FULFILMENT OF REPARATIONS PLANS DURING 1949

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00457R004800260002-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 6
• Document Creation Date: December 23, 2016
• Document Release Date: August 27, 2013
• Sequence Number: 2
• Publication Date: May 15, 1950
• Content Type: REPORT

CLASSIFICATION
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-rtj OR !VIATICA! REPORT CD NO.
CONFIDENT/ArE DISTR.15 MAY 50
NO.'OF PAGES 5
COUNTRY
SUBJECT
PLACE
ACQUIRED
DATE OF
INFO.
Cermany-(Russian Zone
Fulfilment of Reparations
Plans during 1949
NO. OF ENCLS.
CUMMD!IELOVO 4 (1 page)
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SUPPLEMENT TO 50X1-HUM
REPORT NO.
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THIS IS UNEVALUATED INFORMATION
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1.
The DDR delivered 1,069,0009000 DM worth of goods as reparations
In 1949. The quota was 19020,0009000 DM. Experience has shown
that a slight reduction in the first figure must be expected as
the result of final adjustments. In any case the quota for
1948 was not filled so any surplus in 1949 will be applied to
the 1948 deficit.
2. The surp?us was due to the following:
a. Insufficient production because of material shortages,
especially in the first six months, and numerous other
factors led the authorities to lower the quota. A
number of orders which were not expected to be filled
were transferred to the 1950 quota. In their stead new
orders were placed in branches with excess capacity,
e.g. the granhics industry. The improvement in
material surly in the second six months and increased
efficiency then made it possible for some of the post-
poned orders to be filled in 1949.
b. A number of factories pledged themselves to deliver
additional items not included in the plan in celebration
of Stalin's birthday. The Soviet Control Commission
was moved by the workers' friendship to the USSR to
accept these additional unplanned items as reparations.
c. In some cases it was found necessary to grant price
increases so that there was an increased value without
any increased amount.
3. The surplus cannot conceal the faults in our reparations program.
The DDR is honestly determined not only to fill its reparations
quota but also to do everything in its power to repair the
damage done by the German Wehrmacht and to strengthen the
CLASSIFICATION
This document is her ,by reg:lidad to
CONFIDENTIAL in accordance with the
letter of 16 October 1978 from the
Director of Central Intelligence to the
Archivist of the United Sates,
Next Review Date: 2008
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CENTRAL INTzLLIGENC AGENJtI
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USSR as the guarantor of peace. :from this point of view it
is to be regretted that productiot by item (Nomenklatur)
reached only 98.6% of quota. Inazmuch na this deficit is
made up primarily of important ecuirment, e.g. metallurgical
equinment, it must be considered very grave. To be sure it
was not caused by bad will or nerlect; nevertheless its
causes must be thoroughly analyzed in order to insure 100%
fulfillment in lc50. Some of th( blame may be placed on
material shortages, but we are cr; the orinion that there
were also serious organizational faults, e.g., poor coopera-
tion between factories, inattentien to quality, bureaucracy,
etc. .
Analysis of Pinduation
4. The reparations Plan called for the product on of machinery
to the extent of 74.2% cf total reParations production.
This fact is of especial importance because;
a. The emphasis on machinery requircd large qi:antities of
material, mainly metal. An a res;lt of )ne illegal
blockade imposed by the western 'ocnLratiatal powers and
the cutting off of deliveries from Weste.n Europe and
a .series of delays in other imrorts, fullalment of the
quota was faced with serious difficulties.
b. The concentration cn macinery especially heavy mathinery
(45% of machinery total, raised the pro7.su cf cooperation
between factories. Delay in recognizinE the need for this
cooneration was one of the main causes 1)r our difficulties.
5. The quota for equipment for the basic Indus:7y af the USSR was
9.65 of the total. Transport equinment accflintod for 16.4%.
Equipment for power plants accounted for 112. Standard
houses represent only 5.2% of the total bt:thei: importance
'
is not limited to the feel. that they add 4: the recnstruct:on
of destroyed living stnce. (They can hazily nlay n 'cacisive
roll compared to the tatal reconstructiorin the USSR.) Their
a
special,imnortance is that they emrhasiz more than Mos. ther
products the moral rhasiv of reparations :or the broad Nab tts
of the people.
6. Shortages of material, esnecially ferrc.s metals and speciti
parts, e.g. ball beaengs and electric motors, were further
complicated by the neiessity of producing items entirely .
unknown in Germany. This war usually carried out on the basis
of Soviet bluerrints, which were subjeat to misinterpretation
and error in tranaletion, cal:sing lehgthy delays, and which
often required chnnLes for adartion cc our available produc-
tion facilities. Tiese changes had to be approved by the
customer in the USE,R with resultant delays. All in all,
however, we may sty that our industry mastered these diffi-
culties and met all requirement's as far as humanly nossible.
