Foreign Relations of the United States, 1949, Council of Foreign Ministers; Germany and Austria, Volume III

740.00119 Control (Germany)/4–2549

Record of the Meeting of the Three Military Governors With the Parliamentary Council Delegation¹

confidential

Frankfurt, 26 April 1949.

TRISEC/Memo(49)10

Present

General Clay (Chairman)

General Robertson

General d’Armée Koenig

United States	United Kingdom	France
Amb. Murphy	Mr. Steel	M. Sauvagnargues
	German Officials
H. Kaiser	Dr. Adenauer (Head of Delegation)	Dr. Katz
Dr. Lehr		Dr. Greve
H. Kaufmann	H. Schlor	Dr Hoepker-Aschoff
Dr. Pfeiffer	Dr. Suhr	Dr. Heuss
Dr. Straus	H. Zinn	Fr. Wessel
Dr. Laforet	Dr. Menzel	Dr. Seebohni
	Dr. Schmid

Secretariat

Major Scott

1. Dr. Adenauer opened his remarks by saying that the Parliamentary Council Delegation would have been pleased to meet with the Military Governors earlier, but the discussions in which they had been engaged were difficult. He then stated that the party factions had started their discussions with the desire to have a State that functions and is acceptable to the majority of the Parliamentary Council. Furthermore, they wish to comply with the material contained in Document I.² The attitude of the Military Governors demonstrated to them that in a number of points they did not favor the opinions of the Parliamentary Council Delegation. However, in an effort to accomplish everything possible the factions have tried to come to a solution. In the field of Bund legislation and finance, they have come to a solution which, he felt, met the Military Governors’ proposals and the Foreign Ministers’ second memorandum.³ All that remains, he was sure, was to reach agreement on the few remaining points of difference. Finally, as they consider the Basic Law a unit, a final decision can only come by Parliamentary Council vote.

2. Dr. Schmid then described the skeleton of the Basic Law as it now stands, stating that the subject matter on which agreement has been reached is not yet exhausted. He noted the objection in the memorandum of 2 March⁴ with reference to the priority of legislation of the Bund. The new paragraph 36 gives concurrent legislation to the Bund and Laender in which the Laender will have priority in all cases where it can be effectively settled by such legislation and in all cases where legal or economic unity of the Bund is not endangered. In the field of finance, the differences between the old and new version are, firstly, that the tax sources are clearly defined and allocated as between the Bund and Laender, and, secondly, that tax administration is to be carried out by the agency corresponding to the revenue source. He viewed this as strengthening the Laender and that certain powers heretofore reserved were thus no longer applicable. In some fields, the parity of the Bundesrat with the Volkstag has been abolished. Regarding financial type legislation which concerns Laender interests, in a number of instances where the Bundesrat could approve federal legislation, such power has been removed. On the other hand, he felt much remains.

3. General Clay replied that, on behalf of his colleagues, he was happy to meet with the Parliamentary Council representatives on this day and particularly happy that they had given the Military Governors a single proposal and one that removes a great deal of the Military Governors’ apprehensions. He reminded the Delegation that the Military Governors were guided by the London Agreements and by the Foreign Ministers’ agreements in Washington. He recalled that in the Washington deliberations the Foreign Ministers were advised of the constitutional proposals placed before the Military Governors by the Parliamentary Council. Hence, the Foreign Ministers’ comment had been made in the light of this presentation. He then stated that there were three or four matters which he wished to bring to the Delegation’s attention, which still caused the Military Governors some concern. He felt that it was a matter of degree or perhaps the translation difficulties had not accurately effected a common understanding. He then stated that his following comments were in the light of the entire question before them.

4. With reference to Article 34, General Clay stated that the Military Governors were concerned by the provisions of paragraph 3. They agreed that a Federal Government must have power to secure uniformity in the legal and economic fields, but so broadly written was this paragraph that it appeared any measure required uniformity. He asked that the Delegation make a more precise definition on what is intended in this paragraph. He suggested, as nothing more than a thought on the part of the Military Governors, that a guaranty of legal or economic unity to the extent that legal or economic measures adopted by the States or failure to adopt legislation by the States results in conflict which makes uniformity essential, might prove a solution to the problem. He emphasized that this was only the thinking of the Military Governors, but there should be established somewhere that a Land could appeal to a constitutional court. He brought this up particularly, as the present draft Basic Law no longer contained old Article 105 and, consequently, the power of the Bundesrat had been reduced to a considerable degree. Therefore, the Military Governors’ concern on Article 104, which does reduce the Bundesrat’s power, might not be worrisome at all if a more precise definition of paragraph 3, Article 34, were made.

