1. Nature of American
Interest
A mistaken reparation policy may not only have adverse effects on
the future economic stability of Europe but may jeopardize the
political and economic objectives of this country with respect
to Germany. For this reason German reparation should be
supported only to the extent that it does not conflict with more
important objectives.
2. Policy
Recommendations.
Reparation and Restitution Policy
Toward Germany
1. Nature of American
Interest
It is dangerous to assume, because the reparation claims of
this country are likely to be very small, that we have
little interest in the subject of reparation. Not only can
an ill-conceived reparation policy give rise to mischievous
consequences in itself but, what is even more important, it
may jeopardize the achievement of the political and economic
objectives of this country vis-à-vis Germany. For these
reasons the reparation settlement with Germany is an issue
of major importance to the United States.
Accordingly, the guiding principle of U. S. policy in regard
to reparation should be that the reparation claims of our
Allies should be supported only if, and to the extent that,
such claims do not conflict with the other elements of the
settlement with Germany. Reparation policies must conform
and be subordinate to the security and economic measures
adopted with respect to Germany; these measures should not
be modified or weakened to enable Germany to pay more
reparation.
Conceived thus as a “residual”, the reparation program will
be determined, in its main outlines, by prior decisions with
regard to industrial controls, export restrictions,
territorial adjustments, etc. which may be imposed on
Germany. For example, if chief reliance for economic
security is placed on selective prohibitions and controls,
Germany may be able (barring extreme war damage) to deliver
a large volume of reparation goods out of current
production. If, on the other hand, large sections of German
industry are to be permanently dismantled, the bulk of
reparation payments would necessarily take the form of
transfers of existing German capital equipment, rather than
of current output, and the total volume of reparation
deliveries is likely to be comparatively small. Similarly,
restriction of exports for commercial reasons, or important
transfers of territory, would likewise affect the amount and
form of reparation.
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The following recommendations with regard to reparation are
intended to be consistent with the proposals of the State
Department for the economic treatment of Germany.1 They make no assumption
with respect to territorial changes.
2. Reparation Policy
Recommendations
The most important elements of the German reparation program
will be (a) its “weight”, (b) its duration, (c) its form, (d) the
allocation of payments.
(a) In principle, the entire surplus
above the output needed (1) to maintain a minimum prescribed
standard of living, and (2) to pay for occupation costs,
relief, and other prior charges, should be appropriated for
reparation.
It would probably be desirable to make it clear to the other
interested powers that the U.S. will not finance the
transfer of reparation either directly by extending loans or
credits to Germany, or indirectly by assuming the burden of
supplying at its own expense essential goods or equipment to
Germany.
In order to avoid difficulties with public opinion in the
Allied countries, which is likely to regard any given amount
of reparation as inadequate to compensate for the damage and
suffering inflicted by Germany, as well as for other
reasons, the statement of the reparation obligation in terms
of a specific monetary amount should be avoided.
(b) It is essential for the early
recovery of normal trade that the reparation program should
be of relatively short duration. The uncompensated, one-way,
transfers of reparation goods from Germany must necessarily
interfere with the export trade of other countries. The
longer reparation lasts, moreover, the more strongly is
Germany likely to become entrenched in the markets of the
claimant states; the more difficult, also, will be the
readjustment of both paying and receiving countries at the
end of the reparation period. The interference with normal
trade may be relatively slight in the first two or three
years after the war when trading conditions are in any case
apt to be highly abnormal and the overall supply of goods
may fall short of reconstruction needs and deferred demands.
Beyond that time, however, the interference with normal
trade will become progressively greater. It is recommended,
accordingly, that the reparation period should be limited,
if possible, to five years, and in any event should not
exceed ten years.
(c) To avoid “transfer” difficulties,
the reparation obligation should be payable preponderantly
“in kind”, i. e., in goods and services, rather than in
foreign exchange. The goods should be such as Germany is
able to deliver and the claimant countries are willing to
receive, both conditions being necessary for
“transferability”.
