Foreign Relations of the United States, Diplomatic Papers, 1945, Europe, Volume IV

740.00111 EW/8–2345

Memorandum of Conversation Between the French Minister for Foreign Affairs (Bidault) and the Secretary of State, Held in Washington, August 23, 1945⁹⁰

Washington, August 23, 1945

[Translation]

Mr. Bidault having expressed the desire to discuss the German questions first of all, Mr. Byrnes pointed out that the communiqué published on the Potsdam decisions had passed over only one question in silence: that of the German fleet. Russia and the United Kingdom considered this fleet spoils of war and Russia asked for a third of it. This was agreed to but was not made public for fear the crews might be tempted to scuttle the ships. Mr. Byrnes could communicate the exact text of the agreement reached on this point. With respect to reparations, the American Government had prepared a plan in which the German economy was regarded as forming a whole.⁹¹ Germany was to keep enough machines for the strict needs of its economy; the rest were to be distributed as reparations. However, the American delegates found at Potsdam that the Soviet Government’s concept of spoils of war differed greatly from that of the American and British Governments. Without notice, the Russians removed machines which could not be considered spoils of war, machines not used in the manufacture of weapons, furniture, and goods of all kinds. This made any agreement on the definition of spoils of war difficult, if not impossible.

It was not possible to determine the value of the property removed by the Russians, which, according to the Americans, should be applied to reparations.

The delegates had expected that the Russian Occupation Zone would supply about 42% of the total amount of reparations.

The Soviet Government declared—with some justification—that in the Crimea President Roosevelt had agreed to allow it 50% of the reparations. However, if the total of the available assets were thus reduced and if the Russians received 50%, there would remain very little for the others. The Russians thought that only 40% of the reparations, not 42%, could be found in their zone. They also declared that, since the Poles were operating the Silesian mines, the coal extracted from them was Polish and not Russian. The American delegation replied that this coal was in the Russian Zone and should be included in the assets available for reparations.

It was certain that the Soviets needed machines. They wanted very much to obtain part of the heavy equipment of the Ruhr.

It was certain, in any case, that at Yalta President Roosevelt did not agree explicitly to the percentage of 50% of the reparations for the Russians, or to the lump-sum figure of 20 billion dollars. According to the Protocol, the American delegation had accepted the proposal only as “a basis for discussion.” The Russians sincerely believed that the agreement was concluded, and lengthy explanations were necessary to make them understand the difference.

President Truman indicated in a conversation that he would agree to grant the Russians about 50% of the reparations, but he refused to convert this figure into a definite amount in dollars.

The American delegation added that the United States would in any case refuse to do again what it had done after the first war, and that it would not advance a single dollar to Germany to permit the latter to pay reparations to other countries. It insisted that German imports be paid for primarily out of exports.

Mr. Byrnes stated that it was on these bases that the agreement should be concluded if it was desired to have it extend to all the zones, and he hoped that it would operate without misunderstanding. To be sure, the agreement presented numerous disadvantages. However, after two weeks of discussion, it appeared to be the only one possible. Russian losses in men and property were greater than those of any other country, and out of their 50% the Russians would have to make a settlement with Poland. It must be recognized, it is true, that the latter had already taken over Silesia and its mines. The American delegation had become alarmed at the prospect of a shift of population involving 9½ million people, but it was established that most of them had already left, and that only about one and a half million remained.

Mr. Bidault had three observations to make:

1. France had suffered damage twice as serious as in the last war. Yet, immediately after that war she had received 52% of the reparations. This time a settlement had been made without her even being permitted to present any argument. It was a cruel fate, just as detrimental to the harmony between the Allies and the equitable settlement of current questions as to France herself.

2. Paying for German imports out of exports posed a serious problem for France. Coal was for her the chief element of reparations. Not having had an opportunity to present her claims, she was now faced with the prospect of having to pay for German coal in dollars, since it was really only in the United States that Germany would be able to supply her needs. That was a very serious question for the equilibrium of Western Europe.

3. It was not true that France was contemplating mass transfers of the Saar population. She envisaged only a few individual expulsions.

Mr. Byrnes declared that he had not heard it said that France was contemplating mass transfers of population.

With respect to reparations, it was evident that no government endowed with common sense could expect to obtain full compensation for its war losses. The United States had spent 400 billion dollars on the war, and its public debt had increased from 50 to 300 billion. This meant that for years to come the American people would have to pay off this debt. The American Government was not asking for reparations, but it refused to tax the American people so as to send money to Germany to enable her to pay reparations.

