Potsdam Conference (TERMINAL)

128

Cohen notes

Potsdam, July 18, 1945, 4 p.m.

CHURCHILL: When we were at Teheran, there were no journalists. At Yalta, there were few. Here they are all about. They carry powerful weapons. They are making a great outcry.

MOLOTOV: Where are they?

CHURCHILL: They are not in the compound. We can only do our work in absolute secrecy. If my colleagues are willing, I am willing to have a talk with them and explain as a newspaper man the need for secrecy. I am willing to speak to them or to have the President or the Marshal speak to them.

MOLOTOV: What do they wish? Are their demands known to everyone?

TRUMAN: We each have a press representative here. Let them handle it. We will make no communication until the end of the Conference. I am not disturbed by them. Most of them are Americans. Your election is over and so is mine.

Let us proceed. The Foreign Secretaries have recommended the following items for discussion:

  1. Machinery for peace settlement. Shall we discuss this?

MOLOTOV: I agree.

TRUMAN: Draft proposal for Council of Foreign Ministers (American proposal) approved in principle. May I ask the Secretary of State to read the report of the Foreign Secretaries?

MOLOTOV: Yes.

CHURCHILL: Yes.

Secretary of State Byrnes reads report of the foreign secretaries.

Three questions presented:

  1. Peace machinery.
  2. Control Commission for Germany.
  3. Polish question.

TRUMAN: Is it your pleasure to proceed with the first point?

MOLOTOV: The Soviet Delegation withdrew its reservation in regard to paragraph 1, as to the rest, it agrees to accept.

CHURCHILL: What is the meaning of reference to submission to the United Nations?

BYRNES: This is required by United Nations undertaking not to make a separate peace.

CHURCHILL: It means with a view to their ultimate submission.

MOLOTOV: It makes no difference. The three powers represent the whole.

CHURCHILL: British Delegation agrees.

BYRNES: (proceeds with reading of report.)

TRUMAN: What is your pleasure regarding the second item? This is the principles for the control of Germany.

CHURCHILL: What do we mean by Germany? If we mean pre-war Germany, I agree to such.

STALIN: Germany is what has become of her after war. No other Germany exists. Austria is not a part of Germany.

TRUMAN: Why not say the Germany of 1937?

STALIN: Minus what she has lost. Let us for the time being regard Germany as a geographical section.

TRUMAN: But what geographical section?

STALIN: We cannot get away from the results of the war.

TRUMAN: But we must have a starting point.

STALIN: Do you wish to restore German administration to Sudan line [the Sudetenland]?

TRUMAN: I said Germany of 1937.

STALIN: It may be so understood from a formal point of view. If German administration appears in Koenigsberg, we would expel it.

TRUMAN: We said territorial changes are to be made at the peace conference.

STALIN: Let us fix the western frontier of Poland. I have difficulty of [in?] saying what is the frontier of Germany now. No frontier guards, no troops. The country is broken up into four occupation zones.

TRUMAN: I am still suggesting we shall proceed from Germany of 1937.

STALIN: We shall proceed from there as a starting point.

CHURCHILL: I agree.

TRUMAN: That is the Germany of the Versailles Treaty. So it is agreed that the Germany of 1937 should be the starting point.

STALIN: Have we finished the political principles?

BYRNES: The economic principles have been referred to a subcommittee. As to political section, it is reported complete and is ready for discussion.

STALIN: The Russian Delegation accepts in the main all the points in the political section. There is one amendment to item 5. If possible, it would be well to delete the last four lines. We agree to the rest but wish a commission to go over the style of the document.

EDEN: I hope the foreign secretaries can go over the drafting committee’s draft tomorrow.

STALIN: That would be better.

TRUMAN: That is agreed.

CHURCHILL: I refer to Section 2(i)(b). There are experimental military stations (wind tunnels, etc.) in Germany which should not be immediately destroyed.

BYRNES: The language is seized or destroyed.

CHURCHILL: We shall use them share and share alike.

MOLOTOV: The Soviet delegation has a draft to submit.

BYRNES: (proceeds with reading of the report on Polish question.)

MOLOTOV’S paper is read. It suggests severance of all relations with the former Polish government, the transfer of all assets to the government of national unity, and the placing of Polish armed forces and fleet under the new Polish government.

CHURCHILL: The burden of this matter rests on Britain. We received the Poles when they were driven out by the Germans. There is no property of any kind or extent belonging to the old Polish government. There are 20 million pounds gold in London and Canada which is frozen and is the ultimate property of the Polish national state. There is a Polish Embassy vacated by the old ambassador which is available to the ambassador of the new government as soon as they send one and the sooner the better.

The Polish Government has been financed during the last five years by the British Government. We have advanced 120 million pounds sterling for them and their troops.

When the Polish Government in London was disavowed, it was arranged that three months’ salary should be paid all employees and they should be dismissed. It would have been improper to do otherwise. The expense has been borne by Great Britain.

