740.00119 (Potsdam)/7–3145

No. 766
Report by the Economic Subcommittee
[Extracts1]
top secret

Second Report of the Economic Sub-Committee to the Foreign Ministers

1.
The Economic Sub-Committee regrets to have to report that after extensive discussions of the problems of German, Austrian, and Italian reparations, it has failed to come to agreement and consequently must refer these matters back to the Foreign Ministers for decision.
2.
The Sub-Committee has recognized the liability of Germany, Austria, and Italy to exactions on account of reparation.

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4.
The Soviet representatives believe Austria capable of delivering the equivalent of $250,000,000 in kind over six years, and Italy the equivalent of $600,000,000, particularly as Italy and Austria will no longer have their former military expenditures.3 The British and American representatives, on the other hand, point out that both Austria and Italy will require aid from abroad for some time to come, that the U. K., U. S. and Canada have already supplied more than $500,000,000 of goods to Italy to prevent disease and unrest, and that any reparations deliveries from these countries would in fact be financed by the nations supplying such goods. They are thus unable to agree to the imposition of any reparation levies on the current production [Page 665]of Austria and Italy. They would be prepared to consider the possibility of certain once-for-all removals of machinery and equipment from direct war industries having no peace-time utility.

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  1. For the other sections of this report, see documents Nos. 923 and 1322.
  2. So dated in the “Index of Attachments to Summary of the Negotiations in the Economic Sub-Committee” (file No. 740.00119 (Potsdam)/7–3145).
  3. A variant version of this document (file No. 740.00119 (Potsdam)/7–3145) identical with this paper in other respects, has the following final clause in this sentence: “particularly as in the case of Italy she will no longer have her former military expenditures.”