Potsdam, July 31, 1945, 4:00 p.m.
Top secret
MR. BEVIN suggested that as the Rapporteur’s report had been circulated it not be read.
This was agreed to.
THE PRESIDENT proposed that they take up the U.S. proposals on Reparations, the Western Frontier of Poland, and Entry into the United Nations Organization.
MR. MOLOTOV said he wished to circulate the Soviet proposals on this question.
MR. BYRNES said the paper [papers?] presented on behalf of the U.S. Delegation set forth as part of one proposition proposals with respect to three controversial questions – reparations, the western frontier of Poland, and entry into the United Nations Organization. The U.S. Delegation had explained in the meeting of the Foreign Ministers that concessions made with respect to Poland and the United Nations Organization question were conditional upon acceptance of all three proposals.
MR. STALIN pointed out that these questions were not connected and dealt with different subjects.
MR. BYRNES agreed that they were different subjects. He pointed out, however, that they had been before the Conference for weeks without agreement having been reached. They were presented in the hope of reaching agreement. The U.S. Delegation was not willing to accept one without the others.
As to reparations the U.S. proposal was that 25 percent of the industrial capital equipment in the Ruhr which was determined to be unnecessary for a peacetime economy be delivered to the Soviet Union in exchange for certain commodities. It was proposed further that an additional 15 percent of such capital goods unnecessary for peacetime economy be delivered to the Soviet Union without any payment or exchange. In a discussion in the Foreign Ministers meeting the British Delegation had said it could not agree if the transfer was to be made only from the Ruhr but could agree if it were to be from the three western zones. They agreed that the only difference would be one of percentages and if made to apply to three western zones the percentages would be one-half those stated with respect to the Ruhr. This would not affect the total to be received by the Soviet Union. The percentages would be 12½ and 7½ respectively.
MR. MOLOTOV said there had been no agreement on this.
MR. BYRNES agreed that it had not been agreed by the Soviet Foreign Minister but it had been suggested by the British Foreign Minister and he had agreed, and he thought it was better from the point of view of the administration of the French, British and American zones. He also considered that it would be advantageous to their Soviet friends.
MR. STALIN agreed that the three zones would be more advantageous.
MR. BYRNES continued that under this plan the Soviets could get a factory from the American zone and would not be confined to plants from the Ruhr. It had been suggested at the Foreign Ministers meeting that it should be decided by whom the determination of the equipment not needed for a peacetime economy should be made. He had added to his proposal that it should be made by the Control Commission under policies fixed by the Reparations Commission, subject to the final approval of the Commander in the zone from which the equipment was removed. He had suggested the Control Council because the four governments were represented on it and it was an administrative body charged with executive functions, whereas the Reparations Commission was a policy making body. He had also added to his proposal that removals of industrial capital equipment should be completed within two years and the products to be delivered by the USSR in exchange should be delivered within five years. He also thought it should be stated that reparations claims of other countries should be met from the western zones of occupation.
The Polish proposal was that advocated by the Foreign Minister of the Soviet Union at the time the Polish Delegation had presented its case and it gave to the Polish Government the internal administration of all the territory it claimed.
The paper on Admission to the United Nations Organization had been withdrawn by the U.S. Delegation last Saturday. As reintroduced it contained language which he hoped would meet with the approval of the Soviet Delegation. Their British friends could not accept the language in the first draft because they could not recognize the countries with which they were at war. Marshal Stalin had asked if the British would agree to extend a complete or partial recognition. He therefore suggested language to the effect that they would consider recognition to the extent possible prior to the conclusion of peace treaties with the countries concerned. The British said they had some difficulties in this connection but that they tentatively would agree to the language.
MR. STALIN said he had no objection in principle to this wording.
MR. BYRNES pointed out that the other change in wording related to freedom of the press.
MR. STALIN suggested in the sentence on this subject that they replace the words “express the desire” by the words “have no doubt that.”
The British and American Delegations agreed to this change.
MR. BYRNES concluded by stating that the three proposals were submitted together and he hoped they could be adopted.
