Foreign Relations of the United States, 1947, Council of Foreign Ministers; Germany and Austria, Volume II

840.50 Recovery/7–1147: Telegram

The Ambassador in France (Caffery) to the Secretary of State

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urgent
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Paris, July 11, 1947—9 p.m.

2775. For the Secretary and Lovett from Caffery. Under-Secretary Clayton¹⁰ requested me to inform you of our conversation with Bidault. In view of the political importance of some of Bidault’s comments I am submitting them in some detail. He said:

1. The task of the Conference of European Cooperation is urgent. A rapid conclusion must be reached if we wish to avoid serious internal as well as external difficulties.

2. As concerns Germany, there should be no question at present of changing the principles now in effect. The US must be aware that the main argument of the Communists is that the US and Great Britain wish to deal with reconstruction of Germany before that of France; and that they wish the French Government to abandon its position on reparations, the Ruhr, and its other German claims. In point of fact French Government has not modified its point of view on these various subjects.

3. Referring particularly to the Ruhr problem, Bidault indicated that no decision should be taken which might prejudice the final status. It was obvious that Ruhr coal is essential for Europe, including Germany. But a change in the Ruhr institutions, a change decided upon separately, would be dangerous and would put the French Government in a difficult position.

4. The French Government was grateful to Mr. Marshall for the position he took during the Moscow Conference regarding the Saar.¹¹ It was necessary, however, that the Franco-Anglo-American letter on coal be applied without delay and that the ECO be notified of the fact that henceforth the coal resources of the Saar and those of France form an entity. The Sarrois would not understand if France did not go ahead in this matter. Bidault urged that the US make a rapid decision on this subject. A proposal is being addressed to the United States, as well as to Great Britain, which seems ready to accept the French suggestions.¹²

Mr. Clayton, in reply, expressed his admiration for the skillful and rapid manner in which Bidault and Bevin had dealt with the question raised by the Marshall speech.

He agreed that, in the present situation of Europe, speed is a decisive factor in any task to be undertaken, and recalled that the Secretary’s suggestion consisted of aiding a group of countries and of putting an end to the policy of dispersed efforts.

He was in agreement with Bidault that the problem presented by the re-establishment of the Ruhr’s economy must be settled as soon as possible. It was disastrous that two years after the end of hostilities Ruhr coal production only reached 45 percent of the pre-war level. No economic recovery would be possible as long as the continent was not self-sufficient with respect to coal, and at present Europe must spend about 700 million dollars annually to buy this fuel in the Western Hemisphere. It was therefore essential to re-establish the coal production of the Ruhr and to restore it to the pre-war level in order to cope simultaneously with the needs of Germany, France, and the other European countries. The US was perfectly aware of this situation and its Ambassador in London, Mr. Douglas, has discussed it at length with Mr. Bevin.

The steel question was equally important. Steel is in short supply throughout the entire world and it is consequently necessary to restore the Ruhr production.

As for the Saar, Mr. Clayton could only speak purely personally, the problem was not within his jurisdiction. It was his understanding, however, that the US Government had expressed its sympathy for certain French objectives.

Mr. Clayton then discussed, along the lines of our talk with Ramadier (see my July 11¹³), the Department’s diagnosis of Europe’s economic situation and possible methods of dealing with the problem.

Bidault then returned to the Ruhr problem. The present situation was far from being satisfactory and the adversaries of the French Government were using this very fact as an argument to attack it, saying: “to assemble a conference at Paris to examine the Marshall proposals amounts to the same thing as abandonment of reparations and modification of the French position as regards the Ruhr”. He repeated that this situation was extremely serious and that the French Government must take it into account. France could not be faced with a decision that would upset the definitive settlement of the German question.

The Ruhr coal production must certainly be increased. France can and will help in this. This does not imply, however, that we should settle immediately the problem of fusion of the occupation zones.

Bidault repeated that it was important that the Franco-Anglo-American agreement reached at Moscow on France’s coal supply and on the inclusion of Saar resources be applied immediately.

Bidault insisted that, without settling the problem of ownership of the (Ruhr) mines, it would be possible to change the management methods with French participation.

Mr. Clayton, making it clear that he was speaking only for himself, said that he not only agreed that the problem of future mine ownership in the Ruhr should not be determined at this time, but that a moratorium on nationalization or socialization plans for a period of five years should prove very beneficial in removing uncertainties now facing the mines management. This move, coupled with other incentives, would stimulate management to increase production.

Bidault summarized his position as follows: The US says that the Ruhr mines must not be nationalized. Great Britain, on the other hand, desires socialization. France demands internationalization. If it is impossible to settle this question now it is at least necessary to improve immediately the management of the mines with participation by France.