Our position is unique in another way. We must deal with the transfer of forces which have fought with us against the Germans. Some of them came from France after France fell. Some came to Italy from Switzerland. We built up five divisions of 50,000 escaped Poles. The Poles built up an army of 180 to 200 thousand men. These men have fought with great bravery and discipline. They have had heavy losses. I must make it perfectly clear that this involves the honor of His Majesty’s Government. We have given pledges to Parliament and we must treat them in a manner which the world as a whole will regard as just and fair.

STALIN: Of course.

CHURCHILL: These men have taken an oath to their President and we have ceased to recognize him. What is the policy we are pursuing? Our policy is to persuade as many as possible to go back to Poland. I was angry when General Anders said to his troops that if they went back to Poland they will be sent to Siberia. This officer will not be permitted to make such prejudicial statements to the troops. Our policy is to persuade as many to go back to Poland as soon as possible. This applies also to civilian officials, and employees. The better things are in Poland, the quicker they will go. I rejoice in the improvement which has taken place in Poland and I wish every success to the new Polish government. It is not perfect but it is a great advance. I have said if there were Polish soldiers who have fought with us who do not go back we will receive them as British citizens. But we hope the great bulk will return. It would assist if the new Polish Government could give undertakings that those who do return will be safe in their livelihood. They should with proper assurances want to go back to the land of their fathers which has been liberated by Russian arms.

STALIN: Have you read the draft of the Russian delegation?

CHURCHILL: I have read the draft. I agree in principle, subject to what I have said. I should be pleased to have the draft remitted to the foreign secretaries to be considered along with the British suggestion.

STALIN: I appreciate the difficult position of the British who have sheltered their former rulers. I know that despite this fact the former rulers have caused great difficulty for the British government. I assure Mr. Churchill my draft is not intended to make the position of the British government more difficult. It is intended only to put an end to the former Polish government. They have their agents and press which make an unfavorable impression on public opinion. The purpose of our draft is to put an end to this position. I am fully prepared to withdraw anything that will complicate the British situation. Our only purpose is to put an end to an indefinite situation.

CHURCHILL: If you cut off all financial aid, you can’t in England prevent their talking. We have no relations with them. But we have to be careful about the Army. They might mutiny. Our purposes are the same. We ask for trust and confidence in the making of [in making?] Poland a place which will attract them.

TRUMAN: It seems there is no fundamental difference. The Prime Minister is asking time for soldiers to get back. I think there should be an agreement. I am interested in the Polish Government, particularly in free elections assured by the Yalta agreement.

STALIN: Let us refer this matter to the foreign secretaries, including the matter of elections. The Polish Provisional Government has never refused to hold elections.

TRUMAN: That is all the foreign secretaries have submitted today. Is there anything further? Shall I suggest that the foreign secretaries prepare another agenda for tomorrow?

CHURCHILL: I am concerned with the weight and scope of the political principles. Are we going to have uniform control or different practices in the four zones?

STALIN: This is dealt with in the political section. My understanding is that we all favor a unified policy.

Meeting adjourned.

129

U.S. Delegation Working Paper

[Babelsberg,] July 18, 1945

Memorandum to Ambassador Pauley

In accordance with your instructions, your staff has reviewed the “Proposed Agreement on the Political and Economic Principles to Govern the Treatment of Germany in the Initial Control Period” and respectfully submits the following comments and suggestions:

Appendix A:
(I) Insert the following at the beginning of the first sentence: “Subject to the policies and provisions of any Agreements entered into between the Governments of the USSR, UK, and USA, …”

(II) (b) The terms “starvation, disease and civil unrest” are noted. Under this, the area commander may in his own discretion maintain any plants that he may desire. This is broad power.

(d) The only financing that should be permitted should be incident to exports which are required for approved imports. Otherwise, our policy that exports should be a first charge against imports, would be undermined.

(III) Sentence should be amended by insertion of clause as indicated by underscoring: “During the period of occupation, the German Reich as its boundaries existed on December 31, 1937, shall be treated as a single economic unit.”

130

Proposal by the Soviet Delegation

July 18, 1945
[Translation]

The Statement of the Heads of the Three Governments on the Polish Question

In view of the setting up on the basis of the decisions of the Crimea Conference of the Provisional Polish Government of National Unity and in view of the establishment by the United States of America and by Great Britain of diplomatic relations with Poland, which previously already existed between Poland and the Soviet Union, we agreed that the Governments of Great Britain and the United States of America as well as the Governments of other United Nations shall sever all relations with the government of Arciszewski. We deem it imperative to render to the Provisional Polish Government of National Unity the necessary assistance in the immediate transmission to it of all stock, assets and all other property belonging to Poland, which still is at the disposal of the government of Arciszewski and of its organs, in whatever form this property may be and no matter where or at whose disposal this property may prove to be at the present moment. The transfer of this property to any institution of any kind or to private persons is forbidden.

