40. Memorandum From Secretary of the Treasury-Designate Dillon to Secretary of
State-Designate Rusk0
Washington,
January 13,
1961.
Given our present balance-of-payments position1 it is important
that we get as much help as possible from the Germans, as promptly as
possible, in the negotiations now under way. Particularly important
would be German prepayment of the GARIOA debt, increased military
procurement in the U.S. and the removal of restrictions on certain of
our agricultural exports.
I am reasonably certain that the minimum price we will have to pay for
this will be an agreement on our part to recommend legislative action
for a limited return program for German vested assets. The attached
memoranda, which have been reviewed technically by GER and L/EUR, set forth the background and recommended solution.
I hope that we can move forward on this immediately after the 20th and
would appreciate your views.
Attachment
SETTLEMENT OF GERMAN VESTED ASSETS
The issue of compensating Germany for U.S. seizure of private German
assets during World War II has become of major political importance
in Germany and a serious irritant in U.S.-German relations.
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Recent discussions with Germany indicate that the Germans may be
prepared to conclude a settlement with the new Administration more
favorable than we have hitherto been able to negotiate. The probable
elements in this settlement would be:
- 1.
- Prepayment to the U.S., immediately, of $600 million of
Ger-many’s $787 million GARIOA debt.
- 2.
- Cancellation of the remaining $187 million of the GARIOA
debt in full settlement of the vested assets—a figure about
half-way between the previous German request of $200 million
and the previous U.S. estimate of $175 million. This
cancellation would have to be submitted to the Senate as a
treaty amending the GARIOA agreement.
- 3.
- Other actions by Germany to help the U.S. balance of
payments, including increased German military procurement in
the U.S., removal of German restrictions on certain U.S.
agricultural exports, and possibly German payment of a part
of U.S. military aid to Greece and Turkey.
There is no assurance that the Senate would approve a treaty
offsetting vested assets against GARIOA since there is strong
Congressional sentiment against any return program. Nevertheless
mere submission of the treaty would ease German-U.S. relations and
the other proposed actions, including the $600 million GARIOA
prepayment, would be of great benefit to the U.S. at the present
time.
The essential details of the long-continuing and complicated vested
assets problem, and of the proposed settlement, are set forth in the
attached memorandum.2
