740.00119 EW/1–1948

Memorandum of Conversation, by the Secretary of State

Participants: The Secretary
The British Ambassador, Lord Inverchapel
Mr. Loy Henderson, NEA
Mr. John Hickerson, EUR

The British Ambassador came in to see me by appointment made at his request this afternoon. In the course of a conversation covering several topics the Ambassador raised the question of the resumption of German reparations deliveries.

I informed the Ambassador that this question is now being considered by the United States Cabinet but thait I hoped that after the next Cabinet meeting and early consultation with our Congressional leaders, to be in a position to tell him definitively what our policy will be in this matter.

I told the Ambassador that our present thinking was that we should be prepared to deliver to the Soviet Union reparations in return for deliveries by the Soviet Union up to the 15 percent figure agreed on at Potsdam but that in view of the Soviet violations of the Potsdam Agreement we would encounter great Congressional opposition to delivering the other 10 percent. I stated that our difficulties will be intensified if the British Government resumes deliveries to the Soviet Union. I pointed out that the appropriation bill for Bizonia will be under consideration in Congress in the next few days and in this bill the United States will provide over $600,000,000 of the financing while the United Kingdom will furnish about $70,000,000.1 said that this new allocation of financial responsibility may well encounter increased opposition if the British Government resumes reparations deliveries to the Soviet Union and the United States Government decides not to do so. I added that, as the Ambassador is aware, the question of resumption of plant deliveries to the Soviet Union from the United States Zone in Germany is being examined by Congressional committees from the standpoint of its effect on the European Recovery Program.

In any event, I told the Ambassador that I would let him know what our final decision is as soon as it is possible for me to do so.