instances in mixed commissions created by the President of the ACC for questions connected with the execution by the ACC of its functions. 3. Free movement by the American and British representatives in the country will be permitted provided that the ACC is previously informed of the time and route of the journeys.

4. All questions connected with permission for the entrance and exit of members of the staff of the British and American representatives in Hungary will be decided on the spot by the President of the ACC within a time limit of not more than one week.

5. The bringing in and sending out by plane of mail, cargoes and diplomatic couriers will be carried out by the British and American representatives on the ACC under arrangements and within time limits established by the ACC, or in special cases by previous coordination with the President of the ACC.

I consider it necessary to add to the above that in all other points the existing Statutes regarding the ACC in Hungary, which was confirmed on January 20, 1945, shall remain in force in the future.

ANNEX II

USE OF ALLIED PROPERTY FOR SATELLITE REPARATIONS OR "WAR TROPHIES".

1. The burden of reparation and "war trophies" should not fall on Allied nationals.

2. Capital Equipment-We object to the removal of such Allied property as reparations, "war trophies", or under any other guise. Loss would accrue to Allied nationals as a result of destruction of plants and the consequent loss of markets and trading connections. Seizure of Allied property makes impossible the fulfillment by the satellite of its obligation under the armistice to restore intact the rights and interests of the Allied Nations and their nationals.

The United States looks to the other occupying powers for the return of any equipment already removed and the cessation of removals. Where such equipment will not or cannot be returned, the U. S. will demand of the satellite adequate, effective and prompt compensation to American nationals, and that such compensation have priority equal to that of the reparations payment.

These principles apply to all property wholly or substantially owned by Allied nationals. In the event of removals of property in which the American as well as the entire Allied interest is less than substantial, the U. S. expects adequate, effective, and prompt compen

sation.

3. Current Production-While the U. S. does not oppose reparation out of current production of Allied investments, the satellite must provide immediate and adequate compensation to the Allied nationals including sufficient foreign exchange or products so that they can recover reasonable foreign currency expenditures and transfer a reasonable return on their investment. Such compensation must also have equal priority with reparations.

We deem it essential that the satellites not conclude treaties, agreements or arrangements which deny to Allied nationals access, on equal terms, to their trade, raw materials and industry; and appropriately modify any existing arrangements which may have that effect.

(b) Proclamation Defining Terms for Japanese Surrender, July 26, 19451

(1) We-The President of the United States, the President of the National Government of the Republic of China, and the Prime Minister of Great Britain, representing the hundreds of millions of our countrymen, have conferred and agree that Japan shall be given an opportunity to end this war.

(2) The prodigious land, sea and air forces of the United States, the British Empire and of China, many times reinforced by their armies and air fleets from the west, are poised to strike the final blows upon Japan. This military power is sustained and inspired by the determination of all the Allied Nations to prosecute the war against Japan until she ceases to resist.

(3) The result of the futile and senseless German resistance to the might of the aroused free peoples of the world stands forth in awful clarity as an example to the people of Japan. The might that now converges on Japan is immeasurably greater than that which, when applied to the resisting Nazis, necessarily laid waste to the lands, the industry and the method of life of the whole German people. The full application of our military power, backed by our resolve, will mean the inevitable and complete destruction of the Japanese armed forces and just as inevitably the utter devastation of the Japanese homeland.

(4) The time has come for Japan to decide whether she will continue to be controlled by those self-willed militaristic advisers whose unintelligent calculations have brought the Empire of Japan to the threshold of annihilation, or whether she will follow the path of reason. (5) Following are our terms. We will not deviate from them. There are no alternatives. We shall brook no delay.

(6) There must be eliminated for all time the authority and influence of those who have deceived and misled the people of Japan into embarking on world conquest, for we insist that a new order of peace, security and justice will be impossible until irresponsible militarism is driven from the world.

(7) Until such a new order is established and until there is convincing proof that Japan's war-making power is destroyed, points in Japanese territory to be designated by the Allies shall be occupied to secure the achievement of the basic objectives we are here setting forth.

(8) The terms of the Cairo Declaration shall be carried out and Japanese sovereignty shall be limited to the islands of Honshu, Hokkaido, Kyushu, Shikoku and such minor islands as we determine.

(9) The Japanese military forces, after being completely disarmed, shall be permitted to return to their homes with the opportunity to lead peaceful and productive lives.

(10) We do not intend that the Japanese shall be enslaved as a race or destroyed as a nation, but stern justice shall be meted out to all war criminals, including those who have visited cruelties upon our prisoners. The Japanese Government shall remove all obstacles to the revival and strengthening of democratic tendencies among the Japanese

! The Axis in Defeat, Department of State publication 2423, pp. 27-28; Department of State Bulletin of July 29, 1945. This proclamation issued on July 26, 1945, by the heads of governments of the United States, United Kingdom, and China was signed by the President of the United States and the Prime Minister of the United Kingdom at Potsdam and concurred in by the President of the National Government of China, who communicated with President Truman by despatch. It is to be noted that the Soviet Union did not participate in this proclamation.

people. Freedom of speech, of religion, and of thought, as well as respect for the fundamental human rights shall be established.

