Office of the Historian

Department of the Army Files

The War Department to the United States Deputy Military Governor for Germany (Clay)19

War 73742
[Washington ] 5 October 1945.

Subject is advance reparation deliveries urad CC 16875 Sept 29 [88], 45.20. This is interim reply.

1.
Decision has been reached in London negotiations concerning inter-Allied Reparation Agency –IARA– that initial allocation of industrial equipment removed from Western Zones of Germany as between Russia and Poland on the one hand, and other claimants on the other, will be made by Control Council. Further sub-allocation among claimants other than Russia and Poland will be made by IARA. However, State Dept opposes present allocation or delivery to Russia of any industrial equipment from Western Zones, pending –a– Appointment United States member IARA, who would act as your advisor on allocations by Control Council, –b– Receipt by IARA of lists of plants desired by other claimants, –c– Progress in resolution of counter-delivery issues—see Para 4 below—and formulation of valuation principles. For your information State Dept will review this matter with Secretary Byrnes on his return to determine whether he has made any commitments to make token deliveries in anticipation of regular allocation and delivery procedures.
2.
Although you refer to 3 plants in US Zone included in original Soviet request, urad lists only 2-BMW21 and FAK.22 Request information as to 3rd plant.23 With respect to these and other plants declared available in United States Zone request that you transmit exact identification of properties concerned, E. G., does BMW plant now on list include only motorcycle portion of works in city Munich, the [Page 1331] whole plant in Munich, or the whole complex of which Munich is the parent plant?24 This is interim reply.
3.
Pending decision on these allocation matters State Dept approves your action in declaring plants eligible for advance deliveries and urges you continue this process. It is contemplated such lists will serve not only as basis for advance deliveries but also will facilitate final determination called for Art 4 Para 6 Berlin Protocol.25
4.
Interpretation Art 4 Para 4 a Berlin Protocol concerning sources of Russian products to be exchanged for 15% removals from Western Zones allocated to USSR is considered to be matter for Reparations Commission. It is recommended that you ask Control Council to seek guidance Reparations Commission on this point. For your information State Dept recognizes that Para 4 a of Protocol is ambiguous and standing alone does not necessarily preclude counter-deliveries from Russian Zone of certain products enumerated Para 4 State Dept opposes Russian view that reciprocal deliveries should originate exclusively in Eastern Zones of Germany inasmuch as list of specific commodities for counter-delivery includes such items as coal, petroleum and zinc which cannot be derived from Eastern Zone.
5.
War Dept efforts secure valuation experts and economists subject of separate cable.
6.
You should make all possible progress in determination by Control Council general valuation principles. In event of disagreement you may wish to seek guidance Reparations Commission. Please transmit general valuation principles you propose.
  1. Lieutenant General Clay was Head of the Office of Military Government of the United States for Germany, established in Berlin on October 1, 1945, to succeed the United States Group, Control Council for Germany.↩
  2. Not printed; it stated the position of the United States Group, Control Council, that no plants could be made available for advance reparations deliveries until the question of the body making the allocation of reparations from the Western Zones between the Soviet Union and other claimants had been settled. It also indicated that the United States had already ordered dismantling of 5 plants in its zone in anticipation of their use as advance reparation payments and reported that 11 more would be made available. The British had listed 13 plants as available. Of this total of 29 plants, 13 were included in the Soviet list dated August 23, 3 from the United States Zone, and 10 from the British Zone. (Copy obtained from the Department of the Army files)↩
  3. Bayerische Motorenwerke.↩
  4. Kugel Fischer Werke, ball-bearing plant in Schweinf urt.↩
  5. Telegram CC 17588, October 15, from General Clay to the War Department, stated that the third plant was the Bremen Deshmag Weser, a shipbuilding plant at Bremen. (Copy obtained from the Department of the Army files.)↩
  6. Telegram CC 17588, October 15, explained that two BMW plants had been declared available, that on the Soviet list was the main plant located in the city of Munich; originally a motorcycle engine plant, it had been converted for war use into an aircraft engine parts plant. (Copy obtained from the Department of the Army files).↩
  7. Reference is to the Report on the Tripartite Conference of Berlin; see Conference of Berlin (Potsdam), vol. ii, p. 1506.↩