740.00119 EW/6–1945: Telegram

No. 356
The Representative on the Allied Commission for Reparations ( Pauley ) to the Secretary of State
top secret

2165. Top secret for the Secretary from Pauley.

In numerous informal conversations with Mr. Maisky, he keeps coming back to the 20 billion dollar sum that was discussed at Yalta1 of (sent to Dept as Moscow’s No. 2165) which the Soviet Union would receive 10 billion or 50%, the British and the US 8 billion or 40% and all others 2 billion or 10%. Inasmuch as Roosevelt, Stalin and Churchill agreed at Yalta to use this as a basis of discussion, I have not officially resisted this basis. At this moment, however, I am strongly of the opinion that:

It is too early until at least a preliminary survey of German ability to pay is determined to discuss an exact amount of dollar value.
Until other countries entitled to reparations are considered we should not fix any total figure in advance of hearing their claims.
That a formula [should] be adopted which will emphasize percentages, rather than dollars, and which will [bring]2 Russia into partnership with US and UK in relinquishing reparations to be assigned to other Allies.

In explanation of this last point, disregarding the amounts of money involved, the formula discussed at Yalta expressed in percentages was: USSR 50%, Great Britain and the US 20% each (assuming Great Britain and the US divided equally the 40% allocated to them), all others 10%.

In order that the three powers now meeting may share together on a proportionate basis, whatever benefits or burdens may arise from the allowance or disallowance of the claims of other nations to reparations, I propose to suggest that, in so far as the Big Three are concerned, they shall divide whatever reparations may become available to them as a group as follows: USSR 55%, Great Britain 22½%, USA 22½%. But this agreement among the Big Three as to the initial division as between themselves shall be accompanied by their publicly proclaimed willingness to bring all other nations in, hear their claims and give up proportionately to meet such claims as appear justified. This would:

Keep all of the Big Three together.
Keep other nations from believing that the Big Three have prejudged the amounts of their claims.
Give time for full consideration of (a) dollar value of immediate removables (war factories, plants, machine tools and other capital equipment); (b) what is left to take from Germany in the form of deliveries of natural resources, current manufacture, and other items to be produced over a period of time set by the Reparations Commission.

We must claim all we can accept. The US might well demand more reparations except that we are limited as to the kind and type of thing we can take. We cannot use plants, machinery and labor. But we can take and should assert to the fullest extent our demand for gold currencies, foreign assets, patents, processes, technical know how of every type. Also we may desire to reduce our percentage to conform to what we may be able practically to accept.

Ambassador Harriman shares and endorses the views above set forth.

  1. See vol. ii, document No. 1416, section v .
  2. This word, which is missing in the Department of State file copy, has been supplied from a copy in the Moscow Embassy Files (file No. 711.9 Reparations Commission).