Foreign Relations of the United States: Diplomatic Papers, The Conference of Berlin (The Potsdam Conference), 1945, Volume I

740.0011 E. W./6–1845

No. 160
The Acting Secretary of State to the President

secret

[Washington, June 18, 1945.¹]

Memorandum for the President

This memorandum relates to the economic issues which may appropriately be discussed at the coming three-power meeting.

Outlined below is a list of economic questions on which memoranda are being prepared for the forthcoming meeting. You may wish to raise some of these questions, while others on this list may be raised by the United Kingdom or the USSR.

In view of the importance of these questions, it is suggested that at least three representatives of the economic side of the State Department be included in the American delegation.

matters for three-power discussions

A. Germany

1. Treatment of Germany as an economic unit: It is urgently necessary that uniform policies be adopted in all zones with respect to ration scales, industrial and agricultural questions, foreign trade, and currency; and that barriers to the interzonal movement of goods be prevented from arising.

2. German exports prior to the reparation settlement: An agreement should be obtained governing the export of German goods and equipment, which are urgently needed for relief and rehabilitation, in the period before the conclusion of a formal agreement on reparations.

3. Territorial partitions or cessions: We should be prepared to deal with these questions in case they are raised by another government.

4. Permanent economic and industrial restrictions: Although we should avoid, at this time, any commitment on measures involving permanent or indefinitely prolonged controls on German industry, we should be prepared on this question in case it is raised by another government.

5. Establishment of a combined transportation agency in Germany: Since transportation is a key problem which must be dealt with as a matter of top priority, agreement should be sought on the immediate establishment of an inland transportation agency under the Control Council.

6. Establishment of a combined coal agency in Germany: To solve the critical European coal problem, we should press for the immediate establishment of a combined coal agency, under the Control Council, to maximize the production of coal and to distribute it equitably.

7. German property and assets located in neutral and other countries: A three-power understanding is necessary on principles and mechanisms for the control and disposition of this property.

8. Admission of France and possibly other countries to the Reparations Commission: This question may be raised by another government.

B. Austria

1. Financing of Austrian imports: Agreement should be obtained on the principle that the occupying powers should share the cost of initial Austrian imports, and should obtain repayment from the proceeds of Austrian exports.

2. Payment for Austrian exports: Agreement should be obtained on the principle that no goods and equipment, with certain specified exceptions, should be taken from Austria except against payment.

3. Economic and financial assistance to Austria: Plans for the extension of assistance to Austria should be considered as a necessary means of implementing the Moscow Declaration on the restoration of an independent Austria.²

C. Italy

In connection with a re-examination of Italy’s status, consideration should be given to the revision of the economic terms of the Italian armistice³ and to the economic elements in a possible peace settlement with Italy.

D. Eastern Europe

1. Role of US and UNRRA representatives in the satellite countries and of the US members of the Allied Control Councils: We should seek assurances on the freedom of movement of US and UNRRA representatives in Eastern Europe and on full participation of US members in the Control Councils.

2. Utilization of Eastern European production for military and relief purposes: Agreement should be sought to bring the production of Eastern Europe into the general planning of the United Nations for military and relief needs.

3. Treatment of US trade and investments in satellite countries: We should endeavor to obtain equality of opportunity for US business interests in these areas, and an agreement protecting the rights of US property owners.

4. Relief and reconstruction needs of satellite countries: To establish a workable basis for US assistance to these countries, we need an agreement on principles governing the uses of indigenous production, including the question of removal of goods to other areas.

5. Bulgarian reparations to Greece: An agreement should be sought on the necessity for increasing Bulgarian reparations deliveries to Greece.

E. International Organizations

1. Participation in EECE and ECO: We may wish to make further efforts to obtain Russian participation in the Emergency Economic Committee for Europe and the European Coal Organization.

2. UNRRA problems: These include the questions of requirements and surpluses of Eastern Europe, additional contributions to the resources of UNRRA, admission to UNRRA of certain neutrals and other non-participating countries, and organizational matters.

3. The World Federation of Trade Unions: The USSR may raise the matter of relating the World Federation of Trade Unions in some official way to the General International Organization. The status of the International Labor Organization is involved.

F. Shipping

We should seek an arrangement with the USSR which would enable us to deal directly with Moscow, rather than with the Russian representative in London, on a number of important current shipping questions, including the matter of Russian relations with the United Maritime Authority.

matters for bilateral discussions

A. USSR

1. Credits to the USSR.

2. Lend-lease policy, lend-lease settlement policy, and recapture questions.

3. Retransfer of lend-lease goods: We should endeavor to obtain a satisfactory understanding on the question of Russian retransfer of lend-lease goods or equivalent goods to third countries.

4. Soviet commercial policy: This may be an appropriate occasion to discuss Russian commercial policy questions, particularly such matters as export dumping, barter, restrictive bilateral agreements, and the use of the Russian foreign trade monopoly to obtain political objectives.

5. Exchange of technology: Discussions may be desirable on the protection of US-owned technology in the Soviet Union.

6. Radio-telegraph circuits: We should seek the concurrence of the USSR in our plan for the establishment of direct radio-telegraph circuits between the US and Rumania and between the US and Bulgaria.

7. Civil aviation matters: We should seek to obtain adherence of the USSR to the Chicago aviation agreements;⁴ acceptance by the USSR of a seat on the interim council; and an agreement permitting US civil air carriers to serve Russian territory.

B. United Kingdom

1. Post V–J Day financial arrangements: It would be desirable for the President to suggest to the Prime Minister that, in view of the approach of V–J Day, integrated discussions of lend-lease settlement, foreign exchange policy, postwar credit arrangements and multilateral trade policy take place between the two governments in the near future.

2. Lend-lease questions: An understanding should be sought on the proposed 3 (c) agreement⁵ with the United Kingdom, principles to govern the disposal of fixed lend-lease installations, and principles of payment for surplus property.

3. Radio-telegraph circuits: We should seek the concurrence of the UK in our plan for the establishment of direct radio-telegraph circuits between the US and Iraq and between the US and Saudi Arabia.

4. Civil aviation matters: Agreement should be sought with the Prime Minister on several civil aviation questions, including civil aviation rights between US and British territory; British opposition to our acquisition of landing rights in the Near and Middle East and elsewhere; and British use of exchange controls in the sterling area to prevent the purchase of American aircraft.

Joseph C. Grew

1. The signed original in the Truman Papers is so dated.
2. Text in Department of State Bulletin, vol. ix, p. 310.
3. Treaties and Other International Acts Series No. 1604; 61 Stat. (3) 2740.
4. Executive Agreement Series Nos. 469, 487, and 488; 59 Stat. (2) 1516, 1693, and 1701. Treaties and Other International Acts Series No. 1591; 61 Stat. (2) 1180.
5. i. e., an agreement under section 3 (c) of the Lend-Lease Act of March 11, 1941 (55 Stat. 31), as amended April 16, 1945 (59 Stat. 52).