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United Nations claiming reparation from Germany, in addition
to being entitled to payments in kind, should have the
option of retaining and disposing of all German property and
rights within their territories and to apply the proceeds
against their reparation claims.
The Soviet Government will probably demand, in satisfaction
of part its reparation claim, the performance of labor
services by German manpower in Russia. There is no
compelling reason for the United States to oppose such
claims within reasonable limits, provided that in the
conscription of the labor force a distinction is made
between formerly active Nazis and politically passive
Germans, with minimum standards of treatment and a
relatively short period of service for the latter.
(d) The principal basis for the
apportionment of reparation among the claimant states should
be the amount of damage to and loss of non-military
property, exclusive of current output, caused by or incident
to hostilities. As a supplementary basis of allocation,
occupation costs (including for this purpose clearing
balances accrued in Germany during the occupation period)
should also be allowed as an admissible claim, but at a
lower weighting than property losses. The reparation
settlement should be considered as clearing finally all
outstanding claims against Germany arising out of the
war.
3. Restitution
The following policy recommendations are made:
- (a)
- In principle there should be an unlimited
obligation on Germany to restore identifiable stolen
property. In practice, however, official efforts to
locate such property will have to be confined to a
limited number of categories such as art treasures,
securities, machinery, rolling stock, et
cetera.
- (b)
- Looted property should be returned by a
Restitution Commission to the Government having
jurisdiction over the territory where the property
had its situs and not to the former owners
individually. The Commission should not be burdened
with the task of deciding disputes with respect to
ownership, liens, etc. Such questions, whether
intra-national, or involving two or more countries,
should be adjudicated in the place from which the
property was taken.
- (c)
- All property transferred to Germany during the
period of German occupation should be presumed to
have been transferred under duress and accordingly
treated as looted property.
The British Government has been pressing in the European
Advisory Commission for the early establishment of a
Restitution Commission to cope with the complex problems of
restitution which will arise as soon as enemy territory is
occupied to any appreciable extent. This Government has
indicated its general approval of the British proposal,
subject to certain reservations.
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The French have also introduced a proposal for restitution
into the European Advisory Commission. Their concept of
“restitution”, however, apparently goes far beyond the mere
restoration of identifiable objects and would include the
replacement of lost or destroyed objects with similar or
equivalent goods found in Germany at the time of surrender.
It is believed that such a broad application of the
principle of replacement is undesirable. Claims for lost or
destroyed property should be embraced in the reparation
settlement; “replacement” should be confined to unique
objects such as art treasures, and possibly gold.
4. German Foreign
Holdings
“German” property in neutral and satellite countries can be
divided into three categories:
- 1.
-
Looted Property. This is not
properly German property, and the principle of
restitution has already been indicated.
- 2.
-
Flight Capital. This is
property which is and has been leaving Germany for
refuge from post-hostilities Allied control. Efforts
are now being made to have the neutrals prevent
ingress of such property, and to segregate and
control that which has already left Germany.
- 3.
-
German Foreign Investment.
Control over this property is essential to the
control of the German economic system. Cooperative
U. S. and U. K. efforts are being made to conduct a
census of such property, to have it segregated, and
make it available for such disposition as may be
agreed on among the Allies.
A coordinated effort, particularly directed at the neutrals,
to control these classes of property is being made. The
United States, United Kingdom, and USSR, among others of the
United Nations, have cooperated in the issuance and
endorsement of the following documents: Declaration of
January 5, 1943, declaring a policy of refusal to recognize
Axis acts of dispossession, in whatever form;2 Gold
Declaration of February 22, 1944, declaring a policy of
refusal to purchase gold from nations which have not ceased
gold purchases, directly or indirectly, from the Axis;3 Bretton Woods Resolution VI, calling on
neutrals to take appropriate action with respect to loot,
flight capital, and German foreign investment.4
