Foreign Relations of the United States, 1951, European Security and the German Question, Volume III, Part 2

The United States High Commissioner for Germany (McCloy) to the Secretary of State and the Administrator for Economic Cooperation (Foster)¹

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I have the honor of submitting my Eighth Quarterly Report covering the period from July 1 to September 30, 1951.

The high point of the period in the political sphere was the announcement by the Foreign Ministers of the U.S., U.K. and France, at the conclusion of their meetings held in Washington in September, of the intention of their Governments to transform their relationship in so far as the German Federal Republic is concerned from one of occupation to one of defense and of free association in a Western community of nations.² With this step they envisaged the further strengthening and integration of free Europe by the inclusion of Germany in the Western community. The Soviet masters of East Germany, and their agents in the government of the “German Democratic Republic” promptly countered with a new proposal for German unification attended with much publicity and elaborate propaganda effects. On the economic side the quarter was marked by continued increase in German exports, a slight decrease in industrial activity reflecting in part a decline in consumer demand, and in part the general European-wide coal shortage. Unemployment continued to show some decrease. Meantime, increasing political awareness among the Western Germans was manifest in the restiveness with which they responded to these and other less significant political and economic developments.

Almost two years to the day after the creation of the Federal Republic the Foreign Ministers of the U.S., U.K. and France reached agreement in Washington on the scope of the new relationship between the Allies and the Federal Republic. Except for a few fields where the present international situation requires the Allies to retain certain prerogatives, the Federal Republic would, if it sees fit to adopt the proposals made by the Ministers, upon the substitution of contractual agreements for the Occupation Statute, emerge as a full and equal partner in the European community. Germany is already a member of the Council of Europe, the OEEC and the EPU; by joining the European defense arrangements it would help to close the ranks of the free European nations. It would share fully not only in the benefits but also in the obligations which such membership implies.

Preliminary negotiations between the Allies and German authorities both with regard to the contractual arrangements³ and to German participation in the common defense of the West⁴ had been conducted prior to the Washington meeting. The task now at hand was to proceed from the preliminary to the final stage of negotiation. The four governments sought to find solutions to many problems acceptable to them and to the other members of the European community. The objective was not just another revision of the Occupation Statute, nor an exchange of additional concessions to Germany for German military contributions. The crucial purpose was to lay the foundations of a peaceful and defensible commonwealth of Europe.

The significance of this new phase in Allied-West German relations was emphasized by the demand for German unification voiced by the Communist and Soviet authorities of the Russian-occupied area. Similar appeals have been launched behind the Iron Curtain whenever new progress in the integration of Western Germany with the free world was in sight; the greater the progress toward integration, the more conciliatory the Communist terms for the unification have been made to appear. Judging by the latest appeal, issued on September 15 by the Soviet Zone “People’s Chamber,” which soft-pedaled a great number of hitherto typically Communist demands in connection with general elections, Eastern authorities appeared seriously concerned by the prospect of the Federal Republic’s integration with the West.⁵

The East Zone proposals called for immediate East-West German talks leading to the election of a national assembly clothed with wide powers which would negotiate a peace treaty for the united territory, to be followed by the withdrawal of all foreign troops. The East German appeal was strengthened by a statement of General Chuikov, Chairman of the Soviet Control Commission for Germany, supporting this proposal.⁶ In reply to these overtures the Federal Government on September 27 proposed and all West German parties in the Federal Lower House, except the Communist, adopted a declaration which accepted the principle of unification and called for internationally-supervised free elections throughout the whole of Germany. The declaration further requested the High Commissioners to negotiate the necessary conditions for such elections with their Soviet counterpart; asked the United Nations to arrange for international supervision to ascertain whether conditions for holding free elections existed; and demanded immediate free elections throughout the four sectors of Berlin as a test of Communist intentions. At the end of this period, there had still been no official acceptance or rejection of these proposals by authorities in the Eastern Zone.

Growing German national consciousness found its expression in government and press statements criticizing various Allied actions. These expressions were critical of the coal export allocations made for the third and fourth quarters of 1951 by the International Authority for the Ruhr. With the ever-increasing defense effort of the West, coal is again in short supply throughout Europe. The coal-importing nations depend to a greater degree than ever on the coal and coke of the Ruhr for the production of defense material. The action of the IAR in allocating for export the same quantity of German coal and coke as in the preceding quarter, notwithstanding increased European demand and defense needs, met with strong objections from the Germans who requested a smaller export allocation in view of their own expanding industry.

During this period, U.S. authorities were also attacked for removing from German jurisdiction the case of Dr. Kemritz, accused by the Germans of luring certain German nationals into Soviet hands at the beginning of the Occupation.⁷ The German nationals involved were subject to mandatory arrest under Control Council regulations then in force. Kemritz at the time was acting as an agent of the U.S.S.R. and, at the same time, was most effective in protecting from Soviet arrest many other Germans whom the Soviet authorities were seeking. The German accusations charged U.S. authorities with protecting a “kidnapper” and with bad faith. As the case, a heritage of the war and immediate postwar period, involved many considerations which made a full public discussion of all its aspects impractical, the American High Commissioner agreed with the Federal authorities to conduct a joint inquiry into the entire affair and this inquiry is now proceeding.

