740.0019 Control (Germany)/11–2848: Telegram

The Ambassador in the United Kingdom (Douglas) to the Secretary of State

us urgent

5032. Ruhrto 18. 1. Following French formal statement 11 November (Ruhrto 21) re supervision over management Ruhr coal, coke and steel industries, and elaboration on 12 November reported Ruhrto 3,2 French have circulated a formal proposal and given USDel an additional elaborating statement. Matter has been discussing informally with French and British. Following is summary of French proposal and French explanation:

2. During control period, French participation in coal and steel control groups satisfies French desires re supervision over management. After control period IAR should inherit certain powers including:

To prevent reconstitution of excessive concentrations in coal and steel industries, there should be submitted to IAR for approval any proposed changes in the structure of the industries or the charters of trade organizations. This applies to any changes from structure existing at end of control period;
To prevent return to positions of policy creation in coal and steel industries of persons who furthered aggressive designs of Nazis or their dummies, nominations to principal directing positions in enterprises and trade organizations should be submitted to authority for approval. French concede this should apply only to persons who have been found by competent tribunal to have furthered Nazi designs and not be arbitrary. Not clear how this would apply in case of dummies;
To assure that policies of management (gestion) are consistent with aims of non-aggression and European recovery, programs of production, equipment and investment of coal and steel industries should be submitted to authority for approval. This point breaks into two parts. Re coal, desire is to ensure that there will be adequate investment and development and consequently production of coking coal and metallurgical coke to satisfy needs both of Germany and those dependent upon German coke. Re steel, aim is one of security and is to ensure that steel production and capacity does not exceed amount necessary for internal civilian needs of Germany, i.e. to enforce a ceiling. Frequent denials of commercial objective re steel.

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3. On steel production French are motivated by, among other things, fears that rumors current in Germany that steel production level will be raised to 14 million tons are founded on US–UK intentions; fear which Benelux seem to share that reparations program will be halted thus leaving Germany with steel capacity greater than needed for German internal civilian needs, thus making increase of German steel production more difficult to limit; fear that present preoccupation re Soviet causes neglect of dangers of German resurgence, recuperative powers of Germany being now evidenced by extraordinary progress made in coal and particularly steel industries in Bizone. While French undoubtedly desire to establish French steel industry in predominant position on Continent, this desire is related to security objectives as well as commercial. Internal French political situation forces taking a strong line re Ruhr, particularly in view of violent reaction against preamble trusteeship agreement, French intend to submit to Assembly any agreement drafted here.

4. Benelux delegates, although much more quiet than French, obviously share security apprehensions strongly and have the added feeling that it is now extremely difficult for them to get their point of view seriously considered by occupation authorities.

5. British are sympathetic to French objectives re preventing excessive concentrations in private hands (apparently not considering nationalization as excessive concentration) and preventing return of Nazi supporters. No evidence in these talks that in coal and steel export field British are worrying about future competition and they seem to support French desire for adequate coke production and limitation of steel production on security grounds. View has been expressed by British that expansion of Ruhr production may be dangerous strategically as Germany east of Rhine not defensible. British also clearly feel that considerable satisfaction should be given to French mainly, for political reasons and to try to head off the coming into power of an extreme French Government with all the difficulties that would raise re ERP, Brussels pact, German Government etc. British have proposed to us informally giving to IAR certain powers in the fields mentioned by French. Essentially British proposal is that IAR should have power by majority Allied vote to require German Government to make changes in structure of industries if IAR finds excessive concentrations in private hands, to require removal of Nazi supporters from key posts and at request of Military Security Board to require submission to IAR for its approval, production and equipment programs and to order such modifications of these programs as Military Security Board may require,3 British have asked our reaction to this proposal.

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6. US line expressed to date has been that objectives re excessive concentrations, Nazis, adequate coal production and preventing rebirth of German military potential are shared but question exists as to means for securing these objectives. London agreements must be considered as a whole as stated in report covering annexes. Each segment had a special purpose and any attempt to spread the functions envisaged under one segment e.g. Security Board over other separate portions IAR could only result in confusion and prejudicing the effectiveness of the whole. Economic measures for assuring security are to be found in annexes relating to limited and prohibited industries and Military Security Board. Effort to add on to IAR production control functions would result in its overlapping Security Board to detriment of both. Point was made that effective functioning of IAR will be, certainly during post-control period, dependent upon at least some degree of willing cooperation from Germans. Every inclusion of a measure of punitive character further precludes the chance of IAR ever being acceptable to the Germans. US is not trying to benefit Germans but to find the type of organization which, by minimizing German resentment, can have hope of successful operation. Point also made that effect of measures of too punitive a nature would be to drive Germans towards east or encourage revival Nazis.

