740.00119 EW/6–947
Edwin W. Pauley, Special Adviser to the Secretary of State on Reparations, to President Truman 91
My Dear Mr. President: I have heard that my letter to you of April 15, 1947,92 discussing the proposals of Mr. Herbert Hoover with regard to the reparations program and the future of Germany,93 has been regarded by some as supporting a program of “pastoralization”—de-industrializing and converting the nation into farm land. It has consequently occurred to me that some of the aspects of my letter may have lost connection with the context of my original recommendations to you on the subject of reparations. I should like, therefore, to clarify a few points, and to recall the official basis for the position taken by the United States Government in this matter. I am definitely not in favor of the so-called pastoralization of Germany.
My only insistence, in my letter of April 15, 1947, was against departing from the philosophy of the Potsdam Agreement in favor of the philosophy apparently advocated by former President Hoover, namely the philosophy of rebuilding Germany, without regard for long-range economic or political implications, ostensibly in order first, to counteract communism, and secondly, to meet the needs of Europe.
There is no reason, except the keeping of a faith inherent in all international accords, to cling to the statistical letter of the Potsdam Protocol94 and its supporting agreements. The actual level of industry to be maintained in Germany, and the specific nature of the reparations [Page 1107] to be taken from Germany are and should be subject to amendment, by international agreement, as experience dictates. Secretary Marshall has indicated his willingness to consider such a modification. I am, as you know, now engaged in an intensive study, at Secretary Marshall’s request, of such a possible modification. The objective of our current study is to determine what changes need be made in the first place to call a halt to the drain on the American taxpayer to support the German economy, in the second place to meet the needs of Europe for food and commodities, in the third place to bolster up the sagging structure of peace, and in the fourth place to insure the inability of Germany again to wage war against us.
However, there is no tendency on my part to advocate the stripping from Germany of all her industry, or the conversion of Germany into grazing land. Germany can and must fit into the pattern of European economy and assist in the filling of the commodity needs of the continent. Yet I do not see how the fact that Germany is now hungry, and that all Europe is needy calls for the scrapping of Potsdam and the return to Germany of her pre-war domination over the European economy. The fact that Russia seems to be playing the role of devil’s advocate should not necessarily lead us into blind flight in the opposite direction.
In my letter to you, I cited certain errors in Mr. Hoover’s statistics. I do not claim infallibility for mine. I hope all figures can be re-examined, so that the best possible and most scientific judgment can be reached by our own Government, in preparation for its negotiations with the other Great Powers.
You may recall that the American position in the German reparations negotiations was prepared by the Informal Policy Committee on Germany (IPCOG), consisting of representatives of the State, War, Navy and Treasury Departments, the Foreign Economics Commission, and my Mission, guided by frequent conferences with you and with members of the Foreign Relations Committee of the Senate and the Foreign Affairs Committee of the House of Representatives.
One of the points agreed upon during these discussions, and embodied in my formal instructions (Memorandum No. 2, Informal Policy Committee on Germany95), was the need for leaving in Germany the means of self-support.
This point constituted one of the basic principles which I submitted at Moscow on June 21, 1945,96 before the first plenary session of the [Page 1108] Allied Commission on Reparations. The principle was embodied in the Potsdam Protocol in the statement:
“Payment of reparations should leave enough resources to enable the German people to subsist without external assistance. In working out the economic balance of Germany the necessary means must be provided to pay for imports approved by the Control Council.”
This document corresponds completely to my fundamental position in the matter. All that is proposed now is that we maintain that basic position, but propose whatever adjustments are vital to achieve the four objectives cited above, the objectives of your foreign policy.
Respectfully,
-
The source text was sent to the Secretary of State under cover of the following letter, also dated June 9, 1947:
↩“I enclose a copy of a letter I have addressed to the President. The original letter, of which this is a clarification, was written before my connection with the State Department. I wish, however, that you be informed of this communication.”
- Not printed.↩
- At the request of President Truman, former President Herbert Hoover carried out an economic mission to Germany and Austria during February 1947. For the text of former President Hoover’s report on economic policies in Germany, which was sent to President Truman on March 18, 1947, see Herbert Hoover, An American Epic: The Guns Cease Killing and the Saving of Life from Famine Begins 1939–1963, vol. iv (Chicago, Henry Regnery Company, 1964), pp. 245–256.↩
- Foreign Relations, The Conference of Berlin (The Potsdam Conference), 1945, vol. ii, p. 1477.↩
- For the text of the Instructions to the United States Representative on the Allied Reparations Commission, document IPCOG 2/2, May 18, 1945, see Foreign Relations, 1945, vol. iii, p. 1222.↩
- The basic principles referred to here were reported upon in telegram 2441, July 6, 1945, from Pauley in Moscow, Foreign Relations, The Conference of Berlin (The Potsdam Conference), 1945, vol. i, p. 527.↩