740.00119 Control (Germany)/1–2848: Telegram
The United States Political Adviser for Germany ( Murphy ) to the Secretary of State
234. Personal for Saltzman and Hickerson. Eyes Only. With further reference to French note of January 23 regarding reorganization German bizonal economic agencies,1 Riddleberger, Steel and Litchfield are in Frankfurt today discussing plan with German representatives. [Page 46] After this discussion report and recommendation will be telegraphed you regarding form of reply we feel should be made to French note. In meantime I pass to you for your confidential information preliminary comment on French counter proposals made by Clay:
“An examination of French protest indicates that they believe proposed bizonal organization to be too centralized, that it will fail to work because it will not receive support of Laender and finally, that it turns too much responsibility over to Germans. Substantially this French position same as taken in Moscow. It indicates clearly once again that French are visualizing confederation of states and not federal structure in any sense of true meaning of federalization.
I find it difficult to understand French reference to an agreement reached at Moscow as I did not understand that any tripartite agreement had been reached in Moscow. It is true that originally it was contemplated that each German administration would be directed by committee composed of representatives of several Laender. However, this type of governmental structure as exemplified by Laenderrat in American zone, is no longer adequate to meet responsibilities now facing bizonal area.
Specifically in reply to five French questions:
- There was no disposition on our part not to have equal powers for Economic Council and Laenderrat as proposed for bizonal area. Laenderrat was established to represent states. However, determination of its powers was left largely in hands of Germans. I may point out present power given to Laenderrat is much in excess of that believed desirable by British. It has power to initiate legislation, to amend legislation, and to veto legislation unless overridden by Council by absolute majority. Perhaps it might be well to advise French of this requirement of absolute majority as compared to simple majority: former meaning at least one vote more than fifty percent of authorized membership Economic Council. These powers as given to Laenderrat were recommended by Germans and accepted by myself and Robertson.
- No central organization worthy of its name can exist without some powers of taxation. One of reasons why bizonal administration to date has been ineffective has been its dependence upon Laender for revenue. No federal state in world today exists which depends upon its member states to contribute supporting revenue. However, we were most careful to limit powers of Economic Council to customs and excise taxes and to such a percentage of income tax as proved necessary to carry out authorized expenditure programs. Moreover these expenditure programs must be approved by occupying powers. Collection of taxes is left to Laender which is contrary our own practice federal government collection.
- It was originally my proposal that chairman Executive Committee be selected by Laenderrat and confirmed by Economic Council. Obviously this represents much smaller popular basis. Robertson was [Page 47] insistent selection be in hands of Economic Council and this I accepted, requiring him to give up his desire for chairman to be parliamentarily responsible to Economic Council rather than independent executive elected for specified term office. It is clear French desire weaken power of executive and to permit each of several department heads to operate largely on his own discretion. We had found that much greater coordination must be effected among several agencies if economic recovery is to be expected to progress rapidly, and that we cannot secure effective chairman unless he is given power to do normal job of executive in democratic state.
- Administration of departments in conjunction with committees composed of representatives from several states would result in topheavy structure which would make impossible effective bizonal administration in economic and finance fields. French view of government is that matters pertaining to bizonal area must be resolved as they arise by mutual agreement of states. On contrary, we propose give to central administrations certain specific responsibilities which will be exercised by bizonal administration and will no longer be responsibilities of several states. This is in full accord with our policy of central government with limited powers clearly specified and with all other powers reserved to Laender.
- Appointment of Supreme Court Justice for each Laender perhaps could be accomplished although it is inconsistent with impartial judiciary which will weigh interest of state against federal government in impartial manner. If we could visualize Supreme Court at home being composed of Justices from each of states, hearing cases in panels, I think we would realize that a court so composed could never have served to maintain balance in government which our Supreme Court has maintained. I do not know what German view would be as to this change, as Germans have accepted charter of Court without this provision.
I would like to point out that our proposals, acting under our instructions, have been presented to Germans and of course to French. Any substantial change at this late date would be most damaging. Moreover, French concept of loose confederation would not be resolved as it is our understanding economic and finance setup at Frankfurt is only prelude to government, at least of British and American zones, to be made effective at early date if quadripartite agreement for unified Germany fails to materialize. We are at critical position in Germany and we must either move forward to give Germans increased responsibility in bizonal area to insure their proper contribution to European recovery or else we must move backward to increase our own forces to run more colonial type government. We have been in Germany three years now and have progressed very little beyond state level in devolving responsibility upon German officials. I am quite sure most thinking people at home will find that our bizonal organization does not go far enough in this direction and its weaknesses largely come from our desire to meet what we know [Page 48] would be French views, as much as possible consistent with effective administration. Unless we are willing to establish working organization in which Germans are given real responsibility we would have to expand our own organization many times to take care of additional export trade which we fully hope will materialize in coming months. Delay now will prove most expensive in months to come. If State Department desires we delay in effecting this organization or has any specific [suggestions?] in mind, I would appreciate receipt appropriate instructions through Department of Army as matter of urgency”.
I hope you will defer reply to French note until there has been opportunity for further discussion of foregoing here as well as opportunity to coordinate our views with British. I am proceeding to Frankfurt and will telegraph again Friday upon my return to Berlin.
Sent Department as 234, repeated Paris, personal for Caffery, as 49 and to London, personal for Gallman, as 32.