International: From Yalta to Paris

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As long as men have fought wars, victors have exacted payment of indemnities from the vanquished. But systematic dismantling of factories as reparations came as an innovation in the wake of World War II. At Yalta and Potsdam the U.S., Britain and Russia tried to avoid the mistake made by the Allies after World War I, i.e., to demand an impossible money tribute from Germany; instead, they plumped for reparations in capital equipment. In addition to anything she cared to take out of her own zone, Russia was to get 25% of the dismantled plants from the West.

The purpose of dismantling was twofold: 1) to compensate, in some measure, the conquerors and victims of Nazi Germany; 2) to keep future German industrial production "down to a "safe" level. In 1946, with France invited into the quadripartite administration of Germany, the Big Four agreed on a maximum level for Germany's industry keyed to an annual steel production of 5.8 million tons. About 400 war plants were to be dismantled (in a few cases, destroyed) as a matter of military security; about 1,500 other plants not directly engaged in war production, called "surplus," were earmarked for possible dismantling as a curb on excess productivity. The British foresaw that German production ceilings would have to be raised later on, but they abided by the majority will.

No Safety. The reparations agreement was made on the optimistic assumption that Germany, under four-power control, would be administered as an economic unit. After it became clear that Moscow would block unification, the West stopped further capital shipments to Russia (she did receive some equipment, including a Daimler-Benz aircraft factory and part of the great Kugelfischer ball-bearing plant at Schweinfurt). The U.S. began to realize that wholesale dismantling provoked resentment among German workers, and seriously interfered with German—and therefore with West European—recovery, which was the West's supreme objective. In other words, dismantling was making Germany anything but "safe."

To speed up Germany's recovery, the Western powers in 1947 raised the permitted level of steel production in West Germany to 10.7 million tons, and several hundred surplus plants were dropped from the category set aside for dismantling. The most recent working list covered 796 plants and parts of plants. Of these, 179 were in the U.S. zone, 125 in the French zone, 492 in the British zone. By last month the U.S. had dismantled all but two of the listed plants in its territory, and shipped most of them to Germany's former enemies. The French had completely or partly dismantled all but 15 of theirs. The factories in the British zone (which includes the great industrial complex of the Ruhr) were the nub of contention at last fortnight's Big Three meeting in Paris.