740.00119 Council/3–3147: Telegram
The Secretary of State to the Acting Secretary of State
urgent
1122. Delsec 1376. For the President, Vandenberg, Connally and Acheson from Marshall. Eighteenth CFM meeting, March 31, Marshall presiding, initiated the discussion on the treatment of Germany as an economic unit, including the level of industry, industrial demilitarization and resumption of reparations. Marshall stated that US stands for (1) German economic unity, (2) a common plan to balance exports and imports at a livable standard in Germany, (3) an increase in the level of industry plan to bring German productive plant more into line with the requirements of Europe and, with this, (4) the quick completion of reparations. He added that although we are here to resolve and not to accentuate our difference, we should not seek agreement merely for the sake of agreement. He concluded by saying that the US recognizes that its responsibilities in Europe will continue and is more concerned in building solidly than in building fast.97
Bidault again insisted that the question of the export of German coal and the problem of the Saar must be solved at the same time as other problems connected with German economic unity. He said the [Page 300] question of reparations from current production must be considered from the point of view (1) its effect on German coal available for export, (2) on war potential, and (3) on the German balance of payments. He said there was no insurmountable difficulty in reaching a practical solution of the questions under discussion.98
Bevin began his statement by urging the council to look to the future and agree on the allied objectives to be followed in Germany from now on. He warned that any decision taken now by the council must be open to revision in order to take into account any later council decision on German frontiers. He listed the four cardinal requirements to achieve full economic unity as (1) freedom of movement throughout Germany for persons, trade and ideas; (2) proceeds of German exports from current production and stocks must first go to pay the cost of German imports; (3) equitable sharing by the four powers of occupation costs—past, present and future; and, (4) establishment of central German administrations with German executive powers. Replying to Molotov’s earlier statement of Soviet demands, Bevin said: (1) Reparations from current production are not possible now or in the near future because Germany can not balance her import-export account and bear this additional burden and because the cost to the UK of occupying its zone would be increased. (2) No special four-power agency for the Ruhr is acceptable as long as the zonal system remains but when Germany is unified economically, the Ruhr would be subject to controls applying equally to all of Germany; (3) the agreement fusing the US and UK zones was the result of failure to implement the Potsdam decision on economic unity and that the agreement provided that when economic unity is achieved, the two zones will merge with the rest of Germany.
Bevin said he supported the French in their claim for the Saar subject to agreement on the area to be included and on a readjustment of reparations as a consequence of the transfer. He said he did not want to see a settlement of the big German problems blocked by the French demand for coal and expressed hope that US and UK plans to help France get more coal would satisfy Bidault and permit him to withdraw his demand.
Bevin stated that the level of German peacetime industry must be raised in order to improve the exceedingly low standard of living in Germany. He also urged the council to set a time limit during which removals for reparations must be completed and suggested a simpler plan for evaluating and allocating plants to be removed. He urged that the questions of reparations and the level of industry be settled here, adding that it was useless to ask the Germans to cooperate in reestablishing [Page 301] a democratic state unless they knew how much reparations they are to pay and how and when collected. He concluded by tabling a detailed proposal on future allied policies toward Germany.99
Molotov attempted to rebut parts of his three colleagues statements and added little to what he said previously. He did say that on the majority of questions connected with the problem being discussed he thought sufficient agreement could be reached to facilitate the allies task in Germany. He demanded a concrete settlement of reparations and said the USSR wants to increase both German imports and exports. He agreed to help in improving German rations but suggested that the food supply be increased by carrying out land reforms as had been done in the Soviet zone. He insisted that the areas of Germany now administered by Poland can not be included in any discussion of German economic unity. He joined Bevin in asking that quick action be taken to raise the German level of industry but added that the destruction of war potential must be hastened. He denied that the USSR wanted to separate eastern Germany from the rest.1
Upon adjourning, the Ministers accepted Marshall’s suggestion that the council meet in restricted session tomorrow to continue its discussion of economic unity.
London disregard following note:
For Acheson: Make certain that President sees my detailed statement (Delsec 1374, March 312) made at conference today.
Department please repeat Vienna 21, Rome 18, Paris as 95.
Repeated London 116 and Berlin 196.
- For the full text of Secretary Marshall’s statement summarized here, which was circulated to the Council as document CFM(47) (M)88, March 31, 1947, see Germany 1947–1949, pp. 445–447, or Department of State Bulletin, April 13, 1947, pp. 649–650.↩
- For the text of Foreign Minister Bidault’s statement summarized here, see Déclarations de Bidault, pp. 25–27.↩
- For the text of the British proposal referred to here, entitled “Supplementary Principles to Govern the Treatment of Germany” and circulated to the Council as document CFM(47) (M)89, March 31, 1947, see Documents on International Affairs 1947–1948, pp. 453–464.↩
- For the text of Foreign Minister Molotov’s statement summarized here, which was circulated to the Council as document CFM(47) (M)90, March 31, 1947, see Molotov, Problems of Foreign Policy, pp. 400–409.↩
- The telegram under reference is not printed.↩