MILITARY GOVERNORS' CONFERENCE REPORT OF WORKING PARTY NO. 6

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00373R000200070008-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 14
• Document Creation Date: December 15, 2016
• Document Release Date: April 3, 2003
• Sequence Number: 8
• Publication Date: April 14, 1948
• Content Type: REPORT

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MILT' CRY COVRNOFS' rOT "?CE
RJ 'O'_'"L' OF um ,=, c, P`T Y NO.6
1. At their meetine? on the 19th March the British, U.S. and French
Com tiers-in--Chief rave instructions for the formtiof of a Working
Party Ivilth the following terms of reference: -
".I.o -study the question of safeguarding the rights,
of f oreiam owners n-f the coal and steel industries
in the Rehr and elsewhere in Germany."
The work as to be undertaken in full consultation ~aitti-a-de ~tiori
r
from the countries.
CO:NDIT.i 0dS C" J L ~ 1, i l,C1 T J
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2 The 7ritish member, in taking part in the discussions on this
subject, has regarded himself as bound by the recorded results of the
recent Ton, on ` ripartite '' lks. "c has considered tt gat it was ad.e
clear in these records t1 hat the present comiersations should be
restricted to studying the question, of safeguarding foreign interests
in the two grain industries of coal and steel in the context of the
future international cont-?ol of the Ruhr. As a result, he has not
considered this `'Dorking Party as justified to deal with this subject
as it affer: is current i' ii_li terry ;rove rtir'lent policy, the nuestion of
ultimate ownership, o:-` current ir.anagerial arrangements. Consequentl~.,t,
when issues ' ave been raised which traverse this interpretation, the
E iti_sh member has felt obliged to refrain from ccnent and to -cserve
the British position.
3 The TT. S. mer;ber, without regarding himself as bound in a manner
similar to t1 e ri.tish member, nevertheless has also regarded. issues
which encroach upon the current a nagerial arrangements as outside the
cor:petence of the `:tor ing; Party, and as more properly coming within the
competence of Working Parties 2 and 4.
1 . The French and ES] JY delegations consider that the Ipndon
Conference took no decisions restricting the study of the. safeguarding
of ~'llied interests. Therefore the Trench and BET ,ITX delegations hr-,:~,~e
pointed out ti ~t the terms of reference as given to the Wolkin ; Party by
the Military Governors' Conference are the only limitations to the scope
of the '."Iorkin Party's task. The French and T TFLZ'X. representatives
have re :ardec'. the task. of the `forking Party as entitled to be conducted
with the broadest terms of reference and with no restrictions as regards
current Military Government policy or questions of ultimate ownership or
present managerial rights.
5. The Wor'..ing Party has been compelled to carry out its task within
the limitations implied by these differences of approach. Discussions
ha.:re taken place under seven headings proposed jointly by the French and
TIM 12,T7 delegations. The results are set out in the succeeding
ara=graphs. Proposals which have been. agreed by all delegations have
been sidelined
OSD review(s) completed.
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6. Joint French/",'?' TLL~ proposal is as follows,-
Protect ion of oliinershi ri'rt s
,allied property shall not be the subject of any measures
affec-' .nsgg the ownership ri hts, such as deconcentration,
expropriation, decartolization, nationalization and l, .nd
refor< ,.
1. ??owever, the enterprises cor.y~rioing less than 507' `,flied
interests may be subjected to the measures mentioned in
the preceding paragraph, .th the reservation that in
this event t'e question of the treatment of these holdings
shall be studied beforehand w .t'h the interested parties,
in te spirit of such principles as are enumerated below-
_ The money value of rqinoirity foreign investments
in German enterprises should be evaluated
according to their pre-war value on a gold basis.
(ii) solution for the protection of minority
interests rmir>'st be found in pooling minority
participations into a lesser number of majority
nte~ests. 3uc'b. inter
i ests should then be
treated in every respect as other :",flied
property,
(iii) If re-p.'roupin', as proposed in sub--para. (ii.)
could not take effect9 other methods of safe-
guar(dJ_ng should be reached, `I nhey should include,--
(a) influence in the nanng;ernent of the enterprises
in proportion to the size of the foreign
interests;
(b) transfer of dividends and interests,
(c) the prevention of discrimination against the
interests of the for( ign owners concerned,
These owners should be in a position to
exercise their rights to the full e:ctent
within the limits of the legislation in
force in Gcri;Eny;
(iv) in the absence of a solution as mentioned above,
no measures affecting the interests of enter-
prises containing Allied minority interests should
be taken without an amicable arrangement with the
.:.lfied interested part_e.es concerned, or, failing
agreement, without establishing; previously a full
and transferable indemnification in kind or other-
wise, in agreement with the iillied owners.