5. In paragraph 4 of Article 122 (b), General Clay noted that provision was made for certain ways to provide financial equality among the States. The Foreign Ministers, he observed, had the Parliamentary Council’s proposals before them with reference to the powers concerned. Here again, he felt, if Article 34 were more precisely defined, the apprehensions of the Military Governors might be relieved. Subject to that remark, he noted that the Military Governors were sympathetic with the German objectives but were not completely satisfied about the manner of execution. It might be used as a punitive power against the States. Therefore, again as a suggestion and not as a definition of the only way in which the task could be accomplished, he proposed that to paragraph 3 in Article 122 (b) something of the following nature be added: “and grants for which, if necessary, specific taxes would be raised to assist the Laender which had insufficient revenue to increase their working efficiency”. This, he noted, would involve the deletion of paragraph 4.

6. He then observed that in the last [draft of] Article 123 the Military Governors were pleased with paragraph 3 and would be satisfied if such a delegation [deletion?] were made.

7. General Clay then stated that this concluded the extent of the Military Governors’ comment at this time and that they would be prepared to discuss the questions now or at such later time as the Delegation might wish. The Military Governors then withdrew.

8. The meeting was called to order subsequently, and Dr. Schmid stated that his colleagues had asked him to reply with reference to the Military Governors’ remarks upon Article 34. He believed that the wording of this Article excluded any apprehensions of the nature expressed by the Military Governors in this meeting. In the first place, paragraph 3 would become effective only if under Bund legislation it becomes necessary. Therefore, Federal law would not be issued merely when it seems opportune arbitrarily, but only where there is need for such legislation. Secondly, Article 128 (1) of the old draft requires constitutional competency of the court. Under this, a Land can appeal to the Federal court when there is chance of misinterpretation of a law. If, therefore, a Land is of the opinion that there are misuses, under Article 34 any Land can appeal to the constitutional court. Under paragraph 2 of that Article, this can be extended to cover the problem of Federal and Land law being compatible. Hence, there is an effective guaranty that the competence handed over by Article 34 cannot be misapplied.

9. General Clay replied that it would seem that a constitutional court which could not go beyond the exact terms of a constitution could not rule that the lower house could determine when legislation and economic unity is threatened.

10. Dr. Schmid replied that the constitutional court cannot, in its nature as a court, determine when any measure is legally or economically necessary but could determine when Federal legislation has misapplied authority under Article 34.

11. Dr. Menzel then stated that in the wording of paragraphs 3 and 4 of Article 122(b) care had been taken to comply as far as possible with the Military Governors’ comments and the Foreign Ministers’ memorandum. According to the second Foreign Ministers’ memorandum, he believed Federal authority could legislate to make grants in the fields of education, health, and welfare, with any approval dependent on legislation by the Bundesrat. It would be easy to add that such grants would be made only when the Laender cannot help themselves. The grants would certainly be of small amounts, as the Federal Government would have available only limited funds. Therefore, the financial burden could not be equalized out of these grants alone. He was sure the Military Governors were aware of the difference between the strong and weak taxation Laender. Therefore, it was necessary that equalization must be established among the Laender themselves, in accordance with the advice of the Financial Experts which had been given them. Funds would come from a common pool and then would be reallocated on a different key than that on which they came in. In this respect, he reiterated that the proposal merely quoted from the Financial Experts’ aide-mémoire.⁵ As an example, the motor vehicle tax used for road maintenance would come into the pool and then be reallocated, perhaps on the basis of the length of Land road nets. Further, 25% of the Land revenue taxes would also be channeled into the common pool and reallocated on a different key. As a basis of reallocation, the population in the Laender or the refugee burden might be used. Moreover, the Bundesrat must approve which taxes were to be concerned. Accounting would be done amongst the Laender, with no Federal interference. Therefore, it was not intended that these taxes flow into Federal hands and then be reallocated, but into a common State pool and then reallocated by the States.

