single economic unit clause (Potsdam)

The clause and the contradiction

Paragraph 14 of the Potsdam Agreement's economic principles states that 'during the period of occupation Germany shall be treated as a single economic unit,' calling for common policies across mining and industrial production, agriculture, wages and prices, foreign trade, currency and banking, reparations and transport. Yet the agreement's reparations section let the Soviet Union satisfy its claims from its own zone while receiving 10 percent of unnecessary Western-zone industrial equipment free of charge and a further 15 percent in exchange for Eastern-zone food, coal, potash, timber and petroleum products. A pledge to run Germany as one economy thus sat side by side with a rule allowing each occupier to take reparations from its own area.

Dead letter and Bizonia

The decisive test was the exchange. Western-zone equipment removals began in 1946, but the Soviet zone never delivered the food and coal central to feeding and heating the millions of expelled Germans in the west. The American military governor Lucius D. Clay halted dismantling and delivery of Ruhr plants to the Soviet zone on 3 May 1946, and the exchange collapsed. So long as the clause lived, economic policy was meant to follow common rules, so its failure meant the end of the whole scheme for treating Germany as one economy. Joint Anglo-American economic administrations were set up in September 1946, and the merger of the two zones into Bizonia on 1 January 1947 institutionalised the economic division of Germany.

Interpretation

The clause is a textbook case of how quickly the Yalta-Potsdam system's idea of 'Germany as a whole' disintegrated in the early Cold War reparations disputes. With the June 1948 currency reform in the western zones and the ensuing Berlin blockade, the 'single economic unit' survived only as a phrase in a document.