Foreign Relations of the United States: Diplomatic Papers, 1945, European Advisory Commission, Austria, Germany, Volume III

740.00119 Council/10–445

The Ambassador in the United Kingdom (Winant) to the Acting Secretary of State

London, October 4, 1945—8 p.m.
[Received October 5—3 a.m.]

10342. This is Delsec 107 from Reinstein.

1. With the conclusion of the meeting of the Foreign Ministers Council it appears possible to make a full reply to Department’s telegram 8377 [8387], September 24 and to report on the results of the conversations I have had with Waley and Rueff. I have felt it desirable to do so at length so that full information may be available to Department prior to departure of reparations group for London and Berlin meetings.

2. As indicated in Embassy’s telegram 9629, September 18,⁹⁹ the USSR on September 14, submitted a proposal to direct Allied Control Commission, Germany to fix the amount and character of equipment to be removed from the Western Zones by December 1 and to fix dates for the determination and commencement of equipment to be furnished as advance deliveries. (Document CFM 45 (15) [C.F.M. (45) 15].) Soviet proposal also provided for transfer of ACR to Berlin and sending of mixed commissions of experts into Western Zones. Soviet proposals re dates were opposed in a British paper (CFM 45) [C.F.M. (45) 45].¹ British also opposed immediate sending of commissions proposing instead exchange of information of removals from Soviet zone for list of equipment available in British zone. After examination this data, British prepared for entry of specialists representing interested countries into British zone conditioned upon entry of specialists into Soviet zone. (This proposal was made prior to my furnishing British with Soviet reply of September 16 to our proposals of early September given in Moscow’s 3300 [3303], September 18 to Department.) French submitted paper (CFM 38) [C.F.M. (45) 38]² calling for action on restitution as part of reparation proposal.

3. As a result of Secretary’s conversation of September 16 with Molotov³ latter agreed to drop proposal on dates. When subject came up on September 26 [25] (minutes 21 meeting⁴) Molotov introduced a substitute resolution providing simply that ACR should move to Berlin and that Allied Control Commission, Germany should be instructed, in collaboration with ACR to accelerate work on reparations plan and in particular advance deliveries in order that date set in Potsdam Protocol should be met (CFM 53) [C.F.M. (45) 53].⁵ French attempted to attach, as condition to approval, provision for restitution and replacement but eventually agreed to separate discussion of restitution. Soviet proposal was then adopted.

4. Restitution was considered both by Council and deputies on several occasions. On September 27 (24th meeting) Conference Foreign Ministers agreed Allied Control Commission Germany should examine urgently restitution problem, taking into account United Nations Declaration of January 5, 1943⁶ on Axis acts of dispossession and instructed deputies to consider and report before end of session on French proposal for a 2–year period for effecting restitution. As indicated by Delsec 85,⁷ Soviets blocked every attempt to work out a formula under which any requirements would be placed on Allied Control Commission to take action on grounds that they needed advice and information from their economic experts before they could engage in any discussion on restitution. Matter is still pending before deputies as unfinished business. Soviets also blocked our effort to raise question of restitution in Austria. Soviet tactics of delay adopted in face of warning from Secretary in Council meeting that failure to settle restitution question might cause difficulty when reparations plan comes before Allied Control Commission, where French concurrence will be needed.

5. Replying last paragraph Department’s telegram 8377 [8387], British position appears to have changed in last several weeks. Waley’s letter of September 17 to Dunn quoted in Delsec 35⁸ and his early conversations with me indicated a clear position that interim deliveries should be very small. Later he began talking of extensive advance deliveries. I believe that this may reflect ministerial consideration of the question. Dept’s attention is directed in this connection to differences between paragraph 3 of September 17 letter and paragraph 5 of British paper of September 22 (CFM 45) [C.F.M. (45) 45]. Listing of plants available for removal from British zone, including Krupp Works at Essen (refer CC 16875, September 29 [28] from USG/CC to War⁹) is also significant.

6. French position is tied up with restitution and with their desires concerning Rhineland and Ruhr. Our impression was they did not realize strength of their position in influencing reparations program through veto right in Allied Control Commission. However, they now appear to have grasped the point. Question remains how far they will be prepared to go in exercising their veto right in opposition to the USSR. In general, impression I received from talks with Alphand¹⁰ is that French hope to see establishment of Rhineland-Ruhr state which would be joined in some form of economic union with France and are opposed to removals from this area to USSR. As a result of Soviet objection to consideration of Rhineland-Ruhr question by deputies, it was agreed French paper on this subject (CFM 17) [C.F.M. (46) 17]¹¹ should be discussed through diplomatic channels with eventual resubmission to CFM. French and British have agreed to discuss economic aspects of matter next week probably beginning October 8. French desire discussions to take place in Paris but British are insisting upon London. It is our plan to join for purpose of listening to French views and reporting to Department.

