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

Department of Defense Files

Record of Teletype Conference Between Washington and Berlin ¹

top secret eyes only
for clay and wilkinson

Washington , March 17, 1949—5:25 p.m.
Berlin , March 17, 1949.

TT2012

Present:

• Washington
• Mr. Tracy S. Voorhees, Asst Sec Army
• Mr. G. H. Dorr, Former Spec Asst to Sec Stimson, acting as Special Counsel to Asst Sec Army for three power discussions on Germany
• Mr. H. F. Sheets, OAS
• Col. R. M. Cheseldine, OAS
• Lt. Col. C. B. Smith, CAD
• Berlin
• General L. D. Clay, CINCEUR
• Mr. L. Wilkinson, Econ Adviser

Subject: PRI and Reparation and reference London cables repeated to Berlin 154, and 155,² 16 March both from Douglas and State’s reply to Douglas repeated Berlin as 321 on 16 March.³

[From Berlin]

CINCEUR 1—For Mr. Voorhees from General Clay. For your background only and not for distribution in present form.

I am becoming more and more disturbed over the negotiations in London with respect to occupation statute and trizonal fusion. We have been through so many changes that it has been almost impossible to follow the deliberations. However, I am quite sure that we are fast arriving at an occupation statute and method of voting controls which will prove completely impracticable in operation. If, in fact, we secured the same type of French cooperation that has existed between United States and United Kingdom representatives, it might be workable. However, our complete historical record indicates that obstructionist tactics are the aim of the French representatives and, if such continues to be the case, it will be virtually impossible to administer Germany. At present, tripartite meetings of Military Governors are a duplicate of quadripartite meetings with Koenig taking the place of Sokolovsky. Robertson and I are able to consider and agree on an agenda of 16 or 17 items in a couple of hours. When we meet with the French, we will spend all morning discussing an agenda of three or four items and seldom reach agreement on any, even though Robertson and I quickly reconcile our views and offer compromises. In the meantime, the situation in Germany is deteriorating; the desire of the Germans for the constitution⁴ is becoming noticeably lukewarm. The People’s Congress meets in Berlin tomorrow and its representatives for some time have been making overtures to West Germans.⁵ It is difficult to expect West Germans to move ahead vigorously when the three governments which have authorized their constitution appear hopelessly deadlocked.

I am inclined to believe that in spite of the delays which it may occasion to the basic law and to formation of West German government that our only hope now of getting proper solution is to start over with a clean slate. I would urge prompt consideration be given to cancelling the London negotiations with a view to reviewing the entire original London agreement on political structure in its proper relationship to other German matters at a top level conference which by all means should be held in Washington. Truly, we are so mixed up now that it is going to seem a travesty on government to give the Germans for trizonal government something less than the Germans in the Bizonal area now have. It will be difficult to meet the popular appeal of the constitution which will most likely be proposed by the People’s Congress.

Unfortunately, it also looks as if we are going to have to announce West boundary changes⁶ and perhaps the prohibitions and restrictions on industry in the period in which the constitution is either being prepared or is being considered by the German people. While I recognize the necessity for these actions, they will make it difficult to obtain German enthusiasm for a Western Government encouraged constitution which promises democracy at the same time the Western powers say we do not trust you to make this government democratic so we are modifying your boundaries and prohibiting and restricting your industrial capacities. The timing is bad.

It seems to me that we are making major decisions during a period in which we say we are re-examining our German policy and yet these major decisions really make it impossible to re-examine German policy. I believe this re-examination of policy and a clear establishment of our objectives is probably desirable before we have committed ourselves in the matters now under negotiation. After all there are 45 million Germans and we are spending a great sum of money not only for humane reasons but also because we do not wish them to live under economic conditions which will insure their orientation toward the East. However, in neither timing nor in public announcements do we take into consideration that these 45 million Germans may be human beings who love their country. Hence, it seems to me we might well, in starting with a clean slate, be able to direct our efforts to minimize the reactions from the punitive measures which we must take in the interests of security and to maximize the economic aid which we wish to extend to a stabilized and responsible German government. In point of fact, I have great fear of German reaction in the face of occupation statute and the voting methods by which the Military Governors exercise control. The Germans know the effect of veto and would accept a severe occupation statute with majority vote with less misgivings than a better occupation statute requiring unanimous agreement or permitting lengthy appeals to governments. I am quite sure that unless there is a complete change of French administration personnel, we can expect any and every right of appeal will be taken with a deliberate purpose of delaying action and making the working of the German government difficult, if not impossible, thus proving that such a government is not desirable and that separate German states should be created. I assure you this is not fancied thinking on my part.

