Potsdam Conference (TERMINAL)

60

Memorandum by the U.S. Chiefs of Staff

[Babelsberg,] 17 July 1945
Top secret
CCS 890/1

Control and command in the war against Japan

With reference to the proposed boundaries for the extension of command of the Supreme Allied Commander, Southeast Asia, suggested by the British Chiefs of Staff, the United States Chiefs of Staff have no objection from the military viewpoint to the inclusion of Indo-China south of latitude 15 degrees N. in the new area. This, however, is a matter primarily for decision by the Generalissimo and a shift does not appear practicable until such time as his agreement is obtained. Until that time it appears operations can go forward on the present basis.

As to the boundaries of the Australian command, this is a matter on which the solution worked out between the British and Australian Chiefs of Staff should be acceptable to the United States Chiefs of Staff.

On the matter of the northern boundary of the area, the United States Chiefs of Staff reaffirm the necessity for retaining control by the United States of the Admiralty Islands for the reasons set forth in paragraph 3 of CCS 852/1.

The proposal to extend the British sphere of responsibility east of the present boundary of the Southwest Pacific Area does not appear necessary or desirable until United States activities are cleared from the area, at which time the transfer should be effected. Aside from United States military resources in the area which must continue to be rolled up under United States military control, there are no military objectives or problems in the area except Ocean and Nauru Islands. At such time as British forces are prepared to recapture these islands, the United States will offer no objection.

The objective of the United States Chiefs of Staff in proposing the transfer has been to release United States resources and commanders from the responsibility for containing and mopping up the Japanese forces in the area in order that they might concentrate on the main effort. Hence they have proposed 15 August as the date of turnover. Their objective would not be achieved by delaying the turnover until such time as Admiral Mountbatten is in position to advance through the Malacca Straits. Furthermore, it does not appear that retention of the area under United States responsibility until the end of the year will result in any activity additional to that which would occur if the area passed to Admiral Mountbatten on 15 August. The forces employed in the area are already primarily Australian. It is possible that if the British Chiefs of Staff do not desire to take over the area shortly, the Australian Chiefs of Staff might be able to do so with subsequent adjustment with Admiral Mountbatten within the British Empire.

In summary, with regard to the matter of the Southeast Asia Command and the Southwest Pacific Area, the United States Chiefs of Staff consider that the immediate action should be to pass to the British Chiefs of Staff as of 15 August or very shortly thereafter the area with boundaries as outlined in CCS 852/1.

Concerning the matter of higher strategic control in the war against Japan, the thought of the United States Chiefs of Staff is that the role of the Combined Chiefs of Staff in the European war cannot appropriately be applied to the Pacific war. In the Pacific war there exist two clearly delineated areas that, commanded by Admiral Mountbatten with the extensions proposed in the foregoing paragraphs, constitute an area of British Empire responsibility associated with the Portuguese, the Dutch, and perhaps eventually the French. The initial operational interest of the United States in this area has now greatly decreased. The Pacific area is devoted to the main effort, is organized under a command-and-control set-up peculiar to the United States, and has forces and resources overwhelmingly United States unless the Chinese, and possibly Russian, contribution is considered. Any change in the present control system which would involve added complications and more cumbersome procedures is unacceptable.

It appears that the interest of the United States in Admiral Mount-batten’s expanded theater now includes little more than sufficient review of operations to determine their impact on Allied operations and from the standpoint of lend-lease requirements, that they are adjusted to the main effort, and that they do not have an unduly adverse effect on the supply line to China through India and Burma. In line with this thought the British Chiefs of Staff may wish to consider some readjustment of the status of the Southeast Asia Command under the Combined Chiefs of Staff, perhaps along the line of the present status of the Pacific Theater.

In summary, the United States Chiefs of Staff believe that increased participation of the Combined Chiefs of Staff in the Pacific Theater is impracticable.

61

Truman-Stalin meeting, noon

Truman’s quarters, 2 Kaiserstrasse, Babelsberg

Present
United States Soviet Union
President Truman Generalissimo Stalin
Secretary Byrnes Foreign Commissar Molotov
Mr. Bohlen Mr. Pavlov
Fleet Admiral Leahy Mr. Vyshinsky 
740.00119 Potsdam/7-1745

Bohlen notes

12. July 17.

M. S. late.

Truman—[blank]

S—Chinese—delayed fly—no doctors

Tr: glad to—looking forw—

S—Personal relationship

Truman no difficulty in agreeing—

S—added—questions

T—no.

M—reads—some already on agenda—i e 1 division on German fleet. 2 Reparations. 3 Polish Question—continued of continued—Art—London Govt—western frontiers of Poland—(on list)

S—Yalta—did not decide frontiers of7

M—trusteeships for USSR.

S—no question of changing regime of trusteeship—settled S.F.—but maybe stupid—division of Italian colonies—other nationals—roughly [one word illegible]

M—relations with Axis satellite—

T—on ours

M—Spain Franco regime

T—ready—

B—trusteeship—other than Italian

M—yes—

S—Italian & other colonies.

T—what time

S—5 proposed—M & Eden

B—I know habits of rise late—getting—opportunity

T 5 today—4—after that

S—I have changed my habits since

B—[blank]

T—Gen Marshall like your Chiefs—they ready to discuss—Antonov—Air Marshal.

T—Chiefs of staff—no.

S—ours in Berlin could not attend. Re Franco—I should like to explain—F. regime not result of internal conditions of Spain—imposed on Spain—by Ger—Italian—thus a danger to Uni. Nations This regime harmful—by giving shelter to different fascist remnants—we thought it proper to break off with present regime & give change

T—I hold no brief for Franco study

S—right.

T—I would like—certain matters—first to US—take into consider—orderly—way—but—reasons

T—pleasure to meet for am—your present—welfare Soviet reps—& U J I am here to—be yr friend—deal directly yes—or no—no diplomat

S—good—help—work—USSR—always go along with US.

T—Byrnes.

B—[blank]

T—friends—all subject differences settle—frankly

S—good of course difference—but.

T Churchill—called—

S [one word illegible]

B—[blank]

S—I think so—Labor—surprise

T—expressed same 2 to 1 80 majority

S—yes—people won’t throw out W Ch—self Preservation

T—yes—1944 R

S—clever—Eng less clear Jap war—for—Russians & Amer—do their duty Eng think war mainly

T—P.M offered—

S—peculiar—mentality—bombed by Ger—not Japan war over for them—these feelings may work vs P.M. US people—give power to finish task—can Brit ask that—they believe war over—little interest in war vs Japan—may be

T—we are—not in dire straits as Eng was in re Germany—

S—we ready Aug mid of Aug needs agreement with China [one word illegible]

T—I think that

S—O M agreed—long negations—R. R. Dairen. P.A —differences. Soong—not hopeful by cable—I noticed S understood us than Chungking

T—yes—I had long talk He understands

S—he prepared to return to Chungking—& persuade return end of July—He asked a statement assurance re M—part of China—sovereignty—gave that assurance

S—asked assurances deal only with central govt & not with any nucleus. one Army—he had in mind Com army we shall give full assurances

T—very happy to hear that—settle matter

S—National 1 govt 1 army Treaty agreed—not. Ch 30 in place of 20 as Czech. agree—non-interference Ch internal affairs Soong—Sinkiang—Conflict—Ch author. & local pop—no assistance to rebels—[one word illegible]—special provisions—vs. interference could not do it help—suggested concession—Ch [one word and figure illegible] %—rest non Chinese local native schools set up. Soong agreed—won’t be able to calm by stick—improvements—Soong agreed.

T Soong—reasonable.

B—pts of difference—failure on—misunderstanding.

S—in Yalta agreement said—re RR. joint preeminent interests. be safeguard—same in Dairen & P.A. The Chinese don’t recognize preeminent int & get around it—what is our preeminent interests—no profits—equally divided—altho built by Russian money—no guards as Japs had—Chinese protect RR themselves—old treaty 80 yrs—back to China we suggest 30 yrs—agreed satisfaction—but what preem int lie—like to 1 maj vote on board of RR—Russian director they want Chinese director—& no maj—Dairen Chinese administration

B—jt administration

S—yes—but 1 Chinese maj—we propose—City Council—jt—board. Russian part

T—effect on our right—

S—free port—open—[one word illegible].

T—open door

S—not all smooth with Chinese—that is why he went home

S—mid August—as agreed at Yalta—we keep word

M } keep words
T

B—in accordance—with Yalta—OK—if in excess difficult

S—our wishes—more liberal than Yalta—restoration of Russian rights—entitled to station troops—80 yrs exclusively Russian—we have formal right—not done so we do not wish to add or deceive Chungking don’t understand horse trading—slow. try to wangle every thing—big pictures—very

T—big—Chin

B— } main interest free port
T—

B—when here from Soong

S—end July—to finish negotiation—Chinese 22 years no ties—no repre—can’t lose what one does not have.

