Potsdam Conference (TERMINAL)

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

…

148

Lawrence: Russians seen in peace role

Molotov’s talk with Jap envoy may foreshadow surrender move
By David Lawrence

…

149

U.S. State Department (July 18, 1945)

761.94/7-2145: Telegram

The Japanese Ambassador in the Soviet Union to the Japanese Minister of Foreign Affairs

Moscow, July 18, 1945 — 11:28 p.m.
[Translation]
very secret
very urgent

1416

Re your telegram No. 913-2

The so-called unconditional surrender or peace obtained by some-thing close to unconditional surrender referred to in my telegram No. 1392 and others which I sent from time to time, omits the problem of protecting the fundamental character of our nation. It goes without saying that even in conducting negotiations with the Soviets on the subject of your telegram, the absolute desire on the part of 70 million citizens as regards our form of government should be forcefully stressed. Therefore I have already added a statement in the latter portion of my telegram No. 1143, believing that there should be no fear of a misunderstanding arising therefrom on this matter; I mention this only in order to make sure.

If the matter of the preservation of our form of government were already taken care of, whether you call it unconditional surrender or whether you call it something close to this condition, in the final analysis it is a matter of degree. As for us I think it should not be made an absolute condition. Concerning the early portion of the telegram, I would like to express my humble opinion at another time after giving the matter full consideration.

150

Log of the President’s Trip to the Berlin Conference

Wednesday, July 18:

Sergeant Truman had breakfast with the President this morning.

The President conferred with the Secretary of State and a number of his advisers during the forenoon.

At 1315 the President, accompanied by Mr. Ross, General Vaughan, and Captain Vardaman, left the Little White House by foot for the Prime Minister’s quarters. There the President lunched privately with the Prime Minister while Mr. Ross, General Vaughan, and Captain Vardaman had lunch with Junior Commander Mary Churchill and some, other members of the Prime Minister’s personal staff.

At 1450 the President, together with the Prime Minister and Miss Churchill, left the Prime Minister’s residence and walked down the street to Mr. Eden’s quarters where they met Mr. Eden and Secretary Byrnes. The party then returned to the Prime Minister’s house. The President’s party assembled at the Prime Minister’s and left with him for Generalissimo Stalin’s quarters so that the President could return Marshal Stalin’s earlier call.

At 1500 a pouch with mail for the White House was dispatched to Washington.

1504: The President and his party arrived at the Generalissimo’s quarters. The President was met as he alighted from his car by Mr. Molotov who escorted him and his party inside where Mr. Stalin awaited. Although most of our party had just left the luncheon table, we were ushered to a large dining table where a buffet lunch was served us. After lunch with attending toasts, the President talked briefly with the Generalissimo. Then they posed for still and motion pictures. The President and party left the Generalissimo’s house at 1600 for Cecilienhof. We arrived at the Palace at 1608.

At 1615 the second meeting of the Berlin Conference was convened. The meeting adjourned at 1800, and the President and his party left immediately to return to the Little White House.

1930: Assistant Secretary Clayton, Assistant Secretary Dunn, and Mr. Donald Russell were dinner guests of the President. The U.S. Headquarters, Berlin District, Army Band, under the direction of Warrant Officer Frank J. Rosato, played during the dinner hour…

151

Salzburger Nachrichten (July 19, 1945)

Truman führt den Vorsitz

BERLIN, 18. Juli (PW) – Am Dienstagnachmittag begann in Potsdam die Dreimächte-Konferenz. Folgendes amtliche Kommuniqué wurde ausgegeben:

Die Potsdamer Konferenz der Regierungschefs von Großbritannien, den Vereinigten Staaten und der Sowjetunion nahm heute um 17 Uhr ihren Anfang. Der Präsident der Vereinigten Staaten wurde von den beiden anderen Regierungschefs aufgefordert, den Vorsitz bei den Zusammenkünften der Konferenz zu übernehmen. Es fand ein vorläufiger Meinungsaustausch darüber statt, welche Fragen von den drei Regierungschefs entschieden werden sollen. Ferner wurde beschlossen, dass die drei Außenminister regelmäßig zusammentreffen sollen, um die vorbereitende Tätigkeit der Konferenz durchzuführen.

