740.00119 EW/7–1745: Telegram

No. 897
The Acting Secretary of State to the Assistant Secretary of State ( Clayton )1

us urgent

40. (For Clayton.)

British note of July 92 refers to Pauley’s communication on June 27 to Monckton of paraphrase of his instructions3 to his representative at Frankfurt4 and raises whole question of arrangements for interim exports from Germany pending assumption by ACC of responsibility in this field. Note communicates draft of British views on such exports, excluding movement for purposes of restitution, on which position is reserved, which has been sent to Monckton for discussion with Pauley. British hope to get Pauley to modify his instructions to his representative, to reach agreement on instructions for British and US zones, then to approach Maisky jointly.

British interpretation of Pauley’s instructions to his representative differs from that held by Department, ETOUSA and Judge Rosenman. Difficulty arises over ambiguity in paragraph 2 of Pauley’s instructions (2298 from Moscow to Department, June 275), which states that approval shall be given by Pauley representative to exports from US zone for purposes of reconstruction provided receipts are signed leaving open questions of restitution, reparation, etc. Context of telegram, including introductory remarks and first sentence of paragraph under reference, made clear this approval was required only for property asked for by way of restitution.

Department proposes to reply to British note first on question of Pauley’s involvement in questions of interim exports. Reply will state that his approval is required only on goods asked for by way of restitution, although he has an interest, pending the conclusion of agreements by the Reparation Commission on interim exports and their adoption by governments, in holding open the question of whether exports not asked for by way of restitution are exported on reparation, restitution or commercial account for which payment will later be required in acceptable currency. This interest is protected by receipts to be given by importing country. Meanwhile General Eisenhower has responsibility for availabilities, collection of information on requirements of Allied countries, and allocations.

[Page 841]

Judge Rosenman has agreed to this interpretation of the power of control sought and obtained by Pauley from President. He is anxious, however, to clear this matter with Pauley before replying to British Government either on jurisdiction or substance.

Will you ascertain whether Pauley agrees with this position?

Copy of letter to Pauley, British note and draft preliminary reply6 will be sent you in Thursday pouch. Telegram sent against possibility Pauley will return to Moscow before letter arrives.

[ Grew ]
  1. Sent to the Secretary of State at Babelsberg.
  2. document No. 372, printed in vol. i .
  3. See vol. i, document No. 360.
  4. Francis W. H. Adams.
  5. See vol. i, document No. 360, footnote 1.
  6. None printed.