Foreign Relations of the United States, 1948, Germany and Austria, Volume II

740.00119 EW/6–948: Telegram

The Ambassador in the United Kingdom (Douglas) to the Secretary of State

top secret
urgent niact

London, June 9, 1948—9 p. m.

2557. For Saltzman from Douglas. Deptel 2123, June 7.¹

1. Discussed with Strang this morning question of reparations, and suggested to him that the matter of delivery of 25 percent share of reparations to Soviet be the subject of discussion after we have a better opportunity to evaluate the Soviet response to results of London talks on Germany. Strang told me he thought there was little chance that Bevin would agree to this suggestion, but that he would put the matter to him. Subsequently, Strang informed me that Bevin found this unacceptable.

2. Stevens of the Foreign Office called on me at the request of Strang, who was otherwise engaged. I explained to Stevens that were we to agree to the paper as reported in Deptel 2425, June 2,² we would be in a vulnerable position, and that we were, therefore, very reluctant to accept it in its present form.

3. I asked Stevens (being unable to see Bevin on the subject) whether discussion of the disposition of the 10 percent share of Soviet reparations would be held with a view to arriving at a mutually satisfactory agreement. He replied that although he could not give a commitment, he was quite certain that Bevin certainly contemplated an objective review of the subject for the purpose of arriving at a mutally satisfactory arrangement. (This confirms earlier impression I gained from Bevin.) Without making any concessions, I suggested, after discussion with and modification from Stevens, without any pride of authorship, the following agreed minutes under paragraph 2 of the paper reported in Deptel 2425, June 2:

(a) “By consultation is meant that within the framework of these instructions, and in particular as regards paragraph XIV of this document, the commanders-in-chief shall be in agreement as to procedures for notification to the Soviet and IARA countries. It shall also be applied to the selection of equipment pending agreement on the question referred to in 3. (b) of this document.

(b) “It is agreed that no action shall be taken in regard to retroactive reciprocal deliveries or the disposition of the remaining 10 percent until agreement on these two matters has been had; provided that if, at the expiration of six months, no agreement has been negotiated, each commander-in-chief may in respect of these two matters act independently.”³

4. You will note that our position on the entire paper is reserved and that in respect of 3. (b) above no concession has been made on retroactive reciprocal deliveries. It is my judgment, however, that if the British agree to this minute, we should drop the question of retroactive reciprocal deliveries for reasons which General Clay has stated and in which I concur.

5. The effect of the agreed minute 3. (b) above is:

(a) To place a premium on arriving at an agreement, and,

(b) If no agreement is arrived at, to make impossible the delivery of the 10 percent share for a period of six months, and thereafter to leave the matter to the discretion of each military governor acting in behalf of his government. Thus, the British are left in a naked position for six months, and we are left in an equally naked position thereafter in the event no mutually satisfactory arrangement is made.

6. I strongly suggest that the idea reflected in the agreed minute in 3. (b) above be agreed to:

(a) Because I believe it is the best we can obtain from the British, if indeed they will agree to it, and of this I am not certain; and

(b) Because it will permit a speedy settlement which is urgent; first, because of the support it will give to Bidault in the forthcoming debate in the Chamber Friday; secondly, because there have been many leaks with widespread publicity on the subject of reparations; and thirdly, because unless we dispose of the matter promptly, the Soviet may ask for a reconvening of the ACA, in which event the allocation of capital equipment for the IARA countries would again be postponed; and

(c) Because it puts aside an issue which if not resolved in the near future by negotiation may be resolved within the six-months period by the compulsion of events.

7. In looking over the first sentence of paragraph XIX, the British suggest the following: “You should consult with your colleagues as to any special steps for presenting the above procedure to the German people, and if these are deemed necessary, agree upon the required steps.”

8. Will telephone you about 6 p. m. your time tonight.

9. For General Clay: Will telephone you in the morning for your comments.

Sent Department as 2557; repeated Berlin for Clay and Murphy as 186.

Douglas

1. Supra.
2. Ante, p. 754.
3. The draft interpretative minute quoted here was revised during subsequent discussions between Douglas, Strang, and Massigli and their advisers. For the final agreed version of this minute, see Part II of the Instructions to the United States, United Kingdom, and French Military Governors for Germany, p. 772.