740.00119 Council/3–1947: Telegram
The Secretary of State to the President and the Acting Secretary of State
urgent
892. Delsec 1318. For the President and Acheson from Marshall. Ninth CFM, 19 March, Molotov presiding.
Bevin opened on economic unity and reparations, agreeing for the need of central administrative agencies, revision of level of industry plan and a sound financial plan. He supported over-all consideration of the problem as against Molotov’s piecemeal handling and reiterated [Page 264] British stand that German payments for imports must have equal priority with reparations, not out of sympathy for Germany, but in order to reduce the cost of occupation to Allies. He supported the Potsdam Agreement provided it was implemented as an entity. On the Ruhr, he opposed any quadri-partite control as a separate problem, but agreed that when four-power control of all Germany was settled, the Ruhr would naturally be included. He felt that steel production of 11 million tons per year should be left to Germany to establish an adequate level of industry. He refused to consider annulment of bi-zonal merger as demanded by Molotov, until complete economic unity was obtained. He stated categorically that a reparations plan is inseparable from a level-of-industry plan, and that in arriving at economic unity, we must have agreement to complete freedom of movement, sharing of indigenous resources, sharing of expenses both past and present, and an equitable export-import plan. Bevin called impractical and unworkable Bidault’s demand for a definite proportion of Germany’s coal production, and asked for a spirit of compromise around the CFM table. He concluded by asserting his complete objectivity in approaching the whole problem of economic unity and stated that the solution of this problem was really the key to what we all allegedly wanted in Germany.
Molotov then stated that the Soviets took the Potsdam decision as the basis for their consideration of the problem. He pointed out that there seemed already to be general agreement on most of the points discussed and saw no reason why a compromise solution could not be reached. He linked economic unity and reparations as inseparable at Potsdam and inseparable now.
On reparations, Molotov blamed the failure of western zones to pay reparations rapidly as reason for unilateral action taken by eastern zone military authorities. But stated that he was ready to account for every kopek. He maintained that Potsdam did not prohibit payment of reparations from current production and insisted that German industry must be set at a level to insure her internal needs, payment of imports, and reparations. He accepted in principle Bidault’s contention that a definite coal allocation be guaranteed France, and compared, favorably to the Soviets, the current coal production in western and eastern zones. As to the Ruhr, he said no single nation should attempt to control this area since it is the heart of German military potential, but hoped that quadri-partite control would occur through a plan for economic unity.39
I concurred in Molotov’s exposition of the possibility of general agreement on these matters, however grave the present differences appeared. [Page 265] I pointed out that the rapidly changing Soviet viewpoint on increasing German steel production highlighted clearly the danger of a program for paying reparations from current production. “We must avoid at all costs,” I stressed, “establishing conditions in Germany similar to those after the first World War, when in an incredibly short period of time, Germany, through increased production for reparations and foreign loans, was able to build up her internal economy geared for war.” “At same time”, I said, “under no conditions should we set her economy so low that a democratic way of life could not hope to survive in Germany.”
The Ministers adjourned with the promise to hear Bidault on this subject tomorrow.
- For the text of the statement made by Molotov at this time, see Molotov, Problems of Foreign Policy, pp. 379–390.↩