Friday, July 27, 1945 at Potsdam, Germany
Vyacheslav Molotov showed up at the Little White House for a one on one meeting with Jimmy Byrnes at 6:00 PM.
Molotov appeared furious and quickly lashed out. “Why were we not consulted regarding this ultimatum with Japan?”
Byrnes calmly stated the obvious – that is, “We did not consult the Soviet Government since the latter was not at war with Japan and we did not wish to embarrass them,” according to Byrnes’s interpreter on the scene, Chip Bohlen. “Mr. Molotov replied that he was not authorized to discuss this matter further. He left the implication that Marshal Stalin would revert to it at some time.”
Meanwhile, the British delegation still hadn’t returned from London so the tenth plenary session would be put on hold for another day.
This gave Byrnes and Molotov a chance to negotiate one of the Conference’s most contentious issues: reparations and the future of Germany.
The Soviet Union had shed more blood and suffered more death in WWII than any other nation by far, and the Soviets expected to get the lion’s share of reparations in return.
First and foremost, the Soviets were first demanding that Germany pay $20 billion in reparations of which half would go to the USSR. This figure was introduced at the Yalta Conference and accepted by Roosevelt not as an agreement, but rather “as a basis for discussion.”
This money was critical to the Soviet plan for postwar expansion and Molotov pressed Byrnes on agreeing to it. But Byrnes had to remind the Soviet Foreign Minister and explain to him in the simplest of terms that the $20 billion figure was set up at Yalta as a basis for discussion.
“If you say I owe you a million dollars and I say I will discuss it with you,” Byrnes would famously say during this meeting, “that does not mean I am going to write you a check for a million dollars.”
“I see,” Molotov replied.
But he didn’t. Byrnes’s analogy wasn’t sinking in; the Soviets wanted to get paid.
Yet, Byrnes knew that the $20 billion just wasn’t practical. He explained to Molotov and reminded him that Germany was in shambles; hundreds of thousands were starving, and were in desperate need of food, water and shelter.
And really the only way that Germany would be able to pay this would be through loans from the United States, which would likely never be paid back. History would therefore be repeating itself, as this was exactly the mistake that the United Sates made after WWI, and the American people would simply and surely not stand for it again.
So Byrnes had to come up with something else – that is, “namely, that each country would obtain its reparations from its own zone (of occupation) and would exchange goods between the zones,” Byrnes said.
Molotov immediately wanted clarification. Did this mean that each of the four occupying powers “would have a free hand in their own zones (to extract reparations) and would act entirely independently of the others?”
It’s funny that Molotov would even bring this up, for there was already ample evidence that the Soviets had been looting territories that the Red Army had conquered – in especially Germany.
President Truman had appointed a man named Edwin Pauley, a wealthy California oilman, as the U.S. representative on the Allied Reparations Committee. Pauley had been touring Germany and observed as he would write, “Red Army men packing woodworking machines, bakery ovens, textile looms, electric generators, transformers, telephone equipment – countless items, most of which could not be considered war potential, and assuredly not war booty. Yet there they were, moving before my eyes, on their way to the Soviet Union.”
In other words, the Soviets had already begun paying themselves at Germany’s expense.
When Byrnes asked Molotov if the Soviet authorities were removing German equipment and materials, even household goods, for transport to the USSR, Molotov did not deny it. “Yes,” he said. “This is the case.”
Yet, Byrnes was talking solely about reparations from each occupying power’s own zone, which hadn’t (wasn’t supposed to) even begun.
According to the meeting minutes: “The Secretary knew that there were some practical issues that needed to be confronted…The Russians grew the most food but had less industry; the British zone had the most manufacturing but would need to import food. These economic complexities would require trade, and meanwhile, each occupying nation would be extracting reparations from its own zone.”
Byrnes’s plan was an attempt to create a mechanism for a peaceful occupied Germany that would eventually reunify. He wanted to avoid future conflict between the United States and the Soviet Union, and thus diving Germany between east and west.
Interpreter Chip Bohlen recorded in his notes: “The Secretary said that he felt that without some such arrangement the difficulties would be insurmountable and would be a continued source of disagreement and trouble between our countries.”
Molotov, however, refused to let the $20 billion figure go and began to point fingers at the Americans that they were breaking the promise they had made at Yalta.
The meeting ended where it had started, with no agreement. Already, the hope for a peaceful reunification of Germany was slipping away.
Meanwhile in Tokyo, Prime Minster Kantaro Suzuki and his cabinet had met during the morning to discuss the release of the Potsdam Declaration.
Suzuki decided to simply ignore the matter. The declaration, he said at a press conference, was nothing but a rehash of old proposals and as such, beneath contempt. He would “kill (it) with silence,” he said.
The Potsdam Declaration had clearly warned the Japanese of “prompt and utter destruction” if they did not accept it.
It was rejected on July 27, 1945.