740.00119 EW/7–1445

No. 378
United States Delegation Working Paper1

Notes on Reparation

I. Scope of Reparation:

Before considering the question of division of reparation among the various claimants, agreement should be sought, in as precise terms as possible, on the scope of reparation in relation to other forms of compensation by Germany.

War Booty
War Booty should be defined narrowly, preferably to include only equipment and supplies belonging to the German armed forces.
Labor Services
The net value of labor services rendered by Germans outside Germany (i. e., the portion of the workers’ wages, allowances and maintenances provided by Germany or paid in marks) should be credited to reparation account.
In the determination of reparation claims, account should be taken not only of property destroyed but also of property removed by Germany from Allied countries, and reparation should be regarded as compensation for both destruction and removal of property. Consequently, the value of property found in Germany and restored to its place of origin in an Allied country should be credited to reparation account. Works of art, however, should be an exception to this rule. The looting of art treasures should not be taken into account in fixing reparation claims, and the return of such property should not count towards meeting Germany’s reparation liabilities.
In subsuming restitution under reparation for accounting purposes, there should be no abandonment of the general rule that property removed to Germany from Allied countries should be returned to the government having jurisdiction over the territory from which the property was taken. Thus, French railroad rolling stock found in [Page 551] Germany would be returned to France and its value credited as reparation by Germany. The attempt to identify and return all Allied property in Germany to its country of origin could lead to absurd results if pressed to the limit. For example, manufacturers in German-occupied countries have produced components for motor vehicles. Their physical return would require the disassembly of completed vehicles. It is safe to assume that demands for the return of this type of property will not be pressed, particularly if restitution is assumed [subsumed?] under reparation so that the countries in question can obtain something else instead.
We have repeatedly stated our position that monetary gold found in Germany is all looted and should be returned. Our present position is that such gold, together with any “tainted” gold which we may induce neutral countries to surrender, should be prorated among Allied countries from which gold was looted in proportion to their total losses of gold from this source. This is an adaptation of the admiralty principle of general average. Gold returned to Allied countries on the above basis would be credited to reparation.
Territorial Cessions
Property acquired from German owners by a country to which German territory is ceded should be counted as reparation. Where German minorities are expropriated and expelled, but where no cession of territory is involved, a logically strong case can be made for counting such property transferred as reparation also, but it may be politically unwise to press this case.

II. Apportionment of Reparation:

Mr. Pauley has recommended that the Big Three should decide the apportionment among themselves of the aggregate share of total reparation going to them collectively, but should not attempt to determine, in advance of consultation with the other Allies, the division of reparation between the Big Three on one hand and the other claimants on the other. This principle seems entirely sound, except that it would be far better if “Big Three” could be replaced by “Big Four”. This matter of French participation in the initial formulation of a reparation plan is one on which the Russian view has prevailed so far. With four power occupation of Germany, three power handling of reparation is [has?] raised and is going to raise innumerable difficulties. This issue ought to be brought up again at the present conference.

III. Share of the United States in Total Reparation:

Mr. Pauley is of the view that the United States should assert as large a claim to reparation as possible and that we should seek payment in German gold and external assets. The Department’s view has been that we should not seek to obtain the German gold, and, in general, that we should seek an adequate share of total reparation for the European countries which fell under German occupation rather than [Page 552] for ourselves. The reparation program should contribute to the economic restoration of these countries. We also believe that, provided the scope of reparation is properly defined, along the general lines indicated above, 50% of total reparation is not an excessive share for the Soviet Union. With, say 50% for Russia and 30 or 35% for other continental European Allies, only 15 or 20% would be left for the United States and United Kingdom.

  1. Authorship not indicated. This paper was used in the PauleyMonckton meeting of July 15. See document No. 380.