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

740.00119 Control (Germany)/12–1148: Telegram

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

secret

London, December 11, 1948—11 p. m.

5209. Ruhrto 37. 1. At meeting of Ruhr Delegations 11 December,¹ Ambassador Douglas presented first US comments on French proposals.² Agreed there would be no disclosure his remarks to press.

2. Ambassador’s statement summarized as follows: Sympathetic consideration had been given French proposals which had raised the perplexing problem of trying to segregate security from economic problems. Wish to make following points:

a. US did not now propose change in existing limit of 10.7 million on Bizone steel production as distinguished from retained capacity. Any change should be made at peace settlement or by prior agreement between governments of peace settlement long delayed.

b. US believed Military Governors should proceed to reach prompt agreement prohibited and limited industries.

c. Principles regarding Military Security Board and its purposes had been largely agreed and it should provide a useful mechanism for assuring security.

d. Regarding IAR, it had to be related to other instrumentalities. During control period security fears should be covered by Military Security Board, coal and steel control groups.

e. US suggested that during control period governments study what powers of coal and steel control groups should be transferred to IAR. In principle US agrees necessary to make adequate provision against revival of excessive concentrations of economic power and return of Nazis to key posts. US suggests the example of Article X (B) of Annex C be followed so as to provide that protection these points, if not vested in some other body, be assigned to IAR trusteeship laws provide for decentralization and state policy regarding Nazis [apparent omission]. Definition of specific powers which should survive control period should not be attempted now but should await further experience under trusteeship laws, e.g. experience on how to identify Nazi supporters who should be kept from key posts. Regarding supervision over production and investment, US suggests that governments study this matter and before end of Military Government responsibilities should decide what powers now in existence should be transferred either to successor Military Security Board or IAR.³

3. Alphand speaking for France then made following points:

a. US statement of no intent to modify limit on steel production how implied that it might be modified later. French Government view was that limitation should be permanent.

b. French view expressed that proposal of Humphrey Committee would allow retention of capacity to produce up to 13 million. (Douglas pointed out that with 10.7 million production limit, retained capacity was about 13 which with capacity in French zone totalled 13.3 million. Humphrey Committee recommendations were for increase of retained capacity of 200,000 but that irrespective of capacity, US did not now contemplate raising level of permitted production over 10.7) Alphand continued that with existence of capacity over permitted production, Germans will wish to increase production which reenforces need for supervision over management.

c. Regarding limited and prohibited industries, there were some differences between Military Governors.

d. Regarding Military Security Board, Military Governors were near agreement and he suggested that Military Security Board and IAR agreements should be announced together. He pointed out that although Military Security Board continues during control period only, Annex L of London agreements⁴ provides for continuance of functions.

e. Regarding specific US proposals, French agreed that during control period security problems covered by Military Government, Military Security Board and coal and steel control groups.

f. Regarding post-control period, Alphand implied acceptability of US proposals regarding deconcentration and Nazis. Disappointed, however, regarding proposal on supervision of investment and production in steel and coal, pointing out that US proposal did not imply that any powers of coal and steel control groups should be retained and that if there were no agreement in principle now, there might well never be.

4. Douglas in very generalized way expressed views about desirability of some sort of appeal procedure along lines previously expressed in Ruhrto 36.⁵ Further with regard to US proposals on supervision of management, suggested that IAR agreement could contain statement that the powers which the governments upon consideration found necessary to maintain over investment and production would be assigned either to IAR or to successor of Military Security Board.

5. Netherlands Delegate⁶ remarked that IAR should have some function in relation to plans for investment and development of Ruhr industries as IAR would be qualified to analyze and understand significance of investment programs in planning state.

6. Douglas stated US did not reject possibility that IAR should have such powers but that the need for powers and their definition should be studied in the light of experience coal and steel groups.

7. Alphand expressed concern over postponement of all decisions regarding supervision of management. If no agreement in principle now, nothing is done to meet French proposals on this point. French believe that IAR should have powers in Nazi and deconcentration fields. Wanted to know whether US could now agree that for the benefit of Europe and security some powers over production and investment would have to be retained after end of control boards. Douglas stated US would consider this proposal sympathetically and hoped to give answer Tuesday afternoon.

8. Netherlands Delegate asked whether, if Nazi and deconcentration powers were given to some body other than IAR, would Benelux be representated on those bodies. This was an important matter to Benelux. Douglas answered difficult to foresee what instrumentalities would be necessary regarding Germany, important not to have overlapping and conflicting jurisdictions. Would ask instructions on answer to question of Benelux representation posed by Netherlands Delegate. Netherlands Delegate also made point that if IAR is to have any functions in management field, it should start exercising them before end of control period so that it could get some practice.

