Foreign Relations of the United States, Diplomatic Papers, 1944, General, Volume I

740.00113 E.W./7–2044: Telegram

The Secretary of State to the Ambassador in the United Kingdom (Winant)¹⁹

Washington, August 16, 1944—4 p.m.

6485. We refer to your 5751 of July 20, 8 p.m. We consider that an interim arrangement for securing prompt and substantial contribution from the German economy is essential both in order to accelerate European rehabilitation and to avert an unduly heavy imposition of European requirements upon the American economy while the war against Japan is still in progress. It is also necessary that general policies be agreed upon as soon as possible in order to avoid possible sources of friction between the Allies immediately following the termination of hostilities in Europe and to avoid in that period destruction or concealment by Germans of looted Allied property. We also believe that development of such an interim arrangement should not await agreed, final determinations with respect to the long-term economic treatment of Germany or the ultimate amount, composition, allocation and duration of reparation payments. In our view, therefore, the purpose of technical conversations at this time should be to recommend plans for prompt establishment of

(1) an operating machinery and organization, integrated to the Allied control machinery as a whole, which will quickly initiate restitution and reparation transfers, and develop and carry out a large, interim program of transfers, and

(2) a deliberating organization, which, during this interim period, will record and scrutinize claims, and develop and propose the terms of a final reparation settlement.

Although it is recognized that some consideration may have to be given to long-term questions even in the formulation of arrangements for an interim organization, our view is that at present these questions are not appropriate for discussion at the technical level except to the limited extent that may be necessary in planning effective interim arrangements.

We agree with the preliminary reactions of the Foreign Office as to the essentiality of approaching the Soviet Union because of its substantial interest in the subject. We also agree with the recommendation of the Embassy that the first step should be to explore the practicality of obtaining tripartite agreement of the representatives of EAC as to statement of topics concerning reparation and restitution to be discussed by experts of the three countries.

The results of such technical discussions should be reported to EAC and through that organization to the three governments. This would be followed by policy discussions by the representatives on EAC and as soon as general agreement has been reached on the basic policies similar discussions would be instituted with the other European Allies. In view of the need for instituting discussions in the near future it may be impracticable to proceed through EAC. If an attempt to proceed through the EAC would result in lengthy delays we should be agreeable to participate in discussions on a technical level independent of EAC. In conformity with this general approach we are presenting below a list of topics which in our view would form a suitable basis for discussions either through or independent of EAC. It is suggested that unless you perceive some objection you discuss the list of topics with the Foreign Office as a proposed basis for tripartite discussions at a technical level and also the question of procedure and inform the Department as soon as possible of the British reaction. A similar request is being sent to Harriman at Moscow. The list of topics is as follows:

1. Organization of Allied Machinery for restitution and reparation transfers for early, post-surrender period, in particular:

a. Composition, membership and powers; integration with Allied control organization for Germany.

b. Machinery and procedures for procurement and allocation of goods and services from Germany and for coordinating and expediting Allied requests for such procurement.

c. Relationship of reparation transfers to procedures for control of German foreign trade and exchange, including

(1) measures necessary to secure such imports as may be agreed upon as necessary for reparation program, and

(2) measures to mobilize existing German assets abroad, to prevent new accumulations by Germany, and to handle debts and other claims competitive with reparation.

2. Forms and methods of payment in early post-hostilities period, in particular:

a. Policies and procedures regarding transfers on restitution or reparation account of existing assets, including financial assets, unique objects, and existing capital equipment and stocks.

b. Questions with respect to reparation transfers from current production of goods, from labor services, from foreign exchange and procedures with respect to any transfers permitted.

c. Financial and payment procedures

(1) within Germany, and

(2) with claimant countries.

d. Provisions for accounting and record keeping.

3. Procedure and Allied machinery for developing terms of final reparation settlement.

Referring to the final paragraph of the cable under reference, the British Embassy was furnished copies of the documents informally and with the clear statement that the documents were purely tentative and represented merely the thinking in some quarters of this Government. Such a course of action was considered desirable in as much as the Malkin Report²¹ had been made available to us. We understand that copies of the documents have been sent by the British Embassy to London. The documents made available were those presented to the Executive Committee on Economic Foreign Policy which were the same as those transmitted to you except all references to the Malkin Report were deleted.

Hull

19. This telegram with the exception of the last paragraph was repeated to Moscow as telegram 1951, August 16, 4 p.m.; the last paragraph of telegram 1951 to Moscow read: “It is suggested that unless you perceive some objection you discuss the list of topics with the appropriate Soviet authorities as a proposed basis for tripartite discussions at a technical level and also the question of procedure and inform the Department as soon as possible of the Soviet reaction.” (740.00119 EAC/8–1644)
21. Report of the British Foreign Office interdepartmental committee on reparations and economic security presided over by the Foreign Office Legal Adviser, William Malkin.