Foreign Relations of the United States, 1948, Germany and Austria, Volume II

740.00119 Council/5–1948: Telegram

The Secretary of State to the Embassy in the United Kingdom

secret
urgent

Washington, May 19, 1948—8 p. m.

1820. Secdel 1581. Uriels 2108, May 13, Delsec 1733, and 2148, May 18, Delsec 1740.¹ Dept considers that Benelux claims advanced in letter of May 12² and CFM (D) (47) (G) 64, Feb 19³ and earlier submissions there cited can be dealt with as follows:

1. Territorial claims. Dept recognizes logic argument external boundaries be fixed prior to or concurrently with creation German provisional govt. If Benelux press strongly for action Dept would not object boundary commission, to include German as well as appropriate Allied representatives, be created to examine claims and make recommendations, if possible, prior to meeting constituent assembly, provided such commission has adequate technical preparation and expert help for complex problems involved in some Benelux claims. For your info Dept rejects principle territorial claims can be properly justified on war loss or similar reparation basis. Would be prepared give sympathetic consideration to minor rectifications if clearly established that they conform sound geographic and economic principles and interests populations concerned. Any changes would be considered provisional and subject to confirmation or modification in final peace settlement.

2. Economic Claims and Demands. Dept has analyzed these claims on basis Benelux submissions and has reached conclusion that no special commission regarding them should be established for reasons indicated below. Claims under this heading appear to fall under the following sub-headings:

(a) Benelux claims to mining facilities and several to petroleum facilities are in the areas claimed for cession by Germany. If any such areas ceded, future ownership rights with respect state, quasi-public and private property interests might be determined through subsequent negotiation or in final peace settlement.

(b) There are a number of claims for the exclusive right to operate and to exploit the production of mines and mineral concessions in areas which are not subject to Benelux territorial claims. Dept regards such claims as raising basic questions regarding sources of reparation and control over German export resources and is not prepared to consider departing from agreed basis that reparation be confined to capital removals, ships and German external assets. Dept believes no changes in basic reparation policy can be considered except in connection with final peace settlement.

(c) Claims with respect to certain rights and privileges in connection with the operation and exploitation of Benelux-owned property interests in Germany. Dept would be willing to agree that such matters may be considered by working group already agreed upon to consider general questions of foreign property interests in Germany.

(d) Certain miscellaneous economic demands. Dept understands these demands to include elimination of discrimination against use of Low Country ports and Rhine facilities; prohibition of construction of new German canals permitting diversion of traffic from above ports to North German ports; and general problems of exchange discrimination affecting important Benelux entrepot trade. It is believed necessary to distinguish between such restrictions as may be suitable for peace settlement and such measures as may be taken in near future to minimize discrimination without excessive cost to US through increased need for assistance. It is our hope that forthcoming negotiations regarding use of Low Country ports will provide interim solution for first problem, second is academic for present since no plans exist (Gen Clay should confirm) to construct new canals, and third should be alleviated by measures of currency reform and establishment of exchange rate which are under consideration. Occupying authorities have endeavored to eliminate discriminating foreign exchange and foreign trade practices employed by Germans in pre-war and war periods. Currency reform and establishment single conversion factor between mark and foreign exchange prices should further ameliorate situation. Dept expects that substantial progress can be made in OEEC and by bodies considering customs union to remove Benelux complaints even before time for peace settlement.

Dept agrees strongly with USDel position re procedure for exercising control over state govts outlined in item 2, and hopes you will maintain firm stand on this issue.

Marshall

1. Ante, pp. 245 and 249.
2. Not printed.
3. The document under reference here is not printed, but its salient points are included in the Report of the Deputies for Germany to the Council of Foreign Ministers, February 25, 1947, Foreign Relations, 1947, vol. ii, p. 40.