740.00119 EW/1–1548: Telegram

The Civil Affairs Division of the Department of the Army to the United States Military Governor for Germany ( Clay )

secret

Warx 93723. From CSCAD cite PL.

1.
As you are aware, in Senate debate 19 Dec Vandenberg was able to obtain withdrawal of rider to supplemental Appropriation Act which would have prevented use of appropriation for compensation of pers engaged in dismantling non-mil plants in Bizone by promising his committee would undertake to review entire question German reparations in connection hearings on ERP.2 Hearings began yesterday (8 Jan).
2.
Adoption definitive US policies on future reparations deliveries awaits progress these hearings, further discussions with British and consideration in US cabinet.
3.
Meantime you should continue practice of making no deliveries to Soviet Union except for any tag ends of deliveries which were never suspended and are now being completed pursuant advance deliveries and war plants equip programs. There should be no public statement or statement to Soviets on this practice pending adoption [Page 704] definitive US policy. Reasons for secrecy are delicate negotations with British and desire if possible avoid any Soviet reprisals pending definitive policy.
4.
Anticipated Secy State recommendations to Cabinet are that:
A.
Reparations program as whole be strongly defended and that dismantling for and deliveries to IARA countries be suspended pending Congressional inquiry only if adm is persuaded after full conference with Congressional leaders that indispensable to Congressional support for ERP.
B.
Deliveries to Soviet Union be suspended indefinitely except perhaps tag ends referred to Para 3 above.
C.
Deliveries to all IARA countries be continued.
D.
Agreement be sought with British and French to suspend deliveries to USSR from western zones but no economic pressure be exerted if to do so is against their judgment.
5.
In foregoing connections your comments are urgently desired re fol points.
A.
Advisability of announcing as US decision that all deliveries to USSR are suspended, but that when Soviet reciprocal deliveries have paid in full for past plant deliveries from US zone, US will consider resuming deliveries to USSR of 15% of plants to be removed from US zone provided (1) USSR indicates its willingness to continue reciprocal deliveries for full value this 15% and (2) USSR agrees that none of commodities delivered by it in return for plants shall be drawn from economy of Eastern zone of Germany without eff compensation in other goods or svs.
B.
Estimate of effect of cessation of reparations deliveries to Soviets upon pos western powers Berlin.
C.
Estimate of probable effect of suspension on quadripartite allocation procedures.
D.
Desirability of stopping tag ends of deliveries referred to Para 3 above.
6.
British pos as fols: They have indicated quite definitely that they do not wish to join with US in cessation of deliveries to Soviets and that they regard themselves as obligated to continue such dismantling and deliveries. Most comprehensive expression British pos set forth in aide-mémoire delivered by British Ambassador to State Dept on 27 Dec 47, pointing out fol harmful effects of cessation: (1) It would give Soviets excuse to increase difficulties of pos western powers in Berlin; (2) It would cause Soviets to halt reciprocal deliveries of urgently needed commodities such as wheat, potash, timber etc, thus causing difficulties with IARA powers who would be deprived of part of their share of reparations; (3) It would further discourage trade between eastern and western Europe and (4) it would intensify opposition of Communists in western zones to dismantling program. According to more recent communication from British Ambassador to State Dept, British lay great stress on argument that to [Page 705] cut off reparations to Soviets would give them excuse for launching further attack on allied pos in Berlin.
British have been advised of probably Congressional dissatisfaction with their attitude especially in view of financial burden assumed by US under recent Bizonal agreement and requests for further economic assistance to British under ERP. Although British so far have not indicated that they would be willing modify their views in light of these difficulties, State Dept will discuss matter further with them and with French in effort to persuade them to US point of view.
7.
Info supplied by you in connection House resolution 3653 much appreciated. It may be necessary ask you for further analysis re possibility particular plants produce certain items world short sup. British and French Embassies’ Wash have been approached with suggestion it is in interest their Govt’s to see that desired info produced for their zones. Any further cooperation you can give this regard will be appreciated.

  1. After consultation with officers of the Department of State, Senator Arthur Vandenberg asserted in a Senate speech on December 19, 1947, that the United States was seeking adequate arrangements with the United Kingdom regarding any further shipment to the Soviet Union of dismantled industrial plants from the Western zones of occupation of Germany. The Department of State issued a statement that same day confirming Senator Vandenberg’s assertion. Senator Vandenberg’s speech came during a Senate debate on an appropriations bill for occupied areas that included an amendment, introduced by Senator Styles Bridges, which would have banned the use of appropriated funds for the compensation of personnel “engaged in dismantling non-military plants in bi-zonal areas of occupation of Germany”. Senator Vandenberg assured the Senate that the subject of dismantling German industrial plants would be thoroughly explored when the Senate Foreign Relations Committee began hearings on January 7, 1948 on the European Recovery Program. Following Senator Vandenberg’s speech, Senator Bridges withdrew his restrictive amendment, and the appropriations measure was approved.
  2. On December 18, 1947, the House of Representatives adopted House Resolution 365. The Resolution requested the Secretary of State and the Secretary of Defense to transmit to the House of Representatives at the earliest practicable moment certain information regarding the removal of industrial plants from Germany by way of reparation. Regarding the Department of State’s response to this request, see the editorial note, p. 117.