Foreign Relations of the United States: Diplomatic Papers, 1945, European Advisory Commission, Austria, Germany, Volume III

740.00119 EW/1–1046

The United States Political Adviser for Germany (Murphy) to the Secretary of State

Berlin, January 10, 1946—1 p.m.
[Received January 12—11:02 p.m.]

77. By telephone Paris Embassy has informed me that Dept does not understand paragraphs A and E of excerpt quoted in tel No. 190 from Angell, Dec 27 [28],²⁹ although “message does not appear to be garbled”. Wording as received by Dept should be checked against article VI of Final Act as transmitted by No. 183 from Angell.³⁰

Paragraph A in No. 190 incorporates these ideas: Local choice of procedures, differentiation between effect of German nationality and enemy character (by definition) of owner, permanent elimination of German enemy ownership, such assets to be charged against reparation share and value charged to be a figure net of specified prior deductions. Basic idea of article VI paragraph A of Final Act was transmitted to Dept by No. 73, Nov 23, from Angell.³¹ A companion tel, No. 72³² raised with Dept at above early date problem of how net figure to be charged against reparation shares would be determined. From No. 73 [72] it will be seen that British originated suggestion that what should be deducted in determining net value of assets should be defined.

An enumeration of deductions was contained in Waley’s first draft final act. Waley’s suggested deductions, however, did not include claims of unsecured creditors; and it was on this point that Canadians, Indians and ourselves felt obliged to disagree with him for reasons explained in paragraph 3 of No. 190 from Angell. Dept having made no reply to problems raised by No. 72 of Nov 23, matter was raised again by paragraph 8 of Dec 14 teletype conference.³³ Dept conferees were against Dutch proposal that each country should charge against its share only whatever might be left after liquidation in accordance with its own law. Teletype reply from Dept added “write offs of gross assets are desired but must be defined.” Such definition is precisely what we had been attempting. Wording substantial [ly] as in final act had been transmitted by No. 72 [73] and again by Dec 14 teletype. Thus, No. 105 from Dept³⁴ introduced an entirely new concept, one completely unacceptable to countries listed in groups (b) and (c) of No. 190. Moreover, it was not clear to us that a 5% deduction would adequately cover us, considering our interest in a large share of German external assets in neutrals. Canadians balked completely, stating that 2% of gross was permitted Canadian custodian as expenses of administration alone and that difference between 2% and 5% would certainly not cover other legitimate deductions which should be made before charging value against reparation share. Problem created by this last minute suggestion of Dept was explained to Dept conferees in paragraph V of teletype of Dec. 18.³³ Final paragraph Dept conferees reply was taken as authority to disregard suggestion in 105 from Dept in view of difficulties regarding obtaining any agreement on point, other than one that would leave each country entirely free to fix the figure to be charged against its reparation share in any way it might see fit. Bather awkward wording of paragraph A results from sensitivity during final phases of conference of Egyptian and others, who felt that niceties required clause regarding charging assets against reparation shares to follow rather than to precede clause recognizing power of signatory governments to administer the assets. Meaning of paragraph A, however, is exactly that set out in Nos. 72 and 73 from Angell.

Paragraph E of Final Act spells out in sufficient detail to satisfy Yugoslav delegate a general exhortation to signatory countries to uncover cloaks and nullify cloaking transactions. We had so frequently led in rejecting or recasting Yugoslav proposals couched in English different from what we would have said, that we did not consider it wise to insist upon our federalese regarding German assets. Hence we permitted first sentence of paragraph E to include a phrase having same meaning as our term of article “cloaking”. We rather hoped that inclusion of “cloaking” in second sentence would prevent Washington from misunderstanding.

Sent to Dept as 206 from Angell and 77 from USPolAd; repeated to Paris as 1 from Angell and 5 from USPolAd.

Murphy

29. See telegram 7382, December 28, 11 a.m., from Paris, p. 1492.
30. Telegram 7349, December 26, from Paris, not printed.
31. See telegram 6754, November 23, 1 p.m., from Paris, p. 1404.
32. Telegram 6753, November 23, 1 p.m., from Paris, not printed.
33. No record found in Department files.
34. See telegram 5900, December 17, 7 p.m., to Paris, p. 1477.
33. No record found in Department files.