3. Capacity for the production of 34,000 tons of dyestuffs will be retained, which is somewhat below pre-war. One plant will be available for reparations in this industry, with a capacity of 2,500 tons of sulphur dyes.

4. One pharmaceutical plant for the production of atabrine will be available for reparations. This will leave the bizonal area with a capacity equal to about 87% of pre-war production.

5. In the miscellaneous chemical groups, a capacity greater than the pre-war level of production will be retained. About 15% of the capacity will be available for reparations.

6. In the basic, organic, and inorganic chemical industries, sufficient capacity will be retained to permit output at about pre-war levels. Not more than 17% of present capacity will be removed as reparations. G. Cement. All of the cement capacity in the bizonal area is required and will be retained.

H. Electric power. Except for certain power stations attached to industrial plants scheduled for reparations under this plan, and power plants already allocated for reparations, no further removals will take place. In order to sustain the level of production required by the bizonal economy, the present power plants in the bizonal area will have to be substantially repaired and replaced to meet the power requirement.

1. Non-ferrous metals. The bizonal copper requirements are 93% of estimated current refining capacity. Fabricating capacity for 215,000 tons of copper in the bizonal area will be retained, as compared with 140,000 tons for all of Germany under the old plan. This will make available for reparations one smelter plant and appreciable quantity of fabrication facilities, including special pieces of equipment that are surplus to individual plant.

IV. PROHIBITED INDUSTRIES

The production of aluminium, beryllium, vanadium, and magnesium is prohibited under the previous level of industry plan. No plants in these industries will be made available for reparations purposes pending further review. No change is proposed in the arrangements made under the previous plan in regard to ball bearings, synthetic ammonia, synthetic rubber, and synthetic gasoline and oil.

95. LONDON MEETING OF THE COUNCIL OF FOREIGN MINISTERS, NOVEMBER 25-DECEMBER 15, 1947: STATEMENTS BY SECRETARY MARSHALL 1

(a) Polish-German Frontier, November 27, 1947

At the Moscow session, the United States proposed the creation of a special boundary commission which, under the direction of the Deputies, would consider and make recommendations to the Council concerning the Polish-German frontier.2 On the suggestion of other

1 Department of State Bulletin of December 7, 28, 1947, pp. 1078-1079. 1247-1249. See also report on the London meeting of the Council of Foreign Ministers by Secretary Marshall, printed under II. Postwar Conferences. • Department of State Bulletin, April 20, 1947, p. 694.

569 members of the Council, the United States is willing to enlarge the scope of this work, which could still be undertaken under the direction of the Deputies to include a study of all frontier proposals.

With regard to the Saar, the United States supports the claim of France to the economic integration of the Saar territory. The political status of the Saar should be based, we think, on the principle of political autonomy and local self-government. I urge that at this session we approve the French proposal of economic integration of the Saar territory into that of France. After this, the details, including territorial limits, can be worked out.

With regard to the Polish-German frontier, the starting point for our consideration must be the Potsdam protocol which provided that "The final delimitation of the western frontier of Poland should await the peace settlement". Mr. Molotov presented the view that the decision regarding the western frontier has been taken. This is clearly not the case as the quotation just referred to indicates. A just settlement of this frontier, as I stated at our meeting in Moscow on April 9, 1947, requires that we give careful consideration to the needs of the populations which will be directly affected and keep equally in mind the importance of this frontier for the economic and political stability of Europe.

No line, however carefully drawn, can entirely satisfy the desires and aspirations of all the peoples concerned. We must take the broader view and seek to establish a frontier which reduces irredentist sentiment to a minimum and promises to be lasting. At the same time the frontier should not be permitted to become a barrier to economic and cultural intercourse. We believe that frontiers between nations should cease to divide and embitter, and in drawing new frontiers we should promote this objective.

