Foreign Relations of the United States: Diplomatic Papers, The Conference of Berlin (The Potsdam Conference), 1945, Volume II

Truman Papers

Department of State Minutes

Potsdam, July 27, 1945, 4 p.m.

top secret

Mr. Molotov was in the Chair[.]

Mr. Molotov proposed that they take up first the question of the satellite states as there was little left to do since the Big Three had discussed it and come to agreement on most points.²

Mr. Byrnes said he did not think that the Big Three had decided the question.

Mr. Molotov proposed that they discuss it nevertheless.

This was agreed to.

Mr. Byrnes said he had a list setting forth the status of the problems before the Conference which he proceeded to read.³ These questions were as follows:

1. German Economic Questions.

Mr. Molotov said that the question of reparations was even more urgent because unless this was settled there could be no progress on the economic matters.

Mr. Byrnes said he did not dispute the order in which these questions were considered.

2. Reparations.

Mr. Byrnes said he had no objection to considering this question before that of German economic matters.

3. Italian and Austrian Reparations.

4. Oil for Western Europe.

5. Admission into the United Nations Organization.

6. Implementation of the Yalta Agreement on Liberated Europe.

7. Italy and the Other Satellite States.

8. The Rumanian Oil Equipment.

9. The Western Boundary of Poland.

10. Cooperation in [Solving] Immediate European Economic Problems.

Mr. Byrnes said to the best of his recollection that all items on the original United States and Soviet agendas had already been raised at the Conference. Two questions had not been raised at the Big Three meeting, namely:

(1) War claims [crimes] which had been proposed by the British delegation, and

(2) Transfer of populations from Poland to [and] Czechoslovakia.

Although there had been a brief discussion on this matter during the Conference Mr. Molotov pointed out that a Committee had been set up to consider this matter.⁴

Mr. Byrnes said he was speaking of the questions not yet considered by the Big Three.

Mr. [Sir Alexander] Cadogan said that there was another question—that of German political matters. Two points which had been raised in the economic discussions had been considered more political than economic.⁵

Mr. Molotov also recalled that there was the question of the disposition of the German fleet. He suggested that they refer the question of war criminals to the Big Three.

Mr. Byrnes said he agreed. He also wished to call attention to the question of the American paper on inland waterways.⁶ This was also in the hands of a committee.

1. Italy

Mr. Byrnes said he understood that the Prime Minister did not agree with the paper presented as amended⁷ and that the question had been passed over.

Mr. Molotov said he understood that the President had indicated his”consent subject to an examination of the drafting.

Mr. Cadogan stated that the Prime Minister had been unable to agree to the proposed Soviet amendment to paragraph 3 concerning the resumption of diplomatic relations with Hungary, Rumania, and Bulgaria. He thought it might be useful for him to explain that it was Constitutionally impossible for the British to enter into full diplomatic relations with a country with which they were at war. The British might be able to accept some language to the effect that the conclusion of peace treaties with the governments of these states would enable the resumption of normal diplomatic relations with them to be undertaken.

Mr. Molotov pointed out that this entirely differed from the Soviet proposal. The Prime Minister had accepted the first sentence after the substitution of “for” for the word “with”. He had proposed no other amendments.

Mr. Cadogan said this was true but he also pointed out that the Prime Minister had said he could not accept the Soviet amendment to paragraph 3.

Mr. Byrnes said that the Prime Minister had made the statement that he did not approve the language proposed in which the President had acquiesced and had said that he thought it was unwise. Mr. Byrnes said he remembered this because when he had learned that there was no agreement on the matter he regretted that he had brought forward the paper on Italy.⁸ He had proposed it because he thought there would be no difficulty in regard to it. When he had put it forward it had met a proposal that all neutrals be considered. Next there was a proposal to modify the language with reference to the Italian Government and in an effort to reach agreement he had accepted amendments to that paragraph. Next there had been a proposal to include Bulgaria, Rumania, and Hungary. After days of discussion there had been no agreement on that. After the Prime Minister had taken his position Mr. Byrnes said he had reached the conclusion that it was best to withdraw his proposal because it was most important for the states represented here to be in agreement. If the Soviet and British delegations could not agree with his proposal as amended, he withdrew his proposal with regard to the entry of Italy into the United Nations Organization. There were many important matters which they should agree upon in the few days that they intended to remain here and he did not want his proposal to delay them. He proposed that they should put on the agenda such important matters as those of reparations, the German fleet, and the western boundary of Poland, and other matters that are vital and prepare for final adjournment in the next few days.