62 
740.00119 Potsdam/7-1745

The Assistant to the Secretary of State to the Assistant Secretary of State

[Babelsberg,] July 17, 1945
Top secret

Memorandum for Mr. Dunn

Molotov this morning outlined to the President and the Secretary the following additional points which the Soviet Government intends to place on the Agenda:

  1. Question of Tangier.

  2. The Levant.

  3. The Disposition of the Captured German Naval and Merchant Vessels.

  4. Franco Regime.
    On this point Stalin says that in the view of the Soviet Government the Franco Government was not native to Spain but had been imposed by the Axis Government[s] and as such was harmful to the United Nations. Some measure should be devised whereby the Franco Regime would be eliminated.

  5. Polish Question.
    (a) The continued existence of the London Government.
    (b) The western frontiers of Poland.

  6. Reparations.

  7. Trusteeship for the USSR.
    Stalin said that this is not a question of changing the regime of trusteeship which was set up at San Francisco but the question of the division under trusteeship of Italian colonies and perhaps certain mandated areas.

  8. Relationship with the Former Axis Satellite States.

The Secretary would like to have you study these questions in preparation for the Soviet presentation.

CHARLES E. BOHLEN

63

U.S. Delegation Working Paper

[Babelsberg,] 17 July 1945
Secret
Draft

Memorandum for the Secretary

Subject: APPROVAL OF THE TWO AGREEMENTS ON AUSTRIA

The four-Power Agreement on control machinery in Austria was approved by the European Advisory Commission on July 4 and transmitted to the four governments for their consideration and approval. Similarly the agreement on the zones of occupation in Austria and the administration of the city of Vienna was approved by European Advisory Commission on July 9. (The texts of the two agreements are attached).

On July 12 the British representative on the European Advisory Commission stated that his Government had approved both agreements. The French representative stated that his Government approved the agreement of July 4 and would shortly approve the agreement of July 9.

Since April the American Government has been pressing for the conclusion of these two agreements. The Zones Agreement comes into force as soon as it is approved by the four Governments and the control machinery agreements comes into force at the same time, provided it too has been approved by the four governments.

The two agreements conform in every respect to the instructions which were despatched to Ambassador Winant in the course of the negotiations. In view of our interest in expediting the establishment of Allied control and occupation in Austria I suggest that you will wish to approve the attached telegram instructing Ambassador Winant to inform the representatives of the other three Governments of American approval of the two agreements. I have consulted Mr. McCloy who concurs in this recommendation on behalf of the War Department.

64

The Joint Chiefs of Staff to the President

Washington [Babelsberg], 17 July 1945
Top secret

Memorandum for the President

The Joint Chiefs of Staff recommend the following statement of policy in regard to the disposition and distribution of captured German merchant shipping.

a. In view of the urgent requirement for personnel shipping in the further prosecution of the war, captured or surrendered enemy vessels capable of being used to transport troops should be made available as quickly as possible for the U.S. military use.

b. All captured or surrendered German vessels should be divided among the Allied Nations, first as to immediate use and later as to final disposition, except for such coastwise and inland water craft as are determined to be essential for the minimum German economy. No ocean-going vessels (i.e., ships over 4,000 deadweight tons) designed for foreign trade should be left in the hands of the Germans.

c. All captured and surrendered German and other enemy ships should be placed in a common pool. In this connection, every effort should be made to persuade the Russians to enter the United Maritime Authority agreement covering the handling of the Allied Nations pool of ships.

d. In the final disposition all ex-German personnel shipping should be divided among the Allied Nations.

Further details in regard to the U.S. needs for personnel shipping were given in a memorandum to you from the Joint Chiefs of Staff dated 7 July 1945.

For the Joint Chiefs of Staff:

WILLIAM D LEAHY
Fleet Admiral, U.S. Navy,
Chief of Staff to the Commander in Chief of the Army and Navy

740.00119 Control (Italy)/7-1745

The Joint Chiefs of Staff to the President

Washington [Babelsberg], 17 July 1945
Top secret

Memorandum for the President

The Joint Chiefs of Staff have given careful consideration to the memorandum from the Secretary of State to the President dated 4 July 1945 on the subject of “Retention of Allied Forces in Italy.”

In his memorandum the Secretary of State proposed that five Allied divisions, in addition to the two in Venezia Giulia, be retained in Italy until major problems are settled. This will require the retention in Italy of one U.S. division in addition to the present estimate of one for the Venezia Giulia commitment.

Under present redeployment plans there will be excess U.S. forces in Italy until December, 1945 and in Europe until April, 1946. It is thus not necessary at this time to accept a commitment to retain additional forces in Italy, and it is militarily undesirable to make a commitment for their retention until the situation requiring the presence of those forces becomes more apparent. Sufficient air forces remain in Europe even after redeployment to provide any necessary show of air forces in Italy.

In view of the above it is suggested that the question of the desirability of retaining additional United States forces in Italy be reexamined late in 1945, in the light of the situation as it will have developed.

In this connection, the Joint Chiefs of Staff have taken the position with the Combined Chiefs of Staff that a review of the situation in Italy should be made about 1 September 1945, with a view to early dissolution of the Allied Command, Mediterranean.

For the Joint Chiefs of Staff:

WILLIAM D LEAHY
Fleet Admiral, U.S. Navy,
Chief of Staff to the Commander in Chief of the Army and Navy

65

Stimson-Churchill conversation, early afternoon

Present
United States United Kingdom
Mr. Stimson Prime Minister Churchill
Mr. Attlee
Lord Leathers

Stimson’s diary entry: “I returned to Potsdam and lunched with the Prime Minister, Attlee, and Lord Leathers, … We had some talk about ships – the distribution of the German merchant marine, Europe and others. We discussed the coal situation in Great Britain and the United States – supplies of both were going to be short this winter. As he walked down to the gate I told him of Harrison’s message. He had not heard from his own people about the matter. He was intensely interested and greatly cheered up, but was strongly inclined against any disclosure. I argued against this to some length.”

66 
740.00119 Control (Germany)/7-1745

The Secretary of War to the Secretary of State

Potsdam, 17 July 1945
Top secret

Dear Mr. Secretary: I am enclosing herewith the original and a copy for your files of a memorandum to the President relating to the problem of the administration of Germany. This is the memorandum referred to in my note delivered to you yesterday evening.

At your earliest convenience I would very much like to see the President with you about this memorandum and the memorandum on Japan sent to you yesterday.

Faithfully yours,
HENRY L STIMSON

[Enclosure]

The Secretary of War to the President

[Babelsberg,] 16 July 1945
Top secret

Memorandum for the President

The matters with which I am primarily concerned, namely the administration of Germany and the conduct of the war with Japan, are, upon analysis, inextricably related to the general problem of post war rehabilitation and the achievement of the strategic aims for which we have been fighting.

The condition of Central Europe
We have occupied Germany following a devastating conquest which has laid waste wide areas of middle Europe, extending from France to well within the boundaries of Russia, and extending from the North Sea and the Baltic to the Mediterranean. Germany, which has been responsible for loosing the forces which resulted in the two World Wars, is herself laid waste and is in the geographical center of the area of devastation.

This area in the main was a highly industrialized one, its industrialization being evidenced by the number of large and prosperous cities within it. All who have visited Germany and the portions of Poland and Russia overrun by the war, testify to the great destruction visited upon those cities. Almost without exception, cities large and small have been torn by explosives of greater power than have been developed in any previous wars. It may be true, as was stated before the Kilgore Committee of the Senate, that many of the plants could, with industry, be restored or set in motion with relatively little or no repair. But there is a great difference between the mere physical existence of a plant and its capacity to operate as a going concern. That capacity has been destroyed, at least temporarily, by the destruction of the means of communication to and from the plant, and by the general collapse following defeat. A paralysis of commerce has set in due to the lack of transportation, raw materials, and the means of trade. This paralysis is not limited to Germany, but may grip all western Europe as well.

As occupiers of portions of this area, we shall have many serious administrative problems to cope with, problems which will be greatly accentuated by lack of food and fuel. For this reason alone it should be our policy to make it possible for the people we control to work, and thus relieve us to the maximum possible extent of the burden of their idleness and want. I take it that all our objectives are included in one fundamental purpose – the achievement of security and peace under conditions which preserve to us our concepts of liberty. While it is our object to disarm Germany, it should not be our purpose to make it impossible for the German people to live and work. We should not remove their capacity for aiding in the restoration of stable conditions in Europe and the world.

