740.00119 PW/7–2848

Memorandum of Conversation, by Mr. Robert A. Fearey of the Division of Northeast Asian Affairs

confidential
Participants: Mr. H. A. Graves, Counselor, British Embassy
Mr. W. W. Butterworth, Director, FE
Mr. J. M. Allison, Chief, NA
Mr. R. A. Fearey, NA

Mr. Graves called on Mr. Butterworth at 2:15 P. M. to leave the attached aide-mémoire,1 in which the British Government states that it is prepared to accept the schedule of reparations shares of Japanese industrial assets presented to the FEC by the US in November, 1947, provided that certain changes informally proposed by Mr. Edwin Martin in London last March,2 and specifically stated in the aide-mémoire, are made in the schedule. Mr. Graves explained that Ambassador Franks had planned to discuss this and certain other matters directly with Mr. Lovett, but for various reasons had asked him, Mr. Graves, to see Mr. Butterworth on this question instead.

By way of background, Mr. Graves recalled that Mr. Martin had stated informally last March that the US Government might be willing [Page 992] to relinquish 5 percent of its total share of 28 percent for division among Great Britain, France, the Netherlands and India as an inducement to these countries to approve the US schedule of shares. Under the plan the US, in accordance with the earlier offer, would divide 18 percent of the 23 percent left it among the ten other reparations recipients, leaving it a final share of 5 percent. Mr. Graves stated that the Treasury had with some difficulty been persuaded to accept this proposal, on the condition that the final UK share should total not less than 16 percent, made up of at least 12 percent of the initial schedule plus the UK’s pro rata share, estimated to be 4 percent of the total, of the 23 percent which the United States (18%) and Australia (5%) had offered for redistribution.

Mr. Butterworth stated that the British note was very helpful, and inquired whether Australia had been approached to determine whether its offer to redistribute 5 percent of its share remained in effect under the new apportionment. Mr. Graves stated that he did not believe that Australia had been specifically approached in the matter but that he was quite certain that its offer would remain.

Mr. Butterworth then inquired whether it had been decided how the UK’s share would be divided among the UK, Burma, Malaya and Hongkong. When Mr. Graves replied that it had not, although it was expected that the UK would take very little for itself, Mr. Butterworth raised the question of whether Burma with its newly established independence might not later voice dissatisfaction with the share allotted it and assert a claim of its own, particularly if it should have been admitted to the FEC. Mr. Graves stated that the UK remained responsible for Burma in such matters, and that he was confident that Burma would be satisfied with the share given it. He agreed that Burma would probably gain the right to speak for itself on the subject if admitted to the FEC, but considered that there was little chance of Burma’s being taken into the FEC.

Mr. Butterworth then inquired how Pakistan’s share was being allotted. Mr. Graves replied that Pakistan’s share was India’s, not the UK’s, responsibility, and that India had stated that it would take care of Pakistan out of its share. It was suggested, however, that if Pakistan were to be admitted to membership in the FEC, which Mr. Graves thought most unlikely, it might well assert the right to claim its own reparations share. Mr. Butterworth concluded by stating that the question of Burma’s and Pakistan’s status as reparations claimants, particularly if they should be admitted to the FEC, clearly required clarification, and that he intended to request the Legal Adviser’s opinion in the matter.

  1. 41/81/48, July 28, not printed.
  2. See memorandum of March 1, p. 950.