12. General Clay pointed out that the Military Governors operate under the Foreign Ministers’ instructions. It was the intent of the Foreign Ministers in proposing grants in aid to find a way out of this problem. He felt that the Military Governors had come further in saying grants for the three specific purposes could be extended for these purposes and that Federal taxes could be raised for these purposes. He then pointed out that paragraph 3, Article 34, was still quite broad. The proposals of the German Delegation in this meeting reduced the power of the Bundesrat. Nevertheless, the Military Governors were trying hard to find a solution to this problem and yet stay within their instructions. They had asked and did ask for a clarification of paragraph 3 and the equalization item. Unless a solution were found, the Military Governors would have no choice but to go back to their Governments. He suggested that a clearer definition be written by the Germans and that they endeavor to try without resort to giving the Federal Government the right to interfere with State revenue. He submitted that the same thing could be done by taxation and grants. The Laender could not be financially independent, he felt, if its revenue within the field in which it had authority to tax could be taken. He was not, however, questioning the Federation’s right to tax for specific purposes.

13. General Robertson then stated that he was disappointed in the response to paragraph 3 of Article 34. He had felt that there should be no difficulty if the German Delegation could put down exactly what it wanted and meant. He agreed with General Clay that the present wording was wide. General Clay had put forward an alternative thought to the Delegation, but Dr. Schmid had not said why this thought was unacceptable. He observed that this was a point to which the Military Governors attached considerable importance and whatever they were able to arrange with the German Delegation on this clause would affect others concerned with it. He, therefore, joined with General Clay in asking that a closer definition be drawn up. (At this point, the Germans consulted among themselves in the meeting for five minutes.)

14. Dr. Adenauer then replied that they would discuss this question further in Bonn, specifically with respect to the suggestion made by the Military Governors with reference to Article 34. General Clay replied that he thought that the Delegation had come to this meeting so that they and the Military Governors could negotiate across the table to reach agreement. That, he stated, was the condition under which they were invited and to which they had agreed. The Military Governors were here for that purpose. In response, Dr. Adenauer stated that it would then be necessary to interrupt the meeting once more. Before doing so, however, he would ask Dr. Hoepker-Aschoff to make a few remarks.

15. Dr. Hoepker-Aschoff stated that the differences of tax revenue of the various Laender were sometimes very great. Based on last year’s figures, the tax revenue per capita in the poorest Land was 73 deutsche mark, while in Bremen, the richest, it had been 386 deutsche mark. He felt that if they wished to equalize this disparity, then the Federal Government must interfere. Therefore, equalization between the strong and weak Laender must be carried out among the Laender themselves. Part of certain taxes should be brought into a common pool and then reallocated on a different key from that on which they were raised. If it were necessary for the Federal Government to interfere, administrative difficulties would arise. In his opinion, there was now a fairly clear distinction between Land and Bund taxation. This clear division of tax sources and administration would be endangered if it were necessary to raise Federal taxes to achieve equalization. Grants were thus of secondary importance, compared to Land action.

16. General Clay stated that, in fact, Federal legislation sets the amount of taxation to be made available. Thus, it was certainly not left to the Laender as a matter of administration. The Military Governors’ suggestion leaves to the Federal legislature the right to make taxes for the purpose. Obviously, this would reduce State tax revenue and thus, in effect, make revenue available for this purpose. The Foreign Ministers extended the agreements they approved in London in this connection. He was not trying to suggest for himself or his colleagues the exact wording, but he believed the Delegation could find the wording necessary. He noted that the Military Governors were trying very hard to help the German representatives find a way to do this.

17. Dr. Hoepker-Aschoff then remarked that there appeared to be a complete turn-around in the attitude of the Occupation Powers. They had always emphasized that the Bund should not make grants, and heretofore said that the Laender themselves would have to make equalization, but the Delegation was now told that the Bund was to have larger powers and make the distribution itself.

18. General Clay pointed out that when the Foreign Ministers agreed to the extension of grants, it certainly was a change from the previous position and it was done in an effort on the part of the Foreign Ministers to accede to the German wishes. He noted that in a good many fields the Military Governors were now willing to go further than they had a few months ago and he felt that this meeting today would not have been held if this were not so.

