740.00119 P.W./6–2746
Memorandum of Conversation, by Mr. Robert W. Barnett, of the Division of Japanese and Korean Economic Affairs
Subject: United States Proposal Regarding Japanese External Assets
| Participants: | Maj. Gen. J. H. Hilldring |
| Mr. J. K. Galbraith | |
| Mr. R. W. Barnett | |
| Ambassador N. V. Novikov | |
| Mr. A. P. Korobochkin |
On 24 June 1946 General Hilldring opened a conversation on reparations from Japan with the Soviet Ambassador by saying that the United States Government regretted past delays and desired to hasten a prompt settlement. One of the obstacles to agreement on the method of handling reparations was external assets, including the problem of war booty. He said that he hoped that exploratory discussions of a United States proposal on this matter might be fruitful. It was the United States view, he said, that once the question of external assets could be settled, then the likelihood of agreement on terms of reference for a reparations agency would be greatly improved. When terms of reference were adopted the United States intended to appoint a man of the ability and standing of Mr. James Angell to devote himself to the task of handling, promptly and comprehensively, all aspects of the reparations question.
Having heard these preliminary points made by General Hilldring, Mr. Novikov interjected to say that he had received his instructions as to the USSR proposal for terms of reference of a reparations committee. He said that while he read our proposal we could be reading his. He hoped that the Soviet terms of reference would appear reasonable to us.
After having read, aloud and very slowly, the United States proposal regarding Japanese external assets, Mr. Novikov asked two questions. The first question arose from a misunderstanding as to the meaning of paragraph 2(c) in which it is stated that the United States Government would join with the USSR in suggesting that Japanese assets in Korea not be deducted from the total reparations allotments to the United States and USSR. Mr. Novikov had not understood that this applied only to assets in Korea. His second question was, he said, prompted by newspaper reports that the Russians had removed considerable property from Manchuria and northern Korea. If those assets exceeded in value the recognized and approved Soviet claim for reparations, would the Soviet Union, he asked, be [Page 545] required to return any of those assets. Mr. Barnett stated that the language of the proposal assured all countries that they would retain assets within their territories or removed to their territories prior to 1 June. Rough and preliminary U.S. estimates of claims which might be submitted by claimant countries, he said, seemed to indicate that the value of assets now held by the Soviets might not appreciably exceed the Soviet claim as approved by the reparations agency. Whether or not it did could not be determined until all the facts, particularly those embodied in inventories of external assets, had been made available. Mr. Novikov agreed that that undoubtedly would be the case.
Mr. Novikov summarized his view of the United States proposal by saying that it was practical and simple and in many ways appealed to him very much. It was, he said, a very serious and deep document which required thorough study. He realized that the United States Government would like to have the Soviet view as soon as possible and it was his intention to scrutinize the proposal, to formulate his own comments and recommendations, and to forward them to Mr. Molotov and the Soviet Government as soon as possible.
Mr. Novikov was interested to know whether or not Mr. Byrnes would raise the question of Japanese reparations in Paris. General Hilldring said that he had no way of knowing what subjects Mr. Byrnes might discuss informally in the course of his days in Paris, but that when leaving Washington Mr. Byrnes had been informed that General Hilldring would make advances to Ambassador Novikov with a view to settling in Washington outstanding issues involved in the Japanese reparations problem. At that time Mr. Byrnes endorsed the action General Hilldring proposed to take, but gave no intimation that he, himself, would raise the issue in Paris. Mr. Novikov was pleased to have clarified the facts that Mr. Byrnes was not intending initiate discussion in Paris but was informed of the proposal now in his hands.
Mr. Novikov then inquired what our initial reaction was to the Soviet terms of reference for the reparations committee. Mr. Galbraith pointed out that external assets had been excluded entirely from the terms of reference and that not only the United States but many other members of the Far Eastern Commission considered it impossible to reach a reparations settlement unless dealing with both Japanese external assets and assets within Japan. Mr. Novikov stated that he believed acceptance of the Soviet terms of reference would enable the reparations committee to handle an immediate problem immediately while not closing the door to consideration of the problem of external assets at a later time. Mr. Galbraith felt that the Soviet terms of reference, if augmented by the United States proposal for a policy dealing with external assets, would enable a reparations agency to [Page 546] complete a comprehensive reparations settlement immediately. General Hilldring stated that it was his view that the reparations problem could not be handled piecemeal and that terms of reference which excluded external assets would be inacceptable to many countries. Mr. Novikov attempted to support the Soviet terms of reference as a measure of expediency but seemed to recognize the lack of logical support for his stand.
Mr. Novikov said that the Soviets would present their terms of reference to the reparations committee at its next meeting for comment by other countries. He would notify General Hilldring as soon as he had received a reply from Moscow or Paris regarding the United States proposal on Japanese external assets.