740.00119 Control (Germany)/5–1047: Telegram

The Political Adviser for Germany (Murphy) to the Secretary of State

secret

1123. Personal for the Secretary. Sir Sholto Douglas, British Commander-in-Chief, and Lord Pakenham, in charge of German affairs, British Foreign Office, called on General Clay and myself today. This was Pakenham’s initial courtesy call. There was a frank and useful discussion of bizonal affairs. In reply to Pakenham’s inquiry regarding points of disagreement and whether progress could be made in Berlin toward their reconciliation, Clay reviewed developments prior to and through Moscow period assuring visitors of our continuing desire for success on bizonal undertaking. Clay pointed out that as early as 1945 when difficulties with USSR were beginning, he had suggested to British representatives possibility of bizonal arrangement and in 1946 he had participated enthusiastically in negotiations which led to present setup.

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Pakenham indicated feeling in London that there had been refusal by Clay to continue negotiations Berlin. Clay stated there had been [no?] refusal and while he has been available during past two weeks no effort made by British to contact him. Working parties including Draper and Weir have not yet come up with their reports which may be available tomorrow, and there will be a meeting of bipartite board27 next Monday.28

We suggested that part of difficulty possibly arose from scattering negotiations between Moscow, Washington and Berlin. We believe this method has been initiated by British in an effort to obtain better terms and greater concessions from US. Pakenham stated that there had been no intention to by-pass Berlin.

In substance it was (1) agreed that the grave food situation in the bizonal area results not from the operational difficulties of the bizonal agencies but from a serious deficit of bread grains, fats and potatoes which can only be met by importation; (2) stated that general problem is divisible into short and long-term phases and there should be no great difficulty finding compromise solution of short term phase; (3) suggested by us that on issue of highly centralized industrial and economic planning if British position is maintained we would require instructions from our Government because we believe British theory would encounter vigorous criticism of US businessmen and possibly Government; (4) stated that we had made considerable concessions on financial side already but apparently more are expected of us; (5) stated that we had no anxiety regarding question of socialization of industry for moment because we understood British view that German people should decide themselves this question to which Douglas and Pakenham assented.

Interview friendly. In reply to Pakenham’s question whether we considered future of negotiation now on governmental level, we replied that British initiative seemed to have placed it there.

Later today I had further conversation with Pakenham who informed me that today’s discussion had improved his understanding of relative positions and relieved him of an inaccurate estimate of Clay’s attitude. Due to his recent assumption present responsibilities, he confessed ignorance of a number of practical bizonal operational features and asserted confidence that difficulties can be ironed out in Berlin. In reply to my inquiry regarding his view of socialization of [Page 920]industry, Pakenham said that he did not wish to mislead us. It is true that British policy favors letting the Germans determine over the longer term the degree of socialization desired but this is so because British are convinced that the Germans “possibly a majority of them” advocate an important degree of public ownership. He thought, however, that some clarification should come from Governments. When he returns to London Tuesday he will lay entire matter before Bevin. He is uncertain whether under circumstances latter will wish proceed through Washington or return issues to Berlin.

As result discussion I am convinced British not unyielding on questions of centralized controls but that they will keep trying for better financial arrangements. They, I believe, are likewise convinced of our sincere intention to make as great a success of bizonal operation as present shattered economic conditions permit.

Murphy
  1. In 1946 it was agreed that the then Deputy Military Governors for the United States and United Kingdom Zones of Occupation in Germany would constitute a Bipartite Board whose purpose it would be to ensure common economic measures in the two zones; see despatch 7343, October 11, 1946, from Berlin, Foreign Relations, 1946, vol. v, p. 613.
  2. May 12.