deliveries were to be spread over a period of five years, whereas the capital removal program was to be completed within two years. Under present plans total capital removals from the western zones would probably amount in 1938 values to approximately 1 billion Reichsmarks, of which the Soviet share would be RM 250 million. In return from this removed plant RM 150 million worth of reciprocal deliveries would be required from the U. S. S. R. Since roughly RM 100 million worth of capital equipment has already been delivered to the Soviet Union, while reciprocal deliveries are only now about to begin, the theoretical debts on both sides are now roughly equal. In other words, the U. S. S. R. owes to the western powers RM 150 million worth of coal, food, and other commodities, and an equivalent value in deliveries of capital equipment is theoretically owed to the Soviet Union. The extremely urgent demands for commodities in western Europe and the disproportionately great increase in world prices of commodities over capital equipment since 1938, tend to make this possible exchange advantageous to the member nations of the Inter-Allied Reparation Agency. CONCLUSIONS Analysis of Germany's economic situation shows beyond question that the revised level of industry, and the dismantling program based on it, have no present effect on Germany's ability to produce and to export; nor has the revised level been found an obstacle to planning the maximum feasible contribution by Germany to the general European Recovery Program. It provides for the retention in the bizonal area of sufficient industrial capacity to provide the basis for development of a reasonable standard of living and of a volume of industrial exports greater than prevailed in 1936. The dismantling and removal of German plants, therefore, represents a transfer of capacity which would otherwise remain idle in Germany to countries which, because of more adequate supplies of manpower, housing transport, and other scarce factors of production, and because they enjoy more stable monetary and administrative organizations, can make good use of them. Transferred German plants are already contributing to the economic recovery of other European countries and may be expected to reduce the cost of the American contribution to European aid. To a considerable extent recipient nations have no other available source of supply for meeting their requirement for much-needed industrial expansion. The reparation settlement embodied in the Potsdam and Paris reparation agreements, of which the dismantling program represents the concrete implementation, is one which accords with the best interests both of the United States and, recognizing its obligations, of Germany. It is a settlement to which genuinely friendly European countries, including both Great Britain and France, regard the United States as being fully committed, and one which represents to them the symbol of an attitude towards Germany's past actions and towards their own future, the abandonment of which would cause them the greatest concern. 208. LIMITATIONS ON CERTAIN INDUSTRIES IN GERMANY 1 Agreement by United States, United Kingdom, and France, April 13, 1949 1 The Departments of State and Army made public the text of an agreement which was announced on April 13 by the Military Governors of the United States, the United Kingdom, and France, in Germany, regarding limitations to be placed upon certain industries in Germany in the interest of security. The agreement embodies recommendations recently formulated by representatives of the three Governments in London and approved by the three Foreign Ministers on April 8, 1949, in Washington, as part of the general agreement which they reached regarding Germany, in order to permit the establishment of a German Federal Government which could form a part of the European community. The question of prohibited and restricted industries was considered by the three Governments in conjunction with the review of the reparation dismantling program to bring that program into harmony with the European Recovery Program. In consequence, coordinated agreements were reached by the three Governments on both subjects. A separate announcement was made with regard to reparations. Pursuant to instructions received from their respective governments to conclude the agreement hereinafter set forth, concerning prohibited and limited industries in the United States, United Kingdom and French Occupied Areas of Germany (hereinafter referred to for the purposes of this Agreement as Germany), the United States, United Kingdom and French Military Governors and Commandersin-Chief hereby promulgate the following agreement, effective forthwith: Article I The prohibitions laid down in this Agreement shall remain in force until the peace settlement. The limitations laid down in this Agreement shall remain in force until 1st January, 1953, or until the peace settlement, whichever is the earlier, and thereafter as may be agreed. Should no peace settlement have been concluded by 30th June, 1952, the Military Governors shall forthwith review these limitations in the light of the conditions then prevailing, taking into account the requirements of security of the Allied Powers, the state and effectiveness of the arrangements made to preserve security, and the requirements of European Recovery. Should the Military Governors be unable within 90 days from 30th June, 1952, to reach agreement on the limitations which in the absence of an earlier peace settlement shall be continued after 1st January, 1953, the matter shall be considered forthwith by the three Governments. Article II Action within the discretion of the Military Governors under the terms of the Agreement shall be taken by unanimous decision. 1 Department of State Bulletin, April 24, 1949, pp. 526–531. Article III The production or manufacture of the following substances and war materials shall be prohibited, and all plants and equipment for their production or manufacture not already removed or destroyed shall, as soon as possible, be removed from Germany or destroyed. (a) The items listed in Schedule A to Control Council Law No. 43 (at Annex A) (b) Primary Magnesium (c) Beryllium Article IV The production, import, export, transport, storage, use and possession of radioactive materials. will be the subject of legislation by the Military Governors. Article V 1. The production of synthetic rubber and butadiene shall be prohibited. 2. In order to give effect to the foregoing prohibitions, facilities for copolymerization, facilities for research and testing of synthetic rubber, and facilities for the production of butadiene at the Huls, Ludwigshafen and Leverkusen plants shall be removed or destroyed. Article VI 1. The production of petrol, oil and lubricants directly or indirectly from coal or brown coal by the Bergius hydrogenation process, the Fischer-Tropsch synthesis, or analogous processes, shall be prohibited except, temporarily, to the extent inseparable from the production of hydrocarbon waxes for the manufacture of synthetic fatty acids for the production of washing materials. 