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 Director for Mutual Security (Harriman)¹

undated

I have the honor of submitting my Ninth Quarterly Report covering the period from October 1 to December 31, 1951.

The period was characterized by the rapid growth of the Federal Republic’s stature in European affairs. It was marked by the November conference of the Western Foreign Ministers with the Federal Chancellor in Paris;² by a heightening of the prospects for ratification of the Schuman Plan;³ by West Germany’s determined stand for European integration in the Council of Europe at Strasbourg,⁴ and for a truly integrated European defense in the Paris discussions;⁵ and by the United Nations’ adoption of a West German proposal for an impartial UN investigation to determine whether the conditions for holding free and secret all-German elections exist in the four zones and in Berlin.⁶ The Federal Republic’s exports continued to rise, the production index resumed its upward movement and coal output showed a promising increase. Mounting unemployment was attributed to seasonal factors. Thus, on the verge of the New Year the Federal Republic presented a generally encouraging picture.

A milestone in the progress of the Federal Republic was reached when on November 22 Federal Chancellor Adenauer joined the Foreign Ministers of the U.S., U.K. and France in Paris to put the finishing touches on the draft of the “General Agreement” on contractual arrangements designed to replace the Occupation Statute.⁷ The understanding reached by the four Ministers paved the way for the conclusion of five conventions embodying in detail the terms of the new relationship. These were in various stages of negotiation at the close of the period under review. They embody arrangements and principles affecting the changeover to the new relationship and, if somewhat complex and difficult of negotiation, it must be recalled that unlike a general treaty they cover the manifold details involved in the final liquidation of a complete governmental system as well as the arrangements relating to the continued presence in Germany of large bodies of Allied troops and their dependents. In spite of the problems presented it appeared that the conventions would be concluded in the near future. Upon ratification of the whole treaty structure by the Parliament, the Federal Republic will attain virtual sovereignty, except in the few fields where the present international situation necessitates the retention of certain specified but limited powers by the Western Allies.

When the French National Assembly ratified the Schuman Plan Treaty on Dec. 13, 1951, Europe moved significantly closer to integration. The Foreign Affairs and Economic Policy committees of the German Federal Lower House subsequently recommended approval of the Plan, thus virtually ensuring the realization of this epochal venture. Final debate on the Plan was scheduled for Jan. 9, 1952, when the government bill was to have its third reading in the Federal Lower House. After the establishment of the Schuman Plan High Authority, the functions of the International Authority for the Ruhr (IAR) and of the agencies of the Allied High Commission deriving from the Ruhr Agreement will be progressively eliminated as the High Authority assumes corresponding or related functions under the Schuman Plan Treaty. Thereafter, apart from the completion of the de-concentration programs in Germany (which is a basic prerequisite to the creation of a single market for the European coal and steel community), the German coal and steel industries, together with those of the partner nations, will be subject only to the directions of the Schuman Plan High Authority.

During the closing session of the Council of Europe’s Committee of Ministers the voice of the Federal Republic was raised strongly in support of genuine European integration. The Federal Chancellor, in his dual capacity as Foreign Minister, addressed the Consultative Assembly on December 10. He stressed not only the necessity for decisive action to lay the foundation for a unified Europe, but also the need for speed in building a strong military and economic community capable of resisting successfully the menace of communism. When the Foreign Ministers of the six nations participating in the negotiations on the European Defense Force (EDF) subsequently met in Paris, Germany again took a positive stand in favor of a unified budget as well as other measures which would signify the creation of a true European force. How the budget of the EDF was to be managed was not resolved during December 1951. Nor was the problem of the supervisory organization fully solved. While France, Italy and Western Germany advocated a common defense budget and a federal organization, the Benelux Countries, motivated largely by constitutional difficulties, favored national budgets and a less centralized arrangement. It was hoped, however, that satisfactory solutions would be found early in 1952.

In the United Nations, West German representatives were heard for the first time when a delegation from the Federal Republic and West Berlin pleaded for the necessity of investigating conditions for all-German elections in the four zones and Berlin. This demand had been formulated in September by the Federal Government as one of the prerequisites to free and secret elections which were themselves prerequisites to Germany’s reunification. After first declining to appear before the United Nations, the German Communist rulers of the Soviet Zone acting apparently under the pressure of world opinion reversed their position and sent a delegation to the General Assembly. Their refusal to acquiesce in such an impartial investigation by the UN was not unexpected. The impressive UN vote approving the Western proposal to establish an impartial investigating commission demonstrated the moral support which the world gives to the principle of German unity based on elections which are truly free.