German criticism was also directed at the High Commission for promulgating a law exempting from the application of a hastily-conceived German “treason” law those Germans who cooperate with the Allies by supplying information. While the “treason” law did not specifically apply to such Germans, it could be construed so as to prevent the Allies from receiving any information from German sources. This criticism was in part related to that arising from the Kemritz case. Another Allied law which drew fire was the High Commission Law “Clarifying the Status of German External Assets and of Other Property Taken by Way of Reparation or Restitution,” (incorrectly called the “Divesting Law”). Under international agreements, since 1945 German assets in a number of countries have been taken for reparations or external restitution. The new law served to clarify title to these assets, but was quite unjustly attacked as imposing an added burden on the German economy. In fact, it was a definite step toward clarifying the situation in respect to foreign assets not heretofore liquidated.

German exports continued to show a favorable trend during the period under review, reaching an all-time record of $321,000,000 in July. Expenditures of U.S. troops showed large increases thus adding to Germany’s dollar reserves. Excellent harvest prospects contributed to a brightening of the overall economic picture. Employment remained favorable with a record of almost 15,000,000 wage and salary earners employed as of mid-September. Notwithstanding the steady influx of Germans from the East, unemployment figures edged downward, but more slowly than they had in the same period last year.

There were, however, signs of declining economic activity in various fields caused by a decrease in consumer demand, and, to some extent, by the tightening of coal supplies. In general it seems clear that the period of rapid expansion of the German economy has come to an end, being replaced by a stage of relative stability. In spite of this, Germany appears to be at least as able as other European nations to withstand temporary economic disturbances.

The leaders of the German Trade Union Federation announced on July 24 that they were considering withdrawal from active participation in the economic bodies of the Republic in protest against the Government’s economic policy. They wished stronger controls to be imposed in order to prevent a further diminution of real wages caused by a general rise in prices. They also demanded the establishment of a Federal Economic Council with wide prerogatives and a greater voice in management beyond the coal and steel industries where they had already achieved codetermination. The trade unions, which have a favorable record as a positive democratic force, agreed to negotiate their grievances. At this writing, it could be expected that a solution acceptable to all parties would be found and a crisis averted.

During the period, a number of new organizations of war veterans appeared in West Germany. Although in most cases these groups professed themselves to be non-political, their appearance gave rise to anxiety among many responsible elements of German society. Although certain of these organizations have certainly gotten off to a rather bad start, it is to be hoped that they will not be influenced by nationalist forces but will contribute constructively to the democratic development of the nation.

The neo-Nazi Socialist Reich Party (SRP) has endeavored with only moderate success during the past quarter to expand its organization now centered in Lower Saxony. Several state and local governments forbade the appearance of SRP leaders or prohibited public SRP meetings.

The economic recovery of Berlin was threatened during the quarter by the intensification of the Soviet imposed obstructions to Berlin’s trade, including the imposition of an exorbitant tax on West German and West Berlin vehicles traveling the Soviet Zone highways linking the four-power city with Western Germany. The various interferences with the freedom of access to Berlin caused the West German authorities to delay the signing of the new trade agreement which was to provide for important exchanges of goods between East and West Germany. Although the agreement was finally signed on September 20, after the East German authorities had given assurances that restrictions would be lifted, it was too early, at the end of September, to judge Eastern performance in this regard.⁸

In September, Berlin was the site of a gigantic Communist youth rally. The one and a half million blue-shirted youth, marshaled in three waves from East Germany, was increased by small delegations from many countries and several thousand West German youth who crossed the border between the Zones in one fashion or another. Although the value to the Communists of the somber spectacle of uniformed youth endlessly marching in procession and carrying anti-Western slogans should not be underestimated, the West succeeded in capturing the attention of at least half a million East Zone youngsters. Defying cordons thrown up along the boundaries of the Soviet Sector by the so-called People’s Police, they ventured into West Berlin, the small oasis of liberty and comparative plenty behind the Iron Curtain.⁹

The American operated German language radio station in the U.S. Sector (RIAS) proved a strong rallying point for countless youngsters. The many thousands who stopped at RIAS were not only shown through the studios where originate the broadcasts which form the only bridge between millions of East Germans and the free world, but they were also afforded participation in open discussions with prominent West German political leaders and high Allied officials, including the U.S. High Commissioner.¹⁰

The one and a half million free meals dispensed to these youngsters; the more than a million pamphlets carried away by them; the warm hospitality extended by the West Berliners and the Allied authorities; the display of wares in the shops of the city; and the feeling of freedom unknown in Eastern Germany, must have created at least a doubt in the minds of these young people concerning the blessings of the Communist system.

