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briculated 21/12/1586/14

IS-DOCUMENT IS THE PROPERTY OF HIS BRITANNIG MAJESTY'S GOVERNMENT)

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SECRET

C.P. (51) 81

20TH MARCH, 1951

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75

COPY NO. 31

CABINET

OWNERSHIP OF GERMAN COAL, IRON AND STEEL INDUSTRIES

Memorandum by the Secretary of State for Foreign Affairs

The Council of the Allied High Commission in Germany will shortly have to decide whether to allow the transfer to private owners of shares in one of the new steel companies formed under Allied High Commission Law No. 27 (for the reorganisation of the German coal, iron and steel industries).

2.

This decision involves the correct interpretation of the clause in the preamble to Law 27 which permits the German Federal Govern- ment to decide on the form of ownership in these industries. The view of the United States element in the High Commission is that Law 27 merely enables the Federal Government to take its decision when it likes. The view of the United Kingdom element is that the Law obliges the Federal Government to take the decision on ownership before any shares in the new coal, iron and steel companies to be formed under the Law pass from the hands of trustees and are sold on the market, and that any previous sale of shares would constitute prejudice to the Federal Government's decision.

3.

My colleagues are asked to confirm that the United Kingdom High Commissioner be instructed to maintain this position by the arguments outlined in paragraph 7 of the annexed memorandum.

4. My colleagues are asked to confirm that the United Kingdom High Commissioner should: (i) express the view that, in order to end the present uncertainty on ownership, the Federal Government should be pressed to obtain a decision on this point as soon as possible from the Federal Parliament; (ii) if he cannot obtain the agreement of his colleagues to this course, he should propose that. the Federal Government be asked to express its opinion on whether the sale of shares would prejudice its own eventual decision. Such a reference is appropriate in the light of a recent resolution by the Federal Parliament, asking both the Federal Government and the High Commission to take no steps which would prejudice the Federal Government's eventual decision on the pattern of ownership in the German coal, iron and steel industries.

5.

My colleagues are further asked to confirm, in the light of the considerations put forward in paragraph 12 of the attached memorandum, that the United Kingdom High Commissioner should be instructed to appeal to governments, if he is outvoted on the interpretation of the "ownership clause".

ForeigOffic&£ 58W.1.,

20TH MARCH, 1951.

H. M.