Foreign Relations of the United States, 1948, Germany and Austria, Volume II

740.00119 Control (Germany)/10–248

Memorandum by the Assistant Secretary of State for Occupied Areas (Saltzman)

top secret

[Washington,] October 2, 1948.

This morning Mr. West, Mr. Tracy Voorhees’ deputy, called me and asked whether it was the view of the State Department and the intention of my letter to Mr. Draper dated September 30,¹ that General Clay should not enter into the JEIA Agreement with the French presently being negotiated until he has obtained from the French a commitment to work out a satisfactory formula for computing occupation costs which would result in charges which will not strain unduly the German budget and which will provide equitably for the three Western occupying forces. He said that Mr. Draper was proposing, subject to our concurrence, to send General Clay an instruction as follows:

“You should complete the JEIA Agreement as soon as French have taken a commitment to work out a formula for computing occupation costs which would result in charges which will not strain unduly the German budget and which will provide equitably for the three Western occupying powers.”

I informed Mr. West that the State Department did not believe that the conclusion of the JEIA Agreement with the French should be made contingent upon obtaining such a commitment from the French. I told him that although we were in agreement that such a commitment was important, we did not think there was a suitable basis for making it a prerequisite for the JEIA Agreement which under the London Agreements was to be entered into provided it did not involve additional expense to the U.S. I pointed out that it was desirable for us to conclude the JEIA Agreement promptly in view of the importance of progressing with existing plans for Western Germany and in view of the necessity for close cooperation with the British and French in the present European situation. Consequently, if the JEIA Agreement was otherwise satisfactory to us and did not involve additional cost to the U.S. because of this particular point under discussion, the Agreement should be concluded.²

Charles E. Saltzman

1. In his letter of September 30 to Under Secretary of the Army Draper, not printed, Assistant Secretary Saltzman observed that General Clay had questioned the practice of the French occupation authorities paying their troops in marks as an occupation cost and had expressed hesitancy in completing the JEIA agreement with the French unless the French desist from the practice. Saltzman expressed Department of State attitude in the matter as follows:

   “In our judgment, this problem should be dealt with in relation to the overall budgets of the three western zones. We are, of course, anxious to prevent the German budgets from being unduly burdened by unreasonably large occupation costs. If the French or the British desire to use funds received as occupation costs for troop pay, we should not object if the total amounts charged as occupation costs are reasonable. The Department of State suggests that General Olay take up with the French at once the obtaining from them of a commitment that they will join in working out a formula for computing occupation costs. The formula should be such as to result in charges which will not strain unduly the German budgets and which will provide equitably for the three western occupying powers.”

   Saltzman, however, concluded his letter as follows:

   “I understand that it has been suggested that the conclusion of the agreement providing for French participation in JEIA be delayed pending decisions on this matter of troop pay, control of ECA supplies to the French Zone, and perhaps revision of the bizonal fusion agreement. At the present moment, full cooperation of the western occupying powers is of vital importance. The Department of State consequently feels strongly that it is urgent that the JEIA agreement be concluded as soon as possible; and that any unnecessary delay would prejudice the working out of more far-reaching agreements relating to Western Germany.” (740.00119 Control (Germany)/9–3048)

2. The views set forth in this paragraph were reaffirmed in a letter of October 4 from Assistant Secretary Saltzman to Under Secretary Draper, not printed (740.00119 Control (Germany)/10–248).