740.00119 Control (Germany)/4–1547: Telegram

Major General William H. Draper to the United States Military Governor for Germany (Clay) at Berlin38


MA 51238. Personal for Clay from Draper. Delegation has suggested I cable you the following memorandum to Secretary from [Page 474] Mason and myself and that I request your comments by cable in view of importance of decisions involved:

“Mr. Bevin plans to see you soon concerning a proposal on the level-of-industry. This morning we discussed with Hall-Patch what Mr. Bevin proposed to do. According to our information he will seek an opportunity at the Council to propose Four-Power agreement on a revised level-of-industry based on a steel production of 10 million tons (11½ million tons capacity to be left in place). The British expect (and so do we) that the Soviet Delegation will immediately raise the question whether this provides for reparations from current output in accordance with the Soviet demand. The answer being “no”, it is expected that the Soviet Delegation will not agree. It is also expected that France will not agree because of the steel figure.

If this is the outcome, Mr. Bevin plans to indicate that he regards himself as free to take whatever action is appropriate regarding the level-of-industry. In this connection he will seek a US–UK agreement to announce:

That the bizonal area will undertake a revision of the level-of-industry based on a 10 million ton production of steel (capacity of 11½ million tons to be left in place).
That plant and equipment will be moved as soon as the new level has been determined and the plants available for removal are listed.
That, in the interval, 15–20, or some larger number of plants drawn from categories II, III or IV will be allocated.
That the allocation of plant and equipment mentioned in (2) and (3) will be to the east as well as the west according to the Potsdam formula.

Recommendation: We agree that Four-Power agreement should be sought. We are convinced, with the British, that it will not be attained.

We think that, in this event, public announcement of a US–UK agreement should be postponed for two or three months pending the completion of the study and the listing of plants. A public announcement during the Conference or shortly thereafter, would, we believe, be too indicative of a break in relations. Russia and France should be given some opportunity of reconsidering their positions.

We should, however, agree with the British before the end of the Conference:

To undertake a study of the appropriate new level-of-industry immediately;
To list the plants thereby made available for allocation;
To allocate. (General Draper does not agree. He believes that agreement to allocate should await the completion of the study and the listing of plants);
Issue the appropriate directives to our authorities in Berlin.

We do not agree that allocation of plants outside of Category I should be undertaken before completion of the study. As soon as allocation is begun a decision will have to be made on allocations to France and Russia. This is a serious decision which should be postponed until these countries have had a chance to reconsider positions taken at this Conference.

If Mr. Bevin insists, however, on immediate allocations and if you agree with him, there are three possible positions regarding allocations to France and Russia:

No allocations to these countries.
Allocations to France and Russia but with the U.S. and U.K. selecting the plants if USSR and France refuse to cooperate and holding them in reserve pending economic unification.
Allocation and shipments to all countries in accordance with the Potsdam formula.

Mr. Bevin, as indicated above, will support the 3rd position.

We advise the acceptance of the 2nd position though there is disagreement in the American Delegation on this matter.”

  1. The source text was sent to the Department of State as enclosure 1 to despatch 106, April 15, 1947, from the United States Delegation at the Council of Foreign Ministers in Moscow, not printed. Enclosure 2 to the despatch just cited was the following text of a telegram from Draper to Clay, dated April 13, 1947, transmitted as telegram 257 through the Office of the United States Political Adviser at Berlin:

    “Secretary and Delegation generally favor acceptance points 1, 2 and 4 of Bevin’s proposal sent you in previous cable but withholding public announcement for the time being. In view this question actively under discussion, Secretary wishes to know if you would desire to participate in discussion here.”