740.00119 P.W./4–1646

Memorandum by the Director of the Office of Economic Security Policy ( Galbraith ) to the Secretary of State

In view of the President’s statement at his press conference a week ago about Mr. Pauley’s current assignment on reparations problems,2 you may wish to mention to the President that the U.S. representative on the Far Eastern Commission is about to submit to the FEC a SWNCC-approved proposal for setting up within the general administrative framework of the FEC a reparations committee to handle reparations from Japan. With the establishment of this committee, the focus of U.S. action on reparations matters will move from Mr. Pauley to the U.S. member of this new body.

This proposal for a reparations committee within the administrative framework of the FEC, composed of representatives of the eleven countries on the FEC and voting by a majority including all four of the major powers, has received the general approval of Mr. Pauley.

It should be noted, however, that the Soviet representative on the [Page 490] FEC has raised questions about the jurisdiction of the FEC over Japanese external assets. Since there is general agreement that any reparations body must also consider the disposition of external assets, informal negotiations are proceeding in an attempt to persuade the Soviets that the present U.S. proposal is in substance the most satisfactory one for handling the problem.

However, the question of whether the reparations committee should or should not be within the framework of the FEC does not appear to be vital to the U.S., and adjustments may be made in the present proposal in order to secure prompt action on removals of equipment to claimant countries.

  1. For statement on April 11 regarding Ambassador Pauley’s work on the Reparations Commission, see Public Papers of the Presidents of the United States, Harry S. Truman, Containing the Public Messages, Speeches, and Statements of the President, January 1 to December 31, 1946 (Washington, Government Printing Office, 1962), p. 194. For President Truman’s announcement at his press conference on May 2 regarding Ambassador Pauley’s trip to the Far East, see ibid, p. 224, or Department of State Bulletin, May 12, 1946, p. 821.