19. Dr. Hoepker-Aschoff asked if it were then possible to have a financial administration. General Clay replied that the Delegation should read the Foreign Ministers’ comments for an answer to this question. (The meeting then recessed for one hour, 35 minutes, while the German Delegation deliberated.)

20. Dr. Katz reopened the discussion by stating that the Members of the Parliamentary Council here today had first dealt with paragraph 3, Article 34. They believed the wording was not sufficiently clear for a juridical decision and, therefore, had agreed to a clearer interpretation as follows: “Clause 3: The maintenance of legal unity or of the economic unity, especially the maintenance of homogeneity of living conditions beyond the limits of any individual State demands it.” In explanation, he stated that the point at stake was that an intolerable sliding scale between individual States must be avoided. This means, he added, each person could expect his individual rights in any Land.

21. General Clay replied that he thought the Military Governors agreed to the meaning, but the translation in English was not clear. Dr. Katz stated that the general economic conditions in each Land were not affected. Moreover, they had taken into consideration the homogeneity of living conditions. To General Clay’s question as to whether this meant the homogeneity of living conditions themselves or the opportunity to achieve such conditions, Dr. Katz replied that opportunity was what was meant. General Clay then remarked that if what was meant was the same economic opportunity to obtain homogeneous economic conditions, he thought everyone was thinking along the same lines.

22. Dr. Schmid added that not only economic opportunity should be considered but also legal and so forth, to which General Clay replied in the affirmative. General Clay further stated that he would make the Military Governors’ comment after all of the German proposals had been heard.

23. Dr. Lehr then stated that the Delegation had carefully and seriously considered the financial question and he regretted straining the Military Governors’ patience. Nevertheless, after a thorough and serious study, the Delegation did suggest that the proposals they had made yesterday be adhered to. He felt the realization of the Military Governors’ wishes would only be possible if there was a financial administration which in its essentials was carried on by the Federal Government. At this point, General Clay asked for a short recess for the Military Governors to confer. (The meeting recessed for 10 minutes.)

24. General Clay then said that in a very sincere effort to try to meet the German representatives’ views as fully as possible without going back to their Governments, the Military Governors would like to make the following suggestion: In paragraph 4, stop with the word “grants” and add the following: “and may derive the requisite revenues from the Land taxes which it may specify and in the proportion which it may specify with the approval of the Bundesrat. Revenues will then be transferred in the amounts thus granted to the Laender to whom granted.” This would mean, he explained, that on the motor vehicle tax a certain proportion would accrue in each Land and such amounts would then be transferred by the Federal Government to specific Laender in specific amounts. Its general effect should be to make legislation for the degree to be taken and then to direct the transfer of funds to accomplish it. (General Clay then left his chair and went over to the German Delegation to personally explain what was meant by the Military Governors. He remarked that to raise these funds a certain proportion was placed under the direction of the Federal Government. To that coming from the wealthier States, the Government would say that such funds should be transferred. This would have to be done by legislative action. The Federal Government directs the State to collect but does not collect itself. These grants would cover what the Germans may decide, and not just health, education and welfare. He would like to see paragraph 3 retained as, for instance, the Federal Government might want to allocate some of the Reichsbahn revenue to, say, a university. Under paragraph 3, the flexibility was retained to accomplish this.)

25. Dr. Adenauer replied that the Delegation was thankful for this proposal and they accepted it and would try to word it as the Military Governors wished.

26. General Clay then stated that General Robertson would read the Military Governors’ interpretation of paragraph 3, Article 34. General Robertson observed that the following was what he believed to be the sense of this paragraph: “Because the maintenance of legal or economic unity demands it in order to promote the economic interests of the Federation or to ensure reasonable equality of economic opportunity to all persons.” General Clay observed that it might be necessary to add a phrase on legal equality in order to ensure equality before the law. The German Delegation assured him, however, that this was contained in the Basic Law under the fundamental basic rights. Dr. Adenauer then stated that General Robertson had rendered the Delegation’s meaning of paragraph 3, Article 34, correctly in the English language.