Churchill lud Präsident Truman zu einem Frühstück in die Villa am See den Wohnsitz des Ministerpräsidenten, ein. In einer der benachbarten Villen empfing der britische Außenminister Anthony Eden den amerikanischen Außenminister James Byrnes als Gast.

152

L’Aube (July 19, 1945)

Quinze hommes autour d‘une table ronde gardent le secret de leurs entretiens

…et 180 journalistes estiment s’être déplacés pour rien

…

153

U.S. State Department (July 19, 1945)

871.6363/7-1945: Telegram

The Chargé in the Soviet Union to the Acting Secretary of State

Moscow, July 19, 1945 — midnight
Secret
2634

Letter went forward to Foreign Office in conformity with Department’s 1621, July 16, warning that exclusive Soviet Rumanian trade pact and monopolistic agreements on oil would cause serious concern in United States Government and might compel United States Government to reconsider present favorable oil policy toward USSR. (To Department, repeated Bucharest 94, London 372). Harriman has been informed.

KENNAN

154

Meeting of the Joint Chiefs of Staff, 10 a.m.

JCS 198th Meeting

Present
Fleet Admiral Leahy Brigadier General Lincoln
General of the Army Marshall Brigadier General Esposito
Fleet Admiral King Captain McDill
General of the Army Arnold Captain Stroop
General Somervell Captain Oster
Lieutenant General Hull. Colonel Peck
Vice Admiral Cooke Colonel Dean
Rear Admiral Flanigan Colonel Donnelly
Major General Gross Colonel Stone
Major General Deane Colonel Riggs
Major General Norstad Colonel Cary
Brigadier General Cabell Lieutenant Colonel Woodward
Brigadier General Jamison
Secretariat
Brigadier General McFarland Captain Moore

JCS Minutes

Potsdam, July 19, 1945, 10 a.m.
[Extract]
Top secret

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

Information for the Russians Concerning the Japanese War (CCS 884, 884/1 and 884/2)

GENERAL HULL said that it was the desire of the British that information be given to the Russians on a combined basis. This had not been the policy of the Joint Chiefs of Staff. The Combined Intelligence Committee had prepared an intelligence report on the Japanese situation which had been presented to the Combined Chiefs of Staff and the Joint Intelligence Committee had prepared a report which might be given to the Russians. He said that he did not believe that the British would agree to giving the Russians the Combined Intelligence Committee report, but he thought the Joint Chiefs of Staff would be willing to give the report of the Joint Intelligence Committee to the Russians.

GENERAL MARSHALL said that he thought the British were more concerned in regard to intelligence that might be given the Russians on special projects than in regard to operational intelligence.

GENERAL DEANE said that he believed that the British had two motives in presenting their views: first, to share in the operational running of the war, and second, to exchange information with the Russians on a quid pro quo basis.

He said that he believed that we should give the Russians operational intelligence without reference to the British. He agreed to a certain extent in the exchange of intelligence with the Russians on a quid pro quo basis, but it had been the policy of the Military Mission to Moscow to go further than that and to provide the Russians with information they needed to win the war. He felt that Russian security was entirely adequate and that they would not disclose information furnished them. It was his view that the only relations that the British would have with the Russians in connection with the war in the Far East was in the exchange of intelligence, whereas our interest was operational and much greater than that of the British.

ADMIRAL KING said that he had noted that the British paper on the subject (CCS 884/2) was written before yesterday’s meeting of the Combined Chiefs of Staff and he felt that their motive at that time was to take an equal part with the Joint Chiefs of Staff in the operational strategy of the war against Japan. He thought there should be a delimitation between operational intelligence and general intelligence; that we should give the Russians directly such operational intelligence as we considered necessary and that general intelligence should be furnished the Russians on a common basis which would mean a continuation of the present arrangement.

The Joint Chiefs of Staff: Agreed to discuss this subject with the British Chiefs of Staff.

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