Mr. Molotov said that he had several times discussed this question, the American delegation had taken the initiative in the matter, and the Soviet delegation had the impression in the Big Three meeting that there was agreement between the United States and the Soviet delegation and that it was only the British delegation that was opposed.

Mr. Byrnes said that the American delegation had agreed subject to a reconsideration of the drafting.

Mr. Molotov suggested that the question be referred to the Big Three who could withdraw the proposal or could discuss it. The Foreign Ministers had no right to dispose of the matter themselves.

It was agreed to refer the matter to the Big Three.

2. Reparations

Mr. Molotov said that the Soviet delegation regarded the work done by the Commission on Reparations⁹ as unsatisfactory. He said that they should have clear replies to the questions under discussion or should direct them to other channels in case they were unable to solve them themselves. He asked the United States delegation if the decision with regard to reparations which was taken at the Crimea Conference remained in force. He suggested that perhaps the United States delegation held a different view than it held at the time of the Crimea Conference. The Soviet delegation was anxious to learn if what was agreed at the Crimea was still valid. He then cited paragraph 4 of the Crimea decisions with regard to reparations.¹⁰

Mr. Byrnes replied that certainly the United States delegation agrees to that statement which explicitly stated that the Moscow Reparations Commission should take the Soviet proposal as a basis for discussion. Pursuant to that agreement the question was submitted to the Reparations Commission for study. If Mr. Molotov meant that by agreeing that it be studied we had agreed to an amount of the reparations then he was not in accord for we had not agreed to any amount.

Mr. Molotov said that he understood this but he had heard that three days ago Mr. Pauley had officially withdrawn this opinion of the American delegation.¹¹ He would like to know if the American delegation withdrew this agreed opinion, that is, that 20 billion dollars be taken as a basis for discussion.

Mr. Byrnes said he wanted no misunderstanding. At Yalta the American delegation had expressed no opinion. The figure had been suggested by Mr. Maisky and not by Mr. Roosevelt. Mr. Roosevelt had said that the statement would be accepted as a basis for discussion and that it would be referred to the Moscow Reparations Commission.¹⁰

Mr. Byrnes said he had asked Mr. Pauley with regard to this statement attributed to him and Mr. Pauley informed him that he had received and considered the proposal and that in view of the circumstances now existing he regarded it as impractical.

Mr. Molotov asked if he was to understand Mr. Byrnes to mean that at Yalta 10 billion dollars in reparations had been allocated to the Soviet Union but that now this sum was considered to be impossible.

Mr. Byrnes repeated that neither the President nor anyone else had agreed to 20 billion dollars. All that was done was to accept the proposal as the basis for discussion. If he were asked for a million dollars and he said he would discuss it, this did not mean that he would write a check for it.

Mr. Molotov said he only wanted to know what remained from the Crimea decision as a basis for discussion. Mr. Byrnes knew that the Soviet delegation was willing to consider reducing the amount of reparations.

Mr. Byrnes pointed out that they had been talking about the matter for two weeks.

Mr. Molotov recalled the United States delegation at Yalta had agreed to take as a basis for discussion the proposal that 20 billion dollars, of which one-half would be allocated to the Soviet Union, be fixed as the amount of German reparations. With this in mind the Soviet delegation had put its proposals to this Conference¹² and had indicated from which branches of German economy and on what dates these reparations could be exacted. Yet Mr. Maisky had informed him that Mr. Pauley had officially withdrawn agreement to accept the Yalta proposal as a basis for discussion. Mr. Molotov suggested that perhaps the President had authorized him to make such a statement.

Mr. Byrnes thought there had been a misunderstanding. Mr. Pauley had accepted the Yalta proposal as a basis for discussion. He had been in Moscow for 35 days and had discussed it. He had come to Berlin and had continued to discuss it. He had made an investigation after which he had determined that it was now in his opinion impractical.

