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OWNERSHIP OF GERMAN COAL? IRON AND STEEL INDUSTRIES
Allied policy about the ownership of the German coal, iron and steel industries was expressed in paragraph 2 of the preamble to the Tripartite Allied High Commission Law 27 which came into force in May, 1950. The paragraph runs as follows:-
"And whereas the Allied High Commission has decided
that the question of the eventual ownership of the coal and iron and steel industries should be left to the determination of a representative, freely elected German Government".
It is a repetition of the identical clause in the preamble to the Anglo- American Law 75, promulgated in November, 1948. The French appealed in April, 1950, to Governments against this clause. The appeal was, however, not upheld, and the French as well as the United States and United Kingdom Governments must be held to be bound by the terms of the preamble.
2.
It has for some time been apparent that these terms are interpreted differently by the United States and United Kingdom elements of the Allied High Commission. In the United States view, which seems now to be shared by the French, they mean no more than that the Federal Government should be free to make in its own time, and irrespective of the imple- mentation of Law 27, a decision about the ownership of the German coal, iron and steel industries. In the United Kingdom view, the Federal Govern- ment must make its decision on the form of ownership before Law 27 is fully implemented, and in particular before the shares in the new "unit companies", which are being formed under the Law, pass from the hands of the Trustees appointed to hold them and are sold on the open market. It has always been our view that if the shares were sold to private owners, the Federal Government's decision on ownership would be prejudiced. Before any shares of the "unit companies" are put on the market, therefore, the Allied High Commission should request the Federal Government to take the steps necessary to determine the form of ownership.
3.
The German attitude on the question of ownership is uncertain. The United Kingdom views on procedure are supported by a resolution adopted in November, 1950, by the German Federal Parliament, resolution both the Federal Government and the Allied High Commission were requested to take no action, in the course of implementation of Law 27, which would in any way prejudice a future decision by the Federal Government on the ownership of the basic industries. It is, however, very improbable that, if the present Federal Government or Parliament were now to take such a decision, it would be in favour of any form of public ownership. Even the Social Democrat Party and the Trade Unions in Germany have concentrated far more on attaining joint control of policy in the main individual coal and steel companies ("Mitbestimmung") than on working out plans for public ownership. In achieving, as they have now done, a considerable degree of joint control, they have gone far towards ensuring against any possible revival of the old reactionary influences in German heavy industry. They may in consequence be content with something considerably less than full State or public ownership of the heavy industries. It would therefore be unwise to expect that even a favourable decision within the Allied High Commission on the interpretation of the preamble to Law 27 would be followed in the near future by any steps on the part of the
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the near future
age 77.of Federal Government to bring the German coal, iron and steel industries under public ownership.
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4.
It is against this general background that the issue of the interpretation of theprean.ble has now been raised for plecision by the Council of the Allied High Commission. The particular occasion of its emergence is a complicated case of which the essential features
are:-
5.
(a) Two of the constituent companies of the Mannesmann
Röhrenwerke (a large steel complex due for deconcentration under Law 27) are to be set up under the Allied reorganisation plans as a single "unit company''.
(b) Shares in the two constituent companies would be transferred under
a restitution agreement by Mannesmann Röhrenwerke to a British firm Hahn Brothers, who would thus become a majority holder in the new "unit company".
(c) The Americans propose and the French agree that the property
and shares of the new 'unit company" should be decontrolled and released by the trustees who now hold them.
In submitting this proposal to the Council of the Allied High Commission and in raising the main issue of the interpretation of the preamble to Law 27, the French and Americans will argue that delay in the sale of shares, pending a decision by the Federal Government on ownership, is not required by the preamble, and that it would jeopardise Allied control over the distribution of shares in the unit companies, thereby facilitating the resumption of control in these companies by Nazis or Nazi supporters. It must be admitted that if the decision on ownership were delayed, and if shares were sold only after that decision, the Allies would be in a weaker position than at present to prevent the return of former owners to positions of control. It should, however, be possible to meet this diffi- culty and to counter any legitimate French and American fears by means of some contractual arrangement with the Federal Government making special provision against the return of the former owners.
6.
When the proposal in paragraph 4 above is submitted to the Council of the High Commission, the United Kingdom element of the High Commission proposes to record its opposition on the following grounds:-
7.
(i) the preamble to Law 27 places an obligation on the Allied
Authorities to refrain from any action which might prejudice the ultimate decision by the Federal Government on the ownership question;
(ii) the transfer of shares to private owners at this stage would prejudice
the Federal Government's decision in favour of private ownership and thus constitute a breach of the Allied High Commission's obligations,
It may be possible to oppose the American and French proposal on the legal ground that the Hahn/Mannesmann
restitution agreement is invalid; but it seems unlikely that we could stand for long on this ground.
The United Kingdom attitude will be supported by the following arguments:-
(a) the agreement of November, 1948, to resolve Anglo-
Pamerican differences on the ownership question by the fegula in
the preamble to Law 75 was reached only after prolonged negotiation and reference to Governments;
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8.
(b)pthe right 38the Government of any State to nationalise the87
property of its subjects is inherent in the sovereignty of that State. There would be no necessity to reiterate an inherent right in the preamble to Law 27.
(c) the law makes full provision for holding the shares of the new
companies in Trusteeship. These measures would have been unnecessary had the intention been limited to deconcentrating the old concerns and to handing over the shares in the new companies to new private shareholders or to the shareholders of the old concerns;
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(d) When the text of the preamble was originally agreed between
the Military Governments, General Clay, the American Military Governor, evidently shared the United Kingdom view of its meaning. In his book "Decision in Germany" he writes (p. 329 of the English edition): "The enterprises to be formed under the reorganisation must be held in trusteeship until a freely elected Western German Government has determined the economic pattern of ownership for these industries".
(e) To take the shares out of the hands of the Trustees at this
stage would be contrary to the resolution adopted by the German Federal Parliament in November, 1950, in which the Allied High Commission was requested in the course of implementation of Law 27 not to prejudice the question of the future ownership of the basic industries.
Strong as these arguments are, it must be recognised that they will probably not be accepted by the Americans and French (who after a long period of hesitation seem to have aligned themselves in all essentials with the American position). On the main problem at issue therefore the United Kingdom High Commissioner is likely to be outvoted by his colleagues. A precedent will be created for the sale of shares of each unit company as it is formed, and any eventual decision by the Federal Government will thereby be progressively prejudiced in favour of private ownership.
9. It might be possible to avoid a vote and at the same time to gain our point by proposing that the Federal Government should be pressed to obtain as soon as possible a decision on the form of ownership from the Federal Parliament. Such a decision would end the present state of uncertainty and could be made irrespective of the interpretation of the preamble. It is unlikely that the Americans and French will agree to any approach to the Federal Government in this sense. The United Kingdom High Commissioner should, however, put forward the idea.
10. The United Kingdom element in Germany have suggested another possible means of avoiding an immediate decision against us in the Council of the High Commission on the interpretation of the preamble to Law 27. They have suggested that the Federal Chancellor should be told by the High Commissioner of the proposal put forward by the Americans and French, as outlined in paragraph 4 above, and asked whether in the view of the Federal Government such a proposal would constitute prejudice to the decision of the ownership issue under the terms of the resolution passed by the Federal Parliament (paragraph 3 above). Reference to the Federal Chancellor on this point has certain additional advantages:-
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