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

Frankfurt USPolAd Files—600 Berlin Conference

No. 858
Texts Considered by the Economic Subcommittee¹

[Babelsberg, July 19, 1945.]

9. The German economy shall be decentralized for the purpose of eliminating the present, excessive concentration of economic power as exemplified by cartels, syndicates, trusts and other monopolistic arrangements. Notwithstanding this, however, and for the purpose of achieving the objectives set forth herein, central administration of certain forms of governmental machinery, including in particular Finance, Transportation and Communications, shall be restored or maintained.²

10. In the imposition and maintenance of economic controls authorized by the Control Council, German administrative machinery shall be established and the German authorities shall be required to the fullest extent practicable to proclaim and assume administration of such controls. Thus it should be brought home to the German people that the responsibility for the administration of such controls and any breakdown in these controls will rest with themselves. Any German controls which run counter to the objectives of occupation will be abolished.³

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

(a) to carry out programs of industrial disarmament and demilitarization, of reparations, and of approved exports and imports.

(b) 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 maintain in Germany average living standards not exceeding the average of the standards of living of European countries. (European countries means all European countries excluding U. K. and U. S. S. R.).

(c) to ensure the equitable distribution of essential commodities between the several zones so as to produce a balanced economy throughout Germany and reduce the need for imports.

(d) to control German industry and all economic and financial international transactions, including exports and imports, with the aim of preventing Germany from developing a war potential and of achieving the other objectives named herein. For the same purpose no grant of credit to Germany or Germans by any foreign persons or Government shall be permitted except with the approval of the Control Council.⁴

12. The production of arms, ammunition and implements of war, including all types of aircraft and ocean-going ships, shall be prohibited and prevented. Production of metals, chemicals and machinery shall be rigidly controlled and restricted to minimum, peacetime needs. Production of selected key items within these industrial fields shall be wholly eliminated. Productive capacity not needed for permitted production shall be removed or destroyed.⁵

13. The principles and conditions governing the exaction of reparations from Germany are set forth in Annex I⁶ to this agreement.⁷

14. Measures shall be promptly taken:

(a) to effect essential repair of transport;

(b) to enlarge coal production;

(c) to maximize agricultural output; and

(d) to effect emergency repair of housing and essential utilities.⁸

1. Each paragraph is on a separate page headed “Economic Sub Committee 11 A.M.—July 19, 1945”.
2. This paragraph bears the following typed notation, “Wording tentatively agreed”. Attached to the following paragraph (and bearing the manuscript notation “#10”) is an earlier draft of this paragraph, the first sentence of which reads: “The German economy shall also be directed towards decentralisation.” Manuscript changes made by Murphy on the face of this draft alter the text to that of the “tentatively agreed” paragraph 9 printed above. No changes were made in the second sentence. Murphy marked the draft “Preliminary acceptance”.
3. This paragraph bears the typed notation, “Wording tentatively agreed:” and the following manuscript notation by Murphy: “OK RM”. Murphy, in a memorandum of November 8, 1954, has supplied the information that this notation, and the similar notations noted in the following footnotes, meant “that our representation on the Economic Subcommittee, headed by Will Clayton, was in accord or approved the text under reference.” Attached is the following “Proposed Amendment” (obviously an earlier proposed amendment of paragraph 10 of document No. 852): “In the imposition and maintenance of economic controls, German authorities shall administrative machinery shall be established and required to the fullest extent practicable be ordered to proclaim and assume administration of such controls. Thus it should be brought home to the German people that the responsibility for the administration of such controls and any breakdown in those controls will rest with themselves and their own authorities. Any German controls which run counter to the objective of occupation will be abolished.” Manuscript changes made by Murphy on the face of this “proposed amendment” alter the text to that of the “tentatively agreed” language printed above, except that the last word of the paragraph, as corrected in Murphy’s hand, is “prohibited” rather than “abolished”.
4. This paragraph bears the typed notation, “Wording tentatively agreed:” and the following manuscript notation by Murphy: “OK RM”. Cf. footnote 3, supra.
5. This paragraph bears the typed notation, “To be considered further:” and the following manuscript notation: “OK as amended”.
6. See document No. 894.
7. This paragraph, renumbered “14” by hand, bears the typed notation, “Wording tentatively agreed:” and the following manuscript notation by Murphy: “OK RM”. Cf. footnote 3, ante.
8. This paragraph, renumbered “16” by hand, bears the typed notation, “To be considered further:” and the following manuscript notation by Murphy: “OK RM”. Cf. footnote 3, ante.