Mr. Byrnes said there were so many reasons for this that he could understand Mr. Pauley’s view. He had already gone into the matter with Mr. Molotov¹³ and he could do so again if it would be helpful. Since the proposal had been accepted as a basis for discussion Mr. Pauley had learned that the Russian Army had destroyed a lot of property in Germany and what they did not destroy the American Army did. He had not discussed figures with Mr. Pauley but if Mr. Pauley told him that there were not [now] the same possibilities of reparations as there were when Mr. Maisky had made his proposal he would not have a good opinion of Mr. Pauley’s judgment. At Yalta the discussion was based on the whole of Germany and not on the present basis when a large part of Silesia had been turned over to Poland. Moreover, he knew that there were differences of opinion as to what constituted war booty and reparations. Mr. Clayton and Mr. Pauley informed him that in the American zone of Berlin they had seen the plant of the American Telephone and Telegraph Company which was practically stripped of all machinery. They had seen other plants equally stripped which had made rayon, ice, and optical instruments.¹⁴ Mr. Pauley said that circumstances made it impossible now to know what reparations should be exacted from Germany. He supposed he had in mind these conditions. The United States Delegation had thought that these plants would be available for reparations. He saw many difficulties in trying to reconcile two views so different as those of our representatives on the Reparations Commission. He wanted them to reach agreement but did not see how they could do it in the light of these conditions.

Mr. Molotov stated that perhaps the American Delegation could suggest a different basis for discussion.

Mr. Byrnes said he understood that they had suggested a different plan.¹⁵ He thought it very important that they adopt another plan, because the attempt to carry out the present one would be a constant source of irritation between us, whereas the United States wanted its relations with the Soviet Union to be cordial and friendly as heretofore.

Mr. Molotov said he understood Mr. Byrnes’ proposal to be that each country should take reparations from its zone. He pointed out that if they failed to agree on reparations the result would be the same as under Mr. Byrnes’ plan. Each would draw reparations from their respective zones.

Mr. Byrnes pointed out that the United States was not seeking reparations for its own people. It was entitled to reparations and it asserted its claims because we knew that we must look after other people, such as Belgium, Holland and Yugoslavia. He pointed out that the United States had already sent 500 million dollars of assistance to Italy and that we must send more to France. He emphasized that we were simply trying to do the best we could in a complicated situation. What had impressed him the most—it was more important than the money involved—was the desire to remove any source of irritation between our two governments. The instructions to the American army had been not to remove equipment from Germany. According to his information this had been carried out with only one or two exceptions where certain equipment was needed in order to provide a model.¹⁶

Mr. Molotov pointed out that neither the United States nor Great Britain had had their territory occupied by Germany, whereas a large part of the Soviet Union had been occupied and their plants and towns had been laid waste by the Germans. He thought that the Soviet Union and Poland had the right to claim reparations. Perhaps factories had been removed from German territory, but this was small compensation for the damage done by the German soldiers who, he repeated, had not been on United States or British territories. If Great Britain and the United States found that not a dollar of reparations should be exacted, the Soviet Government would still stand on its position but it was willing to discuss the question of the amount of reparations which it should claim. He said that they were entitled to a clear answer to their questions. The Economic Sub-Committee had been marking time and had departed from the decisions taken at Yalta. It was, therefore, necessary to clarify this situation.

Mr. Byrnes said he understood that there was no question but that the Soviet Union should have substantial reparations.

Mr. Molotov replied that this was an empty sentence which did not satisfy them.

The Secretary said that it was probable that it would not satisfy anyone. He was only anxious to devise some plan and to do the best thing possible under trying conditions.

Mr. Molotov asked what he suggested.

Mr. Byrnes said that they could probably make no headway until Mr. Attlee’s return.¹⁷ It was necessary to consider the British position. For example, the machinery referred to in the Ruhr was in the British zone.

Mr. Cadogan thought he could make no useful contribution at this stage except to say that the British Government had accepted and had not abandoned the Yalta agreement. There was no desire to deprive Russia of her due share of reparations.

Mr. Byrnes suggested that the question be passed over until the next day.

Mr. Molotov asked if it would be referred to the Big Three.

Mr. Byrnes said he did not see how it could be discussed usefully along the lines of the discussion today. He suggested that when the British returned they make one more effort to reach agreement and if they could not they should so inform the Big Three.

