CAB129-37 — Page 676

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As to (b), both Mr. Acheson and I took strong exception to the proposal for payment of compensation to the Governments represented on the Inter-Allied Reparations. Agency. We pointed out that the value of the synthetic oil plants and the remainder of the steel plants would run into many millions of pounds, that the only way that Germany could pay the compensation suggested would be by deliveries from current production and that in fact the United States and our- selves would have to find the foreign exchange to do it. We refused to agree to such a solution, and eventually M. Schuman withdrew his condition.

12.

The Americans also raised during our discussions the restrictions which should be imposed upon German shipping. At that time virtual agreement had been reached at the official level on the nature of all restrictions with the exception of the speed of exceptional ships, the definition of tonnage, and one or two minor technical matters. With regard to speed we and the French wished to restrict the trial speed of exceptional ships to 16 knots as being in our view adequate to maintain a sustained sea speed of about 15 knots; the "Americans believed 162 knots to be necessary for this purpose and thought that agreement on this figure might be of value in the negotiations with the Federal Chancellor. part of a satisfactory settlement of the questions under dis- cussion in Paris I thought it wise to recommend to my colleagues the acceptance of 16 knots; in the light of this agreement a solution of the question of tonnage satisfactory to ourselves has since been reached.

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13.

I feel confident that if the decisions which were reached in Paris can be translated into an agreement with the German Federal Government and put into practice as a programme agreed both by the three Western Occupying Powers and that Government, we ought to make steady progress in Germany during the next stage. Although the Germans may try to obtain further concessions from the High Commission in the course of the negotiations I consider that the High Commissioners have got sufficient authority now on all major questions to enable them to arrive at a satisfactory settlement, provided that they all three stand firm on the essential points and do not give Dr. Adenauer any encouragement to think that he may obtain more by playing one Allied Government off against another. The first meeting on 15th November between the High Commission and Dr. Adenauer seems to have been successful and I hope very much that the discussions themselves will not be protracted, since I feel sure that the sooner an agreement is reached the better it will be for all concerned and the sooner our present difficulties in the British Zone will disappear. Our aim should be to use the time between now and the moment when the Occupation Statute is due for review to prepare the ground for the further evolution of our policy in Germany, which aims at binding the German Government and the German people more closely to the Western world and at the same time making adequate pro- vision for security.

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16TH NOVEMBER, 1949.

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