7. USDel is convinced that purely negative approach or rejection all parts of French desires would have most unfortunate effect. Even if agreement could be reached here, doubted whether French Assembly would approve. References to Security Board and future agreements re limited and prohibited industries are weakened by fact that neither functions of Security Board nor agreement on prohibitions and limits has been reached and by French and Benelux belief that US under ECA act will insist on leaving large steel capacity in Germany. British proposal outlined above (which already incorporates results of informal discussions with USDel) seems to warrant serious consideration and to meet some of the objectives of French and Benelux. Principal difficulty is that it is restrictive and negative in character and is probably opposed to longer run US objective of furthering a closer integration of west Germany into west Europe. Accordingly USDel would propose taking the following line and pushing it fairly hard:

8a. US approved London agreements which had among their objectives the imposition of security controls in both military and economic fields on Germany to assure that German war potential was not rebuilt. US intentions along this line have long been matter of record and have been often expressed by US, most recently by Secretary State in November 24 press statement.4 Particular importance of [Page 533] Ruhr recognized and US position formally stated by Secretary State in Moscow spring 1947. London agreements re Ruhr were reaffirmation of that position. Method of assuring against rebirth German aggression one upon which opinions may differ. US believes that general pattern developed in all parts of London agreement is consistent and will be effective. US willing to consider with greatest sympathy specific proposals for extension of IAR beyond Annex C concept provided such proposals have acceptable purpose and do not interfere with or duplicate the functions assigned to other bodies by London agreement. Initial French proposals seem too generalized and too sweeping to meet this criterion, although security and access objectives French have stated are objectives with which US is in sympathy. Preliminary outline of functions of Security Board is in process of completion and US proposes that both IAR and Security Board be considered together for purpose of deciding how each can best be assigned functions which will meet the legitimate security objectives of the Allied powers.

8b. US does not believe, however, that ultimate solution of German problem nor of European security can be found outside of the concept of a closer degree of doing [sic] European action and much closer cooperation than has existed to date. The US support of the concept of closer European integration is evidenced by massive support of ERP and declared backing of Brussels pact. Important to follow up this objective at every available opportunity. IAR could be converted into a major step towards this aim. Preamble to Annex C contains this concept. During immediate future, therefore, establishment of any German Government and during early efforts of a provisional government to establish itself domestically, it may be difficult to take practical steps to further the objective of integrating west Germany, or all Germany if it is not split, into the west European community. This objective, however, should be stated at once and the hope held out to the peoples of all countries concerned that there is not being reestablished a pattern of extreme national rivalry such as developed after the first war. Accordingly, US proposes that this larger concept be written into IAR agreement. Not only should it be stated as one of the objectives of IAR, but the agreement itself should make provision for method of expanding the functions of IAR to include areas other than Ruhr, including the related areas of Saar, Lorraine, Luxembourg, Belgium and Netherlands. While necessary restrictions will be maintained in Germany that adequate access to Ruhr resources will be assured and that they will not again be used for exclusive German military or economic purposes, these restrictions might be loosened if and when Germany evidences its willingness to cooperate in a joint effort to use the great industrial resources of the areas mentioned above for the benefit of all Europe. A body which concerned itself with the [Page 534] coal and steel resources of this greater area could play an important role in assuring access to those resources by all Europe, could coordinate and endorse programs for investment and development and help prevent distortions in trade with the objective of providing the necessary production of coal and steel on the most economical terms without regard for national frontiers or nationality of consumers or producers.

8c. Accordingly the signatory governments should specifically undertake that they will work out the terms under which the IAR would be extended to cover this larger geographical area and the functions which it should perform with respect to this larger area. The development of the details of this proposal requires extended study and careful thought. It is doubtful that such details could be incorporated in the agreement presently being negotiated, but as a minimum the signatory governments should now bind themselves to work out such details and to define the means for attaining the long-range aim which alone can assure peace and prosperity in Europe.

9. Expect US statement re French proposals must be made Wednesday, 1 December. Urgent comments requested.

Sent Department 5032; repeated Paris 944; Berlin 609.

  1. Telegram 4830, p. 476.
  2. Telegram 4853, p. 482.
  3. For additional documentation regarding the Military Security Board, see pp. 665 ff.
  4. See footnote 2 to McDermott’s memorandum of the Secretary’s press conference of November 24, p. 528.