USPOLAD Germany Files: Telegram

16

The United States Military Governor for Germany (Clay) to the Chief of the Civil Affairs Division, War Department (Noce)

top secret
priority

CC–8959. This is an important message. In reading it please refer to our previous radios numbered CC–887117 and CC–8933.18

[Page 912]

Robertson returned to my office for further conference this morning, having had the opportunity to discuss our previous conference19 with Mr. Bevin. He was much more moderate and no longer demanded an immediate decision with respect to our acceptance of a highly centralized controlled German economy. He was also prepared to resume all agreed studies and perhaps to accept our proposals for immediate short-cuts in present Minden procedures which should have an early stimulating effect on our lagging export program.

Robertson again brought up the question of Bizonal Political Fusion. He stated that Mr. Bevin was reluctant to consider a full Political Fusion pending the November conference. However, he proposed as his own view without committing his Government the establishment of a Bizonal German Economic Council, the members of which would be elected by the several landtags. The council would select an executive director who would have approximately the status and authority in the 2 zones of a Reichsminister for economics. The Bizonal Council thus would become a political body which, however, would be limited in its sphere of activity to economic matters only. To render it less susceptible to Soviet criticism he proposes to emphasize its part in developing the revised reparations plan and in effecting deliveries.

This raises the question as to the advisability of half-way measures. Full political fusion of the 2 zones would eliminate many of our present difficulties without destroying the political gains, and particularly the strong feeling of States’ rights which have developed in encouraging fashion in the American Zone. A half-way measure will not resolve the political differences existing in Germany and will not satisfy the German people. It will develop as much Soviet propaganda and opposition as an all-out political fusion. In my own view, if we are going to take a half-way measure, we might better proceed to full political fusion of the 2 zones. I believe the latter is now desirable and justified. However, in the interests of a better economic integration, I would be prepared to compromise in accepting a halfway measure except for the inherent risk to our national policy.

The British proposal (wisely conceived in their political interest) would create an economic council for both zones which, based on equal State representation, would have a substantial SPD (Social Democratic Party) majority. At present, the SPD is headed by Dr. Schumacher, who works in close collaboration with the British Labor Party and consequently could be expected to dictate the majority views in this council. Dr. Schumacher has already expressed himself [Page 913]as in favor of the immediate socialization of Germany, the nationalization of industry, a highly centralized controlled economy, and in fact a strong Central Government. His views are, of course, diametrically opposed to our policies of Decentralization and Federalisation. This SPD majority might not in fact, represent majority German opinion, as the strong conservative German vote represented by the CDU (Christian Democratic) and LDP (Liberal Democratic) parties is concentrated in heavily populated States of Bavaria and North Rhine Westphalia. Under equal State representation these 2 parties would have a much lesser voice in Bizonal affairs than entitled to by their size.

In discussing this proposal, we shall try to work out a more proportionate representation which still provides for State representation although this will be difficult to accomplish in view of the larger number of small States predominately SPD. If the council materializes on the basis of the British proposal, we must be prepared for a vigorous German effort in the council to obtain a high degree of centralization which will be directed to the development of a socialistic Bizonal Area. American Military Government will then be placed in the position of accepting such measures or of being in constant opposition to the German majority supported by British Military Government. This would place us in a difficult position which might receive sufficient opposition in America to endanger our appropriation as the adoption of socialistic controls by the council proceeds. Of course our policy does not call for opposition to socialization although we have assumed that we should not promote such measures and should evidence our continuing faith in free enterprise. Thus, we have insisted that socialistic measures cannot be adopted except by vote of the German people and then only on a land basis until German Government is reestablished under electoral procedures. We believe that we [should?] try informally to limit socialistic controls to as few basic industries as possible while maintaining the broad principle of free enterprise. In our view, in the long run this will represent the desire of the German people. In their present extremity, State control of the economy looks attractive, even though it was such control that made Hitler’s rise to power and subsequent ability to wage war, successful.

There can be no question but that the long range issue involved in this entire matter in the establishment of State controls of economy, which will lead to a planned economy as advocated by socialists everywhere and with a substantial degree of State ownership. There will be little field in such an economy for private initiative and free enterprise. I believe that we can work the matter out here with reasonable [Page 914]compromises, provided that is the desire of our Government. However, each issue may well be taken to Government level unless it is clear that our Government desires the issue to be worked out in Germany. Certainly, Robertson and, most probably Mr. Bevin, are under strong pressure from the British Government to get these matters agreed now when the condition of the German economy makes the proposal seem more reasonable, so that there will be an established pattern by the time economic conditions are improved.

With every desire to make economic fusion work, we must compromise. However, if we can not secure reasonable compromises, we must realize that if we accept the British proposal, the results are almost certain to be a strongly socialized German Government with much more central power than we desire. Such a control as contemplated by the British given to the Bizonal Council would almost certainly be opposed by the French and might even make tri-partite agreement impossible. What we would like is assurance from our Government that its desire to make economic fusion work does not make it willing to accept a highly centralized economic control, which will be utilized in the hands of the SPD with the support of British Military Government, to extend the socialist influence. With such assurance, we should be able to insist on compromise solutions here which will, at least protect in some degree our policy of decentralization, and also a reasonable degree of free enterprise and initiative.

[
Clay
]
  1. Top Secret Files of the Office of the United States Political Adviser for Germany, Lot F–80, 1947, File – T.S. 801.1.
  2. Not printed.
  3. The text of the message under reference is included in telegram 1006, April 27, from Berlin, supra.
  4. The Clay-Robertson conference referred to here is described in message CC–8933, cited in previous footnote.