Reparations From Germany
(The Translator read the Soviet proposal on Reparations from Germany).
MR. STALIN said that Mr. Byrnes suggested that the three questions be linked. He understood this and it was for Mr. Byrnes to use any tactics be wanted but he could not undertake to reply with such tactics and the Soviet Delegation would vote separately on these questions. The most debatable question was that of Reparations from Germany. The Soviet proposals had just been read. They had accepted the point of view of the Americans. They had agreed not to mention a definite figure of reparations but had accepted a statement of percentages.
MR. STALIN said he had received some new material on British and American removals from the western zones. They included 11,000 railroad cars. What the fate of this property would be in the future he did not know. Would it be returned to the Russian zone, or would they be compensated?
THE PRESIDENT said that the American view was that there should be a central transport administration.
MR. STALIN continued that the Soviets did not remove railroad equipment from the American zone although the Americans had charged the Russians with taking everything. He mentioned this to show that not only the Russians had sinned but also the British and Americans. With reference to the substance of the question he thought that they had a common basis now. The principle in the American plan that each country exacts reparations from its own zone was accepted; also, it was agreed that reparations from the west should come not only from the Ruhr but from the three western zones. It was agreed that part of the equipment to be removed from the Ruhr could be compensated by goods. It was agreed that the Control Commission would determine the equipment that should be removed. All these had been accepted. What was the difference that remained? The Russians were anxious that a time limit be fixed for determining the equipment to be removed.
THE PRESIDENT said he agreed to fixing a time limit.
MR. STALIN said they suggested three months and inquired if that was enough time.
THE PRESIDENT said he would agree.
MR. BEVIN thought three months was not enough.
MR. STALIN said make it three, four or five, but there should be a time limit.
MR. BEVIN said he would accept six.
MR. STALIN agreed to accept six.
THE PRESIDENT also agreed.
MR. STALIN said that the only remaining question was the figure of the percentage. He hoped the British and Americans would meet the Soviet wishes. Mr. Bevin should have in mind that the Russians have lost much equipment. They should receive a small part of it back.
MR. BEVIN said that the British had had in mind equipment after determination of the amount needed for the maintenance of the economy.
MR. STALIN said this was in his proposal. If he thought it over, Mr. Bevin would accept it.
MR. BEVIN replied that he could not. He had used the words “equipment not needed for peacetime economy.” This was not in the Soviet document.
MR. STALIN reread the Soviet proposal on this point.
MR. BEVIN said he did not give the basis on which the determination would be made.
MR. STALIN insisted it was the same thing.
MR. BEVIN asked if he would then accept the British wording and said he did not want a misunderstanding.
MR. STALIN said the Russians had in view 15 percent of the equipment to be removed which was not necessary for peacetime economy but was not clear about it.
MR. BEVIN again cited the British language which he said reflected the views agreed upon by the British and American Delegations.
MR. STALIN said that he would accept this language.
MR. BYRNES observed that the only remaining differences were the percentages in the Soviet proposals in regard to the shares of German companies and gold holdings. He pointed out that it might be proved that the gold belonged to others and must be returned.
MR. STALIN said the Russians meant German gold.
MR. BYRNES said his information was that it was all looted gold and the question was would they return it to the countries from which it was removed. He inquired if the Soviet Delegation was insisting on the increase in percentages and on this 30 percent of German foreign assets and the shares of German companies.
MR. STALIN said yes, he would like to receive this if possible.
MR. BEVIN asked what he had in mind.
MR. STALIN said he had in mind the foreign assets of Germany frozen in other countries, including America.
MR. BYRNES observed that in America this was a matter which required action by Congress; that Congress had already fixed the manner of establishing claims. There were no doubt many people, including refugees, who had valid claims. The U.S. Delegation certainly could not agree to anything disposing of these assets in the U.S. He added that in Latin America many countries have claims against Germany for shipping and other losses and no doubt they would use these assets to satisfy their claims.
MR. BEVIN said that yesterday they had agreed that France be added to the Reparations Commission in order to work out these questions and he would like France to be added to the Reparations Commission.
