heard of Okinawa. Even if they had they probably weren't impressed. It was Just another lonely, subtrOpical island defended by more than 100,000 Japanese soldiers. Nevertheless, it had to be wrested from the eneaw's grasp if we were to launch a successful invasion attempt against the Japanese mainland defenses on Kyushu, lying only 1.50 miles to the north. Americans paid heavily for Okinawa. During the 91-day campaign, which ended officially on the 30th of June, the island rocked under tons of exploding artillery, land mines, mortar rounds, rockets, demolition charges, lb—inch naval shells and 1,000-pound delayed action bombs. 105 Casualties on both sides were tremendous. The Japanese alone lost more than 110,000 troops killed while combat losses of the six American divisions and their supporting air and naval units including dead and wounded were nearly 50,000. . Those who fought this last and bloodiest battle of World War II's Pacific campaigns would have difficulty recognising the island.today. Just a few years ago Okinawa still was a barren island littered with the rubble of war and the wreckage of typhoons which sweep over this sweltering, rainsdrenched outpost several times each year. Hen stationed on the island referred to it as "The Rock'I and considered their assignment, though important, as highly undesirable. A little more than two years ago officers and men still were living in tents and families were quartered in small, often inadequate, quonsets. Recreational facilities were extremely limited. Okinawan villages were off limits and fraternization with the natives was strictly prohibited. With poor living conditions, hot humid weather, damp rot and frequent typhoons, life on Okinawa, at best, was a lonesome dreary existence. Okinawa was piled high with abandoned military equipment. Millions of dollars worth of tanks, guns, vehicles and other war materials massed for the intended invasion of Japan lay unprotected and unguarded in high "dumps," exposed to rust, wind damage and looting. In the space of two short years all this has been changed. The southern half of the island today is one vast construction project. It is significant to note that while this huge building pragram has been in pro- gress, Okinawa has been on a fulltime operation basis. Since June 25, 1950, when the Commists invaded South Korea, it has been one of the main 3-29 bases in support of the United Nations forces on the Korean battlefront. 106 Japanese, Okinawan and American construction firms, working around the clock on contracts let and supervised by U. 8. Army engineers of the Okinawa Engineer District, still have a long way to go to complete the building program. Night and day, above the roar of bomb-laden B-29's and the whoosh of sleek Jet fighters, the sounds of bulldozers, concrete mixers, earth movers, dump trucks and construction crews can be heard over the island. many concrete two and three-story typhoon-proof barracks are in the process of construction and several already are occupied by military personnel. All these are large permanent buildings complete with spacious dining rooms and modern recreation lounges. Concrete, typhoon-resistant homes for families of enlisted personnel, officers and civilian employees of the Army and.Air Force are being constructed. Many already are occupied and.more will soon be available for occupancy. Where only a few years ago war-scarred fields and rice paddies lay fallow and untended, compact military'"cities" now are rising. The huge stockpiles of.military equipment that were left on Okinawa or shipped here from Korea, the Philippines and the Marianas-Bonins, have been sorted and inventoried. Much of this equipment now is stored in large new”warehouses although some materials remain outside, carefully stacked and protected by tarpaulins, in fence-enclosed guarded storage areas. Records show the exact location and quantities of hundreds of thousands of separate items. Okinawa's "Operation RolldUp," one of the largest programs for the rehabilitation of‘WOrld'War II military equipment ever undertaken.by the Army, has been a great success. Tons and tons of military equipment has been salvaged, repaired or rebuilt and shipped to Korea for the use of American.combat forces, representing a saving of millions of dollars to taxpayers of the united States. 107 The build-up of Okinawa, when completed, will result in one of the biggest U. 3. air bases anywhere in the world. The island, in short, is destined to become one of the strongest defense bastions of the United Nations in the unsettled and troubled Orient. militarily, Okinawa' s value lies in its triple capacity to support air, naval and ground operations against any would-be aggressor in the Far East. is an offensive bomber base or as a potential staging area for amphibious or airbone Operations, Okinawa is indeed a valuable asset. From the standpoint of strategic bombardment, for example, Okinawa- based medium bombers have a far greater flexibility in the selection of possible target areas than do those located in Japan or in the Philippines. Japan-based medium bombers may reach farther into Siberia but are denied targets in Southeast Asia. Philippine-based medium bombers have closer range to Southeast Asia but are denied all targets in Siberia. Okinawa-based medium bombers, however, can reach all important target areas in an arc stretching northward from Singapore to the Kuriles. Considered as a potential staging area for amphibious or airbone operations in the Orient, Okinawa likewise is ideally located. Protected on its southern flank by the democratic government of the Philippines and on the north by a new, free Japan, the island has been forged into a defensive union of strength whose mutual support facilities provide additional protection for the free nations in the Pacific area. With the improvements that have been made in port facilities, road nets, utilities, comunications, storage areas and airfields—and there are numerous Japanese-built airstrips on the island which, though not in use, still are in good condition—the number of troops which could be staged through Okinawa far surpasses the total stationed here during World War II . 