Appendix One (Chapter Two, Note 86)
The Potsdam Agreement and Reparations from Current Production

At Potsdam, the original U.S. reparation plan of July 23-25, which formed the basis of the Potsdam agreement, specifically authorized removals of capital equipment and deliveries from "current production."(1) When the Soviets accepted the principle of the Byrnes plan, they agreed that both forms of reparation, annual deliveries as well as one-time-only removals, would be organized on a zonal basis. When their draft was discussed on July 31, neither Byrnes nor Bevin raised the slightest objection to the idea of deliveries from current production.(2) This attitude was, of course, perfectly consistent with Byrnes's basic idea that the "Soviet Union would take what it wished from its zone."(3)

Since there had been no dispute about what the Soviets could take from eastern Germany, the issue was dealt with elliptically in the final Protocol, which stated simply that Soviet claims would be met by "removals" from the Soviet zone.(4) But given the drafting history, this phrasing cannot be interpreted as a surrender of the principle that the Soviets had the right to extract reparation from their zone in any form they chose.

It is sometimes argued that paragraph 19 of Part II of the Potsdam agreement ruled out reparation from current production, at any rate until Germany was able to earn enough from exports to finance necessary imports. But as the drafting history of this article shows, the first charge principle was to be applied to Germany as a whole only if the Control Council could agree on an import program for the country as a unit. If, as was expected, there was no agreement, the assumption was that the zonal authorities would be free to do whatever they wanted. If the Soviets took reparations from current production from their zone and that aggravated that zone's deficit, financing it would be their problem and their problem alone, so the western allies felt no need to try to prevent them from doing so.(5)

The American government was thus mistaken when it later claimed that the USSR had no right under the Potsdam agreement to take current output reparations from the eastern zone.

NOTES

1. U.S. proposal, July 23, 24 or 25, 1945, FRUS Potsdam, 2:869.

2. Plenary meeting, July 31, 1945, and Soviet proposal referred to in the minutes, ibid., pp. 514-515, 1593-94.

3. Byrnes-Molotov meeting, July 29, 1945, ibid., p. 475.

4. See the final protocol, ibid., p. 1485, and the documents that bridge the gap from the Soviet July 31 proposal to the August 1 agreement: ibid., pp. 929-933.

5. See the discussion in chapter one, pp. 32-33.