Potsdam Conference (TERMINAL)

387

Truman: War fought for freedom

President reviews troops at Frankfurt
By Merriman Smith, United Press staff writer

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388

Adm. Mountbatten, Stalin confer on war in Pacific

Parley prompts predicts Russia soon may join in fighting against Japs

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389

Editorial: The Big Three and Spain

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390

U.S. State Department (July 26, 1945)

Log of the President’s Trip to the Berlin Conference

Thursday, July 26:

At 0730 the President and certain members of his party left the Little White House by auto for the airport at Gatow. At Gatow they enplaned for Frankfurt to inspect U.S. Army personnel and facilities in that area.

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

1830: The President’s plane arrived at Gatow. He and his party entered waiting motor cars here and left at once for the Little White House where they arrived at 1900.

1915: General Marshall called on the President.

Captain John B. Ross, Medical Corps, USA (Secretary Ross’ son) and Major Alfred K. Lee, JAGD, USA (a personal friend of the President) were dinner guests at the Little White House this evening. Captain Ross spent several days in Babelsberg visiting with his father.

2200: Ambassador Harriman called on the President.

The President, jointly with Prime Minister Churchill and Generalissimo Chiang Kai-shek, issued a proclamation from Berlin this evening calling on the Japanese to surrender unconditionally now or suffer complete destruction. This document later became known as the “Potsdam Declaration.” A copy is appended.

There was no meeting of the Big Three today as Mr. Churchill, Mr. Attlee, and Mr. Eden were in England in connection with the official election count.

391

The Syonan Shimbun (July 27, 1945)

Attlee new British Prime Minister

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Churchill, Eden not returning to Potsdam

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392

Salzburger Nachrichten (July 27, 1945)

Clement Attlee Ministerpräsident

Überragender Wahlsieg der Labour-Party

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Englands neuer Regierungschef

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393

L’Aube (July 27, 1945)

Triomphe des travaillistes aux élections britanniques

Winston Churchill a démissionné – M. Attlee forme le nouveau gouvernement

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394

Churchill retournera-t-il à Potsdam ?

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395

Une proclamation de l’Angleterre des États-Unis et de la Chine au Japon

Il faut choisir : se rendre ou subir l’assaut final

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396

U.S. State Department (July 27, 1945)

The Secretary of State to the Ambassador in China

[Babelsberg,] July 27, 1945
Secret
urgent

Victory 375

The Governments of the Union of Soviet Socialist Republics, United Kingdom and United States of America have agreed that, in order to provide appropriate machinery for dealing in an expeditious manner with peace negotiations and territorial settlements arising from the present war, it would be desirable to establish a Council of Foreign Ministers charged with this responsibility. We are of the view that this Council should, in order that it may represent those nations having the broadest interest in the peace settlements in Europe and Asia, be composed of the Foreign Ministers of those States which, in accordance with the decision of the San Francisco Conference, are to have permanent seats on the Security Council of the United Nations. The text of the proposal approved by the three Governments here at Potsdam is as follows:

The Establishment of a Council of Foreign Ministers

  1. There shall be established a Council composed of the Foreign Ministers of the United Kingdom, the Union of Soviet Socialist Republics, China, France, and the United States.

  2. (i) The Council shall normally meet at London, which shall be the permanent seat of the joint Secretariat which the Council will form. Each of the Foreign Ministers will be accompanied by a high-ranking Deputy, duly authorised to carry on the work of the Council in the absence of his Foreign Minister, and by a small staff of technical advisers.

    (ii) The first meeting of the Council shall be held in London not later than September 1st 1945. Meetings may be held by common agreement in other capitals as may be agreed from time to time.

  3. (i) As its immediate important task, the Council shall be authorised to draw up, with a view to their submission to the United Nations, treaties of peace with Italy, Roumania, Bulgaria, Hungary and Finland, and to propose settlements of territorial questions outstanding on the termination of the war in Europe. The Council shall be utilised for the preparation of a peace settlement for Germany to be accepted by the Government of Germany when a government adequate for the purpose is established.

    (ii) For the discharge of each of these tasks the Council will be composed of the Members representing those States which were signatory to the terms of surrender imposed upon the enemy State concerned. For the purposes of the peace settlement for Italy, France shall be regarded as a signatory to the terms of surrender for Italy. Other Members will be invited to participate when matters directly concerning them are under discussion.

    (iii) Other matters may from time to time be referred to the Council by agreement between the Member Governments.

  4. (i) Whenever the Council is considering a question of direct interest to a State not represented thereon, such State should be invited to send representatives to participate in the discussion and study of that question.

    (ii) The Council may adapt its procedure to the particular problem under consideration. In some cases it may hold its own preliminary discussions prior to the participation of other interested States. In other cases, the Council may convoke a formal conference of the States chiefly interested in seeking a solution of the particular problem.”

Pursuant to this agreement, it gives the three Governments represented here great pleasure to invite the Government of China to become a member of the Council of Foreign Ministers described above and to participate in its work. We are convinced that our association with China in this new body which will be charged with such important functions in establishing a stable peace will offer an essential and fruitful introduction to our future association as permanent members of the Security Council.

We expect to give you authorization within a day or so to present, in concert with your British and Soviet colleagues, the foregoing invitation to President Chiang Kai-shek and to obtain his acceptance. Please do so immediately upon receipt of authorization in order that your telegraphic notification of Chiang’s acceptance may be in our hands before the conclusion of the Conference. If it is not possible to concert your action with that of your colleagues you are authorized to proceed alone without delay.

397

Ninth meeting of the Foreign Ministers, 4 p.m.

Present
United States United Kingdom Soviet Union
Secretary Byrnes Sir Alexander Cadogan Foreign Commissar Molotov
Mr. Dunn Sir William Strang Mr. Vyshinsky
Mr. Clayton Major Birse
Mr. Bohlen
Mr. Cohen

Department of State Minutes

Potsdam, July 27, 1945, 4 p.m.
Top secret

MR. MOLOTOV was in the Chair.

MR. MOLOTOV proposed that they take up first the question of the satellite states as there was little left to do since the Big Three had discussed it and come to agreement on most points.

MR. BYRNES said he did not think that the Big Three had decided the question.

MR. MOLOTOV proposed that they discuss it nevertheless.

This was agreed to.

MR. BYRNES said he had a list setting forth the status of the problems before the Conference which he proceeded to read. These questions were as follows:

German Economic Questions

MR. MOLOTOV said that the question of reparations was even more urgent because unless this was settled there could be no progress on the economic matters.

MR. BYRNES said he did not dispute the order in which these questions were considered.

Reparations

MR. BYRNES said he had no objection to considering this question before that of German economic matters.

  1. Italian and Austrian Reparations.
  2. Oil for Western Europe.
  3. Admission into the United Nations Organization.
  4. Implementation of the Yalta Agreement on Liberated Europe.
  5. Italy and the Other Satellite States.
  6. The Rumanian Oil Equipment.
  7. The Western Boundary of Poland.
  8. Cooperation in [Solving] Immediate European Economic Problems.

MR. BYRNES said to the best of his recollection that all items on the original United States and Soviet agendas had already been raised at the Conference. Two questions had not been raised at the Big Three meeting, namely:

  1. War claims [crimes] which had been proposed by the British delegation, and

  2. Transfer of populations from Poland to [and] Czechoslovakia.

Although there had been a brief discussion on this matter during the Conference MR. MOLOTOV pointed out that a Committee had been set up to consider this matter.

MR. BYRNES said he was speaking of the questions not yet considered by the Big Three.

MR. [SIR ALEXANDER] CADOGAN said that there was another question – that of German political matters. Two points which had been raised in the economic discussions had been considered more political than economic.

MR. MOLOTOV also recalled that there was the question of the disposition of the German fleet. He suggested that they refer the question of war criminals to the Big Three.

MR. BYRNES said he agreed. He also wished to call attention to the question of the American paper on inland waterways. This was also in the hands of a committee.

Italy

MR. BYRNES said he understood that the Prime Minister did not agree with the paper presented as amended and that the question had been passed over.

MR. MOLOTOV said he understood that the President had indicated his consent subject to an examination of the drafting.