That the German Soviet Zone rulers were more than reluctant to bare the political conditions of their police state to the inquisitive eye of an impartial observer was understandable; less so were the “reasons” advanced for the rejection of the proposed commission. The East Germans claimed that they, together with the West Germans, were quite able to reach an understanding under quadripartite supervision by the U.S., U.K., France and U.S.S.R., apparently within the framework of the Allied Control Authority. This position ignored the fact that the four powers have for six years unsuccessfully tried to adjust their views with regard to German unification. Moreover, the Communist proposal would mean the reintroduction of the Soviet veto.

An investigation under the auspices of an international body of which all four powers were charter members and which had proved its effectiveness in dealing with difficult situations in the past would give the Communists, if sincere, an opportunity to participate in a positive step toward unification based upon world support.

Communist attempts to use the unity question as a device, if not to prevent, then at least to retard the Federal Republic’s integration with the West, have not succeeded. But the last attempt in this regard has probably not even yet been made. The issue of unification is one which troubles large numbers of Germans who have not the slightest attraction to totalitarian concepts. There are few if any independent Germans who would accept unification at any price. There are many who earnestly seek it if freedom can likewise be secured and they would not consciously take any steps which precluded a unified Germany. But increasing numbers of thinking Germans on both sides of the Iron Curtain have begun to realize that, far from obstructing unity, full West German partnership in the free European community will prove to be the most effective way to achieve peaceful unification on democratic terms. Indeed, it is significant that the Soviet appeals for unity have increased in quantity and character as the prospects of European integration unproved. The daily growing moral, economic and military strength of this community cannot fail to continue to exert an irresistible force toward such a unification.

There was a continued rise in the volume of the Federal Republic’s exports throughout the last quarter. The balance of payments with other OEEC countries took a favorable turn, thus once again permitting in early 1952 a partial liberalization of foreign trade, which had been bridled somewhat six months ago. At the same time, the German industrial production index reached the unprecedented mark of 148 percent of the 1936 figure. Since Germany’s industrial potential and manpower reserves are still not fully used, it appears probable that the utilization of these facilities for the benefit of Western European defense would lead to a further economic expansion.

An especially welcome development was the increase in coal production recorded during the past three months. Efforts of a German Coal Production Committee consisting of government, management and trade union representatives constituted in early October to further coal production had already resulted in an increase of the daily coal output. When its plans are fully carried out, it may be expected that one of the most serious bottlenecks in European production will be eased, and the working and living conditions of the miners improved at the same time. This increase, together with the lateness of winter weather, confounded the predictions of a disastrous coal shortage made by those who had been attacking the German coal export quotas with such vehemence a few months ago.

Moreover, the significance of coal as an irritant in Allied-German relations was likewise diminished when agreement was reached on November 22 within the International Authority for the Ruhr (IAR) on a reduction of the German coal export quota, and on a retroactive price increase for Ruhr coal. Simultaneously, a formula was agreed under which other IAR countries could draw from increased German coal production on a sliding scale.

A major step in the regulation of the German debt question was taken on December 11. The Tripartite Commission on German Debts, during the course of negotiations with the German delegation, announced in London its terms for the settlement of the claims arising from the postwar economic assistance given to Germany by the Governments of the U.S., U.K. and France. The Allies stated that they had agreed to a scaling down of their claims which reduced German indebtedness to the U.S. from $3.2 billion to $1.2 billion; to the U.K. from £201 million to £150 million; and to France from $15.7 million to $11.8 million. The German delegation was informed that the Allied governments are prepared to make important concessions, both with respect to priority and to the total amounts of their claims concerning postwar assistance, on the clear understanding that these concessions are conditional upon the achievement of a satisfactory and equitable settlement of Germany’s prewar debts. Fair arrangements were made regarding terms of repayment, while it was also understood that neither the Federal Government nor its nationals would present any counter claims against the three powers in connection with or incidental to their activities in Germany since the end of hostilities.

The economic situation in the Soviet Zone revealed continuing and drastic efforts to make it an integral part of the Soviet orbit economy, A “Five Year” Plan regulating all economic activity was designed to achieve this purpose. Piece work, overtime work without overtime pay, “competitions” between factories for an increase in production, and a complete subordination of Communist-led trade unions to the almighty state were the outward signs of the “progress” made in the Soviet Zone in introducing Communist labor conditions.

Notwithstanding price reductions in the state-run “HO” stores selling rationed goods at black market prices, the standard of living of the population was still low. The export to Russia of vast quantities of goods from current East German production continued. Despite the hardships of the population, determined efforts were made, and with some success, to refurbish the outward appearance of the Soviet Zone and to make it to an increased measure independent of Western Germany. Public building in East Berlin increased to the accompaniment of much propagandistic fanfare and extensive rubble clearance appeared to be going on in the more conspicuous sectors of the city. Undoubtedly the striking contrast between the Allied and Soviet Sectors of the city was becoming hard to bear, for after a long period of dismal inactivity, a determined effort appears now under way to propagandize the East Sector by erecting a number of undistinguished monolithic public buildings, tribunes, parade areas and similar adornments to counter the more natural and active development of life in the West Sectors of the city. Certain housing projects are also planned. The attraction of Western Germany and of the Western Sectors of Berlin manifests itself in the uninterrupted flow of East Germans to the West, but all this stresses the need for housing in the West.

