740.00119 EW/7–1645: Telegram

No. 1316
The Acting Secretary of State to the Director of the Office of Financial and Development Policy (Collado)1
secret
us urgent

33. (For Collado.)

In telegram 2250 of June 24,2 Pauley suggested that certain (unspecified) [Page 1379]commodities received by Soviet Union on reparation account from satellite countries might be made available to American occupation forces through reverse-lend-lease arrangements. Dept drafted reply to effect that US waived none of its claim to reparations from satellites (though expecting none), that prospects of obtaining commodities from Soviet Union for US forces were so small as to preclude an approach to Soviet Union, and that US interest in exportable surpluses of the satellite countries centered on deliveries to UNRRA beneficiaries for relief of UNRRA and in turn US. This draft was taken by the Secretary.3

When reply was drafted, Dept was thinking in terms of agricultural products, including food. It is apparent from later telegrams that Pauley is deeply interested in obtaining oil from Rumania, Hungary and Austria and has corresponded with PAW and SHAEF on this subject. His latest telegram to PAW4 asks for information on tanker requirements for Anglo-American oil for western and Mediterranean oil requirements from Anglo-American sources, and tanker savings possible if Austrian, Hungarian and Rumanian sources could be used.

Suggest you consider asking the Secretary to enlarge the draft reply to 2250 of June 24 to indicate the interest of the US in obtaining oil from this area, and in paying dollars for such oil (if necessary) to Rumania and Hungary rather than USSR with understanding that these dollars be used primarily to satisfy US claims on these countries.

You may recall that Dept has already asked Embassy in Moscow for information on prospects of obtaining oil from Russian sources, [Page 1380]or from Rumanian and Hungarian fields dominated by the Soviet Union. A long reply was received from Harriman to the effect that the Soviet Union position in oil continued to show a deficit.5 This exchange took place before Pauley’s arrival in Moscow.

[Grew]
  1. Sent to the Secretary of State at Babelsberg.
  2. Document No. 620, printed in vol. i .
  3. The text of the draft referred to, which was repeated to Byrnes at the Conference as telegram No. 54 of July 18, is as follows (file No. 740.00119 EW/7–1745):

    “While claims by this country on account of war damage would not be substantial (Embtel 2250, June 24) and Dept realizes that the prospects of this country’s securing general reparations payments from the satellite countries are negligible in any case, US has not waived any of rights respecting presentation of reparations claims which are reserved to it in armistice agreements signed with Rumania, Bulgaria and Hungary. With respect to Austria, this Govt is opposed to exaction of reparations. The transfer of existing capital equipment clearly in excess of healthy, peacetime requirements of Austrian economy, such as machinery in armaments plants erected since 1938, need not necessarily conflict with this policy.

    “With regard to your suggestion that certain commodities received by the Soviet Union on reparations account from satellite countries might be made available to American occupation forces through reverse lend-lease arrangements, Dept believes that the prospects of inducing Soviet Union to turn over to American forces such commodities are so small as to preclude any approach to the Soviet Govt on this question.

    “Our interest in the exportable surplus of the satellite countries has been centered on deliveries to UNRRA beneficiaries and thus reducing the burden falling upon UNRRA and ultimately upon our production and shipping availabilities. Some of these matters may be discussed at the forthcoming Big Three meeting.”

  4. See vol. i, document No. 625.
  5. Not printed.