811.002/1–2348
Memorandum by the Secretary of Commerce (Harriman) to the President 1
secret
[Washington,] January 23, 1948.
I set forth below my reaction to the “Proposed Recommendations by the Secretary of State to the Cabinet on German Reparations” dated January 15.2
- 1.
- I am gravely concerned over Proposal 3 that “the plant removals
program based on the August 1947 Bizonal Level of Industry be
maintained [Page 717] and deliveries
continued to all the countries signatories of the Paris Agreement on
Reparation”.
- (a)
- I am not satisfied that the program of plant removals will permit Germany to attain self-support as rapidly as possible and thus relieve the burden on the American people.
- (b)
- I do not believe that sufficient consideration has been given to the part necessary to be played by Germany as a producer and consumer in the recovery program for Western Europe.
- (c)
- Members of the Congress have shown concern over the removal program, and unless the decision is reviewed it will be a constant source of difficulty in the maintenance of cooperative relationships with the Congress on the European Recovery Program and related foreign economic policies.
- (d)
- The cost of removal of many of the plants is a very large proportion of the recoverable value. At the present time this cost is a burden on the available German labor, material and transportation, which in the last analysis falls on us.
- (e)
- I fully recognize the desire of our Western Allies to obtain reparations from Germany and the political difficulties that are involved in any decision on this question. On the other hand, I feel that in connection with the European Recovery Program we now have an opportunity to offset reparations against the aid we will be extending, a large part of which will be grants-in-aid.
I suggest that a complete review be made of all aspects of plant removals by a small competent group uncommitted by previous decisions.
- 2.
- I am not familiar with the amount of material left undelivered to the Soviet Union under Proposal 1. I feel that we should suspend shipments of all equipment of war material plants which I understand are involved in this program. Considering the present attitude of the Soviet Government, I do not see how we are justified in sending any additional material which strengthens its direct military potential.
- 3.
- I question the advisability of reopening negotiations as contemplated in the second part of Proposal 2, namely, the delivery of 15 percent in return for commodities. The decision on Proposal 3 will of course affect the amount available. On the other hand, I am so much impressed with the cost to us of the removal of plants that I question whether we will obtain sufficient value in commodities to justify continuation of such a program. I am inclined to believe that it would be cheaper to buy whatever we can extract from Eastern Germany and pay for this from current production or otherwise.