740.00119 European War 1939/11–2344: Telegram
The Acting Secretary of State to the Chargé in the Soviet Union (Kennan)
2727. British Embassy have informed Department that according to reports of their representatives in Helsinki and Bucharest the Soviets have told the Finnish and Rumanian Governments that their reparation deliveries would be valued at 1938 and 1939 prices respectively.
The British are instructing Clark-Kerr to make representations to the Soviet Government on this matter and to hand them a note, the text of which we have seen, in which they argue strongly for valuation on the basis of current world prices. They have asked that you be authorized to support Clark-Kerr in this representation.
The Department is in general agreement with the position of the British on this subject and with the economic arguments adduced by them in support thereof. If you have independent knowledge that the Soviet Government is actually proposing to value Rumanian reparation deliveries at 1939 prices or similar arbitrary figure, you may associate yourself with Clark-Kerr’s representation with respect to Rumania, pointing out the following:
- 1.
- It has always been the understanding and belief of this Government that the basis on which the reparation deliveries would be valued would be current prices in dollars. The expression of the obligation [Page 263] in terms of current gold dollars lends itself to no other reasonable interpretation.
- 2.
- This Government from the beginning opposed fixing the reparation obligation in terms of a specific amount of money. When we did give our assent to a figure which we already considered high in relation to Rumania’s capacity to pay, it did not occur to us that there might be applied an arbitrary basis of valuation the effect of which would be to increase greatly the actual amount of the obligation.
- 3.
- While this Government has always fully acknowledged the claim of the Soviet Government for reparation from Rumania, it has on previous occasions also manifested the great direct interest which the United States has in European recovery and the early return of European economic stability. This Government does not oppose severe reparation terms but believes that reparation obligations which clearly exceed capacity to pay may retard recovery and react harmfully on American interests.
In your discretion you may present an aide-mémoire to the Russians incorporating the foregoing points, or if you consider it more appropriate in the circumstances you may confine yourself to an oral expression of these views.