MR. CADOGAN stated that the Prime Minister had been unable to agree to the proposed Soviet amendment to paragraph 3 concerning the resumption of diplomatic relations with Hungary, Rumania, and Bulgaria. He thought it might be useful for him to explain that it was Constitutionally impossible for the British to enter into full diplomatic relations with a country with which they were at war. The British might be able to accept some language to the effect that the conclusion of peace treaties with the governments of these states would enable the resumption of normal diplomatic relations with them to be undertaken.

MR. MOLOTOV pointed out that this entirely differed from the Soviet proposal. The Prime Minister had accepted the first sentence after the substitution of “for” for the word “with”. He had proposed no other amendments.

MR. CADOGAN said this was true but he also pointed out that the Prime Minister had said he could not accept the Soviet amendment to paragraph 3.

MR. BYRNES said that the Prime Minister had made the statement that he did not approve the language proposed in which the President had acquiesced and had said that he thought it was unwise. Mr. Byrnes said he remembered this because when he had learned that there was no agreement on the matter he regretted that he had brought forward the paper on Italy. He had proposed it because he thought there would be no difficulty in regard to it. When he had put it forward it had met a proposal that all neutrals be considered. Next there was a proposal to modify the language with reference to the Italian Government and in an effort to reach agreement he had accepted amendments to that paragraph. Next there had been a proposal to include Bulgaria, Rumania, and Hungary. After days of discussion there had been no agreement on that. After the Prime Minister had taken his position Mr. Byrnes said he had reached the conclusion that it was best to withdraw his proposal because it was most important for the states represented here to be in agreement. If the Soviet and British delegations could not agree with his proposal as amended, he withdrew his proposal with regard to the entry of Italy into the United Nations Organization. There were many important matters which they should agree upon in the few days that they intended to remain here and he did not want his proposal to delay them. He proposed that they should put on the agenda such important matters as those of reparations, the German fleet, and the western boundary of Poland, and other matters that are vital and prepare for final adjournment in the next few days.

MR. MOLOTOV said that he had several times discussed this question, the American delegation had taken the initiative in the matter, and the Soviet delegation had the impression in the Big Three meeting that there was agreement between the United States and the Soviet delegation and that it was only the British delegation that was opposed.

MR. BYRNES said that the American delegation had agreed subject to a reconsideration of the drafting.

MR. MOLOTOV suggested that the question be referred to the Big Three who could withdraw the proposal or could discuss it. The Foreign Ministers had no right to dispose of the matter themselves.

It was agreed to refer the matter to the Big Three.

Reparations

MR. MOLOTOV said that the Soviet delegation regarded the work done by the Commission on Reparations as unsatisfactory. He said that they should have clear replies to the questions under discussion or should direct them to other channels in case they were unable to solve them themselves. He asked the United States delegation if the decision with regard to reparations which was taken at the Crimea Conference remained in force. He suggested that perhaps the United States delegation held a different view than it held at the time of the Crimea Conference. The Soviet delegation was anxious to learn if what was agreed at the Crimea was still valid. He then cited paragraph 4 of the Crimea decisions with regard to reparations.

MR. BYRNES replied that certainly the United States delegation agrees to that statement which explicitly stated that the Moscow Reparations Commission should take the Soviet proposal as a basis for discussion. Pursuant to that agreement the question was submitted to the Reparations Commission for study. If Mr. Molotov meant that by agreeing that it be studied we had agreed to an amount of the reparations then he was not in accord for we had not agreed to any amount.

MR. MOLOTOV said that he understood this but he had heard that three days ago Mr. Pauley had officially withdrawn this opinion of the American delegation. He would like to know if the American delegation withdrew this agreed opinion, that is, that 20 billion dollars be taken as a basis for discussion.

MR. BYRNES said he wanted no misunderstanding. At Yalta the American delegation had expressed no opinion. The figure had been suggested by Mr. Maisky and not by Mr. Roosevelt. Mr. Roosevelt had said that the statement would be accepted as a basis for discussion and that it would be referred to the Moscow Reparations Commission.

MR. BYRNES said he had asked Mr. Pauley with regard to this statement attributed to him and Mr. Pauley informed him that he had received and considered the proposal and that in view of the circumstances now existing he regarded it as impractical.

MR. MOLOTOV asked if he was to understand Mr. Byrnes to mean that at Yalta 10 billion dollars in reparations had been allocated to the Soviet Union but that now this sum was considered to be impossible.

MR. BYRNES repeated that neither the President nor anyone else had agreed to 20 billion dollars. All that was done was to accept the proposal as the basis for discussion. If he were asked for a million dollars and he said he would discuss it, this did not mean that he would write a check for it.

MR. MOLOTOV said he only wanted to know what remained from the Crimea decision as a basis for discussion. Mr. Byrnes knew that the Soviet delegation was willing to consider reducing the amount of reparations.

MR. BYRNES pointed out that they had been talking about the matter for two weeks.

MR. MOLOTOV recalled the United States delegation at Yalta had agreed to take as a basis for discussion the proposal that 20 billion dollars, of which one-half would be allocated to the Soviet Union, be fixed as the amount of German reparations. With this in mind the Soviet delegation had put its proposals to this Conference and had indicated from which branches of German economy and on what dates these reparations could be exacted. Yet Mr. Maisky had informed him that Mr. Pauley had officially withdrawn agreement to accept the Yalta proposal as a basis for discussion. Mr. Molotov suggested that perhaps the President had authorized him to make such a statement.

MR. BYRNES thought there had been a misunderstanding. Mr. Pauley had accepted the Yalta proposal as a basis for discussion. He had been in Moscow for 35 days and had discussed it. He had come to Berlin and had continued to discuss it. He had made an investigation after which he had determined that it was now in his opinion impractical.

MR. BYRNES said there were so many reasons for this that he could understand Mr. Pauley’s view. He had already gone into the matter with Mr. Molotov and he could do so again if it would be helpful. Since the proposal had been accepted as a basis for discussion Mr. Pauley had learned that the Russian Army had destroyed a lot of property in Germany and what they did not destroy the American Army did. He had not discussed figures with Mr. Pauley but if Mr. Pauley told him that there were not [now] the same possibilities of reparations as there were when Mr. Maisky had made his proposal he would not have a good opinion of Mr. Pauley’s judgment. At Yalta the discussion was based on the whole of Germany and not on the present basis when a large part of Silesia had been turned over to Poland. Moreover, he knew that there were differences of opinion as to what constituted war booty and reparations. MR. CLAYTON and MR. PAULEY informed him that in the American zone of Berlin they had seen the plant of the American Telephone and Telegraph Company which was practically stripped of all machinery. They had seen other plants equally stripped which had made rayon, ice, and optical instruments. Mr. Pauley said that circumstances made it impossible now to know what reparations should be exacted from Germany. He supposed he had in mind these conditions. The United States Delegation had thought that these plants would be available for reparations. He saw many difficulties in trying to reconcile two views so different as those of our representatives on the Reparations Commission. He wanted them to reach agreement but did not see how they could do it in the light of these conditions.

MR. MOLOTOV stated that perhaps the American Delegation could suggest a different basis for discussion.

MR. BYRNES said he understood that they had suggested a different plan. He thought it very important that they adopt another plan, because the attempt to carry out the present one would be a constant source of irritation between us, whereas the United States wanted its relations with the Soviet Union to be cordial and friendly as heretofore.

MR. MOLOTOV said he understood Mr. Byrnes’ proposal to be that each country should take reparations from its zone. He pointed out that if they failed to agree on reparations the result would be the same as under Mr. Byrnes’ plan. Each would draw reparations from their respective zones.

MR. BYRNES pointed out that the United States was not seeking reparations for its own people. It was entitled to reparations and it asserted its claims because we knew that we must look after other people, such as Belgium, Holland and Yugoslavia. He pointed out that the United States had already sent 500 million dollars of assistance to Italy and that we must send more to France. He emphasized that we were simply trying to do the best we could in a complicated situation. What had impressed him the most – it was more important than the money involved – was the desire to remove any source of irritation between our two governments. The instructions to the American army had been not to remove equipment from Germany. According to his information this had been carried out with only one or two exceptions where certain equipment was needed in order to provide a model.

MR. MOLOTOV pointed out that neither the United States nor Great Britain had had their territory occupied by Germany, whereas a large part of the Soviet Union had been occupied and their plants and towns had been laid waste by the Germans. He thought that the Soviet Union and Poland had the right to claim reparations. Perhaps factories had been removed from German territory, but this was small compensation for the damage done by the German soldiers who, he repeated, had not been on United States or British territories. If Great Britain and the United States found that not a dollar of reparations should be exacted, the Soviet Government would still stand on its position but it was willing to discuss the question of the amount of reparations which it should claim. He said that they were entitled to a clear answer to their questions. The Economic Sub-Committee had been marking time and had departed from the decisions taken at Yalta. It was, therefore, necessary to clarify this situation.

