740.00119 EW/3–249: Telegram

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

us urgent

773. Personal for the Secretary and Saltzman from Douglas.

Before receipt Deptel 684,1 spent an hour discussing reparations and dismantling with Bevin.
He had again reviewed the matter with Cabinet. As a result, I regret to say my analysis paragraph 5, Embtel 6752 was too optimistic, for Bevin assured me that despite strenuous efforts on his part to persuade Cabinet to permit him to deal with problem dismantling separately from prohibited and restricted industries, he was compelled to maintain his former position that the two problems, reparations and dismantling on the one hand and prohibited and limited industries on the other, must be dealt with together.
Bevin repeated all of the arguments which have previously been reported, including emphasis on French position. I in turn advanced all the arguments against dealing with the two matters coevally, but the deadlock remains unlocked.
Bevin suggests that inasmuch as there will probably (depending upon outcome of discussions with Foreign Ministers France, Belgium and the Netherlands) be a meeting of Foreign Ministers in London of the Western Union powers commencing March 14, he, Schuman, myself would discuss and settle both questions dismantling and prohibited and limited industries on that occasion. He assured me that if we would agree to this proposition, he would go as far as he possibly could to meet us on the Humphrey Committee recommendations and to influence the French to do likewise. Moreover, he said that he was prepared, if we would agree to his proposal, to be reasonable on P. and L. industries, and to attempt to be persuasive with the French. He felt that the two matters could be disposed of within two days and stated emphatically that HMG was very anxious to dispose of these two questions with the greatest possible speed. He hoped that this might give us some confidence that HMG would not drag on the discussion interminably, delaying the final settlement for such a protracted period that it will not serve the purpose we have in mind with Congress and in other respects.
Was handed very confidentially the following paper entitled “Prohibition and Limitation of Certain German Industries—Main Questions of Principle to be Decided”:

“1. Shipbuilding.

Removal of three largely destroyed shipyards over which local German authorities plan to develop other industries.
Limitation of German shipbuilding capacity to capacity remaining in Germany after removal of the three yards referred to above.
Maintenance of the prohibition of building seagoing ships until completion of coastal fleet required by European Recovery Programme.
On completion of coastal fleet authorization of seagoing fleet subject to limitations on speed, tonnage and type of ship to be constructed proposed in letter from British to U.S. Military Governor of 4 May 1948.3
Maintenance of Allied control authority shipping directives subject to minor amendment in the light of later study.

2. Synthetic rubber.

Prohibition of manufacture and removal as reparations of all equipment.

3. Synthetic oil.

Prohibition of manufacture and removal of all equipment other than that which British and American authorities are already prepared to leave.

4. Ball bearings.

Limitation of capacity to that required to meet German internal needs (estimated by appropriate authorities at 27 million units) and removal as reparations of surplus equipment.

5. Machine tools.

Prohibition of manufacture of two types of machine tools and of the larger sizes of 19 other types of prime importance to armaments production.

6. Duration of restrictions.

7. Electronic valves.”

In discussing paper Bevin indicated that from British point of view shipbuilding and duration of restrictions were most important. He thought differences on ball bearings, etc. could be reconciled.
While recognizing the virtue of your arguments against negotiating on the two questions at the same time, I doubt that we will be able to loosen the British and French from their position.
Therefore, I suggest that we tell British and French that we are prepared to discuss both questions at the forthcoming meeting in London of Bevin and Schuman on the condition that if both questions are [Page 559] not satisfactorily disposed of within some definite period such as, for example, four or five days, we will then be compelled to consider them separately. This, it seems to me, protects our position against protracted delays and possibility of excessive concessions in order to reach agreement, and at the same time, gives the British and French an opportunity to discuss the two subjects together. Would either side lose much by agreeing to this compromise?

I have not given slightest intimation this compromise to British or French.

Please believe I do not want to negotiate these two questions together, but I do want to do the very best I can to break deadlock as I know you do.

  1. Not printed; in it Saltzman told Douglas that he could inform the British and French that the United States was willing to initiate negotiations on prohibited and restricted industries shortly after the settlement of the reparations question. (740.00119 EW/3–149)
  2. Supra.
  3. Not found in Department of State files.