740.00119 EW/3–2445
Memorandum by the Adviser on German Economic
Affairs (Despres) to the Assistant
Secretary of State (Clayton)
[Washington,] 24 March, 1945.
The attached memorandum from the White House21 represents the most extreme statement which I have yet seen of
the Treasury doctrine with respect to economic treatment of
Germany.22 It calls for pulverization of German industry, and it opposes
any attempt to assume comprehensive control over the German economy. The
resolution of all this with reparation is achieved by emphasizing
reparation through transfer of existing wealth rather than current
production. It essentially ignores the fact that the Russians are
resolutely determined to get large reparation, including, of necessity,
substantial reparation from current production. Moreover, the subject
memorandum takes no account of the need for keeping our impositions
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on Germany within limits
which will obviate the necessity for permanent outside relief to
Germany.
Mr. Stettinius, in arranging for Mr. Lubin’s appointment, emphatically
took the position that he would represent the Department of State in
undertaking this assignment. In conformity with this principle, it would
seem appropriate that Mr. Lubin’s instructions should come from the
Secretary, though with Presidential approval, rather than from the
President directly. On the assumption that the letter of instruction
would be prepared here, Mr. Luthringer has drafted a short policy
statement for inclusion in such a letter. A copy of this draft statement
is attached. It seems to me to provide much sounder guidance to Mr.
Lubin than the memorandum received from the White House. I suggest that
the policy statement to be contained in Mr. Lubin’s letter of
instruction should be considered by your new Germany Committee23 and by Mr. Lubin.
[Enclosure]
Memorandum by the Chief of the Division of
Financial Affairs (Luthringer)
[Washington,] 24 March
1945.
It was agreed at the Yalta Conference that Germany must pay in kind
for the losses caused by her to the Allied Nations in the course of
the war.24 The primary purpose of the Reparation
Commission should be the formulation of a general program for the
exaction of reparation and the establishment of the policies under
which this program is to be implemented.
The principal interest of the United States in reparation is not to
obtain as large a share as possible for this country; it is rather
to assure that the reparation program will not jeopardize the
economic and security objectives of this country with respect to
Germany. The position of the United States on the various issues
involved may be summarized as follows:
- (a)
- This Government would oppose any reparation program which
would entail the continued existence of industrial capacity in
Germany considered to be dangerous to the security of the United
Nations.
- (b)
- Another important interest of the United States is to prevent
a reparation program of such magnitude as to face us with the
alternative of permitting mass starvation in Germany or assuming
sustained responsibilities for relief of the German people. It
should also be made clear to the Reparation Commission that
consideration of the
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amount of reparation to be fixed should not be based on an
assumption that the United States will finance reconstruction in
Germany.
- (c)
- Similarly, it is to the interest of the United States to see
that payment of the costs of the occupation of Germany and
payment for such minimum German imports as may be determined to
be essential receive priority over reparation. In seeking to
establish this principle, it will be necessary to secure
agreement as to what shall be included in occupation costs as
distinct from reparations.
- (d)
- Each United Nation should retain and dispose, as it sees fit,
of German property within its territory, the proceeds to be
applied against its reparation claim. Agreed principles should
be formulated to achieve the disposal of German property in
neutral countries.
- (e)
- In order to prevent reparation from furnishing a pretext for
rehabilitation of the German economy, this Government favors a
short reparation period, preferably five years and in any event
not over ten.
- (f)
- The United States will not wish to receive labor services as
reparation. It is the policy of this Government that labor
supplied by Germany for reparation should be recruited primarily
from Nazi groups. It is anticipated, however, that you will
probably be unable to obtain agreement with this policy. This
Government will in any event insist that Nazi labor should be
segregated from general reparation labor and that the latter be
obliged to serve for only a short time and under
safeguards.
- (g)
- It is anticipated that the representatives of the U.S.S.R.
will press for the definitive establishment of the total sum of
the reparation obligation and for agreement on detailed
schedules of reparation deliveries even in the absence of
knowledge of the extent to which the German industrial plant
will have been destroyed at the conclusion of hostilities. If a
definite sum is agreed upon, it is of prime importance that it
should be low enough not to interfere with sharp restriction of
German production for export of metals, machinery, chemicals and
electrical equipment, as part of a program of economic
disarmament. The combination of reparation exactions and
economic disarmament measures imposed on Germany should be such
as to leave Germany with enough means to provide low subsistence
standard for her population, without outside relief. Any
agreement on detailed schedules should be made conditional on
the extent of damage to the German industrial plant, and such
schedules should be subject to revision whenever they are found,
in actual practice, to be excessive.
- (h)
- It is not the objective of the United States, however, to
prevent reparation deliveries until the facts concerning extent
of destruction are known or until there is final agreement on
apportionment of reparation payments. It is accordingly
suggested that one of the first tasks of the Reparation
Commission be the formulation of a plan
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for the establishment of an interim
advisory body to recommend the allocation of such commodities
and equipment as the military authorities shall determine to be
available for removal from Germany. Records should be kept of
all deliveries made on reparation account under the interim
arrangement and such deliveries should be made without prejudice
to the final allocation of reparation shares.
The reparation program will be intimately related to the question of
economic disarmament of Germany and to the restitution of property
looted by Germany from Allied Nations. Discussion of these two
matters will take place in the European Advisory Commission in
London concurrently with the discussion of the reparation question
at Moscow. In order to provide for the proper integration of
reparation policy with policies in these related fields, it will be
necessary that the Department and Ambassador Winant in London be
kept fully informed as to the progress of the work of the
Reparations Commission.
