740.00119 Potsdam/7–2845

No. 842
Proposal by the United States Delegation1

Use of Allied Property for Satellite Reparations or “War Trophies”

1. The burden of reparation and “war trophies” should not fall on Allied nationals.2

2. Capital Equipment—We object to the removal of such Allied property as reparations, “war trophies”, or under any other guise. Loss would accrue to Allied nationals as a result of destruction of plants and the consequent loss of markets and trading connections. Seizure of Allied property makes impossible the fulfillment by the satellite of its obligation under the armistice to restore intact the rights and interests of the Allied Nations and their nationals.

The United States looks to the other occupying powers for the return of any equipment already removed and the cessation of removals. Where such equipment will not or cannot be returned, the [Page 745]U. S. will demand of the satellite adequate, effective and prompt compensation to American nationals, and that such compensation have priority equal to that of the reparations payment.

These principles apply to all property wholly or substantially owned by Allied nationals. In the event of removals of property in which the American as well as the entire Allied interest is less than substantial, the U. S. expects adequate, effective, and prompt compensation.

3. Current Production—While the U. S. does not oppose reparation out of current production of Allied investments, the satellite must provide immediate and adequate compensation to the Allied nationals including sufficient foreign exchange or products so that they can recover reasonable foreign currency expenditures and transfer a reasonable return on their investment. Such compensation must also have equal priority with reparations.

We deem it essential that the satellites not conclude treaties, agreements or arrangements which deny to Allied nationals access, on equal terms, to their trade, raw materials and industry; and appropriately modify any existing arrangements which may have that effect.

  1. Printed from an undated mimeographed copy. United States Delegation notes on the agenda for the Eleventh Plenary Meeting, July 31 (ante, p. 511), state that this proposal was circulated on July 25. Cf. ante, pp. 545 546. The proposal became an annex to the Conference Protocol; see post, p. 1498, footnote 99.
  2. A working draft of this proposal (file No. 740.00119 Potsdam/7–2845) has the following additional paragraph at this point:

    “2. We deem it essential that each Allied Government make such adjustments in its reparations demands and its economic and trade relationships to insure that the burden of reparation not be shifted to nationals of other Allies because of the inability of the satellite to make adequate, effective and prompt compensation for the loss of Allied property”

    This working draft also has minor variations in wording from the proposal as presented.