740.00119 Potsdam/7–1445

No. 351
The Assistant Secretary of State ( Dunn ) to the Secretary of State 1

Memorandum for the Secretary

Sir Alexander Cadogan, Permanent Under-Secretary at the Foreign Office, called this afternoon and discussed for two hours in a preliminary way a number of matters on the agenda of the Conference.3

. . . . . . .

3. Creation of German Central Administrative Agencies.

Sir Alexander referred to a memorandum,4 presented by Field Marshal Montgomery and approved by the Prime Minister, urging the necessity for reestablishing central German “ministries” in order [Page 506] to enable the Control Council to cope with the problems affecting Germany as a whole. He expressed some doubt as to whether Berlin could offer sufficient accommodation for these agencies. I stated that we favored developing German control [central] administrative agencies, under some less imposing title than that of “ministries.”

. . . . . . .

5. Financing of German Imports.

Coulson, Cadogan’s assistant, felt that Germany might need a considerable volume of imports in excess of exports before it can begin to provide substantial exports on reparation account. He felt a US–UK–French agency to regulate the foreign trade of the three western zones was necessary as a stop-gap to carry through the handling of combined supplies already allocated, pending establishment of four-power control over German exports and imports. Mr. Clayton and I felt that any such three-power arrangement should be avoided until we had explored the possibility of four-power arrangements to deal with this problem for Germany as a whole.

Mr. Clayton pointed out that if the Control Council agrees on the financing of German imports by exports, this will promote freer interzonal movement of goods within Germany since each zone would prefer to give available goods to other zones rather than provide exports to cover imports. Coulson felt it was difficult to plan a four-power policy on imports into Germany in the absence of agreement on what to do with German industry and that conflict over available supplies and shipping would arise between requirements for Germany and those of liberated countries.

. . . . . . .

7. German Political Activity.

Sir Alexander agreed that it was time to drop the SHAEF policy of forbidding political activity in Germany and read from a British memorandum5 which favored free political activity.

Sir Alexander stated that his delegation would bring up the question of coordinating propaganda in the different zones, in the hope that some provision might be made for regular consultation, which in turn might result in applying some restraint to Soviet propaganda. He expressed skepticism regarding the possibility of achieving much in this field, but felt that some provisions should be made for exchanging views in order to have some consistency in the various zones.

. . . . . . .

James Clement Dunn
  1. Printed from a carbon copy on which there is an uncertified typed signature.
  2. For other extracts from this memorandum, see documents Nos. 140, 218, 234, 258, 319, 379, 404, 470, 519, 635, 645, 678, and 708.
  3. For a list of persons present at this meeting, see document No. 234, footnote 3.
  4. Not found in United States files.
  5. Not printed.