On the one hand it is clear that Germany has created, and twice misused, a swollen war industry – one substantially beyond her peaceful needs, and even though this capacity has been greatly impaired by defeat, certain physical steps can and should be taken to hamper the regrowth of her industrial capacity to more than reasonable peacetime needs.

On the other hand from the point of view of general European recovery it seems even more important that the area again be made useful and productive. Considering Germany alone, the figures show that the commerce of Europe was very largely predicated upon her industry. There was a period, substantially before the war, when Germany became the largest source of supply to ten European countries – viz. Russia, Norway, Sweden, Denmark, Holland, Switzerland, Italy, Austria-Hungary, Roumania and Bulgaria, and the second largest supplier of Great Britain, Belgium and France. At the same time she became the best customer of Russia, Norway, Holland, Belgium, Switzerland, Italy, and Austria-Hungary, and the second best of Great Britain, Sweden and Denmark.

Germany, according to estimates we now have, will continue to have about the same number of people she had before the war, and they will have to be fed, clothed, and housed in some manner. Of her approximately 70,000,000 people (including Austria), about 25,000,000 have been supported by industrial rather than agricultural activity. England and France, at the moment, do not have sufficient production to take care of their own needs by a long measure. There will be a scarcity of products which will plague all Europe for a substantial period to come, and the effects of it are bound to be felt by the other countries of the world.

The problem which presents itself therefore is how to render Germany harmless as a potential aggressor, and at the same time enable her to play her part in the necessary rehabilitation of Europe.

The impracticability of destroying German industry
It is my view that it would be foolish, dangerous and provocative of future wars to adopt a program calling for the major destruction of Germany’s industry and resources. Not only would any reasonable prospect for the reestablishment of European industry be dissipated by such action, but such destruction would be bound to leave a focus of economic and political infection which might well destroy all hope we have of encouraging democratic thinking and practices in Europe. What elements of German industry can be destroyed or removed as unnecessary for peacetime needs is a matter of [for?] expert determination. The balance must be put to work as soon as practicable and subjected to some system of security control. It is a task requiring perseverance, application and intelligence over a long period of time, but I am certain that mere destruction is neither effective as a security measure, nor, in the light of European, including German needs, possible as an economic one.

The need of all Europe includes the prompt stimulation of production within Germany, of food, coal, clothing, and housing. Production of these items is not capable of independent development. It must be based on other items and services, in short, general industry and trade. Without freedom of internal trade and communication, no one of these items can be produced on the scale which will be required. It follows that we cannot afford to operate Germany as if she were four separate water tight compartments.

Recommendations
Accordingly, as a first step, I would urge the adoption by the Great Powers at the Conference of a policy which would treat Germany as an economic unit so as to permit her to contribute to her own and to general European rehabilitation. To this end I would urge that the three Powers instruct their representatives in the Control Council to adopt a uniform policy in respect to such matters of nation-wide importance as transportation and communication, rationing and control of critical prices. I would urge that the Control Council also be instructed to adopt a uniform currency and a uniform fiscal and taxation system. They should also be instructed to decree a free exchange of commodities and persons, (subject to feeding and housing limitations) between the zones, and the full recognition of the principle that the cost of any imports shall be a first charge against any exports. And at the same time, in order to accomplish the future security, I would urge that the Control Council be instructed to:

a) Institute a system of control over imports and exports which will eliminate the importation of any article not clearly needed for peacetime necessities and commerce.

b) Decentralize the political authority of the Germans, giving encouragement to the local administrative units, and by the popular selection of local administrators through free but Nazi-purged elections. For the time being there should be no central political government of Germany other than the Control Council itself acting through such German administrators as it cares to select.

c) Completely abolish the German General Staff and submit a plan whereby the world may be assured that neither it, nor anything like it, will again become a factor in the government of Germany.

d) Determine and report the extent to which German industrial activity may safely be resumed, considering (1) rehabilitation needs, and (2) the necessity of reducing Germany’s overdeveloped war making powers.

The above are not all-inclusive, but I believe they are essential and would constitute a good common start toward achieving the economic and strategic objectives which we seek. I assume of course, that the process of punishment of war criminals will, in coordination with the Control Council, be prosecuted vigorously.

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

HENRY L STIMSON

67 
841.24/5-2945

President Truman to Prime Minister Churchill

[Babelsberg, July 17, 1945]
Secret

Memorandum for the Prime Minister

I have gone into the question that you raise in your telegram of May 28 in regard to Lend-Lease during the Japanese War. We intend to furnish Lend-Lease to the British Commonwealth for the prosecution of the war against Japan generally in accord with the schedules of requirements for the first year following the defeat of Germany and other terms worked out between British and American supply representatives in October and November 1944.

You, of course, realize that the policy I have indicated does not necessarily mean that either the munitions or the non-munitions program for the present year will be equal in total or individual items to the Lend-Lease requirements as estimated in the meetings of last fall. Those estimates were subject to changing strategic demands as well as to supply, procurement, and allocation considerations, and to the provision of the necessary funds by the Congress. Individual requisitions are of course handled by the usual administrative and allocation channels, with full discussion between our supply representatives.

In connection with the foregoing, it has come to my attention that the British gold and foreign exchange holdings are now considerably higher than was anticipated at the time of the Phase II discussions. I do not wish to propose reopening the Phase II discussions on this account. However, I would like to request that your Government relax its position with respect to permitting dollar payments on certain items, particularly those where the unwillingness of your Government to make payments leads to political criticism in the United States. For example, it would be of considerable assistance if your Government relaxed its restrictions on dollar payments for the proceeds of property sales in the Middle East and elsewhere; if the United Kingdom continued to take its share of the burden of the military relief and UNRRA programs in Europe; and if dollar payments were allowed on other items which arise from time to time in our relationships. I urge that you provide this flexibility in the long-term interests of both your country and mine.

[HARRY S. TRUMAN]

68 
761.91/7-1745: Telegram

The Acting Secretary of State to the Secretary of State

[Washington,] July 17 [1945]
Secret
39

During personal conversation between Ambassador Murray and Shah of Iran July 13, Shah expressed frankly his growing concern-over Iran’s future, emphasizing his fear as to Soviet intentions towards Iran. He stated he is greatly disturbed over entire question of Russian policy towards Iran, and feels incapable of appointing strong premier because of inevitable Soviet opposition. Iran accordingly is forced to submit to rapid succession of weak and ineffective governments.

British Ambassador to Iran, according to Murray, telegraphed Foreign Office July 11, expressing opinion that Russians are apparently making determined effort to obtain dominant position in Iran prior to withdrawal of forces.

Ambassador Murray states it is impossible not to be alarmed at present situation and ruthlessness of Russian tactics. He compares present Soviet official and press attitude towards Sadr Government to Soviet policy towards Saed Government last autumn, and believes Soviet is determined to have favorable cabinet in office during course of forthcoming elections.

These statements indicate progressive deterioration of Iranian internal affairs, which is being hastened by intense Soviet-British rivalry in Iran. This rivalry is producing critical internal schism in which exercise of effective Iranian administrative control and rehabilitation of economy are impossible.

Since continuation or development of this situation is prejudicial to Iranian sovereignty, Allied solidarity, and international security, you may wish to discuss entire Iranian problem fully and frankly at Conference. (See four background memoranda on Iran prepared by Department for Conference and in particular memorandum entitled “Anglo-Soviet Rivalry in Iran.”)

[GREW]

69

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

CCS 194th Meeting

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

CCS Minutes

Potsdam, July 17, 1945 2:30 p.m.
Top secret

Approval of the Minutes of the CCS 193rd Meeting

The Combined Chiefs of Staff: Approved the conclusions of the 193rd Meeting and approved the detailed report of the meeting subject to any later minor amendments.

British Participation in the War Against Japan (CCS 889 and 889/1)

Sir Alan Brooke referred to a memorandum by the United States Chiefs of Staff containing their views on the proposals of the British Chiefs of Staff concerning British participation in the war against Japan. He said that the British Chiefs of Staff were very pleased to see that the United States Chiefs of Staff agreed in principle to the participation in the final phase of the war against Japan of a British Commonwealth land force, subject to the resolution of certain operational problems with the Commander in Chief, U.S. Army Forces, Pacific, and Commander in Chief, U.S. Pacific Fleet, and to the clarification of certain factors with which he then proposed to deal.