(11) Japan shall be permitted to maintain such industries as will sustain her economy and permit the exaction of just reparations in kind, but not those [industries] which would enable her to re-arm for war. To this end, access to, as distinguished from control of, raw materials shall be permitted. Eventual Japanese participation in world trade relations shall be permitted.

(12) The occupying forces of the Allies shall be withdrawn from Japan as soon as these objectives have been accomplished and there has been established in accordance with the freely expressed will of the Japanese people a peacefully inclined and responsible government.

(13) We call upon the government of Japan to proclaim now the unconditional surrender of all Japanese armed forces, and to provide proper and adequate assurances of their good faith in such action. The alternative for Japan is prompt and utter destruction.

Part II

CONFERENCES ON THE PEACE SETTLEMENT

18. FIRST MEETING OF COUNCIL OF FOREIGN MINISTERS, LONDON, SEPTEMBER 11 TO OCTOBER 2, 1945

Report by Secretary Byrnes, October 5, 19451

The first session of the Council of Foreign Ministers closed in a stalemate. But that need not, and should not, deprive us of a second and better chance to get on with the peace.

In the past I have been criticized and commended for being a compromiser. I confess that I do believe that peace and political progress in international affairs as in domestic affairs depend upon intelligent compromise. The United States Delegation acted in that spirit at Berlin. We acted in that spirit at London. And we shall continue to act in that spirit at future conferences.

That spirit is essential in international conferences where action can be taken only by unanimous agreement. When any one member can prevent agreement, compromise is a necessity. Men and women who have served on a jury can appreciate that.

Compromise, however, does not mean surrender, and compromise unlike surrender requires the assent of more than one party.

The difficulties encountered at the London conference will, I hope, impress upon the peoples of all countries, including our own people, the hard reality that none of us can expect to write the peace in our own way. If this hard reality is accepted by statesmen and peoples at an early stage of the peace-making process, it may at later stages save us and save the peace of the world from the disastrous effects of disillusionment and intransigences.

Regardless of how Americans may differ as to domestic policies, they desire unity in our foreign policies. This unity will be essential in the days ahead of us when we may expect differences in views by various governments as to peace settlements. However, the political party in power cannot expect this unity unless it freely consults representatives of the opposing political party.

Believing this, I requested Mr. John Foster Dulles, one of the bestinformed Americans in the field of foreign relations and a loyal Republican, to accompany me to London in an advisory capacity. He has been more than an adviser; he has been a partner. Between us there have been no secrets. At the Council table and in private conference he has participated in the making of all decisions. Our accord serves to show that in foreign affairs Republicans and Demo

1 Department of State publication 2398, Conference Series 78; Department of State Bulletin of October 7, 1945.

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crats can work together and that in vital matters of foreign policy we Americans are united.

When it was agreed at Berlin to establish the Council of Foreign Ministers I think we all had in mind the precedent of the Dumbarton Oaks conference. There, representatives of Great Britain, the Soviet Union, China, and the United States worked together to prepare draft proposals for the United Nations Charter as a basis for discussion with other nations. France was not present at Dumbarton Oaks only because France had not yet been liberated. Her right to permanent membership on the United Nations Security Council was not questioned.

Experience reveals that a certain degree of understanding among the major powers is essential to secure general agreement among many nations. When understanding among the great powers is not achieved in advance of a conference participated in by many nations, it usually has to be secured informally during the conference.

At the Versailles conference, for example, it took the Big Three and the Big Five so long to agree among themselves that the complaint was made that the smaller powers had little more time to consider the treaty than was given to the Germans.

The Berlin agreement envisaged the naming of high-ranking deputies who could carry on the work of the Council in the absence of their chiefs, the Foreign Secretaries. The Council, as President Truman and I understood it, was to be a sort of combined staff to explore the problems and prepare proposals for the final peace settlements.

At Berlin it certainly was never intended that the three powers present or the five powers constituting the Council should take unto themselves the making of the final peace. The Berlin declaration setting up the Council begins with the statement, "The Conference reached the following agreement for the establishment of a Council of Foreign Ministers to do the necessary preparatory work for the peace settlements."

The Council was not to make the peace settlements but to do the necessary preparatory work for the peace settlements. It certainly was not my intention to agree to any final treaty without first getting the views of the Foreign Relations Committee of the Senate which must pass upon all treaties before ratification.

The first session of the Council, so far as the personal participation of the Foreign Ministers was concerned, was intended to provide directives for the deputies in the preparation of treaties for Italy, Rumania, Bulgaria, Hungary, and Finland.

This work was exploratory-to find out on what points we were in agreement, on what points we differed, and on what points further study and data were required. It is a little naive to suppose that when really vital differences emerge, one nation or another is likely to abandon its position on the first interchange of views.

At this stage it is as important to know and understand wherein we and our Allies differ as wherein we agree. We must understand our points of difference before we can intelligently consider means of reconciling them.

So far as the Italian treaty was concerned I think we made very good progress toward agreement on directives to govern the work of our deputies.