As regards imports, the American Government knew that a certain quantity was necessary to maintain the German economy and prevent a bankruptcy which would affect France and Belgium even more than the United States. Now, the only way to pay for imports was to use the proceeds from exports.

Mr. Bidault replied that France had conceived a system which would permit Germany to pay for her imports, but that she had not had an opportunity to have it discussed.

Mr. Byrnes observed that France, which would be represented on the Allied Control Council and the Reparations Commission, would henceforth have every opportunity to present her point of view.

At Yalta the Soviet representatives had suggested the allocation to Russia of a total of 20 billion dollars as reparation, noting that this amount represented but a small part of Russian losses. Mr. Churchill had stated at that time that in his opinion even this limited amount of reparations would never be extracted from Germany, and the Soviet representatives seemed now to have understood him.

However, since Crimea the Russian armies had invaded Germany and seized matériel throughout the zone occupied by them. On the other hand, the American and British Air Forces had destroyed everything not carried off by the Russians.

With respect to coal, it was certain that if more of it was to be got from Germany the food ration of German miners must be increased. A certain amount of Silesian coal was going to Russia and the situation in Berlin threatened to become very bad. That is why the American Government had tried to send coal there. In its agreement on reparation, it had provided for the shipment to Russia of certain machines in the western occupation zone, which the Russians were anxious to obtain, in exchange for coal and foodstuffs to be shipped to this zone by Russia.

Mr. Bidault recognized that reparations never correspond to the losses sustained. What interested France in the matter of reparations was to obtain coal, machinery and labor. If coal was exported instead of being delivered as reparation, it meant that France would actually obtain no reparation except what she might have been able to seize on the spot; that she would in fact be completely excluded from reparation. This was all the more serious for her since the problem of restitution had not yet been settled. This was not the same problem as that of reparation, for restitution should, in her opinion, be given absolute priority. Among the invaded countries France was, so to speak, the only one that had had industrial equipment. But she was now being told that she could not regain possession of the stolen equipment because such equipment was part of the reparation assets. Consequently, if French machines were found in Germany, France could not obtain their return to her, for they would be liable to being shipped elsewhere. The essential points for France were therefore restitution and some assistance which would enable her to dispel the present uncertainty in regard to the three essential elements: coal, machinery, labor.

Mr. Byrnes replied that the Reparations Commission was still free to take decisions relating to coal and that the question was still open. Furthermore, it was certain that if French machines were identified in Germany they were to be returned to France.

Mr. Bidault noted that even if restitution was not prohibited, it was nevertheless true that it had not yet been regulated. In order to make restitution, one must be able to draw up an inventory. This argument was not challenged, but attention should be called to the urgent and serious character of the problem.

Mr. Byrnes stated that the American position in regard to the restitution of identifiable goods was the following: all identifiable gold found in the American Zone would be returned to its lawful owner. Likewise, if a machine was identified by the control authorities as belonging to a given Allied Government, such machine must be returned and would not be included among the assets allocated to reparation.

Mr. Bonnet stressed the importance of this question, especially with respect to Belgian gold.

Mr. Bidault announced that Mr. Rueff, the French representative on the Reparation Commission, was to leave at once for Moscow.

Mr. Byrnes suggested that Mr. Rueff be instructed to raise the question of restitution with the Commission.

Mr. Bonnet added that with respect to coal the question not only of payments but also of the percentage of coal to be allocated to France must be settled. For the Ruhr Basin, as for the other occupation zones, a special privilege had been granted to the Zone Commander in the matter of reparation. Now, the occupation authorities were in touch with the reconstructed Kohlen Syndikat and a strong tendency had naturally appeared in the Syndicate to allocate most of the Ruhr coal to Germany. Before the war the Ruhr produced 140 million tons of coal annually. If Germany should become an agricultural country, she ought to be quite satisfied with 60 to 70 million tons in future, which would permit allocating an appreciable amount of the output to France. In the meantime, it was important for France to obtain an adequate percentage of the coal to be extracted, and for the United States to give her all the support necessary to procure it.

Mr. Byrnes admitted that German coal should be distributed fairly. However, when it was said that Germany was to become an agricultural country, this obviously meant, at most, making her more agricultural than she used to be.

Mr. Byrnes asked further whether France had done all she could to increase the number of her miners.

