740.00119 Control (Germany)/10–1745: Telegram

The Chargé in the United Kingdom (Gallman) to the Secretary of State

10850. For Rubin from Reinstein.30 As requested in our teletype conference October 15 I discussed treatment of German external assets on October 16 with Play fair and Villiers of MEWFO (Ministry Economic Warfare Foreign Office) at some length. In general introductory [Page 908] conversation Villiers expressed considerable exasperation over delay of US in adopting “Rubin approach” in contrast with ready British and French acceptance. Playfair emphasized that differences between us have been as to tactics and not as to objectives. He said British have felt that approach should be made to neutrals before issuance of vesting decree. He also stressed that primary objective in British view is to get rid of German influence and that while something should be realized question of receipts is distinctly secondary.

I pressed British strongly for immediate adoption of vesting decree pointing out that questions raised by neutral govts as to our legal authority seem to necessitate some action which would provide an answer as a basis for making our approach. Playfair agreed that this argument has validity. He finally admitted that British Commander in Germany had been instructed that if question of vesting decree is raised by US at Coordinating Committee meeting on October 26 he should not object to adoption of decree.31 Playfair said the wording of decree is an entirely separate matter and thought it should be possible to reach agreement on the wording in legal directorate. He made clear that while British would agree they are not convinced this is proper action although he admitted that something must be done to resolve present stalemate.

With reference to sanctions Playfair and Villiers both thought this is matter to be considered in light of answer to our notes and circumstances prevailing at the time. I pointed out that it was hardly wise to initiate a program without some idea of what we shall do if neutrals refuse to agree. Villiers suggested that a flat refusal is unlikely and thought it hopeless to raise a hypothetical question and to get any answer in the British Govt as to what might be done under circumstances which cannot readily be envisaged. He asked what form of sanctions we would propose and pointed out that British financial position vis-à-vis neutrals is not such as to make pressure through financial measures very useful. He said flatly British would not cut off coal to Switzerland or Sweden in order to get cash. I pointed out that there are various means of exerting pressure and that the question was not one of getting cash but of getting rid of Germans. Finally in response to direct question as to whether British Govt would be willing to exert pressure on neutrals Playfair and Villiers said that while they are without authority to commit [Page 909] British Govt they felt that the answer was “in principle yes” for the purpose of getting rid of German influence. They made clear that their feeling is that compromises would have to be made in practice regarding the actual disposition of German assets as between the neutrals and the Allies. I pointed out that it makes a great deal of difference what kind of compromise is proposed and referred to the disagreement which has arisen regarding the Italian war debts to Switzerland. Neither Playfair nor Villiers was familiar with this matter but agreed that subject was one on which no compromise could be made.

I pressed very hard for the initiation of some consideration as to what can be done by way of putting pressure on the neutrals. Villiers was very stubborn in his insistence that this would not be useful but I think Playfair agrees to necessity. I will discuss the matter privately with him and urge again its importance. British urge that notes to neutrals be presented as soon as possible and felt that best approach was on apparently already previously suggested point, drafting by British and US Missions in neutral countries with reference to London and Washington. They said their missions are already at work on this and urged that we instruct ours to collaborate with them. They hoped that Oliver32 and Baker33 might be able to discuss text of notes and suggested that they come up to London from Paris for a day or so for this purpose. [Reinstein.]

  1. Jacques Reinstein, Associate Chief, Division of Financial Affairs; Economic Adviser, U.S. Delegation, Council of Foreign Ministers, September 11–October 2, 1945.
  2. For discussion of the decree at the Sixteenth Meeting of the Coordinating Committee, see telegram 869, October 28, 1 p.m., from Berlin, vol. iii, p. 887; approval was given by the Control Council at its Tenth Meeting, October 30, as reported in telegram 896, October 31, 6 p.m., from Berlin, ibid., p. 848. For text of Control Council Law No. 5, Berlin, 30 October 1945: Vesting and Marshalling of German External Assets, see CC Official Gazette, No. 2 (30 November 1945), p. 27, or Department of State publication No. 2630, United States Economic Policy Toward Germany, p. 88.
  3. Covey T. Oliver, Associate Chief, Division of Economic Security Controls; Counselor, U.S. delegation, Paris Conference on Reparations, November–December 1945. For documentation on this Conference, see vol. iii, pp. 1169 ff.
  4. George W. Baker, Assistant Chief, Division of Economic Security Controls; Chief of the External Assets Division, U.S. delegation, Paris Conference on Reparations.