740.00119 Control (Germany)/9–3045: Telegram

The Ambassador in the United Kingdom ( Winant ) to the Secretary of State

10176. For Clayton. Since Mr. Bevin26 was engaged with the Foreign Ministers at the time of the receipt of your message (8515, September 2727) I arranged to have the substance of it delivered at once to his Secretariat notifying Bevin. Arrangements were made to have it referred to the experts in the German Dept and in the Economic Warfare Dept who are dealing with the question of German external assets.

Discussions yesterday with the Economic Warfare Dept revealed continued strong British objections to the immediate issue by ACC (Allied Control Council) of a vesting decree. Reasons for the British stand are as follows:

1. His Majesty’s Government object on both legal and tactical grounds to the immediate issue of a decree vesting German external [Page 905] assets in a body to be created by the Control Council for this purpose.

2. It is certain that the neutral governments will not readily admit the Allied claim to ownership of German assets in neutral countries. The Swedish Government have asked on what grounds this claim is based and His Majesty’s Government do not see what effective reply can be given to this enquiry. It is impossible to contend that the effect of the surrender has been to vest in the Control Commission the title to all German assets abroad since this in substance means that the Control Council has by virtue of the surrender wider powers over German assets abroad than an ordinary sovereign government generally has over property belonging to its nationals situated in foreign territories.

The British representative on Control Council has been given these reasons as a basis for attempting to convince his American and French colleagues that an immediate vesting decree would be unwise.

Should the British representative be unsuccessful he must refer back to London for further instructions.

Because of this necessity for reference back to London I consider it most unlikely that a unanimous decision in favor of an immediate decree will be reached at the October 1 meeting.

3. Moreover His Majesty’s Government have grave doubts whether it would be in Allied interest to maintain any such contention. The Allied Governments are more likely in the future as in the past to wish to uphold the right of their own courts to decide on the validity of transfers, effected under foreign laws, of property situated within their jurisdiction. It seems to His Majesty’s Government that it would be a mistake to upset or make exceptions to these legal principles for the sake of German assets in neutral countries at any rate so long as there is any chance of obtaining some part of Allied demands by other arguments.

4. These “other arguments” are of course Mr. Rubin’s proposal that the Allies should approach neutral governments not on the ground that the Allies are legally entitled to German external assets but on the ground that they have fought the neutral countries’ battle and saved them from Nazi tyranny and have suffered terrible losses in consequence. The Allies are morally justified therefore in asking that German external assets should be handed over to them as a small makeweight for their sacrifices. Immediate issue of the decree will seriously prejudice any chance of success which the Rubin proposal may have since it will at once raise the issue of the legal right to vest and thus precipitate the discussions with neutral governments which it is so desirable to avoid.

5. An argument which has been advanced in favor of the immediate issue of the decree is that delay will give Germans in neutral countries [Page 906] more time to conceal their assets. This argument is hardly tenable. In the first place the issue of the decree will not in itself prevent concealment and in the second place such a public declaration of Allied intentions as the issue of the decree might accelerate and stimulate concealment.

6. The fact of issuing the decree will not effect the transfer of German external assets into Allied hands. The decree will have no validity in neutral countries unless and until it is recognized and enforced by the governments and the courts of those countries. It will be open to German concerns in neutral countries to plead duress and it is difficult to believe that the local courts will reject this plea which will be based on the incontrovertible ground of a decree of expropriation. In other words German concerns in neutral countries will have obtained the very thing for which they are seeking. In the opinion of His Majesty’s Government no harm could be done to Allied interests if the issue of the decree were postponed until after the Rubin approach had been tried and failed.

7. It would be interesting to know what action the US, Russians and French Governments contemplate when it seems certain the Allied claim to German external assets is rejected by neutral governments on legal grounds. His Majesty’s Government would find it very difficult to follow them in extreme measures such as cutting off exports to those countries since they consider that neutral resources should be used to the utmost possible extent in rehabilitating the devastated regions.

8. It is undeniable that the vesting decree creates a precedent which other governments may follow in future. Protests against the illegality of expropriation by other governments will lose much of their force if the latter can point to similar action in the past by the Allied Governments.

Sent Department as 10176; repeated USPolAd as 157.

  1. Ernest Bevin, British Secretary of State for Foreign Affairs.
  2. This message (printed in vol. iii, p. 840) instructed Ambassador Winant to take up with Mr. Bevin the question of British delay in approving the United States proposal in the Allied Control Council for a decree on vesting and marshalling of German assets.