MR. STALIN replied, I have no objection.
MR. BEVIN said with regard to percentages, we thought we had met you yesterday in the meeting of Foreign Ministers. I agreed to 12½ percent and thought that we had treated your claim liberally.
MR. STALIN said that it was the opposite of liberal.
MR. BEVIN said then it was generous. They had different points of view. He took it that this question of reparations would not interfere with the ordinary exchange of goods within Germany. He referred to the document on economic principles for Germany.
MR. STALIN replied that could be discussed in connection with the consideration of those principles.
MR. BEVIN said that the Soviet proposal in regard to gold was difficult for the British. He asked if Stalin would agree that their proposal in regard to foreign assets be limited to neutral territory.
MR. STALIN said he would agree.
MR. BYRNES said the American position was that we did not agree to the Soviet proposals that had been added.
THE PRESIDENT said that he had just been informed by Stalin that there had been unauthorized removals by the American Army. He wished to state that they were not made under instructions of the American Government and that they would be accounted for. He said he had addressed a communication to General Eisenhower and was having an investigation made. He added that no people had been removed by the American Army.
MR. STALIN suggested that they discuss paragraph 3 of the proposal; everything in the Soviet document was true.
THE PRESIDENT said if the Russians would leave off their paragraph 4 he would agree to the percentage they proposed.
MR. BEVIN pointed out that they had to satisfy France. He said that if the Russians would drop all of the second page of their proposal he would agree to 12½ percent-10 percent.
MR. STALIN pointed out that paragraph 5 should remain.
MR. BEVIN said that he meant that paragraph 4 should be dropped.
MR. STALIN observed that the U.S. was willing to meet the Soviet wishes – why was Britain unwilling?
MR. BEVIN said that because they were responsible for the zone from which the Soviet claims were to be satisfied. They were also responsible for satisfying the claims of France and other countries.
MR. STALIN pointed out that France had signed an armistice with Hitler and had suffered no real occupation. France should be satisfied with a small amount. He said that 150 divisions had been sent to Russia from France or had been supplied from France.
MR. BEVIN repeated that they had to satisfy France, Belgium, Czechoslovakia and Holland. The British wanted nothing except some raw materials.
MR. BYRNES said that the American proposal used the language “other countries entitled to reparations.” He urged that this language be accepted.
MR. STALIN said he agreed to this.
MR. BEVIN said that the percentage the Soviets asked plus reparations from their own zone gave them more than 50 percent.
MR. STALIN insisted that it would be less than 50 percent and pointed out in addition that they were supplying goods to the equivalent of 15 percent. The Soviet proposal was a minimum. The Soviets received only 10 percent – the others got 90 percent. He agreed to 15 percent and 10 percent and thought it fair. The Americans agreed. He hoped Bevin would support them.
MR. BEVIN said “All right then.”
MR. STALIN expressed his thanks.
MR. BEVIN said he understood that the American paper as amended was accepted.
MR. STALIN said he thought they had settled all their differences and should appoint a committee to draw up a text.
The committee consists of Mr. Clayton and Mr. Pauley for the U.S.; Sir D. Waley and Mr. Turner for the British; and Mr. Vyshinski and Mr. Gromyko for the Soviets.
Polish Western Frontier
MR. BEVIN said his instructions were to stand for the eastern Neisse and he would like to ascertain what was involved in this new proposal. Would the zone be handed over to Poles entirely and would Soviet troops be completely withdrawn? He said he had met the Poles and had discussed this question in the light of the declaration referred to in the U.S. document. He had asked them what their intention was in giving effect to this decision. He pointed out that any decision had to be defended in Parliament. He had asked the Poles [what their intention?] was in regard to the actual holding of free and secret elections on the basis of the 1921 Constitution. They had assured him that elections would be held as soon as possible and they hoped not later than early 1946. He pointed out that this was subject to conditions being made possible for the holding of elections. The Poles also agreed to freedom of the press and to foreign correspondents sending reports abroad without interference. They had also assured him in regard to freedom of religion. An important matter was the return of the troops under Allied command as well as return of civilians. He had asked the Poles to make a declaration to insure that these people would be treated equally with those in the country. A point that concerned more particularly the Soviet Government and the British and which the Polish Government could not now settle was the question of a British military air service between Berlin and Warsaw and London to enable His Majesty’s Government to maintain regular communications with its Embassy at Warsaw. On that point he should like to get agreement immediately. In the U.S. document it was stated that this territory would be under the Polish state and not part of the Soviet zone of occupation and that it would pass out of Soviet responsibility. He took it that notwithstanding the placing of this zone under Polish administration it would technically remain under Allied military control. Otherwise, they would be transferring territory before the peace conference. If it were a question of transfer, he would have to get approval of the French.
