740.00119 EW/7–2345

No. 878
United States Delegation Working Paper1

Memorandum for Mr. Clayton

German Economic Matters

1. Basic policy for supply and reparations operations as between Soviet and Western Zones of Germany has been laid down in memorandum relating to the Western boundaries of Poland.2

The following recommendations are based on the assumption that this policy is agreed among the three powers.

2. Reparations and Related Matters—

There is attached a draft U. S. proposal3 which would pave the way for winding up the Reparations Commission and turn the handling of reparations, restitution, etc. to the individual zone commanders subject only to such general agreement as they may wish and be able to reach in the Control Council. The definition on restitution is somewhat broader than Mr. Pauley’s staff would like to see, and Mr. Pauley may raise questions about it.

3. Economic Principles—

Assuming agreement on the reparation proposal and the agreement which was tentatively reached on Sunday4 by the Foreign Ministers on Principles Nos. 10, 11, 12, 14, 15, 16, and 17,5 there remain only the following points for further action:

In view of the agreement on supply matters generally involved in the memorandum on the Polish Western Boundary, it would be desirable to accede to the Soviet request that Principle No. 18 be deleted.6
In view of the decision in fact to give up quadrilateral action on reparations operations and on programing, procuring and financing of imports, the last sentence of paragraph 14 (d), already tentatively agreed by the Foreign Ministers, should be amended to read as follows: “except where determined by the occupying power concerned to be required for the payment for necessary imports, no grant or credit to Germany or Germans by any foreign persons or governments shall be permitted.” If agreement cannot be reached with the Russians on this amendment, we should insist on the deletion of the entire sentence.
A minor improvement would be effected in the document by the following two amendments to paragraph 13:
  • “(e) Currency and banking, central taxation and customs;”
  • (g) Transportation and Communications”

4. It will be necessary to determine the manner in which the agreement referred to in 1. is to be formalized.

  1. Authorship not indicated.
  2. document No. 918.
  3. No attachment found. Cf. document No. 916.
  4. See ante, p. 233.
  5. See the attachment to document No. 863.
  6. See ante, p. 234.