One is bound to pall a bit at the thought that so many youths can be transported to Berlin and paraded in this fashion as adherents of communism and Stalinist doctrine. Though it was quite clear that these young people came mainly because of the pressures which were exerted upon them to come, yet it was equally clear that many were faithful adherents of the party, if not fanatics. It was a mammoth effort and it repeated without any opportunity to counter it, the likelihood that a strong core of youthful adherents will be established by such methods is just as certain as the fact that the Nazis were able to do as much.

The full effect of the demonstration was clearly blunted by the contact with the Western Sectors of so many of the Eastern youth, but one could be misled if it were not realized that the weapon was in fact only somewhat dulled rather than destroyed by the countermeasures the West was able to bring to bear. It is nonetheless interesting that the announcement has been made that next year the Festival will not be held in Berlin.

The Cultural Festival held in Berlin during September was a bright spot in the life of that city. Most of the American contributions to the Festival were warmly received by both the highly-discerning Festival public and press critics. Chosen—in so far as possible—to give a wide representation of American cultural activities and interests, they included the Broadway musical, “Oklahoma;” Astrid Varnay’s performances with the Berlin City Opera; the Hall-Johnson Choir; the Juillard Quartet; the pantomimist, Angna Enters, and five performances of “Medea” by an American cast led by Judith Anderson; performances of American opera and music by German groups; a recital by Maurice Wilk, young American violinist; and the ECA-sponsored “Design for Living,” showing American standards and achievements in household design.

The quality of French and British productions was of the highest. The officially-sponsored attractions included the Comédie Franchise; the Orchestre National, of Paris; an exhibition of Bourdello’s sculpture; the Old Vic Theater Company, of London; and an exhibition of drawings by English artist Henry Moore. Unofficial representation arranged by German authorities included performances by soprano Suzanne Juyol and pantomimist Marcel Marceau, of France: and, from London, the Amadeus String Quartet and the Dennis Wood Wind Ensemble. The Festival was of large and significant proportions. Although handicapped to some extent by budgetary limitations which were reflected in limited advertising and insufficient transportation facilities from Western Germany, the Festival was nevertheless a success and an impressive demonstration of the cultural strength of the West.

The Washington Conference of the Western Foreign Ministers overshadowed the fact that during the past quarter domestic action was taken by the major Western Powers and other members of the United Nations to terminate the technical state of war which still existed between themselves and Germany.¹¹ This action removed certain disabilities from which German nationals abroad still suffered and opened the way to reinstatement or re-negotiation of many treaties between the Federal Republic and foreign countries.

Progress has also been made by the Federal Parliament in completing important legislation. The Federal Constitutional Court finally came into being and will be called upon immediately to decide a number of important constitutional issues, among them the constitutionality of the Socialist Reich Party. In an impressive statement the Federal Government announced its earnest desire to make amends for the horrible fate suffered by the Jews at the hands of the National Socialists and to make the principle of equal rights, as embodied in the Basic Law, an axiom of future German policy.

The quarter saw Western Germany further removed from fear and want, full of a new consciousness of its importance in the world, more apt to react sharply to the very limited Allied controls which remain, anxious to become full master in its own house, yet quite as anxious for continued Allied aid and protection. The Federal Lower House gave continued evidence of dealing seriously with serious problems even though there were mountainous piles of legislative work still to be tackled. Striving in common with other Western nations to find the solution for grave problems imposed by the East-West tension, the Federal Republic appeared to be emerging from the growing pains of a transitional period and to face the serious responsibilities which freedom imposes.

John J. McCloy

Frankfurt/Main, September 30, 1951.

1. This letter of transmittal is reprinted from HICOG’s Eighth Quarterly Report on Germany, July 1–September 30, 1951, pp. iii–ix. The accompanying Report is not reprinted here.
2. For documentation on the Foreign Ministers meetings at Washington, September 10–14, see pp. 1163 ff., and for the text of their instructions to the Allied High Commissioners for Germany regarding the new relationship with the Federal Republic, see WFM T–5a, p. 1197, and footnotes thereto.
3. For documentation on the negotiations with the Federal Republic concerning contractual relations, see pp. 1446 ff.
4. For documentation regarding German participation in the common defense of the West, see pp. 755 ff. and pp. 990 ff.
5. For documentation on the September 15 appeal by the People’s Chamber (Volkskammer), see pp. 1747 ff.
6. For the text of Chuikov’s statement, September 20, see Documents on German Unity, vol. i, p. 208.
7. For further documentation on the reaction to the decision on the Kemritz case, see telegram 1241, June 21, p. 1916.
8. For further documentation on Soviet harassment of trade and communications with Berlin, see pp. 1828 ff.
9. For documentation on the World Youth Festival at Berlin. August 5–19, see pp. 1987 ff.
10. A copy of McCloy’s interview with participants in the youth rally on August 17 is in the Bonn Embassy files, lot 311, D (51) 1203.
11. Regarding the termination of the state of war with Germany, see American Foreign Policy, 1950–1955: Basic Documents, vol. ii, pp. 1723–1724.