MR. STALIN replied that this concerned the Russian zone and that the French had nothing to do with it.
MR. BEVIN inquired if the British could give away pieces of their zone without approval from the other governments.
MR. STALIN replied that in the case of Poland this could be done for they were dealing with a state which had no western border. This was the only such situation in the world.
MR. BEVIN pointed out that the authority of the Control Commission was to extend over the whole [of] 1937 Germany.
MR. BYRNES said they all understood that the cession of territory was left to the peace conference. They had found a situation where Poland was administering with Soviet consent a good part of this territory. By this action the three powers agreed to the administration in the interim by Poland in order that there would be no further dispute between them in regard to the administration of the area by the Polish Provisional Government, He added that it was not necessary that the Poles have a representative on the Control Commission.
MR. BEVIN said he did not press the matter. He asked what would happen in this zone now. Would the Poles take over and the Soviet troops withdraw?
MR. STALIN said the Soviet troops would withdraw if this territory did not constitute a line of communications with their army in Germany. There were two roads there, one to Berlin to the north and the other to the south. These two roads were the ways by which the troops of Marshal Zhukov were supplied in the same way that Holland and Belgium were used by the British.
MR. BEVIN inquired if these troops would be limited to the lines of communication.
MR. STALIN replied that they would. The Soviets had already removed four-fifths of their troops from Poland and they were contemplating a further reduction. As to the transfer of the territory to the Poles he pointed out that the territory was now actually already administered by Poles. There was no Russian administration.
MR. BEVIN asked if Stalin could help them with this question of air communication. The Poles had not been able to manage this. They wanted one or two planes a week and this involved the Soviet military command because they had to fly over the Russian zone.
MR. STALIN said that British planes now flew up to Berlin.
MR. BEVIN asked if he could agree to their going to Warsaw.
MR. STALIN replied that this would have to be discussed with the Poles and that they could then agree if the Soviet planes could go to London and France. He said that as to communication to Moscow along this line, Russian pilots would fly the part of the route where they were and as to Russian needs for communication with France and London, French and British pilots would fly. Then they would have a line from Moscow to London. That was the way the Russians looked at the matter.
MR. BEVIN said he was willing to discuss this but it was too big to decide at this meeting. He asked, however, that Stalin help them with the question of communications with Warsaw as a matter of convenience to the British.
MR. STALIN agreed to do all he could.
THE PRESIDENT said then they were all agreed on the Polish question.
MR. BEVIN asked if they should inform the French of the changes in the Polish arrangement.
MR. STALIN said he thought that they should. This was agreed to.
Admission Into the United Nations
MR. BYRNES said that the American paper had been circulated.
MR. MOLOTOV suggested substituting “have no doubt” in place of “express the desire” in the fourth paragraph. He also suggested the word “will” instead of “shall” in the paragraph referring to freedom of the press.
This was agreed to.
Economic Principles for Germany
THE PRESIDENT said that this had been laid aside pending the reparation settlement. He supposed there would be no difficulty in agreeing to it now.
MR. MOLOTOV said the Soviets had proposed a new paragraph 19, which he read.
MR. BYRNES said he thought that now that they had agreed to the reparations plan that provided for delivery of a certain percentage to the Soviet Union there was no need for this paragraph in regard to imports and exports.