We also found it necessary that the Polish armed forces, including the navy and the merchant marine, now subordinated to the government of Arciszewski, should be subordinated to the Provisional Polish Government of National Unity, which [will?] determine the further measures to be taken in respect of these armed forces, men of war and merchant ships.

131 
740.00119 Potsdam/7-1845

Memorandum by the British Delegation

Foreign Office, 18th July, 1945

The Eastern Frontier of Germany as It Affects the Principles Governing the Treatment of Germany and the Authority of the Control Council

At the plenary session on the 18th July, it was unanimously agreed that as a preliminary working assumption Germany should be regarded as comprising all territories contained within her 1937 frontiers. It is suggested that at this afternoon’s meeting Marshal Stalin should be asked how, in the light of this understanding, the Soviet Government regard the Polish claim to a frontier on the Oder and the Neisse (including Stettin) in its effect upon the joint occupation and control of Germany. Do these territories come under the authority of the Soviet Commander-in-Chief in Germany? Are the Polish authorities in this area acting as the agents of the Soviet Commander-in-Chief and responsible to him? Are the resources of the area available for supplying the rest of Germany?

If these questions do not provoke a direct answer, we might go on to say that we understand that Marshal Zhukov at recent meetings in Berlin, has maintained that the territory to the east of the Oder and the Neisse was outside his zone and that he could not therefore draw upon it for food and fuel supplies for his zone.

We should then develop our grievance on the following lines:

  1. Under the agreements concluded in the European Advisory Commission on the occupation and control of Germany, the controlling Powers agreed that the zones of occupation should be created out of Germany within her frontiers as they were on the 31st December, 1937, including East Prussia, and that the members of the Control Council should jointly exercise authority in matters affecting Germany as a whole (i.e. 1937 Germany). His Majesty’s Government do not regard these agreements as having been modified by the Crimea decisions on Poland. His Majesty’s Government consider that the Soviet Government are not entitled to release from their authority any of the territory of 1937 Germany without prior consultation and agreement with the other controlling Powers.

  2. If these German territories are withdrawn from the authority of the Control Council and of the Soviet Commander-in-Chief, the whole basis of our combined plans for the treatment of Germany is altered. The balance between the zones is upset. The Soviet zone, reduced in area but obliged to support a larger population owing to the influx of Germans expelled from the territories further east, becomes in Marshal Zhukov’s view a deficit area. The British and American Commanders-in-Chief, instead of being able to draw upon the normal surpluses of Eastern Germany, are expected to help to supply Berlin. This radical readjustment threatens to cause very serious consequences for us in our zones. Moreover, the total stock of reparation supplies available for the common pool is gravely reduced.

  3. His Majesty’s Government, while fully supporting Poland’s right to accessions of territory, regard the present claim to the Oder-Neisse line, including Stettin, as excessive. On the short-term view, it is doubtful whether the Poles will be able to maintain full production in the whole of this area during the critical next winter, while continued expulsion of Germans from the area will cause grave problems for the controlling Powers in Germany. On the long-term view Poland’s capacity to populate and absorb the whole of these territories is uncertain, while the permanent amputation of one-fifth of the area of Germany would be a cause of weakness to Poland and of instability in Europe as a whole.

Marshal Stalin should then be asked to have the Soviet view reconsidered in the light of our attitude and to let us know the result.

132 
852.00/7-1845: Telegram

The Ambassador in the United Kingdom to the Acting Secretary of State

London, July 18, 1945 — 5 p.m.
Secret
7241

Ambassador Mallet, proceeding Madrid Monday, expressed himself this morning as in much doubt how to handle Franco. Franco’s latest moves considered by FonOff unsatisfactory, unencouraging and it seems to be feared Franco by holding on will play Spain into Soviet hands. Garran of FonOff expects interesting developments Spanish scene in view of Soviet interest in Tangier coupled with renewed radio campaign against Franco which now features, Garran said, instructions for sabotage.

Sent Dept as 7241; repeated Madrid 189.

WINANT

881.00/7-1845: Telegram

The Ambassador in the United Kingdom to the Acting Secretary of State

London, July 18, 1945 — 5 p.m.
Secret
7242

The British do not intend to raise Tangier question at big three meeting except in so far as determining whether Russia will participate is concerned, according to Harvey and Garran of FonOff. Embassy was told today that while Russian request presumably will be granted British hope to use their concurrence as bargaining point with Russia. It was stated British are dissatisfied with tardy and sometimes unsatisfactory Soviet action on British requests. Garran said Spanish Under Secretary Castillo has told Bowker if Russians brought in Spain will revert to status quo ante 1923. FonOff evidently believes Soviet Govt out to embarrass Franco to fullest and has noted anti-Franco Soviet broadcasts recently stepped up considerably.