MR. BYRNES said he understood that there was no question but that the Soviet Union should have substantial reparations.

MR. MOLOTOV replied that this was an empty sentence which did not satisfy them.

THE SECRETARY said that it was probable that it would not satisfy anyone. He was only anxious to devise some plan and to do the best thing possible under trying conditions.

MR. MOLOTOV asked what he suggested.

MR. BYRNES said that they could probably make no headway until Mr. Attlee’s return. It was necessary to consider the British position. For example, the machinery referred to in the Ruhr was in the British zone.

MR. CADOGAN thought he could make no useful contribution at this stage except to say that the British Government had accepted and had not abandoned the Yalta agreement. There was no desire to deprive Russia of her due share of reparations.

MR. BYRNES suggested that the question be passed over until the next day.

MR. MOLOTOV asked if it would be referred to the Big Three.

MR. BYRNES said he did not see how it could be discussed usefully along the lines of the discussion today. He suggested that when the British returned they make one more effort to reach agreement and if they could not they should so inform the Big Three.

MR. CADOGAN said his latest information was that Mr. Attlee would return for a late meeting the next day.

MR. MOLOTOV summed up the position to be:

  1. The question be postponed to the next meeting of the three Foreign Ministers.

  2. After it had been considered at the next meeting the results should be reported to the Big Three.

  3. That the Foreign Ministers discuss it the next day or the day after that.

MR. CADOGAN said that Mr. Attlee might bring the Foreign Secretary with him or he might instruct Cadogan to act. He agreed that if possible they should discuss it the next day; if not possible, the day after.

This was agreed to.

Reparations From Austria and Italy

MR. MOLOTOV said the Soviet Delegation regarded the work done by the Economic Sub-Committee on this question as unsatisfactory. In his opinion they should discuss the proposals made by the Soviet Delegation at the meeting of the Foreign Ministers. They had proposed three paragraphs for consideration in regard to reparations from Austria and asked that this be the basis for discussion. They proposed that Austrian reparations be fixed at 250 million dollars and he pointed out that this amount was less than that which had been settled for the satellite states. The kind of goods in which reparations should be paid could be discussed later. The period for reparations should be fixed at six years. The Soviet Union, Great Britain and the United States and Yugoslavia should be the recipients of reparations from Austria. He inquired if this could be taken as the basis for an agreement on Austrian reparations.

MR. BYRNES said that insofar as the United States was concerned its representatives on the sub-committee held the view that it was impossible to hope for any reparations from Italy and Austria, that is, as to current production. The United States, the United Kingdom and Canada had already supplied 500 million dollars to Italy to prevent disease and unrest. They realized that they will be required to furnish that much more. He knew they would be unwilling to advance hundreds of millions of dollars that would be used for the payment of reparations and that United States representatives on the committees had stated that they were prepared to consider the possibility of removals of machinery and equipment that had been used in war industries and that had no value for peacetime production. Certainly the United States did not want them and would be agreeable to their going to the Soviet Union as reparations. As to current production, in view of the fact that there could be none unless we put up money for that purpose, we were unwilling to agree.

MR. MOLOTOV said that no one had proposed this.

MR. BYRNES said that the situation was that we knew that unless we advanced money no current production would be available.

MR. MOLOTOV said that Austria would be bound to pay either by her exports or by payment in the future for credit.

MR. BYRNES said that the sub-committee did not see how there would be production for the payment of exports. We realized we would not get back any of the money we had put in there. Frankly he did not see how anything could be got out of Italy except war plants.

MR. MOLOTOV again referred to the fact that the United States had not been occupied by Austrian troops, whereas the Austrians had wrought great devastation in the Soviet Union and they could not let the Austrians go unpunished. MR. BYRNES said he appreciated the sacrifices of the Soviet people in human lives but nothing material could ever compensate them for the lives lost.

MR. MOLOTOV replied that he was speaking of the destruction of property.

MR. BYRNES said that with respect to property there was not much difference between destroying a building worth $100,000 and our paying out $100,000. He pointed out that the United States had paid out 400 billion dollars in the war. This was a property loss.

MR. MOLOTOV said that the Soviet war expenditures were immense, but he had not referred to them. He was speaking of devastation. He thought they could not let these people go unpunished. If Rumania were paying compensation because she occupied territories, who would understand such a position with respect to Austria and Italy. The Rumanian armistice terms bore the signatures of the United States and Great Britain. It would be unjust to exempt Austria.

MR. BYRNES said the United States had signed the armistice terms with Rumania, but we knew that we could not get reparations from Rumania.

MR. MOLOTOV replied that Rumania was paying reparations. The United States could renounce its claims against Austria, as its territory had not been occupied.

MR. BYRNES replied that we were merely trying to be practical. With respect to Italy, he was sure that Greece could make a claim for reparations and ask for prior consideration for the same reason advanced by the Soviet Union in the case of Austria.

MR. MOLOTOV said the Soviet Union had expected that Greece, Yugoslavia and Albania would receive reparations.

MR. BYRNES replied that they would ask for prior consideration.

MR. MOLOTOV proposed that they agree to give it to them.

MR. BYRNES stated that Greece had not presented a claim and that in any event our position would have to be that where we saw no money there should be no reparations, as in the case of Italy, except capital plants, machinery and materials which he had described. He was advised that Austria would have to get relief from UNRRA.

MR. MOLOTOV rejoined that this had no relation to the question of reparations.

MR. BYRNES said that his understanding was that no country paying reparations was eligible for relief from UNRRA. He supposed the theory was that if they were able to pay reparations they did not need relief.

MR. MOLOTOV proposed referring the whole question to the Big Three.

MR. CADOGAN said the British position was the same as that expounded by Mr. Byrnes and that this had been made clear in the sub-committee session.

MR. MOLOTOV asked if they could place on record the different views held by the Soviet Union on the one hand, and the United States and Great Britain on the other. He said that the American and British Delegations held the view that it was possible to exact reparations from Austria and Italy only if they were taken in the shape of plants and materials.

MR. BYRNES said only if they had been used for war purposes.

MR. MOLOTOV said that materials used for war purposes were “war booty.” He suggested that they should say “equipment,” because war material had no relation to reparations.

MR. BYRNES said that Mr. Molotov could record his own position, but Mr. Byrnes thought that he also wished to state his own. He said that the removal of machinery and equipment could be made from war industries, provided they had no peacetime use.

MR. MOLOTOV asked that this be put in the record. He also wished to make clear that UNRRA had no limitations to the fact [effect?] that a country paying reparations had no claim for relief.

MR. BYRNES said he would have to look the matter up as his information was to the contrary.

Economic Principles

MR. MOLOTOV said he felt that provided they reached agreement on all the other remaining questions, it would be possible for them to reach agreement on the question of exports.

MR. BYRNES said he felt that this depended on the outcome of the discussion on reparations.

MR. MOLOTOV agreed.

Oil for Western Europe

MR. BYRNES said the sub-committee was not ready to make its report, but hoped to do so later. He understood that the Soviet representative had not received certain information needed and it was, therefore, useless to discuss it now.

It was agreed to put off the discussion on this question.

Cooperation in Solving European Economic Problems

MR. MOLOTOV said they had no objection to the report on the matter.

MR. BYRNES said he had just read it for the first time. He noted that it stated that the Soviet Government was willing to participate in the European Inland Transport Organization. As this was the first progress they had noted for some time, he thought they should thank that committee. He noted that the first paragraph of the report stated that the Soviet Government would review the documents on the other Organizations. He inquired whether the meeting should report now or wait for this further consideration.

MR. MOLOTOV suggested that the report of the committee be approved.
It was agreed that they should report it to the Big Three at once.

Rumanian Oil Equipment

MR. CADOGAN inquired if Mr. Molotov had had time to consider the British proposals on this question.

MR. MOLOTOV replied that the Soviet Delegation had just sent the British Delegation a memorandum on this question.

Meeting adjourned.

398

Cohen Notes

Potsdam, July 27, 1945, 4 p.m.

MR. MOLOTOV acted as Chairman.

