740.00119 EW/3–1949: Telegram

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

top secret
us urgent

1080. Murphy (Eyes Only) from Douglas. [1.] I fully appreciate the not unnatural and subconscious tendency of a person stationed in a foreign post to take on, like the chameleon, the color of his environment and to assume, in part at least, the attitude of government to which he is accredited. In this instance I doubt that I am completely guilty of this charge. Because I am very critical of British indifference to their problem of high costs, and particularly to attitude of this government to problem of high cost, I am not insensitive to British tendency to rationalize fears of competition. Furthermore, because I understand past consequences of British high costs and future adverse effects of British indifference to high costs, I am even more critical of them on this score than many at home.

I hope you will, therefore, construe substance of this cable as being as objective an analysis of problem of plant retention and PRI as I can make against the background of security and competitive considerations, within the complex of French and British apprehensions and what British and French believe, rightly or wrongly, to be an increasing indifference to them on the part of US.

2. Paragraph one of your Deptel 944.1 We are in complete accord with the general basis of our position as stated. Indeed, we have advanced the arguments in support of this basis I think, on the whole, with considerable persuasiveness and French and British have agreed to the elimination of mass restrictions on ten industries. We agree, too, that prohibitions and limitations must be related to military security, but not to the exclusion of broad national economic factors—for example, in resisting British and French we are often advocates of German economic interests and even of our own.

As to last two sentences of your first paragraph, frankly, we have some doubt. At some time in the future Germany may, for a variety [Page 578] of different reasons some of which may be good, some, from our point of view, bad, conclude that at least in economic sphere, they should make arrangements with the East. Should there be such arrangements, German war potential, whether in shipping or in other industries, may become partially available in peacetime to Soviet. This is, however, not the only method by which German industry might become available for Soviet use. Should war break out and should Soviet over-run and occupy part, if not all, of Germany as far westwards as Rhine, German industrial capacity and German “know-how” would be available to Soviet. This does not mean, however, that German industry should be arbitrarily restrained. Some sort of a compromise between adopting an excessive attitude in one direction or the other is the only answer, it seems to us, to the present issue with which we are dealing.

To say, for example, that our attitude toward Germany should be such as effectively to prevent her from making associations with the East is to be indifferent to certain forces which are almost certain to operate. At some time Western Germany must begin to export her industrial products eastwards in consideration for the importation of raw materials. Similarly, to assume that in event of war Germany may not become, through Soviet occupation, tool of Soviet, is to ignore what may be an event which no collection of powers can prevent. We are not, it seems to me, dealing with the recurrence of a Rapallo attitude of mind, but with an unforeseeable future.

In this context, will deal specifically with the question of shipping which is one of items in British and French position which you apparently consider to be dictated more by commercial than by security interests.

This question in Britain and France is wrapped up in politics. There are commercial interests, particularly in Britain. Labor, particularly on the Clyde and in other shipbuilding areas in Britain would doubtless be hostile to unlimited German ship construction. The British Government’s position is, therefore, in part only, a rationalization, but I am convinced it is not dictated exclusively or predominantly by the political and commercial considerations. The following are my reasons:

British and French insist that a ship with a speed of 18 knots or more is much more difficult to locate and much more difficult to catch than a slower ship. It was for these reasons, to which I can testify from my personal experience in war shipping during the past war, that we permitted cargo ships a 17 knot speed or more to run free of convoy except on a few particularly dangerous routes. It is for this reason British and French feel that ships of this speed have greater war use and would be more effective tenders for submarines [Page 579] of which the Russians have already a substantial fleet to which they are adding by construction the most modern.
British and French will not accept technicians of commercial shipping interests or the Ministry of Transport to determine the limitations on speed and size. Only admiralty technicians acquainted with problems of security, both British and French insist, must be chosen to make the determination. (We here have maintained that the problem consisted of reconciliation of security considerations on the one hand with an effective dry cargo and tanker fleet on the other, and that accordingly, the naval experts were not the only ones who should play a part in defining speed and size.)

3. There follow comments on the specific instructions your 944.

4. Our views covering suggestion that discussion on occupational statute and trizonal fusion be linked with PRI and plant retention were submitted in Embtel 1075,2 March 18. The more we consider the matter you suggest, the more we believe that it would be unwise.

5. As to duration—your paragraph 4, (a) will constitute concession to previously advanced British and French position; (b) will present some difficulty. Do not believe either British or French will agree that restrictions (limitations) presently agreed upon (if an agreement is reached) will lapse automatically on any date. Believe that if we can meet them substantially on shipbuilding and synthetic rubber and other items, may be able to persuade them to accept a review on June 30, 1952, on understanding that any modifications of the limitations and restrictions will not become effective until possibly six months thereafter. This assessment of British and French attitude may be optimistic. Believe we could persuade British and French to agree to paragraph (c).

