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Marshall Aid and British policy on reparations from Germany, 1947–1949

Published online by Cambridge University Press:  26 October 2009

J Farquharson
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Extract

The object of this article is to examine the impact of the Marshall Plan (ERP) on the strategy of reparations from Germany that was pursued by the British government in the postwar era. In order to put this into some kind of context it will first be necessary to provide a brief survey of the mechanism of reparations and then of the rationale behind the system of financial assistance afforded by the USA to Western Europe known as Marshall Aid (its title derived from the US Secretary of State, George Marshall, who pioneered the scheme). The idea of extracting some form of compensation from Germany, to be apportioned among the victors, came to be debated in Whitehall during hostilities, but little attempt was made to coordinate plans among the Allies until the conference at Yalta in February 1945. No consensus could be attained there among the participants (the UK, the USA and the USSR). Stalin lodged a claim for $10 billion of reparations in ten years, which entailed that the Soviet Union would be allocated half of all payments from Germany. The lack of assent from the Western powers led to a new body, the Allied Reparations Commission (ARC), being convened in Moscow, which also failed to reach a conclusion. Reparations were then settled at the Potsdam Conference between the same three powers in July–August 1945.

Type
Research Article
Information
Review of International Studies , Volume 22 , Issue 4 , October 1996 , pp. 361 - 379
Copyright
Copyright © British International Studies Association 1996

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References

1 Cairncross, A. K., The Price of War: British Policy on German Reparations 1941–1949 (London, 1986)Google Scholar.

2 Kramer, A. K., Die britische Demontugepolitik am Beispiel Hamburgs 1945–1950 (Hamburg, 1991)Google Scholar; seealso his survey, ‘British Dismantling Politics, 1945–9; A Reassessment’, in Turner, Ian D. (ed.), Reconstruction in Post-War Germany: British Occupation Policy and the Western Zones 1945–1955 (Oxford, 1989)Google Scholar. See also Ahrens, D., Demontage. Nachkriegspolilik tier Alliierten (Munich, 1982)Google Scholar.

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4 Hogan, M. J., The Marshall Plan: America, Britain and the Reconstruction of Western Europe, 1947–1952 (London, 1987)CrossRefGoogle Scholar. See also Milward, A. S., The Reconstruction of Western Europe, 1945–1951 (London, 1984)Google Scholar, and Gimbel, J., The Origins of the Marshall Plan (Stanford, CA, 1975)Google Scholar; Abelshauser, W., ‘Hilfe und Selbsthilfe, Zur Funktion des Marshallplans beim westdeutschen Wiederaufbau’, Vierteljahrshefte fur Zeitgeschichte, 37 (1989), pp. 85–114Google Scholar; Newton, C. C. S., ‘The Sterling Crisis of 1947 and the British Response to the Marshall Plan’, Economic History Review, 2nd ser., 37 (1984), pp. 391–408CrossRefGoogle Scholar. Both these studies cast some doubt on the Plan's actual effectiveness.

5 For the ERP rationale in Washington, Milward, Reconstruction, pp. 56ff; for German inclusion, ibid., pp. 7Iff. The Committee for European Economic Cooperation was to be the vehicle for the implementation of Marshall Aid.

6 Vide Yergin, D., Shattered Peace: The Origins of the Cold War and the National Security State (London, 1980)Google Scholar.

7 For the ‘fangs and teeth’ distinction made by the then Chancellor of the Exchequer Sir John Anderson, Armistice and Post-War Committee minutes, 15th meeting, 31 August 1944, PRO CAB 87/66.

8 The British leader was Sir Walter Monckton, Attorney-General; see his letter to Sir David Waley at the Treasury, 7 June 1945, PRO T236/257.

9 For ‘Trademark’, British Control Commission, Germany memo, 19 October 1945, PRO FO 1012/420; for the March 1946 list, Overseas Reconstruction Committee (of Cabinet), paper ORC (46)28, 19 March 1946, PRO CAB 134/595.