Mr. Cadogan said his latest information was that Mr. Attlee would return for a late meeting the next day.

Mr. Molotov summed up the position to be:

1. The question be postponed to the next meeting of the three Foreign Ministers.

2. After it had been considered at the next meeting the results should be reported to the Big Three.

3. That the Foreign Ministers discuss it the next day or the day after that.

Mr. Cadogan said that Mr. Attlee might bring the Foreign Secretary¹⁸ with him or he might instruct Cadogan to act. He agreed that if possible they should discuss it the next day; if not possible, the day after.

This was agreed to.

3. Reparations From Austria and Italy

Mr. Molotov said the Soviet Delegation regarded the work done by the Economic Sub-Committee on this question as unsatisfactory. In his opinion they should discuss the proposals made by the Soviet Delegation at the meeting of the Foreign Ministers. They had proposed three paragraphs for consideration in regard to reparations from Austria¹⁹ and asked that this be the basis for discussion. They proposed that Austrian reparations be fixed at 250 million dollars and he pointed out that this amount was less than that which had been settled for the satellite states. The kind of goods in which reparations should be paid could be discussed later. The period for reparations should be fixed at six years. The Soviet Union, Great Britain and the United States and Yugoslavia should be the recipients of reparations from Austria. He inquired if this could be taken as the basis for an agreement on Austrian reparations.

Mr. Byrnes said that insofar as the United States was concerned its representatives on the sub-committee held the view that it was impossible to hope for any reparations from Italy and Austria, that is, as to current production. The United States, the United Kingdom and Canada had already supplied 500 million dollars to Italy to prevent disease and unrest. They realized that they will be required to furnish that much more. He knew they would be unwilling to advance hundreds of millions of dollars that would be used for the payment of reparations and that United States representatives on the committees had stated that they were prepared to consider the possibility of removals of machinery and equipment that had been used in war industries and that had no value for peace time production. Certainly the United States did not want them and would be agreeable to their going to the Soviet Union as reparations. As to current production, in view of the fact that there could be none unless we put up money for that purpose, we were unwilling to agree.

Mr. Molotov said that no one had proposed this.

Mr. Byrnes said that the situation was that we knew that unless we advanced money no current production would be available.

Mr. Molotov said that Austria would be bound to pay either by her exports or by payment in the future for credit.

Mr. Byrnes said that the sub-committee did not see how there would be production for the payment of exports. We realized we would not get back any of the money we had put in there. Frankly he did not see how anything could be got out of Italy except war plants.

Mr. Molotov again referred to the fact that the United States had not been occupied by Austrian troops, whereas the Austrians had wrought great devastation in the Soviet Union and they could not let the Austrians go unpunished. Mr. Byrnes said he appreciated the sacrifices of the Soviet people in human lives but nothing material could ever compensate them for the lives lost.

Mr. Molotov replied that he was speaking of the destruction of property.

Mr. Byrnes said that with respect to property there was not much difference between destroying a building worth $100,000 and our paying out $100,000. He pointed out that the United States had paid out 400 billion dollars in the war. This was a property loss.

Mr. Molotov said that the Soviet war expenditures were immense, but he had not referred to them. He was speaking of devastation. He thought they could not let these people go unpunished. If Rumania were paying compensation because she occupied territories, who would understand such a position with respect to Austria and Italy. The Rumanian armistice terms²⁰ bore the signatures of the United States and Great Britain. It would be unjust to exempt Austria.

Mr. Byrnes said the United States had signed the armistice terms with Rumania, but we knew that we could not get reparations from Rumania.

Mr. Molotov replied that Rumania was paying reparations. The United States could renounce its claims against Austria, as its territory had not been occupied.

Mr. Byrnes replied that we were merely trying to be practical. With respect to Italy he was sure that Greece could make a claim for reparations and ask for prior consideration for the same reason advanced by the Soviet Union in the case of Austria.

Mr. Molotov said the Soviet Union had expected that Greece, Yugoslavia and Albania would receive reparations.

Mr. Byrnes replied that they would ask for prior consideration.

Mr. Molotov proposed that they agree to give it to them.

