840.50 Recovery/9–748
The British Secretary of State for Foreign Affairs (Bevin) to the Secretary of State 1
I am profoundly disturbed at Hoffman’s stated intention to undertake a fresh enquiry on the strength of section 115 (F) of the Economic Cooperation Act into the question of what plants if any now scheduled for reparations should be retained in Germany in the interest of the European Recovery Progamme. I cannot help thinking that this proposal, if acted upon, will have very far reaching consequences outside the economic field and I earnestly hope that before anything further is done you will agree that we should look at the implications of the scheme together in consultation with our military advisers.
2. Six months ago I agreed in principle to consider retaining a small number of plants in Germany if that would help the European Recovery Programme. I understood that a list of 20 or 30 plants would be involved and I said I would be ready to look at it. No list was ever produced. Instead a United States Technical Mission went to Germany. I have never seen its report, though I have been frequently assured over the past three months that final decisions [Page 805] would shortly be taken in Washington on the basis of that report. Now it is being suggested that the work of investigation should start all over again, and that the reparations programme should be held up meanwhile, perhaps for as much as four months. This creates what I must regard as a new situation.
3. I have never been asked to suspend the dismantling of any particular plant, although I was, prepared to consider doing so if given a short list of plants to look at. Dismantling has gone steadily on and is now in progress at some 200 plants in the British Zone. In the United States Zone it is, I understand, already almost complete. At many of these plants in the British Zone dismantling has not yet gone far but another three months would make a lot of difference. On the other hand a reduction in the rate of dismantling, or a fortiori its interruption, would put the whole reparations programme in jeopardy. The Germans do not want to pay reparations, although they are at present carrying out the dismantling programme with a fairly good grace. But, once we falter, all the German politicians who have been appealing against dismantling over the heads of the Military Governors and our two Governments, will believe themselves to have beaten us; and they will be right. With the formation of a Western German Government a few months hence, German resistance to reparations can be counted upon to harden. It is therefore not the future of certain plants which is now in question, but the whole reparations policy of the three Western Powers. By far the greater part of the dismantling still to be done is in the British Zone. Please believe that the position is as I describe it. If I accept Hoffman’s proposal and there is a further three or four months’ delay, reparations are finished once and for all. We must face that fact and its implications.
4. It is not only the plants on the existing reparations list which are at issue. When we drew up the Revised Level of Industry Plan over a year ago we excluded from consideration, at Clay’s insistence, the so-called “prohibited industries”. We still have not reached final decisions about this most important group. The Military Governors are now under instructions from their Governments to study these industries and to make recommendations concerning them. No reparations list for these industries has been drawn up, and if dismantling of plants which have been scheduled for reparations for months were now to be suspended it would never be possible to carry out a reparations programme in the prohibited industries field, which is of course the most; important of all from the security point of view.
5. The issue is therefore whether to continue our existing reparations plans in substantially their present form and tempo, or to abandon them and with them our whole policy of industrial disarmament. Unless we intend to give up reparations I fear that another review of the reparations programme would be disastrous. I am quite prepared [Page 806] as before to consider withdrawing from reparations a small number of selected plants, for the withdrawal of which a good case can be made out; but if this is to be done I would only say that it must be done quickly.
6. Our two Governments are committed, and rightly in my view, to the industrial disarmament of Germany. The United Kingdom Government have throughout pursued a consistent and moderate policy in this respect. When the Quadripartite Level of Industry Plan was being negotiated in 1945 and 1946, we were consistently in a minority of one, advocating against the opposition of all our Allies levels two and even three times as great as those considered sufficient by our Allies. Subsequently the United States Government came round to our way of thinking, and the Revised Level of Industry Plan is very close to the original British proposals; we do not now want to rush to the other extreme.
7. Quite apart from the fact that we are deeply committed to the disarmament of Germany and that the peace of mind of Germany’s neighbours depends upon our honouring the undertaking into which we have entered, I consider that the industrial disarmament of Germany is as necessary as ever it was. It is true that the danger of a resurgent and aggressive Germany has receded; but we are now faced by the menace of Germany allied to or occupied by the Soviet Union, whose industries may be used to feed the Soviet war potential. The necessity of physically removing the element of war potential from German industry is therefore as great as ever, and indeed much more urgent than before; and the reparations programme is the only means we have of removing it.
8. There are many economic and political arguments for adhering to our reparations policy; but security is the overriding consideration. I hope you will agree with me that, as an immediate step, our two Governments should jointly seek the advice of the Combined Chiefs of Staff upon the effects in the defence field of any deviation from our present policy for the industrial disarmament of Western Germany. I think, moreover, that it might be desirable that we should find some means of associating the French Government with these discussions. I ask you to agree that we should receive, and consult together upon, the advice of the Combined Chiefs of Staff before doing or saying anything further which might cast doubt upon our determination to carry through the reparations programme.
9. There are also other considerations which I suggest we must take into account before reaching any final conclusions.
10. The effect on other members of the Inter-Allied Reparations Agency would be most serious. Some of them are participants in the European Recovery Programme; others are not. In either case the [Page 807] termination of the reparations programme would deal a serious blow to their recovery plans. I can speak feelingly on this point because we in the United Kingdom are counting on certain plant from Germany to help us to restore our external trade.
11. There are also other international considerations. There is the effect upon the Germans themselves of abandoning the reparations programme. We should be playing right into the hands of all their agitators. German politicians and publicists will flatter themselves that they have induced us to abandon our intentions; the whole German people will be encouraged to think that if they complain loud enough they will be able to get away with anything; and the prestige and authority of the Occupying Powers will suffer a serious decline.
12. Finally there is the effect upon Soviet Russia. If at this particular moment action is taken which they will recognise to mean the end of the reparations programme, the Russians will assume that we are deliberately taking this step in order to deprive them of any further reparations from the Western Zones of Germany. They would not only regard this as a most serious breach of Potsdam; it would also make any hope of reaching agreement much more remote.
13. I fully understand that you have to face questions and criticisms about a programme which appears at first sight to be inconsistent with European recovery and which cannot be expected to have a popular appeal. I know how difficult all this can be because we too have our critics of the reparations programme in this country who are very active and have a lot of plausible arguments. But I do not regard this as a reason for taking a step which may have incalculable consequences. I beg you that we may have an opportunity of looking at all these aspects of the problem together before irrevocable steps are taken.
- The source text was left with the Secretary of State by the British Ambassador on the morning of September 7; see supra. ↩