740.00119 Control (Germany)/1–748: Telegram

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


15. Personal for Saltzman and Hickerson. Eyes Only. Following the meeting this morning of US–UK groups latter met this afternoon with military government directors and regional commissioners from US–UK Zones and the eight Minister Presidents and their staffs. Clay after welcoming Minister Presidents called on Robertson to explain general purpose of today’s meeting. Robertson referred to CFM meeting in London1 to which he said US and UK Governments had sent representatives in the hope of finding a solution of the German problem but were disappointed. He referred to Bevin’s last speech which made it clear that objectives his government would pursue remained unchanged and it would be impossible to sit with folded hands. Secretary of State Marshall made similar statements. Robertson said that he and Clay had come to Frankfurt because it is not possible to sit here with folded hands and General Clay would outline the immediate steps necessary to overcome the present difficulties. It is our practice, he said, to take account of German opinion and that lie was confident that after the Minister Presidents heard what Clay had to say that they would receive it with understanding and agreements. He emphasized that we had not invited the Germans to Frankfurt in order to outline to them a plan which they would be asked to accept. We desire the benefit of the German views and hope that tomorrow we could receive them. Our emphasis now is on the immediate steps which in our opinion are necessary to overcome present difficulties. Robertson referred to number of statements made regarding a new German constitution and said that for the immediate present we are not interested in that question which would come later. Robertson referred to the possibility that there might be disappointment on the German side because he and Clay would not tell Germans today what we would do under all circumstances in the future. However this not the time for emotion and drama but rather to be calm, careful and wise. Our object is to see a unified Germany under a German government with sufficient powers to govern. During coming months we will do nothing to defeat that purpose. It would be wrong to say that a [Page 9] division of Germany is a fact we must recognize. Neither we nor the Germans do recognize it. As we build we must build something suitable for our object. It would be most foolish if we would write off that part of Germany that is not united with us.

Clay then outlined US–UK thinking, stating that he would then open meeting for questions by the Germans and that after that Robertson would then outline to them changes planned in US–UK organizations.

Clay emphasized purpose in mind is to strengthen German organization so it can take on added responsibility for financial and economic future. We have not come here with a written plan. He said that we were giving our ideas to the German Minister Presidents and will expect to obtain theirs tomorrow.

Clay explained our thought to broaden the economic powers in order to give it a more representative character and sufficient size to operate effectively in the economic and financial legislative field. The Council would be double in size and would be composed of two houses. Second house would be composed of two representatives from each land who may or may not be officials of the land as may be determined by the government of the land. The powers of the two houses are to be worked out by the minister presidents and the Economic Council with two exceptions.

Second house would not have the right to initiate legislation regarding revenue or expenditures.
Create executive committee under chairman who would be elected by Economic Council and approved by second house.

Clay explained that chairman would select directors of several departments who would be political administrators and each of them would have a civil service deputy. As this is provisional these appointments would be made for provisional period. They have right to appear before Council and latter has the right to summon them for questions and explanations.

Council would be given certain powers it does not now have. Thus to establish and approve bizonal budget; to take over responsibility for customs and excise taxes; to fix its share of income tax. It cannot tax to obtain surplus revenue. It must raise sufficient taxes for its own expenditures. (Clay outlined proposal of high court to be composed of nine persons operating under budget established and approved by Council to serve as court of appeal handling all cases arising out of Economic Council legislation including disputes by the Laender and Council.) It would have authority to establish branches and lower courts by legislation of Council. Court could hear appeals from Laender courts.

On the subject of the central bank Clay pointed out that it was desired that there be immediate authority to establish a Laender [Page 10] union bank which will be owned by several state banks. This will become at some future time a bank of issue and will have certain powers in control of credits, export and internal credit instruments. It would be obviously closely related to the Export-Import Agency. For the present the bank cannot be placed under general bi-zonal organization as we hope other occupying powers will wish to join in the bank eventually. However whether they join or not we have no time to lose waiting for them, Clay explained. He further pointed out that the creation of Laender banks in UK Zone is now in course. JEIA and JFEA will create German organizations as counterparts which will be given responsibility as soon as possible relating to trade opportunities but not trade policy as well as looking to creation of public corporations which will take over these responsibilities. Clay explained that what we have tried to do is to provide tools with which the Germans can take over responsibility for their economic future.

After these US–UK explanations there followed a lengthy question and answer period with the German representatives asking pertinent and searching questions. For example, Dahrendorf asked: “Have you considered putting city of Berlin in bi-zonal organization?” Clay answered that this was not now possible except that special arrangements with Bizonia may be concluded with magistrate. There were a number of questions relating to problems re relationship between Laender and Economic Council, constitutional questions re courts, the central bank and the currency issue. General Robertson objected at one time to the trend of the questions raising the rights of the Laender vis-à-vis council. However questions were constructive. After meeting Clay and I discussed subject with President of Council Koehler who feared that proposals were more far reaching than Germans had anticipated.

There will be meeting Bi-Partite Board tomorrow morning followed by further meeting tomorrow afternoon with German representatives.

  1. For documentation on the Fifth Session of the Council of Foreign Ministers in London, November 25–December 12, 1947, see Foreign Relations, 1947, vol. ii, chapter iv .