Foreign Relations of the United States, 1946, The British Commonwealth, Western and Central Europe, Volume V

740.00119 EW/6–1746: Telegram

The Acting Secretary of State to the Ambassador in the Soviet Union (Smith)²⁵

secret

Washington, June 17, 1946—10 a.m.

1105. Please present note in following language to USSR:

“Acting upon instruction from my Government, which attaches the highest importance to this matter, I have the honor to bring the following considerations to your attention:

At the Potsdam Conference, the Governments of the USSR, the United Kingdom and the United States of America agreed upon an overall and far-reaching program designed to meet our mutual reparation and security objectives. In the Protocol of that Conference, it was agreed, inter alia, that Germany would, during the period of occupation, be treated as a single economic unit; and that the reparation claims of the USSR would be met by removals from the zone of Germany occupied by the USSR and from appropriate German external assets.

Subsequently, and in accordance with procedures envisaged at Potsdam, a conference was held in Paris to discuss distribution of reparation shares to other nations entitled to compensation from the other three zones of Germany, and from appropriate German external assets. In the agreement resulting from that conference, the signatory nations agreed that they would in no way support claims on behalf of themselves or persons entitled to their protection in respect of property received by a reparation-claimant government as reparation ‘with the approval of the Control Council for Germany’. In addition, it was agreed that each signatory nation should have a prior right to claim items declared available for reparation removal when a claimant nation or its nationals had a substantial interest in such property.

Subsequently, the ACC for Germany has established the principle that, in an industry in which reparation removals are to take place, purely German property should be removed before that in which nationals of the United Nations have an interest; and the Level of Industry report, which has been under serious consideration over a considerable period of time, has been agreed.

The United States is informed that certain removals of plants in which nationals of the United States have substantial interests have taken place from the zone of Germany occupied by the USSR. The United States would desire to be informed, at the earliest possible moment, of the cases in which such removals have taken place, of the extent of such removals, and the justification of each. On the question of principle which is involved, the United States would desire to bring the following comments and suggestions to the attention of the Government of the USSR:

1. The United States feels strongly that, in the absence of specific determination on each such case in the ACC, properties in Germany in which nationals of the United Nations have a substantial interest are not properly subject to removal for reparation purposes. For purposes of discussion, the United States would define the term ‘substantial interest’ as being a shareholding of 48% or more of the outstanding stock of the German corporation or entity directly owning the property in question.

2. The United States believes that all past or future cases of removals from the zone of Germany occupied by the USSR of properties in which nationals of the United Nations have a substantial interest should be identified to the ACC. Only thus can implementation be given to the agreement that Germany is to be treated as an economic unit. Furthermore, this information is essential in order to enable the ACC to pass on an overall basis upon the suitability of such removals as reparations.

3. The United States proposes that the ACC shall be instructed to institute procedures which will make it possible for Germany to provide compensation to the nationals of the United Nations having a substantial interest in properties removed as reparation from Germany. In the view of the United States, these procedures would entail appraisal of the United Nations interest in such property by the ACC, deposit of the appraised value in reichsmark by the ACC to the account of the United Nations owner, and permission by the ACC that the sums so deposited may be used by their owner in the purchase in Germany of similar properties in related industries. The ACC should also be instructed to give favorable consideration to methods of compensating such United Nations owners, where feasible, by transfer of shares of similar enterprises in Germany. The ACC should also be instructed to explore other ways and means of making available to such United Nations owners, as a charge on the Germany economy, compensation for the properties so removed.

4. The United States requests that, pending these steps, any removals which may be contemplated of properties in which nationals of the United Nations have a substantial interest should be discontinued.

5. The United States must state that, where past or future removals do not fall within the category of reparation removals as thus defined by the ACC, the United States reserves its right to claim compensation from the reparation recipient, on behalf of its nationals, in respect of such removals of properties in which such nationals have a substantial interest.

6. In recognition of the needs of economic security, the United States recognizes the right of the occupying powers to effect removals of all plants and equipment falling within those categories which are proscribed under paragraph III B.11 of the Potsdam Protocol.²⁶ The United States reserves its right at a later date, however, to ask reichsmark compensation for its nationals with respect to such removals.

7. The question of minority interests of nationals of the United Nations is expressly reserved in this memorandum.

8. The United States will support proposals in the ACC for Germany designed to implement these principles, and requests an expression of the views of the Government of the USSR at the earliest opportunity.²⁷ The United States is making similar proposals to the Governments of the other occupying powers.”

Acheson

25. Repeated to Berlin as telegram 1333, and to Paris for the Secretary’s information as telegram 2880 (Secdel 276).
26. Reference is to the Communiqué of the Potsdam Conference, Foreign Relations, The Conference of Berlin (The Potsdam Conference), 1945, vol. ii, pp. 1499, 1504.
27. The reply of the Soviet Union to this memorandum is contained in telegram 3392, September 4, 11 p.m., from Moscow, p. 600.