Potsdam Conference (TERMINAL)

13 
500.CC/7-1645 Telegram

The Acting Secretary of State to the Secretary of State

[Washington,] July 16, 1945
Secret
32.

London’s 7146, July 15 reports Eden is to discuss with you our proposed announcement of support for Ital admission to World Security Organization (our 16, July 11), Brit meanwhile urging we withhold announcement until Ital status discussed at Big Three meeting.

We still feel that it is important both here and abroad to announce our support as soon as possible after Ital declaration of war on Japan (officially announced yesterday). Moreover in the light of SAC’s report (Caserta’s 2964, July 15) on Brit FonOff position re Italy … we believe it even more necessary to issue following statement without awaiting Big-Three discussions.

Begin Statement. The Govt of the US is convinced time has come to recognize new democratic Italy – allied with UNations in war against Germany and now in war against Japan – as member of family of nations. It therefore intends to support Italy’s admission to World Security Organization as soon as that Organization is in position to consider this application for membership.

This decision does not spring from the consideration that Italy has already paid heavily – and will long continue to pay – for the fascist crimes conceived on Ital soil. It is motivated by conviction that cause of world freedom, peace, and progress requires bringing into World Security Organization the energies of every nation as soon as it can prove dedication to that cause; and it is based on spirit and achievements of Ital people in this sense during past two years of grave moral and material suffering. The people of Italy have thrown off Fascism, established democratic laws and procedures, formed a representative govt, fought courageously and well against Germans, joined in struggle against Japan. They merit the recognition of the UNations for their contribution as cobelligerents and the support of the UNations in their earnest efforts to build a sound democratic pol and econ order so that they will not again be brought through confusion into totalitarianism. End Statement.

Do you approve of issuing this statement July 18? We would likewise inform the other permanent members of the Security Council of our proposed announcement.

[GREW]

14 
740.0011 PW/7-1645

The Secretary of War to the President

[Babelsberg,] 16 July 1945
Top secret
[Extract]

Memorandum for the President

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

Trusteeship for Korea
I understand this matter was not the subject of a formal agreement at Yalta although the matter was discussed orally.

It was the late President’s view, I am informed, that there should be an international trusteeship of Korea, pending such time as the Koreans are prepared to govern themselves.

The Russians, I am told, have agreed to a four-way trusteeship but no further details have been agreed upon. I understand that. Stalin has urged that no foreign troops be stationed in Korea.

The Russians, I am also informed, have already trained one or two divisions of Koreans, and, I assume, intend to use them in Korea. If an international trusteeship is not set up in Korea, and perhaps even if it is, these Korean divisions will probably gain control, and influence the setting up of a Soviet dominated local government, rather than an independent one. This is the Polish question transplanted to the Far East.

My suggestion is that the trusteeship be pressed. I suggest also that at least a token force of American soldiers or marines be stationed in Korea during the trusteeship.

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

HENRY L STIMSON

15

The Chief of the Military Representation on the Allied Control Commission for Rumania to the War Department

[Bucharest,] 16 July 1945
Top secret
priority

Top secret. M 1240. AFHQ pass to AGWar for War OPD info to ComGenMed, ACC Hungary and ACC Bulgaria from Schuyler Rumania.

In my M-1227 of 13 [14] July, I outlined certain additional rights and privileges which I feel this delegation should be authorized to exercise if we are to be able to carry our full share of duties and responsibilities as US Representatives on the Allied Control Commission for Rumania.

It is earnestly hoped that some definite agreement with respect to these rights and privileges will be arrived at during the course of the Berlin Conference. On the basis of my 8 months experience here and in view of the uncooperative attitude which has been exhibited by the Russians throughout that period, I feel that specific and detailed agreement on the highest levels is absolutely essential to the proper continuance of our work here.

It must be remembered that the Allied Control Commission, as it now operates, is the supreme authority in Rumania; it is a policy making body and an executive agency as well; it exercises complete and autocratic control over all phases of Rumanian national life; hence, even though we may secure certain concessions which result in a broadening of the present Rumanian Government so as to render it more nearly representative of all parties, nevertheless such concessions might and probably would be completely nullified by actions of the Allied Control Commission unless we could assume ourselves a suitable executive role on that body.

For these reasons, the importance of securing for this delegation the minimum additional rights and privileges set forth in my M-1227 cannot be overemphasized.

16 
740.00119 Control (Hungary)/7-1645: Telegram

The Special Assistant to the Director of European Affairs to the Director of European Affairs

[Washington,] July 16, 1945
Secret
34

For Matthews from Reber.

