Foreign Relations of the United States, 1955–1957, Central and Southeastern Europe, Volume XXVI

128. Memorandum of a Conversation, Department of State, Washington, July 17, 1957¹

Washington, July 17, 1957

SUBJECT

• Return of German Assets

PARTICIPANTS

• Ambassador Krekeler, German Embassy
• The Secretary of State
• Mr. Douglas Dillon—W
• Mr. Raymond E. Lisle—GER

Ambassador Krekeler, who called at his request, delivered to the Secretary a letter from the Foreign Minister thanking the Secretary for his message on the occasion of the Stinnes award. A copy of the letter is attached.²

Ambassador Krekeler then turned to the subject of German assets. Nothing had given him more trouble in the seven years of his service in the United States. Several years ago five Bundestag Deputies had formally complained to the Chancellor that the Ambassador was not sufficiently active in pressing the German case for return. This was the only time a complaint had ever been made against him.

The coming election is of tremendous importance, he said. The Communists are making every effort to get the Federal Republic out of NATO. Everything is at stake. The situation is confused by the intense public feeling on the question of atomic weapons and by charges that the Chancellor has failed to reunite Germany. The Chancellor has made headway in recent speeches. However, his election may be jeopardized by failure to achieve a solution to the question of German assets. The issue is a very live one and any failure on the part of the Chancellor will be made a subject of partisan attacks. The SPD would not be satisfied by a limited return up to $10,000. They have never accepted this solution in any way. Professor Baade, an SPD Deputy, has been one of the leading figures in the fight for full return. Therefore, they are in a good position to attack the Chancellor.

On the basis of advice given him by Ambassador Krekeler, the Chancellor has said that the solution worked out should not be a burden on the American taxpayer and in his “good talks” with Mr. Dillon the Ambassador had sought to propose a solution based on that principle.

The Secretary noted that any solution based on the proposals made by the Ambassador would require $100 million of new money. Mr. Dillon was working on the figures to see whether this would be made unnecessary by a more modest return than that contemplated in the German proposals.

The Secretary asked how the Germans viewed the ownership of General Aniline. The Ambassador replied that on the basis of clear instructions he was able to say that General Aniline was not German property and that there was no question of the Germans seeking a return of the value of this property. The Secretary asked Mr. Dillon whether General Aniline was not included in the figures on which he was working. Mr. Dillon replied that they were, but account had to be taken of this in any over-all settlement. Even if the Germans did not consider it their property the Swiss interest must be taken into account.

The Secretary said that a plan based on the German proposals had run into serious difficulties, particularly in view of the necessity for economy. Mr. Dillon, however, was looking into the problem on the basis of figures to be provided by the Attorney General to ascertain whether it would be possible to return more than the $10,000 provided by the present Administration bill without use of $100 million of new money. He was not sure whether this would content the Germans.

The Ambassador made reference to the figure of 97 percent used by the Secretary in his press conference yesterday³ as the percentage of claimants who would be satisfied by a $10,000 limited return. Mr. Dillon noted that this figure had been given by the Attorney General only last week but that the figure we had used in public releases and in our presentations to Congress had been 90%. The Secretary recalled that the Attorney General had said something to the effect that if the amount of return were raised to some higher figure, perhaps, $20,000, the percentage would run well over 98%. The Ambassador thought that the 90% figure was the more correct one but it must be remembered that this did not include the shareholders in corporations, the American properties of which had been vested.

The Ambassador had been asked to return to Germany and report to his Government on August 1, and hoped therefore that he could have a favorable report by July 30. The Secretary replied that every effort was being made to work out the solution promptly and that it was hoped that the necessary figures would be obtained from the Department of Justice today.

The Ambassador stated that although immediate Congressional action would of course be desirable, he recognized this was not possible this year. He was sure that Congress would approve any solution on which the Administration and the Germans agreed. He hoped there could be a very early announcement of such agreement. He would suggest this announcement make clear that hardship cases would receive prompt payment, but that other cases would take longer. This would make possible the use of the money flowing in over a period of time from German repayments on the settlement of its postwar debt. Thus, it would not be necessary to vote a $100 million new appropriation.

Ambassador Krekeler stated that when he had thanked the Attorney General a few weeks ago for all the assistance that he had given him, the Attorney General urged that the Ambassador call on him when he had any problem. If the Secretary thought it desirable he would be willing to go to the Attorney General with the Secretary. The Secretary did not think that was advisable, but if the Ambassador wished to call personally on the Attorney General he saw no objection and the German Government might be pleased by this effort of the Ambassador.

Ambassador Krekeler thought that any doubts the Attorney General might have arose out of the question of General Aniline. He repeated that his Government did not consider this a German corporation or a German interest that could come into German hands. It would be better if it were left out of any arrangement. The Secretary noted this would be difficult, as we consider General Aniline German property and, if any plan based on the German proposals was worked out, the value of General Aniline would have to be returned to the Swiss on the same basis as any on which compensation was given to German claimants.

1. Source: Department of State, Secretary’s Memoranda of Conversation: Lot 64 D 199. Confidential. Drafted by Lisle.
2. Not printed. Dulles’ letter to Brentano, dated June 27, was transmitted to Bonn in telegram 3706, June 27. {Ibid., Central Files, 611.62A231/6–2757)
3. For the transcript of Dulles’ news conference of July 16, see Department of State Bulletin, August 5, 1957, pp. 228–235.