Pauley Files

No. 915
United States Delegation Working Paper 1

Memorandum on Reparations

It was agreed by the Three Governments at the Crimea Conference2 that Germany, when defeated, would be forced to make reparation and restitution for the burdens and losses imposed, particularly to the Allied Nations which have suffered most and have contributed most to the organization of victory.

In as much as the damage caused by Germany, and the suffering imposed by the ruthless German methods far exceed anything Germany can ever repay, it was agreed from the first that the exactions from Germany should be such as to take from Germany not only all industries and tools relating directly to war, but also all capital goods and current production down to that which is essential for maintaining in Germany a standard of living no higher than that of the neighboring Allied countries. Under this hard but fair policy the German people would be made to pay in goods, work and reduction of living standards, all that they can, over a limited period, even though this be far less than they owe the world.

In the course of the actual military operations, which required prolonged and vicious mechanized fighting, airbombing and artillery shelling throughout all of Germany, much was destroyed and, with full occupation by large military forces, not a little property was needed and taken by the armed forces directly for sustenance and as war booty.

These developments have changed the practical situation in a number of ways. Destruction has lessened what is left to take in reparations; similarly what has been taken as booty, or to support the armies of occupation, cannot be taken again as reparations. Under the formula of “maximum possible removals from Germany”, whatever is destroyed, or used, or removed as booty, or in any other way, reduces pro tanto what is left to be taken as reparations.

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For this reason the definition of “war trophies” presented on July 21 by the U. S. S. R.3 as a statement of fact as well as a statement of future policy, calls for corresponding adjustments in the plans for reparations. If most removable capital goods and production are to be taken as “war trophies”, clearly little remains as reparations. However the end result from the standpoint of exaction will be the same.

Under these circumstances it is clearly unnecessary to distinguish closely between what is taken as “war trophies” and what is taken as reparations. In the end they add up together to all that can be removed within the standards we have set.

Since the military commanders of the armies of occupation will in any case take charge of the extraction of war booty, the simple solution for the removal of reparations would seem to be to entrust this task also to the Zone Commanders, and to consolidate the two as “removals” rather than to attempt the meaningless task of segregation, separate administration and separate accounting.

The adoption of this simple and practical policy, apparently envisioned in the Soviet definition of “war trophies”, appears also to conform to the requirements of rough justice, because the assets and productive capacity of the Zones into which Germany has been divided for purposes of military occupation and civil government during the occupation coincide roughly with the agreed division of reparations as between the chief Powers. For example, the U. S. S. R., which it was agreed by the Allied Commission on Reparations4 should receive 56% of the total, less an amount to be given up pro rata to help meet the accepted claims of other nations, now occupies a Zone which will make possible the exaction of booty and other removals combined approximately equal to its expected receipts under the percentage formula.

The Government of the United States, though it would have preferred a more limited definition of “war booty”, a correspondingly broader content of “reparations”, and a more unified administration of removals of both from all of Germany, accepts the Soviet definition of “war trophies” for Germany, and the administration of removals for the present by Zones of occupation which is implicit in that definition.

In doing so it is understood that the claims of other nations will be dealt with as follows: Poland’s share will be paid through the transfer of assets included within territories to be annexed to Poland, together with any further payments which the U. S. S. R. may desire to allot from its removals from the Soviet Zone of occupation. Recognizing that this will use up any excess credits from that Zone, all [Page 858] other claimants will look for reparations to the other three zones, namely those of the U. S., the U. K. and France. The United States is prepared to do its share in meeting the reparations claims of other nations and it is believed that the U. K. and France may be similarly depended upon.

In accordance with these considerations, the Government of the United States presents with this statement a revision of the plans already submitted to the Three Governments by the Allied Commission on Reparations, in the belief that this new draft5 which rests upon the “principles”6 and the “formula”7 agreed by the Commission, and the prior decisions of the Crimea Conference, will meet the requirements of the situation in a practical way and commend itself to the Governments of the USSR and the U. K.

The plan as here presented disposes, for the time being at least, not only of the problem of “war trophies” and “reparations” but also of “interim reparations” and “restitution.”

  1. This paper bears the manuscript notation “Gulick”.
  2. See document No. 1416, section v.
  3. document No. 904.
  4. See attachment 3 to document No. 894.
  5. Presumably document No. 916.
  6. Attachment 1 to document No. 894.
  7. Attachment 3 to document No. 894.