MOLOTOV: Our first question relates to Italy and the other satellite states being admitted to the United Nations. This question was virtually settled at the meeting of the Big Three.

BYRNES: I did not so understand.

MOLOTOV: Let us discuss this question today. What other questions are there?

BYRNES: I have a list of questions for discussion by the Big Three. I think I should read it as we are approaching the end of the Conference.

The pertinent questions are: [1.] German economic question[.]

MOLOTOV: The question of reparations is even more urgent.

BYRNES: I agree. That is the next question on my list. You may put it first if you wish.
2. German reparations.
3. Italian and Austrian reparations.
4. Oil for western Europe.
5. Admission of Italy and satellites to United Nations.

MOLOTOV: I thought that was our first item on this afternoon’s agenda.

BYRNES: That is right. I am merely listing the questions without regard to priority.
6. Implementation of Yalta agreement on the satellite states.
7. Policy toward Italy and other satellite states.

The paper of the United States has not been acted upon.

MOLOTOV: What is that?

BYRNES: The paper presented the first day.

MOLOTOV: What is contemplated?

BYRNES: It refers to the terms of the Armistice.
8. British paper on oil equipment in Rumania.
9. Western boundary of Poland.
10. Cooperation in solving immediate European economic problems.

All items on the original United States and Soviet agenda have been raised before the Conference.

Two questions have been raised and not fully discussed or disposed of – war crimes and the transfer of German population from Czechoslovakia and Poland.

MOLOTOV: A committee has been set up to deal with the latter question.

BYRNES: I am now ready to discuss the paper submitted by the United States on the admission of Italy into the United Nations.

CADOGAN: There is a question of political significance which could be taken from the economic principles regarding Germany and put into the political principles.

MOLOTOV: We must have an interchange of views. You have recalled all your questions? Then I should like to recall the disposition of the German fleet. There is also the question of war criminals. Should this not first be discussed by the Big Three?

BYRNES: I do not see on my list another question – that of inland waterways. This is also in the hands of a committee.

As to policy for Italy. My understanding was that the Prime Minister did not agree with the paper as submitted or amended and it was passed over.

MOLOTOV: So far as I understand, the President indicated his assent.

BYRNES: That is true, subject to drafting changes.

CADOGAN: It is not possible for us to enter into complete diplomatic relations with a government with which we are at war. We could say that the conclusion of a peace treaty with a responsible democratic government should make possible the resumption of diplomatic relations and its entrance into the United Nations. I offer this suggestion as a possible compromise.

MOLOTOV: It differs entirely from what the Soviet Delegation proposed. The Prime Minister suggested that the first sentence should be made to read treaty “for” and not “with” these states. No other amendments suggested.

CADOGAN: That is true but he was unable to accept the Soviet amendment. I offered [offer this?] text as compromise.

BYRNES: The Prime Minister made the statement that he did not approve the language the President acquiesced in. I do not know if the entire statement was translated. I have regretted that I had proposed the paper regarding the admission of Italy. I thought it was a matter as to which there would be no objection. I was then presented with a proposal to agree to a policy regarding the admission of neutrals and then to a proposal for the admission of the other satellite states on the same basis as Italy. After days of discussion we could not agree. I have reached the conclusion that the United States paper on Italy should be withdrawn. If the Soviet and British delegations do not agree on the language proposed, I withdraw entirely our proposal. There are many important matters which should not be delayed, such as reparations, the German fleet and western boundary of Poland, which are all immediate and vital. We should prepare for final adjournment within the next day or two.

MOLOTOV: We have spent many a day on this. The American delegation brought it up. President Truman accepted the amendment.

BYRNES: That is true, subject to drafting changes. He had in mind one word.

MOLOTOV: I propose we refer it to the Big Three to consider or withdraw. We can’t do it ourselves. Mr. Attlee will come tomorrow. The President and Generalissimo will be present.

BYRNES: I have no objection. I am simply stating the position of our delegation which has the approval of the President. The paper was proposed by the United States but it related only to the admission of Italy as other proposals had [been?] added. In the absence of agreement, we should withdraw it if we can’t agree.

MOLOTOV: I propose the question be referred to the Big Three. The next question is German reparations or German economic problems. Which shall we discuss first?
Cadogan: I am at the disposal of the Chairman, but I don’t see what we can do now.

BYRNES: My information is that the Committee is far apart.

MOLOTOV: I propose we discuss reparations.

The Soviet delegation regards the work done by the economic committee [subcommittee] as unsatisfactory. We should direct these questions then to other channels that [when?] we are not able to settle them ourselves. I should like to know if the American delegation has changed their views expressed at Yalta. Is the Yalta understanding still valid as regards fixing the total sum of reparations and its distribution among the Allies. Yalta took as a basis for discussion 20 billion dollars and 50 percent should be allocated to the Soviets. Yalta provided for discussion at Moscow.

BYRNES: Yalta merely says that reparations commission should take Soviet total figure as basis of discussion and study. If you mean by submitting the questions to study we agreed to the amount, the answer is no.

MOLOTOV: I understand. But I have heard that Mr. Pauley officially withdrew the view taken by the American delegation at Yalta. That may be necessary but I should like to know whether the American delegation withdraws its Yalta opinion. I am not insisting on this. I want simply to find out.

BYRNES: At Yalta the United States expressed no opinion as to amount. Maisky suggested figures, not Mr. Roosevelt. At the conclusion of discussion Mr. Roosevelt said it would be all right to accept it as a basis for discussion and study. Mr. Pauley says what he stated was he had received and considered proposals and in view of circumstances now existing he regards it as impractical.

MOLOTOV: Should Secretary Byrnes be understood to state that in [at] Yalta ten billion dollars for the Soviets was considered possible and now it is not?

BYRNES: Neither the President nor anyone else agreed to 20 billion at Yalta. When you ask for 20 billion and I say I will discuss it, it does not mean that I shall write a check for it.

MOLOTOV: The same applies to our position. The Soviet delegation is willing to reduce the amount. Mr. Maisky says that Mr. Pauley officially withdrew the basis.

BYRNES: Mr. Pauley did discuss this basis at Moscow.

MOLOTOV: Maybe the American government has made a new decision.

BYRNES: Mr. Pauley did consider it at Moscow and here. Investigating conditions, he did determine in his opinion that it was impracticable. I have already gone over this matter with Mr. Molotov. Since Yalta a lot of property has been destroyed by the Russian Army and by the American Army. They did a tremendous job. I do not know Mr. Pauley’s view of the figures. But if he told me the figures had not been altered by events, I would not have a good opinion of his judgment. No opinion was expressed at Yalta. Twenty billion dollars [was] suggested for the whole of Germany, including Silesia. Since then there has been a great dispute as to what is war booty and what is war reparations. Mr. Pauley and Mr. Clayton tell me that in the American zone in Berlin they saw a plant of the I. T. and T. stripped of all machinery and four other plants were stripped, rayon plant, Zeiss plant, and others. When Mr. Pauley said circumstances made it impossible under these conditions to tell what reparations are available in Germany, it was certainly the understanding of the American delegation that such plants would be available for reparations. It is difficult to reconcile the views of our representatives and the Soviets on the reparations commission. I want to see an agreement but I do not see how they can reach one.

Molotov: Perhaps the American delegation can suggest a different basis.

Byrnes: I understand that the American delegation has. I think it important to find another plan. We do not want a plan which will cause constant friction between us.

MOLOTOV: My understanding, Secretary Byrnes, is that you have in mind the proposal that each country should take reparations from its own zone. If we fail to reach an agreement the result will be the same.

BYRNES: Yes. As I stated, the United States is not seeking reparations. We would not trouble in agreeing on what we want for ours [ourselves]. We assert our claim because we have to look after others, Belgium, Holland, Yugoslavia. We have already sent five hundred million dollars to Italy. We must send more to France. We are trying to do the best we can in a very complicated situation.

What impresses me is that more important than the money involved is the removal of the source of irritation between our two governments so that we may work together.

MOLOTOV: I understand.

BYRNES: Our instructions to the Army were not to remove factories. Only one or two experimental [plants?] or models were removed from our zone.

MOLOTOV: Neither United States nor Great Britain was occupied. Our plants were laid waste. We think that our right to reparations [is] inalienable. The United States’ and Great Britain’s position morally is entirely different. Countries which were occupied have a right to reparations. Perhaps certain plants were removed from Germany but this is small compensation for our losses. We shall maintain our view even though the United States and Great Britain find that not a dollar of reparations should be exacted. We do not insist on the Yalta figures but we want a clear reply from the United States and Great Britain. The right of occupied and invaded countries to reparations is inalienable. Economic committee is marking time and it is high time that we have our answer.

