State on the Spot

Potsdam aimed not only at Germany's economic heart, but at lopping off her business arteries abroad. With varying degrees of enthusiasm the Big Four want to make German foreign properties available for reparations, at the same time ensuring that such concealed interests as the far-flung I. G. Farbenindustrie cannot later serve a new aggression.

Last week in Berlin, Russell Nixon, acting U.S. member of the German External Property Commission, charged the State Department with trying to "hamstring" EPC's efforts to trace, freeze, and seize German-owned foreign property. State's denials were as sweeping and spirited as Nixon's charges.

1) Nixon: the State Department is trying to exclude Russia from participating in the search and seizure of German assets in countries outside southeast Europe. State: the division of effort was specifically embodied in the Potsdam Agreements, was accepted by all parties, is obviously the only practical way to proceed.

2) Nixon: the State Department is trying to exempt all the Western Hemisphere, including Argentina, from the plan to seize German assets abroad. State: we have been enlisting Latin American cooperation ever since early 1942 to find and freeze German assets concealed there.

3) Nixon: the State Department is adopting a "do nothing" attitude. State: for "a period of years" we have maintained a special unit for eliminating German economic influence abroad; we have sponsored many international agreements to trace and eliminate German interests. (It was the U.S. that pushed the external property program through the Allied Control Council.)

4) Nixon: the State Department is saying "would you be so kind" to countries where German assets are uncovered, instead of supporting EPC's proposals for strong demands against neutrals, notably Spain. State: Nixon does not understand the functions of EPC. It can only look for evidence inside Germany that German nationals have interests abroad. From that point on, attempts to get hold of the property must be made through usual diplomatic channels.

Shaky Grounds. State's case was good on paper, but Nixon was objecting to a gap between plan and execution. Four years of efforts to destroy German interests in Latin America have not been notably successful (best results in Brazil and Mexico; worst in Argentina). No one has yet revealed to what extent Germany's external assets (estimated by Nixon at $5 billion, by the State Department at $1 1/2 billion) have been run to earth.

At best, the legal grounds for the Big Four demands for German property in neutral countries are shaky. Sweden has already objected to informal demands, has cooperated to the extent of earmarking German interests, pending the presentation of satisfactory legal claims. Last week the State Department complained that Nixon's "misleading" charges had aggravated the difficulties.

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