?
7. In some cases fulfillment of the quota required the construction
of new factories, reconstruction of destroyed factoriesl-or
increase of capaiity, thus demanded double effort, first for
the construction of capacity and then for the prouclion
rrocess itself.'
?
8. The nublicly owned factories accounted for 39.2% and other .
German factories (rrivate). for only 17,5%. The importance
of the SAGs to.; the German economy is domonstrated by their
large share, 44.3%. The explanation fgmr this is that the
factories of e.he heavy industry branch are largely SAGs and
the shift in emrhasis in reparations t?heavy industry
necessarily Meant allotting the SAGs more contracts.
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CENTR:1L Ih. ELLIGENC AGENCY
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Survey of Fulfillme:t
wr
The shift to heavy industry required n arming-u reriod
so the quota for the iirSL quarter Ttis set at 18.&% of the
annual quota. Nevertieless rroduction lagged behind at
17.15. Varous fact:cries attempted ') blame this on
delayed recertion of the contracts. h careful investigation
disclosed that this does not hole -inter since 65% of
the annual contract: had been awarded by 31 January 1c.49 and
96.3% by Yarch.
''Delivery of muteriiis was very slow. Acccrding to cur
stet:sties tne ruu.ly of rolled steel, canings, malleable
steel, etc., amorited to:
Jthuary
Feoruary
Mirch
.5'1 of unnual supply
2.1% "
8 % "
11 A numbet. of deliveries scheduled Jolt December '.948 were %et
made then. Th:se were taken over in the quota or the ffixst
quarter 1949 End thus the fgure or 17.1% war ac'tieved.
Deliv.-ries. of equipment for mining and for the metallurgicil
industry tot-lied only 3.3% of the Innual quota in the first
quarter. Tiansport (14%) and chemi.:81 industry (125;!)
we-!e elso liggard.
12. :then the yegularity of production if broken it is nat.lral
that rroduction at the beginning of the new plan rent:6 will
lag. The increased production at t}e end of 1948 necessarily
resu1te6 in excessive consumption o! materials and a reduction
in production of preparatory producl, .so that 154c began
rith a shortage of material and a slt:rtage of semi-figished
products. This concentration of wort in the last day of
the 1948 period, with overtime and nt holidays, produced a
reaction in the rorkers which resulted in slackened
nroduction.
33. By the end of the second quarter 1949 a4.2% oi the annual
quota had been reached. Imrroved-surrLy of fer.tus metals
in Arril and May WAF iuereason . I..: addition al contracs
had been allotted and trchnical difficulties had Leen over-
come. Equipment for metallurgical industry remaiile:' the
weak snot (13%). The main reason was the poor, ql:Jility of
sheet metal and castings. This condition continued tllrough
the third quarter and seriously endangered the rho:.e rl.ogram.
14. Thanks to the energetic endeavors of all concernedtproduccion
rose in the.fourth quarter in all branches and the annual
quota was filled with 104.9%. This.inprovement was made
nossible by reallotting orders which had piled up il various
overworked rlants. Thus Yrupp-Gson had been given the
major rortion of contracts for the production of eql.inment
for the metallurgical industry; in Sertember Krurr-.;ruson's
subcontractors were obliged to give.these orders first
priority by SMA Order 135; later a number of orders for
rolling mill equipment were transferred from Krunp-GruSon
to German factories and the head of the Machinery Section
of the ,A.nistry of Industry was placed in charge of the
whole program. In addition subcontractors' conferendes were
held regularly to eliminate bottle.-necks.
S 'RFT.
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C.-ENTfl. IITMLIG:INCE AGENCY
15. Out of a total of 3,242 reparations contracts 6(-!f were charge
from 3 to 10 times for n total of 32C0 changes?- It cannot
be -.raved exacfly ho" much thfs effected the entire nrogrnm;.
ho7ever, it is c fact vnr:ovs contracts had to be
cancelled for various periods. The changes often couad not
be made in either because of misunderstanding,' by the
contractor or dissatisfaction on the rnrt of the customer.
In such cases anrrcval had to be obtained from the Uf.SR?rith
resultant losses in work nreparation, planning, and
production.
