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December a "restricted” list of seventeen categories of commodities which cannot be released for interzonal trade without approval of the zonal commander, was adopted in order to safeguard the distribution of critically scarce items. When it became apparent this spring that the flow of interzonal trade was still only a trickle, the Allied Control Council directed that a report be prepared on the elimination of restrictions on interzonal trade. This report is presently in preparation and should do much to focus attention of the occupying powers on this problem.

The control of commodities entering interzonal trade has thus been left to the separate zones with the result that there are in operation widely different procedures and controls, ranging from restrictions on various individual items to formal bilateral trade agreements, and from almost complete control by Military Government to almost complete control by the German authorities.

From the beginning OMGUS policy has had two facets – promotion of greater freedom in the interzonal flow of goods between the U. S. Zone and other zones and the progressive delegation of authority to administer internal trade to the German agencies. Formal trade agreements are prohibited and barter arrangements are forbidden. The German authorities are directed to retain only such controls as are necessary to maintain the zonal ration or allocation programs for the zone. Within the framework of these directives administrative control has been turned over to the German authorities with Military Government in the role of supervisor and advisor.

Barter and Other Problems

The problems which confront interzonal trade are complex and difficult to control. Goods tend to be sold or bartered for raw materials or semi-finished products which are necessary to keep the enterprise operating, a procedure which is stimulated by the lack of confidence in the Reichsmark. Frequently, trade within and between the Laender and the zones may be outwardly on a reciprocal monetary basis but are in effect barter because goods are insisted upon in exchange. The land or the zone fears that it will be drained of goods unless it barters. Under such circumstances trade is cumbersome and timeconsuming.

For the individual German who engages in interzonal trade and must of necessity travel from one zone to another, the travel restrictions are disheartening. Restrictions on travel between the U. S. and British Zones have been virtually removed under the bi-Zonal Unity Plan, and in the other zones a semipermanent interzonal pass has been adopted, but of limited scope. In addition, insecurity of transportation has made him hesitate to ship his goods.

The most heartening progress is in the field of bi-zonal programming. Plans are presently under consideration to program and schedule releases to other zones over a certain period of time based upon available production. Releases of this type, being general in character, will avoid many of the restrictive con trols and tend to liberalize trade. Such planning will avoid any compensatory agreements or understandings which would require another zone to furnish commodities on a specific barter exchange basis.

Recently the German representatives in the U. S. zone have entered into discussions with their equivalent members in the other zones. In May conferences were held with the German authorities in the British Zone and in June similar conferences took place with those from the Soviet Zone. A quarterly program for the exchange of goods was drafted and a permanent German Committee from the U. S. and Soviet Zones was established to work out detailed procedures. Statistics will be interchanged. These meetings, at which Military Government appeared only as an observer, proved very satisfactory and constitute the first steps toward subsequent meetings to be attended by economic representatives of all four zones.

Rationing

The critical shortage of raw materials for the manufacture of consumer goods requires the rationing of practically all consumer items on a needs basis. The German Economic Office has established standards of evaluation for determining the issuance of purchase permits. The following priorities as created by Military Government are used to guide the German Economic Office:

(a) persons who are in need as a result of racial, religious, national or political discrimination; confiscation of property; imprisonment in Nazi concentration camps for political, racial, or religious reasons; or of other Nazi terroristic practices;

(b) bombed out individuals, German refugees from areas outside of Germany, and ex-prisoners of war;

(c) essential workers, including farmers (essential workers employed by the Military Government, U. S. Army, UNRRA, and authorized German governmental agencies will be treated nc differently from other essential workers) and

(d) all other individuals.

It is contemplated that these priorities will be changed in order to include essential workers, miners and farmers in the first group, German refugees from the East and former War prisoners arriving since some recent date in the second, and all others in the third. This would have the effect of stimula ting people to do essential work in order to be placed in the No. 1 priority, and eliminate the tendency for people to ride along upon their past records.

After the purchase permits have been issued, there is a definite coupon flow-back system in effect which provides for maintenance of control over the retailer, wholesaler and manufacturer. This system is similar to the point system which was used in the United States during the war.

The progress that has been made in the mobility of individuals engaged in trade is in sharp contrast with the restrictions which were operative last summer.

The United States prepared to eliminate barriers to internal trade by treating Germany as an economic unit, but such action is dependent upon reciprocal agreement. Until this can be attained, there will only be one other alternative

namely, to press for the piecemeal removal of restrictions and the step by step adoption of uniform procedures by quadripartite action, and to promote the programming of interzonal trade.

No zone is in itself self-sufficient. U. S. Military Government and German officials realize that the solution of common problems can be reached only on the basis that Germany must be treated as an economic unit. The recent conferences of Germans from the different zones have emphasized the necessity of an integrated program for Germany as a whole. Policy in the U.S. Zone there fore remains committed to the objective of economic unity in the field of trade between the zones.

"14. During the period of occupation Germany shall be
treated as a single economic unit. To this end common poli-
cies shall be established in regard to:

(a) mining and industrial production and allocation;
(b) agriculture, forestry and fishing;
(c) wages, prices and rationing;
(d) import and export programs for Germany as a whole;
(e) currency and banking, central taxation and customs;
(f) reparation and removal of industrial war potential;
(g) transportation and communications.

In applying these policies account shall be taken, where
appropriate, of varying local conditions.”

- Economic Principies, Report on the Tripartite

Conference of Berlin, 2 August 1945

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