Sent Dept as 7242; repeated Paris 461; Madrid 190; Tangier 44; Moscow 255.

WINANT

133 
740.00119 Control (Germany)/7-1745

Memorandum by the Central Secretariat

[Washington,] July 18, 1945
Top secret
SC-145b

Proposed Communication to the Secretary at the Berlin Meeting on the Objective of the United States Government in the Occupation of Germany

There is attached a redraft of the proposed communication to the Secretary on the objective of the United States Government in the occupation of Germany.

This redraft has been prepared by Mr. MacLeish in the light of comments in the meetings of the Staff Committee on July 16 and July 17.

[Annex]

Subject: OBJECTIVE OF THE UNITED STATES GOVERNMENT IN THE OCCUPATION OF GERMANY

  1. The Allied purpose with respect to the future of Germany was stated in the communiqué issued at the close of the Crimea Conference as being “to ensure that Germany will never again be able to disturb the peace of the world.”

  2. This objective was to be achieved by the unconditional surrender of Germany and its occupation by the Allied armies which would apply certain measures of control, political, economic, and social. The achievement of the objective by the destruction of the German people was never considered as a possibility. Even the partition of Germany was rejected. Reliance was put upon the occupation as the means of attaining the end in view.

  3. Programs of occupation have been developed by the Allied governments, but their relation to the overall purpose “to ensure that Germany will never again be able to disturb the peace of the world” has not been defined. It is essential to the successful administration of any program or programs of occupation ultimately approved that their relation to the end purpose should be clearly understood by those responsible for their direction.

  4. It is sometimes assumed that the occupation of Germany will remove the German threat to the peace of the world solely by destroying the German war potential. It is undoubtedly true that certain measures contemplated will deprive Germany not only of existing arms but of the materials and machines necessary to the waging of modern war. It is highly improbable, however, that the occupation will deprive Germany permanently of the material means of waging war, since it is highly doubtful that the occupation itself will be permanent.

  5. An illustrative parallel can be drawn between the treatment of Germany and the treatment of individual criminals in modern penal institutions. It is well-known to penologists that, although numerous criminals are condemned to prison for life, and even for terms beyond life expectancy, few such criminals ever die in prison. The violence of the public demand for severe punishment declines rapidly as time passes, and life-term convicts are commonly released, at first under parole and then completely, after fifteen to eighteen years. There are already signs that the violence of the demand for German punishment is subsiding, and it is highly improbable that Allied occupation of Germany – at least American occupation – can be continued beyond the period of a few years.

  6. Furthermore, the principal war potential of Germany is not German industry or German raw materials. The principal war potential of Germany is the German people whose industrial and scientific aptitude and whose docility in accepting military and social discipline have been demonstrated over a considerable period of time. Since the destruction of the German people is not thinkable, and since it is unlikely, not to say inconceivable, that the German people will be kept under permanent control and surveillance from without, it would follow that the Allies cannot put their sole or even their principal reliance, for the achievement of their over-all purpose, on the destruction of the material means of making war.

  7. Over and above their reliance upon the destruction of the material means of waging war, the Allies will be obliged to attempt to bring about a change in the attitude toward war of the German people. If we are not prepared to destroy the German people, and if we are not prepared to police the German people permanently, we must attempt to change the German people in such a way that the German nation, when finally freed of occupation and surveillance, will be a nation which will not be a threat to the peace of the world.

  8. A relevant consideration is the fact that weapons developed, or in the course of development, during the present war indicate not only that future wars will be increasingly destructive but that they will be waged with weapons which a scientifically and industrially minded people can produce under conditions which will make surveillance difficult.

  9. If this analysis is substantially correct, then the purpose of the German occupation is to remove the German threat to peace by changing the German attitude toward peace. We are occupying Germany, in other words, with a view to changing the social and political character of the nation to such an extent that Germany can be trusted at some future time with independent existence as a nation in a world in which weapons will be more destructive and more difficult to control than they have ever been before.

  10. It should be noted that this objective conforms to the objectives of the United Nations Organization and to the situation which the establishment of that Organization will create. A peaceful and peace-loving Germany could be introduced at some appropriate time into the United Nations where the measures of the Organization for security and for peace could be brought to play affirmatively rather than negatively.

  11. The explicit recognition that the occupation of Germany is intended to produce a change in the German people would enable us to plan the various measures of occupation more intelligently and to administer them more effectively. At the present time, there is a tendency to make a distinction between political, economic, and military measures for Germany, on the one hand, and measures for what is called the “reeducation” of the German people on the other. Actually, if the present analysis is correct, all aspects of the occupation, whether military, or economic, or political, or social, have one end objective, which is largely psychological: to create a Germany which can be trusted to exist without continuing occupation and surveillance – a Germany which can be re-admitted to the society of peaceful nations. The success of all measures taken in the occupation should therefore be judged not by their immediate consequences alone but by their ultimate effect upon the social and political structure of Germany.