(End CINCEUR 1)

[From Washington]

DA 1—1. Re PRI and Reparations and to phone talk of Murphy with Douglas last week in which Douglas requested and urged that he be authorized to confer with Bevin and Schuman this week on PRI and Reparation and indicated optimism concerning possibilities of progress.⁷

2. As you know Murphy wanted to approve this and I acquiesced reluctantly only because I could not justify obstructing State in method of negotiation which a senior Ambassador recommended as probably fruitful. Accordingly, Douglas’ instructions were limited to negotiations lasting about five days, under our arrangement with Murphy that if agreement not reached then matters would be transferred back here to proposed three-power conversations at time of Atlantic pact.

3. Yesterday, Acheson apparently agreed—we believe with some hesitation—to recommendation of Murphy and others for three-power conversations here concerning German problems immediately preceding signing Atlantic pact. These recommendations were made to Acheson following very strong pressure in our Steering group from me and from Bissell of ECA. Our position was that since State was leaving Army with responsibility for Germany and since Steering group had recommended almost three weeks ago a three-power conference on these subjects which State then agreed to, and since the President and Cabinet had approved Royall’s letter of January 10⁸ for packaging negotiations, it was up to State to go ahead vigorously with such negotiations or else take over promptly entire German responsibility.

4. I have feeling that our difficulty here has been that Acheson himself has naturally given highest priority of attention to Atlantic pact and has therefore not had time for these other questions; also that since State does not have operating responsibility for Germany as we have, and for Economic recovery of Germany as ECA has, Acheson has not felt the same acute need which we and ECA feel for really satisfactory settlement of these problems on basis consistent with making Germany self-supporting. It is very different for ECA and for us, who face hostile examination of these decisions very soon when we seek our appropriations, than it is for State which seeks itself no appropriations for Germany, and is, therefore, not similarly required to justify policies which may increase load on U.S.

5. Bissell and I, supported strongly by Blum of Forrestal’s office, have insisted vigorously that Steering group of NSC committee must perform vital function and cannot be bypassed or partially ignored by State as tendency has been to do in recent weeks. Bissell, Blum and I are insisting strongly that there be a really vigorous all-out negotiation of all these questions effective [affecting] Germany at time of Atlantic pact’s signing, but we feel State very lukewarm about this method of procedure and reluctant to press anywhere near as vigorously as we consider necessary if we are to be left with tolerable position in our German responsibilities. I am also greatly influenced in taking this strong position by your reports that differences between the three powers about setting up German government and other matters that are providing effective material for Communist undermining of German will to form government, and therefore constitute seriously prejudicial psychological factors. I note with interest that Drew Middleton’s byline articles in New York Times last [week?] and again today based on conversations with the German Laender and others state position very much like yours on above question.

6. Against above background, I find today Douglas’ cables repeated to you as 154 and 155 and further learn that State made interim reply repeated to USPolAd as 321 which indicates inclination toward approval. Further I find that State desires meeting this afternoon and am told that, except for five-year duration which it wants to reduce, in fact is inclining strongly toward accepting Douglas’ proposal, and authorizing him to go to Paris to see Schuman to button it up.

[At this point in the source text Voorhees interrupted the transmission of DA 1 to transmit DA 2, reporting the receipt of another telegram from London on the PRI negotiations. Regarding this telegram see footnote 5 to telegram 994, page 569.]

7. I request full and frank expression of your views as to position I should take, remembering that my familiarity with merits of these individual questions, their effect on German economic recovery, and on psychological factors affecting formation of German government, very inadequate, and that I wish to be very largely guided by your advice. Without any modification of such statement I do feel generally that we cannot let State soften up in manner which leaves us holding responsibility in Germany, under agreements more or less forced on us by State which would make our task difficult, and would further prejudice us in obtaining appropriations.