BYRNES: The economic committee recognizes your right to reparations.

MOLOTOV: It is unsatisfactory.

BYRNES: It is not satisfactory to anyone. We can’t satisfy anyone.

MOLOTOV: What do you suggest?

BYRNES: I have made one suggestion. If that is not satisfactory I suggest we pass it over until tomorrow when Mr. Attlee will be here. The Soviets spoke of the Ruhr. That is in the British zone. We can’t make progress until the British delegation can discuss this with us.

MOLOTOV: Perhaps the British representative can speak for the British government.

CADOGAN: Not at this stage. The British [Government?] accepted and has not abandoned the Yalta agreement. No one wants to deprive Russia of her due share of reparations.

MOLOTOV: Secretary Byrnes wishes to pass the question over until tomorrow.

BYRNES: We can’t do anything before then. My suggestion is that we pass it over until tomorrow.

MOLOTOV: Shall it come up before the Big Three?

BYRNES: I don’t see how it can be discussed on the basis we have discussed here. We must make another final effort before we refer it to the Big Three. Can you tell us, Sir Alexander, when Mr. Attlee will come?

CADOGAN: Mr. Attlee simply said he hoped to be here for a late meeting tomorrow.

MOLOTOV: Three ministers think it advisable to postpone question until their next meeting. After such consideration results should be reported to the Big Three.

CADOGAN: Mr. Attlee may bring a foreign secretary with him or he may instruct me.

MOLOTOV: We will discuss it tomorrow if possible. If not, the following day.
We passed the question of reparations from Austria and Italy. The work of the economic committee on this subject is unsatisfactory to the Soviet delegation. We suggest that the foreign ministers discuss this. We propose three paragraphs for reparations from Austria and I ask that these be taken as a basis for further discussion. We propose regarding Austria two hundred fifty million dollars reparations – less than that exacted from the satellites. The kind of goods can be agreed upon later. The period of time would be six years. Reparations would go to the Soviet [Union], Great Britain and United States and Yugoslavia.

BYRNES: Our representatives on the commission think it is impossible to hope for reparations from Berlin [Italy?] and Austria out of current production. The United States, Great Britain, and Canada have already supplied a half billion dollars to Italy to prevent starvation and unrest. That much [more] will be required. We would be unwilling to advance money and goods to be used for reparations. Our representatives are prepared to consider the removal of war equipment having no peacetime use. The United States does not want this war equipment. It can be paid as reparations to the Soviets. As to current production, there can be none unless we advance money and we are unwilling to do this.

MOLOTOV: No one suggests that. Austria will be bound to pay for her imports by her exports.

BYRNES: We cannot get the money back we put in there.

MOLOTOV: United States territory was not occupied by Austria.

BYRNES: Nothing material can compensate you for the lives lost.

MOLOTOV: I speak of land and property devastated.

BYRNES: That is different. When it comes to property there is not so much difference between the destruction and [of?] buildings and money costs. We have paid out 400 billion dollars.

MOLOTOV: Our war expenditures were immense. I have not referred to them. Can we let our land be devastated and not be compensated? Why should Rumania pay and not Austria? United States was a party to the Rumanian armistice.

BYRNES: The United States does not expect reparations from Rumania.

MOLOTOV: Rumania is paying reparations.

BYRNES: Not to us.

MOLOTOV: It is your right. You can waive it if you like.

BYRNES: As to Greece, she has a claim against Italy – a prior claim.

MOLOTOV: Yes, Greece, Albania and Yugoslavia. We can provide a prior claim for Greece and other invaded countries.

BYRNES: I cannot see reparations from these countries except their war plants. Austria must get relief from UNRRA.

MOLOTOV: This has no application to reparations.

BYRNES: No country paying reparations is entitled to relief from UNRRA. Let us place our differences on record and report to the Big Three.

CADOGAN: Our views accord with those of the American delegation.

MOLOTOV: Can we place on record this difference in views? The American and British governments favor reparations only from equipment.

BYRNES: Only war plants and equipment having no peacetime use.

MOLOTOV: Let us say equipment. This [is] reparations, not war booty.

BYRNES: I say machinery and equipment from war industries having no peacetime use.

MOLOTOV: Let us put that on the record. I should make it clear that no provision is in the UNRRA document that a country paying reparations is not entitled to relief.

BYRNES: My information is otherwise. We will have to look it up.

MOLOTOV: Next question is the economic principles for Germany. Paragraphs 18 and 19 should be considered.

BYRNES: This depends on other economic questions. Let us pass it.

MOLOTOV: Next question – oil for western Europe.

BYRNES: Committee is not ready to report. Soviet representative was to secure information.

MOLOTOV: Let us put it off.

BYRNES: We should discuss the cooperation in solving immediate European economic problems. I have copy of report.

MOLOTOV: I have it but must read it. We have no objection.

BYRNES: It states that the Soviet government will participate in the inland transport conference. I think we should thank the committee for reaching an agreement. But other parts merely say that the Soviets will review documents. Do you want to report it that way?

MOLOTOV: Whichever way you like.

CADOGAN: We could add Soviet government is considering further participating in the other agencies mentioned.

MOLOTOV: I suggest that report of committee be approved.

BYRNES: I agree.

MOLOTOV: Next question.

BYRNES: I have no further question.

CADOGAN: Has Soviet delegation considered our Rumanian oil proposal?

MOLOTOV: We have sent a memorandum on the subject today.

Adjourned.

399

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

[Babelsberg,] July 27, 1945

Dear Mr. Secretary: Yesterday I visited five plants in the American area of Berlin located in Zehlendorf and Tempelhof. These plants manufactured artificial wool and artificial silk from wood fibre, electrical instruments, radios, telephones, etc. Will Clayton accompanied me in looking over two of the plants.

These plants are strictly peace-time concerns. We made the following observations:

  1. Very little damage was done to the plants as a result of bombing and shellfire.

  2. Subsequent to the armistice, virtually all machinery was removed by the Russians. The machinery was numbered and removed out of our zone some of it just across the line. The work was tremendously rushed toward the end. A few pieces of machinery were left behind.

    The technical information in the plants, process records and specifications were also taken.

  3. In every case, a few foremen and supervisors were “persuaded” by the Russians to accompany the machinery to Russia.

  4. Two of the plants visited belonged to the International Telephone and Telegraph and were 94% and 100% American owned. They have been completely stripped of machinery down to even small tools.

It would appear that all these removals were in complete violation of all efforts to maintain “non-war potential” industries in Germany. The effect of the removals will be the complete destruction of employment opportunities in the area.

What we saw amounts to organized vandalism directed not alone against Germany, but against the U.S. forces of occupation. Incidentally, under the techniques used, Russia will withdraw two to three times as much from any area as would be withdrawn by the U.S. or U.K. under similar circumstances. In the area which we captured and turned over to the Russians we made no removals except for a few samples of unique equipment.

You may draw your own conclusions.

Respectfully yours,
EDWIN W. PAULEY

[Attachment]

[Babelsberg,] July 27, 1945

Factory Equipment Removals from the American Zone of Berlin

Area Covered
On July 26 the Reparations Mission Staff, headed by Edwin W. Pauley and Isador Lubin, accompanied during part of the trip by Will Clayton and others, visited five industrial plants in the American sector of Berlin under the guidance of Major Gentle of the U.S. Military Government. The plants were in Zehlendorf and Tempelhof, in the U.S. sector of Berlin.

Specific Plant Observations
The three plants most carefully inspected were the artificial fibre plant of the Spinnstofffabrik Zehlendorf AG, the Zeiss Ikon lens and adding machine plant, and the glass works of the Sendlinger Optische Glaswerke. These were selected because they are among the largest plants of the area and are peace-time industries rather than war plants, though their products were used by the military during the war.

The following paragraphs will give a brief view of the facts:

  1. Spinnstofffabrik Zehlendorf AG

Normal products: Artificial wool and silk, from wood pulp.

War products: Same

Plant: About 770,000 sq. feet, mostly one story. About one half built during the war and equipped with new machinery. War damage at end was 20% to buildings and to machinery practically none.