16. The quality of reparations production was often poor and
resulted in rejectims. Much time was lost because the
materiels received were of ouch poor f:eality that they could
not be used. ? The loss amounted to 10% of capacity in some
factories. Sx factories had 12elere lost hours in the first
half of 1949 because of Poor castings received from Kunsch,
Kr, Krautheim, and Otto Gruson. The same trouble was some-
times encountered in itaterial imrorted from the Test. Thus
steel imported from Belgium in Aegust could not be used,
likewise steel rine from Hamburg.
17. Execution of a product-ten plan requires correct allotment of
materials. Because some contracts were received late, it
was often impossible to submit requests for materials on
time. Again and again it was found that the necesity for
additional allotments for late contracts seriously interfered
with the entire material sunny rinn. It soon became evident
that Some allotments could not be realized: because the
material allotted on parer had already been issued elsewhere.
In adtlition it anpears that some associations did not give
enough supply nurrortto their factories engaged in reparations
rroduction. This applies to packing materials especially.
l. Ball bearings and electric motors! were a bottle-neck all year
long. In the first six months the supply of steel castings
was 1,100 tons short of the amount required for production
of metallurgical equipment alone, later there was some
improvement. Factories which required imported materials
were especially hard hit. At first ft was *possible to obtain
materials from western firms in spite of the blockade but
with increased border controls thfs became impossible. .After
the blockade was lifted there was a considerable lag in
deliveries. The supply of Dk (Test) was difficult to obtain,
usually several weeks were necessary and even then the
entire sum was seldom available. Only through intensive
effort was it poesible to' raise the large sums needed in
the fourth quarter 1049.
ConClusion
19. Reparations production in lc-'49 can be considered satisfactory.
Although some individuals eisiiti.e reoarat4%.,s, tne
majority of the workers and technicians regard renarations
as a moral ditty end rs an im-oortant contrbt+ion to the
reconstruction of the USSR and thPreby to the improvement
of the economy of the DDR. The following points must
receive special attention in 1'750:
n. One of our greatest difficulties was the shortame of
material and poor quality. The Reparations Office
must pass the necessary ordinances. The Office of
Reparations must be granted a supply of PM (Test) to
be issued by it to the Ministry of Industry, the
SAGst and the.state governments tc buy imrortant
materials.
SE RET
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CENTRAL INTELLIGENCE AGENCY
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.b. The. ball bearing probThm must be solved by reorganizing
DM?, Leipzig, by building a net'; factory, and by making
arrangements immediately for imnorts.
c. The lanistry of Industry must provide sheet metal of
nroper quality and electric motors cf the tyres needed.
d. The large metal-worI4ng machinery needed must be acquired
promptly.
e. Cooperation between the faCtories must be improved,
particularly between SAGs and German factories.
f. Difficulties have arisen because the German directors
of SAGs were not strong enough. The SAGs are an
essential Port of the economy of the DDR and therefore
the government must put strong German directorates in
them even though they are Soviet property. The Soviet
Directors are too few and are not acquainted with
ccndi`fons here and thus are not able to make all
necessary arrangements.
Quality is the imncrtnnt question. Factories which
produce high quality goods for reparations should
receive -prizes.
h. Factories which deliver with serious delays because of
carelessness should get stiff fines.
g ?
SECRET ?
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CENTRAL INTELLIGENCE ?AGENCY
ATTACHMENT ONE
A. Renarations 71ar 1'49 according to
?
C.
B.
Branch
Machinery including
electric equinment
Chemical
Light industry Moly:d-
ing standard houses
Inclpding typograph-
ical production
Including others
in 1,(Te
?
?
742,013
1341141
58,298
186,274
? 521320.
88,000
32,187.
According, to tyne of product.
Eqnt. for 'ciasic
Incl. eqnt. for
meta)lurical ind.
Inci. mining eqnt.
?Eqnt. for transnort"
Incl. RR eqpt.
st Shinning eqpt.
Eqpt. for chem. ind.
II It food Ind.
Machinery
Incl. machine tools
ores-ea, etc.
tools
Eqnt. tor power plants
Special equinment
C. According to ownershir
German
Incl. VEB(Z)
VEB(L)
Other (Private)
SAGs
96,487
31,812
32,493
1641852
98,221
46,631
19,329
61,448
25,605
11,033
9,367
14,002
112,891
22,241
o" factory.
570,000
376,000
18,000'
176,000
450,000.
branch of industry.
Actral Production
762,754
138,218
67,861
200,119
52,94z
102,236
31,777'
100,791
33,217
32,125
175,029
106,486
68,543
19,158
63,664
28,802
9,318
9,0.3
14,833
116,728
22,484
610,363
402,752
18,006
189,605
45811c8
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