740.00119 Council/4–747
Memorandum of Conversation, by the Secretary of State
Mr. Bevin called at my quarters shortly before 1:00 o’clock today and left at 2:30, having informal lunch with me. Mr. Cohen was present during most of the conversation.
Mr. Bevin first brought up his concern about the matter of the prompt determination of the level of industry in Germany. He felt that if this issue was referred back to the Allied Control Council by the Council of Foreign Ministers in the present state of misunderstanding, a long period of months would elapse before anything was done, meanwhile the situation in Germany was urgent for correction.
Mr. Bevin felt that the British proposal now would be for the prompt study of the matter by the experts with a directive which named possibly ten million tons of steel per annum as a determining basis on which to correlate all other matters, of course with the stipulation that additional costs for the British taxpayer were not permitted. He recognized that this procedure involved a redetermination of the reparation plant transfers to the Allies to whom they had already been allocated and that some compensation would be necessary. He felt, however, that this could be done without a departure from the Potsdam Agreement, but rather as a practical application of the terms of the agreement to the existing situation.
Mr. Bevin expressed concern over the delays and disagreements which would probably result from an effort to evaluate the plants which remained in Germany and he wondered if we could not reach one grand total as a best way of avoiding such complications. He remarked that the Board of Trade advised him that the difference in value between a plant removed and the plant remaining in place was between 70 and 80 percent, that representing the loss if the plant were transferred. He recognized that the whole matter of plant transferences had proved far less profitable to the Allies, particularly Russia, than had been anticipated at Potsdam; that the Soviets, for example, found themselves involved in the necessity of making large expenditures for plant buildings, sidings, sewage, etc., for which they could not find the money, and that therefore the transfer of the plant machinery merely involved them in the cost of transportation with no probable advantage for a long period to come, during which there would be a continued deterioration of the machinery. (The Embassy reports that the machinery of the transferred plants is now lying out in the open on railroad sidings throughout Russia.)
[Page 310]Mr. Bevin hoped that we—the British and Americans—could get together on the basis of approach to this matter to hasten a general agreement which would permit an immediate study of the question by experts, which in turn would permit an early solution.
I explained to Mr. Bevin the American reluctance to involve themselves in a fixed tonnage of steel as a basis of departure, although they recognized the convenience of this procedure which had been more or less the basis for the initial calculation. I also explained to Mr. Bevin the delicacy of conducting a discussion about reparations in recompense for the non-transference of plants previously allocated and our desire to avoid not only additional expense to the American taxpayer, but also to avoid a basis of payment which would be a continued source of altercation and therefore serious difficulties, particularly between the Soviet Union and Germany. I agreed to his suggestion that the American and British representatives get together to see if they could work out a proposal which Mr. Bevin and I could put forward at the Conference Table.
Mr. Bevin next discussed in general the progress of the conference and his reluctance to enter into discussions which appeared to differ from my point of view, at the conference table. We discussed at length the French position on various matters, particularly that of the level of industry.
Mr. Bevin brought up the problem of the Middle East pipeline and explained the reasoning of the British Government, particularly the British Chiefs of Staff, for a route for the pipeline to the sea at Gaza, which would involve six million pounds more expenditure than the two previous proposals. This additional expenditure was reasonable by keeping out of regions which were very liable to be sources of discord and trouble in the future, to avoid Jaffa, which would also mean too many irons in the same pot, and to reach the sea at a point which would be helpful to the development of the hinterland and also would assure the Arabs an opening to the sea if a partition or canalization should follow in Palestine. I told him I had referred his paper to the Department in Washington for study.15
Mr. Bevin next brought up the establishment of a High Commissioner, I believe he called it—he gave me no papers—in Singapore, which would be the British point of outlook in the Far East. His government hoped it would be acceptable to us to station a liaison officer there. He stated that no such proposal had been made to the Soviets. He did not ask for an answer at this time.
[Page 311]I took up with Mr. Bevin a memorandum just introduced by the British Representative on the Coordinating Committee which cited three questions as being fundamental issues in connection with the political organization of Germany. I explained to him that the American Delegation felt that the answers—from our point of view—hardly required comment, but we thought it inadvisable for the British to put such a proposal forward at this time because of the propaganda material they would give the Soviets for claiming that the British and Americans under cover were seeking for the definite partition of Germany; also, that one paragraph was so worded that it confused the issue, which involved our insistent stand that the election machinery should be controlled in the Laender and not in Berlin. He agreed to reconsider.
- The paper under reference here is presumably the undated memorandum which Bevin gave Marshall on April 8, 1947, explaining the British position on the various pipeline proposals. The memorandum is included in the documentation on the participation by the United States in the development of the petroleum resources of the Near East presented in Foreign Relations, 1947, volume v .↩