740.00119 EW/10–3045
The United States Political Adviser for Germany (Murphy) to the Secretary of State
[Received October 31—9:14 a.m.]
883. The seventeenth meeting of the Coordinating Committee took place on October 29, with the French member presiding. It had been convened specially to consider the question of advance deliveries of plants on account of reparation.
The French member first raised the question of the effect upon reparations of the restitution question. He stated that his Government’s position is that no decision of reparations should be taken without a decision on restitution, and he asked: (1) For an agreement that looted property in a factory slated for reparations delivery be set aside and kept for restitution; and (2) that a program for restitution be submitted by November 5. He also stated that in one factory in Bavaria under consideration [for] reparations, there are 1200 machine tools taken from France by force. He thought there were many other examples. The other members agreed in principle that looted property should be returned to its owners but they did not agree that this question should take priority over reparations. The United States member stated: (1) That he was opposed to allowing restitution problems to delay advance delivery of reparations; (2) that looted property subject to restitution should be defined and this would take a long time; (3) that there was over 200 million dollars of United States owned property in Germany whose existence would not be allowed to delay reparations matters; (4) that an entire assembly line should not be broken up in order to take out a few looted items. The British member argued that a distinction should be made between property which had always been in Germany and had formed part of Germany’s industrial equipment. The United States member agreed with this distinction. It was agreed that the French member would reserve his position while the meeting considered the reparations question.
The meeting then proceeded to consider the report on method of making allocations for advance deliveries, prepared by the Reparations [Page 1365] Directorate.84 It was agreed that the list of factories already available for advance deliveries should be sent to those countries who claim reparations out of the Western Zones, and that those countries must indicate within 14 days after the date the list is sent out (probably October 31) those plants in which they are interested. The message to those countries will also state that two factories in the US Zone have been offered to the Soviets (see my No. 842, of October 25, noon). I am informed that the United States member of the Economics Directorate offered to the Russians the BMC [BMW] plant No. 1 at Munich and an underground plant near Heidelberg. Both make aircraft engines. Soviets said they wished to inspect several before they accepted and the matter is temporarily at a standstill.
The meeting approved the clause instructing the Economics Directorate to recommend units of allocation (i.e. whole plant, part of plant, et cetera) and the United States proposal that preliminary valuation be based upon 1938 reproduction cost less deterioration and war damage. (The British stated they had 1945 official tax valuation for 90% of the plants in their zone but it was feared that depreciation was not uniformly calculated.)
The principal argument of the day concerned the Soviet claim to receive 75% or 22 of the 30 plants declared to be available as advance deliveries. This was to be irrespective of valuation of the plants. The British, French and United States members stated that they were not authorized to agree to any allocations substantially in excess of 25% to the Soviet Union and that they could not consider allocations on a basis other than value. The British member urged the Soviet member to recognize the claims of other countries and to agree to a compromise whereby the Soviets would take 25% now and agree to reserve their claim for additional allocations. The United States member urged that the whole question of percentages in allocation be left out of this paper so that the other steps in the procedure could promptly be put into operation. The Soviet member stated he would compromise on a 50% allocation to his country and supported his position on the ground that the United States sponsored Allgemeine Zeitung had quoted a BBC broadcast to the effect that the Council had allocated to the Soviet Union the 14 largest plants in Western Germany. (The news story had in fact appeared on October 28 and is apparently based on a report from Stuttgart picked up by correspondent Twitty of the New York Herald Tribune.) The Soviet member stated that Soviet prestige was thereby involved in the eyes [Page 1366] of world public opinion. After considerable argument in which the US member suggested delaying the whole matter until the Nov 10 meeting of the Council, it was agreed to submit the paper to the Oct 30 meeting, leaving out the clause about percentage of allocation and inserting a note as to Soviet claims to 50%.85
The paper agreed also contains a clause that the Finance Directorate shall work out an agreed basis for final evaluation and that shipment can take place on the basis of the preliminary evaluation. When the basis for final evaluation is reached, the necessary readjustments will be made.
[Here follows brief discussion of matters not relating to reparations and restitution.]
- Reference is to CORC/P (45) 117 revised, dated October 26, copy of which was transmitted to the Department with despatch 1251, November 5, from Berlin, neither printed.↩
- For discussion of this matter at the October 30 meeting of the Allied Control Council, see report contained in telegram 896, October 31, 6 p.m., from Berlin, p. 848.↩