740.00119 EW/10–347
Memorandum of Conversation, by Joseph A. Todd of the Division of Occupied-Area Economic Affairs
| Participants: | Mr. Hubert Penson—Minister, Advisor to the Ambassador on Germany, British Embassy. |
| Mr. A. F. Geolot, Second Secretary, British Embassy | |
| Mr. C. Tyler Wood—A–T | |
| Mr. Covey T. Oliver—OE | |
| Mr. Joseph A. Todd—OE |
Messrs. Penson and Geolot called to present the views of the United Kingdom with reference to the United States proposals23 discussed by Ambassador Douglas with Foreign Secretary Bevin in London last week. These proposals were to the general effect that further deliveries to the Soviet Union of capital equipment as reparation would not be made pending the outcome of the forthcoming CFM meeting, and that no deliveries would be made thereafter to the Soviet Union if agreement was not reached on the question of economic unity for [Page 1125] Germany. The Foreign Secretary was also informed that the United States was considering the possibility and desirability, under the latter circumstance, of including Albania, Czechoslovakia and Yugoslavia under the ban against further deliveries, despite the status of these countries as signatories to the Paris Reparation Agreement.
The British Embassy representatives stated that their Government viewed these United States proposals with alarm and referred to the commitment given by the Secretary of State at Moscow that reparation deliveries under a revised level of industry would be resumed to both Eastern and Western nations. They went on to point out the probable undesirable effect on the CFM discussions if the Soviet Union should be in a position to charge bad faith as a result of delaying tactics which were clearly revealed as such. While the UK is willing to consider the prohibition of further deliveries of capital equipment to the Soviet Union if the CFM fails to reach substantial agreement, she is very anxious to proceed rapidly with the announcement and implementation of the reparation program under the revised level of industry.
During the discussion it was made clear that the allocation of capital equipment between the USSR and IARA would not take place before approximately December 1, even if there were no delays of entirely usual origin, and that actual dismantling and removal in any appreciable volume could not, therefore, be expected before the end of the year.
Mr. Wood pointed out that there appeared to be general agreement between the two Governments regarding the desirability of having the record clear at the time the CFM was discussing economic unity and, because of the time table referred to above, little disagreement as to the practical results which might be expected. Before confirming officially that the US was prepared to agree allocations before or during the CFM meeting in the event this came about in the normal course of events, he wished to consult Assistant Secretary Saltzman and, possibly, Undersecretary Lovett.
In addition to the question of making allocations and resuming deliveries, the UK representatives also stated it appeared desirable to emphasize at the time the new reparation program was announced that the US would make every effort to maintain the food ration in the bizonal area and to assist the Germans in reviving their economic activity conditioned upon the acceptance by the Germans of the reparation program and their full cooperation in its implementation. Mr. Wood stated that the Department wished to take this question under consideration and informed the UK representatives that he would get in touch with them at a later date.
[Page 1126]The possibility that the existence of official allocations might make it difficult to halt deliveries to the Soviet Union if this course proved desirable was discussed. There was general agreement that the political circumstances attendant upon failure to reach agreement on economic unity would be sufficient basis for nullifying allocations even if they have been officially confirmed.
The British Embassy representatives stated that their instructions did not refer in any way to the suggestion that deliveries to Albania, Czechoslovakia and Yugoslavia might also be halted.