740.00119 EW/7–2648
Memorandum by the Assistant Secretary of State for Occupied Areas (Saltzman) to the Under Secretary of State (Lovett)
Subject: Report of the Technical Mission on Reparations
The attached letter received from Secretary Krug1 transmitted to the Department the final report of the Technical Mission. The report itself has been retained in this office for study.
In substance the final report is identical with the draft report in that it recommends for retention in Germany 316 whole plants and 15 part plants, quantities which are identical with those recommended in the draft report. In spite of repeated requests none of the deficiencies pointed out by State and Army has been corrected. No effort has been made to conform to the terms of reference of the Mission.
The principal difference is the inclusion of a new appendix listing plants recommended for retention in accordance with three priority categories (a) “Vital,” (b) “Important” and (c) “Unimportant.” These categories include respectively 131 whole plants, 5 part plants; 92 whole plants, 4 part plants; and 91 whole plants, 9 part plants.
The second important difference is the inclusion of several recommendations as to procedure which, if adopted, would nullify the decision of the Secretaries at the meeting of July 2nd by taking formal study and recommendation on the entire subject away from the Ad [Page 789] Hoc Committee (representing the five Secretaries, and including an ECA observer) and vesting it in the ECA Administrator who would presumably request the advice of Army and State. We are informed confidentially that action toward this end has been initiated by Secretary Krug who is endeavoring to obtain concurrence of Secretaries Sawyer and Brannan to direct transmission of the report to the President by the three Secretaries.2
Considering the unsatisfactory nature of the report, the first objective of State and Army will be to establish a basis, preferably working through the Ad Hoc Committee, whereby plants in the b and c categories may be released for allocation at the earliest possible date together with any plants that can be immediately justified for removal from the a list.
In view of the Sokolsky article,3 attached hereto as Tab A, the Executive Branch may shortly be confronted with requests for the Technical Mission report from other parts of the Government. We propose that initially such requests be met with a statement that the final report has been received only very recently and that since its substance involves negotiation with the British and French, it requires review in light of pertinent considerations not covered in the report.
It is desirable to avoid release of the report outside the Executive Branch of the Government, at least until it has been thoroughly evaluated in light of political, security and other relevant factors. There is some doubt that its release can be avoided indefinitely, however, since periodic progress reports by the Technical Mission to interested Congressional committees have offered to make the report available. If it should become desirable to release the report, it is necessary that justification be established by then for reducing the list of plants to be retained [Page 790] to a number suitable for initial discussion with the British and French and that a statement indicating its deficiencies be prepared to accompany the report. To gain the necessary time for this action, consideration is being given to preparation of a progress report which will give the Congressional committees the status of the Technical Mission report, outline the steps required for further action and state that final recommendation in the matter will be made after review of all pertinent factors by an interdepartmental committee.
There is an obvious danger that critics may make capital of the reparations issue during the election campaign. It is suggested therefore that consideration be given to informing Mr. Dulles at the appropriate time of the international implications in the situation, bearing in mind the security precautions which we have urged strongly on all Cabinet members having access to the report.
- Secretary Krug’s letter, dated July 22, is not printed. It contained no substantive comment regarding the Report of the Cabinet Technical Mission.↩
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At or immediately following the Cabinet meeting of July 2, the Secretaries of State, Interior, Commerce, Agriculture, and Army (the Cabinet Committee on Reparations) apparently agreed to designate their representatives to constitute an Ad Hoc Committee on Reparations. The task of this Ad Hoc Committee, which was also to include an observer from the Economic Cooperation Administration, appears to have been a review of the Report of the Cabinet Technical Mission on Reparations. After several inconclusive meetings, the Ad Hoc Committee decided on July 30 to recommend that the Cabinet Committee on Reparations submit the Report of the Technical Mission to the President together with a letter setting forth a recommended course of action in dealing with the dismantling question. The final text of the Cabinet Committee’s letter to the President, dated August 9, is printed infra.
The information set forth here is derived from materials included in file 740.00119 EW for July and August 1948. No record has been found of the Cabinet or post-Cabinet meeting of July 2. Handwritten notes of some of the meetings of the Ad Hoc Committee are included in CFM Files, Lot M–88, Box 2234, File—Reparation Plant Review, July.
↩ - Under reference here is a newspaper article by columnist George Sokolsky, which appeared on July 17, suggesting that officials in the government were attempting to suppress the Report of the Cabinet Technical Mission on Reparations.↩