New “order of procedure” for ACC Hungary in second period set forth in Voroshilov’s note to Genl Key meets main point of our proposals (Deptels 1168 May 28 and 1391 June 23 to Moscow) by providing for tripartite agreement on ACC directives on “principal questions” and tripartite participation in meetings of various ACC subdivisions (Retels 281 and 286 July 13 from Budapest). Other minor points we proposed are also included, (such as frequent and regular meetings, free movement of our personnel in Hungary, rapid clearances for entry of planes and couriers) but the wording of these clauses is not entirely satisfactory. Reference in clause 2 to mixed commissions is not understood, as this phrase appears neither in existing statutes nor in our suggested revision.

We believe Soviet note offers real basis for agreement on reorganized ACC. However, since original statutes were negotiated by three Allied Governments, their revision should be result of further negotiation and agreement of all three and not of decision of Soviet Govt alone. If agreement in principle on truly tripartite ACC, which seems possible on basis of Soviet proposals, can be reached at Potsdam, we think detailed working out of statutes might well take place at Moscow after Conference or at Budapest.

Dept is suggesting to Schoenfeld that he and Key send you any further comment they may wish to make after further study of the Soviet note.

17 
740.00119 Potsdam/7-1645

Draft Memorandum by the Political Adviser to the Representative on the European Advisory Commission

[Babelsberg,] July 16, 1945

Memorandum for the Secretary

Creation of a Separate Rhineland-Ruhr
There are several proposals for special treatment of the Rhineland-Ruhr. They have in common the assumption that control by the Western powers of the economic resources of this area, whether by political or economic means or by a combination of them, will provide a means of assuring our security interests in the European settlement.

All these proposals raise a number of complicated questions, which are bound to be advanced by the other Governments. Before approaching our Allies with this proposal, we need to consider what answers we will give to those questions.

  1. If the pattern of use of the Ruhr iron, steel, coal, and chemicals remains unchanged and these resources undergo final fabrication in many other parts of Germany, what especial benefit will be derived from “controlling” the raw material and crude manufacturing resources of the Ruhr?

  2. If the Rhine-Ruhr is to be drawn away from the rest of the German economy and oriented toward the West, what adjustments would the Western countries, including ourselves, have to make in the pattern of their manufacturing and trade in order to accommodate this important area, even on a reduced scale of production, within the western orbit? In controlling this area the Western powers would be drawn between two conflicting objectives: 1, the desire to prevent or restrict a competition of this powerful area against relatively high cost areas in France and Britain, and 2, the need to provide sufficient export markets in Western Europe and overseas to make the Rhine-Ruhr an economically workable area.

  3. If Germany east of the Oder or Oder-Neisse is cut off, if the Rhine-Ruhr is given a special status and if ten or twelve million Germans are dumped into the rump Germany which would be left in the middle, what economic adjustments would be necessary in that middle area? The middle area is a highly industrial area specializing in machinery and electrical equipment and fabricated consumer goods. To maintain even a minimum subsistence this area would have to become dependent on whatever countries would accept these products in exchange for foodstuffs and raw materials. The most likely market would be found in Eastern Europe because Western European countries and America have highly developed and competitive industries of the same type.

  4. If as the result of creating a separate Rhine-Ruhr state, Germany falls apart, will a Western German state of some sixteen million be able to withstand the pull exerted by a differently organized German state of some fifty million? Both economic and patriotic forces would tend to pull the smaller Western Germany, over the long run, to rejoin the much greater Eastern German state.

  5. If a Rhine-Ruhr state is created, what powers will control it? It is more than doubtful that France, Belgium, and the Netherlands, even in combination, are competent to control this area and to work out the adjustments necessary to make it a workable unit. Britain would suffer many disadvantages if she accepted the creation of a continental bloc of this nature outside her own control. If Britain joins in underwriting and controlling this bloc she will be taking a long step toward establishing a west-European bloc which will inevitably come into rivalry with Russia. For this and other reasons the Soviet Union will either oppose the creation of such a bloc outside her control or will insist on a strong voice in controlling and directing it. If, in order to overcome British and Russian opposition, they are brought into the controlling body, the control over the area would basically be in the hands of the same four powers which are already committed to controlling and policing Germany jointly. The British and Russians would then ask: why introduce the great complication of a separate political unit when they have already agreed to control Germany on a four-power basis?

  6. If this plan is proposed to our Allies, they will ask whether the United States is prepared to underwrite it and, if so, for what period of years and with what commitment of military force and financial contribution. Will such a plan reduce or increase our commitments in Europe and will it present those commitments in a form palatable to the American public and compatible with the purposes with which it entered the war? Will it be able to obtain from Congress the large appropriations which will be necessary to enable the population to subsist during the long period which must elapse before an economically workable adjustment has been made. We must assume that neither France or Britain is able to undertake such an economic commitment on their own resources.

