871.6363/8–2845: Telegram

The Secretary of State to the American Representative in Rumania (Berry)

462. Objective of U.S.-Soviet Commission93 of experts should be to determine damages sustained by American interests from seizure of materials, equipment and supplies. Accordingly, Commission should ascertain (a) replacement value of everything seized, and (b) damages to normal operations resulting from shortages. In addition to establishing and agreeing upon the facts it is hoped that the Commission will be able to prepare agreed recommendations for settlement to be referred to the two Governments. (Deptel 412, Aug 10 and urtels 570, Aug 2194 and 589 [587], Aug 2395).

It is suggested that the following facts should be established:

1.
Inventory of materials and equipment in stock at date seizure by Soviets commenced, by country of origin, and segregated as to receipt prior to and after June 22, 1941. To this should be added materials received during the period seizures were continued and also materials seized directly from suppliers which were owned by American interests. This category would include all inventory items such as oil field materials, automotive equipment, tank cars and all other movable assets.
2.
A similar inventory of refined products in bulk and in packages.
3.
Corresponding inventories and lists of all items taken by the Soviets during the period seizures were in progress.
4.
Corresponding inventory of materials used by the companies during the same period.
5.
Closing inventory of materials on hand at some agreed date after the seizures ceased.
6.
List of capital assets dismantled and removed, including such items as compressors, gasoline plants, motors and refinery equipment [Page 658]showing location from which items were taken, date of removal, book value, and estimated replacement value.

In estimating value of materials seized, consideration should be given to normal sources of replacement. Supplies of tubular goods from US can probably not be expected before next winter, and from Germany and Czechoslovakia before opening of Danube next spring.

In estimating damages to operations resulting from shortages, basis should be the development, production and rehabilitation programs operators would have normally carried out had removed materials been available. Specific items are:

1.
Higher costs of transportation due to loss of automobiles and trucks.
2.
Delays and losses in drilling due to lack of proper casing, use of over-age drill pipe, etc.
3.
Delays and losses in refinery operation and rehabilitation due to lack of equipment.

Equitable settlement requires either return of equipment taken in equal condition or replacement with material of equal quality. Compensation for material not replaced and for other damages sustained should be paid in dollars.

Byrnes
  1. i.e., the Oil Commission.
  2. Telegram 570, not printed; it reported that the first meeting of the American-Soviet Oil Commission was held on August 20 and was primarily concerned with the establishment of an agenda for discussion (871.6363/8–2145).
  3. Not printed; it reported that American-British discussions had preceded the first meeting of the British-Soviet Petroleum Commission on August 18; the Americans and British had agreed among themselves that Commission discussions should be confined to factual data concerning the amount of oil equipment available in Rumania prior to the beginning of Soviet removals and the amount of such removals by the Soviet authorities. It was further reported, however, that at the second meeting of the British-Soviet Commission, August 22. the Soviets had requested detailed information on oil equipment stocks for the entire 1939–1944 period. (871.6363/8–2345)