740.00119 Control (Germany)/12–948: Telegram
The Ambassador in the United Kingdom (Douglas) to the Secretary of State
us urgent
5170. Ruhrto 34. For Lovett from Douglas.
A. After discussions in USDel and with Saltzman and Reinstein,1 in light of considerations previously expressed and of further informal talks with Alphand, it seems to us that conclusion of a Ruhr agreement at this time possible only if some positive definition included of functions for IAR tending in direction of French proposals. I submit following hesitatingly as my view of provisions which we might consider accepting and to which French might assent. They would define the area within which we could negotiate. They do not appear materially to prejudice our position though I recognize they have objectionable features. We cannot give any assurance that French will accept this compromise, particularly [Page 554] in light of reparations and plant retention discussions. In fact Alphand told me privately this evening, after discussion with Humphrey committee, that plant retention discussions made it imperative that we concede French position on Ruhr.
B. Re prevention of reconstitution of excessive concentrations of economic power: I propose we be prepared to give IAR power after control period:
- (1)
- To obtain information re changes in structure or charters of Ruhr coal, coke and steel industries and of trade and marketing organizations of these industries;
- (2)
- To veto any major changes in structure or charters of such industries or organizations which IAR determine would result in excessive concentration of economic power provided that such veto shall be exercized only when authorized by twelve affirmative votes in IAR;
- (3)
- Such power shall be exercised only in the case of changes which would materially affect structure of industry or organizations as they exist at end of control period; and
- (4)
- This power would not require changes to be submitted to IAR for approval but would only authorize a negative veto of action or proposed action.
(Comment: So long as US is member of IAR, this proposal would insure that IAR could not prevent action which Germans wished to take and which we approved. It would meet British fears on nationalization as IAR could not stop it if Germans want it and British approve. This is consistent with our past stated policy. I remain somewhat apprehensive at the prospect of an unknown German Government being able to nationalize these industries and wielding the great power represented by ownership backed by sovereign rights.)
C. Re return of Nazi supporters: I propose we be prepared to give IAR power after control period:
- (1)
- To receive reports as to what persons are holding important positions in direction or have important ownership interests in Ruhr coal, coke and steel industries;
- (2)
- To direct German Government or other appropriate German governmental authorities to cause removal from such positions of persons who have at that time, been found by a competent tribunal to have furthered the aggressive desires of the Nazi Party;
- (3)
- Determination of what procedure is necessary to identify persons affected by this provision will be made by signatory governments in light of experience of Military Governors during control period, particularly under trusteeship laws, and will be made prior to any exercise of these powers by IAR; and
- (4)
- If another generally applicable procedure is established in Germany for the post-control period to prevent return to power of those who furthered Nazi aggression, that procedure shall apply in Ruhr and IAR functions in this field lapse.
D. Re supervision over coal and coke production and development: I propose we be prepared to give IAR power after control period:
- (1)
- To obtain information re plans for production, investment development in these industries;
- (2)
- To make recommendations to governments, including the German Government, as to means for maintaining or increasing coal and coke production or increasing the efficiency of such production; and
- (3)
- Upon request, to give comments on proposals or projects for development, expansion or increasing the efficiency of production particularly when investment of non-German capital is involved.
(Comment: French preoccupation is with steel and interest coal and coke is less important. In view of power to allocate for export by qualities, IAR could by maintaining prior ratio of exports to German consumption, cause any willful slow down on production to bear more heavily on German use than on exports since exports now constitute only about 25 percent of production. If necessary, we might concede a provision that when IAR finds by votes all allied signatories that there has been willful curtailment by German authorities of production of coal and coke in Ruhr, IAR is authorized to maintain export allocations at quantities exported prior to such curtailment.)
E. Re supervision over management steel: I propose we be prepared to give IAR after control period following functions:
- (1)
- To obtain information re plans for production, investment and development in Ruhr steel industry;
- (2)
- In any case in which IAR finds by unanimous vote of all allied signatories, that any such plan would, if carried out, appear to constitute or threaten a violation of limitations or prohibitions imposed on Germany in the interest of security by international agreements then in force and to which the occupying powers are parties, to refer the plan and its finding to Military Security Board or its successor which is charged with the enforcement of limitations and prohibitions on industry, together with IAR’s recommendations as to action which should be taken;
- (3)
- In any case in which the Military Security Board or its successor confirms finding of IAR, to take such action, if any, as Military Security Board or its successor may specify in the premises if the Military Security Board determines not to take action itself;
- (4)
- To perform such other functions with respect to Ruhr steel industries as Military Security Board or its successor may request;
- (5)
- It should be made unequivocally clear that IAR shall not, under this provision, exercise any functions for purpose of protecting commercial interests of any other country nor to prevent technological development or improved efficiency;
- (6)
- IAR could also be given authority to make, upon request, recommendations re the most beneficial projects for investment in the Ruhr steel industry, particularly when investment of outside capital is involved.
F. I would initially try out alternative suggested by General Clay in Berlin’s 908 (repeated to Department as 2876 and Paris as 10002) but would suggest substituting stand by governments instead of by Military Security Board. I believe Clay’s suggestion would also be a useful addition to any provisions along lines of paragraphs B, C, and D and E above included in IAR agreement so as to allow review of any such provisions when we have fuller information as to development re Germany.
G. The Teal dilemma in this situation is how to avoid taking action which would have depressing effect on German production and prevent German cooperation, while at the same time preventing so strong a French reaction as to upset French political situation and prejudice [apparent omission] or going along with the many other important German decisions in which three power cooperation is essential.
H. I would appreciate your most urgent comments on these proposals and indication of extent to which I may negotiate on this or any other basis. These proposals have been developed after consideration of Department’s 4539 (repeated Berlin as 1909 and Paris as 46503). It does not seem practicable to develop ideas only with UK and Benelux in view of close relations these delegations with French. Other delegations are most anxious to proceed, and stalling is becoming increasingly difficult. We are being pressed hard to make some comment on French proposals on which all other delegations spoke a week ago.
Sent Department, repeated Berlin 636, Paris 1010.