740.00119 Council/3–2147: Telegram

The Acting Secretary of State to the Secretary of State at Moscow

top secret

611. Secdel 1361. Personal for the Secretary. Mr. Pauley has requested Dept to transmit following message to you:

“Have been greatly impressed by reports of Molotov’s current insistence on 10 billion reparations. Went through this entire argument with Maisky and others at Moscow meeting in 194545 and later at Potsdam.

Feel sure Stalin, Molotov and other Soviet officials firmly committed internally budgetwise and to their people with regard to obtaining reparations having a monetary value of 10 billion dollars, consequently, do not believe they can be dissuaded from that point, if it involves public exposure of their previous inaccuracies.

However this problem can be solved by different methods of valuation. So long as they are permitted to value their reparations in amount of 10 billion whether the value is fictitious according to US standards or not, they will be able to say they have maintained their long advocated position of obtaining 10 billion reparations. Respectfully call your attention to the fact that USSR and Poland will receive more than this in fee ownership of land etc. east of Oder and Neisse Rivers.

If in addition what they get from Germany is valued at 10 billion through their own methods of valuation, believe it immaterial to fix total monetary value of reparations to be removed from Germany.

Am convinced from previous contacts present USSR leaders will lose face if they back down on 10 billion reparations figure.

Believe sincerely you are doing marvelous job reflecting untold credit on US and yourself. Am making above suggestion in hopes your splendid record will not be endangered by Russian adamance on a point that can be handled in manner suggested above.”

[Page 396]

While not disputing Pauley’s thesis as stated in para two, Dept questions whether in fact reparation assets obtained by Soviets, including those east of Oder-Neisse line can be valued in manner producing total of ten billion dollars without using methods of valuation which cannot stand close scrutiny. More important, acceptance of thesis that Soviet Union is in fact entitled to ten billion reparation involves also acceptance thesis IARA countries are entitled to same amount. Dept sees no conceivable means of valuing past and future reparation to IARA countries at total even remotely approximating this amount.

  1. For documentation on the meetings in Moscow during June and July 1945 of the Allied Commission for Reparations, see Foreign Relations, 1945, vol. iii, pp. 1169 ff. and Foreign Relations, The Conference of Berlin (The Potsdam Conference), 1945, vol. i, pp. 510548 passim.