396.1–ISG/7–1450: Telegram

The Secretary of State to the United States Delegation at the Intergovernmental Study Group on Germany, at London1


Tosig 37. We are gratified contents Sigto 38 and 402 as we were beginning to be seriously concerned by what appeared to be a fragmentized approach to work ISG under UK spurring for important conclusions earlier than we had intended. It appears to us from reports on hand that other Govts view agenda items as unrelated to each other and view many of them with very limited objectives in mind but we note with satisfaction your pressure toward inter-relation of items. For instance we have noted their insistence on treating termination of state of war as limited technical, unilateral act and apparent willingness to take this act with complete disregard for Ger attitude or commitments. We noted Fr thesis that no connection shld be made with question Fed Rep’s status as successor to Reich rights and obligations but that this question shld be sidetracked until peace settlement. We noted apparent Fr desire to considerably limit scope of inquiry into status of pre-treaty obligations. We also noted absence any discussion settlement claims problems in connection question Fed Rep status or termination state of war. Hence it appeared from this distance that in each sub-comite US Del was confronted with Br and/or Fr draft of limited outlook on subj and was being maneuvered into detailed and limited discussion of each agenda item separately.

While your Sigto 38 indicates your full appreciation inter-relation various items we are still in difficult position to proceed with full discussion, even though preliminary, of the occ stat. We are frankly ill prepared at this stage for full exploration problems arising in such a review. Inasmuch as our thinking and our various cables on this subj have been along lines reserving substantive discussions on stat until later phase, we had given priority in our preparations towards other agenda items.

Problems which concern us most re revision occ stat do not really arise in line by line review of stat to determine what powers cld be given back to Gers. This seems to be easiest part of problem and one in which we seem to be in substantial agreement. Such an approach is one of concessions entirely to Gers without counter-balance or protection on our side. It is an approach apparently desired by Br which has made us increasingly hesitant to start in this fashion.

[Page 753]

Real problem seems to be not what powers can be given away but rather method and form of accomplishing this and still retaining gains we have already made in Ger and a position in which we can obtain further success in coming period. It wld seem that US leadership is needed most in this gen area rather than in process of determining what powers will be given away. Even in areas of reserve powers which we clearly agree shld be relinquished to Gers, we are reluctant agree to a course in which Gers will be free to backslide from various reforms that have already been made. We also have a very great interest in maintaining a position of influence in some of fields in which we have perhaps already technically given up our power. This applies particularly to gen field of democratization. We have been trying to devise a formula for revision Statute which wld take care these various concerns and are thinking more in terms an expanded appendix to present Statute rather than a mere revision Statute itself. It wld seem time has arrived to state in more specific terms responsibilities of Gers and ourselves in various fields. An over-simplified example will be given in case of decartelization. Cld we not define for instance in an appendix to Statute time and condition under which we wld relinquish this power and include as well a statement of principles under which we wld henceforth allow Gers full authority and responsibility to carry on program. Hence Gers wld clearly understand extent their authority and occupying powers wld only intervene in case agreed principles were being violated. If such a method were followed it wld be most important that tone and content of such principles wld be generally accepted in Ger as being in their own interests and protection and we wld wish to obtain another gen packaged agreement along lines Petersberg which wld produce rational programs with which both sides cld feel a measure of satisfaction.

A more difficult example wld be in field of gen democratization. We can clearly not reimpose as a reserve power that which we have already given away, yet as time proceeds we find ourselves really more interested in this field than in certain of reserved fields which now exist. Can we in effect agree on and define “basic purposes of the occupation?” As one element in this field, for instance, can we find some method in which we can dispose of present heavy burden of prior review of all Ger legis and yet allow McCloy or High Comm. authority to take action on specific exaggerated cases of importance in development of Ger such as recent Civil Service or trade practices matters.3 [Page 754] Here again we wld hope (and this will be difficult) to find a formula in which we cld hold Gers to an agreed set of principles in their future operations.

Such an approach to Occ Stat wld involve a great deal work and without doubt great deal disagreement among Allies. In preparation of such principles for future action we wld expect agreement with Brit wld be most difficult. Certainly if we had already arrived at gen agreement with them, even though labelled tentative, of the various powers; that wld be given up and particularly that of fonaffs we wld be left in a poor bargaining position to obtain a more extensive type of revision. We had frankly rather relished idea of keeping Brit in doubt on our position on fonaffs until we clarified our thinking with McCloy as to best means of procedure.

In an even broader field we regard control of fonaffs as being of critical importance. There can be no doubt that present Occ Stat in addition to our position through ECA gives us a position of great influence not only in Ger but in Eur. With Gers in conduct of their own fon relations position of Allied HICOM, and particularly our own position, will be radically altered. There seems by now to be every evidence that Brit wld be delighted to reach stage where they can unilaterally work with Gers by end runs around HICOM. With estab of dipl representation this process will undoubtedly quickly diminish authority HICOM and our own position. We wish to retain even under these conditions greatest possible influence in internal development Ger in coming period. In this connection you will recall position stressed by Secy at last For Min mtg. Here again formulas which we have been able devise to date do not leave us satisfied.

We realize difficult position you are in at present stage of discussions and will of course, with above expression of our thinking, leave tactics of discussions entirely in your hands. We wld hope, however, that first round of discussions cld end without going much farther in vital parts of Occ Stat.

We are most eager to have personal comments from McCloy on matters raised in this msg.

  1. Repeated to Frankfort as 324 and to Paris as 246.
  2. Not printed; in it the U.S. delegation reported on the July 11 meeting of the deputies at which work on the Occupation Statute had begun. It was agreed that the deputies would examine the statute and submit a report to the heads of the delegations, and the work began with a line-by-line reading for the purpose of exploratory discussion. (396.1–ISG/7–1350)
  3. Under reference here are the Federal Civil Service Law and the Baden Handicraft Law. The United States opposed the former because it contained sections that seemed to repeat the provisions of similar Third Reich legislation and the latter because it seemed to be a restraint on domestic trade and economic activity. Documentation on these two laws is in files 762A.14 and 862A.33.