Sitting (from left): Clement Attlee, Harry S. Truman, Joseph Stalin, and behind: Fleet Admiral William Daniel Leahy, Foreign Secretary Ernest Bevin, Secretary of State James F. Byrnes, and Foreign Minister Vyacheslav Molotov
Cecilienhof, site of the Potsdam Conference, pictured in 2014
Stalin, Churchill, and Truman gathered to decide how to administer Germany, which had agreed to unconditional surrender nine weeks earlier on 8 May (Victory in Europe Day). The goals of the conference also included the establishment of postwar order, peace treaty issues, and countering the effects of the war.
A number of changes had taken place in the five months since the Yalta Conference which greatly affected the relationships among the leaders. The Soviet Union was occupying Central and Eastern Europe; the Red Army effectively controlled the Baltic states, Poland, Czechoslovakia, Hungary, Bulgaria, and Romania, and refugees were fleeing from these countries. Stalin had set up a puppet Communist government in Poland, and he insisted that his control of Eastern Europe was a defensive measure against possible future attacks, claiming that it was a legitimate sphere of Soviet influence.
Second, Britain had a new Prime Minister. Conservative Party leader Winston Churchill had served as Prime Minister in a coalition government; his Soviet policy since the early 1940s had differed considerably from President Roosevelt's, as Churchill believed Stalin to be a "devil"-like tyrant leading a vile system. A general election had been held in the UK on 5 July; but with results delayed to allow the votes of armed forces personnel to be counted in their home constituencies. The outcome became known during the conference when Labour leader Clement Attlee became the new Prime Minister.
Third, President Roosevelt had died on 12 April 1945, and Vice President Harry Truman assumed the presidency; his succession saw VE Day (Victory in Europe) within a month and VJ Day (Victory in Japan) on the horizon. During the war and in the name of Allied unity, Roosevelt had brushed off warnings of a potential domination by Stalin in part of Europe. He explained, "I just have a hunch that Stalin is not that kind of a man." "I think that if I give him everything I possibly can and ask for nothing from him in return, 'noblesse oblige', he won't try to annex anything and will work with me for a world of democracy and peace."
Truman had closely followed the Allied progress of the war. George Lenczowski notes that, "despite the contrast between his relatively modest background and the international glamour of his aristocratic predecessor, [Truman] had the courage and resolution to reverse the policy that appeared to him naive and dangerous", which was "in contrast to the immediate, often ad hoc moves and solutions dictated by the demands of the war". With the end of the war, the priority of allied unity was replaced with the challenge of the relationship between the two emerging superpowers. The two leading powers continued to sustain a cordial relationship to the public, but suspicions and distrust lingered between them.
Truman was much more suspicious of the Communists than Roosevelt had been, and he became increasingly suspicious of Soviet intentions under Stalin. He and his advisers saw Soviet actions in Eastern Europe as aggressive expansionism which was incompatible with the agreements that Stalin had committed to at Yalta the previous February. In addition, Truman became aware of possible complications elsewhere when Stalin objected to Churchill's proposal for an early Allied withdrawal from Iran, ahead of the schedule agreed at the Tehran Conference. The Potsdam Conference was the only time that Truman met Stalin in person.
At the Yalta Conference France had been granted an occupation zone within Germany, France had been a participant in the Berlin Declaration, and France was to be an equal member of the Allied Control Council. Nevertheless, at the insistence of the Americans, General de Gaulle was not invited to Potsdam, as he had too been denied representation at Yalta; a diplomatic slight which was a cause of deep and lasting resentment. Reasons for the omissions included the longstanding personal mutual antagonism between Roosevelt and De Gaulle, ongoing disputes over the French and American occupation zones and anticipated conflicts of interest over French Indochina;  but also reflected the judgement of both the British and Americans that French aims in respect of many items on the Conference agenda were likely to be at variance with Anglo/American agreed objectives.
Germany's eastern border was to be shifted westwards to the Oder–Neisse line, effectively reducing Germany in size by approximately 25% compared to its 1937 borders. The territories east of the new border comprised East Prussia, Silesia, West Prussia, and two thirds of Pomerania. These areas were mainly agricultural, with the exception of Upper Silesia which was the second largest centre of German heavy industry.
"Orderly and humane" expulsions of the German populations remaining beyond the new eastern borders of Germany were to be carried out; from Poland, Czechoslovakia and Hungary, but not Yugoslavia.