Mr. Byrnes stated that Greece had not presented a claim and that in any event our position would have to be that where we saw no money there should be no reparations, as in the case of Italy, except capital plants, machinery and materials which he had described. He was advised that Austria would have to get relief from UNRRA.

Mr. Molotov rejoined that this had no relation to the question of reparations.

Mr. Byrnes said that his understanding was that no country paying reparations was eligible for relief from UNRRA. He supposed the theory was that if they were able to pay reparations they did not need relief.

Mr. Molotov proposed referring the whole question to the Big Three.

Mr. Cadogan said the British position was the same as that expounded by Mr. Byrnes and that this had been made clear in the sub-committee session.

Mr. Molotov asked if they could place on record the different views held by the Soviet Union on the one hand, and the United States and Great Britain on the other. He said that the American and British Delegations held the view that it was possible to exact reparations from Austria and Italy only if they were taken in the shape of plants and materials.

Mr. Byrnes said only if they had been used for war purposes.

Mr. Molotov said that materials used for war purposes were “war booty.” He suggested that they should say “equipment,” because war material had no relation to reparations.

Mr. Byrnes said that Mr. Molotov could record his own position, but Mr. Byrnes thought that he also wished to state his own. He said that the removal of machinery and equipment could be made from war industries, provided they had no peace time use.

Mr. Molotov asked that this be put in the record. He also wished to make clear that UNRRA had no limitations to the fact [effect?] that a country paying reparations had no claim for relief.

Mr. Byrnes said he would have to look the matter up as his information was to the contrary.

4. Economic Principles

Mr. Molotov said he felt that provided they reached agreement on all the other remaining questions, it would be possible for them to reach agreement on the question of exports.

Mr. Byrnes said he felt that this depended on the outcome of the discussion on reparations.

Mr. Molotov agreed.

5. Oil for Western Europe

Mr. Byrnes said the sub-committee was not ready to make its report, but hoped to do so later. He understood that the Soviet representative had not received certain information needed and it was, therefore, useless to discuss it now.

It was agreed to put off the discussion on this question.

6. Cooperation in Solving European Economic Problems

Mr. Molotov said they had no objection to the report on the matter.²¹

Mr. Byrnes said he had just read it for the first time. He noted that it stated that the Soviet Government was willing to participate in the European Inland Transport Organization. As this was the first progress they had noted for some time, he thought they should thank that committee. He noted that the first paragraph of the report stated that the Soviet Government would review the documents on the other Organizations. He inquired whether the meeting should report now or wait for this further consideration.

Mr. Molotov suggested that the report of the committee be approved.

It was agreed that they should report it to the Big Three at once.

7. Rumanian Oil Equipment

Mr. Cadogan inquired if Mr. Molotov had had time to consider the British proposals on this question.²²

Mr. Molotov replied that the Soviet Delegation had just sent the British Delegation a memorandum on this question.²³

Meeting adjourned.

2. See ante, pp. 357–364.
3. Cf. ante, pp. 394–395.
4. See ante, pp. 398–399.
5. See document No. 879, post.
6. See ante, p. 387, footnote 12.
7. The draft which was before the Eighth Plenary Meeting, July 24, has not been found (see document No. 1424, post, footnote 1). Concerning the discussion of that draft by the Heads of Government, see ante, pp. 357–364. The paper discussed had since been redrafted on July 25 (see document No. 730, post, footnotes 2 and 3) and again on July 26 (see document No. 730, post).
8. Document No. 727, post.
9. i. e., the work done on reparations by the Economic Subcommittee.
10. See document No. 1416, post, section v.
11. Cf. post, p. 871.
10. See document No. 1416, post, section v.
12. Document No. 920, post.
13. See ante, p. 297.
14. See documents Nos. 929 and 940, post.
15. Document No. 925, post.
16. See document No. 940, post.
17. Attlee had taken office as Prime Minister on July 26, following the announcement of the results of the British general election.
18. Ernest Bevin.
19. Document No. 769, post. For the Soviet proposal concerning reparations from Italy, see document No. 1099, post.
20. Signed at Moscow, September 12, 1944 (Executive Agreement Series No. 490; 59 Stat. (2) 1712).
21. Document No. 1162, post.
22. Document No. 841, post.
23. Document No. 843, post.