8. Five-year duration of agreement and various other provisions look to me like such extensive surrender to French as perhaps to cause not only economic but also psychological repercussions in Germany and in our Congress.

9. Another point I do not fully understand but am concerned about is extent to which matters of substance would be left under Douglas Plan for decision to Military Security Board. An important illustration would be machine tools. My understanding is that such Board would vote by majority, which would mean that British and French could refuse licenses by Security Board and so cause damage to German recovery, the extent of which we could hardly estimate now. It would seem to me that such Security Board ought to be given more specific instructions so that its carrying them out would be largely a matter of good faith action rather than to have Board left with these very broad discretionary powers. Latter would seem to me to constitute a surrender of U.S. control over considerable areas. In this connection I note that proposed Trizonal Agreement relative to U.S. predominant voice has express exception for matters covered by other specific agreements. Accordingly, Security Board action would appear to me to override your predominant voice, and perhaps nullify it on many matters if British and French should gang up on us in use of licensing procedure under Security Board. Further in Douglas’ cable I see that ship building is likely to be hamstrung by tying down to 6000 ton ships or leaving size, etc., to “technical” experts which might be the same thing. Such size limit would obviously be so uneconomical that the ships could not be competitive. Our Navy sees no real security implication in larger freighters.

10. If an agreement like this should be explained to the Appropriations Committees, as it would probably have to be, I fear that we would have rough sailing on the appropriation sea.

11. Furthermore, to my benighted mind the business of having Douglas trot over to Paris to ask Mr. Schuman to agree to something like this, thereby indicating that we are very anxious to get such agreement makes very little appeal to me as compared with terminating the discussions in London upon basis that agreed duration of them has expired, and that we propose to take them up as previously planned in package with many other matters at time foreign ministers are here.

12. The above comments are merely to place before you for consideration such ideas as I have here for purpose of obtaining your detailed comments, as I am not certain that I am right on many of them.

13. I am not going to get pushed by State into rush action on these matters, and am glad to find that ECA is inclined to feel somewhat as we do. If you prefer to defer comment therefore, please do so and I will act accordingly.

14. Above is of course exclusively for your and Larry’s [Wilkinson] attention to formulate Army position, and not for distribution to USPolAd or Kennan.

(End DA 1)

[From Berlin]

CINCEUR 2—Reur DA 1. I am surprised at Murphy’s views which seem to have changed materially since he left here as he then favored most strongly overall one package solution. I think that placing licensing in MSB does exactly what you fear. Positive action as issuance of license would require majority report. Moreover, five year limit is much less flexible than period of occupation unless otherwise agreed.

Further my concessions here were made on unlimited ship building and on retention of synthetic rubber and oil except for final processing plants.

I think my CINCEUR 1 really answers your DA 1.

In spite of yours and Murphy’s assurance we are trading PRI against reparations. If we do give on PRI it should be for political concessions.

Kennan who sat in tripartite meeting said tripartite administration would never go and felt we should make Bizonia a government.

Crook called today and feels we are getting nowhere.

I think we should refuse to accept Douglas views, stop all negotiations now going on, and start with clean slate really on governmental level.

(End CINCEUR 2)

[From Washington]

DA 3—Can we use substance of CINCEUR 1 without verbatim quotation? It would be helpful with ECA and State. I see no reason for not stating this frankly as being substantially your present view.

However, I would in fact be hesitant to wipe slate clean and start over except as absolutely last resort.

I also do not understand reconciliation between your present view and that stated in our telecon about three weeks ago Sunday⁹ when I understood you emphasized need to go ahead. Since then we have made no important concessions on occupation statute or trizonal agreement.

I concur in your view that we could not go along on any arrangement requiring unanimous action by Military Governors but we don’t intend to. If we could get State really lay it on the line with British and French at coming meeting here and use our real negotiating power I can’t see why the most serious difficulties you mention could not be in substantial degree surmounted. Further you speak of a considered policy on Germany. We have a draft of such policy statement which we will send you soon for comment and which would be foundation for proposed negotiations with British and French here and also to explain our position to Germans.¹⁰ No delay on this account seems to me to be necessary.

I should think that question of wiping slate clean should be deferred until after meeting here shows what real French attitude will be when all these matters are put together.

