Pauley Files

No. 957
Memorandum by the General Counsel of the United States Delegation to the Allied Commission on Reparations ( Marshall )1


Out of Germany (including that part occupied by Russia and Poland) the U. S. should want two important things:

Technical knowledge, information, and “know how” relative to the scientific developments, plants, and processes which contributed to both the war and peace-time industrial strength of Germany.
Relief from the enormous burden of imports to support Western Europe.

Knowledge, information, sample equipment, and data we can largely get for ourselves from the Western Zones. But imports for the West, unless they are to be paid for by U. S. taxpayers, can only come from the East. These necessary imports are food, fuels, and fertilizers (potash). Russia wants capital equipment from Western Germany. We want current production from Eastern Germany.

We can call those deliveries of current production (food, fuel and fertilizers) from East to West anything we like—for example:

“Deliveries to relieve import burdens”
“Deliveries in recognition of the principle that imports shall be paid for before reparations are removed”.

Whatever we call them, the fact remains that unless we get them:

The American taxpayer will have to provide them and U. S. rationing will be the more stringent, and,
Our imports are what permit Russia to get reparations out of Germany—which is another way of saying we are paying for reparations. The Russians have maneuvered us into throwing aside the principle that imports are afirst charge against the entire economy of pre-war Germany.

The foregoing results can be avoided practically regardless of what the figures show as to the relative proportions of capital removables between West and East, by refusing to deliver any capital equipment from the West, which is what the Russians desire, until [Page 919] they agree to deliver food, fuel, and fertilizer from the East, which is what we desire.

J H[oward] Marshall
  1. This paper bears the following manuscript notation by Marshall: “Drafted for Committee #1 at Potsdam.”