840.50 Recovery/7–1247: Telegram

The Ambassador in the United Kingdom (Douglas) to the Secretary of State

secret
urgent

3816. For the Secretary. Have discussed with Bevin agenda for coal discussions suggested in Deptel 2959, July 1048 He agrees to all items except number 11 and suggests addition of following:49

“He considers that coal production is only one aspect of the problem of the economic recovery of Germany and that there are other aspects which also require full consideration. The real issue with which the two governments are faced is not only the question of coal production but how to achieve a balanced economy in Germany and thus relieve the burden at present being borne by the British and American taxpayer. That being so, the following matters should in his view be included in the discussions.

(a)
Finance. It is clear that owing to the deterioration of the financial situation it will not be possible for the UK to continue to support the drain on its dollar resources entailed in the existing Anglo-American arrangements for financing Germany’s imports. He will therefore have to ask for a revision of the financial provisions of the fusion agreement.
(b)
Food, and in particular cereals for the combined zone. He welcomes Mr. Anderson’s recent statement confirming the determination of the US Government to do everything practicable to make possible the honouring of a regular 1550 calory ration during the coming 12 months.50 He feels, however, that if we are to stimulate German production they must aim higher than this and do their utmost to achieve an 1800 calory ration. He thinks [Page 937]that, subject to the considerations set out in (a) above, our two Governments should accept this as the target and consider what steps can best be taken within the limits set by the overall supply position to make its achievement possible.
(c)
Bizonal economic policy. A joint survey of the field of bizonal economic policy should be made in order to settle a number of outstanding questions such as currency reform and an exchange rate for the mark, whose early solution seems essential if Germany is to be restored to stability and enabled to make a contribution to the recovery of Europe.

2. In these circumstances, he presumes that Mr. Marshall will be prepared for the discussions in Washington to cover all these problems while General Clay and the British party of officials are present. If this is agreed, he intends to send a party headed by Sir William Strang and including General Robertson and a small number of representatives from the Foreign Office and Treasury.”

Mr. Bevin hopes that the British party will be ready to leave at any time convenient to the United States authorities after July 18 provided sufficient notice is given in advance.

As to item 11 Bevin requests that it be eliminated.

He feels that since citizens of Belgium, Luxembourg, the Netherlands, and France have interests in Ruhr mines, he must first talk with these Governments. He will thereafter discuss the matter with Marshall when the first occasion arises. In the meantime he has instructed Robertson to make headway with Clay in arranging for mutually satisfactory organization of management.

He hopes you will concur with his opinion that item 11 should be omitted from the agenda.

Douglas
  1. Supra.
  2. The British position reported upon here was also presented in an aide-mémoire from the British Embassy to the Department of State, dated July 15, not printed, and in a conversation on July 15 between Under Secretary of State Lovett and the British Minister in Washington, Balfour. (862.6362/7–1547)
  3. For additional documentation regarding the measures taken to deal with the food crisis in Germany and the principles of a food supply program for Germany, see pp. 1144 ff.