A factual elaboration of the F' !`PfTK position in regard to
minority interests is attached at rppendix'P?,"
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14th :.c ril, 101
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P'n)IX oiCir to
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7. The U.S. delegation wishes to record the U. S. position as
follovis
The U. S. delegation has already given its assurance to the
general principle th t foreign inter.es~ts will be safeguarded. It has
also indicated its complete agreement that such interests should be
guaranteed freedom from any discriminatory action which mi>7ht be taken
against them by German administrations both in the future and during
the present -;period of military occupation. The TT. S delegation is not
prepared to give the French and H'fdkJX delegations theclcatcategorical
c.ornroitment which they request under Item 1. The TT.
considers that a course of action as proposed ti could have the effect of
setting up undesirable discrimination.
The U.S. delegation is in a position to give certain assurances
as concern measures which have been or are being imposed upon the German
people in order partially to compensate .^,llied nations for losses
incurred as a result of Gernan ag_'ression. For example, the U. S.
delegation can assure the French and ,SNMJIDC delegations that the policy
which resulted in the selection of the final list of plants to be taken
as reparations from the U.S. Zone, required that reparations should be
taken in the first place from GerErran owners, and that only after ,holly-
Gerrmn owned facilities had been exhausted were facilities having
foreign interests designated.. Tn the latter event enterprises with a
minority of foreign interests were taken first.,
The TT. S. delegation takes the position that the measures of
decentralization, decarteli la.t ion, na.t iorkalizat ion and land reform
which are spgcifically mentioned in the French/R_ T'-Z.JTX proposals under
Item I are not measures which are being imposed on the Germans as a
punishment for war guilt, but are imposed upon the German people, or
will be adopted as a result of the expressed opinion of the German
people, as the case Tray be, as being a sound and healthy basis for the
future German peacetime economy Consequently, the U. S. delegation
takes the position that any person v~rho wishes to be part of the future
German economy, and to operate commercially within that economy, meat
conform to the general pattern and that it would be imoracti.cab1(c to
attempt to establish special economic conditions for limited and
specified interests.
The U. S. deleation recognises that losses incurred by "Hied
interests as a result of these measures should be conenseted, and.
convoys the U. S. conviction +5111::at provision should be nude in the
peacetreaty for just compensation to :.'Hies suffering losses Incident
thereto by establishing a clai.) against the future Gera n government.
The U.S. delegation would like to point out that :.'Hied owners
are not involved in measures of expropriation. Fpropriation implies
confiscation without compensation. In the U.S. Zone such actions
have been taken only against those who have been found rui:lty of war
crimes or of furthering the aims of the Nazi regime,,
In regard co the French/ t + ,UX recomnendations for treatmerr
of minority interests the U.S. delegation takes the following poiit-Jon'-
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S E C R T
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lLth ril, l .88
"PP TDLX. `;C;? to
The U. S. delegnt ion cannot agree to, the proposal that minority
interests be exchanged in such a w .y as to accord the owners a ssmller
number of majority interests. Such a procedure would not be possible
under the present rules laid dorm by U. S. Military Government against
barter transactions, and the overall policy ,jhich provides a moratorium
against fog ei?;n investments, unleus such investments fulfil certain
clearly specified conditions, including the condition that the proposed
acquis.!tion shall not result in the foreign purchaser acquiring; a greater
percentage; of interest in the given field than he enjoyed before the war.
It is doubted that there gill be any change in this policy in
regard to the moratorium on forci.fn investments until after currency
reform. The IT, S. delegation is quite willing to reccr rend that, ,Athin
the framework of a possible tri-zonal fusion, a RFIT ,LT?X delegation
should be invited to participate in discussion of a revision of the
moratorium policy when the issue is -gain raised by the occupying power
or powers involved.
In regard to the French/T 3'77 T X proposal that minority interestu
should hkave an influence in the management of enterprises in proporti.n
to the size of the foreign interests, the U.S. delegation takes the
position that such a suggestion is perfectly acceptable if the forei a
interests are sufficiently large to entitle them to elect one or more
directors under existing C,erman law, w: ith the understanding; that such
directors for the time being would have to be limited to German acrsonncl
and be appointed and governed in conformity with existing Military
Government regulations,
In regard to the French/E T T.I X proposal th:.1t they should be
allowed to transfer dividends and, interest, the U. S. delegation points
out that such m asures wouY have to ::nit a c x-Ange in the German
internal economy and. monetary situation which would allow removal of
profits in the form of foreign currency which, under present
circumstances, cannot be permitted.
Tn regard to the French/1?.1?EITTX proposal that 'flied owners should
be in a posit: on to exercise their right to the full e~ tent within the
.limits of the legislation in force in Germany, the U. Sa delegation
expresses