740.00119 Control (Germany)/12–1747

Memorandum of Conversation, by the Ambassador in the United Kingdom (Douglas)

top secret
Participants: Secretary Marshall
M. Bidault
Ambassador Douglas
M. Alphand (as interpreter)

The Secretary opened the conversation by saying that the failure of the CFM raised a number of important questions relating to Germany and the three western occupying powers.

First was the question of the relationship between the U.K. and U.S. zones on the one hand and the French zone on the other. The Secretary suggested a good approach to the subject would be for the French to examine the fusion agreement between the British and the U.S. Governments and to prepare a criticism, from the French point of view, of its provisions.

Bidault said that this suggestion seemed to be reasonable. He implied, however, that some time would be necessary to arrive at a fusion of the French zone with the other two zones and that this should be an evolutionary development. There were many questions to which it was related—the question of the Saar and the question of the Ruhr.

The Secretary then went on to say that in Berlin there were several steps which he hoped would be discussed and taken as soon as possible.

The first of these was currency reform. He thought that the matter would be proposed to the Allied Control Council in the hope that it would receive four power approval and provide a currency for all of [Page 814] Germany. Should it fail to receive endorsement by the four powers, he hoped that it would be acceptable to the occupying powers of the three western zones. A sound currency was important to the rehabilitation of Western Germany—the production of coal, etc.—so that she could play her part in assisting European recovery.

The second step, he suggested, would be the removal of the French zonal restrictions on the movement of people and goods so that the zonal boundaries would constitute no interference to the circulation of people, particularly trade union leaders, and to the flow of commodities between the zones.

The third step, he said, might be the adoption, in so far as practicable, by the French occupying authorities of procedures within the French zone similar to those followed in the U.S.-U.K. zones. This would bring the zones into greater harmony by evolutionary processes.

The question of the Saar should be disposed of as soon as possible. The two important factors were, of course, financial adjustments within the U.S.-U.K. zones, and coal. France would have to make her own case before ECO for coal allocations.

As to the Ruhr, the Secretary said he was anxious that the French explore the matter with us and the U.K. He hoped, however, that no action would be suggested which might retard increased production. The problem divided itself into two parts. The first embraced a period when the production of the Ruhr had to be increased. Coal was the bloodstream of Europe; its production must rise so that it can become available in much greater quantities for European recovery. Production generally too must increase. During this period (which he called the short range one) of low production no question of security arose except as the pattern of things established then might give rise to security problems later. During the short range period, the occupying powers would be in control of Europe. The second (which he called the long range one) commenced when production was high and the occupational period was over. The Ruhr might then present a problem of security. Except for the possibility that methods adopted during the first, or short range, period might affect the long range, it was of the latter (that is, the long range) that it was hoped that there would be an exchange of views for the purpose of arriving ultimately at some satisfactory solution. He hoped that the exchange of views and discussion on this subject would be held in London.

As to the Secretary’s remarks on the discussions and steps to be had in Berlin, Bidault at first did not quite understand. He indicated that London would be an acceptable place for discussions on the Ruhr though he thought all problems were related and should be considered [Page 815] together. When, however, he understood that many of the steps to be discussed in Berlin could be taken more by administrative action than by formal agreement he indicated that what the Secretary had suggested was agreeable and that without entering a fusion agreement immediately offered no serious obstacle.

Bidault thought, however, that some of the questions could not be divorced from the Ruhr. Berlin might not be the best place for discussion of them since among other reasons Koenig was inclined to have a “negative” approach to the problems.

Lewis W. Douglas