Pauley Files

No. 942
The Representative on the Allied Commission on Reparations (Pauley) to the Secretary of State1

My Dear Mr. Secretary: I am enclosing a copy of a letter which I have prepared for transmittal to Mr. Maisky, together with copy of my letter to the President on this same subject.

I shall appreciate your reviewing this proposed communication to Mr. Maisky. If you think it advisable, I would be happy to have the letter prepared for your signature and addressed to Mr. Molotov.

Respectfully submitted,

Edwin W. Pauley
[Enclosure 1]

The Representative on the Allied Commission on Reparations (Pauley) to the President1

My Dear Mr. President: I have prepared a letter to Mr. Maisky which, taken with my letter to him of July 3rd,2 gives a brief history to date of our negotiations and our present attitude toward the problems of reparations. I have naturally refrained from sending this letter until I have secured the approval of yourself and the Secretary of State.

Inasmuch as the subject of reparations will undoubtedly be a matter of public interest and discussion in the United States, and inasmuch as verbal statements by representatives of nations can be so easily misquoted or misunderstood, I think it wise that the official record as regards reparations should be well documented.

I am therefore presenting this proposed letter to you and to the Secretary of State for whatever comment you wish to make concerning it. I am also enclosing for your reference a copy of my previous letter to Mr. Maisky dated July 3rd, 1945.

Respectfully submitted,

Edwin W. Pauley
[Page 894]
[Enclosure 2]

The Representative on the Allied Commission on Reparations (Pauley) to the Chairman of the Allied Commission on Reparations (Maisky)3

My Dear Mr. Maisky: In my letter to you of July 3rd, I called your attention to the fact that although we had been in Moscow some twenty-two days, we had received from the Soviet Government neither a presentation of the Soviet “plan” of reparations nor any figures in support of the amount of reparations which was agreed at the Crimea Conference4 should be the subject of discussion at our meeting in Moscow.

In the foregoing letter, I pointed particularly to this meeting of the Big Three, and recalled our understanding, reached the day after the arrival of the British delegation in Moscow, that it was our joint responsibility to present a definitive reparation program at this meeting of the heads of Government. In addition to reaching an agreement on the fundamental principles of a reparations plan, I urged that we define “reparations”, “restitution”, and “war booty”, in order to make definite and certain the subject matter upon which a reparations program could be predicated. This latter problem of definition appeared to me then, and even more so now, to be an elementary and obvious first step.

As you know, we discussed and agreed on seven of eight general principles which the United States Delegation proposed should guide the formation and administration of a reparations plan for Germany as a whole. It was understood, of course, throughout all our discussions that for the purpose of reparations Germany included all of the territory lying within the boundary of the old German Reich.

Both we and the British submitted proposed definitions of “restitution”. You agreed at a meeting of the Steering Committee that you would present a definition of “war booty” or “war trophies”. After countless delays and postponements, no Soviet definition of “war booty” or “war trophies” was forthcoming. When we arrived here at the Big Three Conference, we had received from the Soviets neither an explanation of their proposed “plan” of reparations nor any figures supporting their proposed amount of reparations, nor a [Page 895]definition of “war booty” without which it will be impossible to ascertain what should be available for reparations, or how fairly to divide among claimant nations what is removed.

Upon our arrival in Berlin, the United States Delegation sought to facilitate the necessary definition of the subject matter of reparations by submitting to the Soviet and British Delegations, proposed definitions, not only of “war booty”, but of “restitution” and “reparations” as well. These proposed definitions were as follows:

[Here follow the definitions contained in attachment 2 to document No. 894.]

Here in Berlin, it has been impossible not to observe that extensive removals of capital equipment of all kinds have been made by the Soviet Government both from the American zone of occupation prior to our occupation, and from the Soviet zone. The removals from the Soviet zone are continuing on a comparable scale and include equipment from many peace-time industries essential both for the maintenance of a minimum subsistence in Germany and to provide for necessary imports and recurrent reparations. Even American owned equipment of this character has been removed.