I believe such a frontier is possible between Poland and Germany. Poland is justly entitled to compensation for her wartime losses, and the United States Government wishes to honor this obligation. We must bear in mind that much of the territory now under Polish administration has long been German and contains agricultural resources of vital importance to the German and European economy. In seeking to create a democratic and peaceful German state we must avoid a decision which would deny hope to the moderate forces within Germany and, by violating the principles of the Atlantic Charter to which we have all agreed, would fail to win approval in the court of enlightend world opinion. In considering cessions of territory to Poland, we should also make provision for insuring that the key industrial resources situated in these territories be made available to the economy of Europe, including Poland and Germany.

We will have before us also consideration of a proposal by nations neighboring Germany for minor rectifications.

To reach in a fair and equitable manner decision regarding all boundary claims affecting Germany, the United States recommends the constitution of one or more boundary commissions. Such commissions should be composed of representatives of the Four Powers and interested states and would work under the direction of the Deputies. They should have authority to investigate the merits of boundary proposals and to submit recommendations thereon to the Council of Foreign Ministers.

(b) Need for Provisional German Government, November 27, 1947

I am not prepared this afternoon to enter into a detailed discussion regarding the statement made by Mr. Bevin with certain recommendations as to the German peace treaty, nor am I prepared to discuss either in detail or in any general way the proposal just put forward by Mr. Molotov for the Soviet Delegation. I might say this, however, that the British proposal submitted at Moscow (and I do not believe changed since then), while it gives more of a central organization for Germany than the proposal of the United States Delegation and still more than that, I believe, proposed by the French Delegation, is in general detail very much in accord with the United States proposal, and I think we can easily accept it in part, subject to modifications as to detail either by the Deputies or the Allied Control Council. More tentatively, I will make these comments regarding the proposal just submitted by Mr. Molotov for the Soviet Delegation. I believe the first proposal, "No. 1, to recognize that the formation, etc., of a democratic government". I think we are in accord with that quite definitely. The second proposal, "No. 2, to establish that at a peace conference the German Government will be given opportunity, etc." involves the question of procedure or timing. In the main, while I think it will not be too difficult to resolve, and I will undertake to discuss it later. The third proposal labeled "No. 3, that the peace treaty should be signed by a German Government, etc." I think we are in accord with that. The fourth proposal (Mr. Molotov's fourth proposal was the peace conference will consist of representatives of Great Britain, the Soviet Union, the United States, France, China, and of the representatives of Allied countries bordering on Germany, as well as the Allied states which took part with Allied forces in the common struggle against Germany) requires much more analysis and discussion. I think there is some difference regarding the nations listed by Mr. Molotov, and there is a very great difference from the United States point of view as to those nations who declared war on Germany but are not represented in this proposal whatsoever. I will undertake later to make a formal reply both to Mr. Bevin's proposals and to Mr. Molotov's proposals.

At the moment I have only the following to add. The United States Delegation considers that the establishment of a German Government is an urgent necessity. I am repeating what I have said several times before. We have, I think, actually taken the lead in this regard. More than one year ago Mr. Byrnes at Stuttgart declared that the United States favored the establishment of a provisional government for Germany. In the course of the Moscow session of the Council of Foreign Ministers I made a statement on March 22, proposing the establishment of a provisional German government, and suggested a method for the preparation of a German constitution under which permanent government organization of the German state could be accomplished. Other delegations likewise made proposals on this subject. After exhaustive debate the Council was unable to reach an agreement, a state of affairs which was very

much regretted by the United States Government. We earnestly and most sincerely desire to see a democratic government established in Germany at the earliest possible moment.

(c) United States Reiterates Hope for Unified Germany and Austrian Independence, December 15, 1947 1

1

The United States came to this Conference to work for a comprehensive settlement which would overcome the present division of Germany. It hoped to obtain agreement on a treaty for Austria and the reestablishment of that country as a free and independent state. As regards Germany the United States sought to achieve at this meeting a solution which would revive German economy through economic unity, thus enabling Germans to contribute to the restoration of Europe, which has so grievously suffered from German aggression. The United States recognized that Germany in its present state of destitution would require outside assistance and was prepared to accept a fair share of the burden of such aid until a unified Germany could become self-sustaining.