Employees: At end about 2,000 of whom 300 were foreign “slave labor” and were reported by the superintendent to be “just as good as the Germans”.

Removals: 80% of all machinery removed, including all modern equipment; conveyor systems; 2 modern steam turbines, 12,000 KWH; pumping equipment from 7 deep wells (leaving 2); all specifications and process records; 4 technicians.

  1. Zeiss Ikon AG Goertzwerke

Normal products: Cameras, adding-machines

War products: Optical devices

Plant: 270,000 sq. feet, modern 5 story concrete reinforced. War damage, buildings 50%, machinery 5%

Employees: 2,300 including about 300 “slave labor”

Equipment removed: 95% of machine tools, some 1800; all locomotive and rolling stock; all technical reports, drawings and specifications; several technicians went to Russia with the machinery.

  1. Sendlinger Optische Glaswerke GmbH

Normal products: Raw glassware for illumination, Röntgen glass, lenses, magnifying glasses, condensers, raw glass for optics.

War products: Same, with emphasis on raw glass and lenses for optical instruments.

Plant: 117,700 square feet, modern 5 story main plant; war damage to buildings 25%, to machinery none.

Employees: 420, about 25% “slave labor”

Removals: All machinery except 14 old machines removed since Armistice, kilns and furnaces remain. Some plumbing, electrical fixtures are missing. All measuring machines taken.

In addition two International Telephone and Telegraph plants were visited. They manufactured telephones, pneumatic conveyors, radios and other electric equipment.

General Observations

  1. These were not “war potential” plants.

  2. These plants were in full operation up to May 1945. Several of the plants had been damaged during the war mostly by fire, but were repaired and brought to 100% production or more in 30 to 90 days. Some IT&T machinery had been moved out into plants in Czechoslovakia, otherwise there was no evidence of “dispersal.”

  3. Managers or superintendents reported that all plants were operated as parts of various cartels, though they could not give all details.

  4. “Slave labor” made up around 20% of the labor force, somewhat less than we found in heavy industry. Foreign labor was highly regarded by the superintendents we talked with.

  5. Superintendents said that the bulk of their former labor force is still available in the neighborhood, though their living accommodations are very crowded. Present employment is 7% to 10% of normal, and is engaged in repair and clean-up work.

  6. Raw materials and semi-finished materials on hand in the plants are very limited or non-existent, in contrast to the stock-piles in the steel plants. This may be an indication of the breakdown in transport toward the end of the war.

  7. Virtually all useful machinery, including some boilers, turbines, generators and pumps were removed as well as plumbing and electrical fixtures.

  8. Removals were executed by Russian military personnel under some technical supervision. Some 100 men were employed in removals, which may be compared with the 2000 normal employees of the plant. Removals continued up to the time we took over physically. Some machinery, taken from place, was left behind for lack of transport.

  9. The removed machinery was carefully numbered and addressed and apparently sent to places selected in advance, to be set up on the former pattern.

  10. Superintendents reported that the high precision and measuring machinery was not properly protected and was allowed to stand outdoors and along the streets and roads after removal.

  11. German technicians were taken with the machinery to assist in its installation and operation. These technicians went voluntarily, according to the superintendents, though they implied that various “strong inducements” were offered. The Russians wanted many more, but could not persuade them to go.

  12. Two of the plants belonged 94% and 100% to the IT&T Co. They were completely “looted”. They had been more seriously damaged than the other plants we visited, but most of their machinery was in good condition at the end of fighting.

Conclusions

  1. The USSR considers all industrial equipment as war booty, including the equipment of plants engaged in making textiles, cameras, optical instruments, radios, telephones, switchboards and pneumatic tubes and conveyors.

  2. Removals are systematic and in some cases supervised by technical personnel. Machinery is numbered and addressed to places selected in advance. (This conflicts with some evidence seen at the freight marshalling yards. Practices may differ for general purpose machinery). Technical personnel is persuaded but not forced to accompany the machinery.

  3. Special effort was made to strip the Zone turned over to us in Berlin before we came in. The IT&T in our Zone was stripped before July 4, while the AEG (General Electric) plant in the Russian Zone is only now being stripped.

  4. There will be serious industrial unemployment no matter what we do in our Berlin Zone, because the tools of the former peace-time industries are gone.

400 
023.1/9-1454

Proposal by the Soviet Delegation

[Babelsberg,] 27th July, 1945
[Translation]
P (TERMINAL) 46

Removal of Allied Industrial Equipment Especially in Roumania

In its memorandum of the 24th July (P (TERMINAL) 40) the British Delegation once more raises the question of the legitimacy of the removal by the Soviet Command from Roumania of oil equipment by way of war booty.

The Soviet Government has repeatedly explained its point of view on this question and referred to definite facts proving that the oil equipment under discussion, consisting mainly of pipes, is German military equipment and war booty for the Red Army.

It should be recalled that beginning as long ago as the summer of 1940, the British Oil Companies and enterprises in Roumania were seized by the Germans and used by them up to the 23rd August, 1944, for supplying the German Army with oil products. In aide-mémoires from the People’s Commissar for Foreign Affairs of the USSR dated the 30th November, 1944, and the 4th January, 1945, full details were already quoted to confirm the above statement nor [not] leaving any doubt that the Allied Control Commission in Roumania had in this matter acted in full accord with Article 7 of the Agreement on the Armistice with Roumania and with Article 2 [B] of the Protocol [Annex] to this Agreement. There is, therefore, at the present time, no need to expound the Soviet point of view on this question.

As to the suggestion contained in the British Memorandum of the 24th July to instruct a committee, consisting of three persons who are citizens of Allied countries, to investigate the problem as to whether these pipes were British or German property, the Soviet Delegation considers the reference of this problem to a joint examination by Soviet representatives and British representatives in respect of oil equipment and pipes removed from the territory of the enterprises with the participation of British capital to be more useful. The Soviet representatives, together with the British representatives, could examine the facts and documents which could be presented to the British party.

401 
740.00119 (Potsdam)/7-2745

U.S. Delegation Memorandum

Potsdam, July 27, 1945, 4 p.m.
Top secret

Topics Discussed at Meeting of Foreign Ministers, 4 p.m., July 27, 1945

1. German Reparations
This matter was discussed and passed over for further examination.

2. Admission to the United Nations
Mr. Byrnes stated that as the U.S. proposal in this matter had become complicated by additions and modifications by the other delegations, he preferred to withdraw the paper rather than to delay the Conference by further discussion.

3. German Economic Paper
This matter was deferred until the subject of German reparations was further explored.

4. Italian and Austrian Reparations
This matter was discussed. The American view was that countries which were in need of relief could not be expected to support reparations payments and the subject was deferred to a later time.

5. Oil for Western Europe
The Russian delegation said that they had a paper to present to the Conference on this subject. This paper has not yet been received.

6. Implementation of the Yalta Declaration on Liberated Europe
No report has been received from the subcommittee on this subject.

7. Oil Equipment in Rumania
This matter was not discussed.

8. The Western Boundary of Poland
This matter was not discussed.

9. Cooperation in European Economic Policies
This matter was discussed. The Soviet delegation stated they were ready to enter the European Inland Transport organization and were studying the other economic and coal organizations with a view to arriving at their decision as to whether to join them.

10. German Political Paper
Sir Alexander Cadogan stated that there were two items which had been rejected by the Economic Committee from the economic principles applying to Germany on the basis that they belong properly in the political principles. He suggested that these points be brought before the Big Three. The points were as follows:

(a) Uniform treatment of Germans.
(b) Free circulation of all nationals of the Four Allies in all zones.

11. Inland Waterways
The subcommittee appointed to study this question was not ready to report. Mr. Byrnes asked that the subcommittee expedite this report to the Conference.

12. [German Fleet]
Mr. Molotov asked that the item referring to the German naval and merchant vessels be put on the agenda.