[From Berlin]

CINCEUR 3—I strongly oppose Douglas’ appeal to Schuman. What are we, Tracy, men or mice? Are we financing a Germany to be the prey of Tom, Dick, and Harry or because we want our influence felt in proportion to our aid. We hold the trump cards which need to be played but are holding them to the end where their value will be just one trick in the trump suit. If that is our German policy, then frankly we should recommend to Congress as far as Army is concerned—no funds.

[From Washington]

DA 4—It seems from the Douglas cable just received (Berlin 157) considered with his two prior cables as though he had gone far beyond the terms of reference given to him when we agreed, reluctantly, to permit him to discuss PRI in connection with Humphrey Report. He was told then that he had only the negotiating position previously given to you and we did not expect any results beyond a further clarification of UK and French positions. His last cable seems to indicate that he has offered positions which we should now oppose. Do you agree?

(End DA 4)

DA 5—Re your CINCEUR 2, Bob ¹¹ is experiencing effects of change of climate and pressure from his staff below and I assume from: his chief above.

He is apparently trying to get along with them, rather than standing up strongly for his own views.

[From Berlin]

CINCEUR 4—My reasons for speed on occupation statute are no longer valid. British politicking with SPD and French with CDU have put parliamentary council in a tailspin and prompt action there is not promising now. Your one-package discussion is only hope for decent solution.

CINCEUR 5—To sum up: In my opinion in accomplishing our present objectives re Germany, re European recovery, re communism, we are heading for disaster by piecemeal solutions which compromise our objectives.

We should either change objectives or force agreements which will accomplish them.

This requires full use of all our tools to develop tripartite agreement in our objectives and accomplishment thereof to justify our expenditures. It must be done now once for all or we are throwing money away. If it cannot be done, then we should cease financing a losing venture.

(End CINCEUR 5)

[In CINCEUR 6 and 7 Clay gave his regards to Dorr and Sheets and commented on the latest proposals concerning the prohibited and restricted industries.]

CINCEUR 8—Reur DA 3. It is because of my previous recommendation that I sent CINCEUR 1 for you only. I have no objection to your use of it with your discretion. I know I have changed my view which I think is explained in CINCEUR 4. To that, I would add French obstructionist tactics and internal deals with Germans are increasing. I hoped speed in setting up German governmment would offset other concessions. Holmes’ unwillingness to read our understanding of predominant voice particularly upsetting for if it is not so read and accepted, we should not close out.

CINCEUR 9—For you only reur DA 4. Lew¹² is a grand person but he likes to be liked and is always eager beaver to reach agreement, in which everyone is happy.

(End CINCEUR 9)

CINCEUR 10—Perhaps starting with clean slate is extreme and may prove unnecessary but I think we should enter into top level conference prepared to do so unless we can get reasonable agreements which make possible accomplishment of objectives.

[From Washington]

DA 5—Your messages not coming through clearly. Since it is so late for you suggest you leave and let staff send your comments later either by telecon if this proves possible or if not by Eyes Only cable to reach us tomorrow morning.

I can make out enough of your replies to find substantial encouragement from fact that we are in general agreement on immediate course to follow.

Many thanks to you both and every good wish.

DA 7—Thanks for clear statements. Nothing further here.

1. In the source text in the Department of Defense files all the transmissions from Berlin, bearing the indicator CINCEUR, came before the transmissions from Washington, indicated by DA. This transcript has been rearranged to place the various transmissions in the order in which they most likely occurred.
2. Same as telegrams 993 and 994, March 16, p. 567 and 569.
3. Not printed.
4. For documentation relating to the drafting of the West German Constitution, see pp. 187 ff.
5. For documentation relating to the meetings of the third German People’s Congress, see telegram 858, May 30, p. 518.
6. For documentation on the changes in the western boundary of Germany, see pp. 436 ff.
7. No record of this conversation has been found in the Department of State files.
8. Not printed.
9. No record of this telecon was found in the Department of State files.
10. Presumably Voorhees was referring to a draft policy paper on Germany which was revised and considered by the Steering Group at the end of March. Regarding this draft, see footnote 1 to the paper prepared by Murphy, March 23, p. 118.
11. The reference is to Robert Murphy.
12. The reference is to Lewis Douglas.