The Soviet Delegation, Friday evening (December 12), put forth a statement regarding reparations which, to put it in the simplest of terms, is not at all acceptable to the United States Delegation. That is the situation as I now understand it.

(d) Soviet Disagreement on Fundamental Principles for Germany, December 15, 1947 2

We have reached quite evidently a fundamental difference regarding the question of reparations. Mr. Molotov's last statement seemed. to me a repetition of statements which we largely felt were without foundation. Now at the expense of some repetition of the views Mr. Bevin has just stated, I would like to review the situation as it is seen by the United States Delegation.

The United States hoped there would emerge from this Conference the beginnings of a united and self-respecting Germany which could find its way back to peace and freedom and achieve its own well-being and redemption through cooperative effort with other European countries.

The United States had even higher hopes for an Austrian settlement. It will be useful, I think, at this point to see just where we are. We have failed to reach agreement on a treaty for Austria because the Soviet Union has demanded for itself properties and special privileges in Austria in an amount and to an extent which far exceed any rightful claims and which far exceed what a free Austria can afford. If Soviet claims were admitted, it would be at the price of Austrian independence and in violation of past agreements.

At Moscow the United States, the United Kingdom and France, although differing in some details, found a common basis for agreement on the essential unagreed article in the Austrian treaty-the

1 Department of State Bulletin, December 28, 1947, p. 1247.

* Department of State Bulletin, December 28, 1947, pp. 1247–1248.

problem of German assets. The Soviet Union was in disagreement. To resolve our differences we appointed a treaty commission which for five months conferred in Vienna last summer. Again three delegations found a common approach. Again the Soviet Union was in disagreement. At the present meeting the French Delegation presented a new proposal for a concrete settlement which sought to avoid the problems that had prevented agreement. To three delegations that proposal appeared to present a practical basis for settlement. On December 4 it was rejected by Mr. Molotov, who added that he had no new proposals to make on the subject. Thus the Soviet Delegation has persistently blocked agreement by reason of its unjustified demands on Austria.

As regards Germany, taking first the subject of frontiers, we have been unable to agree on what we mean by Germany. Three delegations are in accord that the Saar territory should be detached from Germany and economically integrated with France. The Soviet Union does not agree.

With respect to the eastern boundary of Germany, the Potsdam protocol clearly provided that the "final delineation of the western frontier of Poland should await the peace settlement".

The United States believes that an effort should be made to establish a frontier which, while it would compensate Poland, would not become a formidable economic barrier preventing Germany access to food and raw materials from this eastern area upon which it has heavily depended.

Three of the delegations agree that boundary commissions be at once established to examine frontier questions. The Soviet Union rejects this proposal. So we neither agree on what Germany is to be nor do we agree on establishing commissions to study these vital boundary problems.

In examining the discussions on economic principles, we have progressed only in agreeing to procedures without substance.

We have failed to reach agreement on sharing of the financial burdens. An ostensible agreement on the equitable distribution of indigenous resources is deprived of all meaning by the Soviet demand for a continuation of present Soviet withdrawals of current German production for reparations.

The Soviet Union has refused to furnish vitally necessary information with respect to reparations removals. Thus we have been asked to reach agreement while information essential to such agreement is withheld by the Soviet representatives.

The Soviet Delegation has refused to agree to the relinquishment of property interests in Germany unilaterally seized under guise of reparations. As matters now stand a large share of the produce of the eastern zone of Germany is drawn off for the Soviet account. An important part of its industry has been placed in a gigantic Soviet trust which enjoys special privilege and which is put above German law, presumably in perpetuity.

These Soviet practices in eastern Germany have prevented Germany from playing its part in the recovery of Europe. In fact they have greatly increased the necessity for the outside aid provided by the United States and the United Kingdom to enable western Germany to live. Nevertheless, the Soviet representatives have chosen to charge that this aid has as its purpose to use western Germany as a "strategic base against the democratic states of Europe" and to