740.00119 Council/11–1149: Telegram

The Secretary of State to the President and the Acting Secretary of State

top secret

4723. For President and Webb only from the Secretary. I have reported by previous cables1 the general results of the meeting here with Mr. Bevin and Mr. Schuman. Although the results obtained on the specific subject of dismantling were slightly less than I had hoped, I was greatly impressed by the very great efforts made by Schuman with his government to meet the views of the British and ourselves. The agreement obtained is in general satisfactory and should I believe serve to advance not only our policy for Germany but our desire to continue and advance conditions for the integration of Germany into the framework of Western Europe. We have agreed, in order to protect the position of our High Commissioners in their coming discussion with German leaders, to hold the following agreement in closest confidence.

Draft Directive to the High Commissioners on Dismantling

The High Commissioners are authorized to reply to the letter received from Dr. Adenauer 2 by informing him that they are prepared to discuss the problem raised in his letter with a view to seeking a solution which will provide a final settlement of the dismantling problem, and at the same time will satisfy the Allied requirements regarding security.
As a first step in the discussion with the Federal Chancellor, the High Commissioners should tell Dr. Adenauer that in order to afford the necessary assurance of security and evidence of good intentions [Page 636] the German Government should agree to join the International Ruhr Authority and declare its intention of co-operating closely with the Military Security Board.3
The High Commissioners should draw the attention of the Chancellor to the importance from the point of view of security which their governments attach to the decartelization of German industry, and should seek an assurance from him that the Federal Government will co-operate in the execution of measures designed to this end, particularly military government law 75.4
As part of a general settlement the High Commissioners will, at their discretion, take up with the Federal Chancellor any other points which they consider can usefully he included in this settlement. They should at the same time emphasize that their governments intend to observe continually the methodical development of their programme in Germany as set out in their directive; the present settlement is intended to promote this methodical development and not as an indication that the pace of development might be accelerated by the presentation of fresh requests.
Provided that the High Commissioners obtain a satisfactory response from the Federal Chancellor on the matters mentioned in paragraphs 2–4 above, they are authorized to reach a settlement of the dismantling issue with the limit of the conditions set out below:
They will not make any concessions regarding category I war plants or the demilitarization measures which are not part of the reparations programme.
To the extent necessary to obtain a final and satisfactory settlement, they may agree to:
The removal from the reparations list of the synthetic oil plants;

The removal from the reparations list of the synthetic rubber plants, less certain special laboratory equipment;

Note: The synthetic plants referred to in (i) and (ii) above must be so controlled that they do not produce any prohibited products or exceed the limitation, if any, placed upon production of any other products.

The limitation or [of] dismantling of the I. G. Farben plant at Ludwigshaven to that portion which has already been dismantled to an extent of 40 percent;
The cessation of all dismantling in Berlin;

The cessation of dismantling at the following steel plants: August Thyssen, Hamborn; Huttenwerke Siegerland, Charlottenhütte; Ruhrstahl, Hattingen; Bochumer Verein, Gusstahlwerke, Bochum; August Thyssen Hütte, Niederrheinische [Page 637] Hütte; Klöckner Werke, Düsseldorf; Deutsche Edelstahl werke, Krefeld;

Note: Except that electric furnaces should be destroyed or dismantled save in those cases when the High Commissioners determine that without such electric furnaces the plant cannot reasonably function.

The High Commissioners should emphasize to the Federal Chancellor that the established reparations programme, save insofar as it may be modified in accordance with paragraph 5 above, will be carried out.
With reference to paragraph 6 above, the High Commissioners should seek an assurance from the Federal Chancellor that the Federal Government will use its influence and authority to ensure that the execution of the remaining dismantling programme is not obstructed.
The High Commissioners will make it clear to the Federal Chancellor that the prohibitions and limitations on production contained in the Washington agreement on prohibited and limited industries5 are to remain in force. The Federal Chancellor in his letter has proposed the establishment of a committee to study the question of steel production and requirements. The High Commissioners will inform him that their governments do not consider that such a committee could do useful work at this time.
In enforcement of paragraph 8 above, all re-equipment or modification which increases the capacity of steel producing plants will continue to require license from the Military Security Board. Such licenses will not be given, save in exceptional circumstances, while the capacity of the industry remains higher than that necessary to produce the annual permitted amount. The High Commissioners should point this out to the Federal Chancellor in order that he may understand that the re-equipment of steel plants which have been wholly or partially dismantled or destroyed will not be permitted. The High Commissioners will take any other action which they may deem necessary to ensure that this principle is observed.
The High Commission shall be given a special responsibility with regard to the control of production and the allocation of the products of the seven steel plants to be taken off the dismantling list, retaining full powers in this respect, and will take immediate action at these plants if they find that the permitted level of steel production is being exceeded.
All equipment which has been dismantled by the date on which agreement is reached between the High Commissioners and the Federal Chancellor will be made available to IARA as reparations. The High Commissioners shall have discretion to make exceptions only in those cases where a very small amount of equipment has already been dismantled and the retention of this equipment will not materially affect the production capacity of the plant in question.
The High Commissioners should endeavour to reach a very quick settlement with the Federal Chancellor. If their discussions with him should appear likely to become protracted, the High Commissioners may at their discretion slow down, without prejudice to recommencement at full speed, dismantling at certain key plants from the list of those on which they are given liberty to negotiate in accordance with the above paragraphs.”

[ Acheson ]
  1. Telegrams 4693 and 4694, November 10, supra, and telegrams 4716 and 4724, November 11, pp. 305 and 306.
  2. Transmitted in telegram 3737, November 4, from Frankfurt, p. 631.
  3. For documentation relating to West German participation in the International Authority for the Ruhr and co-operation with the Military Security Board, see pp. 477 ff.
  4. For the text of Military Government Law #75: Reorganization of German Coal and Iron and Steel Industries, see Ruhm von Oppen, Documents on Germany, pp. 335–343, or Germany 1947–1949, pp. 348–353.
  5. For the text of the Prohibited and Restricted Industries Agreement, agreed by the Foreign Ministers in Washington, April 8, 1949, and promulgated by the Military Governors, April 13, see Germany 1947–1940, pp. 366–371, or Ruhm von Oppen, Documents on Germany, pp. 380–385. The latter source omits the two annexes to the agreement.