893.00/3–746: Telegram

The Secretary of State to the Chargé in the Soviet Union (Kennan)

416. Dept desires that you present the note to the Soviet Govt substantially in the form contained in telegram no. 392, Mar 5, 8 pm. At the same time and in such manner as you deem appropriate (as an addition to the note or as a covering letter) you should express the following views to the Soviet Govt;

Subsequent to preparation and dispatch of the foregoing (or attached) note, the US Govt received the Soviet Govt’s reply to this Govt’s previous note in regard to disposition of industrial enterprises in Manchuria, and regrets to state that it does not find the Soviet note responsive. The statements in the Soviet note substantiate the concern expressed by the US Govt but they “do not in any way invalidate the position taken by this Govt.

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The US Govt regards as unprecedented and inequitable the Russian contention that enterprises in Manchuria which served the needs of the Jap Army constitute trophies of the Red Army. Jap external assets in the form of industrial enterprises in Manchuria are on the territory of a friendly Ally which for 8 years resisted Jap aggression. The US Govt can find no justification for the Russian contention that consideration of those industrial enterprises as reparations is a subject separate from the question of war trophies. As a matter of fact, the US Govt has already informed the Chinese Govt, and the Soviet Govt, of its position that title to all Jap-owned property in countries at war with Japan and invaded or occupied by the Japanese shall be taken by the country in which such property is physically located with its value charged against that country’s reparations claim. It hopes to receive Soviet concurrence in this position.

With regard to violation of the principle of the Open Door, the US Govt has not made reference to the establishment of an exclusive Sino-Soviet control over all industrial establishments in Manchuria, but it has expressed the belief, and continues to believe, that Sino-Soviet agreements for the operation of an important portion of Manchurian industrial enterprises entered into under present circumstances would be in disregard of the interests of the US and other Allies, and would operate to discriminate against Americans and the nationals of other countries interested in the industrial development of Manchuria.

The US Govt would consequently appreciate receiving a reply from the Soviet Govt in regard to the issues raised in its attached note as amplified above.