Office of the Historian

740.00119 EW/7–645: Telegram

No. 367
The Representative on the Allied Commission on Reparations (Pauley) to the Secretary of State 1
top secret
us urgent
Moscow, July 6, 1945—11 p.m.

2441. Top secret from Pauley to the Secretary.

Several weeks ago at the first meeting of the Steering Committee named by the Allied Reparations Commission, I proposed that the [Page 528] Commission adopt certain principles which I derived from IPCOG No. 2.2 After painstaking negotiation, each delegate on the Allied Commission on Reparations has now agreed to recommend that the following principles be adopted by the Commission in the preparation and administration of a reparations plan:

  • “1. Removals of property for reparations shall be primarily such as to assist in bringing to an end the war-making power of Germany by eliminating that part of Germany’s industrial capacity which constitutes war potential.
  • 2. Reparations shall be such as will speed recovery and reconstruction in countries devastated at German hands.
  • 3. For the purposes of making a reparations plan Germany will be treated as a single economic unit.
  • 4. Any plan of reparations shall be avoided which necessitates external financial assistance either to enable reparations deliveries to be made or to facilitate economic reconstruction required for reparation purposes or which might in the opinion of the govt concerned prejudice the successful execution of the task entrusted to the armies of occupation.
  • 5. To a maximum extent reparation shall be taken from existing national wealth of Germany. While for convenience claims may be stated in money, it is necessary to bear in mind that in contrast to reparations after World War I which were assessed and exacted in money, this time reparations will be assessed and exacted in kind in the form of things such as plants, machines, equipment, stocks, foreign investments, etc.
  • 6. In order to avoid building up German industrial capacity and disturbing the long term stability of the economies of the United Nations, long run payment of reparations in the form of manufactured products shall be restricted to a minimum.
  • 7. In justice to those countries occupied by the enemy, reparations shall be calculated upon the basis that the average living standards in Germany during the reparation period, shall not exceed the average of the standards of living of European countries. (European countries means all European countries excluding UK and USSR).
  • 8. After payments of reparations enough resources must be left to enable the German people to subsist without external assistance. In working out the economic balance of Germany the necessary means must be provided for payment of imports approved by the govts concerned before reparation deliveries are made from current production or from stocks of goods.”

I hope I may have your immediate concurrence in subscribing to the foregoing principles.

  1. Sent over the signature of Harriman. Sent to Washington; relayed to Byrnes, then at sea, in telegram No. 2 of July 7 (file No. 740.00119 (Potsdam)/8–645).↩
  2. Not printed as such. For the principles set forth in Pauley’s instructions (IPCOG 2/2), see document No. 363, footnote 3.↩