  12. There will, of course, be conflicts from time to time between the short-term objectives and the long-range purpose of the occupation. For example, the use of German output for the relief of liberated areas may create economic distress in Germany which will make the labor of the conversion of Germany to our views and our outlook more difficult. However, the explicit recognition of the true long-range objective of the occupation, whether or not in conflict with certain short-term purposes, is essential to the success of the undertaking.

  13. Something more is required, however, than the explicit declaration of this purpose. The purpose must also be warmly approved and not shamefacedly admitted. It is our intention to employ every means at our disposition, economic and political means as well as the more direct means of education and information, to produce the change in German thinking and German beliefs and German psychology which we desire.

  14. Furthermore, we must be clear in our own minds, not only as to the Germany we wish to change but as to the Germany we wish to put in its place. The soul of man abhors a vacuum quite as much as nature abhors one. You cannot replace something with nothing in the mind of an individual or the mind of a nation. We must assume, although we have no explicit knowledge, that the Russians are clear as to their intentions on this point. Presumably they propose to substitute for Nazi Germany a Germany at least sympathetic to Communism. We presumably believe that a Germany converted to respect for the worth and dignity of human beings and a belief in the basic principles of justice and in the right of men to govern themselves would be a Germany which we could trust. If this, however, is our purpose, we must recognize it and pursue it consciously. We must play again the role we played at the beginning of our history. We must be ready and willing to propagate ideas of liberty and justice and human dignity.

  15. The important point, however, is to ascertain at the earliest possible moment what the other occupying powers have in mind with reference to the kind of Germany to be set up and the means by which it is to be established. It has been pointed out in a paper delivered to the Secretary on the subject of German reeducation that it is highly desirable that the occupying powers should reach an understanding as to the common denominators of a policy for reeducation in order that Germany may not be turned, under the occupation, into an ideological cockpit. If the analysis of the present paper is correct, the same considerations would lead to the same conclusion as to the entire program of occupation. It is therefore recommended that conversations be undertaken in the early future to determine, if possible, a common Allied position as to the question of the kind of Germany we wish to see established and the means by which we propose to bring it about.

134

The Delegation to the Allied Commission on Reparations to the Representative on the Allied Commission on Reparations

Moscow, 18 July 1945
Secret
priority

To US Headquarters Berlin District Visitors Bureau for Ambassador from Sproul, Abramovitz and Bergson signed Deane M 25043. (Confmess 5)

  1. Approximately 40 percent of both movable and fixed capital assets before the war were located in Russian Zone. This includes Berlin.

  2. Movable capital assets east of Oder-Neisse line were worth about 6 Billion Reichsmarks in 1938. This was about 12 percent of total Germany. This does not include value of land, mineral reserves, fixed plant, housing, commercial establishments or commercial and manufacturing inventories. Values are net after depreciation. Present value probably not less than in 1938.

  3. Based on value added, industrial and mining output. Area east of Oder Neisse was about 28 Billion Reichsmarks in 1938. This was about 7 percent of total Germany.

  4. It should be noted that because of dislocations involved, loss of territory may affect Germany’s capacity to pay in somewhat greater degree than percentage figures above would suggest.

135 
740.00119 (Potsdam)/7-3145

The Representative on the Allied Commission on Reparations to the Secretary of State

[Babelsberg,] July 18, 1945

My Dear Mr. Secretary: The attached memorandum on the relationship between reparations and ceded German territory embodies what we believe to be certain improvements over a similar memorandum submitted to you in my letter of July 16th.

The purpose of this proposal is quite simple. It aims to distribute reparation burdens as well as benefits among those receiving ceded German territory. The first three points provide that any exportable surpluses of commodities from any ceded territory shall be subject to the following priorities:

  • First, Shipment into Germany to such extent as these commodities are needed to sustain minimum subsistence.

  • Second, To pay for imports into Germany where needed to sustain minimum subsistence.

  • Third, For payment into the general reparation fund to be allocated among claimant nations.

The fourth and last point provides that the value of capital equipment and natural resources located in any ceded territory shall be accounted for as reparations delivered to the receiving nation.

Since I understand that the subject of the eastern boundaries of Germany will be considered at today’s meeting of the beads of the Governments, I urge that you give this subject your immediate personal consideration.

Respectfully,
EDWIN W. PAULEY

[Attachment]

Memorandum by the U.S. Section, Allied Commission on Reparations

Re: Relationship between Reparations and ceded German territory

As a part of any treaty recognizing the ceding of any portion of Germany as its boundaries existed at the end of 1937, it shall be provided that:

  • One. Any property or current production available for removal from any ceded territory shall be first utilized within Germany to whatever extent occupation authorities require to avoid the necessity of imports into Germany.

  • Two. Thereafter, the value or proceeds of any property or current production from any ceded territory available for delivery outside of Germany shall be first used to pay for approved imports into Germany.

