740.00119 EW/9–847
The Political Adviser for Germany ( Murphy ) to the Secretary of State
No. 10862
Sir: I have the honor to forward herewith information on the development and current status of negotiations with regard to “reciprocal deliveries,” that is, deliveries by the Soviet Union of food and raw materials in exchange for 15 per cent of the capital equipment received from the Western Zones, as provided by the Potsdam Agreement.15 As the Department is well aware, no such deliveries have yet been made.
About a year ago, to some extent at least as a result of a communication from the Inter-Allied Reparations Agency, a Working Party on Reciprocal Deliveries was set up under the Economic Directorate. In June, 1947, this Working Party was transferred to the Reparations, Deliveries, and Restitutions Directorate, and henceforth this Directorate will assume responsibility for reciprocal deliveries and questions related thereto. Recently the Reparations, Deliveries, and Restitutions Directorate prepared a report on the “Value of Commodities, Place of Delivery, and the Determination of Sources of Reciprocal Deliveries,”16 for consideration by the Coordinating Committee. In the absence of agreement on the method of evaluation of commodities, the entire question was returned to the Reparations, Deliveries, and [Page 1122] Restitutions Directorate. (See our cable 1955, 14 August 1947.)17 Since very little agreement could be reached at this level at a meeting held on August 22, 1947, a comprehensive report on the points which remain unsolved is being prepared for submission to the Coordinating Committee.18
Three principal questions await resolution by the Coordinating Committee:
- (1)
- Who shall take delivery of commodities dispatched as reciprocal deliveries? The Soviets insist that each Zone Commander shall take delivery and sign receipts for commodities in proportion to the industrial capital equipment dispatched from that particular Zone; neither the Zone Commanders of the Western Zones nor the Zone Commander of the Soviet Zone can act as agents for IARA. The three Western nations insist that they can only accept such commodities “acting on behalf of IARA.”
- (2)
- What is to be the source of the commodities dispatched as reciprocal deliveries? The Soviets insist that they alone are to determine the source from which such commodities are delivered. The Americans and British—partially supported by the French—insist that commodities furnished as reciprocal deliveries must come from outside Germany, unless they are in excess of the requirements of an agreed minimum economy for all of Germany and are not exportable to provide funds for reimbursement of occupation costs.
- (3)
- What is to be the price of the commodities dispatched as reciprocal deliveries? The Soviets insist that the cost of packing and transport outside the German borders should be added to the 1938 price in Reichsmarks (plus 5 per cent), and therefore, such costs should be borne by the recipient. The three Western nations insist that such costs are already included in the basic price (i.e., the 1938 price in Reichsmarks plus 5 per cent), and that they should not again be added to the price used for accounting purposes.
The main questions of principle and an outline of the development and current position of the various delegations on each are indicated in the following pages.
. . . . . . . . . . . . . .
Respectfully yours,
- See Foreign Relations, The Conference of Berlin (The Potsdam Conference), 1945, vol. ii, p. 1506.↩
- Document CORC/P(46) 403/3, August 7, 1947, not printed.↩
- Not printed; it reported that at the 133rd Meeting of the Coordinating Committee of the Allied Control Authority, August 13, 1947, document CORC/P(46) 403/3 was referred back to the Reparations, Deliveries and Restitution Directorate for further discussion (740.00119 EW/8–1447).↩
- Reciprocal deliveries were discussed at the 137th Coordinating Committee meeting, September 12, and the 70th Allied Control Council meeting, September 20. Ultimately, at the 139th meeting of the Coordinating Committee, October 2, agreement was reached on a Soviet offer to deliver certain goods, including wood, benzine, grain and synthetic rubber, as reciprocal deliveries. Decision on the questions of principle, i.e., the source of deliveries, transportation costs, etc., was deferred pending economic and political unification of Germany. For an account of the commodities made available by the Soviet Union and the amounts finally allocated to certain member governments of the Inter-Allied Reparation Agency, see Inter Allied Reparation Agency: Report of the Secretary General for the Year 1947 (Brussels, 1948), pp. 21–22.↩