Mr. Bidault replied in the affirmative. The miners’ rations had been considerably increased. However, it was impossible to prevent them from dividing their supplementary rations with their families. The French were often accused of not working enough. Now, although the miners were fewer in number than their normal force before the war, it was surprising to find that production had now reached 65% of the prewar level in the Nord Basin. In the other mines of continental Europe, with the exception of Belgium, the figure was only about ten percent. During the first period after the liberation the miners worked only three days a week, but the reason for this was the lack of pitwood. The reconstruction work already accomplished by France was quite remarkable: 2500 bridges had been repaired; all the railroad, telephone, and telegraph lines had been put back into condition. In some machine shops and in repairing the electric lines, workers had worked as much as 78 hours a week.

Mr. Byrnes expressed the hope that France, being represented on the Reparation Commission and at the Foreign Ministers’ Conference, would henceforth find herself in a more favorable position.

He asked what the attitude of France would be in regard to the air navigation agreement.⁹³

Mr. Caffery remarked that he had discussed this question with the French Air Ministry, but without result thus far.

Mr. Bidault said that he had examined a long report on the subject and that he thought the French delegation would adopt an attitude in conformity with the wishes of the United States.

Mr. Byrnes considered that from the point of view of communications and trade it would be desirable to reach a decision as soon as possible. For its part, the United States claims no monopoly but merely wants the air routes open to all.

Turning to the question of foreign exchange, the Secretary of State noted that if the present rate of exchange of the franc were maintained the French Government would be obliged to resort to a system of subsidies, which would in turn force the United States, by a law of 1931 [1930]⁹⁴, to increase its customs tariff to offset these subsidies. It was feared that such a system would result in the erection of a veritable tariff wall all around France. For a long time the United States itself had made the mistake of halving too high a tariff. It had now adopted the opposite point of view and the Administration had been supported in this by the Congress. A few industries may suffer from it, but the lowering of customs duties will certainly help to promote peaceful relations with the other Governments. It would be unfortunate if France should isolate herself behind a high wall as a result of maintaining the present rate of exchange.

The Minister of Finance asked Mr. Bidault to postpone for a while the ratification of the Bretton Woods Agreement,⁹⁵ which had been adopted in principle. The purchasing power of the franc was at the moment different from the rate of exchange. That was why the French Government had informed the Government of the United States that it had decided to pay a certain per capita sum to American soldiers in France to enable them to purchase the products they needed, despite the disadvantages of such a system in view of the scarcity of foodstuffs in France. The French Government considered that this gesture was justified by the great generosity shown by the American people toward France and by the part played in the war by the American forces.

The Secretary of State had spoken of a tariff wall that France would build around her. France had no desire to have an autarkic regime or an unhealthy economy. However, as a result of the destruction she had suffered, France needed some respite and must in any case continue to protect a few of her traditional industries, which were in quite a different position from that of the huge American industries. As soon as she could she would adopt a regime of freedom in the modern sense of the word, that is, tempered by discipline.

Mr. Byrnes observed that the allowance given by France to American soldiers showed an excellent intention. But, to speak quite frankly, that decision had been received with apprehension. The United States sincerely desired to aid France. The best way to do this was to grant her loans through the Export-Import Bank and by various other means. But first the American people must understand that it was essential to help France to recover. The American Government must educate the people of the United States in this matter, so that the Congress would authorize an increase in American aid to France and other liberated countries. Now, if the newspapers announced that a bonus was going to be paid by France to American soldiers, who were the highest paid in the world, it was to be feared that the people and the Congress would be much less inclined to grant new credits to a Government which, by such a gesture, seemed to indicate that it had sufficient resources.

Mr. Bidault replied that, since France could not change the rate of exchange, she had thought of this expedient as a courtesy to the American forces in France. He was surprised at the reaction of the Secretary of State, for he understood that the measure had been taken by agreement with competent American officials.

Mr. Bidault added that if it should be necessary to make a new readjustment of the franc exchange rate, it was essential that there should be only one. Furthermore, other States had indicated that they were in no hurry, for their part, to ratify the Bretton Woods Agreement. Lastly, as the Secretary of State knew, elections were soon to be held in France. It was not advisable to complicate the political situation on the eve of these elections by a new devaluation of the franc.

The Secretary of State would fully appreciate the force of the last argument.