18 
740.00119 Control (Germany)/7-1745

The Secretary of War to the President

[Babelsberg,] 16 July 1945
[Extract]
Top secret

Memorandum for the President

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

Dismemberment of Germany
In speaking of Germany, I refer of course, to that part of the country which it is intended will eventually return to her sovereignty. I would be disposed to grant to Poland some areas on her western boundaries which would tend to compensate her for the territory to be ceded to Russia. I feel however, that the burden is upon Russia to show that suitable provisions will be made to care for the millions of Germans now in those areas. We must make it clear that they cannot be shunted to American responsibility. I would not be disposed to grant sovereignty to France over all the left bank of the Rhine, although certain provisions respecting fortifications and military installations in this area in favor of France would be desirable. No final conclusions on this subject will, I imagine, be reached without consultation with the French.

I would not go further in the dismemberment of Germany, as I believe in modern times it will require the full resources of the remaining area to make possible any reasonable recovery.

As a part of the demilitarization of Germany I would suggest that a thorough study be made by the experts of the three Powers, and submitted to the three governments, of the practicability of a plan for the international ownership and control of the products and resources of the Ruhr and the Saar. I would not approve either a wholesale destruction of these resources or a territorial annexation of the area by either another country or a condominium of countries.

I have just heard the proposal that the Ruhr and the Rhineland should be severed from Germany, and placed as a protectorate under the management of France, Belgium, and Holland. I understand that the proposed severance from Germany is to be complete, except for a customs Verein.

The reasons why I fear any such attempted remedy of the problems which we are facing in the Ruhr, are as follows:

  1. It at once takes out of the heart of Germany many millions of people of complete German race, and severs them from all political ties with the remainder of Germany. The proposed severance is the most drastic kind of dismemberment, far worse than any severance involving territory where there are mixed nationalities. It is likely to cause the most violent political reactions and the political revolutionary attitude and activity known as irredentism.

The history of Europe during the past one hundred and fifty years proved the correctness of the theory of racial self-determination put forward by the Allied Powers at the close of the last World War. During that period we have constantly seen the evolution of homogeneous racial groups and the dissolution of heterogeneous groups. The development of Italy from 1859 to 1870 was an example of the first kind of trend toward racial amalgamation; the dissolution of Austria-Hungary was a prominent example of the severance of badly combined national groups. The mistake after the last war was not the emphasis on self-determination, but the failure to deal properly with economic realities.

  1. The proposed severance of the Ruhr would, I believe, be a mistake not only in ethnic and political matters but also in the economic field. The cutting of the political and economic ties between Germany and the severed provinces will impair the capacity of both the areas to sustain a reasonable peacetime economy. A protectorate of a foreign race and nationality, will not lead to an effective operation. In the light of the great need for production throughout the European area this let down would be a serious blow to any prompt rehabilitation of Europe. Moreover, by reason of the inability of the remaining portion of Germany to obtain the economic benefit of the Ruhr and Rhineland, great impairment of the economy of the remaining portion will result. Europe as a whole will inevitably suffer.

  2. I believe that the severing of the Ruhr from the main portion of Germany will tend to drive the industries which formerly were dependent upon the Ruhr and the Rhineland to look to eastern Germany and Poland. I think there would be a strong tendency to drive Germany toward the east in her economic affiliations and outlook. I do not think that is in the interests of either western Europe or the United States.

The objections I have stated to the proposed severance of the Ruhr would not inhere in even the most drastic kind of international control to prevent the production of war munitions. The study I have proposed would disclose the advantages and disadvantages of the international control which I have suggested.

It is this road rather than the road of political severance I believe we should follow.

HENRY L STIMSON

19 
740.00119 Control (Germany)/7-1745

The Secretary of War to the President

[Babelsberg,] 16 July 1945
[Extract]
Top secret

Memorandum for the President

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

… I would be disposed to grant to Poland some areas on her western boundaries which would tend to compensate her for the territory to be ceded to Russia. I feel however, that the burden is upon Russia to show that suitable provisions will be made to care for the millions of Germans now in those areas. We must make it clear that they cannot be shunted to American responsibility.…

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

HENRY L STIMSON

20 
740.00119 Control (Germany) /7-1745

The Secretary of War to the President

[Babelsberg,] 16 July 1945
[Extract]
Top secret

Memorandum for the President

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

Dismemberment of Germany
In speaking of Germany, I refer of course, to that part of the country which it is intended will eventually return to her sovereignty. I would be disposed to grant to Poland some areas on her western boundaries which would tend to compensate her for the territory to be ceded to Russia. I feel however, that the burden is upon Russia to show that suitable provisions will be made to care for the millions of Germans now in those areas. We must make it clear that they cannot be shunted to American responsibility. …

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

HENRY L STIMSON

21

Truman-Churchill meeting, 11 a.m.

Truman’s quarters, 2 Kaiserstrasse, Babelsberg

Present
United States United Kingdom
President Truman Prime Minister Churchill
Secretary Byrnes Foreign Secretary Eden
Sir Alexander Cadogan

According to Truman: “No business of the conference was discussed. I did tell the Prime Minister that I had an agenda which I would like to present at the meeting and asked him if he had one. He said, ‘No, I don’t need one.’ Then we talked briefly about the latest news in the Pacific.”