Regarding steel, Bidault stated that he wished to avoid any misunderstanding. At Berlin, in March 1946, the Control Council fixed the production at 7 million tons. At Moscow,¹⁴ three delegations spoke of figures reaching ten, eleven, and twelve million tons. The French delegation, on the contrary, asked that the question be examined by a technical commission, so as to determine the real requirements of Germany, allowing for the problem of security, reparations, balance of payments, and charges of the occupying powers.

At present, steel production does not exceed three to four million tons. Bidault, therefore, saw no reason to raise the ceiling fixed in March 1946, since the maximum authorized was far from being reached.

He recalled that France was capable, if it receives sufficient coke from the Ruhr, of increasing its steel production very substantially and of meeting, with the help of Belgium and Luxembourg, all the requirements of western Europe, including German needs. It was essential that no decision raising substantially the German industrial level be taken at present. This decision could lead to the belief that it is desired to restore the German economy before that of the countries Germany attacked.

Mr. Clayton answered it was his personal belief that the dismantling of factories for reparations brings no appreciable gain to the recipient countries. In addition, he thought that the question of the German level of industry must be settled rapidly.

Bidault said he must protest energetically against this point of view; there must be no repetition of the error of Potsdam where German questions were settled without France. To begin the attempt to settle Europe difficulties by abandoning reparations and by raising the level of German industry would have very serious consequences in Europe. No French Government could consent to it. The whole difficult task they had undertaken would be irremediably compromised. Moreover, the German settlement is a matter for the Control Council and for the Council of Foreign Ministers, as Mr. Bevin and he himself recalled in the invitation sent to the European countries.

France does not desire to reduce Germany to misery; it admits that the reconstruction of Germany is an element of European reconstruction, but it must not take precedence. It is therefore necessary that the dismantling of factories be pursued at an accelerated rate; that France receive a much more substantial share of reparations in equipment and in capital goods. Finally, the problem of the raising of the level of German industry must be reserved for the time being.

Mr. Clayton agreed that the first place in the reconstruction of Europe must not belong to Germany, but it was nevertheless true that Ruhr coal production constituted an essential element of European reconstruction.

Bidault again emphatically argued against any public statement which could lead the French people and Europe to believe that reparations had been abandoned and that the raising of the German economic potential was especially contemplated. If such a declaration were made, he stated that the Conference which is to meet Saturday would be doomed to failure and “there would be no Europe”. Nevertheless if you are determined to do some of this, as much as we dislike it, do it without any public announcements.

Mr. Clayton replied that he understood the sentiments of Mr. Bidault, which are those of the French people. He understood them, just as they are understood by the American public. He stated that no one in the US was thinking of reconstructing Europe around a dominant Germany. Nevertheless, it was a fact that the occupation now puts heavy burdens on Allied taxpayers and that measures must be taken to reduce them. That did not mean, however, that first place must be given to Germany in the reconstruction of Europe.

In any case, Mr. Clayton was very glad to know Bidault’s reactions; he had noted them and would transmit them to the Secretary.

Bidault, in closing, stated that he wished once more to express the gratitude of the French Government for the liberal and humane gesture made by the Secretary of State, the importance of which is appreciated by the entire French nation.

Clayton and I subsequently discussed our conversation with Bidault and we are in agreement that extreme care should be used in dealing with this matter and that care should be taken to avoid any public statement at this juncture to reparations, level of industry, etc. which would react unfavorably on the Paris Conference or strengthen the Communists in their effort to discredit its efforts and those of the French Government.

Sent to Dept as 2775, to Geneva for Clayton as 83.

Caffery

10. Under Secretary of State Clayton was in Paris to advise the Conference on European Economic Cooperation, July 12–September 22, 1947, of the views of the United States on the problems of recovery. For additional documentation on the interest of the United States Government in the Conference, see volume iii .
11. The reference here is to the agreement between the United States, the United Kingdom, and France regarding the regulation of coal exports from the western zones of occupation of Germany, the subject of an exchange of letters between Secretary of State Marshall and Foreign Minister Bidault on April 19, 1947, during the Moscow Session of the Council of Foreign Ministers; for the texts of the letters, see pp. 486–488.
12. The proposal under reference was contained in a French Embassy aide-mémoire dated July 11, 1947, not printed. For a review of French proposals regarding the distribution of Saar coal, see the memorandum of conversation by Willis, July 24, 1947, p. 1084. For additional documentation regarding the attitude of the United States on the detachment of the Saar from Germany and its integration into the economy of France, see pp. 1073 ff.
13. Not printed here.
14. Regarding the proceedings of the Moscow Session of the Council of Foreign Ministers, March 10–April 24, 1947, see pp. 234 ff.