Foreign Relations of the United States: Diplomatic Papers, The Conference of Berlin (The Potsdam Conference), 1945, Volume II

740.00119 EW/7–1645

No. 848
United States Delegation Working Paper¹

[Babelsberg, July 16, 1945.]

Proposed Agreement on the Political and Economic Principles To Govern the Treatment of Germany in the Initial Control Period

1. The authority of the Control Council to initiate plans and reach agreed decisions on the chief military, political, economic and other questions affecting Germany as a whole shall be paramount in Germany, and those plans and decisions shall be carried out in each zone of occupation by the national Commander-in-Chief concerned.

2. In its work the Control Council will be guided by the Crimea Declaration,² by the Declaration of June 5, 1945, on the Defeat of Germany,³ and by the provisions of the Agreement on Additional Requirements⁴ which is in the final stage of negotiation in the European Advisory Commission. In addition, the Commander-in-Chief will apply the additional agreed political and economic principles set forth below in this Agreement.

Political Principles

3. War criminals, including those who have participated in planning or carrying out Nazi enterprises involving or resulting in atrocities or war crimes, shall be arrested and brought to judgment. Nazi leaders and influential Nazi supporters and any other persons dangerous to the occupation or its objectives shall be arrested and interned.

4. All members of the Nazi Party who have been more than nominal participants in its activities and all other persons hostile to Allied purposes shall be removed from public and semi-public office, and from positions of responsibility in important private undertakings. Those Germans who are permitted to remain in, or are appointed to, official posts (e. g. in the police or the administration) should understand that they hold office only during good behavior.

5. German education shall be so controlled as completely to eliminate Nazi and militarist doctrines and to make possible the development of democratic ideas.

6. The administration of affairs in Germany should be directed towards the decentralization of the political structure and the development of local responsibility. To this end:

(i) local self-government shall be restored throughout Germany through elective councils.

(ii) anti-Nazi political parties together with freedom of assembly and of public discussion shall be allowed and encouraged throughout Germany.

(iii) Representative and elective principles shall be introduced into regional, provincial and state (Land) administration as rapidly as results of local self-government seem to warrant.

(iv) For the time being no central German Political Government shall be established.

7. Subject to the necessity for maintaining military security, freedom of speech, press and religion shall be permitted, and religious institutions shall be respected. Subject likewise to the maintenance of military security, the formation of free trade unions shall be permitted. The Control Council will supervise the dissemination of public information in Germany.

8. The Commander-in-Chief will assure the representatives of United Nations and neutral news-gathering agencies all reasonable facilities for the collection and transmission of news material.

Economic Principles⁵

9. The German economy shall be decentralized for the purpose of eliminating the present, excessive concentration of economic power. To the extent required for carrying out the purposes set forth herein, the Control Council shall permit or secure the establishment of central controls.

10. In the imposition and maintenance of economic controls, German authorities shall to the fullest extent practicable be ordered to proclaim and assume administration of such controls.

11. Allied controls shall be imposed upon the German economy but only as may be necessary:

(a) to carry out programs of military and industrial disarmament;

(b) to carry out programs of reparation and rehabilitation of devastated areas;

(c) to assure the production and maintenance of goods and services required to meet the needs of the occupying forces and displaced persons in Germany and essential to prevent starvation, disease or civil unrest;

(d) to ensure the equitable distribution of essential commodities between the several zones;

12. The production of arms, ammunition and implements of war, including all types of aircraft and ocean-going ships, shall be prohibited and prevented, and specialized facilities for the manufacture of these articles shall be held for removal or destruction. Production of synthetic oil and rubber, and of aluminum and magnesium shall also be prohibited and the productive facilities held for removal or destruction. Production of other metals, chemicals (including synthetic nitrogen) and machinery shall be rigidly controlled and restricted to minimum, peacetime needs. Excess facilities shall be held for removal or destruction.

13. The principles agreed upon or under negotiation in the Reparation Commission at Moscow to govern the exaction of reparations from Germany are set forth in Annex 1⁶ to this agreement.

14.7 To secure the fulfillment of immediate economic objectives, the Control Council will undertake the formulation and prompt execution of uniform programs in the following fields:

a). Development of exports for the purpose of

(i) Meeting a reparation program as formulated by the Reparations Commission.

(ii) Meeting urgent external needs for relief and reconstruction.

(iii) Providing means of payment for Germany’s minimum imports.

Immediate attention should be given to the export of coal and to transfers of railroad rolling stock and live stock for purposes of reparation and economic restoration of Allied countries.

b). Formulation of a single program of minimum required imports for Germany as a whole and determination of basis for sharing procurement and financing responsibility.

c). Establishment of machinery to assure equitable distribution of available supplies within Germany.

d). Establishment of uniform ration scales within Germany.

e). Formulation of immediate steps to secure adequate agricultural and coal output, essential repair of internal transport and emergency repair of housing, electric power and other utilities.

f). Formulation of initial measures for curtailment of metal, chemical and machinery industries to conform to minimum, peacetime needs, and elimination of selected, key industries in these fields.

g). Uniform regulation and control of currency, credit and public finance.⁸

h). Uniform controls of Germany’s international frontiers and recording of movements of persons and goods.

i). Integrated controls and operation of transport and communications.

15. The Control Council is charged with the practical implementation of the basic policies agreed between the occupying powers in the agreements listed in Article 2 above and in the present agreement. The Commander[s]-in-Chief will refer to their respective governments any proposals for modifications of or additions to the basic principles and objectives set forth herein.

16. This agreement does not apply to Austria.

1. Printed from an unsigned carbon copy which bears the following manuscript notation by Mosely: “Prepared July 16, 1945, P E M[osely] and E. Despres Potsdam.” In an “Index of Attachments to Summary of the Negotiations in the Economic Sub-Committee” (file No. 740.00119 (Potsdam)/7–3145), the same text—except that paragraph 11 reads, “Allied controls shall be imposed upon the German economy to the extent necessary:”—is identified as follows: “Proposed Agreement on the Political and Economic Principles to govern the treatment of Germany in the Initial Control Period—text by Clayton, Collado, Mosely and Despres—not used.” Cf. appendix A to document No. 327, printed in vol. i, and document No. 852, post.
2. See document No. 1417, section ii.
3. Treaties and Other International Acts Series No. 1520; 60 Stat. (2) 1649.
4. See the accompaniment to document No. 1038.
5. This is an interpolated manuscript heading on the source copy.
6. No annex to this draft has been found. For the annex to the United States proposal as introduced on July 17, see document No. 894.

7. In a variant working draft of this paragraph (renumbered 15), the preliminary language and subparagraph (a) read as follows:

   “15. During the period of occupation Germany shall be treated as a single economic unit. To this end, the Control Council will promptly formulate programs in the following fields:

   “(a) Development of exports for the purpose of

   • “(i) Providing means of payment for Germany’s minimum imports,
   • “(ii) Meeting a reparation program as formulated by the Reparations Commission.

   “Immediate attention should be given to the export of coal from Germany.”

8. In the variant draft referred to in the preceding footnote, this subparagraph has the following additional phrase: “(including customs)”. The next subparagraph is omitted from the variant draft, and the final subparagraph in that draft is therefore lettered (h).