402

Rapporteur’s Report

Potsdam, July 27, 1945, 4 p.m.
[Translation]

The following questions remain on the agenda of the meeting of Foreign Ministers:

  1. Regarding unsettled questions it was stated that up to the present time the following unsettled questions remain:

    1. regarding the economic principles with relation to Germany;

    2. regarding German reparations;

    3. regarding Italian and Austrian reparations;

    4. regarding European oil supplies;

    5. regarding the acceptance of Italy and other former satellites as members of the United Nations Organization;

    6. regarding the implementation of the Yalta Declaration on Liberated Europe;

    7. regarding the lightening of the armistice conditions for Italy and other former satellites;

    8. regarding the export of oil equipment from Rumania;

    9. regarding the western frontiers of Poland;

    10. regarding collaboration in the solving of immediate European economic problems;

    11. regarding military [war] criminals;

    12. regarding the transfer of Germans from Poland, Czechoslovakia and Hungary;

    13. regarding the additions [addition?] to the political principles of [for?] the treatment of Germany of two points taken from point 13 concerning the economic principles;

    14. regarding the German fleet;

    15. regarding internal [inland] waterways.

  2. Regarding the admission of Italy and other countries which have concluded an armistice and which have become co-belligerents on the side of the Allies into the United Nations Organization

    The Secretary of State of the USA, Mr. Byrnes, stated that if agreement between the Soviet and British Delegations on the wording of the document on this question is not reached, he, with the approval of the President of the USA, proposed to withdraw completely this question from the agenda of the Conference. Mr. Byrnes added that according to his opinion it was first of all necessary to examine the vitally important questions, namely, the questions concerning reparations, the German fleet and the western frontiers of Poland. Mr. [Sir Alexander] Cadogan proposed to change the wording of the last phrase of the third paragraph, as introduced by the Soviet Delegation, by the following phrase:

    The conclusion of peace treaties with responsible democratic governments in the states will permit the three Governments to renew normal diplomatic relations with them and to support proposals on their side to become members of the United Nations Organization.

    V. M. Molotov stated that this amendment was unacceptable.

    It was agreed that since the meeting of the three Ministers could not attain agreement on this question, it should be referred for settlement to the Chiefs of the three States.

  3. Regarding German Reparations

    V. M. Molotov stated that the Soviet Delegation considered the work of the Reparations Committee unsatisfactory and proposed that the question of reparations from Germany be examined immediately at the meeting of the three Ministers. This proposal did not evoke any objection. V. M. Molotov thereupon read point 4 of the Crimea Protocol on reparations and, referring to Mr. Pauley’s statement in the Reparations Committee to the effect that he withdrew the agreement of the Government of the USA to the decision set forth in this point, inquired of Mr. Byrnes whether the Government of the USA continued to support the Crimea decisions on this question, or whether it had changed its position.

    Mr. Byrnes answered that this was a misunderstanding. The Government of the USA had agreed in the Crimea to accept the figure of $20,000,000,000 as a basis for discussion, but since then the Soviet and Allied Armies had caused great destruction in Germany, several areas had been taken away from Germany, and now it was practically impossible to proceed from that general figure which had been adopted by the American Delegation at Yalta as a possible basis for discussion.

    Mr. Cadogan stated that he would refrain from submitting any proposals.

    On the proposal of Mr. Byrnes it was recognized as advisable to postpone the examination of this question until the next meeting of the three Ministers, after which this question should be reported to the Heads of the three Government[s].

  4. Concerning Austrian and Italian Reparations

    V. M. Molotov proposed to accept as a basis for the further study of this question the proposals on reparations from Austria and reparations from Italy submitted by the Soviet Delegation (see enclosures Nos. 1 and 2). Mr. Byrnes stated that the American Delegation did not consider it possible to exact from Austria and Italy reparations in the guise of current production. In the opinion of the American Delegation it was only possible to remove at one time equipment of the war industries which could not be used for peaceful objectives. Mr. Cadogan stated that the British Delegation supported the opinion of the Delegation of the USA.

    In view of the non-obtaining of agreement, it was decided to report the manifested disagreement to the Heads of the three Governments.

  5. Regarding the Economic Principles with Relation to Germany
    On the proposal of Mr. Byrnes discussion of this question was postponed.

  6. Regarding European Oil Supplies
    The discussion of this question was postponed since the Commission had not concluded its work.

  7. Regarding Economic Collaboration in Europe
    It was decided to approve the report of the commission on this question and to inform the Heads of the three Governments accordingly (see enclosure No. 3).

403 
740.00119 Potsdam/7-2745

U.S. Delegation Memorandum

Potsdam, July 27, 1945, 4 p.m.

Pending Problems Before the Conference, Close of Business July 27, 1945

I. Problems before the Big Three

  1. Western Boundary of Poland.

  2. Disposition of German Fleet and Merchant Marine. (Awaiting completion of U.S. and British papers outlining concrete proposals.)

  3. Admission to the United Nations. (Referred to the Big Three by the Foreign Ministers on July 27.)

  4. War Crimes. (This British agenda topic was referred to the Big Three by the Foreign Ministers on July 27.)

  5. Cooperation in Solving Immediate European Economic Problems.
    (The subcommittee report, which states that the Soviets will attend the EITO [ECITO] Conference, but are still studying the question of participation in EEC and ECO, was referred to the Big Three by the Foreign Ministers on July 27.)

  6. Austrian and Italian Reparations.
    (It will apparently be necessary to report to the Big Three that the Foreign Ministers have been unable to reach any agreement in regard to Austrian and Italian reparations.)

  7. Spain.
    (If the U.S. suggestion is approved that the proposed paper on the Admission to the United Nations be dropped, the Soviet proposal for a tripartite statement on the Franco regime will still be pending before the Conference.)

II. Problems before the Foreign Ministers

  1. German Reparations.
    (To be considered at the next meeting of the Foreign Ministers who, if they are unable to reach an agreement at that meeting, will refer the question to the Big Three.)

  2. German Economic Questions.
    (Decision on the outstanding questions, paragraphs 18 and 19 in regard to the source of supply for zones of occupation in Germany and to the payment for essential imports, is dependent on the decision concerning German reparations.)

  3. Rumanian Oil Equipment.
    (The Soviets are circulating a paper, a reply to the British paper on this subject.)

  4. German Political Questions.
    (The British have presented a paper proposing that two additional points be added to the German political document already approved by the conference.)

III. Problems before subcommittees

  1. Oil for Western Europe.
    (The Economic Subcommittee is still considering the U.S. proposal on this subject.)

  2. Implementation of the Yalta Declaration on Liberated Europe and Satellite States.
    (The subcommittee report on this question has not yet been presented to the Foreign Ministers.)

  3. Unrestricted Navigation of International Inland Waterways.
    (The subcommittee report on this question has not yet been presented to the Foreign Ministers.)

  4. Transfer of German Populations from Poland and Czechoslovakia.
    (The subcommittee has not yet submitted its report on this topic.)

  5. Directive to Military Commanders in Germany on Agreements Reached at the Conference.
    (It is impossible for this subcommittee to complete its work until the German economic questions have been resolved.)

  6. Protocol and Communiqué of the Conference.
    (Subcommittees are engaged in preparation of these documents.)

404 
761.94/7-2145: Telegram

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

Moscow, July 27, 1945 — 4:30 p.m.
[Translation]
Secret
urgent

1458

Re my telegram No. 1449

Although it is difficult to predict what the Soviet reply will be to our recent request, it is possible that the repeated request by the Japanese Government is regarded as merely seeking the good offices of the Government of the Soviet Union, since we failed to indicate on what basis such a request was made. Since the request does not even indicate an outline, the Soviet Union may find it impossible to decide its attitude so simply on such an important matter, and it is conceivable that the request may be turned down again. If, by chance, it does result in a Soviet refusal, I am deeply concerned lest this may force us into a very awkward position. It may also implicate the Imperial Household, since we have been ordered by the Emperor to end further bloodshed and are strongly urged to send a special envoy.

In presenting the request, as directed in your telegram No. 931 regarding the mission of Prince Konoye, I have taken the precaution not to give the impression that the mission is to set forth the Japanese Government’s “concrete aim,” and not to present a concrete “proposal.” Lozovsky, however, stated that he understood … is to bring a “concrete proposal” and, as he hinted that he was expecting some form of concrete proposition, I believe we must pay special attention to this point.

In presenting a proposal to end such a tremendous undertaking as the present large-scale war, we do not, in the final analysis, have a definite proposition but are only explaining our intention in an indirect way. It is absolutely impossible to cause the Soviet Government to make a move with such a noncommittal attitude on our part. In this connection I do not have the slightest doubt that the straightforward attitude of the Soviet Union is designed to compel Japan to come out with a concrete proposal.