While gains could be recorded during the past three months in the economic rehabilitation of Berlin, Soviet harassment of outgoing trade from the three Western Sectors of that city continued.⁸ Ignoring the understandings laid down by the West German representatives at the time of the signing of the Interzonal Trade Agreement on September 20, the Communists continued to interfere with the free movement of goods in certain important categories. In consequence, the Federal Republic had virtually stopped trade with the East Zone. The Soviet Zone authorities could readily create conditions which would permit the resumption of interzonal trade on a normal scale, but they have been slow to do so.

On the surface, there was a decrease in the somewhat noisy activities heretofore characteristic of the neo-Nazi Socialist Reich Party. Perhaps this could be attributed in part to the Federal Government’s move to have that party declared unconstitutional by the newly established Constitutional Court. It appeared that the leaders were concentrating their efforts on internal and covert activties, at least pending the outcome of the Federal Government’s action before the Court to have the party outlawed. At the Government’s request the Court will also test the constitutionality of the Communist Party.

Political statements of certain former generals at the head of the veterans’ associations gave rise to considerable excitement. But with the resignation of the provisional head of the top veterans’ organization, brought about by public pressure because of his derogatory remarks regarding the participants in the July 20, 1944 plot against Hitler, the way seemed clear for the election of officers who would better represent the rank and file of former German soldiers. It is to be hoped that such leaders will limit their activities to the legitmate business of looking after the welfare of their members.

In its first decision, the Federal Constitutional Court on October 23 upheld the Federal Law on the political reorganization of Southwest Germany, and ordered a plebiscite to be held in the states of Wuerttemberg–Baden (U.S. Zone), Wuerttemberg–Hohenzollern and Baden (both in the French Zone). When held on December 9, the plebiscite resulted in a 70 percent majority in favor of combining the three areas into one southwest state, thus creating the third largest state in Western Germany. Although some resistance to the merger was still alive in Baden, it was expected that by the spring of 1952 this new and strong state would be a reality.

On Jan. 31, 1952, the International Refugee Organization (IRO) will have terminated its program in Germany. It could look with pride on its successful activities involving the migration of several hundred thousand displaced persons to other countries where they found permanent new homes. Organized as a successor to UNRFA, the IRO has played an important role in alleviating the plight of millions of DPs brought to Germany as slave labor during the war. There still remained a “hard core” of several tens of thousands of DPs who, for various reasons, could not be resettled outside Germany. A tolerable existence for the displaced persons who will continue to be supported by the German economy will be guaranteed by the continued efforts of welfare organizations and by humane West German legislation.

The Office of the U.S. High Commissioner in Germany moved in November to a new location in the immediate vicinity of Bonn, the seat of the Federal Government. This move, involving great administrative effort and extensive building, was successfully completed without undue interruption in the functioning of the individual offices. This move was symbolic of the growing importance of Bonn as a capital and of the approaching change in status of the U.S. representation in Germany from that of the Office of the U.S. High Commissioner for Germany to a regular Embassy. The offices and apartments relinquished in the Frankfurt area are being utilized to meet the requirements of the Armed Forces and their dependents.

Notwithstanding inevitable setbacks and irritations, the progress of the Federal Republic in 1951 was impressive. West Germany had not yet taken the final step which would remove the last vestiges of the Occupation regime. But its industrious people under a democratic government seemed about to eliminate the last political and economic barriers and to attain again an honorable position of economic independence and political importance alongside the other nations of the free world. The year 1952 would very likely see the emergence of a new Europe where, instead of a multitude of competing nations, a strongly-knit community would be formed, and where the people could raise their eyes to higher horizons of freedom and well being.

John J. McCloy

Bonn/Mehlem, December 31, 1951.

1. This letter of transmittal is reprinted from HICOG’s Ninth Quarterly Report on Germany, October 1–December 31, 1951. The accompanying Report is not reprinted here.
2. Regarding Adenauer’s meeting with the three Western Foreign Ministers at Paris on November 22, see telegram 3086 November 22, p. 1605.
3. For documentation on the ratification of the Schuman Plan, see volume iv .
4. For documentation on the meetings of the Council of Europe at Strasbourg, November 26–December 10, see ibid.
5. For documentation on the deliberations of the European Defense Conference at Paris, see pp. 755 ff.
6. For documentation on the question of holding all-German elections, see pp. 1747 ff.
7. For the text of the “General Agreement on Contractual Relations,” see p. 1592.
8. For documentation on the Soviet harassment of Berlin trade and communications, see pp. 1828 ff.