740.00119 Council/10–948: Telegram

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

secret

2474. Personal for Saltzman and Hickerson. Your 1696.1 I suppose you have seen OMGUS CC–6214, October 7 re safeguarding foreign [Page 457] interests in Germany.2 I attended October 7 meeting US/UK Military Governors with French and Benelux representatives in order to comply with provisions London agreements re consultation. Clay opened meeting with statement that French and Benelux were invited in connection with the proposed trusteeship to be established for the coal and steel industries in the Ruhr,3 reminding them that one of prime objectives we have had in Germany is to break up certain large combines that previously existed. This applied particularly to coal and steel industries. Present plan contemplated trusteeship, purpose of which is to give responsibility of ownership to management of these plants without attempting at moment to resolve future ownership. Copies of proposed ordinances had been provided French and Benelux and reply received from French expresses satisfaction with arrangements for protection of foreign interests but objects to proposal because it does not contemplate future international ownership. Clay pointed out that international ownership of Ruhr industries was not accepted at London and that we propose to operate in accordance with London agreements as German economy cannot be operated on basis of what may happen in future conferences or what may happen as result of eventual peace treaty. French right to object to measure on this ground and reserve position recognized but it is essential that steps be taken to improve production and management in Ruhr. Clay added that Benelux countries had expressed general satisfaction with protection contemplated for foreign interests particularly in permitting them return to management field but expressed desire explain in more detail their position and suggested that question be laid over until government committee on safeguarding foreign interests completed studies.

Benelux representatives in commenting on US/UK plan had advised that proposed reorganization of coal, iron and steel industries would influence so radically allied interests in these branches of industry that joint discussions by experts considered indispensable.

At meeting Benelux representatives submitted written comments which are briefly summarized as follows:

(1)
Preliminary survey leads to conclusion that by permitting future German Government decide pattern of ownership for coal, iron and steel industries possibility provided for dangerous concentration economic power;
(2)
Benelux insists on (a) effective protection of allied interests in case of socialization, (b) not only majority allied interests should [Page 458] be protected but also minority interests by pooling or otherwise, (c) accurate info requested concerning extent of powers to be granted representatives of foreign owners holding powers of attorney, (d) Benelux liaison representatives should be appointed to US/UK Steel Control Group as is now case with US/UK coal control group, and (e) re management of allied enterprises meetings of stockholders and boards of directors should be authorized.

Robertson stated Military Governors do not believe that governmental committee would be suitable body for discussion practical and detailed scheme of this nature. He also emphasized urgency of matter in order give impetus to German recovery upon which western European economy is largely dependent. This was confirmed by General Clay who stated that this is a pressing matter which cannot be allowed to go unresolved much longer without serious effect on production. Benelux stated they would have to refer matter back to governments and it was agreed that a further meeting would be held within approximately one week. Robertson emphasized that not more than one meeting on this subject would be held.

I am forwarding by airmail text of US/UK plan for appointment of trustees in coal, iron and steel industries, together with copy letter September 16, from Benelux representatives and September 23 from French as well as copy of views of Benelux submitted at October 7 meeting.4

Sent Department 2474, repeated London 711, to Paris 759.

Murphy
  1. Not printed.
  2. General Clay’s message under reference here is not printed. Regarding the intergovernmental discussions on safeguarding foreign interests in Western Germany, see pp. 698 ff.
  3. The Bipartite (U.S.–U.K.) Board first transmitted its proposed plan for the reorganization of the West German coal, iron and steel industry to French and Benelux representatives during August 1948. For a brief chronology of events leading to this discussion, see General Clay’s message CC–6717, November 13, from Berlin, p. 494. Regarding the plan as eventually promulgated on November 10 as U.S. and U.K. Military Government Law No. 75, see the editorial note, p. 465.
  4. None printed.