22 
740.0011 PW/7-1645

The Secretary of War to the Secretary of State

Potsdam, 16 July 1945
Top secret

Dear Mr. Secretary: I am enclosing herewith the original and a copy for your files of a memorandum to the President relating to the conduct of the war with Japan. It relates to a subject which I think is of supreme importance at the moment, and I would very much like to see the President with you about it at your earliest convenience.

On another matter in which the War Department is greatly interested, namely the administration of Germany, I also have some thoughts which I should like to submit to you and the President. They will be in written form the first thing in the morning.

Faithfully yours,
HENRY L STIMSON

23 
[Enclosure--Extract]

The Secretary of War to the President

[Babelsberg,] 16 July 1945
Top secret

Memorandum for the President

The conduct of the war with Japan
With the great needs of rehabilitation both domestically and abroad facing us, we still find ourselves engaged in war with a major Pacific power. The length and limitation upon our lines of communications to the Pacific combat areas aggravate the strains upon our resources which the wastes of war always impose. The Japanese soldier has proved himself capable of a suicidal, last-ditch defense; and will no doubt continue to display such a defense on his homeland. Yet we have enormous factors in our favor and any step which can be taken to translate those advantages into a prompt and successful conclusion of the war should be taken. I have already indicated in my memorandum to you of 2 July 1945, the reasons which impel me to urge that warnings be delivered to Japan, designed to bring about her capitulation as quickly as possible. While that war is going on, it will be most difficult politically and economically to make substantial contributions to the reestablishment of stable conditions abroad. The longer that war progresses, the smaller will our surpluses become, and the more our overall resources will be strained.

Warning to Japan
It seems to me that we are at the psychological moment to commence our warnings to Japan. The great marshalling of our new air and land forces in the combat area in the midst of the ever greater blows she is receiving from the naval and already established Army forces, is bound to provoke thought even among their military leaders. Added to this is the effect induced by this Conference and the impending threat of Russia’s participation, which it accentuates.

Moreover, the recent news of attempted approaches on the part of Japan to Russia, impels me to urge prompt delivery of our warning. I would therefore urge that we formulate a warning to Japan to be delivered during the course of this Conference, and rather earlier than later, along the lines of the draft prepared by the War Department and now approved, I understand, by both the State and Navy Departments. In the meantime our tactical plans should continue to operate without let up, and if the Japanese persist, the full force of our newer weapons should be brought to bear in the course of which a renewed and even heavier warning, backed by the power of the new forces and possibly the actual entrance of the Russians in the war, should be delivered.

Whether the Russians are to be notified of our intentions in advance in this regard, would depend upon whether an agreement satisfactory to us had been reached with the Russians on the terms of their entry into the Japanese war.

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

HENRY L STIMSON

24

Meeting of the Combined Chiefs of Staff, 2:30 p.m.

CCS 193rd Meeting

Present
United States United Kingdom
Fleet Admiral Leahy Field Marshal Brooke
General of the Army Marshall Marshal of the Royal Air Force Portal
Fleet Admiral King Admiral of the Fleet Cunningham
General of the Army Arnold Field Marshal Wilson
General Somervell General Ismay
Lieutenant General Hull Lieutenant-General Macready
Vice Admiral Cooke Major-General Laycock
Major General Norstad Major-General Hollis
Captain McDill
Captain Oster
Secretariat
Brigadier General McFarland Captain Moore
Brigadier Cornwall-Jones Lieutenant-Colonel Haddon

CCS Minutes

Potsdam, July 16, 1945, 2:30 p.m.
Top secret

Program and Procedure for the Conference (CCS 880/9 and 880/10)

The Combined Chiefs of Staff: Approved CCS 880/10.

Estimate of the Enemy Situation (CCS 643/3)

Sir Alan Brooke referred to the last sentence on page 10 of the paper where the survival of the institution of the Emperor was mentioned. He asked whether the United States Chiefs of Staff had given any thought to the question of the interpretation of the term “unconditional surrender.” From the military point of view, it seemed to the British Chiefs of Staff that there might be some advantage in trying to explain this term to the Japanese in a manner which would ensure that the war was not unduly prolonged in outlying areas. If, for instance, an interpretation could be found and communicated to the Japanese which did not involve the dissolution of the Imperial institution, the Emperor would be in a position to order the ceasefire in outlying areas whereas, if the dynasty were destroyed, the outlying garrisons might continue to fight for many months or years. If an interpretation on these lines could be found an opportune moment to make it clear to the Japanese might be shortly after a Russian entry into the war.

The United States Chiefs of Staff explained that considerable thought had been given to this subject on the political level. One suggestion was that some form of agreed ultimatum might be issued at the correct psychological moment, for example, on Russian entry into the war, the idea being to explain what the term “unconditional surrender” did not mean rather than what it did mean.

