Memorandum of Telephone Conversations, by the Acting Director of the Office of German and Austrian Affairs (Murphy)

top secret

Participants: Secretary Dean Acheson in New York
Ambassador Robert Murphy in Washington
United States High Commissioner for Germany—John J. McCloy

The Secretary telephoned from New York at 6:00 p. m. and said that he had just finished a conversation with Schuman 1 who referred to the conference now in progress at Bonn where he said the French Representative is prepared to vote for twenty percent (20%) devaluation of the Deutsche Mark. In addition to that and the other agreements mentioned by Mr. McCloy in a conversation earlier today,2 the Secretary said that Schuman as a result of the conversation this afternoon with Paris suggested an additional stipulation to be in the form of an agreement between him and the Secretary reading as follows: “The United States Government will fully cooperate with the French Government with a view to eliminate before January 1, 1950 the disparity between the export and domestic price of German coal except in special cases.”

The Secretary said that he had told Mr. Schuman that before passing on this text that he wanted to consult with this office and with Mr. McCloy. On reflection he believed that it would not be advisable to conclude an agreement of this character as between himself and the French Foreign Minister. He is particularly doubtful as to the advisability of discussing the matter without the participation of Mr. Bevin and feels that in any event the agreement if made should be on the level of the High Commissioners and that the British should be brought into the discussion.

It was agreed that I should telephone Mr. McCloy to obtain his reaction so that the Secretary would be in a position to discuss the matter further with Mr. Schuman this evening.

I communicated the foregoing to Mr. McCloy who after careful reading of the text asked that Mr. Acheson be informed that he could not go along with the language of that stipulation because it committed him to the elimination of the disparity before the study is made. Mr. McCloy said that he did not want to be placed in the position of opposition to his British colleague and tied down by such a stipulation three months before the study is completed and regardless of whether [Page 469]that meant to vote that way either in special or general cases, he doesn’t like the idea of being pushed into an awkward personal position. He wants complete freedom of action but is willing to accept in principle that discriminatory practices should be eliminated as far as possible. The wording by Mr. Schuman pushes him too far, and he further believes that the method followed by the French in this case is a bad thing for the Commission; in effect, it would be the constituting of a Franco–American alliance within the Commission which would be bad. I asked Mr. McCloy whether he has been keeping his British colleague informed of the conversations in Paris, and he said that he had kept Robertson fully informed.

I told him that his views would be communicated immediately to Mr. Acheson who is seeing Mr. Schuman a little later this evening. In the meantime, the High Commission is remaining in continuous session at Bonn. He said he has heard nothing further from the French High Commissioner.

The foregoing was communicated to the Secretary who said that he understood Mr. McCloy’s position and would communicate it to Mr. Schuman this evening. He asked a number of questions regarding the factors which would be involved as he said he wanted to be clear in his own mind regarding the nature of the factors making up the disparity and the effect that would have should the disparity be eliminated. I told him that that was the purpose of the study and that it would be obvious that it would have an effect on the general price structure. There are, for example, factors of the marginal mines which required governmental subsidy; there was subsidy for miners’ housing and a number of similar features. There was also the relationship of the price of German coal with foreign price; such as, the British price of coal and the price of French iron ore. All these things required study, and we should not commit ourselves in advance of the study. He said he agreed to this position.

The following message was dictated by Secretary Acheson from New York at 8:00 p. m.: “I have just seen Mr. Schuman.3 I told him that we were not able to make the statement which he asked me to make and which I read to Mr. Murphy. I said that we were not able to do this because this required a commitment as to specific action from us before the study was even made which would have to precede the action. I said that it would also in our opinion interfere with the smooth working and unity of the High Commission. However, I was pleased to say to Mr. Schuman that the policy of the United States in Germany as carried out by Mr. McCloy would be that discriminatory practices should be eliminated as far as possible and as fast as possible. [Page 470]I said that the United States Government was wholeheartedly committed to this principle.

Mr. Schuman said that he would communicate with his Government and that perhaps this assurance which was entirely satisfactory to Mr. Schuman would, he hoped, be satisfactory to his Government. However, they were very nervous and he might have to come back to me again.”

At 8:20 p. m. Mr. McCloy telephoned stating that General Robertson objects strongly to the form of commitment suggested by Mr. Schuman above. General Robertson states that he would have to appeal to his government if a decision were based upon such a bilateral understanding within the Commission.

I talked with Mr. McCloy again at 9:00 p. m. He was very encouraged by the Secretary’s support of his position and said that he and General Robertson had tentatively agreed on a joint statement to the effect that both the UK and US members were prepared to move toward an elimination of the disparity between the export and import price of German coal. He did not have the exact text before him but he said that it had been shown to François-Poncet who stated that he personally would accept it. François-Poncet is still awaiting further instructions from Paris and apparently Parodi and the Foreign Office Staff will remain on duty through the night. The Commissioners will meet as soon as François-Poncet has received further instructions.

September 28, 19494

Mr. McCloy telephoned at 9:30 a. m. to report that agreement had been reached by the High Commissioners at 6:00 a. m. German time. Mr. McCloy said that the French Representative François-Poncet appeared to announce that the French were ready to agree to the rate of 23.8 cents per mark; that is, a twenty percent (20%) devaluation with the balance of the understanding to the effect that a group would be set up to study the question of the disparity between export and domestic price of coal with a view to putting measures into effect by January 1950 to correct this if possible. In the meantime, the present situation would be frozen so that the devaluation would not be permitted to aggravate the disparity. The French did not insist on the stipulation mentioned in the first paragraph above and also it was not necessary for Mr. McCloy to write an explanatory letter.

However, this morning the German Prime Minister Adenauer communicated to the High Commissioners his desire to meet with them tomorrow morning indicating that technically the Germans had never [Page 471]officially agreed to anything less than a twenty-five percent (25%) devaluation. Dr. Adenauer also indicated that the Germans were not enthusiastic about the provision relating to the price of coal and desired more information concerning it. Mr. McCloy said also that he feared that the British would be inclined to support the Germans if they made a last minute insistence on a twenty-five percent (25%) devaluation. I suggested to Mr. McCloy that it might be well to have an informal conversation with Adenauer prior to the meeting with the High Commissioners and he said that he was sending Mr. Riddleberger to Dr. Adenauer for that purpose. I also suggested that it might be well for him to have an informal conversation with his British colleague for the purpose of emphasizing the desirability of a united Allied position as it would seem unhappy to face the Germans with a split vote on the subject. Mr. McCloy said that while Robertson had indicated that he might in the end have to support the German view of a twenty-five percent (25%) devaluation because of conditions in the UK it would not mean that the British would appeal if the vote in the High Commission were two to one in favor of a twenty percent (20%) devaluation.

At 10:00 a. m. I communicated Mr. McCloy’s message to the Secretary.

  1. A memorandum of Secretary Acheson’s conversation with Schuman, not printed, is in file 862.5151/9–2749.
  2. A memorandum of this conversation is printed supra.
  3. The record of Secretary Acheson’s second conversation with Schuman is part of the memorandum of conversation referred to in footnote 1.
  4. Apparently the memorandum prepared by Murphy on September 27 ended with the paragraph concerning his conversation with McCloy at 9:00 p. m. The record of his conversations on September 28 was then added to the memorandum for the 27th.