6. Your paragraph 5—shipbuilding. There are three questions which are related to the problem:

First is what sort of agreement will be relatively immune to disturbance by our own commercial shipping interests operating through Congress and Bland Committee.3 Even if we could obtain British and French agreement to unrestricted German construction of ocean-going vessels within limitations of the retained shipbuilding yards, there would be about as much chance, in my opinion, of such an agreement being undisturbed by Congress as there is of snow remaining unmelted in Arizona desert. For more than twenty years I have had, from time to time, intimate experience with shipping lobby—first as member of Congress; second in Bureau of Budget; third in war shipping; and fourth, in connection with ECA presentation in Senate and House last year. I have recently observed the not unsuccessful endeavors of same interests to frustrate us in our attempts to save [Page 580] money for European Recovery Program. Why then insist upon Clay’s position when it is almost as certain as death and taxes that, should French and British agree (most unlikely) Congress would intervene to upset?
Second consideration is the type of agreement which we can reasonably expect to obtain from British and French. We have discussed with them security considerations which apply to limitations on speed and size of various types of vessels. Specifically, ocean-going, dry cargo and tanker vessels; coastal vessels including specialized types, the Baltic pulp carrier and the iron ore carrier; and fishing vessels. Have indicated and made general comments in this regard in paragraph 2 above. Believe British and French would welcome a directive to their admiralty experts and our naval experts requiring definition of limitation on speed and size related to security considerations. Believe, however, that in respect of ocean-going cargo vessels and tankers they will insist that we state in present agreement some maximum limitation on speed, such as 16 knots, and on size, such as 12,000 tons dead weight for cargo vessels and 16,000 to 18,000 dead weight for tankers. For various types of vessels there are obviously a number of combinations of speed and size which affect security. For example, a 15,000 dead weight ton cargo vessel designed for Swedish iron ore trade might without impairing its effectiveness have a speed of not more than 12 knots.
Third is how legitimate security considerations are reflected in restrictions on characteristic[s]. I confess that from my own experience, British and French are not completely off base when they urge limitations on those grounds and I could defend, I believe, adequately, limitations and restrictions for security reasons if the limitations and restrictions were reasonable. In this connection, a standard of reasonableness might be the adequacy of speed and size to permit the Germans to service a reasonable portion of their export and import trade thus relieving their economy of exchange burden.
Further, in this connection British and French urge that limitations and restrictions imposed now can, when subject comes up for review, be relaxed and that restrictions and limitations agreed upon now are not necessarily permanent. During period prior to review it is not unlikely that considering capacity of the retained yards that will be used for repairs (a very lucrative business) and shipbuilding facilities that must be devoted to the coastal and fishing fleets, small tonnage of ocean-going vessels will have come off the ways.
British and French want restrictions applied to purchased ships also.

7. As to your paragraph 6 and 7. I hope General Clay will give me his views very promptly. After their receipt I may find it necessary to consult you further.

8. Your paragraph 10. We have been completely unyielding on Krefeld. I assume if absolutely essential we can release in the following order: plants 7, 5 and 6 or any two of them. Your assumption item two is correct.

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9. Believe that can obtain agreement British and French substantially along lines indicated above if we will agree on butadiene, styrene and a reasonable formula as to shipping.

10. I realize you may not have received my 1075, March 18 when you sent Deptel 944, March 18. Perhaps my reports have not given you full flavor of diet here, the heat to which we have subjected Bevin and Schuman, the unwillingness with which they permitted me to extract concessions and bitterness which remains. We have obtained agreement considerably better than our instructions required in several fields, eliminating all restrictions on ten industries, including some which had been agreed in Berlin, raising the level of permitted aluminum production above level agreed in Berlin. We may still be able to do better than our instructions required in bearings. In addition, of course, we were close to an agreement on Humphrey list. Delay may lead not to gains but to losses for our view.

11. If our position is substantially less conciliatory on PRI than that indicated in this cable, a break in our negotiations seems inevitable. If, in addition, it is necessary that the negotiations on the occupation statutes and the principles of trizonal fusion be linked—a decision with probably far-reaching consequences. I would prefer, instead of laying down this condition, simply to tell Bevin and Massigli that we cannot reach agreement and that negotiations must be broken off for the present.

12. I agree I cannot at the moment tell them we expect to have general discussions on Germany, although they may have picked up news in Washington. I would not want to tell them unless I could give them a fairly detailed outline of what we have in mind.

13. Even simple breaking off of negotiations would, after all that has been said and all that has transpired over past two months, leave a bitter taste in British and French mouths.

14. Would appreciate your advice by Monday in order avoid embarrassing delay and arousing suspicions we did not mean what we said about need for speed to allay congressional attacks. If negotiations are to be broken off, a phone call will do.

15. What stinkers we are here!!

Sent Department 1080, repeated Paris (Caffery Eyes Only) 200.

  1. Ante, p. 573.
  2. Supra.
  3. The Committee on Merchant Marine and Fisheries, House of Representatives, of which Schuyler Otis Bland of Virginia was chairman.