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

740.00119 council/10–645

The Chargé in the United Kingdom (Gallman) to the Secretary of State

London, October 6, 1945—noon.
[Received 4:05 p.m.]

10426. Delsec 111. From Reinstein. Following supplements Delsec 98, October 2,²⁷ on fifth meeting regarding Inter Allied Reparations Agency and completes reports on points discussed with British and French.

2. Reference paragraph 3. Department’s telegram 8390, September 24. Restitution issue has been left for later consideration, reference is to restitution being meanwhile eliminated from draft memorandum. French feel strongly Inter Allied Reparations Agency should handle restitution questions. British suggest it should handle cases where there are conflicting claims. I asked whether it would not be possible to avoid questions of conflict by adopting policy proposed in our early restitution documents in Washington of returning property to jurisdiction from which taken, leaving question of ownership to be unraveled at that point.²⁸ British and French thought this would greatly reduce number of questions, but believe that some would still be left, including such matters as what to do with bearer securities discovered in Germany, origin of which was uncertain.

My view, which I did not express at meeting, is that Allied Control Commission Germany should not be placed in position of arbitrating issues between Allied Governments. Its job is to run Germany and it should not be saddled with legal or political problems which are not a part of that job. Whether or not the solution of conflicts should be made a function of Inter Allied Reparations Agency or some other agency depends partly on how well Inter Allied Reparations Agency operations are carried out and how it is set up. British feel strongly we should not create a large number of agencies for dealing with various segments of the problem of dividing what we get from Germany. Consequently they favor placing the function in Inter Allied Reparations Agency.

3. Both British and French recognize their definitions of restitution are not entirely practical. Rueff indicated informally that French recognize distinction must be drawn between goods shipped to Germany which in fact were commercial exports and removals which constituted looting. I offered no comment except that American proposal to limit restitution to certain specific categories of goods was designed to meet these practical problems.

4. Department’s suggestion that cost less depreciation be used as basis of valuation of equipment removed from Germany (paragraph 5, Department’s telegram 8390) met with little enthusiasm. While any system of valuation which could be applied in a more or less uniform fashion would be useful in terms of making an equitable distribution, the British are concerned lest basis used result in under valuation. It was pointed out that German depreciation allowances have usually been rather large. Under valuation would have bad political effect and would place us in a disadvantageous position for negotiating Soviets for compensating deliveries. The entire subject seems to me to require further study.

5. British propose now that salary of Secretary General be 3000 pounds and those of deputies be 2500. This should make it possible to raise salary scale of subordinate personnel in line with paragraph 6 of Department’s 8390. Department should bear in mind these salaries are to be tax free.

6. Department’s comment with reference to 1 a Department’s 8549²⁹ not communicated to British and French. Recent discussions here have not envisaged that delegates would necessarily have to spend full time at Inter Allied Reparations Agency headquarters. Insofar as Deputy Secretary General of US origin is concerned, I have not considered it appropriate to make comment proposed by Department. This official will be employee of Inter Allied Reparations Agency and not US Government. While consultation between him and US element of USCC [ACC] may be desirable, I doubt whether we should go into the subject at the present time.

7. Department’s comments on 1 b of Department’s telegram 8549 were communicated to British and French.

8. As separately reported, British anxious for preliminary discussion of questions relating to German foreign assets. Playfair urges that Rubin³⁰ come to London if possible for October 10 meeting.

9. As separately reported, British feel allocation between USSR-Poland and other claimants should be made by ACR rather than Allied Control Commission. I have not discussed the point in meetings, but I agree with this viewpoint. As indicated in paragraph 2 I do not feel that Allied Control Commission should be required to settle issues between Allied Governments. Department’s position on method of making this allocation not clear to me since last paragraph of Department’s telegram 8388, September 24³¹ and paragraph 8 of Department’s telegram 8390, September 24 appear to be contradictory.

10. British and French expect US to be prepared to discuss what use it intends to make of its share of reparations in October 10 meeting, particularly if we will be willing to cede part of our share to other claimants.

11. Regarding organization of Inter Allied Reparations Agency original British ideas envisaged quite a substantial organization. As result of discussions ideas have become more modest. Dearborn and I feel that staff of Inter Allied Reparations Agency could probably be kept fairly small. Memorandum prepared by Dearborn on size and composition of staff is being telegraphed in clear.³² Our thought is that Secretary and Deputy should be persons of considerable skill, both from technical viewpoint and ability to compose differences. Success of organization will depend to a large extent on them. Remainder of staff will be primarily technical. Salary scale now envisaged should make it possible to get qualified people. US delegate and US staff should be closely tied in with American representative on ACR. It might be possible for American member of ACR in fact to serve as US delegate on Inter Allied Reparations Agency, with a Deputy representing him in the event there are conflicting meetings. Suggest Department consider this.

12. I should appreciate being informed of the Department’s plans with respect to US Deputy Secretary General. It would be desirable for the person who is to act in this capacity to proceed to London in the near future, possibly proceeding to Berlin for consultation with Allied Control Commission in company with British and French representatives. Task to be accomplished by Inter Allied Reparations Agency and size of staff needed will depend in part on how and what Allied Control Commission will do. Only someone from Washington could presumably indicate possibility of recruiting staff from US at this time.

Sent to Department as 10426, repeated to USPolAd Berlin as 177, Paris as 648 and Moscow as 343. [Reinstein.]

Gallman

27. See footnote 18, p. 1329.
28. For text of a briefing book paper setting forth the policy referred to, see Conferences at Malta and Yalta, p. 196.
29. Dated September 27, p. 1315.
30. Seymour J. Rubin, Chief of the Division of Economic Security Controls in the Department of State, had been detailed to the U.S. Delegation to the Allied Commission on Reparations until August 28, 1945.
31. Same as telegram 535, September 24, 7 p m., to Berlin, p. 1309.
32. Telegram 10415, October 6, from London, not printed.