2. The synthesis of hydrocarbon waxes by the Fischer-Tropsch process shall be permitted only so long as the supply of fats and oils available in Germany is inadequate for the manufacture of sufficient washing materials without the use of synthetic fatty acids, and in any event not beyond 31st December, 1949. 3. The Fischer-Tropsch plants not now engaged in the synthesis of hydrocarbon waxes shall, as soon as possible, be removed from Germany or destroyed. The two Fischer-Tropsch plants engaged in the synthesis of hydrocarbon waxes shall, as soon as possible after production ceases, be removed from Germany or destroyed. 4. All Bergius plants except the Wesseling plant shall, as soon as possible, be removed from Germany or destroyed. The whole Wesseling plant shall be retained, and may be used for the refining of natural petroleum, for the hydrogenation of heavy residues from such refining and for the synthesis of ammonia and methanol. Article VII The manufacture of electronic valves shall be limited to a list to be drawn up by experts and published by the Military Governors of permitted types that shall not exceed either 10 watts dissipation or 250 megacycles frequency, subject to the authority of the Military Governors, acting upon the advice of the Military Security Board, to permit by license the manufacture of types exceeding 10 watts dissipation (but not exceeding 250 megacycles frequency) in case of necessity. Article VIII 1. The capacity of the following industries shall be limited as stated below: (a) Steel, to that remaining after the removal of reparations; (b) Electric arc and high frequency furnace steel furnace capacity, to that remaining after the removal of reparations; (c) Primary Aluminium, to that sufficient to produce 85,000 tons of primary aluminium a year; (d) Shipbuilding, to that remaining after the removal as reparations of the following yards in addition to those four that have already been made available for reparations: CIND 1206 Germania Werft, Kiel CIND 1287 Deutsche Werft Reiherstieg, Hamburg; (e) Ball and Roller Bearings, to that remaining after the removal as reparations of plant and equipment calculated to leave in Germany capacity sufficient to produce 33 million units a year on a one-shift basis, or present capacity, whichever is the less; (f) Synthetic Ammonia, to that remaining after the removal of reparations; (g) Chlorine, to that remaining after the removal of reparations; (h)_Styrene, to 20,000 tons annual working capacity. 2. In order that the total authorised capacity of the industries limited in paragraph 1 above shall not be exceeded, no enterprise shall be permitted, (except under licence from the Military Governors, acting upon the advice of the Military Security Board) to increase the productive capacity of any of its plant or equipment that is engaged or partly engaged in any of the industries list in this article, whether it is proposed to effect the increase by the extension of existing facilities, the construction of new facilities, or the addition of new equipment. The construction of new plant and equipment, and the replacement or reconstruction of that removed or destroyed shall likewise be prohibited except under licence from the Military Governors, acting upon the advice of the Military Security Board. The Military Security Board will ensure that obsolete or wornout plant or equipment the replacement of which by new has been licensed is removed from Germany or destroyed. Article IX 1. The production of steel shall be limited to 11.1 million ingot tons a year. 2. The production of primary aluminium shall be limited to 85,000 tons of primary aluminium a year. No specific limitation shall be placed on imports of bauxite and alumina; they shall, however, be controlled to prevent stock-piling in excess of a number of months' supply, to be determined by the Military Governors. 3. The production of styrene shall be limited to 20,000 tons a year. Article X 1. The manufacture of the following shall be prohibited: (a) Machine tools or other manufacturing equipment specifically designed for the production of weapons, ammunition or other implements of war. (b) Attachments, devices, tools or other objects having no normal, peacetime use and specifically designed to convert or adapt machine tools or other manufacturing equipment to the production of weapons, ammunition or other implements of war. 2. The manufacture of the types of machine tools listed at Annex B shall be prohibited except under licence from the Military Governors, acting upon the advice of the Military Security Board, which licence will normally be granted unless the Military Governors have reason to think that the tools are not intended for peaceful production. Article XI 1. The construction of ships whose size or speed does not exceed the limits contained in the following table shall be permitted in Germany, provided that no ocean-going ships shall be constructed until a German coastal fleet adequate for the requirements for European and German recovery has been reconstituted. (It has been estimated that Germany will require for this purpose 517,000 G. R. T., including 360,000 G. R. T. of dry cargo ships.) (including fishing vessels and ships other than cargo-carrying craft) 2. Notwithstanding the above provisions, Germany shall be permitted during the period of this Agreement to acquire abroad up to 100,000 G. R. T. of tankers of not more than 14 knots speed and 10,700 G. R. T., being not less than 16,000 dwt; and up to 300,000 G. R. T. of dry cargo ships of not more than 12 knots speed and 7,200 G. R. T. 3. In order to provide guidance for the Military Governors, a committee of experts is to be constituted by the Governments of the United States, the United Kingdom and France with instructions to prepare, within three months, a report outlining the types of ships, excluding ships primarily for passengers, which may be required by Germany, although they exceed in one respect or another the limits in paragraph 1 above. The committee shall also determine those features of design, construction, propulsion machinery, etc., which would facilitate use for or conversion for war purposes or which do not conform to normal merchant marine practice and should therefore be prohibited. The recommendations of the committee shall be transmitted to the Military Governors for action in accordance with the procedure outlined in the following paragraph. 4. The Military Governors, acting upon the advice of the Military Security Board, may permit by licence the construction or acquisition of ships exceeding in some respects the limitations on speed and |