740.00119 EW/7–3147
Memorandum by the Assistant Secretary of State for Occupied Areas (Hilldring) to the Secretary of State
Subject: Review of U.S. Position on Reparations from Germany and Japan
Germany:
Discussion: The basic purposes of U.S. reparations policy remain those of disarmament, European reconstruction and a German economy [Page 1118] limited to peaceful needs and to the living standards of the rest of Europe. Our policy is, however, circumscribed by the need to reduce our German costs, the probable necessity to assume some of the British expenditures, the greatly increased population of the Western Zones, and the unlikelihood of economic unification of Germany.
The level of industry Agreement is designed for two purposes; to determine finally the amount of equipment to be removed and to provide not a production program to be implemented but merely an amount of capacity which the bizonal area should contain if it is ultimately to become self-supporting and contribute to European recovery. The rate at which retained capacity is activated is, for the next few years, of far greater importance than the actual level of capacity retained. We therefore contemplate not a priority for German production but a coordinated reactivation of idle capacity in Europe in partial implementation of the proposals made in your Harvard speech.
Such coordination requires the assurance that reparations deliveries in accordance with the new level will be resumed and completed as rapidly as possible. The decision to resume should be sought at an early Cabinet meeting. A separate memorandum is being sent you urging this approach.
Recommendations:
- 1.
- That however firmly the Clay-Robertson plan13 may be initially pressed, the countries consulted should not be given the impression that it is unalterably fixed, except, (a) that no revisions which would significantly hinder the early achievement of German self-support could be considered and (b) that the U.S. and U.K. must make the final decision, both on general principles and on detail.
- 2.
- That we emphasize that the capacity retained is less important than the question of the rate at which it should be reactivated in the interests of European recovery.
- 3.
- That reparation deliveries be resumed as soon as possible after, and if possible simultaneously with the final agreement on a new level of industry; and that such deliveries should be made both to IARA countries and the USSR (and Poland), or at the minimum, to all IARA countries.
- 4.
- That all future public announcements concerning the level of industry should emphasize a) that its chief purpose is to determine the amount of reparation removals, b) that it in no way constitutes a production [Page 1119] program or gives German recovery a higher priority, and c) that it is U.S. policy to relate both level of industry and the rate of German recovery to a general European recovery plan.
[The remainder of this memorandum was devoted to a discussion of the basic problems of Japanese reparations policy. For documentation on this matter, see volume VI, Japan: War claims: reparations, restitution, levels of industry and of production.