The Acting Secretary of State to the Administrator for Economic Cooperation (Hoffman)
My Dear Mr. Hoffman: I refer to your memorandum of October 3, 19491 regarding German reparation and your letter of September 23, 19492 on the same subject. I have forwarded your memorandum to [Page 611] Mr. Acheson and will communicate with you as soon as I hear from him.
I might point out that, as I believe Mr. Murphy has already told you, the German dismantling program has been discussed with Mr. Bevin and Mr. Schuman. For your information, I enclose a copy of the memorandum of conversation which Mr. Acheson had with Mr. Bevin and Mr. Schuman on this subject on September 15.3 I should add that it was agreed by the Foreign Ministers that the fact that they had discussed the subject of dismantling and the possibility of a further review of the matter at a later date should be kept most secret. I would therefore appreciate it if you would limit access to this document in the Economic Cooperation Administration as narrowly as possible.
I believe that Mr. Murphy’s letter to you of September 23,4 which was written prior to the receipt of your letter, deals with most of the points made in your letter of the same date regarding the 185 unallocated plants in Western Germany which have been set aside against the Soviet reparation share. As was pointed out in Mr. Murphy’s letter, we are obligated by international agreements to remove these plants from Germany. The plants had in fact been reviewed by you in accordance with Section 115 (f) of the Economic Cooperation Act and had not been recommended for retention in Germany. It has seemed to us that the fact that they had been reviewed is the important point and that the question of whether, if removed from Germany, they should be delivered to one country rather than another is a wholly separate matter to be determined separately in accordance with our international agreements.
There is one point in your letter of September 23 on which I should like to comment. This is the suggestion that the delivery of those plants to IARA is in the nature of a windfall and that a decision not to deliver them to the Soviet Union will result in the non-receipt of reciprocal deliveries which could in part be applied to the benefit of Germany. I believe that this comment may result from a misunderstanding of our agreements which it would be useful to clarify.
The plants removed from the Western zones of Germany, including those to be exchanged for reciprocal deliveries, are reparation. The reciprocal deliveries received from the Soviet Union are likewise reparation and are distributed by IARA. If the IARA countries are, as in fact has been the case, unable to obtain reciprocal deliveries, it is the Department’s view that they are clearly entitled to claim the plants for which the reciprocal deliveries would be exchanged. No windfall is therefore involved.[Page 612]
As one of the countries which benefits from German reparation, the United States is entitled to claim a portion of the reciprocal deliveries. We have in the past claimed such a portion, which we have used as part of the support of the occupation of Germany. Any supplies so used are charged to our reparation share and reduce our share of reparation from other sources within the category of reparations to which they are charged. The situation with respect to such supplies furnished to Germany is in effect the same as that with regard to supplies secured from appropriate funds. Needless to say, there is no right insofar as Germany is concerned to receive any benefits from these reparations. The question is largely academic, since no reciprocal deliveries have been received from the Soviet Union for some time and there appears to be little or no likelihood that the Soviets would deliver any substantial quantities if we had deferred the action we have taken any longer.
As was pointed out in Mr. Murphy’s letter, the decision to allocate these plants to IARA was approved by the President.