740.00119 Control (Germany)/5–1848
The Secretary of the Army (Royall) to the Secretary of State
My Dear Mr. Secretary: I feel great concern after reviewing the proposals put forth by Mr. Douglas in London in regard to the agreement for the international control of the Ruhr. It had previously been agreed by State and Army that the United States predominant voice in German economic affairs would be largely safeguarded in the Ruhr authority by United States control of the German votes, and in the unlikely event that we should still be outvoted, the United States Military Governor would be able to prevent, under the fusion agreement, the implementation of undesirable decisions.
Mr. Douglas now proposes, and has informed other delegations at London that the United States will not exercise control in connection with German votes, and further has proposed, without prior consultation [Page 252] with Military Government or the Department of the Army, that the division of coal, coke and steel from the Ruhr shall be in accordance with OEEC programs, thereby effectually placing control of the German economy in the hands of OEEC, subject, to some degree at least, to the approval of the ECA Administrator.
At the present time, the United States majority voice in Germany is exercised by the Military Governor in all matters relating to foreign trade. The Douglas proposal would shift this voice to the ECA Administrator, as regards the vital Ruhr production, and merely by the physical displacement of authority from Berlin to the United States the exercise of the United States majority voice would be made complicated and cumbersome. The division of responsibility between the Military Governor and the Administrator would hardly be satisfactory to either one. The Department of the Army does not consider that it can discharge its direct responsibilities for the economic rehabilitation of Germany if the ultimate decision as to the disposition of German industrial production is to be made by another agency of the Government.
This is inconsistent with the understanding with the British at the time we took over the major part of their financial obligations in the bizonal area—and inconsistent with the information which we gave Congress at the time they appropriated the additional funds made necessary by the British failure to contribute their part.
As a matter of fact, the Congressional situation seems to me a serious one. Both in connection with the assumption of the British obligation as well as in connection with the occupation program in general, both the Army and the State Departments have repeatedly assured the Appropriations Committees as well as other Committees of Congress that General Clay would have the predominant voice in the control of German foreign trade. Such appropriations as were obtained were, at least in part, based upon this assurance. Therefore, if the new proposal should be finally adopted, we would, of course, have to inform the Chairmen of the Appropriations and other Committees concerned that this change had been made in the policies which we announced to the Committees.
It should be clearly understood that there is not the slightest intention on the part of the Army Department or Military Government to slight the obligations of Germany to support actively the work and recommendations of OEEC. On the other hand it cannot accept an arrangement where OEEC is given a voice which may well be decisive in German internal affairs, particularly when such an arrangement is designed to overcome the objections of our British partner to the “predominant United States control” which is an established policy of our Government.
[Page 253]Furthermore, the prestige and position of Bizonal Germany as a full member of OEEC will be seriously impaired if she is placed in the uniquely unfavorable situation of having her internal economy regulated by decisions of OEEC whereas the other participating countries retain full sovereignty over their domestic production.
The following language should achieve the objective of insuring full coordination of programs under ERP while avoiding the difficulties envisaged above:
“The international authority, in making its findings, shall give every consideration to the approved programs of OEEC for recovery of the participating countries.”
While I realize that this matter is being discussed in London, I feel I should make clear to you the position of the Department of the Army. Your agreement to this language and to the principle that the United States shall control the German vote on the international authority is requested.
Sincerely yours,