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THE UNITED STATES REPRESENTATIVE ALLIED COMMISSION ON REPARATIONS July 19, 1945 The Honorable The President of the United States My dear Mr. President: The question of the disposition of the German Naval and Merchant fleets has been raised by Generalissimo Stalin. As I understand it, he suggests that one-third of the tonnage of these fleets be allocated to each of the three powers. Most of the German Naval and Merchant tonnage is in the possession of the U. K., with some little in the hands of the U. S., and a small although unknown amount is held by the Russians in areas which they occupied. Clearly under our proposed definition ofll war booty", the Naval ships would be excluded from reparations But the Merchant vessels not belonging to the German armed forces would be deemed reparations I quote our definition of war booty: s. "War booty shall be limited to finished equipment and supplies produced for and belonging to the a SERVICE" AND ALCORDS German armed forces exclusive of any facilities used to produce such equipment or supplies" Under any definition of war booty heretofore laid down, the German Naval fleet would be so classified and therefore excluded from reparations. If we award one-third of the German Naval tonnage to Russia, we would be making an outright gift to the Soviet Union. While I do not object to making this gift, I believe that it should be subject to certain specific conditions. These conditions are that: One, Agreement be reached on proper definitions of war booty, restitution, and reparations, including par- ticularly the boundaries of Germany from which repa- rations will be exacted. Two, Whatever allocation of ships is made to the U.S.S.R. shall not be delivered until the Japanese War is ter- minated. Three, The U.S.S.R. agree to provide approximately 50,000 barrels per day of petroleum or petroleum products from Hungary and Rumania to relieve the present bur- den on the U.S. and U.K. of providing tankers, needed