War reparations to the Soviet Union from their zone of occupation in Germany were agreed. It was also agreed that 10% of the industrial capacity of the western zones unnecessary for the German peace economy should be transferred to the Soviet Union within 2 years. Stalin proposed and it was accepted that Poland was to be excluded from division of German compensation, to be later granted 15% of compensation given to Soviet Union.
German industrial war-potential was to be destroyed, through the destruction or control of all industry with military potential. To this end, all civilian shipyards and aircraft factories were to be dismantled or otherwise destroyed. All production capacity associated with war potential, such as metals, chemical, machinery etc., were to be reduced to a minimum level which was later determined by the Allied Control Commission. Manufacturing capacity thus made "surplus" was to be dismantled as reparations or otherwise destroyed. All research and international trade was to be controlled. The economy was to be decentralized (decartelization). The economy was also to be reorganized with primary emphasis on agriculture and peaceful domestic industries. In early 1946 agreement was reached on the details of the latter: Germany was to be converted into an agricultural and light industry economy. German exports were to be coal, beer, toys, textiles, etc. – to take the place of the heavy industrial products which formed most of Germany's pre-war exports.
France, having been excluded from the Conference, resisted implementing the Potsdam agreements within its occupation zone. In particular, the French refused to resettle any expelled Germans from the east. Moreover the French did not accept any obligation to abide by Potsdam agreements in the proceedings of the Allied Control Council; in particular resisting all proposals to establish common policies and institutions across Germany as a whole, and anything that they feared might lead to the emergence of an eventual unified German government.
Poland's old and new borders, 1945. Territory previously part of Germany is identified in pink
One person who was at the Potsdam Conference, but is not mentioned often is William D. Leahy. Leahy was Fleet Admiral in the U.S. Navy and stood as advisor to President Roosevelt during the Yalta Conference and to President Truman during the Potsdam Conference. Leahy had lengthy military background as he served as the senior-most United States military officer on active duty during WWII. He said in his book, I Was There: The Personal Story of the Chief of Staff to Presidents Roosevelt and Truman Based on His Notes and Diaries Made at the Time, that the Potsdam Conference was one of the most frustrating out of all the conferences, due to hostile relations between the Soviet Union and the United Kingdom and the United States. Throughout his work, he refers to the conference as its code name, Terminal. Later in his book he discusses a tour of Berlin that he takes with President Truman, and describes this experience as "I never saw such destruction. I don't know whether they learned anything from it or not."
Truman had mentioned an unspecified "powerful new weapon" to Stalin during the conference. Towards the end of the conference, the United States gave Japan an ultimatum to surrender or meet "prompt and utter destruction", which did not mention the new bomb but promised that "it was not intended to enslave Japan". The Soviet Union was not involved in this declaration, as it was still neutral in the war against Japan. Prime minister Kantarō Suzuki did not respond, which was interpreted as a declaration that the Empire of Japan should ignore the ultimatum. Then the United States dropped atomic bombs on Hiroshima on 6 August and Nagasaki on 9 August 1945. The justification was that both cities were legitimate military targets, to end the war swiftly, and to preserve American lives.
When Truman informed Stalin of the atomic bomb, he said that the United States "had a new weapon of unusual destructive force", but Stalin had full knowledge of the atomic bomb's development due to Soviet spy networks inside the Manhattan Project, and he told Truman at the conference to "make good use of this new addition to the Allied arsenal".
^Hunt, Michael (2013). The World Transformed. Oxford University Press. p. 35. ISBN9780199371020.
^Harry S. Truman, Memoirs, Vol. 1: Year of Decisions (1955), p.380, cited in Lenczowski, American Presidents, p.10
^Nash, Gary B. "The Troublesome Polish Question." The American People: Creating a Nation and a Society. New York: Pearson Longman, 2008. Print.
^Reinisch, Jessica (2013). The Perils of Peace. Oxford University Press. p. 53.
^Thomas, Martin (1998). The French Empire at War 1940-45. Manchester University Press. p. 215.
^Feis, Hebert (1960). Between War and Peace; the Potsdam Conference. Princeton University Press. p. 138.
^Alfred de Zayas Nemesis at Potsdam, Routledge, London 1977. See also conference on "Potsdamer Konferenz 60 Jahre danach" hosted by the Institut für Zeitgeschichte in Berlin on 19. August 2005 PDFArchived 20 July 2011 at the Wayback Machine Seite 37 et seq.