MR. STALIN agreed.
It was agreed to drop paragraph 19.
MR. BYRNES proposed two changes, one relating to paragraph 13 which had reference to a common policy in regard to currency, banking, central taxation and customs. He also proposed a new [sub-]paragraph (g) in regard to transport and communications. Mr. Byrnes proposed that the last sentence in subparagraph (d) of paragraph 14 be altered to read, “Except where determined by the occupying power concerned to be required for necessary imports, no grant or credit to Germany or Germans by any foreign persons or governments can be permitted.”
MR. MOLOTOV asked if this would be applicable in all the zones.
MR. BYRNES replied of course.
MR. BEVIN proposed that the whole sentence be deleted.
MR. BYRNES agreed.
MR. BYRNES proposed that paragraph 18 be agreed to as a result of the reparations agreement. This was agreed to.
MR. BEVIN pointed out that he had raised the question of first charges at the Foreign Ministers meeting yesterday.
MR. STALIN pointed out that they had agreed to delete the whole paragraph.
THE PRESIDENT said that this was what he had understood.
MR. BEVIN said he did not agree.
MR. BYRNES asked why they did not handle this in their own way since they were in control in their zone.
MR. BEVIN replied because it cut across the agreement to treat Germany as a whole economy. It would divide Germany into three zones.
MR. STALIN said that for this purpose they would need a centralized German administrative machinery. This would be discussed and was the next point on the agenda.
MR. BEVIN proposed that they then pass over this question until they had decided the question of political principles.
MR. MOLOTOV pointed out that the Soviets had circulated a paper on the Ruhr.
MR. BEVIN said he could not discuss this without the French being present. It was a very big point of principle.
MR. MOLOTOV asked if there were any doubts that the Ruhr should be considered a part of Germany.
THE PRESIDENT said there were no doubts in his mind.
MR. STALIN suggested that they might postpone all points in the paper except the thought in the first paragraph.
THE PRESIDENT said the Ruhr was under the Control Council.
MR. BEVIN asked why the matter was raised.
MR. STALIN replied that because at Tehran the point had been raised that this whole region should be separated from Germany under the control of the great powers. Several months afterwards he had discussed this question with the British on the occasion of Churchill’s visit to Moscow and it had been said that perhaps it was a good thing to establish the Ruhr under an international control. This discussion was a consequence of the consideration of the general dismemberment of Germany. Since then the views of the great powers had changed and dismemberment was considered inadvisable. The Russian Delegation would like to know if it were agreed that the Ruhr should not be detached.
THE PRESIDENT said his opinion was that the Ruhr was part of Germany and would be so administered under the Control Council.
MR. STALIN said the Soviets agreed but thought it should be mentioned somewhere. He asked if the British Delegation agreed.
MR. BEVIN said he could not agree because he did not now have all of the previous discussions with him. He was aware that the idea of internationalizing the Ruhr to reduce the war potential of Germany had been discussed. He agreed that it remained under the administration of the Control Commission until it should be decided that it should be disposed of otherwise. He would want to discuss the question with his government and was willing that it should go to the Council of Foreign Ministers.
This was agreed.
Political Principles for Germany
MR. BEVIN said the Soviet Delegation had circulated a draft on proposals for administrative machinery. He proposed a short draft in place of the long one submitted by Molotov. This draft was accepted.
MR. BEVIN asked if paragraph 19 could go back to the committee to be reconsidered in the light of this decision.
MR. BYRNES said he was agreeable.
MR. MOLOTOV inquired if they had sufficient time.
MR. BEVIN suggested it could be done immediately.
MR. STALIN agreed.
Transfer of German Minorities
MR. BYRNES stated that he understood that the document on this question was acceptable, except for the last sentence. He urged that the last paragraph be agreed to because it was necessary in order to make the document effective.
MR. MOLOTOV pointed out that the document was intended to make this business orderly. It was apt to be misunderstood by the Polish, Czech and Hungarian Governments. He considered that it was hardly possible to adopt a decision here in Berlin without the Polish, Czechoslovak and Hungarian Governments. This would create difficulties. The matter could have been arranged if these Governments had been represented here.