Admiral Leahy suggested that as the matter was clearly a political one primarily, it would be very useful if the Prime Minister put forward to the President his views and suggestions as to how the term “unconditional surrender” might be explained to the Japanese.

The Combined Chiefs of Staff:
a. Took note of the estimate of the enemy situation in CCS 643/3.

b. Invited the British Chiefs of Staff to consider the possibility of asking the Prime Minister to raise with the President the matter of unconditional surrender of Japan.

Progress Reports on Operations in the Pacific and Southeast Asia Command (CCS 892 and 893)

Sir Alan Brooke said that the only area not dealt with in these two reports was the China Theater. The British Chiefs of Staff would welcome a report of progress in this theater.

General Marshall described certain features of the operations in the China Theater, particularly as to the effectiveness of Chinese troops when properly equipped. He further stated that a report of operations in the China Theater would be prepared and presented to the Combined Chiefs of Staff.

The Combined Chiefs of Staff: Took note:
a. Of the progress report on operations in the Pacific and Southeast Asia Command in CCS 892 and CCS 893.
b. That the United States Chiefs of Staff would submit later a report on operations in China.

Development of Operations in the Pacific (CCS 880/4)

The Combined Chiefs of Staff: Took note of the memorandum on the development of operations in the Pacific in CCS 880/4.

Report on Army Air Operations in the War Against Japan (CCS 894)

General Arnold commented in detail on certain aspects of the report.

The Combined Chiefs of Staff: Took note of the report on Army air operations in the war against Japan in CCS 894, and of General Arnold’s explanatory remarks.

25 
740.00119 EW/7-1645

U.S. Delegation Working Paper

[Babelsberg, July 16, 1945]

Proposed Agreement on the Political and Economic Principles to Govern the Treatment of Germany in the Initial Control Period

  1. The authority of the Control Council to initiate plans and reach agreed decisions on the chief military, political, economic and other questions affecting Germany as a whole shall be paramount in Germany, and those plans and decisions shall be carried out in each zone of occupation by the national Commander-in-Chief concerned.

  2. In its work the Control Council will be guided by the Crimea Declaration, by the Declaration of June 5, 1945, on the Defeat of Germany, and by the provisions of the Agreement on Additional Requirements which is in the final stage of negotiation in the European Advisory Commission. In addition, the Commander-in-Chief will apply the additional agreed political and economic principles set forth below in this Agreement.

Political Principles

  1. War criminals, including those who have participated in planning or carrying out Nazi enterprises involving or resulting in atrocities or war crimes, shall be arrested and brought to judgment. Nazi leaders and influential Nazi supporters and any other persons dangerous to the occupation or its objectives shall be arrested and interned.

  2. All members of the Nazi Party who have been more than nominal participants in its activities and all other persons hostile to Allied purposes shall be removed from public and semi-public office, and from positions of responsibility in important private undertakings. Those Germans who are permitted to remain in, or are appointed to, official posts (e.g. in the police or the administration) should understand that they hold office only during good behavior.

  3. German education shall be so controlled as completely to eliminate Nazi and militarist doctrines and to make possible the development of democratic ideas.

  4. The administration of affairs in Germany should be directed towards the decentralization of the political structure and the development of local responsibility. To this end:
    (i) local self-government shall be restored throughout Germany through elective councils.
    (ii) anti-Nazi political parties together with freedom of assembly and of public discussion shall be allowed and encouraged throughout Germany.
    (iii) Representative and elective principles shall be introduced into regional, provincial and state (Land) administration as rapidly as results of local self-government seem to warrant.
    (iv) For the time being no central German Political Government shall be established.

  5. Subject to the necessity for maintaining military security, freedom of speech, press and religion shall be permitted, and religious institutions shall be respected. Subject likewise to the maintenance of military security, the formation of free trade unions shall be permitted. The Control Council will supervise the dissemination of public information in Germany.

  6. The Commander-in-Chief will assure the representatives of United Nations and neutral news-gathering agencies all reasonable facilities for the collection and transmission of news material.

Economic Principles

  1. The German economy shall be decentralized for the purpose of eliminating the present, excessive concentration of economic power. To the extent required for carrying out the purposes set forth herein, the Control Council shall permit or secure the establishment of central controls.

  2. In the imposition and maintenance of economic controls, German authorities shall to the fullest extent practicable be ordered to proclaim and assume administration of such controls.

  3. Allied controls shall be imposed upon the German economy but only as may be necessary:
    (a) to carry out programs of military and industrial disarmament;
    (b) to carry out programs of reparation and rehabilitation of devastated areas;
    (c) to assure the production and maintenance of goods and services required to meet the needs of the occupying forces and displaced persons in Germany and essential to prevent starvation, disease or civil unrest;
    (d) to ensure the equitable distribution of essential commodities between the several zones;

  4. The production of arms, ammunition and implements of war, including all types of aircraft and ocean-going ships, shall be prohibited and prevented, and specialized facilities for the manufacture of these articles shall be held for removal or destruction. Production of synthetic oil and rubber, and of aluminum and magnesium shall also be prohibited and the productive facilities held for removal or destruction. Production of other metals, chemicals (including synthetic nitrogen) and machinery shall be rigidly controlled and restricted to minimum, peacetime needs. Excess facilities shall be held for removal or destruction.

