740.00119 Control (Germany)/7–1847: Telegram
The Ambassador in France (Caffery) to the Secretary of State
urgent
niact
2863. The pertinent parts (dealing with the level of industry question) of minutes of conversation with French (Deptel 2635, July 1721) [Page 994] follow: Resumé of technical meeting the following morning (referred to in minutes and in mytel 284322) being transmitted in separate telegram.
We interpreted Deptel 2605, July 1523 to mean that talks were designed primarily to be informative rather than consultative, particularly since a number of firm decisions appeared to have been taken by ourselves and the British. It will be seen from the minutes that this was the line taken by Hall-Patch.
“The French wished for an account of the UK–US discussions on the level of German industry.
Sir Edmund Hall-Patch said that our communication should be treated as confidential. He reserved the US position since the US representative had not been fully briefed. He said that we had reached with the US authorities what must be regarded as a firm agreement subject only to minor amendment. The plan applied to the bizonal area, not to Germany as a whole, though it was compatible with a plan for the whole of German industry. It would be for the CFM to decide this latter issue in November. It was recognized by all the delegations at Moscow that the level of German industry laid down in the March 1946 plan must be raised. Our present plan was based on the attainment of a level lower than that supported by the Russians but higher than we ourselves put forward at Moscow. He reiterated that the policy of HMG was based on the attainment of the economic unity of Germany. Having failed in Paris last year to secure agreement, we had entered into the fusion agreement and had announced that this agreement was open to other powers to join. Until a greater measure of economic unity was attained it was the duty of the powers concerned to make the best arrangements they could to make their zones work. We were compelled to take our own decisions and to operate our zones in a manner which would prevent the continuation of the present intolerable drain on the US and UK taxpayers.
The impracticability of the March 1946 plan was as clear to the Germans as to ourselves. The uncertainty of having no known level against which to measure their plans or on which to base their hopes was seriously retarding the economic recovery of our zones. It was also delaying the execution of a reparations program to which we, as well as the French, attached importance. The delay in fixing a level had led to the unfounded German view that we would not carry through a reparations program and that the industries at present at a standstill would later be brought into German use. It was important to stop this development. We must therefore establish a firm level and therefore the maximum German reparations commitment, and then remove all surplus plants speedily. The longer we delayed the more difficult it would be for us to obtain any reparations.
M. Chauvel queried the finality of the plan and emphasized its effect on other nations.
Sir Edmund Hall-Patch said that in our view the lower limit should be treated as final. He said that the policy of HMG was based on the [Page 995] limitation of German war potential to the maximum practical extent. This policy was in our direct interest since we required the reparations it would make available to reduce the drain on our dollar expenditure. Our passionate desire in the interest of world peace was to see the removal of any possibility of a fresh German aggression. But he pointed out that security had to be qualified by the need for a viable Germany. To set Germany an impossible economic task would not be in the interests of Europe; nor could we and the Americans accept indefinite responsibility for meeting a German deficit. After a detailed re-examination of the issue we had come to the conclusion that some of our security restrictions must be loosened in the hope of attaining a balance of payments. Our new level of industry plan was higher than that put forward by US at Moscow because we had been reluctantly convinced that the latter was economically impracticable.
He gave it as his view that in the face of the new proposals by Mr. Marshall it might be necessary, always subject to security considerations, to consider raising German production insofar as this was found indispensable to the recovery of Europe.
Details were given of the level proposed for the main industries together with the reasons which had forced us to these decisions. It was agreed to hold another meeting the following morning at 10:30 to go in greater detail into the levels proposed. In answer to M. Chauvel it was made clear that we did not aim at the reestablishment of a particular prewar level of production but that a year had been chosen as a measuring stick. The year 1936 had been selected as being a normal year before Germany had commenced to re-arm. Allowing for the movements of population, the standard of living which production at the rate of say 1936 would permit would be considerably less than that enjoyed by the German population in that year.
M. Chauvel wished to know whether questions such as the development of industries other than those in the restricted fields or the redistribution of steel between Germany and France had been studied. Sir Cecil Weir made it clear that these questions had been studied from the point of view of what Germany must produce to buy what she needed.
In answer to M. Couve de Murville, Sir Cecil Weir stated that we intended to make every effort to deliver the reparations equipment thrown up by the UK–US plan and to simplify the procedure of valuation, allocation, etc. To his query as to whether we thought it politically practicable to do so, Sir Cecil Weir said that we hoped to carry our program through successfully, but that delay would hamper the prospects oi success.
M. Chauvel summed up French views by saying that he was struck by the effect the decisions we were taking might have on the future structure of Germany, although their decisions were being taken in the guise of administrative decisions necessary simply for bizonal purposes. France looked like being presented with a series of faits accomplis.
Sir Edmund Hall-Patch pointed out that we had not pressed on with these questions as much as self-interest would have dictated [Page 996] since we had hoped for economic unity or at least French cooperation. We were now acting out of sheer necessity.”
- Telegram 2835, July 16, from Paris, not printed, reported that a representative of the Embassy in Paris (James Bonbright, Minister Counselor) accompanied Sir Edmund Hall-Patch and other British representatives in an interview with Jean Chauvel and other French Foreign Ministry officials on the afternoon of July 16. Owing to the lack of background information, Bonbright limited himself to making it clear that the United States was in full accord with the British in informing the French fully concerning the recent American-British bizonal discussions (740.00119 Control (Germany)/7–1647). Telegram 2635, July 17, to Paris, not printed, asked for a telegraphic summary of what had been told to the French (740.00119 Control (Germany)/7–1647).↩
- Dated July 17, 1947, not printed.↩
- Ante, p. 987.↩