  • Three. If sufficient funds are available to pay for all such approved imports, the proceeds or value of any assets delivered from any ceded territory shall be treated as a reparations delivery to such nation or nations and in such amounts as may be designated by the Allied Commission on Reparations, or a permanent Reparations Agency to be created.

  • Four. The value of capital equipment and natural resources within the boundaries of any territory ceded from Germany to any other nation shall be accounted for as reparations. To the extent that the production of such equipment or resources is pledged for reparations or to pay for approved imports into Germany, the reparation value of such equipment and resources shall be correspondingly decreased.

(Practically, the foregoing obligations may well have to be funded both in the form of agreements to deliver certain fixed quantities of coal, zinc, coke, iron, steel, cement, calcinated soda, etc., for a definite period of years, and by reducing the amount of reparations which will be delivered to the nation receiving ceded territory or delivered to another nation for whose security territory may be ceded.)

The Representative on the Allied Commission on Reparations to the President

[Babelsberg,] July 18, 1945

Memorandum to the President

It is important that we get a definite picture of what Generalissimo Stalin had in his mind yesterday when he raised the question of securing reparations from Italy.

As you know, Italy is going to be dependent on the United States for its sheer existence during the coming winter. The economic situation there verges on a state of almost complete economic disorganization. I understand that our Army representatives on the scene have estimated that the United States would have to ship approximately 750 million dollars worth of food and other materials into Italy in order to tide the country over until next spring. Investigations made by FEA place the figure at over a billion dollars, while the State Department estimates it to be no less than 500 million.

Under these circumstances, it is quite evident that we can look for very little in the form of reparations from Italy. Indeed, in the final analysis, any reparations coining from there would in fact be a contribution from the taxpayers of the United States. We certainly cannot permit materials and equipment to be taken out as reparations when at the same time we are pouring in hundreds of millions of dollars to keep the Italian people alive.

In order to clarify this issue fully, I am taking the liberty of suggesting that you ask the Generalissimo just what he has in mind when he talks about “reparations from Italy”. You might wish to ask him to be specific as to what he expects to take out and how large a sum he has in mind.

Respectfully
EDWIN W PAULEY

136 
740.00119 EW/7-1845: Telegram

The Acting Secretary of State to the Assistant Secretary of State

[Washington,] July 18, 1945
Secret
56

(For Assistant Secretary Clayton.)

Bucharest has seen a letter from Russians to Rumanian Prime Minister informing latter that German-held shares in Rumanian oil corporations “pass into the patrimony of the Soviet Union as partial compensation for damages caused to USSR by Germany.” Objectionable features of this are obvious. It (1) asserts Soviet desire for share interests as reparation or otherwise; (2) manifests USSR intention to obtain exclusionary control Rumanian oil industry; (3) bypasses current Four Power discussions regarding treatment of German assets in ex-enemy and neutral countries from economic security and reparations points of view; and (4) raises serious question regarding looted property.

Accordingly, it is suggested that positive steps be taken at Potsdam Conference to forestall this action.

In addition to basing our objections to proposed Russian action upon as many of the foregoing grounds as can be mentioned to Russians, following arguments could be advanced:

  1. No shares can be subjected to control or disposition as German by Soviet for its individual advantage unless it is established that they were not acquired by the Germans in looting transactions outlawed by United Nations’ declaration of January 5, 1943. It might be added that US would have to be satisfied that particular shares were not United Nations’ property which had been looted by Germans;

  2. shares which have met above burden of proof (i.e. shown conclusively to have been German owned through legitimate transactions) should be governed by general principles to be established by Four Powers regarding treatment of German assets in ex-enemy or neutral countries. It should be emphatically denied that such assets in Rumania pass into patrimony of USSR alone as compensation by Germany for war damage. US cannot admit competence of USSR to assert unilaterally ownership rights to German assets in ex-enemy or neutral countries. Without exception US has treated such assets coming within its control in these countries as subject to trusteeship on behalf of all four occupying powers. Similar standard of conduct expected of Soviet Union and must be strongly insisted upon. It should be obvious to Soviet Government that in three neutral Western European countries, German external assets will be principally under control of British and ourselves.

  3. Article 8 of Rumanian Armistice5 pledges the Rumanian Government not to allow the expropriation of any form of German property without the permission of the Allied (Soviet) High Command. While we recognize that protests can hardly be based on actual wording of this article, this Government maintains control should be exercised on behalf of and with respect to interests of other United Nations, particularly since Article 18 provides that Allied (Soviet) High Command, in controlling execution of Armistice, acts on behalf of the Allied Powers.

Please inform Harriman and Pauley. Inform whether this message should be repeated to Moscow and Bucharest for information.

[GREW]

800.85/7-1845: Telegram

The Acting Secretary of State to the Assistant Secretary of State

[Washington,] July 18 [1945]
Secret
57

For Clayton.