Considering each of the subparagraphs of paragraph 2 of CCS 889/1, Sir Alan Brooke made the following points:

a. The land forces which were being offered would not be involved in operations in Southeast Asia prior to CORONET. The force envisaged contained one Australian division which was now completing operation in Borneo; one New Zealand division which was re-forming in Italy; a British division which had been already withdrawn from the fighting in Southeast Asia, and an Indian division probably from Italy. This Indian division had operated in conjunction with Allied troops in Italy for some time and had, on one occasion, been under command of General Clark. It was considered a first-class division, and he thought that the difficulties incident to its employment and due to language complications would not prove insurmountable. The division had already been acclimatized.

Sir Alan Brooke, continuing, said these forces might be used as three divisions in the initial assault with a follow-up of two divisions a good deal later on. This delay was necessitated by shipping limitations. The British Chiefs of Staff would very much like to participate in the assault as opposed to taking part only in the follow-up. The administrative factors could perhaps be discussed with General MacArthur.

b. This question had been dealt with in a. above and Sir Alan Brooke hoped that it would be found possible to overcome any difficulties in this connection.

c. When the question of British participation in the final assault had first been considered, the inclusion of Canadian forces had been envisaged. It had since been learned, however, that a Canadian division had been accepted by the United States Chiefs of Staff, to be equipped with American equipment, with a view to operating under American command. Although the British Chiefs of Staff would like to include a Canadian element in the Empire forces, it was not desired to upset these plans and he therefore suggested that the matter might be left open to discussion. The Canadian division might be used in a follow-up role. Detailed discussions on this matter could be carried out with General MacArthur.

d. It was hoped that answers would be received from the Dominions concerned in the near future.

e. It was entirely agreed that the inclusion of a British force in the final phase of the war against Japan would lead to complicated logistical problems. These problems could be considered in detail with commanders on the spot.

f. The question of where the forces should be concentrated prior to the operation would have to be carefully considered. The Australian division was at present well placed and it should be found possible to concentrate one or two additional divisions in a suitable area. This also could be discussed in detail with the force commanders.

g. It had always been the intention of the British Chiefs of Staff to provide, from British resources, sufficient assault lift for two divisions. The provision of certain close-support craft, was, however, likely to be most difficult owing to the distances involved.

h. Sir Charles Portal said that while it was realized that there would be adequate United States tactical air forces available, he very much hoped that the United States Chiefs of Staff would consider the inclusion of a small tactical air force consisting of about 15 squadrons (about 250 aircraft in all). He made this request as he felt that the Commonwealth forces would like to have supporting them some of their own tactical reconnaissance and fighter-bomber units. The forces he had in mind should not cause complications as they would be Mustangs similar to those operated by United States forces.

General Arnold undertook to investigate the possibility of the inclusion of a force as indicated by Sir Charles Portal, and asked to be supplied with the necessary details to carry out this investigation.

i. Sir Alan Brooke said that the effect of these proposals upon continued operations in the Southeast Asia Command would be to limit the capacity to undertake amphibious operations, as the proposals would necessitate the use of landing craft. It was proposed to submit to the Combined Chiefs of Staff a directive to the Supreme Commander, Southeast Asia, for land operations across the Thailand-Burmese frontier and small amphibious operations to Sumatra and Java with the object of establishing small bridgeheads on those islands which could be developed later as the opportunity arose. The provision of shipping and assault craft was the limiting factor.

Sir Alan Brooke explained further that in approaching this problem it had been the aim of the British Chiefs of Staff to produce the maximum effort against Japan, continuing meanwhile such operations in Southeast Asia Command as could be conducted without detracting from the effort against Japan. The limiting factors affecting the British proposals were the provision of shipping and administrative troops. Hence three alternative suggestions had been included in CCS 889.

As the United States Chiefs of Staff were prepared to accept the proposals in principle, it was suggested that a force commander and his staff (of the nature of a corps commander and staff) should be appointed and sent out to discuss details with General MacArthur and to draw up concrete proposals for submission to the Combined Chiefs of Staff.

General Marshall said that the dispatch of a corps commander and staff to the Pacific was acceptable to the United States Chiefs of Staff and General MacArthur would be informed accordingly.

General Marshall then read extracts from a dispatch from General MacArthur on the subject of the participation of a Commonwealth force in the final phase of the war against Japan. He undertook to make available to the British Chiefs of Staff suitable extracts from the dispatch.

General Hull said that tentative proposals had been made by the Australian Government to the United States Chiefs of Staff for the inclusion of an Australian force in the operation against Japan and for the inclusion of a small token force in Southeast Asia Command under Admiral Mountbatten. The proposal had merely expressed the desire of the Australian Government to participate in these operations and no details had as yet been discussed.

Admiral King said that there were two factors concerning the employment of Australian forces with which he presumed the British Chiefs of Staff were familiar. The first was that the Australian military establishment was being reduced to approximately three divisions. The second was the question of the possible return to New Zealand of the New Zealand division concerned.

Sir Alan Brooke said that while it had at one time been suggested that the New Zealand division should be returned to New Zealand, it had subsequently been agreed that the division consisting of two brigades would be available for operations in Southeast Asia Command. Arrangements had been made to send replacements to Italy and it would therefore not be necessary for the New Zealand division to return to New Zealand for rehabilitation. The views of the New Zealand Government on the present proposal had, however, not yet been received.

Sir Alan Brooke said that the British Chiefs of Staff fully recognized that the participation of British troops in the final phase of the war against Japan would lead to certain complications and he expressed sincere gratitude on behalf of the British Chiefs of Staff for the way in which the proposal had been received by the United States Chiefs of Staff.

General Marshall said that the United States Chiefs of Staff welcomed the proposals and would be pleased to make room for the employment of British forces, within the limitations of shipping and logistic support.

The Combined Chiefs of Staff:
a. Agreed in principle to the participation of a British Commonwealth land force in the final phase of the war against Japan, subject to the satisfactory resolution of operational problems and to the clarification of certain factors which the United States Chiefs of Staff believe will be controlling.

b. Agreed that the British Chiefs of Staff should send out appropriate commanders and staff to visit General MacArthur and Admiral Nimitz and draw up with them a plan for submission to the Combined Chiefs of Staff.

c. Took note that the British Chiefs of Staff would keep the United States Chiefs of Staff informed of the reactions of the Dominions to the proposals.

d. Took note that the United States Chiefs of Staff would take up with the appropriate theater commanders the possibility of establishing a small British tactical air force in support of the proposed Commonwealth land force.

70

Memorandum by the U.S. Chiefs of Staff

[Babelsberg,] 17 July 1945
Top secret
CCS 889/1

British Participation in the War Against Japan

The United States Chiefs of Staff reaffirm their previous agreement to the proposals in subparagraphs 3a and b of CCS 889. In connection with the latter proposal it should be noted that there is little prospect that airfield space for more than ten squadrons of a British very long range (VLR) bomber force will become available at least before 1 December 1945.

As to paragraph 3c, the United States Chiefs of Staff agree in principle to the participation in the final phase of the war against Japan of a British Commonwealth land force, subject to satisfactory resolution of operational problems by Commander in Chief, U.S. Army Forces, Pacific, and Commander in Chief, U.S. Pacific Fleet, and to the clarification of certain factors which the United States Chiefs of Staff believe will be controlling. Their views on some of these factors follow:

a. It is essential that a firm commitment be received as to dates of availability and composition of forces in order to plan for their participation in the final effort and to effect adjustments of the United States redeployment program. It is not practicable to plan on using forces whose availability is contingent upon their release following the conclusion of a separate major operation. Hence it appears these forces cannot at present be planned for use earlier than the build-up phase of CORONET.

b. The difficulties incident to the employment of Indian troops (language complications and the necessity for prior acclimatization) make it doubtful that the Indian division can be effectively employed.

c. Arrangements have already been made with the Canadian Government to organize and equip along United States lines one Canadian division, to operate as a part of a United States corps.

d. It is noted that agreement of the Dominions concerned has not yet been obtained.

e. A solution must be found to the complicated logistical problems involved.

f. The forces should be concentrated in the Pacific or in the United States well in advance of the date scheduled for their participation in the campaign.

g. The question of the provision of assault lift requires clarification.

h. It is considered impracticable to superimpose upon the already adequate U.S. tactical air forces a small British tactical air force, since this would overload prospective airfields and introduce complications resulting from additional aircraft types.

i. The effect of the proposals upon continued operations in the Southeast Asia Command requires further examination.

71

The Acting Chairman of the Interim Committee to the Secretary of War

Washington, 17 July [19]45
Top secret
priority

War-33556

TopSec Secretary of War from Harrison.

Doctor has just returned most enthusiastic and confident that the Little Boy is as husky as his big brother. The light in his eyes discernible from here to Highhold and I could have heard his screams from here to my farm.

