740.00119 Control (Germany)/8–545
The United States Representative on the Allied Commission on Reparations (Pauley) to the Commanding General of the United States Group, Allied Control Council for Germany (Clay)
My Dear General Clay: In the Protocol agreed upon by the Tripartite Conference in Berlin are found the political and economic [Page 1241] principles to govern the treatment of Germany in the initial period of Allied control.45 In this same Protocol is likewise found the Plan for Exacting Separations from Germany.46
You will agree, I am sure, that with the adoption of the foregoing political and economic principles, together with the Plan for Reparations, the major responsibility of the Allied Commission on Reparations have been discharged. There is left with you and the Control Council, as I firmly believe there should be left, the whole problem of administering the reparations plan and of deciding how, when and what production facilities shall be removed from Germany as reparations. The principles adopted in the Protocol are inevitably of a very general character, which means that the particular determinations can only be made by the Control Council and the Zone Commanders in the light of the facts as ascertained by the Control Council and the Commanders.
Under Section 6 of the Reparations Agreement it is provided:
“The determination of the amount and character of the industrial capital equipment unnecessary for the German peace economy and therefore available for reparations shall be made by the Control Council, under policies fixed by the Allied Commission on Reparations, with the participation of France, subject to the final approval of the Zone Commander in the Zone from which the equipment is to be removed.”
Section 7 provides the same procedure for “interim removals”.
Under Section 3 of the Agreement, it is provided that:
“The reparation claims of the U.S., the U.K. and other countries entitled to reparations shall be met from the Western Zones and from appropriate German external assets.”
And Section 5 of the Agreement required:
“The amount of equipment to be removed from the Western Zones on account of reparations must be determined within six months from now at the latest.”
This means that the Allied Commission on Reparations has only two remaining important functions. First, it must submit general policies to guide the Control Council in its determination of the amount and character of industrial capital equipment unnecessary for the German peace economy. Second, it must seek agreement among the nations dependent upon reparations from the Western Zone[s] as to the division of reparations among them.47
[Page 1242]A careful analysis of the economic and political principles incorporated in the Berlin Protocol reveals that the policies that must guide the Control Council and the Zone Commanders in determining the amount and character of reparations removals have been clearly defined in Paragraph 3 of the Section on Political Principles and Paragraphs 11, 14, 15, 18 and 19 of the Section on Economic Principles. Clearly, therefore, there is no present need of any further fixing of policies by the Allied Commission on Reparations unless new problems arise or some question occurs to you which has not as yet been dealt with.
Regarding the claims against the Western Zones of the “other nations” it is to be noted that the date which you and the Control Council will assemble in order to fulfill that section of the Protocol requiring “the amount of equipment to be removed from the Western Zones” to “be determined within six months” is precisely the same data which the Allied Commission on Reparations will need in attempting to negotiate an agreement as to what constitutes a fair division of reparations among all nations entitled to reparations from the Western Zones. In collaboration with the representatives of the U.K. and France, I shall endeavor to ascertain the extent and character of the claims of the remaining claimant nations, and I would hope that your data on what is available for reparations could then be brought to bear in negotiating a proper agreement between these claimant nations.
The whole question of reparations is inseparably interwoven with the “import and export programs for Germany as a whole”; the “elimination of Germany’s war potential”; “Germany’s approved post-war needs”; the “maintenance of goods and services required to meet the needs of the occupying forces,” and “displaced persons in Germany”; and “essential to maintain in Germany average living standards not exceeding the average of standards of living of European countries.” These determinations under the economic principles contained in the Protocol are all properly vested in the Control Council. This means that there is little left for the Allied Commission on Reparations to do except to resolve future policy questions which have not yet arisen and to render such assistance as may prove necessary for you and the Control Council in interpreting matters of Reparation policy.
Accordingly, I plan to leave in Germany only a small nucleus of the staff which has been working with me on the whole reparations problem. This group will need to have very close relations with two of your organization units. The first of these is the Economic Division under Brigadier General Draper, which Division I understand includes the work of Colonel Jefferson who heads Reparation, Deliveries and Restitution. The second is the Legal Division under [Page 1243] Charles Fahy. I would hope that all normal contacts between what will remain of the American Delegation on Separations and your office may be established and limited in this way. If this arangement seems wise to you it would be most acceptable to me as it will avoid confusion and duplication.
As the next step in effectuating this program may we not make arrangements now for the appropriate conferences between your staff and mine beginning on Monday, August 6th.
Very truly yours,
- Conference of Berlin (Potsdam), vol. ii, pp. 1481–1485.↩
- Ibid., pp. 1485–1487.↩
- On August 16, Mr. Pauley in a letter to General Clay deleted this paragraph in a second version of his August 4 letter enclosed therewith. He explained that certain of his colleagues had disagreed with the statement that the Reparations Commission had only two remaining functions. Rather than make an issue of it, Mr. Pauley said, he would prefer to remove the paragraph. This was the only change made. (740.00119 EW/8–1645)↩