  5. The principles agreed upon or under negotiation in the Reparation Commission at Moscow to govern the exaction of reparations from Germany are set forth in Annex 16 to this agreement.

  6. To secure the fulfillment of immediate economic objectives, the Control Council will undertake the formulation and prompt execution of uniform programs in the following fields:

    a) Development of exports for the purpose of
    (i) Meeting a reparation program as formulated by the Reparations Commission.
    (ii) Meeting urgent external needs for relief and reconstruction.
    (iii) Providing means of payment for Germany’s minimum imports.

    Immediate attention should be given to the export of coal and to transfers of railroad rolling stock and livestock for purposes of reparation and economic restoration of Allied countries.

    b) Formulation of a single program of minimum required imports for Germany as a whole and determination of basis for sharing procurement and financing responsibility.

    c) Establishment of machinery to assure equitable distribution of available supplies within Germany.

    d) Establishment of uniform ration scales within Germany.

    e) Formulation of immediate steps to secure adequate agricultural and coal output, essential repair of internal transport and emergency repair of housing, electric power and other utilities.

    f) Formulation of initial measures for curtailment of metal, chemical and machinery industries to conform to minimum, peacetime needs, and elimination of selected, key industries in these fields.

    g) Uniform regulation and control of currency, credit and public finance.

    h) Uniform controls of Germany’s international frontiers and recording of movements of persons and goods.

    i) Integrated controls and operation of transport and communications.

  7. The Control Council is charged with the practical implementation of the basic policies agreed between the occupying powers in the agreements listed in Article 2 above and in the present agreement. The Commander[s]-in-Chief will refer to their respective governments any proposals for modifications of or additions to the basic principles and objectives set forth herein.

  8. This agreement does not apply to Austria.

26 
740.0011 EW/7-1645

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

[Babelsberg,] July 16, 1945

My Dear Mr. Secretary: Because reparations must include all transfers of property within the whole of the German Reich as its boundaries existed at the end of the year 1937, the relationship between reparations and ceded German territory has been given considerable study by our delegation.

Upon this subject, I attach a memorandum embodying four provisions which I strongly recommend be included as a part of any agreement entered into by the United States confirming the ceding of any portion of Germany to other nations.

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 agreement confirming the ceding of any portion of Germany as its boundaries existed at the end of 1937, it shall be provided that:

  1. 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;

  2. 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;

  3. 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 deliveries [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;

  4. The value of all property remaining within the boundaries of any territory ceded to any other nation shall be counted as reparations. To the extent that the current production of any such property is required to be delivered for reparations, or, to defray the cost of approved imports into Germany, an appropriate adjustment in the value of such property shall be made.

27 
800.515/7-1645: Telegram

The Director of the Office of Financial and Development Policy to the Acting Chief of the Division of Economic Security Controls

Babelsberg, July 16, 1945
Secret
Victory 23

For Oliver ES from Collado.

Please bring us up to date on progress in controlling German external assets especially in Spain since Department’s 5499 of July 6th to London and your memorandum of July 7.

28 
881.00/2-945: Telegram

The Acting Secretary of State to the Ambassador in Spain

Washington, July 16, 1945 — 11 a.m.
[Extract]
Secret
us urgent

1200

  1. We have given careful study to the various points raised in your 1475 of July 9, 7 p.m.2 and fully realize that the course which we may be compelled to follow in solving the Tangier problem may result in a deterioration of our relations with Spain and that such deterioration may render more difficult our efforts to use Spain as a source of supply and a base for ATC operations.

  2. We agree that Spain has interests in Tangier which should not be ignored. Nevertheless, we are convinced that if the United States is to discharge its world responsibilities it must take a more, rather than a less, active interest in areas which are a potential source of trouble. If we do not insist just now in appropriate participation in the administration of Tangier, an impression may well be created that we shall not insist upon being consulted in matters of international importance relating to North Africa, the Mediterranean, and the Near East. We feel that we must continue actively to interest ourselves in these areas with the primary purpose of preventing developments from taking place in them which might lead to international conflicts involving ourselves. Since clashes of interests originating in the Western Mediterranean might result in conflicts involving the Soviet Union and since as far back as Algeciras Russia was admitted to have a legitimate interest in Tangier, we do not believe that the Soviet Union can be kept out of Tangier without giving it the impression that the Western powers are discriminating against it. We believe that the Soviet Union would continue to insist upon participation in discussions relating to Tangier even though the United States would withdraw from such conversations.