72 
871.6363/7-1745: Telegram

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

Moscow, July 17, 1945 — 4 p.m.
Secret
2597

By letter to Vyshinski of July 11, British Ambassador stated British Government could not accept Soviet Government views expressed in February 26 Foreign Office note on removal oil field equipment from Rumania. (To Dept, repeated Bucharest 91, London 368) Clark Kerr protested continued Soviet requisitioning and removal British equipment.

KENNAN

73

The Joint Chiefs of Staff to the State-War-Navy Coordinating Committee

Washington [Babelsberg], 17 July 1945
Top secret
SM-2610

Memorandum for the State-War-Navy Coordinating Committee

Subject: UNITED STATES POLICY CONCERNING DARDANELLES AND KIEL CANAL

It is assumed that the request of the State Department for the views of the Joint Chiefs of Staff concerning the future of the Dardanelles is based upon the fact that we have agreed to discuss the Montreux Convention at TERMINAL. A similar request concerning the future of the Kiel Canal indicates that that subject may also be brought up for discussion.

The problem presented is twofold. First, whether or not the United States should agree to decide these matters at this time, and second, if they are to be decided what should be the position of our government.

In approaching this problem it is essential that we first establish in clear perspective, the place of these questions in relation to the overall problem of the general peace settlement which alone can establish and stabilize the boundaries, rights and responsibilities of nations in the immediate post-war era, and thus provide a sound basis for solving the military problems of national and international security.

The problems of the Dardanelles and the Kiel Canal are basically merely two of a score of similar problems which in the aggregate constitute the over-all problem of the peace settlement. Among these problems are agreement on numerous boundaries and bases in Europe, disposition of Italian colonial areas, areas detached from Japan, strategic islands in the Pacific, restitution of territory to China, and the establishment of the trusteeship system, which will of necessity be directly involved in many problems of the general settlement.

While there has been no formal agreement to that effect, the principle has been generally accepted that most of these problems should await the end of the war, or, at least until they can be decided, not separately, but as an integrated whole. The single but important exception in the application of this principle has been Russia.

By agreement or at least by acceptance on the part of her allies, Russia has already established her claims to eastern Poland, to the Baltic States, to parts of Finland and to Bessarabia and Ruthenia There is reason to believe she has also obtained agreement as to her claims in the Far East. Whatever the justification of these agreements, the fact remains that, while the other great powers await the peace settlement to negotiate their proposals and establish their rights and responsibilities, Russia has received preferred treatment, both as regards intrinsic values and as regards priority of settlement.

Russia’s reaction to this favored treatment has been to demand further special consideration. The Joint Chiefs of Staff understand that at present Russia is pressing the question of the Dardanelles, including the right to bases in that area, has demanded certain Turkish areas in northeast Turkey, is agitating the question of access to the Persian Gulf, has occupied the Island of Bornholm and has made proposals to Norway looking to establishing Russian bases in Bear Island and Spitsbergen.

Russia has so far succeeded in obtaining her demands because she has had the might, if not always the right, on her side and has convinced the other powers that in the cases of Poland, the Baltic States, Bessarabia and Ruthenia, she would seize by force what was not granted her by agreement.

The current demands and proposals of Russia, however, are not in exactly the same category. While it is true that the United States and Great Britain could not successfully oppose a determined Russian effort to seize these desired areas by force, it is also true that as Russian demands progress farther afield, her power to seize her objectives progressively declines, and there is a diminishing ratio of return to risk and effort. Furthermore, in estimating Russian intentions, we should give full weight to the fact that she is war-weary, over-extended by her great efforts and in need of years to reestablish her economy, consolidate her gains and recoup her losses, a process in which she requires the substantial support and assistance of the United States. We should also question whether she would be willing to break with the World Organization, before it is established, or with the United States in particular, on the issue that her current demands be accepted now, rather than being decided later as a part of the general peace settlement.

In view of the considerations outlined above, the Joint Chiefs of Staff believe that from the long range and over-all security point of view the United States, in so far as consistent with commitments already made, should limit and postpone discussion of the Dardanelles and Kiel Canal questions and in any case, should insist that final decisions on these matters should be delayed until they can be made as part of the general peace settlement.

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

If, notwithstanding the considerations previously stated, it is necessary, due to previous commitments or other compelling reasons to discuss and possibly reach a decision concerning the Dardanelles, then it is the opinion of the Joint Chiefs of Staff that from the long range and over-all security point of view, the position of the United States should be:

a. The United States would agree to a revision of the Montreux Convention substantially along the lines suggested by the State Department in its recent memorandum on this subject.

b. We should support the demilitarization of the Straits, and failing that should oppose any proposals granting a nation, other than Turkey, bases or other rights for direct or indirect military control of the Straits.

For the Joint Chiefs of Staff:
A J MCFARLAND
Brigadier General, USA, Secretary

The Joint Chiefs of Staff to the State-War-Navy Coordinating Committee

Washington [Babelsberg], 17 July 1945
[Extracts]
Top secret
SM-2610

Memorandum for the State-War-Navy Coordinating Committee

Subject: UNITED STATES POLICY CONCERNING DARDANELLES AND KIEL CANAL

It is assumed that the request of the State Department for the views of the Joint Chiefs of Staff concerning the future of the Dardanelles is based upon the fact that we have agreed to discuss the Montreux Convention at TERMINAL. A similar request concerning the future of the Kiel Canal indicates that that subject may also be brought up for discussion.

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

If, however, notwithstanding the above considerations, it is necessary to discuss and possibly reach a decision concerning the Kiel Canal, then it is the opinion of the Joint Chiefs of Staff that from the long range and over-all security point of view, the position of the United States should be that in any case, the Kiel Canal should be demilitarized, and:

a. Preferably – the Kiel Canal should be placed under the United Nations Organization and be operated by a mixed commission appointed by and reporting to the Security Council.

b. As the first alternative – the German State of Schleswig-Holstein, which includes the Kiel Canal, should be constituted a strategic area under the trusteeship system with Denmark accepting responsibility as the administrating authority, the Kiel Canal then to be operated by Denmark under supervision of the Security Council.

c. As the second alternative – the German State of Schleswig-Holstein, which includes the Kiel Canal, should be annexed to Denmark, with that nation’s consent, and the responsibility for the operation of the Kiel Canal should then be assumed by Denmark.

d. Any proposal by Russia giving her control of or a preferred position concerning the Kiel Canal should be firmly opposed.

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

For the Joint Chiefs of Staff:
A J MCFARLAND
Brigadier General, USA, Secretary

74 
840.811/7-1745: Telegram

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

Moscow, July 17, 1945 — 5 p.m.
Confidential
2598

Creation of a Danube commission (to Dept as 2598 rptd London 369 Bucharest 92 Belgrade 24 Budapest 26 Sofia 68) is a question still under study by Soviet authorities, Vyshinski told Brit Amb in letter of July 11 replying (Embs 1931, June 6) to Brit query on subject.

KENNAN

75 
740.00119 Control (Austria)/7-245

The Acting Secretary of State to the Secretary of State

Washington, July 17, 1945
Top secret

Memorandum for the Secretary of State

Charles of Hapsburg requested the Ambassador in Paris to accept the enclosed sealed letter for transmission to the President. When the Ambassador raised a question as to whether the President was prepared to receive such communications Charles stated that a similar message had been sent from Brussels and that a reply had been delivered to his brother the Archduke Felix.

In accordance with the instructions of President Roosevelt the State Department had authorized certain missions to transmit sealed material to President Roosevelt. Does the President wish this practice continued?

JOSEPH C. GREW

[Enclosure]

The Archduke Otto of Austria to President Truman

July 2, 1945

Dear Mr. President, In view of the impending international decisions I take the liberty to write to you on the Austrian situation. I believe that I can do so as I am in daily contact not only with the former Austrian Resistance Movement, but also with the majority political parties and local administrations.

The situation after two months of liberation is certainly not as it should be. Divided into four zones of occupation, the living body of the Austrian State is cut to pieces. There is no overall economic and no overall political planning. The economic situation is almost desperate. The Allied troops of occupation, despite orders, are living on the country. The Provincial Administrations are receiving no authority – with the exception of the one in the French occupational zone – and have thus no means to fight the spreading doom. Owing to the inactivity of the Allied military authorities there is no harvesting, the factories do no longer run. There is general unemployment. Inflation is spreading. All this will lead to an unprecedented catastrophe in a few weeks. In the Russian zone the Russian troops of occupation have carried away the complete industrial equipment and are looting systematically the private dwellings.

