page_title: History of East Germany
section_title: Reparations
hierarchical_section_title: History of East Germany / Creation, 1945–1949 / Division of Germany / Reparations
caption_attribution_description: English: This page describes the policy of allocation of German industry (factories etc) that were dismantled in the years 1945–1951 as war reparations under the "Level of Industry" plans designed to lower German standards of living and to "forever" deprive her of the industrial capacity to wage war.
context_page_description: The German Democratic Republic, German: Deutsche Demokratische Republik, often known in English as East Germany, existed from 1949 to 1990. It covered the area of the present-day German states of Mecklenburg-Vorpommern, Brandenburg, Berlin, Sachsen, Sachsen-Anhalt, and Thüringen. This area was occupied by the Soviet Union at the end of World War II, with the remaining German territory to the west occupied by the British, American, and French armies. Following the economic and political unification of the three western occupation zones under a single administration and the establishment of the German Federal Republic in May 1949, the German Democratic Republic was founded on 7 October 1949 as a sovereign nation.
  East Germany's political and economic system reflected its status as a part of the Eastern Bloc of Soviet-allied Communist countries, with the nation ruled by the Socialist Unity Party of Germany and operating with a command economy for 41 years until 3 October 1990 when East and West Germany were unified with the former being absorbed into the latter's existing system of liberal democracy and a market economy.
context_section_description: Each occupation power assumed rule in its zone by June 1945. The powers originally pursued a common German policy, focused on denazification and demilitarization in preparation for the restoration of a democratic German nation-state. Over time, however, the western zones and the Soviet zone drifted apart economically, not least because of the Soviets' much greater use of disassembly of German industry under its control as a form of reparations. Reparations were officially agreed among the Allies from 2 August 1945, with 'removals' prior to this date not included. According to Soviet Foreign Ministry data, Soviet troops, organised in specialised "trophy" battalions, removed 1.28m tons of materials and 3.6m tons of equipment, as well as large quantities of agricultural produce). No agreement on reparations could be reached at the Potsdam Conference, but by December 1947 it was clear that Western governments were unwilling to accede to the Soviet request for $10bn in reparations (which the Soviets placed into perspective by calculating total war damage of $128bn). (In contrast the Germans estimate a total loss of German property, due to the border changes promoted by the USSR and the population expulsions, of 355.3 billion Deutschmarks). As a result, the Soviets sought to extract the $10bn from its occupation zone in eastern Germany, in addition to the trophy removals; Naimark (1995) estimates that $10bn was transferred in material form by the early 1950s, including in 1945 and 1946 over 17,000 factories, amounting to a third of the productive capital of the eastern occupation zone.
  In the western zones, dismantling and/or destruction of German industry continued until 1951 in accordance to the (several times modified) "German level of industry" agreement connected with the Potsdam conference whereby Germany was to be treated as a single unit and converted into an "agricultural and light industry economy". By the end of 1948 the US had dismantled or destroyed all war-related manufacturing capability in its occupation zone. In accordance with the agreements with the USSR, shipment of dismantled industrial installations from the west began on March 31, 1946. Under the terms of the agreement the Soviet Union would in return ship raw materials such as food and timber to the western zones. When the Soviets did not fulfil their side of the agreement, the US temporarily halted shipments east, and they were never resumed. It was later shown that although utilized for cold war propaganda reasons, the main reason for halting shipments east was not the behavior of the USSR but rather the recalcitrant behavior of France. Material received by the USSR included equipment from the Kugel-Fischer ballbearing plant at Schweinfurt, the Daimler-Benz underground aircraft-engine plant at Obrigheim, the Deschimag shipyards at Bremen-Weser, and the Gendorf powerplant,
  Military industries and those owned by the state, by Nazi activists, and by war criminals were confiscated by the Soviet occupation authority. These industries amounted to about 60% of total industrial production in the Soviet zone. Most heavy industry (constituting 20% of total production) was claimed by the Soviet Union as reparations, and Soviet joint stock companies (German: Sowjetische Aktiengesellschaften -SAG-) were formed. The remaining confiscated industrial property was nationalized, leaving 40% of total industrial production to private enterprise.
caption: Allocation policy for "surplus" German heavy industry under the ""Level of Industry" plans.
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