Frankfurt USPolAd Files—500 Potsdam Conference
Memorandum by the Political Adviser in Germany (Murphy)2
The following is an exposition of ideas submitted by Messrs. Maisky and Sobelev:
- 1.
- The main task of the Control Council is the elimination of the German war potential.
- 2.
- For purpose of [blank] war potential in the future, the general policy which will be carried out uniformly in all zones of occupation will be in preventing recovery of those parts of the economy which are the basis of the heavy industry and at the same time giving Germany a free hand in agriculture and in light industry.
- 3.
- Guiding ideas for the Control Council and for the German administration: (1) Reparation obligation according to plan which will be established, and (2) Meeting needs of occupying armies. (Russians try to establish that “first” general principle governing the Control Council will be reparations).
(Maisky) It would be undesirable politically to say that imports have priority over reparations. Everybody would say that reparations come first and imports after because we have suffered so much—capitalists want to have profits from foreign trade and don’t care about reparations for those who suffered. Also when Germans know about it they will try to prove that without very considerable imports they can’t live and can’t export. Same as after last war and there is no reason to believe they won’t repeat same joke again as after last war.
German economy after this war will be a very strictly regulated economy, otherwise she couldn’t pay reparations etc. This regulated economy should provide the necessary means. It should be quite feasible to guarantee reparations and necessary imports. On (?)3 of [Page 142] principle we have a conviction that if there is a conflict between reparations and imports, then imports must give way. Political repercussions.
Monckton says political objectives are met by
- (1)
- Imports approved by Government’s consent[.]
- (2)
- Pauley said we are not going to consider that this will be a charge against once for all deliveries (capital assets, etc.).
Clayton—American people will not again, as they did after last war, finance Germany. That was President Roosevelt’s position. Germany has very little in way of natural resources except coal, potash, and some poor quality iron ore.
Maisky suggests also that question of economic regime in Germany and machinery which will regulate this economy—proposes that in postwar period economic life of Germany should be regulated by comprehensive program on annual basis by Control Council and reparations authorities which we should have soon—(?)4 by Control Council and German authorities. Naturally supervisory power lies—with Control Council to approve and German authorities to execute.
This program should include (1) production, (2) distribution of goods, including unified system of rationing taking into account local conditions, and (3) program of exports and imports, (4) currency, (5) railroad communications and water transport. These are main items.
Maisky also pointed out that pre-war Germany lived on a very high scale as compared with other European countries. Now he said we must visualize quite another Germany whose level will be that of “Middle” Europe which is very much lower. Therefore imports will be much lower and we will be able to use German iron ore and not Swedish.
Clayton said he was thinking of principle of minimum standards of living only and Reparations. Bankers will not finance.
Maisky said question is theoretical.
Waley—This is not a school debating society. This is practical.
Clayton suggests that we report this as one principle on which we cannot agree.
No—Approval of new paragraph 12.
No—Approval of new paragraph 13.