with the Hungarian Government and had agreed on some adjustments in the schedule of Hungarian deliveries.

In the light of all the circumstances and particularly the fact that the treaty will result in the withdrawal of the Soviet forces from Hungary, except for the troops necessary to maintain the line of communications to Austria, we resolved our doubts in favor of the Paris Peace Conference recommendation, that the reparation figure be left at $300,000,000.

In the case of Bulgaria, reparation claims were advanced only by Greece and Yugoslavia. The Paris Conference recommended by less than a two-thirds vote that reparations be fixed at $125,000,000. The Soviet Union considered this amount to be in excess of Bulgaria's ability and out of line with the amounts fixed for other countries.

Agreement was ultimately reached on the figure of $70,000,000, which is not entirely comparable to the figure of $125,000,000 because of changes in the basis of valuation of reparation deliveries more favorable to the recipient states.

A question related to reparation, and one of direct interest to the United States, was that of treatment of Allied property in the ex-enemy countries and the extent to which compensation should be made for damages sustained by such property.

In Italy the property holdings of our nationals are in the neighborhood of $130,000,000. More than half is in industrial and commercial enterprises. In Rumania our investments amount to perhaps $40,000,000, consisting principally of interests in the petroleum industry. Our investments in Hungary can be estimated at $20,000,000 and in Bulgaria about $3,000,000. These are direct investments and do not include our security holdings and various other miscellaneous properties and finanical interests.

Provisions have been included in the treaties for the restoration of Allied properties to their owners and for the repeal of discriminatory laws and other measures taken against Allied property during the war. The properties are to be restored in good order by the ex-enemy states. Where this cannot be done, compensation will be made to the owners in local currency at a rate sufficient at the time of payment to cover two thirds of the loss suffered.

It is obviously impossible to restore everyone to the exact position which he had before the war, and the American Delegation considered the provisions ultimately agreed upon to constitute a reasonable degree of satisfaction of the claims of property owners.

While only partial compensation is provided for damages suffered by property owners in the ex-enemy countries, it must be remembered that the payment of reparations will permit only an infinitesimal amount of compensation for damages suffered in the invaded countries. It seemed to us that we could not press for full compensation for one class of claimants, particularly in the light of the total burdens being placed upon the former enemy countries in the peace treaties.

Other provisions in the treaties deal with such matters as the return of property looted in the invaded countries, renunciation of claims

against the Allied states, expenses of occupation, questions of military currency and military requisition, and a variety of other matters.

It seemed to us desirable that the treaties constitute as far as possibie a settlement of all questions arising out of the war and that methods be provided which would enable disputes arising in regard to the interpretation or execution of the treaty provisions to be speedily resolved. We encountered some difficulty in reaching agreement on a procedure for settling disputes, but a formula was ultimately found which I believe will furnish a satisfactory basis for the ultimate resolution of those questions which cannot be resolved by bilateral negotiation.

It is our hope that these states will soon be admitted to the United Nations Organization and also to various specialized agencies which have been created by the United Nations. Through the specialized agencies of an economic character, such as the International Bank, the Monetary Fund, the International Aviation Organization, the International Trade Organization, and other international bodies, the former enemy states will be enabled to join with the United Nations in cooperative action looking forward to the stabilization and improvement of international economic relations and a general increase in trade and employment.

Prior to the outbreak of the war the Balkan countries had been subjected to strong economic pressure by Germany through clearing agreements and other devices. The economic dominance which Germany gradually obtained over them was used not only as an instrument against the commercial interests of other countries but as a means of undermining the independence of the Balkan countries.

With the defeat of Germany it is natural that the countries of eastern Europe will cultivate much closer economic relations with the Soviet Union than they had before the war.

However, we have been disturbed over the development since the end of hostilities of economic policies and practices which seemed to us would result in a new set of discriminatory arrangements in the Balkan

area.

After a long discussion we reached agreement on provisions guaranteeing equality of economic opportunity for a year and a half after the peace treaties come into force, during which period it is contemplated that the United Nations will enter into new trade arrangements with the former enemy states.

These provisions require the ex-enemy states to grant, to each of the United Nations which grant similar treatment to them, nondiscriminatory treatment in matters of trade and equal status with their own nationals in the conduct of business activity within the country. Furthermore, the treaties prohibit discrimination in matters relating to civil aviation and guarantee for the same period of a year and a half equality of opportunity to all the United Nations in negotiating for civil-aviation rights.

Another important provision directed to the maintenance of the open door in the Balkans is the treaty clause on the Danube and the

related agreement by the Council of Foreign Ministers to summon a conference to establish a new Danube regime.1

For almost a century there have been international guaranties of freedom of commerce and navigation on the Danube. These principles are reaffirmed in the treaties with the satellite states.

The agreement of the Council provides that a conference shall be convened within six months after the entry into force of the treaties to establish a new international regime for navigation on the Danube. The countries which will participate in the conference are the states bordering on the Danube, including the Soviet Union, together with the United States, Great Britain, and France."

These arrangements were a compromise, and I think a reasonable one, between the desire of the Soviet Union that arrangements respecting the Danube should be left solely in the hands of the riparian states and the view of the other three powers which participated in drafting the peace treaties that the Danube question concerns all countries and that its settlement should involve appropriate participation by non-Danubian states.

The economic clauses of the treaty constitute only one step in the process of clearing away the debris of the war and the rebuilding of the shattered European economy. While certain provisions will be regarded as harsh, the treaty clauses do lay the basis for resumption of normal and healthy relations between the former enemy countries and the United Nations. Taken as a whole, they have appeared to the American Delegation as constituting a reasonably satisfactory solution of the very difficult problems involved in harmonizing all of the conflicting viewpoints.

