740.00119 (Potsdam)/5–2446

No. 417
Briefing Book Paper
top secret

Policy Toward Germany

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d: agreement on treatment of Germany as an economic unit

This Government should make clear its understanding that the division of Germany into zones of occupation does not imply the erection of barriers to the inter-zonal movement of goods. The [Page 607] U. S. zone of occupation is deficient in food and is almost completely lacking in coal and other major industrial materials. Its operation as a closed economic entity would be utterly impracticable. The British zone has an even larger food deficit, but would provide the logical source of supply for coal and some other industrial materials. The Russian zone has a food surplus and, apart from Berlin—which, according to present agreements, would be under quadripartite administration—has suffered much less bomb damage than Western Germany.

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The urgency of this problem and the need for prompt decision arise from the fact that arrangements among the Western Allies, limited in their application to Western Germany, will soon be essential if initial agreements which include the Russian zone are not quickly reached. The U. S. zone in Germany depends on Ruhr and Saar coal and the British would need assistance from the United States in meeting the large food deficit in Northwest Germany.

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top secret

Draft Memorandum

Proposal on Treatment of Germany as an Economic Unit for Presentation to the British and Soviet Governments2

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2. Adoption of Uniform Ration Scales Throughout Germany

Agreement in principle on free interzonal movements of essential goods and services would be difficult to translate into practice unless agreement were also reached among the occupying powers regarding the standard of living which they intend to maintain for the German population of their respective zones. It would be difficult, for example, [Page 608] for one occupying power to consent to the shipment of food from its zone of occupation to another zone of occupation if the ration scales in the latter zone were higher than in the former zone. …

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6. Formulation of an Agreed Program on Goal Production and Allocation

It is clear that adequate production and distribution of coal is of key importance to all European countries. At present, the acute shortage of coal is the most important obstacle to the revival of economic life in Europe. It is essential for Europe, as a whole, that maximum efforts be made to increase coal output in Germany and to allocate the output equitably among all countries having a coal deficit. To this end, a program for the German coal industry as a whole should be worked out as quickly as possible.

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  1. For the full text of this briefing paper and of its supplement, see document No. 327.
  2. In Matthews’ copy of the Briefing Book, this supplement has been thoroughly revised (see document No. 327, footnotes 26 and 29). The pertinent passages of the revision are as follows:

    “14. During the period of occupation Germany shall be treated as a single economic unit. To this end:

    • “(i) no barriers should be erected to the movement of goods and services which are required for (a) the discharge of Germany’s reparation obligations, (b) the maintenance of occupying forces and displaced persons, and (c) the maintenance of a subsistence standard of living in Germany.
    • “(ii) To the fullest extent possible there shall be Uniform Ration Scales throughout Germany[.]

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    • “(v) There shall be Agreed Programs on German Coal Production and Allocation[.]”