Foreign Relations of the United States, 1949, Council of Foreign Ministers; Germany and Austria, Volume III

740.00119 EW/9–2349

Memorandum by the Administrator for Economic Cooperation ( Hoffman ) to the Acting Secretary of State

secret

[ Washington ,] October 3, 1949.

This will confirm our telephone conversation Saturday morning in which I made the following points.

1. I am greatly concerned over the dismantling situation, all the more so since Congress had now inserted a statement in the ECA appropriation act that of the amount to be appropriated “not more than $25,000 shall be available to the Administrator for any further action he may consider advisable to carry out the provisions of section 115 (F) of the Economic Cooperation Act of 1948, as amended by the Act of April 19, 1949 (Public Law 47.)”

2. I am fully aware of the commitments made by the United States that this question was never again to be reopened, and of the attitude recently expressed by Mr. Bevin and Mr. Schuman on the subject. Nonetheless, I do not feel we should close our eyes to the actualities or assume that the British and French governments will continue to do the same.

3. First of all it has become clear from the recent action of Congress that it considers reparations a live issue. This action stems in large part from the feeling of the people in the United States that continued dismantling makes no sense when we are pouring money into Germany. I do not see how I can authorize ECA financing for replacing equipment removed as reparations, although the prospect of a regulation on this point brings up a host of technical difficulties which are bound to slow up our recovery program. On the other hand, I can not avoid authorizing ECA financing to put Germany on its feet industrially and this can properly be characterized as building up that which we are tearing down. The American people, originally quite content apparently with the April agreements, are now growing restive, and this creates a difficult situation for both of us, which we can not ignore.

4. I have at all times maintained that the amount of reparations equipment which the allied nations are receiving from Germany is negligible, and that the entire question has been exaggerated out of all proportion. But developments in Germany since the April agreements¹ have indicated that the problem may be regarded as being of far more importance by the German people than by our allies. Under the circumstances, particularly with a new government established and a formal request made by the Bonn Parliament on dismantling, I am impressed with Mr. McCloy’s sensitive and intelligent discussion of September 14 (Frankfurt 2287²) and believe his recommendation that we stop dismantling must be seriously considered.

5. I do not feel that we should consider solely a stop to all dismantling. There is a fertile field for negotiation in the case of the plants heretofore earmarked for the USSR, as pointed out in my letter to the Secretary of State, dated September 23.³ Even if we did nothing other than to obtain reconsideration of the Gelsenberg case we would have accomplished something positive. Finally it might be possible to reach an understanding on what action might be taken conditioned on positive cooperation of the Germans in dismantling of plants which would in any case have to go, or cooperation in other fields, along the lines at times suggested by Mr. Bevin. I certainly do not advocate a “get soft” policy toward Germany, but I do question whether it is necessary to stir up unrest and forcible resistance unless circumstances entirely require it; I question whether a “hold the line to the last inch” policy is justifiable or practical and whether it is the policy which Mr. Bevin and Mr. Schuman really desire.

6. In fact this would be a recommendation merely “for the record” on my part if I were not convinced that a renewed discussion might very well produce results. It was not long ago that Mr. Bevin on his own initiative told me he would be willing to negotiate a stop on dismantling; and it is certainly possible that he may be persuaded to revert to this position. Judging from my talks with Mr. Schuman I do not feel that he has a closed mind on the problem. Both of them agree with me, as I am sure you will, that there is no other international problem of major importance which is of so little economic significance but which has created so much ill will.

7. We know that the only possibility of getting anywhere in a review of the reparations issue at this time is at the very top level. It would seem to me we have an ideal opportunity while both Mr. Bevin and Mr. Schuman are here in this country⁴ to make an effort to get the problem settled on a common sense basis. It may be our last chance.

8. Therefore, though I fully realize the burden placed on you by many other responsibilities, I urge you very strongly to arrange for a meeting on this extraordinarily important subject before these gentlemen return to Europe. Should my presence be desired at such a meeting I would be very glad to attend.

1. For the texts of the Tripartite Agreements on Germany, April 8, 1949, see p. 177.
2. Ante, p. 597.
3. Ante, p. 604.
4. Following the Foreign Ministers’ meetings in Washington on Germany and NATO, Bevin and Schuman had gone to New York to attend the Fourth Regular Session of the United Nations General Assembly. Documentation relating to the proceedings of this session is in volume i .