No final disposition of the Italian colonies was agreed upon in the Italian treaty. The treaty provides for further study of this question by the four powers in consultation with other interested countries, and if they are unable to agree the matter is to be left to the decision of the General Assembly of the United Nations. In the meanwhile, the colonies will remain under the control of the British occupational authorities.

3

I regard it as of great significance that we were able to get acceptance of our proposal that in the absence of agreement among the four powers the United Nations, without any state having the right of veto, should determine what should be done with these colonies.

I have no doubt that each Senator can find in the treaties some provision to which he objects. I hope, however, that in considering the question of ratification he will recall our own difficulties reaching agreement under the unanimous-consent rule. This is the rule that prevails in the Council of Foreign Ministers because no one of the great powers can be forced to sign a treaty.

This agreement was reached at the Third Session of the Council of Foreign Ministers, New York, Nov. 4-Dec. 12, 1946; see A Decade of American Foreign Policy, pp. 92-97.

For the Danubian Conference held at Belgrade, July 30-Aug. 18, 1948, see Documents and State Papers, November-December 1948 (Department of State publication 3363; 1949), pp. 487-513.

See A Decade of American Foreign Policy, pp. 471-475.

If in the Senate we find it difficult to reach unanimous agreement when we have common interests and a common language, you will realize how much more difficult it is to reach unanimity in the Council where states have conflicting interests and those conflicts of interest must be presented in different languages.

I believe that the agreements reached are as good as we can hope to obtain at this time or for some time to come. I believe that it is much better for us and for the countries concerned if we ratify these agreements than if we have no agreements.

The fact that agreements were possible even in this limited field will create an element of stability. It disposes of one source of international argument and discussion. It demonstrates that the nations that won the war can agree as to the peace and should make it easier for us to agree on the other treaties.

3. REPORT OF THE SENATE COMMITTEE ON FOREIGN RELATIONS, MAY 15, 1947 (Excerpts) 1

The Committee on Foreign Relations, having had under consideration the treaties of peace with Italy, Rumania, Bulgaria, and Hungary, signed at Paris on February 10, 1947, unanimously report all four treaties favorably and recommend that the Senate advise and consent to their ratification.

MAIN PURPOSE OF THE TREATIES

The main purpose of the peace treaties is to formally bring to an end the legal state of war which still exists between the Allied and Associated Powers on the one hand and Italy, Rumania, Hungary, and Bulgaria on the other. The treaties will also settle many economic, political, and military questions still outstanding as a result of the war and will form the basis of friendly relations among these states in the future.

NEGOTIATION OF THE TREATIES

When the heads of Government of the United States, Great Britain, and the Soviet Union met in Potsdam in July 1945 they agreed that the first step toward the reestablishment of peace should be the preparation of treaties of peace with Italy, Rumania, Bulgaria, Hungary, and Finland, and that the task of preparing these treaties should be given to the Council of Foreign Ministers which, in turn, would submit them to the United Nations. The Council of Ministers met in London in September 1945, and in Moscow in December of the same year. From January to April 1946 the Council's deputies continued the work of preparation of treaty texts and the Ministers

1 S. Exec. Rept. No. 4, 80th Cong., 1st sess., pp. 1-15.

2

2 The Deputies met intermittently from Jan. 18 to May 27, 1946.

resumed their meetings in April and again in June in 1946 in Paris.' Throughout these discussions the United States delegation insisted that not only the great powers but all nations which actively participated in the European war should have a voice in making the peace with Italy and the Axis satellite states.

2

In consequence of American initiative a Peace Conference was convened in Paris, which lasted from July 29 to October 15, 1946, during the course of which the 21 invited nations were given every opportunity to make their views known regarding the kind of peace they wished to see established.3 The recommendations of this Conference were then transmitted to the Council of Foreign Ministers, which completed the final drafting in New York in November and December 1946. Out of the 53 Peace Conference recommendations adopted by the Paris Conference by at least two-thirds majority, 47 were incorporated with little or no change in the final text approved by the Council. In all respects the recommendations of this Conference provided the basis for final agreement and without them no peace settlement could have been achieved. Consequently, they represent the composite judgment of those nations whose fighting forces made victory possible.

MAJOR ACHIEVEMENTS OF THE TREATIES

A complete summary of the treaty provisions is contained in the annex to this report. It is sufficient here to summarize their major accomplishments and briefly to deal with the subjects covered.

In the first instance they represent an important first step toward the restoration of peace, order, and stability. Stability and peace can only be achieved as uncertainty is removed. Until the treaties enter into force the armistice regimes continue with their restrictions upon the sovereignty and independence of these states, leaving open the opportunity for further interference in their internal affairs.

The conclusion of the peace treaties, furthermore, constitutes a necessary preliminary to the admission of these states to the United Nations. Once admitted upon an equal status to membership, they subscribe to the principles of the Charter and have an equal voice with other nations in the settlement of problems relating to their peace, security, and future welfare.

These treaties will result in the withdrawal of Allied forces from Italy and Bulgaria and the reduction of occupation garrisons in Rumania and Hungary to the level required only for the maintenance of lines of communication. Freed from the burden of occupation

1 These meetings were held from Apr. 25 to May 16 and from June 15 to July 12, 1946, respectively; see A Decade of American Foreign Policy, pp. 72-86.

The United States, China, France, the Soviet Union, the United Kingdom, Australia, Belgium, the Byelorussian S.S.R., Brazil, Canada, Czechoslovakia, Ethiopia, Greece, India, the Netherlands, New Zealand, Norway, Poland, the Ukrainian S.S.R., the Union of South Africa, and Yugoslavia.

For the record of this conference, held July 29-Oct. 15, 1946, see Paris Peace Conference, 1946: Selected Documents (Department of State publication 2868; 1947).

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