Foreign Relations of the United States, Diplomatic Papers, 1945, European Advisory Commission, Austria, Germany, Volume III

740.00119 EW/12–845: Telegram

The Ambassador in France (Caffery) to the Secretary of State

Paris, December 8, 1945—2 p.m.
[Received December 10—2:32 a.m.]

7075. From Angell No. 130. Discussion of quotas with French has reached an impasse over charging PW labor to reparation. After further consultation with his Government Rueff now states that agreements under which German PWs are provided to France by US contain no provision for payment or for charging them to reparation account. Also contends that US gave France PWs partly from generosity but partly to avoid cost of feeding them, and that PWs should in any event not be considered a reparation asset. Therefore opposes any charge now to French reparation share.

2. Please wire copies of PW agreements immediately if obtainable or adequate summary of provisions.

3. Repeated firm proposal to Rueff for B quotas²⁵ of US 28, UK 28, France 16 and for A quotas²⁶ of US 12, UK 28, France 22. Stated that French quotas would be regarded by US as embodying a roughly adequate charge made in advance for all German PWs we transfer to French, as long as we leave them in French hands. Reserved right of US to withdraw PWs later. Stated we would support and defend this position in conference, and that we would make comparable adjustments in quotas of any other countries to which we gave PWs, but also reserved our rights to review our position if conference support could not be obtained for this treatment of PW labor. Waley strongly supported our proposal. He agreed that PWs should be charged to reparation, and argued that our proposal was actually very favorable to French. Rueff is reporting proposal to his Government but indicated he thinks it not acceptable for reasons given in paragraph 1.

4. We propose to stand firm on our proposal pending [official reply by Rueff. Urgently request, however, immediate reaffirmation even if preliminary of previous authority to vary quotas in major categories by one or two points. If necessary and sufficient to reach tripartite agreement, may wish to raise French B quota]²⁷ to 17 or 17.5 and reduce others to 27 or 26.5 in B quota. Waley now authorized to agree to 17 and could easily go to 17.5. Must be recognized failure to reach tripartite agreement will involve lengthy and difficult course in Conference.

5. Meanwhile following problem has arisen over treatment of German assets situated in United Nations. Certain United Nations, notably Belgium, Netherlands, Norway, Denmark, Egypt and Luxembourg have more than enough such assets to exhaust their B quotas as presently calculated and might thus have to make payments back to IARA unless A quotas were reduced by the excess over their B quotas. This would probably result merely in failure by most such countries to declare total of assets or in subsequent unreasonable reductions in reported total assets through deduction of exaggerated claims against assets. Following possible solution has been worked out by Waley and me to meet these administrative and accounting difficulties.

Each United Nation at Conference would be permitted to retain all assets situated within its territory and would be required to fender accounting to IARA. Surplus over country’s B quota share, in external assets in United Nations (calculated on basis present estimates of net value of such assets) would be roughly absorbed by reduction in country’s B quota share of other categories (external assets in neutral countries, Russian reciprocal deliveries, etc.) and by corresponding reduction in country’s A quota (plant and ships). Effect on Netherlands, for example, would be to reduce calculated B quota from about 4% to about 2.5% and A quota from about 5.8% to 3.5%. Above procedure creates a disposable surplus of A and new B quotas available for distribution to other countries not having surplus aver unadjusted B quota share in external assets in United Nations, rough account being taken of amount of such assets held relative to unadjusted quota. US and UK would not propose to benefit from distribution of surplus quotas.

External assets held in United Nations would then form separate category to which no quotas apply, each country receiving its own assets, and new B quotas as adjusted would apply to totality of external assets in neutrals, reciprocal deliveries, etc. (B quota percentage as calculated prior to above adjustment for foreign assets held would be used, as explained above, only to determine any excesses of such assets held.) Believe this new basis has many inherent practical advantages from administrative standpoint.

6. In addition under above procedure roughly two or three additional points could be made available to France in B quota and corresponding additional points in A quota. This increase of French B quota to 18 or 19 might help to end present impasse over labor described above. Although new B quota applies to smaller totality of items (external assets in United Nations, having been excluded as noted above), higher French B quota would be politically advantageous for them and higher French A quota would mean slightly greater share in plant. New French B quota of 18 or 19 would provide for same adjustment for labor as French B quota of 16% on old basis.

7. Waley not at present authorized to lower new French B quota of 17 or 17.5 basis but might if necessary be able to obtain authority for 18. I would not propose greater adjustment as French quota on new basis than Waley would agree to in advance. Recognize that French might refuse new basis suggested but might at same time attempt to retain new B quota offered for application on old basis.

8. Urgently request immediate authorization, even if preliminary, to make proposal along above lines in lieu of or as alternative to adjustment in paragraph 4 if such proposal appears to be necessary and desirable.

9. In order to place problem of share for non-repatriables before conference, I shall make following recommendation today without reply to my telegram from Angell No. 105.²⁸

(a) Allocation of share of dollars 25 million for rehabiltation and resettlement of non-repatriable victims of Germany;

(b) share to be satisfied from all non-monetary gold and portions of proceeds of German assets in neutral countries;

(c) classes eligible to include nationals of Germany and formerly occupied countries who suffered loss by German action, who require aid, and who cannot be repatriated in reasonable time, but excluding persons determined to have voluntarily aided Germans in war;

(d) administration by board of trustees of 5; one each to be appointed by France, UK, and US; two to be appointed by assembly of IARA from other countries. Board to be responsible to IARA initially but to be transferred to UNO auspices as soon as possible;

(e) non-monetary gold to be available immediately;

(f) laims of individual refugees against future German Government to be preserved.

10. Waley will support this proposal in principle but will urge that size of share and organization and functions of administering agency be referred to France, UK and US to formulate proposals for submission to other governments.

11. Urgently request comment on above and on desirability of further limitation of eligibles through use of concentration camp criterion or other restriction. [Angell.]

Caffery

25. Category B embraced industrial and other capital equipment removed, from Germany, as well as merchant ships and inland water transport.
26. Category A included all forms of German reparation not in category B.
27. Bracketed insertion on basis of copy in Council of Foreign Ministers files (Lot M–88, box 2060).
28. See telegram 6931, December 2, 8 a.m., from Paris, p. 1437.