740.00119 Control (Germany)/2–1346
The Secretary of War (Patterson) to the Secretary of State
Dear Mr. Secretary: The Office of Military Government has advised the War Department of a development in the Coordinating Committee of the Allied Control Council for Germany which threatens to obstruct further progress in the completion of the reparations program.[Page 502]
As you know, agreement has been reached in the Control Council that Germany would be permitted to retain steel production capacity of 7.5 million ingot tons and that annual production of steel in Germany would be limited in any one year to 5.8 million ingot tons. Although, for a short time, the British representative on the Control Council insisted that levels of production in other industries should be established on the basis of 7.5 million ingot tons of steel, the Office of Military Government has now advised the War Department that the British have agreed to the preparation of a level of industries plan based on an annual production of 5.8 million ingot tons of steel, without committing themselves to final acceptance of such a plan.
However, at a meeting of the Coordinating Committee on February 1, 1946, the French representative officially presented a request that in determining the specific steel plants to be left in Germany under the decision fixing production capacity at 7.5 million tons, the study should be based upon two alternatives: (1) that Germany will retain its present geographic boundaries West of the Oder-Neisse line and (2) that the Saar will be annexed to France. General Clay advised the French representative that the American delegation would not consider reparations under the second alternative, since it felt itself bound by the Potsdam Agreement to treat Germany as an economic unit. General Clay pointed out that the exclusion of the Saar from Germany would not only affect the entire reparations program in the remainder of Germany but would also affect delivery of reparations. The British representative expressed a willingness to make the study requested by the French but stated that any conclusions with respect thereto would be beyond the scope of his authority under the Potsdam Agreement. The Russian representative took the position that there was no question involved inasmuch as the decision had already been made at Potsdam that the remainder of Germany, except as provided in the Potsdam Agreement, would be treated as an economic unit.
General Clay has advised the War Department of his view that until this question is resolved little progress can be made in the completion of the reparations program. Moreover, he expresses his view that the question cannot even be studied in Berlin until it is resolved at governmental levels by reason of the fact that the Soviet representative will refuse to make any studies of reparations which do not treat Germany as an economic unit within the terms of the Potsdam Agreement.
I am, therefore, calling this problem to your attention as a matter of urgency with the request that the State Department resolve the issue with the French Government and that the War Department be [Page 503]advised concerning the instructions to be transmitted to the Office of Military Government for Germany (US) as to their future course.35
- In his reply of February 16 to Mr. Patterson, Secretary Byrnes indicated that the problem of Germany’s Western frontier was one which would have to be solved on a quadripartite intergovernmental basis. The State Department concurred in General Clay’s previously raised objections to the French proposal to exclude the Saar from Germany and observed that the entire Level of Industry Plan would be affected by such a move (740.00119 Control (Germany)/2–1346).↩