MR. STALIN stated that he was afraid that if the Conference adopted this document it could not be carried out. The fact of the matter was that officials of the Polish, Czechoslovak and Hungarian Governments had taken the position which made the Germans want to leave. Such conditions have been created that it is impossible for the Germans to remain. Of course, the Polish, Czechoslovak and Hungarian Governments could give their formal consent to this document, but such a decision would be a shot in the void.
MR. BYRNES pointed out that the last paragraph contains a statement to the effect that the Governments named would be requested to suspend action pending consideration of these problems. If these Governments were not expelling Germans and were not forcing them to leave, the document would not, of course, have any effect. Otherwise, these Governments should be required to cooperate and to regulate these matters in an orderly manner. Of course, there was a difference in the statements of fact on this matter. It is our information that in some cases Germans have been forced to leave. Their departure for other countries increased burdens intolerably. It is only proposed to ask for the cooperation of these governments to the extent possible.
MR. STALIN replied that the Poles and Czechs would tell the Conference that their Governments had given no orders. The Germans have fled. However, if the others insisted, Mr. Stalin would agree.
THE PRESIDENT stated that he would appreciate very much the Marshal being able to agree. Perhaps the document would not change the situation very much, but it would help.
MR. ATTLEE agreed that the Conference ought to bring to the attention of these Governments the activities of their people.
MR. STALIN stated that he had no objection.
MR. BEVIN inquired whether there was any objection to communicating the decision to the French.
THE PRESIDENT stated that there was no objection and remarked that the French were in the Control Council.
German Fleet and Merchant Marine
MR. STALIN stated that he wished to arrive at a final decision regarding the question of the German fleet. If the matter was not ready for discussion today, it could be decided tomorrow.
THE PRESIDENT replied that the Admiral states that he is not ready.
MR. STALIN then suggested that it go on the agenda for tomorrow.
THE PRESIDENT agreed, although he stated that he had had it in mind to get away tomorrow.
MR. STALIN then argued that agreement in principle had already been reached, that one-third of the fleet be given to Russia. However, details had not been worked out and he wished the problem to be determined.
THE PRESIDENT agreed that the committee would report tomorrow.
MR. STALIN then suggested that the Foreign Ministers might consider the matter.
MR. BYRNES noted that the committee acting on this question has hopes of agreement and will meet tonight. In order to save time, we should await their action.
MR. STALIN again stated that it had been decided that Russia would get one-third of the fleet, except submarines which would be submerged, and except for the fact that Russia had agreed that the merchant marine would be used in the war against Japan. He wanted no further delays on this matter and asked that it be disposed of tomorrow.
THE PRESIDENT and MR. ATTLEE agreed.
Revision of Allied Control Commission Procedure in Rumania, Bulgaria and Hungary
THE PRESIDENT stated that the United States had presented a paper regarding the revision of the procedure in the Allied Control Commission in Rumania, Bulgaria and Hungary.
MR. BYRNES stated that a paper concerning the implementation of the Yalta agreement on liberated Europe had been circulated and considered. Some parts had not been agreed to by the three delegations, but substantial agreement was reached on two paragraphs. He asked that these paragraphs be considered and read the American draft entitled “Revised Allied Control Commission Procedure in Rumania, Bulgaria and Hungary” dated July 31, 1945.
MR. STALIN insisted that this question was not on the agenda and stated that he would perhaps not object when he had had time to read it.
THE PRESIDENT suggested that Mr. Stalin read the document and that it be discussed tomorrow.
It was agreed.
Yugoslavia
MR. STALIN stated that the Soviet delegation had just circulated a paper on this question which was principally directed toward Greece.
MR. BEVIN pointed out his feeling that the British had put in one reasonable proposal regarding Yugoslavia and that the Soviet delegation had thereupon promptly put in two. Mr. Bevin suggested that all three be dropped.
MR. STALIN replied: “Yes, welcome.”
THE PRESIDENT indicated that he was satisfied.