Preparations for the conference on Trieste between the United Kingdom, the United States, and Yugoslavia began almost immediately after the Yugoslav Government’s acceptance of the idea on January 11.
In a letter of January 12 to Julius C. Holmes of the Bureau of European Affairs, Ambassador Riddleberger said that he hoped Holmes was going to head the United States negotiating team if the talks were to take place in London, although he said he was curious as to how secrecy could be maintained if the “well-known face of Holmes appears in that city.” Riddleberger indicated that the Yugoslav Government was very interested in knowing whom the United States was sending as the negotiator, because, in addition to Yugoslav sensitivity concerning rank, it wished to find out if the United States wished to make a real negotiation of the talks. Riddleberger also remarked:
“I think the Yugoslavs are vastly pleased with the proposal and want to get down to business as soon as possible. Therefore, I hope we shall come prepared to discuss with them a final solution to Trieste. They are not being sticky about the form, although they realize perfectly well that at some point we must go back to the Italians with a proposal.” (750G.00/1–1254)
On January 12, Assistant Secretary Merchant wrote to the Ambassador in Austria, Llewellyn E. Thompson, and apparently raised with Thompson the possibility of his heading the United States negotiating team in the Trieste talks. No copy of this letter was found in Department of State files, but in telegram 2039 to Vienna, January 15, Merchant asked Thompson to stand by for a possible urgent request to return to Washington for consultation and the “special temporary assignment about which I wrote you Jan. 12.” On January 16, the Department of State requested Thompson to return to Washington for consultation as soon as possible. He left Vienna on January 22 and arrived in the United States the following day.
In a letter of reply to Riddleberger, January 19, Holmes said that Secretary Dulles thoroughly concurred in Riddleberger’s opinion [Page 366] that Holmes was too familiar a figure in London to conduct the secret negotiations on Trieste and in view of the need to maintain secrecy, it had been decided to send Thompson. He also said that, because a number of Department of State officials would soon leave for the Berlin Conference, it was felt that Holmes should remain in Washington and cover that end of the Trieste negotiations. Holmes mentioned that Thompson was being called back to Washington ostensibly for consultation on Austrian matters and would use the cover story that he was stopping over in London to get some new clothes and to talk with the Foreign Office regarding Austrian matters on his way either to Berlin or Vienna. (EUR/RA files, lot 54 D 514, “Trieste, 1954”)
Another reason that Holmes was not selected as the chief United States negotiator in the talks is that Secretary of State Dulles was aware, as early as September 1953, that the Justice Department was contemplating legal action against Holmes on charges of defrauding the United States Government in surplus ship transactions. Dulles, however, was able to persuade Attorney General Brownell to delay taking action against Holmes until early 1954. Memoranda of telephone conversations between Dulles and Brownell regarding Holmes, on September 11, October 5, and November 2, 3, 19, and 20, 1953, are in Eisenhower Library, Dulles papers, “Telephone Memoranda—General.” On February 23, 1954, the Department of Justice announced that Holmes, along with 17 other persons and 7 corporations, were being charged with defrauding the United States Government in surplus ship deals. Holmes had been given advance notice that he was to be indicted and had written to Under Secretary Smith on February 18 saying that he had done nothing illegal or improper. However, he expressed his belief that it was not in the interest of the United States Government for him to continue at his post. On February 23, the Department of State announced that Holmes had been granted a leave of absence. (New York Times, February 24, 1954, pages 1, 15)
There was also considerable discussion among the three participating countries as to which city would be the best location for the talks. The Department of State preferred to hold the talks in Washington rather than in London because it believed that there was a better chance for secrecy in Washington, the Yugoslav Ambassador in London held extreme personal views on the Trieste issue, and an agreement worked out in Washington would be easier to present to the Italian Government than one worked out in London. (Telegram 811 in Belgrade, January 12; 750G.00/1–1154) The British Government agreed with this preference. However, the Yugoslav Government indicated its preference for London because of practical considerations of proximity and travel, its belief that [Page 367] Ambassador Velebit was better informed on the Trieste issue than Ambassador Vladimir Popović in Washington, and the fact that Ambassador Popović was planning to leave Washington in March as a result of his election to the Federal Assembly. (Telegram 863 from Belgrade, January 15; 750G.00/1–1554) On January 16, in telegram 825 to Belgrade, the Department of State expressed its approval for London as the site of the talks and suggested February 2 as the opening date. (750G.00/1–1554) On January 18, in telegram 870 from Belgrade, Ambassador Riddleberger said that the Yugoslav Government had accepted the February 2 date. (750G.00/1–1854)