740.00119 EW/3–1649: Telegram

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

us urgent

994. Following are draft recommendations to be submitted to their respective governments by Messrs Bevin, Schuman and Douglas.

Part I. The Humphrey Committee Proposals of the United States Government1

It is recommended that the governments agree to retain in Germany the industrial plants which the ECA advisory committee (Humphrey Committee) recommended be retained in Germany to further the purposes of the European Recovery Program with the following exceptions: [Page 570]

Cind 1324, August Thyssen Hütte, Hamborn (except that the facilities mentioned in the alternative proposal of the United States Government shall be retained in Germany).
Cind 1327, Deutsche Edelstahlwerke (Tiegelstahl), Bochum.
Five other plants to be agreed, including probably Cind 2042, I. G. Farben, Ludwigshafen (Buna).

Part II. Directive to the Military Governors

The military governors are instructed to complete the drafting of an agreement on prohibited and limited industries on the following basis:

Duration: The ultimate long-term prohibitions and limitations to be imposed on Germany must be a matter for a peace treaty or other instrument by which responsibility for the maintenance of prohibitions and limitations is assumed by or imposed upon a German government with authority over the whole of Germany. The following prohibitions and limitations shall be imposed and maintained until reviewed at the conclusion of a peace treaty or June 30, 1953, whichever shall be earlier. Should any change in the prohibitions or limitations agreed herein be made in a review at June 30, 1953, it shall not become operative until March 1, 1954.

The following industries shall be prohibited:
All items listed in schedule A of the Control Council’s Law 43, including aircraft.2
Radioactive materials.
The production of synthetic gasoline, oil and other synthetic liquid fuels shall be prohibited. All bergius capacity except the Wesseling plant shall be removed. The Wesseling plant shall be retained only to process petroleum still bottoms in connection with petroleum topping. All seven Fischer–Tropsch plants shall also be removed, except that the plants now engaged in producing soap-making materials shall be retained temporarily.
The manufacture of synthetic rubber shall be prohibited. Facilities for copolymerization and facilities for the production of butadiene shall be removed from the Huels Leverkusen and Ludwigshafen factories. A portion of the styrene facilities in the Huels and Ludwigshafen plants agreed to be excess to German requirements shall also be removed.
The manufacture of electronic valves of more than ten watts anode dissipation shall be prohibited except under licensing by the Military Security Board. The production of other electronic valves shall be permitted except for those which may be on a list to be agreed by the military governors, which shall be subject to licensing.
The production of ball and roller bearings shall be limited to existing capacity.
The production of steel shall be limited to 10.7 million tons per annum for the Bizone (11.1 million tons per annum for the Trizone). Capacity shall be limited to that remaining after the removal of reparations.
No limitation shall be placed on the production of the following items:
  • Heavy tractors;
  • Concentrated nitric acid;
  • Vanadium;
  • Radio transmitting equipment to the extent not prohibited by schedule A of Control Council Law 43; Tar distillation;
  • Calcium carbide;
  • Copper refining;
  • Zinc refining;
  • Semi-fabricated non-ferrous metals;
  • Dyestuffs.
No limitation shall be placed on the production of synthetic ammonia and chlorine.
The capacity for production of electric arc and high frequency furnace steel shall be limited to that remaining after removal of reparations.
Machine tools. The production of spiral bevel gear cutters and items 4 to 11, 16, 17, 19 to 25, and 28 of Annex B DECO/P(47) 19/13 shall be permitted under license by the Military Security Board. Licenses for the production of these machine tools shall be granted by the Board unless evidence is produced that their intended use is not peaceful production. The Board shall maintain listings of the location and use of all such tools permitted to be produced.
Aluminum. Production and capacity of aluminum is to be limited to ––––– tons per annum for primary aluminum in the Trizone. No specific limitation shall be placed on imports of bauxite and aluminum which should, however, be controlled by the Military Supply Board to prevent stockpiling above reasonable levels.
Seven shipbuilding yards shall be removed from Germany, viz: Blohm and Voss, Hamburg; Deschimag, Bremen; Kriegsmarine Werft, Wilhelmshaven; Deutsche Werke, Kiel; Germania Werft, Kiel; Kriegsmarine Arsenal, Kiel; Deutsche Werft, Reiheratieg, Hamburg. Removals shall be limited to the items and equipment proposed by the US and UK members of the Tripartite Shipping Committee.

The US, French, and British Governments agree as a matter of operating practice in the light of economic factors in Germany in the discharge of their functions as occupying powers, rather than as a matter of security suitable for inclusion in an agreement on prohibited and limited industries, that they will not permit the production of ocean-going ships until the requirements of the Bizone’s ERP coastal craft fleet have been met by new construction. Thereafter the German shipyards shall be free to construct ocean-going vessels which do not have any characteristics which make them convertible or suitable for direct military use (e.g., landing troops or launching aircraft). It is agreed that some limitations on the size of the various types of oceangoing craft built in Germany and their speed are necessary.

Technical experts will meet to determine these limitations. The Military Security Board will enforce these limitations when they have been agreed.

The limitations in ACA directives 33, 37, 44 and 454 shall be modified to permit the construction of small craft suitable and economic for the purposes for which they are needed.
The limitations in paragraphs B and C above shall not be applied to ships purchased by Germany from builders or owners of other countries.5

Sent Department 994, repeated Paris 180 for Caffery, Berlin 155 for Riddleberger and Clay.

  1. Not printed.
  2. For the text of Control Council Law #43, December 20, 1946, see the Official Gazette of the Control Council for Germany, December 31, 1046, pp. 234–230. Schedule A of this law listed war materials whose manufacture, import, export, transport, and storage were prohibited.
  3. Not printed; the machine tools enumerated in this annex were various types of lathes, milling machines, grinding machines, boring machines, and general machine tools designed for the production of war material. (862.50/4–2347 Bulky files)
  4. For the texts of Directives 37, 44 and 45, see the Official Gazette of the Control Council for Germany, October 31, 1946, pp. 280–282 and November 30, 1946, pp. 224–226. All four of the Directives under reference here restricted the size, speed, and specifications of various types of shipping and pleasure craft.
  5. In telegram 1014, March 17, from London, not printed, Douglas reported further on the discussions with the British and French. While some agreement was confirmed along the lines of these draft recommendations, the Ambassador noted some hedging in preparation for another ministerial meeting. He requested flexibility in dealing with the most critical issues, which he saw as shipbuilding, synthetic rubber and electronic tubes. (740.00119 EW/3–1749)