London Embassy Files: 1948: File–850 Reparations

Memorandum by Mr. Edwin M. Martin 1 Division of Occupied Areas Economic Affairs, to the Ambassador in the United Kingdom (Douglas)


Subject: Telecon with Washington on Reparations2

The information received from the Department in the Telecon of February 25, is as follows:

The Department opposes proceeding with allocations prior to negotiating with the Soviets the U.S. proposal respecting reciprocal deliveries. The risk of destroying the quadripartite allocation procedure must, in Department’s view, be taken.
By “current exchange” in Deptel 640,3 the Department means a currently agreed schedule of reciprocal deliveries.
Department is supporting substitution concept against strong opposition in belief it is essential to U.K. and French concurrence. Are now aware of U.K. position, but are quite anxious to know what French view is.
Clay suggestion for negotiated substitution, with German veto, will require further study by Department.
Cabinet sub-committee not set up pending interdepartmental agreement on its terms of reference and on substitution concept, which was not discussed by Cabinet. Hope to get started within week. Could give no estimate of how long, once set up, it would take to secure agreed list of industries or plants to be reviewed.
Pressed on the importance to negotiations here of more precise data on this latter point, Department could only repeat list of industries drawn up some weeks ago as probable examples: large diameter pipe, steel sheets and plates, mining machinery, agricultural machinery, petroleum equipment, and electrical generating equipment.
Cabinet decision has not been discussed with Congressional leaders yet.

  1. Martin was serving as a member of the United States Delegation to the London Conference on Germany.
  2. The text of the trans-Atlantic telecommunications conference summarized here is included in EUR Files, Lot 55 D 374, File–Reparations G–400.
  3. February 25, p. 86.