Office of the Historian

740.00119 EW/6–3045: Telegram

The Ambassador in the Soviet Union (Harriman) to the Secretary of State

Moscow, June 30, 1945—midnight.
[Received July 1—1:20 p.m.]

2357. From Pauley.

1
The Russian reparation plan34 includes transfers of shares of German corporations as indicated in Crimea protocol.35
2
We propose to oppose such transfers on following grounds: (a) value of shares will be limited by economic security program; moreover acceptance of shares may furnish an incentive for maintaining facilities useful for war and for rebuilding German industry generally, (b) Ownership of German corporations through share holdings is unnecessary for full collection of reparations in kind. Full control over German economy will be exercised by occupying powers during reparation period and during such period no additional benefits could be secured from dividends on shares since annual reparation in kind presumably will be exacted up to the limit of German capacity, (c) Acceptance of shares implies an indefinite extension of reparation transfers beyond contemplated reparation period, complicates future international monetary transfers and may inject issue of US Govt taking a proprietary interest in ordinary commercial enterprise. (d) There would be danger of cartel control of German industry for the benefit of private commercial interests abroad, (e) Continuing international control of German economic resources whether for [Page 1238] security or economic purposes, if desired, can be more effectively imposed by uniform regulation of controlling powers than by management of individual corporations through stock ownership.
3
In the event that we are unable to secure agreement to drop plan to use shares in payment of reparation we propose to attempt to limit use of such shares as narrowly as possible.
4
It is our understanding that the British Delegation also is opposed to this proposal and we have been informed informally that they do not consider themselves committed to it by the Crimea protocol. [Pauley.]36
Harriman
  1. Not printed; the text of this Soviet proposal was circulated as a basis for discussion at the first meeting of the Allied Commission on Reparations on June 21.↩
  2. Conferences at Malta and Yalta, pp. 979 and 983.↩

  3. Telegram 1581, July 11, 7 p.m., to Moscow, gave the following reply: “Department fully concurs in your position reference share transfers for reparation purposes, although it would not desire to exclude possibility of seizing shares in German corporations for temporary control purposes.” (740.00119 EW/6–3045)

    For Soviet agreement to withdraw its proposal to include transfer of shares in German corporations as part of reparations, see Conference of Berlin (Potsdam), vol. ii, p. 517.

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