740.00119 EW/12–2947

Memorandum of Conversation, by the Acting Secretary of State

Participants: The British Ambassador [Lord Inverchapel]
Mr. Penson
Mr. Lovett
Mr. Wisner, A–S
Mr. Wailes, BC

The British Ambassador called by appointment at 3:30 today and left with me the attached Aide-Mémoire43 concerning reparations deliveries to the Soviet Union and certain members of the IARA group. After giving me an opportunity to read the Aide-Mémoire the Ambassador asked for an indication of our current views on the subject.

As background I pointed out that this matter had recently come very much to the fore during a debate on the floor of the Senate concerning the Department of the Army’s request for a deficiency appropriation for occupation expenses in Germany and the other occupied areas. An attempt had been made to write into the Appropriation Bill a clause which would prevent the use of any of the appropriated funds for the compensation or other expenses of personnel engaged in the dismantling of non-military plants in the bizonal areas of occupation in Germany. Due to the strong stand and prestige of Senator Vandenberg, he had been able to effect the withdrawal of this crippling amendment. In order to accomplish this result it was necessary for [Page 1141] Senator Vandenberg to give the firmest assurances to the Senate that the entire dismantling and reparation program would be the subject of an exhaustive investigation by the Senate Foreign Relations Committee as soon as the Congress reconvenes. It had also been necessary for the Senator to say that he had been advised by State Department spokesmen that the Department is seeking adequate arrangements with the British regarding any further shipment of dismantled plants to the East, or words to that effect. Later in the same day the Department had issued a very brief statement to the press in approximately the same language.44 It was obvious that there was a very strong sentiment in the Congress against the making of further reparations deliveries by the United States under the Potsdam Agreement inasmuch as the Soviet Union had so flagrantly violated various provisions of this agreement.

I then pointed out that it would seem from reading the attached Aide-Mémoire that the British Government had overlooked a major factor which considerably colored the thinking of our Congressmen on the subject. This is the fact that the United States has recently agreed to take over a substantial portion of the United Kingdom’s dollar commitments in the bizonal area. This added expense to the American taxpayers led many members of Congress to feel that we could not afford to continue to make reparations deliveries of plants equipment and material which might be used to lessen U.S. dollar expenditures.

The Ambassador then pointed out that at the bottom of page 2 of the attached Aide-Mémoire it was indicated that reciprocal deliveries from the Soviet Union are now being made and inquired whether, in view of this fact, we were still not prepared to go along with the Potsdam decisions. I replied that we had no information of actual receipt of any such deliveries in the American Zone, but that we would send a telegram immediately to ascertain the current situation. I said that it might be somewhat easier to convince Congress that we should continue certain reparations shipments if they were on a “barter basis” and in return for countervailing deliveries by the Russians. I indicated, however, that we were still considering the whole subject of our reparations policy and that we would reach no final decision until after the return of the Secretary to Washington.

The Ambassador then raised the question of our reparations policies toward the IARA nations and I pointed out that this aspect of our reparation policy is likewise still under study but that I felt somewhat more optimistic about the possibility of continuing deliveries to [Page 1142] all the IARA countries, as distinguished from the Soviet Union and Poland.

Finally, the Ambassador inquired what our views would be toward Britain’s proceeding with reparations deliveries without similar action on our part. I replied that frankly I felt that such action by the UK would perhaps cause the Congress to inquire why the British Government should continue to honor commitments made at Postdam and not those in connection with the American loan, et cetera. I pointed out that there was the obvious answer that in one case the British Government was in a position to render specific performance, and in the other it could not. This, however, would be hard to get across to the American public and Congress, and I felt, therefore, that there would undoubtedly be repercussions during the hearings and debate on ERP.

Lord Inverchapel said that he appreciated receiving these views which he would send on to London. At the same time he would ask his Government to furnish him with information on the extent of reciprocal deliveries from the Soviet Union.

Robert A. Lovett
  1. Supra.
  2. The text of the Department’s press statement, dated December 19, is quoted in telegram 2529, December 30, to Berlin, infra.