Department of the Army Files

No. 965
The Assistant Secretary of War ( McCloy ) to the Secretary of State 1

top secret

Dear Mr. Secretary: I am going off to Frankfurt, and from there to Munich to go through our zone, looking particularly at our Military Government installations on the way from Frankfurt to Munich. From there I intend to go on to Italy for a short visit with the people in northern Italy, finally to spend a day with McNarney and perhaps Alexander in Rome. I shall be home in about five days.

I have had talks with Pauley and Clayton about the status of the reparations discussions. I have also had several talks with Clay, and will probably have more in Frankfurt before leaving there. The War Department interest in reparations lies, of course, in the vital effect the solution of the reparations problem has on the day to day administration of Germany. I believe the Army can administer under any of the Plans I gather from Clayton you have in mind as possible solutions of the reparations issue, but I would like to leave [Page 926] with you the following brief thoughts in the hope you will be able to give them consideration in any plan you conclude at Babelsberg:

  • First: In agreeing to a formula for sharing reparations out of the Ruhr area, I hope the wording will insure that whether the amount be stated in percentage or amount, it shall only relate to that portion of the Ruhr surplus which we find is not needed for the maintenance of a reasonable measure of self-supporting economy in Germany. We know that there will be substantial amounts available, but since we have to satisfy France, Belgium, etc., as well as maintain some economy in Germany, we shall be taking the great risk of having to finance that economy if the amount of reparations to be delivered to the Russians from the Ruhr are absolutely fixed now. We have to know more of what has been destroyed and what conditions generally are, in my judgment, before a fixed sum can be set without risk. I know that this is General Clay’s strong recommendation.
  • Second: I hope very much that you will be able to induce all governments to agree that their representative on the Control Council will have delegated to him the authority to deal with all questions within the framework of the policies agreed upon at Babelsberg without reference back to his government for further decision. From what I hear Zhukov is disposed to act and if he is permitted to we shall have a real chance of making the thing work. The language of such a delegation was contained in a paper submitted to you earlier in the Conference by General Clay.2 For your convenience I enclose herewith the language to which I refer.3

I shall be in Frankfurt until Wednesday night.


[No signature]
  1. Printed from an unsigned carbon copy. No signed original of this letter has been found in Department of State files and it has not been possible to verify that the letter was signed and transmitted.
  2. document No. 869.
  3. Attached is a copy of the final two sentences of document No. 870.