To top the economic difficulties the Americans and British have issued a policy of non-fraternisation, in contrast to the French. This policy of non-fraternisation, which creates a feeling that the Allies are treating the Austrians as if they were Germans, is considered by the Austrians as a grave injustice. To this are added general interdictions to travel or to ship goods, suppression of the mails, the telephone and the telegraph, general abuses in the requisition and a curfew for the population, all things justified in conquered aggressor countries, but not for liberated friends. We were the first country to fight the Germans, and if we collapsed in 1938 it was because we were hopelessly outnumbered and abandoned by the Western Powers. Our Resistance Movement was as strong, considering the situation, as in other countries.

The political freedom has not been re-established. We have no free press and no means of creating a healthy democratic public life.

The Russians have been sponsoring a communist-dominated regime of their own in Vienna. There have been rumours that the Allies will eventually recognize this communist regime, the so-called “provisional Government.” I can assure you that the overwhelming majority of the Austrians would refuse to accept such a Government, because they do not want the elections controlled by the Austrian Communists, who avowedly strive for dictatorship and would do anything to impair the honesty of the elections. They furthermore will not accept to be ruled by the communist party.

This is the situation. May I take the liberty to suggest a few measures that ought to be taken in order to bring Austria again to a life of freedom and to do justice to the Austrian people.

  1. Authorization of the establishment of strong Governments in each of the Provinces, who can act under their own responsibility. (These Provinces are: Tyrol, Vorarlberg, Salzburg, Kaernten, Oberoesterreich and Steiermark. This does not include Niederoesterreich, Burgenland and Vienna, who are under Russian occupation).

  2. Liberty for the Austrian Governments of the Provinces to communicate with each other and to come to understandings on common matters.

  3. Assurance that the self-styled provisional Government of Vienna, presided by Dr. Renner, will not be recognized by the Allies.

  4. Abolishment of the policy of non-fraternisation by the American and British forces.

  5. Authorization of the establishment of a free press.

  6. Stoppage of the present inflation through a united plan for the whole Austrian area.

  7. Inclusion of Austria in the general Allied relief program.

  8. Liberty for the Governments of the Austrian Provinces to deport German citizens who are at this time a major scourge for the country.

I am certain, Mr. President, that these measures would permit a rapid consolidation inside Austria. They would give Austria the start it needs to rise from its ruins. On the other hand, a continuation of the present policy will lead the country to anarchy.

Knowing your generous sympathies for my country, I am bringing these problems before you because I am convinced that in pursuance of the great policy of America with regards to Austria you will order that my country be started as soon as possible on the way to consolidation and freedom.

Wishing you the blessings of the Almighty in these days when one of the greatest responsibilities in human history will lie on your shoulders, I am [etc.]

OTTO OF AUSTRIA

76 
740.00119 Control (Rumania)/7-1745

The Acting Representative in Rumania to the Secretary of State

Bucharest, July 17, 1945
Secret
No. 410

Subject: REVISED ADMINISTRATIVE PROCEDURE FOR THE ALLIED CONTROL COMMISSION IN RUMANIA

Sir: I have the honor to attach an English translation of a copy of a letter delivered on July 16th to General Schuyler, heading the American representation on the ACC, from the Deputy Chairman of the ACC, Colonel General Susaicov, which announces revisions in the administrative procedure for the ACC in Rumania. In content it appears that the phrasing of these six points is like that announced for the ACCs in Bulgaria and Hungary.

Both General Schuyler and I agree, after an examination of the points, that virtually every difficulty encountered by the American representation upon the ACC since its beginnings to date could have occurred during that time with the six points in force, if, as has been the case until now, goodwill on the part of the Soviet Executive of the ACC was lacking.

It might be pointed out that repeated promises have been made by the Soviet Executive to hold a conference at least every ten days or two weeks, but when the occasion was deemed unsuitable for such a conference by the Russians, in order to avoid discussion that might be embarrassing, they did not hesitate to postpone it indefinitely. Also the irony of the situation, as set forth in points 2 and 3 of the attached letter, apparently escaped General Susaicov when, at the very time he handed the attached note to General Schuyler, he announced that unilaterally the Russians on the ACC were going to demand of the Rumanian government all nominally German-owned bank stocks in the country, as well as continuing with the unilateral demands upon Rumania for all nominally German-owned oil stocks.

Points 4, 5, and 6, are considered as being virtually no concessions, since point 4, that of freedom of travel, is practically the existing situation; point 5 is almost unnecessary since the present composition of the American and British delegations is considered ample; while point 6 simply describes the existing situation for the receipt and shipment of mail, cargo, and the dispatch of couriers.

Respectfully yours,
ROY M. MELBOURNE

[Enclosure--Translation]

The Deputy Chairman of the Allied Control Commission for Rumania to the Chief of the Military Representation on the Allied Control Commission for Rumania

Bucharest, 16 July 1945
No. SH-1363

In view of the changed situation resulting from the cessation of hostilities with Germany, the Soviet Government considers it necessary to establish the following working procedure for the Allied Control Commission in Rumania:

  1. The Chairman (Deputy Chairman) of the Allied Control Commission will regularly call conferences with the British and American Representatives for discussion of the more important questions concerning the activities of the Allied Control Commission.

A conference will be held every ten days, and, whenever the need arises, more frequently.

  1. Directives of the Allied Control Commission on questions of principle will be issued by the Chairman (Deputy Chairman) of the ACC following previous discussion on the directives planned, with the British and American Representatives.

  2. British and American Representatives will take part in the general conferences of Chiefs of Sections and Representatives of ACC, on questions of principle, which have been called by the Chairman (Deputy Chairman) of ACC, but they may also, either personally or through their Representatives, participate, in the appropriate cases, in mixed commissions set up by the Chairman (Deputy Chairman) of ACC on questions connected with the carrying out of its functions by the Allied Control Commission.

  3. The freedom of travel throughout the country is permitted to British and American Representatives provided that the ACC is informed beforehand of the time and route of the trips.

  4. The British and American Representatives in ACC have the right to determine the number and composition of their representatives.

  5. Deliveries and shipment by air of mail, cargo and the dispatch of diplomatic couriers of the British and American Representatives in ACC will be made at the time and following the procedure established by the Allied Control Commission, and, in special cases, after previous agreement with the Chairman (Deputy Chairman) of ACC.

To this, we feel, should be added that on all other points, “The Statutes of the ACC in Rumania”, which 20/9/1944 was communicated to the Governments of the United Kingdom and the United States of America will continue to remain in force.

SUSAICOV
Chief of Staff
Allied Control Commission for Rumania

Lt General
VINOGRADOV

77

Proposal by the U.S. Delegation

[Babelsberg, July 17, 1945]
Top secret

Policy Toward Italy

The objectives of the three governments with regard to Italy are directed towards her early political independence and economic recovery, and the right of the Italian people ultimately to choose their own form of government.

Italy’s present status as co-belligerent and unconditionally surrendered enemy is anomalous, and hampers every effort both by the Allies and by Italy herself, to improve Italy’s economic and political situation. This anomaly can be finally solved only through the negotiation of a definitive peace treaty which would at best require some months. The preparation of such a treaty should be one of the first tasks of the suggested council of foreign ministers.

Meanwhile, however, improvement in the Italian internal situation would be greatly facilitated by some immediate interim arrangement whereby the Italian Government would have some tangible recognition of Italy’s contribution toward the defeat of Germany.

It is therefore recommended that the short terms of surrender and the numerous obsolete clauses of the long terms of surrender be terminated, and replaced by certain undertakings on the part of the Italian Government to meet the requirements of the existing situation.

These undertakings should provide:

  1. That the Italian Government will refrain from any hostile action against any of the United Nations pending the conclusion of the treaty of peace.

  2. That the Italian Government will maintain no military, naval or air forces or equipment, except as authorized by the Allies, and will comply with all instructions on the subject of such forces and equipment.

Under this interim arrangement, control of Italy should be retained only so far as is necessary:

  • a. To cover Allied military requirements, so long as Allied forces remain in Italy or operate therefrom.
  • b. To safeguard the equitable settlement of territorial disputes.

Proposal by the U.S. Delegation

[Babelsberg, July 17, 1945]

German Reparations

Agreed Principles
The Allied Commission on Reparations has agreed on seven basic principles (text attached).

Principle for Decision
The Commission has failed to reach agreement on the underscored last clause of an eighth principle:

After payment of reparations, enough resources must be left to enable the German people to subsist without external assistance. In working out the economic balance of Germany, the necessary means must be provided for payment of imports approved by the governments concerned before reparation deliveries are made from current production or from stocks of goods.”

The United States Government fully concurs in these principles and must insist that such necessary imports as are approved by our governments shall constitute a first charge against exports from Germany of current production and stocks of goods. To do otherwise, will lead either to a repetition of our mistakes at the end of the last war, or leave us unable to bring about the desired industrial disarmament of Germany.

