740.00119 EW/3–2449: Telegram

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

us urgent

1179. For Murphy from Douglas. Bevin was so rushed this afternoon I could see him for only a few minutes. I told him, as I told Massigli later, that we felt negotiations should be suspended and Humphrey list separated from PRI (if we choose to do so) unless they were prepared to meet our positions on Krefeld, shipping, styrene, and duration. He said he would have to see what could be done in Washington and I told him, that after discussions with Washington I thought he could do no better there and might have greater difficulty. He then reviewed disagreed and reserved items; indicated a desire to reach agreement now; asked me to go over the problems with Kirkpatrick, to whom in my presence, he gave instructions to do his best to get things settled, clearing what was necessary with Ministers of other departments.

We then met with Kirkpatrick for British and Massigli for French. Kirkpatrick, as a result of our talk, undertook to get approval of a position which we worked out together, during today and Friday. I told him and Massigli if we could not get agreement tomorrow we should then suspend.

[Page 589]

Massigli undertook to ask for approval of the position in Paris, although I have the impression he was not so sanguine as Kirkpatrick. In essence the basis for agreement is as follows.

Krefeld to remain in Germany, Hattingen to be retained in place of Niederrheinische, that is BS 57 to stay in Germany when BS 60 is removed. (Would yield on BS 57 if necessary.)
Styrene. Removal of plant number CIND 2042 Ludwigshafen. We had agreed, you recall, to release this in deal on Humphrey list. It means about 5000 tons of styrene capacity goes. We then agreed that the military governors should retain 20,000 tons in other plants, mainly Huels, and should limit capacity by preventing repairs or other means but not by removals, to meet Clay’s desire avoid removals of plants which have not been listed for removal insofar as possible. (20,000 tons capacity is more than British programme and, according to British figures, about ½ former German capacity when synthetic rubber plants were operating.)
Agreed 33 million units ball bearings.
Shipping. Ocean-going dry cargo vessel. We propose to permit Germans acquire by purchase or charter from date final agreement 100,000 GRT tankers, with speeds up to 14 knots and size up to 16,000 DWT and 300,000 GRT dry cargo vessels, 12 knots and 10,800 DWT, during period of agreement.

However, Germans could not build tankers above 12 knots and 10,800 DWT. British assert that the new British tanker production is less than 12 knots and 12,000 tons. They will give me detailed figures in the morning.1 Moreover they say from past experience German constructed 12 knot ship has effective cruising speed of 14 knots.

As previously indicated, we agreed coastal ships limited to 4000 DWT and fishing vessels 1000 DWT or 650 GRT.

I made point of saying that we expected to have exceptions granted at least in limited tonnages for ocean-going cargo ships exceeding limits in speed but smaller or having shorter radius, (this to meet General Clay’s view) as well as ships for special trades i.e., iron ore, etc. In my opinion important security type of limitation would be one of radius and would justify higher speed. I also said that refrigerator ship could justifiably be faster than limits.

I indicated no real trouble on machine tools and electronic valves. While I will try to persuade them to accept draft most favorable our view each case I think there would be little difficulty if we accepted our [Page 590] first draft on machine tools,2 which British agreed as concession, or British compromise3 on electronic valves, especially in view of General Clay’s dismissal of latter problem as silly but not very unimportant [sic].
Duration. On this subject we worked up language quoted below, which French may not completely understand. I think it is far better than we could have expected. I want particularly to explain that I felt your authorization to propose a formula under which majority could continue restrictions until peace settlement was much more dangerous to us than the proposal below. With majority rule, the contemplated restrictions in toto could be extended indefinitely by two i.e., British and French, who could theoretically use this device to postpone for protracted period any peace settlement and thereby frustrate us in matter restrictions, prohibitions and possible settlement, if we want one. I recognize that agreed minute in this language gives possibility of delay until 1 January 1954. I question whether French or British will insist maintain restrictions against our opposition. At the least they will attempt a compromise with us. Our very powerful influence on European affairs will not end with ERP nor will the desire to avoid serious issue with us by taking action against our will. If, however, British and French threaten to insist on maintenance restrictions and invoke majority rule we can inform them that if they do so we will agree to renewal of no restrictions whatsoever after December 31, 1953. (Under our proposal only restrictions agreed by unanimous consent can for any period remain after December 31, 1953.) Accordingly we have fairly strong bargaining position on restrictions during period June 30, 1952–December 31, 1952 under this proposal, whereas we would have little to bargain with under more sweeping proposal we were authorized to offer. For these reasons I think (may be wrong) there is little danger in our proposal. Kirkpatrick agreed, urged French agree and will continue to do so.

Following is language:

“The agreement on prohibited industries based on this directive shall remain in force until a peace settlement. The limitations on industries agreed shall continue until a peace settlement or until 1 January 1953, whichever is the earlier, and thereafter as agreed. On 30 June 1952 the military governors shall review the limitations in the light of the circumstances then prevailing, including the requirements for security of the Allied powers, the state and effectiveness of arrangements for preserving security, and the needs of European recovery. Should the military governors not reach agreement on the limitations [Page 591] which shall be continued and those which shall be modified or eliminated within 90 days from 30 June 1952, the matter shall be considered forthwith by the governments.

Agreed minute. In the event that no complete agreement on the renewal of restrictions is reached, those restrictions on which agreement has been reached will become effective from 1 January 1953. The restrictions on which no agreement has been reached will be continued on the decision of two of the three powers for another year.” The above is result of long discussion.4

UK and French have suggested article in agreement as follows: “Action within the discretion of the military governors under the terms of this agreement shall be taken by unanimous decision.” Do you see any objection to this article which seems to us in line with our general approach.
I continue to feel strongly that we have now offered the British and French less on the whole than the Department authorized us to concede in our instructions. Moreover, many of the concessions we have made, principally those on shipbuilding, are more or less academic ones, since (a) it is unlikely that the limitations will prove serious to German economic life before the review period is over and (b) perhaps unlikely that by then we ourselves will be permitted by Congress to lift them. If I get favorable word from Kirkpatrick and the French tomorrow on Krefeld and shipping I will probably call you to ask that you give me the go-ahead if you can. If British or French reaction unfavorable propose to suspend completely here on issue of Krefeld.
Have informed British and French that if we suspend, all offers by us will be automatically withdrawn and any new discussions must start de novo.

Sent Department; repeated Paris for Caffery, Berlin for Riddleberger and Clay.

  1. In telegram 1181, March 25, from London, not printed, Douglas reported the detailed British figures which showed that over 75 percent of the new tanker construction was for ships of less than 12,000 tons dead weight. (740.00119 EW/3–2549)
  2. For the United States position on machine tools, see footnote 3 to telegram 993, March 16, p. 567.
  3. The British compromise proposal on electronic valves is printed in telegram 993, March 16, p. 567.
  4. In his next telegram (1180, March 25, not printed) Douglas elaborated on this proposal, reporting that it was clearly understood by all that any one of the occupying powers had the right to raise the question of lifting restrictions at any time. (740.00119 EW/3–2549)