10 Cairncross, Price of War, pp. 130ff.

11 See Gelber, H. G., ‘Der Morgenthau Plan’, Vierteljahrshefte fur Zeitgeschichte, 13 (1965), pp. 372–402Google Scholar; see also Loth, W., The Division of the World, 1941–1955 (London, 1988), pp. 16Google Scholar, 18.

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13 Cairncross,Price of War, pp. 107fT, gives the background, including irritation on the British side about Clay's ‘obsession’ with German steel production (i.e. with keeping it down).

14 Gimbel, Origins, believes France to have been the target of the US action, but most historians accept it was aimed at the USSR (for the reason given here).

15 Bevin to Cabinet, 19 June 1946, PRO CAB 134/596; for ministers‘ views, Cabinet minutes, 48(46), 16 May 1946, PRO CAB 128/5.

16 Board of Trade memo, 16 September 1946, PRO BT 211/125.

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25 Overseas Reconstruction Committee (ORC) 6th meeting, 7 July 1947, PRO CAB 134/597.

26 Bipartite (Anglo-US) Control Office Frankfurt to CCG (BE) Berlin with the Economic Council's text, 29 October 1947, PRO FO 371/65212; see also CCG (BE) Lubbecke to FO, 23 September 1947, PRO FO 371/65209.

27 Vide Sir Cecil Weir remarks, chief of Econ. Sub-Commission CCG (BE), Record of Meeting held in Sec of State's Room, 16 December 1947, PRO FO 1030/34.

28 For the British brief, meeting between President of Board of Trade and business (FBI) representative, 29 April 1948, PRO BT 211/84; for Clay's quote, his cable to Draper (Washington), 1 November 1947, in Smith, J. E. (ed.), The Papers of General Lucius D. Clay, Germany 1945–1949, vol. I (Bloomington, IN, 1974) pp. 464Google Scholarff.

29 FO meeting, 26 September 1947, PRO BT 211/19.

30 FO minute, 17 December 1947; for Bedell Smith's dinner table remarks in Berlin, PRO F O 1030/34; for Clay, FO minute to Bevin, 18 December 1947, ibid.

31 Joint State-War Department cable to OMGUS, 11 September 1947, describing the projected approach as a policy statement, FRUS 1947, vol. 2, p. 1123.

32 Notes of a meeting in FO, 3 December 1947, where Robertson, Mil. Governor UK Zone, asserted that only reparations kept quadripartite authority (ACA) together, PRO BT 211/239. For the appeal to the French, FO to British Embassy, Paris, 14 January 1948, PRO FO 1030/34.

33 For the aide-memoire, FRUS 1947, vol. 2, pp. 1137ff. There was a further one delivered on 12 January 1948 on the need for reciprocal reparations from the USSR in particular. FRUS 1948, vol. 2, pp. 705–6.

34 Civil Affairs War Department to Clay, 9 January 1948, ibid, pp. 703ff; for the talks and the sum, memo, 19 January 1948, ibid, p. 710; see also State Department (SD) memo, 20 January 1948, ibid., p. 711.

35 Pauley's resignation note as Special Adviser, 14 January 1948, ibid., pp. 722ff; Harriman to Truman, 23 January 1948, ibid., pp. 716ff; SD memo, 14 February 1948, ibid., pp. 726–7.

36 Marshall to US Cab., 16 February 1948, and to US Embassy, London, 17 February 1948, ibid., pp. 728–9 and 733 for the conditions.

37 Memorandum of Conversation, etc., 22 March 1948, FRUS 1948, vol. 2, pp. 738ff.

38 See memo ‘He who pays the piper calls the tune’, 5 July 1947, PRO FO 1030/169. Clay himself was an ardent advocate of the use of American economic muscle; see US Embassy London to SD, 28 August 1947, FRUS 1947, vol. 2, p. 956.