  3. It is possible that Soviet representatives participating in conversations or in conventions relating to Tangier may insist that the present Spanish Government be barred. If they do so we shall make every effort to find a formula which would admit both the Soviet Union and Spain. If that is not possible, we shall be prepared to consult with the British and French Governments with a view to dealing with this situation when we are confronted with it.

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

GREW

881.00/2-945: Telegram

The Acting Secretary of State to the Ambassador in Spain

Washington, July 16, 1945 — 11 a.m.
[Extract]
Secret
us urgent

1200…

. . . . . . . . . . . . . .
4. We cannot escape the conviction that the Spanish people do not as yet appreciate the weakness of their Government’s international position. It seems clear that the implications of the San Francisco resolution are not adequately appreciated in Spain. We believe that it is going to be increasingly difficult for the interests of Spain and the Spanish people to be adequately represented and recognized in international affairs because of the regime which is governing Spain. All of this is, of course, directly in line with the purport of President Roosevelt’s letter to you in regard to the nature of the relations which must necessarily exist between the United States and Spain so long as the present regime continues in power.

Repeated London as 5815; Paris 3312; Tangier 156.

GREW

29 
841.24/5-2945

The Secretary of State to the President

[Undated]
Secret

Memorandum for the President

  1. I have had prepared a new draft reply from you to the Prime Minister’s telegram of May 28 regarding Lend-Lease during the Japanese War. It would assure the Prime Minister that it is your intention that deliveries should be made for the prosecution of the war against Japan in accordance with schedules and other terms prepared by Army, Navy, and FEA supply officers in consultation with British representatives last November as modified in the light of changing strategic plans as well as of supply, procurement, and allocation considerations. It would remind the Prime Minister that the British dollar position remains at a reasonable level which should permit some relaxation of the exceedingly tight policy of the British with respect to dollar payments.

  2. The schedules prepared last November and modified continuously in the light of changing circumstances are based solely on the efficient prosecution of the war against Japan and have been so presented to the Congress on three occasions: (1) Last November on the conclusion of the Phase II discussions and prior to the release of a statement by Secretary Morgenthau and Messrs. Stettinius and Crowley in the United States and of an address by the Prime Minister before the House of Commons; (2) Last March and April in hearings on the extension of the Lend-Lease Act; and (3) Three weeks ago in hearings on the Lend-Lease appropriation.

  3. The munitions schedules are in three parts: ground forces, air, and naval. The ground forces schedules and conditions were originally signed on October 23, 1944, by Under Secretary Patterson and Generals Somervell and Clay. The air and fleet air arm schedules and conditions were originally signed on October 31, 1944 by Under Secretary Patterson, Assistant Secretaries Lovett and Gates, General Arnold and Vice-Admiral Fitch. The naval schedules and conditions were originally signed on November 10, 1944, by Vice-Admiral Home. As indicated above, these schedules are constantly subject to strategic and supply decisions of the Joint Chiefs of Staff.

  4. The non-munitions schedules were worked out by Mr. Crowley with representatives of appropriate civilian and military agencies and are also subject to changing strategic and supply considerations. They include only items for the support of the British civilian population in the effective prosecution of the war against Japan, and in no case items relating to rehabilitation and reconstruction of Britain, nor items for export or export manufacture. The principal items are: (1) food; (2) raw materials (cotton, pulp and paper, timber, and synthetic rubber which is matched by reverse lend-lease of crude rubber); (3) petroleum; and (4) shipping services.

  5. Mr. Crowley in the Jane hearings on the Lend-Lease appropriation spelled out in some detail the non-munitions or FEA schedules, and the Congress appropriated the funds as requested.

  6. I believe that these schedules have been prepared and are being handled in accord with the letter of the Lend-Lease Act and with the intent of the Congress and of yourself that Lend-Lease shall be used only in the prosecution of the war against Japan. The Congress has recently had an opportunity to examine the matter in connection with the appropriation bill and has signified its concurrence by making the funds available.

  7. I therefore recommend that Lend-Lease deliveries to the British Commonwealth proceed in accordance with the above, and that you reply to the Prime Minister as suggested in the attached draft memorandum.

30 
740.0011 PW/7-1645

The Secretary of War to the President

[Babelsberg,] 16 July 1945
[Extract]
Top secret

Memorandum for the President

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

The Yalta Agreements
As for the Russian participation [in the war against Japan] and the so-called Yalta Agreements, 1 believe that these agreements, so long as they are interpreted consistently with our traditional policy toward China, should not cause us any concern from a security point of view, assuming always we keep clear our control over the Pacific islands. By our traditional policy toward China I refer, of course, to the Open Door and the recognition of Chinese sovereignty over Manchuria.

