740.00119 E.A.C./5–745: Telegram
The Ambassador in the United Kingdom (Winant) to the Secretary of State
[Received 11:11 p.m.]
4629. Comea 231. Further discussion of US General Directive in May 3 meeting of the European Advisory Commission. See my 4628, May 7, 10 p.m. to Department, repeated to Paris for Murphy as my 248.
Paragraph 2 of the General Directive. Gousev objected to the first sentence on grounds that it implies retention of the German administrative machine in its present Nazi form and says nothing about Yalta decisions to abolish Nazi laws and institutions. I pointed out that these points were covered in paragraphs 6, 8 and 9 of the General Directive and offered to include the Yalta wording. Massigli expressed French support for the principle of decentralization or federalization of the German political structure. He felt it would be a mistake to restore the completely centralized political structure which had been built up under both the Republic and Hitler, especially since that structure had disintegrated in defeat.
Strang proposed that the Directive begin with a statement of the purposes of occupation, based on the Yalta declaration and on paragraph 3 of the United Kingdom draft Directive No. 1.31
Strang asked about the reference to “foreign affairs” in this paragraph, and questioned whether Germany would have any “foreign affairs”. I interpreted this to mean “international relations” including economic relations and control of German Nationals and property abroad, but not “foreign affairs” in the usual sense of foreign political policy.
Massigli asked if the “controls” referred to in this paragraph were Allied or German controls. I stated that Allied controls were meant but that some controls might be exercised more directly and others more indirectly. Strang asked whether the list of purposes for which controls were permitted, as set forth under A, B and C, is exclusive or illustrative in character. I stated that these controls would probably be essential from the beginning. Strang proposed that the second sentence read: “shall permit or establish” instead of “may permit or establish”, and that the words “in particular” be inserted after the words “establish central control”, in order to indicate that the enumeration is not intended to be exhaustive. Gousev questioned the meaning of the words “German economy shall also be decentralized”. He asked whether this meant decentralization of the economy itself or [Page 507] decentralization of the administration of the economy. I explained that these words did not envisage geographical redistribution of industry which he had at first understood, but rather a long term policy of decentralizing the control or [of] economy, removing the power of great concentrations, monopolies and cartels to dominate German economy, eliminating as many as possible of the central economic controls established by the Nazis.
Strang asked whether economic decentralization implied decentralization of the economic administration parallel with the decentralization of the political structure and whether each federal political unit would have a corresponding economic unit. He asked whether in place of a single central control there would be a number of federal or regional economic controls. In reply I again stressed the need for breaking up dangerous concentrations of economic power. The United Kingdom delegation asked whether it was intended merely to abolish the objectionable parts of centralized control or also to transfer any useful functions of control to regional and local authorities. I stated that some controls would be abolished as they had been created for war purposes; others might be placed under the control of the component federal states to serve civilian needs. Strang restated the objectives of paragraph 2 as follows: Economic decentralization to follow political decentralization; breaking up industrial associations which had gathered too many industries under their control. Massigli requested the United States delegation to provide an explanatory memorandum to facilitate consideration of this part of the General Directive.
Paragraph 3 of the directive met with no comment.
Paragraph 4. Gousev took strong exception to the words “controls may be imposed”. He stated that the word “may” implied that controls “may or may not” be imposed. In his opinion, the Yalta declaration, which called for the elimination or control of all production that can be used for war purposes, is much more definite. He pointed out that a very large part of industry can be used for war purposes, and stated that these industries must be controlled.
On instructions from his Government, Massigli proposed that paragraph 4 begin with the following words: “German economy will be subjected to all necessary controls, particularly” those enumerated under A and B.
Strang asked whether Allied controls were meant in paragraph 4. I indicated that Allied controls were meant in paragraph 4 and, generally speaking, German controls in paragraph 5.
Massigli asked whether the second sentence of paragraph 4 meant that Germany’s standard of living could be equal to that of any neighboring United Nation. I stated my understanding that these words mean that Germany’s standard may be equal to the lowest [Page 508] neighboring standard, lower than the lowest but in no case higher than the lowest.
With regard to the sentence about treating payment for imports as a first charge on exports, Massigli and Strang asked whether this referred to “authorized imports”. I stated that this was the case since both imports and exports would be controlled.
Regarding the last sentence of paragraph 4 Massigli asked whether countries receiving German reparations would not be “dependent on German economy” to that extent. I interpreted these words to mean that future or long range dependence of other countries on German economy should be avoided.
Paragraph 5. Massigli felt that the expression “assume administration of such controls” gave great power to the German authorities. He suggested that the word “execution” be substituted for “administration”.
It was agreed to continue the discussion of the US General Directive at an early meeting of the EAC.
Sent to Department, repeated to Paris for Ambassador Murphy as my 249.
- For text of the United Kingdom draft General Directive for Germany in the post-surrender period, see Foreign Relations, 1944, vol. i, p. 226.↩