Following is for your information in event Admiral Land’s attendance at conference leads to discussion of question of inviting Italy to join United Maritime Authority. Italy has intimated its desire to be invited to join UMA and British Foreign Office has inquired as to Department’s views. Foreign Office suggests awaiting conclusion peace treaty with Italy. We have been discussing subject informally with WSA. Opinion within Department leans toward extending invitation now, in line with broad general policy of promoting resumption of responsible Italian participation in international affairs and strengthening Italian political and economic status. WSA considers invitation inopportune at this time for fear of jeopardizing smooth operations UMA. Its opposition is based on (1) apprehension of French, Greek and Yugoslav resentment, (2) belief that Italian political status first be clarified as by admission Italy to United Nations and (3) doubts as to competence Italian authorities and shipping operators to function in accordance with UMA requirements. We are not fully in concurrence these objections insofar as they touch on political relations and contemplate requesting more detail as to question of competence, particularly as to steps Italy would have to take to remove this objection. However at WSA request we intend to leave issue in statu quo until Admiral Land’s return particularly as WSA state they are taking steps meanwhile to improve Italian position by substituting specific charter arrangements in place of Admiral Cunningham Agreement as basis for control of Italian ships, by considering possibility of including provisions in charters to compensate Italy for shipping services, and by formulating with Ministry of War Transport arrangements for greater Italian participation in UMA operations in Zone III Mediterranean area.

[GREW]

137

The Navy Department to the Commander, U.S. Naval Forces in Europe

Washington, 18 July 1945
Secret
routine

This is serial No. 33. CominCh and CNO addressed ComNavEu for action and ComNavForGer for info and directed info to be forwarded CominCh and CNO.

Admiralty … [messages of July 7 and 11] indicate no US representation on Capcraft Commission or provision for protecting US interest in disposing of captured enemy small craft including tugs for immediate use in Pacific.

There is an immediate and urgent need for seagoing tugs in carrying out approved primary operations in the Pacific. Request you investigate and if desirable arrange equal representation on Capcraft Commission or set up counter commission for US account in order to secure all possible immediate assistance for Pacific seagoing tug requirements. Suggest substitution of captured German tugs for US tugs now operating ETO.

WSA and War Washington have been advised of Admiralty dispatches and feel their interest identical with ours and that you and local War and WSA representatives should handle to satisfactory conclusion.

138 
868.00/7-1745

The Deputy Director of the Office of Near Eastern and African Affairs to the Assistant Secretary of State

Berlin Conference, July 18, 1945

Memorandum

Subject: GREEK ELECTIONS

The attached telegram No. 38, July 17, from the Department, makes our proposed telegram on Greek elections unnecessary.

The Department agrees with the British suggestion in substance but objects to the British text of a joint “invitation” to the Russians. The Department prefers that we and the British propose that the four powers supervise the elections rather than that the United States and the United Kingdom “invite” the Russians and French to participate. I think the Department’s point well taken and believe I can work out a suitable agreement with the appropriate member of the British delegation, if you would like me to try.

The Department also apparently wishes to limit the proposal to supervision of the Greek parliamentary elections and not to include the subsequent plebiscite regarding the King. The Department doubtless thinks that only one bridge should be crossed at a time. I agree.

G[EORGE] V A[LLEN]

139 
740.00119 Potsdam/7-1845

The Acting Secretary of State to the Secretary of State

Washington, July 18, 1945
Secret

Memorandum for the Secretary of State

The Italian Ambassador called on me this morning and left with me the appended papers which he asked be sent to you for the President’s and your consideration during the present meeting at Potsdam. The Ambassador said that his Government is seriously worried about indications that a peace treaty for Italy might be drawn and that the British and Soviet Governments are inclined to make the terms as harsh as possible. He said that if this were done it would destroy Italian morale and make it impossible for Italy to recover its position in the world, which he believed was not in the best interests of the European nations. The Ambassador feared that the general lines for such a treaty would be laid down at the present meeting and would be accepted. He asks on behalf of his Government that the United States Government take a position at Potsdam which would avoid laying down harsh terms for Italy.

JOSEPH C. GREW

[Enclosure 1]

The Italian Ambassador to the Acting Secretary of State

Washington, July 18, 1945
N. 5760

My Dear Mr. Grew: I have just received from Rome instructions to officially thank the Department of State in the name of the Italian Government for the so encouraging assurances recently given to me and indicating the intention of the United States not to proceed to the signature of a treaty deemed inequitable or oppressive for Italy and to do their utmost, from the Potsdam Conference on, to avoid that such a tendency should prevail.

My Government have also deeply appreciated the verbal communication according to which it was the expectation of the United States Government, that before any Italian peace treaty be put in final form, a full opportunity be offered to the Italian Government to discuss it and present their views.