Manchuria
We can afford to permit Russia to have access to ports in Manchuria, and I interpret the Yalta Agreements as giving her full commercial access to Dairen, with the necessary facilities. Likewise I understand the late President Roosevelt’s willingness to permit the Russians to have what in effect is the lease of a naval base at Port Arthur on the peninsula for a limited time. However no concessions should be made which would permit Russia to control or prohibit trade through Dairen or any other commercial port in Manchuria. In other words I would insist that Manchuria be treated precisely as China proper in this regard, except that Russia be permitted to acquire the facilities necessary to develop and support her trade from and to Russia through the port by her joint control with China of the railway and the normal acquisition of the necessary port facilities. The operation of the railway must be conducted on the usual public carrier basis without discrimination against the trade in Manchuria of any power. I understand Dr. Soong to take this view and I would not hesitate to support China on this, as any other course could constitute an abandonment of one of our longest established and most highly respected American policies. It would also be antagonistic to our clear and growing interests in the orient.

Except for the lease of a naval base at Port Arthur, which in itself is a trend in the wrong direction, no further military rights or control should be granted in the Dairen peninsula or elsewhere in Manchuria.

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

HENRY L STIMSON

31 
740.0011 PW/7-1645

The Secretary of War to the Secretary of State

Potsdam, 16 July 1945
Top secret

Dear Mr. Secretary: I am enclosing herewith the original and a copy for your files of a memorandum to the President relating to the conduct of the war with Japan. It relates to a subject which I think is of supreme importance at the moment, and I would very much like to see the President with you about it at your earliest convenience.

On another matter in which the War Department is greatly interested, namely the administration of Germany, I also have some thoughts which I should like to submit to you and the President. They will be in written form the first thing in the morning.

Faithfully yours,
HENRY L STIMSON

[Enclosure--Extract]

The Secretary of War to the President

[Babelsberg,] 16 July 1945
Top secret

Memorandum for the President

The conduct of the war with Japan
With the great needs of rehabilitation both domestically and abroad facing us, we still find ourselves engaged in war with a major Pacific power. The length and limitation upon our lines of communications to the Pacific combat areas aggravate the strains upon our resources which the wastes of war always impose. The Japanese soldier has proved himself capable of a suicidal, last ditch defense; and will no doubt continue to display such a defense on his homeland. Yet we have enormous factors in our favor and any step which can be taken to translate those advantages into a prompt and successful conclusion of the war should be taken. I have already indicated in my memorandum to you of 2 July 1945, the reasons which impel me to urge that warnings be delivered to Japan, designed to bring about her capitulation as quickly as possible. While that war is going on, it will be most difficult politically and economically to make substantial contributions to the reestablishment of stable conditions abroad. The longer that war progresses, the smaller will our surpluses become, and the more our over-all resources will be strained.

Warning to Japan
It seems to me that we are at the psychological moment to commence our warnings to Japan. The great marshalling of our new air and land forces in the combat area in the midst of the ever greater blows she is receiving from the naval and already established Army forces, is bound to provoke thought even among their military leaders. Added to this is the effect induced by this Conference and the impending threat of Russia’s participation, which it accentuates.

Moreover, the recent news of attempted approaches on the part of Japan to Russia, impels me to urge prompt delivery of our warning. I would therefore urge that we formulate a warning to Japan to be delivered during the course of this Conference, and rather earlier than later, along the lines of the draft prepared by the War Department and now approved, I understand, by both the State and Navy Departments. In the meantime, our tactical plans should continue to operate without let up, and if the Japanese persist, the full force of our newer weapons should be brought to bear in the course of which a renewed and even heavier warning, backed by the power of the new forces and possibly the actual entrance of the Russians in the war, should be delivered.

Whether the Russians are to be notified of our intentions in advance in this regard, would depend upon whether an agreement satisfactory to us had been reached with the Russians on the terms of their entry into the Japanese war.

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

HENRY L STIMSON

32 
740.0011 PW (Peace)/7-1645: Telegram

The Acting Secretary of State to the Secretary of State

[Washington,] July 16, 1945
Top secret
31

Mr. Hull asks me to send you the following comments on the draft statement calling on Japan to surrender:

To James F. Byrnes, Secretary of State – Confidential.

I refer to entire document, and especially to paragraph 12. Its support by the heads of War and Navy and by the Under Secretary of State calls for the most serious consideration. The central point calculated to create serious difference is in paragraph 12 and relates to a proposed declaration by the allies now that the Emperor and his monarchy will be preserved in event of allied victory. I am stating this rather broadly but as the general public will doubtless construe it. The proponents believe that this step might shorten the war and save allied lives. The theory is that somehow the influences and persons who listen to the Emperor and his religion would fight and resist less hard and so save allied lives and shorten the war, et cetera, et cetera. Undoubtedly, if this undertaking should prove successful it would be still more appealing. The other side is that no person knows how the proposal would work out. The militarists would try hard to interfere. Also should it fail the Japs would be encouraged while terrible political repercussions would follow in the U.S. Would it be well first to await the climax of allied bombing and Russia’s entry into the war? HULL

[GREW]