740.00119 (Potsdam)/7–3145

No. 891
The United States Representatives on the Economic Subcommittee to the Secretary of State1

Report to the Secretary on the Work of the Economic Subcommittee

There is attached the Third Report of the Economic Subcommittee to the Foreign Ministers.2

. . . . . . . . . . . . . .

With respect to Article 19, the discussion indicated that the U. S., U. K. and U. S. S. R. representatives were all in fact in agreement on two paragraphs:

“Payment of reparations should leave sufficient resources to enable the German people to subsist without external assistance.

“Payment for imports into Germany approved by the Control Council shall be a first charge against the proceeds of exports out of current production and out of stocks of goods.”

We felt that we could not agree to report favorably these two paragraphs alone without insisting that the following be recorded in the protocol:

“The above clause will not apply to the equipment and products referred to in paragraphs 4 (a) and 4 (b) of the Reparations Agreement.”3

The British representatives indicated that they would concur. When the Soviet representatives refused to agree to a report that would have [Page 828]included a statement of the position of the U. S. representatives in this matter, it became necessary to fail to agree on any part of the subject.

It had been the understanding of the U. K. and U. S. representatives that in the event Article 19 as indicated above had been agreed upon, it would still have been necessary for you and/or the President to indicate that the general Control Council agreement proclaimed June 54 would be operative, that is, if the Control Council failed to agree, each zone commander would still be free to import into his own zone such supplies as his government considered essential, for the payment of which he might assess a first charge on exports from his own zone.

[Attachment—Extracts5]

Third Report of the Economic Subcommittee to the Foreign Ministers6

The Economic Subcommittee considered the questions of a statement regarding German external assets7 and an Article 198 of the Economic Principles relating to payment for imports into Germany.

The Subcommittee also failed to reach agreement in the matter of an Article 19 of the Economic Principles.

  1. Printed from an unsigned copy prepared by the United States.
  2. For the paragraphs omitted here, see document No. 1002.
  3. See the attachment to document No. 972.
  4. See Treaties and Other International Acts Series No. 1520; 60 Stat. (2) 1649.
  5. For the other sections of this report, see the attachment to document No. 1002 and document No. 1325.
  6. This report was presented at the Eleventh Meeting of the Foreign Ministers, August 1. See ante, p. 562.
  7. See document No. 1000.
  8. See documents Nos. 872, 873, 875, and 876.