Mr. Bidault mentioned that, on the day before, the Secretary of State and President Truman had pointed out that in 1918 Germany remained intact, whereas now she was destroyed. She could nevertheless still constitute a danger. To be sure, it was known that with the atomic bomb fifty kilometers more or less did not greatly change the military situation. The French Government, was, however, impressed by one fact: In accordance with the decisions of Potsdam, which were the result of those of Yalta, Germany had been whittled down in the East on a basis officially temporary but probably permanent in actual fact. Nothing like that had been done in the West. Therefore, to the extent to which Germany still constituted an economic and political unit, her center of gravity would be pushed back toward the West and thus nearer to us. When there were Secretaries of State for the whole of Germany, they would have no authority East of the Oder-Neisse Line. Their offices would be in Berlin, and if their authority extended across the British and French Zones as far as the French frontier, it would mean that the Soviet influence being exerted in Berlin would reach to the Western frontiers of Germany. The French did not want that and thought it was not desirable for anyone. The task would be easy for the Russians, who had cleared their zone of its inhabitants and who would exert their influence through propaganda by using the administrative systems of the other zones. If all the zones had been associated the Western Powers could have won over the Germans to their side, but it was now too late. The East Germans had disappeared and the Russians had a free hand to carry on propaganda in our zones.

Mr. Byrnes thought that the fears expressed by Mr. Bidault were without foundation. If the Russians carried on propaganda in favor of their form of government in the British, French and American Zones, they would probably fail because in these three Zones the Germans were better treated than in the Russian Zone. This was proved by the fact that all those able to leave the Russian Zone had done so. This had, moreover, brought about a serious food problem since the population of the Western Zones had increased while the supply facilities remained the same. One would have to believe that a German family in the Russian Zone would, from Soviet propaganda, take such an interest in the Russian political philosophy as to find more satisfaction in it than in the presence of husbands or sons who had been sent away. A very unlikely assumption. If it could be established that a part of the population had been sent to Eussia, the fact would not be forgotten for a long time. The Secretary of State did not know, moreover, whether this was true, for it was just a rumor.

France seemed to fear that, although all machinery capable of producing war materials had been removed from Germany, she could still manufacture planes, weapons, gasoline for military purposes, etc. It was true that twenty years before hostility had been quickly forgotten and the United States had granted loans to Germany for reconstruction, loans in which, furthermore, France and the United Kingdom had participated. That was a mistake which there was no question of our making again. If we were fools enough to do so, we should deserve the fate that would inevitably overtake us. We had now come to understand that when a war of that kind broke out in Europe we could not remain aloof. The people of the United States were therefore determined to do everything to prevent Germany from rearming. When the occupation of Germany by the Allied Forces came to an end, it would be incumbent on the statesmen to adopt the necessary control measures to prevent the recurrence of German aggression. It might be that the United Nations would supply the necessary inspection and control machinery. Otherwise, the possibility of concluding an agreement among the Powers occupying permanent seats on the Security Council would have to be considered, with a view to organizing the inspection and control of Germany. It would be necessary to be always on the alert against the resurgence of the military power of Germany.

Mr. Bidault did not think that Germany would become a threatening military power for a long time. However, he himself had been a prisoner of war in Germany for more than a year and, in the village where he was, although many families had had members interned by the Gestapo, they had remained completely Nazi. Furthermore, in occupied countries the enemy was always the one on the spot. It was therefore to be feared that a unified Germany would fall under Soviet influence. The French Government saw no objection to the frontier of Poland being fixed at the Oder-Neisse line. As far as France was concerned, she had no desire to annex any German territory, but she noted that a section had been cut off in the East while nothing comparable had been provided in the West.

Mr. Byrnes felt that Poland had suffered terribly from the war and had sustained considerable losses in life and property. She certainly would not be able to obtain from the Soviet Government more than a very small percentage of her losses in the form of reparations. Nor was it proper, moreover, to speak of a Soviet annexation of Germany, since France and Soviet Russia were cooperating in the most friendly way at the meetings of the Five Powers.

To return to the question of Germany, it would seem that there should be a Secretary of State for Railways and Postal Service, whose jurisdiction would extend as far as Saarbrücken, for instance, under the authority of the four Commanders in Chief, while cities like Königsberg, Breslau, Frankfort-on-the-Oder and Küstrin, essentially German cities, would pass under Russian control. Germany was therefore brought back farther west, which was, historically, a misfortune for France. If this westward shifting of Germany’s center of gravity were to continue, France might find herself obliged, though this seemed impossible after the war of 1914 and this war, to resign herself to other attitudes. Mr. Bidault hoped that things would not reach that point, but it was none the less true that to have Saarbrücken regarded as forming part of Germany and administered by a German, while this was not the case of Königsberg and Danzig, was an impossible situation.

Mr. Byrnes could not understand how France could suffer from the fact that Germany’s population had decreased from 65 to 45 million and that there would be a man in Berlin who would administer all the railroads of the shrunken country. France would benefit from having a peaceful Germany producing useful goods. What was needed was, by mutual agreement, to adopt measures to prevent Germany from rearming.