Since all of these removals are taking place before any reparations agreement has been reached, we can only conclude that the equipment removed is either being taken as “war trophies” or that the Soviet Government has concluded that the reparations program can best be conducted on a zonal basis, rather than by treating Germany as a single economic unit as was discussed in Moscow. As you know, we have consistently maintained that the economy of Germany, in which reparations necessarily plays an important part, could be more satisfactorily administered by treating Germany as an economic unit. This principle was set forth in one of the seven principles to which the Soviet Government agreed in Moscow.5

It has now been made clear both to the Big Three and the Foreign Ministers that with the acquiescence of the Soviet Union, Poland has been permitted to occupy and take over all of German Silesia lying east of the Oder–Neisse River[s] together with a substantial part of East Prussia. Representatives of the Soviet Union have stated that no Germans remain in these areas and take the position that this area belongs exclusively to the Poles. This means that the large potential surpluses of agricultural products and important minerals and other raw materials produced in these areas of pre-war Germany will no longer be available to balance the German economy. This renders it impossible for zones other than the one occupied by the Soviet Government to balance their economy even on a bare subsistence level without large imports of foods, and other raw materials.

[Page 896]

In the circumstances, both the British and U. S. Governments have been and will be compelled to import into Germany these large quantities of food, and other supplies. The Soviet Government both in our meetings at Moscow and here at this conference has consistently refused to accept that part of the final proposed principle of a reparations plan underlined6 below:

“After payment of reparations, enough resources must be left to enable the German people to subsist without external assistance. In working out the economic balance of Germany, the necessary means must be provided for payment of imports approved by the Government concerned before reparation deliveries are made.”

The Soviet representatives have maintained that reparation deliveries shall have priority over payment for even approved and necessary imports made into Germany by the Allied Governments. This simply means that those Allied Governments which are compelled to ship food and other necessary supplies into Germany without compensation will in effect be advancing funds to provide for deliveries of reparations from Germany. To this neither the United States, nor, as we understand it, the United Kingdom can subscribe. The Soviet position would prevent our receiving compensation for the vast supplies now necessary to maintain our respective zones. Thus we would repeat one of the worst mistakes made after the first World War.

The United States has therefore been placed in the position where it must deal with reparations along the same lines as have, in fact, been initiated by the Soviet Government. It was for this reason that we have submitted (two days ago) a further proposal which formally recognizes that removals will be conducted on a zonal basis.7 This we regard as regrettable, but inescapable, in view of the unilateral actions taken by the Soviet Government.

Our proposal need not interfere with the efforts of the Control Council to work out other economic and political problems for Germany as a unit. Likewise, it need not interfere with your securing heavy equipment from western Germany as reparations in return for deliveries of needed equipment and supplies from eastern Germany both on reparations account and to lighten the import burdens which have been placed upon those powers occupying western Germany.

[Page 897]

I trust that you will understand the spirit in which this letter is written. I am sure that we both realize that removals of necessary peacetime equipment from Germany render it most difficult to deal with reparations and the payment for necessary imports. Let me assure you again that we share your views as to the necessity for removing German war potential.

Sincerely yours,

Edwin W. Pauley
  1. Printed from a carbon copy on which there is an uncertified typed signature.
  2. Printed from a carbon copy on which there is an uncertified typed signature.
  3. document No. 364, printed in vol. i .
  4. Pauley has provided the information, in an interview with Department of State historians on November 23, 1953, that this letter was approved by Clayton, Byrnes, and Truman; that it was handed on or after July 28 to Vyshinsky (who had replaced Maisky as the Soviet negotiator with respect to reparations on the Economic Subcommittee) in the course of a meeting of that Subcommittee after Pauley had stated its substance orally; and that no written reply to this letter was made by the Soviet authorities.
  5. See document No. 1416, section v.
  6. See attachment 1 to document No, 894.
  7. Here represented by italics.
  8. document No. 925.