862.50/2–1946: Telegram

The United States Political Adviser for Germany (Murphy) to the Secretary of State


558. Economic Directorate, on 15 February, agreed to the following statement on German export-import balance:

“For the purposes of the reparations plan, it is agreed:

That the value of export from Germany shall be planned as 3 billion RM (1936 value) for 1949 and that sufficient industrial capacity shall be retained to produce goods to this value and cover the internal requirements to Germany in accordance with the Potsdam Declaration;
That approved imports will not exceed 3 billion RM (1936);
That of the total proceeds from exports, it is estimated that not more than 1½ billion RM can be utilized to pay for imports of food and fodder, if this will be required, with the understanding that any portion of that sum not needed for food and fodder will be used to pay for costs of occupation, and services such as transport, insurance, etc.; and
That the Food and Agriculture Committee is directed to prepare a program of requirements to achieve the maximum agriculture production in order to reach the pre-war yields, in crops and livestock production, by 1949 or as soon thereafter as possible, throughout Germany, in order to reduce required imports of food.”

Agreement on this resolution represents a substantial step toward agreement on reparations plan. Little progress has been made in earlier discussions in which the Russians had insisted that food and fodder imports should not be in excess of .6 billion RM. American food and agriculture experts maintained that 1.5 billion RM of such imports would be insufficient. However, the American delegate, on February 15, felt bound to 1.5 figure but unable to approach the much lower Soviet estimate. The Russian figure was based upon an estimate of recovery of land productivity and cattle population by 1949, whereas American officials expect a much longer period to be required.

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The Russians over-all export-import balance contained a figure of .8 billion RM for cost of occupation and invisible imports. Neither the Brit nor American figures contained any similar item. The Russian estimates of needed imports, including the .8 billion figure, totalled approximately 3 billion RM. As a compromise move, the American delegate recommended the acceptance of the 3 billion figure. He pointed out to the Russians that, if their figure of .6 billion for food imports was sufficient, a balance could be struck allowing for the estimated Russian cost of occupation and invisible imports. The Russian delegate accepted the above compromise, as refusal to do so would have indicated lack of confidence in the Russian estimate of needed food imports. With agreement on this matter, it is expected that more rapid progress can be made on the levels of industry and it is probable that the reparations program which was due February 2 should be achieved within the next 4 to 6 weeks.

Sent Department as 558; repeated to London as 107, Moscow as 49.