7. Waley informs me Mark Turner now in Berlin has reported that economic directorate will submit to coordinating committee on October 15 or soon thereafter a first list of plants available for removal as advance deliveries. List will be comprised of 13 plants in Soviet list (refer CC 16875) plus 13 more from US Zone. This will bring a number of pending issues immediately to a head, among them the following:

a. Who will determine division between USSR-Poland and other claimants? Waley states British Representative will take position this is matter for ACR.

b. What part is to go to USSR? British fear USG/CC will take position all should go to USSR and hope that Department will see that any position taken by USG/CC will reflect US Government position. I have not informed Waley that USC/CC has raised question with Washington.

c. Question of valuation. Waley now feels that ACR should lay down policy.

d. Question of compensating deliveries by USSR. Waley appears to feel these must come from outside Eastern Zone in view of (a) agreement that Germany is to be treated from economic viewpoint as a whole and (b) limitation of reparations under Potsdam Agreement to capital equipment and foreign assets. He states that failure to insist on this viewpoint will undermine efforts to carry on interzonal trade. Any goods taken from Eastern Zone by Soviets should be paid for by them under first charge principle. Although I realize that interpretation place[d] on Potsdam Protocol by Clayton and Collado is different (Embassy’s telegram 8296, August 16 to Department,¹² repeated Berlin as 80) I have not discussed point with Waley since I have attempted to confine my activities on reparations to discussion of Inter-Allied Reparations Agency and to reporting questions and views of British and French to Department, is [in] conformity with Department’s instructions.

8. As I informed Despres and Kindleberger in teletype conversation of September 26 British propose following additional items for discussion at forthcoming meeting of ACR:

a. In determining what capital equipment is to be left in Germany, should any allowance be made for producing goods for delivery as reparations?

b. In calculating equipment needed for producing for export, will exports be figured only at amount necessary to cover import requirements or will allowance be made to cover service on pre-war debt? Waley is under definite instructions to raise this question.

c. US memorandum on labor services.¹³ British intend, I believe merely to record their disagreement with our views.¹⁴

9. In the light of foregoing Waley believes ACR should meet in Berlin at a very early date, if possible about October 16. Rueff informed me that Novikov inclined to even an earlier meeting. Rueff and Waley attempted to arrange meeting with Novikov to discuss this matter after closing of CFM meeting but were unable to do so. Waley takes position calling of meeting is responsibility of Novikov as chairman.

10. As separately reported to Department, French are anxious that restitution and gold be discussed at projected talks of British, French and US elements of ACR scheduled to begin in London, October 10. British would like to have preliminary discussion of disposition of German Foreign assets and related questions. Among items they mentioned are whether German assets in eastern Austria to be taken by Soviets include those in British, French and US sectors of Vienna, what disposition to be made of German assets in western Austria, and disposition to be made of currency captured in Germany.

11. I have not been able to ascertain whether and to what extent British and French positions have been affected by conclusion of CFM meeting. Just prior to final meeting of CFM I discussed with Waley question of future action if CFM should adjourn without reaching agreement. His personal view was that action on reparations should go forward and that it would be mistake to allow Soviets to receive impression we are obstructing implementation of reparations agreement although (as indicated in preceding paragraphs) he envisages that discussions with Soviet will involve points on which there must be hard bargaining. Waley emphasized strongly necessity for full US participation in forthcoming meetings and difficulties which might result from delay of US in sending representatives, both from viewpoint of relations with USSR and from viewpoint of extremely tight time schedule confronting us.

12. Both Waley and Rueff seemed uncertain as to status of CFM decisions on reparations and restitution in the absence of a signed protocol. I pointed out USSR had agreed to moving to Berlin in note of September 14 to us.¹⁵

13. Copies of papers referred to in earlier paragraphs of this message were taken Washington by returning members of delegation.

Sent to Department as 10342; repeated to USPolAd Berlin for Murphy as 169; Paris as 645; Moscow as 341. [Reinstein.]

Winant

99. Not printed; this cable transmitted the text of the memorandum by the Soviet Delegation to the Council of Foreign Ministers, entitled “Reparations from Germany”; for text of memorandum, see C.F.M. (45) 15, September 14, vol. ii, p. 158.
1. Dated September 22; for text, see ibid., p. 325.
2. Dated September 20; for text, see ibid., p. 285.
3. See memorandum of conversation by Mr. Bohlen, September 16, ibid., p. 194.
4. Ibid., p. 384.
5. Text of this document, not printed, contained only minor differences from the proposal as contained in the minutes of the 21st meeting, September 25.
6. For text, see Foreign Relations, 1943, vol. i, p. 443.
7. Telegram 10182, October 1, 3 p.m., from London, p. 1321.
8. Telegram 9698, September 19, 9 p.m., from London, p. 1297.
9. See footnote 20, p. 1330.
10. Herve Alphand, Director General of Economic, Financial, and Technical Affairs, French Ministry of Foreign Affairs, and member of the French Delegation to the Council of Foreign Ministers.
11. Dated September 13; for the text, see vol. ii, p. 177.
12. See Conference of Berlin (Potsdam), vol. ii, p. 938.
13. Reference is apparently to a statement inserted for the record at a meeting of the Allied Commission on Reparations at Moscow, August 12, text of which consisted of paragraph 4 d of IPCOG 2/2, May 18, p. 1222.
14. The British point of view on this matter had been set forth in the note from Mr. Makins to Mr. Clayton, May 27, p. 1231.
15. Reference is presumably to the note dated September 16, text of which is contained in telegram 3303, September 18, 1 p.m., from Moscow, p. 1294. The Soviet memorandum of September 14, however, also assented to the moving of the Allied Commission on Reparations to Berlin; see C.F.M. (45) 15, vol. ii, p. 158.