9. Stevens expressed UK view, characterized US proposals as real effort to meet French point. Agreed good deal to be said for not being too precise but recognized that the less the precision the less the French viewpoint was met. Restating previous British proposals, said UK believed IAR was right body to have powers regarding Nazis and deconcentrations after control period. French proposals were too limiting, e.g. French proposals that all appointments to key posts be subject to approval IAR. British felt IAR should at most have power to disapprove when appointments were pending or made. Regarding production and investment, British recognized value of US proposal that economic aspects of coal and steel group work should be studied to see whether IAR should inherit some of them. Regarding security aspects, referred to successor to Military Security Board as having principal functions. Recognized IAR would be in Ruhr and know a good deal about what was going on and, therefore, might be useful agent to act for Military Security Board on the latter’s request. This had been British proposal. Also felt that IAR could obtain information and refer it to Military Security Board. Called attention that Military Security Board paper makes provision for liaison with IAR.

10. Douglas again referred to necessity of avoiding overlapping and conflicting powers among agencies. Such condition would defeat purposes and agreed objectives. Then asked whether something along lines suggested by US could lead to resolution of problem. In answer to this question, Alphand asked further whether US could agree now to statement that in principle certain specified powers should survive coal and steel control groups, pointing out that he would refer US suggestions to French Government when he was in Paris over week end but thought that it would be difficult and that he would come back with firmer instructions.

11. Netherlands Delegate asked whether Benelux would participate in setting up the successor of the Military Security Board.

12. After meeting, Douglas spoke privately to Stevens and Alphand along lines suggested Telecon December 10,⁷ stating that US had not discarded the idea of an arrangement to adapt the principles of the Byrnes treaty proposal to present conditions. This would not be through a treaty but might be through the evolution of the Military Security Board.

In answer to the last point, British stated that they were thinking along same lines. Alphand stated this was helpful and raised question as to whether something along this line could be stated in communiqué. Alphand pointed out that matter of presentation in France was of utmost importance and hoped that communiqué could rehearse the various steps relating to security, including if possible reference to evolution of Byrnes treaty idea. He also suggested that communiqué should contain generalized statement along lines of recognizing the necessity of incorporating Germany into European community and general willingness including France to play full part in this endeavor.

13. Douglas felt that approach he took was tactically best for present. On Tuesday afternoon it may be desirable to be able to offer French some agreement in principle that certain powers relating to production and investment will survive control period since French answer to US proposals is expected to ask more than Douglas suggested on this point.

Further meeting on matters such as German vote, OEEC, et cetera, scheduled Tuesday morning. Also USDel suggested further proposal on appeal procedure might he forthcoming then.

14. Please instruct on (1) answer to Netherlands questions mentioned in Paragraphs 8 and 11 above⁸ (2) whether any reference to adaptation of Byrnes treaty proposals can be made in communiqué and in particular whether such mention could include reference to Byrnes proposals on length of time of demilitarization measures. Also it would be appreciated if further Department’s comments on appeal and OEEC procedure could arrive London by Tuesday a. m.⁹

Douglas

1. This was the 16th Meeting of the London Conference on the Ruhr. The U.S. Delegation Minutes of this meeting were transmitted to the Department of State as an enclosure to despatch 2491, December 20, from London, neither printed (740.00119 Control (Germany)/12–2048). This was one of the few meetings of the Conference at which Ambassador Douglas was present Assistant Secretary of State Saltzman was also present with the U.S. Delegation.
2. The French proposals under reference are those reported upon in telegram 5032, Ruhrto 18, November 28, from London, p. 530.
3. In telegram 5227, Ruhrto 41, December 14, [from London, not printed, the U.S. Delegation transmitted the text of a proposed article for inclusion in the Ruhr agreement covering the question of excessive concentration and Nazis dealt with in this paragraph (740.00119 Control (Germany)/12–1448). Telegram 4653, ToRuhr 33, December 14, to London, not printed, replied that the text was acceptable to the Department. It was observed that the inclusion of such provisions in the Ruhr agreement would certainly reduce chances for voluntary German accession. (740.00119 Control (Germany)/12–1448)
4. The reference here is to the document entitled “Report on Security”, May 26, p. 291, included as Annex L to the Report of the London Conference on Germany, June 1, p. 309.
5. In telegram 5187, Ruhrto 36, December 10, from London, not printed, Ambassador Douglas expressed the belief that it was most important to provide some appeal procedure by which, if it appeared necessary, there could be a review of the actions of the IAR. Douglas had informally put forward his proposal to other delegates to the Conference. (740.00119 Control (Germany)/12–1048)
6. Netherlands First Secretary Luns.
7. The reference here is a trans-Atlantic telecommunications conference of December 10 between Ambassador Douglas, Assistant Secretary Saltzman, Wayne Jackson and others in London and Reber, Nitze, Beam, Margolies and others in Washington. A record of the conference is included in CFM Files, Lot M–88, Box 124, File—Telecons.
8. Telegram 4635, ToRuhr 29, December 13, to London, not printed, stated that the Department definitely intended associating the Benelux governments with the evolution of demilitarization measures in Germany (740.00119 Control (Germany)/12–1348).
9. Telegram 4634, ToRuhr 28, December 13, to London, not printed, stated that the Department was unable to agree with Ambassador Douglas’ proposal and preferred to have the appeal proposal dropped (740.00119 Control (Germany)/12–1348).