740.00119 Control (Germany)/9–1349: Telegram
The United States High Commissioner for Germany (McCloy) to the Secretary of State
4. From McCloy. Re urtel 1474, September 10[9].1
While we are not convinced that there is necessity to develop specific tripartite policy agreement at this time we do feel that the opportunity afforded by these meetings should not be missed to obtain some restatement of our policy. Many of the problems outlined by Kirkpatrick in London’s 3526 of September 12 give us a desirable aim but one probably only susceptible of long-term solution. Discussions are already under way here on several steps recommended by the British, such as bilateral agreement with ECA and the question of Germany’s joining [Page 273] the Ruhr authority. These discussions will take more solid form as soon as the German Government is established and its responsible Ministers appointed with whom progress can be made. Yesterday we cleared a good bit with the British and French on our procedures re bilateral and the membership in OEEC.
Re Bevin’s four points, it might be possible in Washington to come to some agreement in principle on the time of Germany’s admission to Council of Europe and its relationship to Saar admission. We should like to know whether you desire us to indicate to the Germans that their initiative on admission to the Council of Europe would be desirable. With respect to German participation in international organizations, this problem will no doubt arise early in the Political Affairs Committee, where the French may be the most difficult obstacle. Therefore, any information on Schuman’s attitude would be useful to us. On dismantling and reparations, we have already received indications from Robertson that Bevin is to bring up a modification of the existing program in return for certain understandings on the part of the Germans in the way of steady cooperation on other matters. Moreover, Adenauer yesterday indicated to McCloy that Schuman was also about to bring up certain concessions in this field on which he specifically asked McCloy to urge your support. We are most anxious to be kept currently informed on the British and French proposals in this field. I think we should ascertain if Bevin intends to make any concessions.
With respect to the questions you suggest for discussion, we agree that it might be useful to take up these items. I believe the importance of radio frequency allocations is well known to the Department and affects materially our public affairs program. On shipping, the OMGUS position is well-known and the negotiations in London have been largely in the hands of the Department.
Re foreign investment, there are three steps involved in general picture of trying to improve German financial and economic situation, especially from standpoint increasing amount of funds available for short—and long—term credit. Step 1 would be unblocking of present deutschemark balances held by foreign accounts. This amount generally believed to be about 500,000,000 deutschemarks. Unblocking these accounts appears to be not only unobjectionable from any point of view but acutely desirable considering the dangerous lack of capital in tha present German economy. Step 2. Our government has been holding to view that if step 1 is to be accomplished provisions should simultaneously be made for safeguarding or at least creating measures which would attract new foreign capital for investment here. British take stand that if we insist on step 1 or 2 there should be simultaneous [Page 274] step 3. We feel that this position is being taken not on the merits but for the sake of leaving some leverage to compel us to deal with step 3 simultaneously. Step 3 has to do with compounding of German debts expressed in foreign currencies. We have no definite ideas yet of total amount involved but we should attempt to convince the British that we are entirely sincere in our undertaking to examine immediately the problems which are involved in accepting the principle of compounding. British indicate that exclusive of direct or guaranteed Reich debt amount of other German foreign obligations expressed in sterling amounts to equivalent of about $150,000,000. While we have no definite idea what amount would be expressed in dollars, are certain it is much greater than British amount. British aide-mémoire of 30 August 1949 contained in W 935733 maintains normal right of creditor to compound debtor. Our view completely opposite because this right only exists, in our opinion, on part of non-defaulting debtor to compound with creditor and all German debtors, of which we are aware, are in default to their foreign creditors. Moreover, compounding would inevitably lead to race of diligence by creditors which we convinced would have many unfair and impolitic results.
On German consular representation abroad, we think that we shall have little difficulty with British but may encounter obstacles with French. We very much hope, therefore, that Department will urge Schuman to permit early establishment of German consular representation in addition to commercial representation. US has direct interest in early consular establishment, particularly in order to replace MPO’s; the financial considerations of maintaining this part of CTB have already been explained to Department. An early agreement on consular representation would enable us to liquidate these expenses rapidly.
On admission of Berlin as twelfth Land, we believe that British will raise this question at an early date and recommend acceptance. However, whatever the arguments may be for such admission and in a practical sense they may be good arguments, it might be well to defer this question until we see whether the Soviet overtures for a possible unification of, and establishment of common currency for Berlin are serious. We are already encountering various practical difficulties such as the extension of the Deutsche Post and the Patent Office to Berlin, but so far have been able to develop various devices that will provide at least temporary solutions.
It is also suggested that this may be opportunity to agree on a restatement of our position re common currency for Berlin, that is just [Page 275] what conditions we would desire, however unobtainable such conditions may appear to be.
We feel that any suggestion that the Germans may expect membership in the Atlantic Pact is highly premature at this juncture.