27. General Clay stated that it appeared that all the differences between the Military Governors and the German Delegation had been covered and that he might now be “rushing in where angels fear to tread”. He would ask, however, if the Delegation could now resolve any of their differences before they left Frankfurt in order that they could present the entire matter to the Parliamentary Council. He observed that the Military Governors and the German Delegation had gone very far and he would very much like to have the entire matter settled at this time. Dr. Adenauer then asked for a further recess in order that the Delegation could discuss this last problem. (The meeting recessed for one hour, 25 minutes.) Dr. Adenauer announced that he was happy to be able to inform the Military Governors that the German Delegation had reached agreement on their outstanding points. He stated that they could expect the Basic Law would soon be passed by a great majority in the Parliamentary Council. All parties here had made great sacrifices but had done so in the interests of the German people and in European unity. He most cordially thanked the Military Governors for their understanding of the Delegation’s work and differences and he wished them to be assured that the manner in which the Military Governors had attended and guided, together with the Foreign Ministers’ contribution, had now brought their work to a happy conclusion.

28. General Clay replied that, on behalf of his colleagues and himself, this was a happy occasion for the Military Governors and he thought it marked a happy occasion for the German people which would lead to their closer association with the free nations of Europe. Sacrifices had been made, but the fact that agreement had been reached was a happy omen for all. He would like to ask one or two further questions.

29. First, he inquired whether any progress was being made on the Electoral Law. Dr. Adenauer replied that so far the Delegation had had an amplitude of differences and thus had not had time to deal with this law. He was, however, confident that it could now be dealt with promptly. General Clay stated that he had brought this matter up as he and his colleagues would meet with the Delegation on the subject at any time they wished.

30. For his second question, he asked if any approximation could be made on the German time-table, to include not just the passage of the Basic Law itself but also the passage of the Electoral Law, the ratification, and the final election. Dr. Adenauer felt that everything would be finished, including the Electoral Law, by 15 May. He expressed hope that the Military Governors’ approval of the Basic Law and the Electoral Law would then follow soon. He agreed with his colleagues that ratification would be done expeditiously by the Landtage. He then hoped the election itself could be carried out by mid-July and that the political parties would be reasonable and not ask for too much time in preparation for the election.

31. General Clay then suggested that the press be advised tonight that the meeting had reconciled all of the difficulties, but that it would be impossible to comment specifically until the new German text of the Basic Law had been prepared and a carefully checked translation in French and English furnished in order that the Military Governors and the Germans themselves could release it at the same time. He was afraid that without the new text there might be enough differing comments made to cause confusion. He asked if that arrangement was satisfactory with the German Delegation. Dr. Adenauer replied that the Delegation had agreed just now to also add that they had reached agreement among themselves. General Clay thought this was fine, but that all concerned should wait until the Military Governors’ Liaison Officers had been given the German text and a carefully checked English and French translation made. Dr. Adenauer gave his assent to this arrangement.

32. Dr. Suhr then stated that at the last meeting the Military Governors were kind enough to welcome the Berlin representatives, even though Berlin was not under the Occupation Statute. He noted the Foreign Ministers’ declaration that Berlin should not be included at this time as a Land in the initial organization of the German Federal Republic. However, as the Military Governors had said, important steps had been taken today and he regretted that Berlin could not have been included. He felt that the Berlin representatives, together with all the German delegates present at the meeting, would ask the Military Governors to understand the anxiety and impatience of the Berliners. Berlin did not live only on the airlift, which was admired throughout the world, but also on the hope that soon it could be tied to the new German Republic. The chair of Berlin was outside the door today when these decisions were made, but he trusted that the chair would soon be moved up to the green table of the Volkstag.

33. General Clay replied that on behalf of his colleagues and himself he could assure the Delegation that the Military Governors would certainly transmit these views to their Governments. He did not think that the German representatives need be told how the Military Governors sympathized in this matter. He felt sure that they knew steps were being taken to give Berlin the same status, with reference to the Berlin Allied administration, as the new German Government would have under the Occupation Statute, In conclusion, General Clay expressed the thanks of the Military Governors for the successful work accomplished today. The meeting adjourned, finally, at 2015.

1. The meeting convened at 2:30 p. m. in the main conference room at U.S. Headquarters in Frankfurt.
2. Presumably Adenauer was referring to the message from the Foreign Ministers to the Parliamentary Council, p. 186.
3. Ante, p. 186.
4. Transmitted in telegram 183, March 2, p. 217.
5. Not printed.