Definitions and Allocation of Reparations
The United States proposes immediate agreement on definitions of restitution, war booty, and reparations (text attached). The Commission has agreed on a formula for allocation of reparations between the USSR, U.K. and U.S. and a procedure for settling the division of reparations among other countries (texts attached).

The United States Government feels that the definitions of restitution, war booty, and reparations are so interrelated with the formulae for allocation of reparations that agreement must be reached on all of these matters simultaneously.

[Attachment 1]

Agreed Principles of Reparations

I. Removals of property for reparations shall be primarily such as to assist in bringing to an end the war-making power of Germany by eliminating that part of Germany’s industrial capacity which constitutes war potential.

II. Reparations shall be such as will speed recovery and reconstruction in countries devastated at German hands.

III. For the purposes of making a reparations plan, Germany will be treated as a single economic unit.

IV. Any plan of reparations shall be avoided which necessitates external financial assistance either to enable reparations deliveries to be made or to facilitate economic reconstruction required for reparation purposes, or which might, in the opinion of the Governments concerned, prejudice the successful execution of the task entrusted to the Armies of Occupation.

V. To a maximum extent reparations shall be taken from existing national wealth of Germany. While for convenience claims may be stated in money, it is necessary to bear in mind that in contrast to reparations after World War I which were assessed and exacted in money, this time reparations will be assessed and exacted in kind in the form of things, such as plants, machines, equipment, stocks, foreign investments, etc.

VI. In order to avoid building up German industrial capacity and disturbing the long term stability of the economies of the United Nations, long run payment of reparations in the form of manufactured products shall be restricted to a minimum.

VII. In justice to those countries occupied by the enemy, reparations shall be calculated upon the basis that the average living standards in Germany during the reparation period shall not exceed the average of the standards of living of European countries. European countries means all European countries excluding U.K. and USSR.

[Attachment 2]

Proposed Definitions

The United States proposes that:
1.) Restitution shall be confined to identifiable artistic, religious and cultural objects existing at the date of the invasion of the territories from which such objects have been removed, insofar as such objects can be recovered and irrespective of the form of dispossession by which they came into enemy hands. While any nation entitled to reparation may be allowed a prior claim for the return of certain other particular types of identifiable property removed by the enemy, the value of such property, if returned, shall be entered on the reparation account of such nation.

2.) War booty shall be limited to finished equipment and supplies produced for and belonging to the German armed forces exclusive of any facilities used to produce such equipment or supplies.

3.) Except for property transferred as restitution, war booty or exports to pay for approved imports, all property in the territory within the boundaries of the German Reich as it existed on December 31, 1937 shall be subject to reparations.

[Attachment 3]

Agreed in the Allied Commission on Reparations

In accordance with the principles established at the Crimean Conference, namely, that the countries entitled to the greatest share of reparations are those which have borne the main burden of the war, have suffered the heaviest losses and have organized victory over the enemy, the Allied Commission on Reparations agrees that the total sum of reparations (including both what is received on account of removals from the national wealth of Germany and what is received from annual deliveries after capitulation) will be distributed as follows:

Of the total
USSR 56%
UK 22%
USA 22%
TOTAL 100%

To meet the validated claims for reparations on the part of the other nations, as determined by mutual agreement of the three powers, each of the three powers will give up from their share in the ratio that each share bears to the total.

[Attachment 4]

Agreed in the Allied Commission on Reparations

Procedure for settling the division of reparations between countries other than the U.K., USA, and USSR

  1. The Allied Commission on Reparations will send a communication as soon as possible through the Governments of the U.K., USA, and USSR inviting all the United Nations that have taken a direct part in the war with Germany to submit within one month to the Allied Commission on Reparations through their Diplomatic Representatives in Moscow, or otherwise, statements showing data for establishing their reparations claims against Germany and the value of German pre-war assets in their territory. The nature of the data to be submitted will be determined subsequently.

  2. On receipt of the data the Allied Commission on Reparations will decide as a basis of discussion on a provisional list of countries entitled to receive reparations and also on the percentage to be allotted to each of them.

  3. The Allied Commission on Reparations will in such form as is found to be convenient enter into negotiations with the United Nations whose claims to reparations are considered to be well founded with the object of securing their agreement to the percentage of reparations which has been provisionally suggested by the Allied Commission on Reparations.

  4. If the said negotiations with the United Nations whose claims to reparations have been recognized are successful the Allied Commission on Reparations through the member Governments will send to these nations a further communication inviting them to take part in a special conference for the conclusion of a general agreement on reparations between the interested nations.

If however the preliminary negotiations prove not sufficiently successful to make it possible to call a conference of this kind the Allied Commission on Reparations will consider afresh in the light of the factual material in its possession the question of the further steps required.

  1. A Communication will be sent to the United Nations whose claims to reparations have not been approved informing them of the decision of the Allied Commission on Reparations with an indication of the reasons for that decision.

Proposal by the U.S. Delegation

[Babelsberg, July 17, 1945]
Top secret

Subject: DRAFT PROPOSAL FOR THE ESTABLISHMENT OF A COUNCIL OF FOREIGN MINISTERS

One of the most urgent problems in the field of foreign relations facing us today is the establishment of some procedure and machinery for the development of peace negotiations and territorial settlements without which the existing confusion, political and economic stagnation will continue to the serious detriment of Europe and the world.

The experience at Versailles following the last war does not encourage the belief that a full formal peace conference without preliminary preparation on the part of the leading powers is the best procedure. Such a conference without such preparation would be slow and unwieldy, its session would be conducted in a heated atmosphere of rival claims and counterclaims and ratification of the resulting documents might be long delayed. I therefore propose as the best formula to meet the situation the establishment of a Council composed of the foreign ministers of Great Britain, the Union of Soviet Socialist Republics, China, France and the United States, namely, the countries which compose the permanent members of the Security Council of the United Nations organization. It is my thought that this Council should meet as soon after our meeting as preparations therefor can be completed. I should like to present therefore a draft proposal along these lines which I have drawn up for your consideration.

[Attachment]

Draft Proposal for the Establishment of a Council of Foreign Ministers

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

  2. The Council shall meet at ___________ and its first meeting shall be held on ____________. Each of the Foreign Ministers shall be accompanied by a high-ranking deputy duly authorized and capable of carrying on the work of the Council in the absence of his Foreign Minister. He will likewise be accompanied by a small staff of technical advisers suited to the problems concerned and to the organization of a joint secretariat.

  3. As its immediate important task, the Council would be authorized to draw up, with a view to their submission to the United Nations, treaties of peace with Italy, Rumania, Bulgaria, and Hungary and to propose settlements of territorial questions outstanding on the termination of the war in Europe. The Council shall be utilized 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.

  4. 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. It is not intended, however, to fix hard and fast rules but rather to permit the Council to adapt its procedure to the particular problem under consideration. In some cases it might desire to hold its own preliminary discussions prior to the participation of other interested States. In other cases the Council might desire to convoke a formal conference of the States chiefly interested in seeking a solution of the particular problem. It is so authorized.

Proposal by the U.S. Delegation

[Babelsberg, July 17, 1945]
Top secret

Implementation of the Yalta Declaration on Liberated Europe

In the Yalta Declaration on liberated Europe signed February 11, 1945, the three governments assumed certain obligations in regard to the liberated peoples of Europe and the peoples of the former Axis satellite states. Since the Yalta Conference, the obligations assumed under this declaration have not been carried out. In the opinion of the United States Government the continued failure to implement these obligations would be regarded throughout the world as evidence of lack of unity between the three great powers, and would undermine confidence in the sincerity of their declared aims.

The United States Government proposes, therefore, that the following steps to carry out the obligations of this Declaration be agreed upon at this meeting:

  1. The three Allied Governments should agree on necessity of the immediate reorganization of the present governments in Rumania and Bulgaria, in conformity with Clause (c) of the third paragraph of the Yalta Declaration on liberated Europe.

  2. That there be immediate consultation to work out any procedures which may be necessary for the reorganization of these governments to include representatives of all significant democratic elements. Diplomatic recognition shall be accorded and peace treaties concluded with those countries as soon as such reorganization has taken place.

  3. That in conformity with the obligations contained in Clause (d) of the third paragraph of the Declaration on liberated Europe, the three governments consider how best to assist any interim governments in the holding of free and unfettered elections. Such assistance is immediately required in the case of Greece, and will in due course undoubtedly be required in Rumania and Bulgaria, and possibly other countries.