In consideration of the friendly spirit of such assurances, I want to convey to you personally the heartfelt and profound gratitude of my Government who have highly appreciated this new evidence of the purposes of equity and generous comprehension inspiring the United States toward the Italian nation, in the difficult international situation confronting it at the present time.

Please accept [etc.]

TARCHIANI

[Enclosure 2]

The Italian Ambassador to the Acting Secretary of State

Washington, July 18, 1945
N. 5759

My Dear Mr. Grew: My Minister of Foreign Affairs has directed me to convey to the Department of State our deepest gratitude for the action taken with regard to our declaration of war against Japan and for the very valuable advice given us.

Mr. De Gasperi has instructed me to tell the Department of State that the Italian Government is placing its highest hopes in the action that the President of the United States of America may deem it fitting to take at Potsdam for the purpose of alleviating the terms of a peace treaty for Italy. The Foreign Minister has also asked me to inform you of the following views the Italian Government has on the matter.

It is certain that, should particularly harsh peace terms be imposed upon Italy, even though not in the form of a veritable “Diktat”, thereby humiliating and thwarting the Italian nation, the orderly development of a working democracy in Italy would be seriously endangered.

. . . . . . . . . . . . . .

The basic necessity for Italy – as the Department of State fully realizes – is, at the present time, to be released from the Armistice terms, and to be internationally rehabilitated, so as to allow her to take part in the negotiations for the peace treaty in which she is concerned.

If, therefore, the action of the President of the United States and of the American Delegation at the Potsdam Conference should encounter obstacles and difficulties …, the Italian Government would deem it more preferable if provisional solutions could be adopted which, although settling the fundamental problem of the moral and juridical status of Italy, would leave open the more controversial questions, such as those of Venezia Giulia, of the final settlement of the Italian colonies, and of the fleet (the latter being bound to constitute, in the firm intention of the Italian Government, an important part of the Italian contribution to the war against Japan).

The Italian Government shall be extremely grateful to the United States if, were such a necessity to arise, they would consider it possible to withhold final decisions which would allow Italy to make some headway against opposing international currents, after having, of course, succeeded in attaining on a general basis her international rehabilitation. This would leave to time and to the evolution of the European events in general and of the Balkan situation in particular the possibility of working out with more chances of equitable solutions, a far-reaching and constructive European settlement.

. . . . . . . . . . . . . .

In bringing to your knowledge, according to instructions received, the above-mentioned viewpoints of the Italian Government, I shall be very grateful to you, Mr. Grew, if you will kindly communicate the foregoing to the President of the United States or to the American Delegation at Potsdam.

I avail myself [etc.]

TARCHIANI

140

The State-War-Navy Coordinating Committee to Members of the Committee Panel at Babelsberg

Berlin, 18 July 1945
Top secret
Memorandum for: Mr. Dunn
Mr. McCloy
Admiral Gardner

Subject: UNITED STATES POLICY REGARDING DARDANELLES AND KIEL CANAL

References: JCS 1418 SERIES

The attached memorandum to the Secretary of State, embodying a report by the Joint Chiefs of Staff on recommended U.S. policy concerning the Dardanelles and the Kiel Canal, is circulated for informal consideration.

It is requested that you indicate your concurrence or comments.

For the State-War-Navy Coordinating Committee:
H A GERHARDT
Colonel, GSC Acting Secretary SWNC

141 
740.00119 Potsdam/7-1845: Telegram

The Ambassador in the United Kingdom to the Political Adviser to the Representative on the European Advisory Commission

London, 18 July 1945
Secret
urgent

Tripartite Conference Babelsberg for Mosely from Winant serial number 4307

Please read Dept’s 5766 July 14 to London repeated to Hoechst as 112. No word to date received at Soviet Embassy here from Moscow permitting clearance and signature of additional requirements agreement and agreement amending agreement on zones Germany.

740.00119 Potsdam/7-1845: Telegram

The Ambassador in the United Kingdom to the Political Adviser to the Representative on the European Advisory Commission

London, 18 July 1945
Secret
urgent

Tripartite Conference Babelsberg for Mosely from Winant serial number 4307.

… No word to date received at Soviet Embassy here from Moscow permitting clearance and signature of … agreement amending agreement on zones Germany.

142

The Pittsburgh Press (July 18, 1945)

JAP WAR TOPS TRUMAN’S BIG THREE LIST
Peace plan can follow, Allies told

Must spare lives, President says
By Merriman Smith, United Press staff writer

…

143

Background of news –
A different Potsdam

By Bertram Benedict

…

144

London press protests gag by Big Three

Paper predicts rumor scramble

…

145

Simms: U.S. lives may depend on future of Mikado

Bitter debate rages over disposition of Jap Emperor
By William Philip Simms, Scripps-Howard foreign editor

…

146

Youngstown Vindicator (July 18, 1945)

Editorial: Our policy toward Hirohito

…

147

ON THE RECORD —
The unconditional surrender of Japan

By Dorothy Thompson

…