In March, 1946, the four occupying powers, acting through the allied control authority, adopted a plan for reparations and the level of post-war German economy. The objectives of the plan were to eliminate Germany's war potential, to provide reparations and yet to leave within Germany the necessary plants and equipment to permit the rebuilding of a viable peaceful economy.
Experience has shown the necessity for revision of the plan which was based on specific assumptions that have not been fulfilled. Neither the bizonal area nor all of Germany can regain economic health under the plan as it now stands. Moreover, it has become increasingly apparent that under present conditions Germany cannot contribute her indispensable part to the economic rehabilitation of Europe as a whole.
The revised plan continues to observe the same objectives as the original plan.
Consideration has been given throughout to the necessity for ensuring that the bizonal plan can be assimilated into a plan for Germany as a whole. The offer to the other occupying powers to join the bizonal area in developing a unified German economy still stands. The plan has been developed with due regard to the hope that this offer will be accepted.
I. GENERAL CONSIDERATIONS
The industrial capacity retained under the March 1946 plan was estimated to provide production equal to 55% of 1938, which would have been about 70-75% of 1936 production. The effect of the new plan will be to retain sufficient capacity in the bizonal area to approximate the level of industry prevailing in Germany in 1936, a year that was not characterized by either boom or depressed conditions.
A. The old plan provided for very sharp cuts in production capacities in the metals, machinery and chemicals industries, from which the bulk of reparations were to be obtained. It is impossible to provide a self-sustaining economy in the bizonal area without materially increasing the levels in these industries. Substantially the entire difference between the original and revised plan is in these reparations industries since the original plan already provided for maximum, and in some cases unrealistic, levels for the non-reparations industries. Under the revised plan, capacities in the metals, machinery, and chemical industries will be sufficient to permit production at levels averaging about 5 or 10% less than in 1936. As compared with the war year 1944, the proposed levels represent a reduction of 55 to 60%.