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740.00119 (Potsdam)/7-1745

The Political Adviser to the Representative on the European Advisory Commission to the Assistant Secretaries of State

[Babelsberg,] July 17, 1945
Secret

Memorandum for Mr. Dunn and Mr. Clayton

Subject: CREATION OF A RHINELAND-RUHR STATE

A. The Proposal
While there are several proposals under consideration for separating the Rhineland-Ruhr area from the remainder of Germany, most of the proposals provide for this area to be set up as a permanently separate unit, economically and politically independent of the rest of Germany. One of the proposals provides that it shall be controlled by France, Belgium and the Netherlands under the supervision of the Security Council. Obviously, a merely temporary separation would, by the very assumption that the area would at some foreseeable time be returned to Germany, have political and psychological effects different from those of a separation designed to be lasting. Similarly, the economic effects of separation would be very different if this area were to be left in customs union with the rest of Germany.

B. Advantages of Separation

  1. The advantage of separation most often cited would be that even when political self-rule was returned to the Germans in the rest of Germany the basic resources of the Rhineland-Ruhr area would not return to the control of the German state or the German economy, thus eliminating Germany’s ability to use these resources to rearm. This argument assumes that when direct Allied occupation of Germany comes to an end, the four Powers might be unable or unwilling to prevent the rest of Germany from rearming and that the separation of the Rhineland-Ruhr is therefore a necessary safeguard against the revival of Germany as a military power.

  2. A second advantage is that the separation of this area would make the rest of Germany much weaker as a power factor and hence much less attractive to any outside power which might be tempted to court it as an ally, and that Germany would thus be more likely to remain a political vacuum. If political forces could be shaped or confined by drawing lines on a map, this argument would carry decisive weight. There are other political factors, such as numbers, technical and organizing skills and political drives of a people, which can be deflected but not destroyed by lines drawn on a map.

  3. It is also argued that existence in partite states could be made so attractive to Germans over the long run that it would be accepted by them and would thus form a lasting contribution to a more peaceful Europe. In the history of Europe in the last 200 years nothing suggests that the bulk of Germans either in the Rhineland-Ruhr or in the rest of Germany will eventually accept such a solution sincerely and work to maintain it. Failing such acceptance, this solution, to endure, would require permanent unity of will among the four great powers. An imposed partition of Germany is, over any considerable period, more likely to divide the four major powers than it is to contribute to their continued unity of purpose and action.

C. Disadvantages

  1. Would the economic potential of Germany be reduced by drawing a boundary line around the Rhineland-Ruhr? As a byproduct of separation, the exploitation of the Rhineland-Ruhr would probably have to be maintained on a fairly high level in order, through developing its capacity to export in highly competitive markets, to support its present population. Numerous industries now carried on in the rest of Germany would, as a normal consequence of separation, be developed in the Rhineland–Ruhr area, and thus, if at some later date the boundary between the Rhineland-Ruhr and the rest of Germany were removed, Germany’s total economic potential might well be no smaller than it had been before partition.

  2. The separation of the Rhineland-Ruhr would contribute to the stability of Europe if it were accepted sincerely by the bulk of Germans in both parts of Germany and if the four major powers were equally determined to maintain partition. However, the issue of partition could easily become the focus for all the discontents among Germans in both areas. The grievance of partition would unify all Germans in a way difficult to combat and dangerous to the longer-range aims of the Allies. Any great power which wished to disturb the peace of Europe would have at hand an issue which would win the support of the entire German people and would trouble the conscience and divide the political will of the Allied nations. The inability of the great powers to unite between 1918 and 1938 in maintaining the independence of Austria, which had never been politically a part of the modern German state, gives some inkling of the political risk involved in basing a long-range policy on the assumption that all major powers will share an equal interest in maintaining the partition of Germany.

  3. While control of the Rhineland-Ruhr by France, Belgium and Holland would give a western-European bloc the power to cut off the flow of coal, iron and steel from the Rhineland-Ruhr to the rest of Germany, other potential power-factors would not be under their control. It is doubtful that they could eradicate the will of the Germans to reunite. This factor, even though Germany by itself were incapable of an active political role, would have its influence on all calculations and decisions as long as the separation lasted, since the German people, even disarmed, could be counted on to throw the weight of their manpower and economic potential to the side of any power which seemed likely to support their efforts at reunion.

  4. Any decision as to what powers will dominate a separate Rhineland-Ruhr state or protectorate will give rise to both immediate and continuing rivalries. Neither Great Britain nor Russia can afford to have an area of sixteen million Germans, possessing a great industrial potential, drawn into a combination which would be outside its own control. If the four major powers agree to separate the Rhineland-Ruhr, that will be on a basis of equal participation in its control. As long as the four powers are willing to maintain their joint control over all of Germany, it is hard to see what advantages would be gained by setting up a separate four-power regime for the Rhineland-Ruhr apart from the four-power control over Germany as a whole, and it is easy to foresee the great administrative, economic and political complications to which it would give rise.

  5. If the Rhineland-Ruhr is placed under the control of France, Belgium and Holland, these three countries will have to combine to form a cohesive Western European bloc, in order to control effectively a West German state of sixteen millions. The formation of such a bloc would be regarded with suspicion by Russia and has not previously been encouraged by the United States, which has so far opposed the division of Europe into watertight regional power-blocs. Weak in itself, a West European bloc would need generous and sustained support by both Britain and the United States.

  6. For Britain and the United States to underwrite permanently a spearhead bloc in Western Europe implies a major decision on their part. It assumes that they cannot work out satisfactory joint solutions with Russia and that they must now form a strong and cohesive bloc of their own. If that assumption is the only one on which Britain and the United States can safely act, they should not limit their power-bloc to Western Europe but should strive to make the area of their leadership as broad, inclusive and cohesive as possible. They cannot feel adequately reinforced by having on their side a disparate bloc consisting of France, Belgium, Holland and a reluctant Rhineland.

  7. A principal argument for creating a separate Rhineland-Ruhr state is that this will furnish a reliable safeguard against Germany’s rearming after American and British forces have withdrawn from the Continent. However, a separate Rhineland-Ruhr state could be maintained only by military forces, available in substantial numbers on the ground and always available in unstinted numbers on immediate call at a distance. It is conceivable that the forces needed to maintain a separate Rhineland against the will of the German people and the potential opposition of other major powers would be as great or greater than those needed to garrison all of Germany after Germany has been disarmed and reorganized internally.

    Even if American and British forces are withdrawn from Germany at an early date, Germany could still be garrisoned indefinitely by contingents furnished by the Continental European allies. These allies, which have obligatory military service and are in close proximity to Germany, could easily provide, on a rotating basis, a garrison of 200,000.

    The creation of a separate Rhineland state would not obviate the necessity for maintaining a long-term system of inspection as a safeguard against German efforts to rearm. Through licensing industrial establishments, through direct and frequent inspection by a corps of Allied personnel, through licensing and regulating the use of critical alloys, through eliminating the production of aircraft and synthetic oil and rubber, and through preventing all forms of military training and warlike indoctrination, the victorious powers can, if they so will, prevent Germany from restoring her military strength or potential. Continuity in enforcing such controls under the authority of the Security Council will be attained more easily than continuity of joint and unremitting action to enforce the separation of the Rhineland-Ruhr from the rest of Germany.

  8. It should be the aim of the victorious powers to keep Germany weak and disunited politically. An imposed partition will lead nearly all Germans to subordinate their natural internal differences to the one burning desire, namely, to overcome a division of their country and people which runs counter to their deep national feeling, and to their economic interests. Finally, it will be easier to maintain unity of policy between the four major powers if they agree to keep Germany politically weak and economically open to the influence of all the major powers instead of breaking Germany up into exclusive spheres of influence.

PHILIP E. MOSELY

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740.00119 Potsdam/7-1745

The Assistant Secretary of War to the Assistant Secretary of State

Washington [Babelsberg], 17 July 1945
Confidential

Memorandum for Mr. James C. Dunn, Assistant Secretary of State

General Clay advises me today that he has tentatively worked out with General Weeks, Deputy Military Governor of the British Zone, an agreement that a French Area of Occupation in the City of Berlin will be formed from the existing areas allocated to the United Kingdom and the United States Forces of Occupation. It would seem appropriate now to inform Ambassador Winant that agreement with the British and French on this point seems likely and to request that he agree in the European Advisory Commission with the British, the Russians and the French that the matter may be referred to the Control Council for Germany for settlement, with the understanding that the French Zone will be created out of the areas presently assigned to the United States and United Kingdom Forces.

General Clay expects to confer with General Weeks and General Koeltz on this matter on Thursday and to work out a definitive scheme, subject to final ratification by the Joint Chiefs of Staff if that turns out to be necessary.

JOHN J MCCLOY