Mr. Bidault stated that there was perhaps no immediate danger of war, but nevertheless the reconstitution of a State that had collapsed might seem, at the very least, premature. There was formerly an agreement to keep Germany in a state of subordination, and if France left five years before the end of the stipulated time, it was because her associates were not willing to remain there themselves. She was now prepared to perform the act of faith asked of her, but she must insist that a section of territory be cut off in West Germany similar to that in East Germany.

Mr. Byrnes did not see how an amputation of the kind demanded by Mr. Bidault could be more effective than the force of the whole world organized in the United Nations. If fifty nations could not ward off the German peril, it was not worth while to organize the United Nations. It was by relying on the joint action of all the nations that the maximum security would be obtained.

The Potsdam Agreement did not contemplate at all the creation of a central German Government. It was only thought that a central administration should be set up for such matters as transportation, currency, etc. As for the actual form of the government of Germany, that was a question that should be reserved for the future.

Mr. Bidault considered that the vital interests of France had thus been prejudiced without French participation and he felt obliged to make the most explicit reservations in the matter.

He had been in San Francisco, where he had done his best in a difficult situation. He was strongly in favor of collective security and France would continue to work for it. He had full faith in the texts, which it had been difficult to prepare, but these texts must further win at least universal and sincere approval. Now when, in San Francisco, France had asked for an inquiry into the Syrian and Lebanese crisis, her request had not been granted. If she was now asking that Germany be moved back from her frontiers, that did not at all mean that she had no faith in collective security, but when she noted that a city like Königsberg had been completely given to Russia, although it had never been Russian, the situation was entirely different, and a precedent had been established.

Mr. Byrnes remarked that it was not a question of setting up a central government in Germany, but only three administrative services. The United Nations gave better guarantees than did territorial adjustments. The fate of Königsberg was, moreover, not definitive and would be finally settled at the Peace Conference.

Mr. Bonnet made it clear that Mr. Bidault’s request did not tend to bring France closer to Germany, but, on the contrary, to move Germany farther from France. In this connection two main questions arose: that of the status of the Ruhr Basin and that of the future status of the left bank of the Rhine.

Mr. Byrnes remarked that the Russians were desirous of seeing an independent Ruhr under Allied control.

Mr. Bonnet replied that France, too, wished to see an international system established in the Ruhr. As for the left bank of the Rhine, she was not asking for a definitive decision at once but only that the present system, that of French occupation, be continued without interference from Berlin. France could not accept the reversion of the left bank of the Rhine to Prussia. For the Ruhr it was certainly possible to organize an international régime assuring the life of that country and giving security guarantees to the western neighbors of Germany.

Mr. Byrnes agreed, but he again mentioned the matter of Russian participation, which seemed to him to be contraindicated.

The conversation was then interrupted, the Secretary of State having been summoned to the White House.

On its resumption, Mr. Byrnes inquired about the present situation of the French merchant marine.

Mr. Bidault said that France was hoping to recover 150,000 tons of tonnage in Indochina. The Allied maritime transport pool had returned a certain number of cargo vessels to her, but she was still very short of passenger steamers, which prevented many Frenchmen then in Africa from returning to Continental France.

Mr. Byrnes called attention to the fact that the United States was going to offer 1500 Liberty ships for sale and that very easy terms would be given to purchasers, particularly by spreading payments over a long period. It would probably be worth while for France to obtain immediately a certain number of these vessels.

The conversation ended at 6:00 p.m.

90. A copy of the French text of this memorandum was transmitted to the Department by the French Embassy.
91. For documentation relating to discussion of the subject of reparations from Germany, see vol. iii, pp. 1169 ff.
93. Apparently reference is to Provisional Arrangement between the United States and France effected by exchange of notes December 28 and 29, 1945; for text, see Department of State Treaties and Other International Acts Series (TIAS) No. 1679, or 61 Stat. (pt. 4) 3474, 3475.
94. See section 303 of the Tariff Act of 1930, 46 Stat. 687.
95. The United Nations Monetary and Financial Conference met at Bretton Woods, New Hampshire, July 1–22, 1944, and formulated the articles of agreement of the International Monetary Fund and of the International Bank for Reconstruction and Development. The agreements were signed by the United States on December 27, 1945. For texts of the agreements, see TIAS No. 1501. or 60 Stat. (pt. 2) 1401, and No. 1502, or 60 Stat. (pt. 2) 1440, respectively. For documentation relating to the Conference, see Foreign Relations, 1944, vol. ii, pp. 106 ff.