108 The biggest industry on Okinawa today is the U. S. military'establishr ment. Nearly 75,000 Okinawa natives are working for Army and Air Force activities, including construction, their wages representing the most important contribution to the Ryukyuan economy. But not to be overshadowed by the vast military construction program.now in progress on Okinawa are the improvements being made by the U. S. on behalf of the Ryukyuan people. In 1945 during the invasion of the island, the natives suffered heavily. Caught between the defending Japanese and advancing Americans, thousands of their number were cut to pieces in the furious fighting. In the pro-invasion bombardments and in the course of the battle itself their prized and ancient landmarks, their homes and villages, their small industries and their lands were completely devastated. Thousands of families were separated; a large segment of the island's population was wounded and without food or shelter; and many aged.men and women tOgether with young children, who were orphaned during the assault, wandered dasedly through the debris-littered streets of their burned and flattened villages searching for loved ones, salvagable items and food. The fighting resulted in complete disruption of native life. No central government and virtually'no local government remained, since nearly all Japanese civilian officials had fled before the withering fire of ad- vancing U. S. combat forces. The ravages of'war made it impossible to immediately set up any sort of workable governmental.machinery. Okinawa's economy likewise was completely shattered. Farmlands which once provided.natives their only means of livelihood were ruined and crops lay'wasted and decaying. Records of property ownership were completely destroyed during the bombing of Naha, the capital city, and other major towns and villages on the island. Fishing craft and trade schooners 109 were blasted or sunk. There was no business activity of any kind, and few buildings were left standing. The littered wreckage which remained in war's wake was strewn all over the southern part of the island. In the years intervening since the Japanese surrender many important and far-reaching changes have been wrought on Okinawa. Cities and villages have been rebuilt. Many concrete, typhoon-resist- ant buildings have been erected. New schools have risen. Roads have been constructed and native industry has been revived. Agriculture has been improved, public health measures have been adopted and the island's economy has been expanded and stabilized. Under a democratic and responsible self-government, the peOple today are enjoying a standard of living roughly equal to pro-war levels. ’ The U. 3. Civil Administration of the Ryukyu Islands (USCAR), which replaced Military Government in December 1950, has been diligently working to restore the Ryukyuans to self-sufficiency. The mission: to promote democratic government; to rehabilitate the Ryukyuan economy through mathmn use of their own resources; to effect the consolidation of the Ryukyu Islands intone unified political, social and cultural entity; and to demonstrate and teach the pOpulation the value of freedom» cooperation and unity in accordance with democratic ideals and principles. The Commander- ianhief, Far East Command, is Governor of the Ryukyu Islands and the Commanding General of the Ryukyus Command is Deputy Governor. During the past five years, U. 3. Civil Administration has made notable progress in the establishment of a sound political structure in the Ryukyu Islands. The responsibility for certain governmental functions was passed on to the four Guntos (four main island groups)-Amami Oshima, Okinawa,iMiyako, and Iaeyama-as soon as the people were ready to accept these new responsibilities. In September 1950, for the first time in 110 their history, the peeple went to the polls to elect Gunto governors and assemblymen of their own choice. The establishment of a Provisional Central Government, patterned after the American system of democratic society, was a major step taken by USCAR in April 1951 toward cementing the four Guntos together. But, on march 2, 1952, the people again went to the polls to elect candidates of their own choice to a Ryukyuanewide legislature. This legislature officially went into office April let, the long-anticipated date when the Government of the Ryukyu Islands became a reality. Later this year, probably in October, a new Governor of the Ryukyus‘will be elected. In the interests of economy and efficient Operation, the four Gunto governments are gradually being phased out of existence and will have disappeared entirely by July I, 1952. The economic side of the picture is improving, although the economy ‘will always be a deficit one because of a lack of worthwhile resources and only limited exportable products. As rapidly as permanent and consolidated military installations are completed, land no longer needed by U. S. armed forces is being returned to its proper owners. Small local industries have developed in surprising numbers and have found markets for their goods in Japan, Formosa, and the United States as well as within the Ryukyu Islands themselves. Although crap production of sugar, rice and sweet potatoes--the island's main farm products-—still lags behind predwar levels, better use of fertilizers has increased farm yields substantially. many improvements in the Ryukyuan economy are traceable directly to recommendations made by military and civilian economic experts working under USCAR or in coOperation with local Ryukyuan government officials. 111 Despite the fact that America paid heavily for Okinawa and currently is spending millions of dollars to build the island into a formidable weapon against aggression, the investment has proven to be a sound one. When the Korean war began, Okinawa's value was brought sharply into focus. While the U. S. scrambled to get supplies and military equipment to the United Nations combat fordes in Korea, Okinawa, only 850 miles from the battlefront, stood poised with ready-made airfields and with a gigantic roll-up stock of war materials originally earmarked for the invasion of Japan. American combat troops stationed on the island sailed for Pusan to help bolster the crumbling defenses of the Republic of Korea less than a month following the outbreak of hostilities. Regardless of what may be decided about the future political status of Okinawa, it would appear that permanent U. S. bases here are certain. Whether U. S. claims to base rights will be protected through United Nations trusteeship or by a special defense agreement, whether bases will be bought outright or leased from the Ryukyuan Government, or whether the island will be returned to the Japanese and U. S. bases retained under treaty rights, remains as yet undetermined. By 1953 Okinawa will have been built into a key American base in the Pacific—and at a total cost of less than #00 million dollars. U. S. military and civilian personnel stationed on Okinawa believe that they are making a real and tangible contribution to the free world's struggle for lasting peace. Their duties here, practically at the fringe of Comunism's greatest territorial spearhead, are as important to America's security as any in the Far East. _ .No longer an unmarked dot on the broad surface of the Pacific, no longer an unwanted scrap heap acquired as a stepping-stone to Japan, Okinawa already has proven its worth as an important deterrent to further Communist aggression in this part of the world. A relatively small island, just 67 miles long and 3 to 10 miles in width, Okinawa not only has been an active proving ground for democracy, it is rapidly becoming America's key defense outpost in.the Orient-a modern "Gibraltar of the Pacific." 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