The definitive joint declaration against Japan made by the leaders of the three nations – the United States, Great Britain, and China – at Potsdam on the 26th appears to be a big scare-bomb directed against us. It became very doubtful whether the Soviet Union would offer its good offices under this offensive started by the three countries. Then there is no doubt that the aforesaid tripartite declaration is a counteroffensive, with our trial venture to terminate the war as its target. According to a broadcast of the BBC on the 26th, Lord [Louis] Mountbatten visited Potsdam on his return trip to England and is said to have reported to and consulted with the Big Three leaders of the United States, Great Britain, and the Soviet Union on the progress of the war in the Far East. We must take note of the remark that Stalin has for the first time participated in a discussion of the war in the Far East. For your information I make this reference, since this is also a matter which I fear may have some effect on the attitude of the Soviet Union in relation to our request for the Soviets’ good offices.

405

Byrnes-Molotov meeting, 6 p.m.

Present
United States Soviet Union
Secretary Byrnes Foreign Commissar Molotov
Mr. Bohlen Mr. Pavlov

Bohlen Minutes

Potsdam, July 27, 1945, 6 p.m.
Top secret

THE SECRETARY said first of all he wished to tell Mr. Molotov that his request for a two- or three-day postponement in the issuance of the statement on Japan had only reached him this morning when it was too late.

MR. MOLOTOV replied that he had sent the word last night as soon as he had received the Secretary’s letter.

THE SECRETARY explained that even then it would have been too late since at 7:00 o’clock the statement had gone to the press for early morning release. He explained that the President for political reasons had considered it important to issue an immediate appeal to the Japanese to surrender. Two days ago, he had discussed it with the Prime Minister and he had received his consent to the issuance of the statement and had cabled Chiang Kai Shek. On his return yesterday from Frankfort the President had found a telegram from Chiang Kai Shek agreeing to the issuance of the statement.

MR. MOLOTOV said that thus they had not been informed until after the release.

THE SECRETARY said that we did not consult the Soviet Government since the latter was not at war with Japan and we did not wish to embarrass them.

MR. MOLOTOV replied that he was not authorized to discuss this matter further. He left the implication that Marshal Stalin would revert to it at some time.

THE SECRETARY then said that he had also wanted to discuss privately with Mr. Molotov the difficult question of reparations. He said he had closed off the discussion at the Foreign Ministers meeting this afternoon since nothing could be accomplished until the new British delegation had returned to the Conference.

MR. MOLOTOV agreed.

THE SECRETARY asked Mr. Molotov whether he had had an opportunity to think over the suggestion which the Secretary had made, namely, that each country would obtain its reparations from its own zone and would exchange goods between the zones.

MR. MOLOTOV said would not the Secretary’s suggestion mean that each country would have a free hand in their own zones and would act entirely independently of the others?

THE SECRETARY said that was true in substance but he had in mind working out arrangements for the exchange of needed products between the zones, for example, from the Ruhr if the British agreed, machinery and equipment could be removed and exchanged with the Soviet authorities for goods – food and coal – in the Soviet zone. The Secretary said that he felt that without some such arrangement the difficulties would be insurmountable and would be a continued source of disagreement and trouble between our countries.

MR. MOLOTOV pointed out that whereas removals of capital equipment from the British and American zones could be done in a short period of time, payment for these in the form of products from the Soviet zone must of necessity extend over a longer period of time.

THE SECRETARY agreed and said that was a point of course that would have to be worked out.

MR. MOLOTOV then inquired what amount he thought the United States Government could agree to in respect of removals of industrial equipment for transfer to the Soviet zone under Mr. Byrnes’ plan. He said that they had spoken of 2 billion dollars.

THE SECRETARY pointed out that the Ruhr lay in the British zone and that it would be necessary to consult with them. He said he would talk with Messrs. Clayton and Pauley and when the new British delegation arrived he would discuss possible amounts with them. The Secretary reiterated the advantages of his proposal repeating again that the United States Government would not this time pay out money in order to keep Germans working to produce reparations for others. The Secretary then said that he felt that Mr. Molotov’s question at the meeting in regard to the Yalta decision was based on a misunderstanding. He said in our understanding the words “basis of discussion” merely mean that the subject would be discussed and in no way meant that there had been any agreement as to the sum of German reparations.

MR. MOLOTOV agreed with that and said that he had had in mind the impression that they had received at Yalta, namely, that the United States was in accord with the Soviet view that we should exact as much reparations as possible from Germany whereas at Yalta the British had not shared this view and had fully reserved their position. He said now at this Conference the Soviet delegation had received the impression that the United States no longer held that view and that that was the reason why he had referred to the Yalta Agreement.

THE SECRETARY replied that there had been no change in view on the part of the United States Government and that we were still willing to discuss the Soviet proposal but that he must agree that many conditions had changed since Yalta. There had been first of all the extent of the destruction in Germany and secondly questions as to definitions of war booty and then the de facto alienation to Poland of a large and productive part of former Germany. He said that our aim remained the same and that all he was trying to do was to find a way which would on the one hand be acceptable to all and would on the other take cognizance of existing realities.

MR. MOLOTOV replied that in February the Soviet Government had thought the destruction of the Ruhr was greater than it turned out to be. He said that from their reports only from ten to fifteen percent of the productive capacity of the Ruhr had been destroyed. As a whole, machine tools and the basic equipment remained serviceable. He inquired again what amount of removals from the Ruhr Mr. Byrnes had in mind to exchange for products from the Soviet zone.

THE SECRETARY repeated that he would have to consult with his advisers and the British on this point.

MR. MOLOTOV inquired whether it was still the intention of the United States Government to reduce the production capacity of the Ruhr as a measure of security.

THE SECRETARY replied that that was still our intention. The only question was how much equipment would be available for transfer to the Soviet zone in return for goods over a longer period of time from that zone.

MR. MOLOTOV in conclusion then said that as he understood it what Mr. Byrnes suggested was in fact an exchange of reparations between the zones.

THE SECRETARY said this was correct.

MR. MOLOTOV then inquired on another subject why the Secretary had decided to withdraw our proposal with regard to Italy and the other satellite states.

THE SECRETARY explained that we had wasted a good many days on that and that our original proposal had been amended many times. He agreed, however, that the President had accepted Marshal Stalin’s amendment concerning the consideration of the question of the recognition of the satellite states but that Mr. Churchill had objected to it. He said at one time the British and American delegations had been in agreement but that the Soviets had not and that subsequently the Soviet and American delegations were in agreement but that the British objected. He said he felt that there were more important matters to deal with but if the British and Soviet delegations could reach agreement the Conference could still adopt the proposal.

It was agreed that nothing could be done until Mr. Attlee’s return.

406

Meeting of the Subcommittee on Inland Waterways

Present
United States United Kingdom Soviet Union
Mr. Riddleberger 
840.811/7-2545

The Chief of the Division of Central European Affairs to the Secretary of State

[Babelsberg,] July 29, 1945

Memorandum to the Secretary

Subject: FREE AND UNRESTRICTED NAVIGATION OF INTERNATIONAL INLAND WATERWAYS

The Sub-Committee on inland waterways met on July 27 at which time the American and British representatives presented draft proposals, copies of which are attached herewith. While the British and American drafts are cast in somewhat different form, they both incorporate essentially the same ideas and agreement can no doubt be quickly reached on them providing the Soviet member was willing to go along.

The Soviet representative presented no memorandum and stated that his delegation had not expected this question and was not sufficiently informed to present a statement. He said it would be necessary to obtain more information from his Government before the Soviet views could be made known to the Committee. Furthermore he doubted that the Committee could extend its mandate to include the Kiel Canal and the “Straits” without referring the question to the Foreign Ministers. To this objection the United States member pointed out that the Straits had been the subject of a lengthy discussion in the Big Three meeting and that the Kiel Canal was in any case under the jurisdiction of the Control Council for Germany; the Sub-Committee had been established after this discussion and therefore we thought that these subjects could be properly included. The British member agreed. The Soviet representative said that he would take up these points with Mr. Molotov. The remainder of the discussion was devoted to explanatory comment by the American and British representatives on their respective drafts, largely in reply to questions by the Soviet representative. The Sub-Committee adjourned with a promise by the Soviet representative to discuss the question again when his delegation had received the information it required which he hoped would be by July 29.

The Soviet representative has not called back on this question and our efforts to get in touch with him have been fruitless. I have the impression that the Soviets do not desire to discuss this question at this time and I doubt if we shall make any progress unless pressure is applied to the Soviet delegation at a higher level.