39 CCG (BE) Berlin circular, 9 January 1948, PRO F O 1013/27; for the 245 total, brief for meeting President of Board and Trade and FBI, 20 April 1948, PRO BT 211/84; for the suspension of scheduling, U K Reparations Mission Detmold report, March 1948, PRO BT 211/524.

40 For the UK delegates’ (to tripartite talks) private meeting, 8 April 1948, PRO FO 371/71093; for the talks themselves, minutes 14 May 1948, PRO BT 211/319. For Clay, cable to War Department, 1 July 1948, Smith (ed.), Papers of Lucius Clay, pp. 712–13.

41 For the last point, Control Office for Germany and Austria (COGA) to CCG (BE) Berlin, 10 June 1947, PROFO 1076/13.

42 For his estimate of the number (cf. the fifteen to twenty mentioned by Lewis Douglas), his paper CP (48)34 ‘Reparations and the European Recovery Programme’, 14 October 1948, PRO PREM 8/987.

43 Earl of Listowel parliamentary reply, 152 H.L. Deb., 22 October 1947, 153–7.

44 FO to British Embassy Washington (two telegrams), 11 June 1948, PRO BT 211/319; for the 300 figure, Hogan, Marshall Plan, p. 175.

45 Marshall to London and Paris US embassies, 26 August 1948, FRUS 1948, vol. 2, pp. 796–8, describing Hoffman as under great pressure from a Congress lobby for retention.

46 They had exchanged views in cables on 7 and 16 September 1948, where Marshall pleaded Congressional pressure and public opinion as extenuating circumstances; ibid., pp. 808–10. For Douglas, his cable to Marshall, 1 September 1948, ibid., pp. 800–1.

47 His circular, 14 July 1948, PRO FO 1030/183; see also his cable to FO, 28 August 1948, PRO FO 371/71094; the Board of Trade believed that any suspension would make a restart impossible; memo to FO, 1 September 1948, ibid.

48 Bevin to Robertson, 13 October 1948, PRO PREM 8/987 and ‘Reparations and the European Recovery Programme’, ibid.

49 IARA circular, 5 September 1948, PRO FO 1030/121.

50 British chief IARA delegate (Sir Desmond Morton) reported this conversation to FO, 3 September 1948, PRO FO 371/71094, recounting what Dorr had told him.

51 Hogan, Marshall Plan, pp. 136ff.

52 For the US stop, UK Reparations Mission, Detmold report, 30 September 1948, PRO BT 211/524; for Hoffman's concern with steel, FO to Berlin (twice), 23 October 1948, PRO FO 1013/1537.

53 ‘Reparations and the European Recovery Programme’, Annex C; Cab. minutes, CM (48)63, 15 October 1948, PRO PREM 8/987; Bevin paper CP (48)259, 8 November 1948, ibid.

54 Bevin to Marshall, 1 October 1948, FRUS vol. 2, pp. 814–16.

55 CP (48)306, 20 December 1948, PRO PREM 8/987; see also Cab. Secretary memos to Attlee, 14 and 21 December 1948, ibid. Bevin submitted a second paper to Germany, CP (48)303, December 1948, ibid.

56 Cab. minutes CM (48)82, 22 December 1948, ibid.

57 Vide Abelshauser, ‘Hilfe und Selbsthilfe’, p. 112.

58 Cab. minutes CM (49)10, 8 February 1949, PRO CAB 128/15, taking Bevin's paper CP (49)23 of the same date.

59 SD (Acheson) to US Embassy London, 6 February 1949, FRUS 1949, vol. 3, pp. 550–1; Douglas to Acheson, 23 February 1949, ibid., pp. 555–6.

60 Bevin paper CP (49)76, 5 April 1949, PRO PREM 8/987, gives a potted history of the tripartite talks from September 1948 until January 1949.

61 Cable to Sec. of State (Acheson), 2 and 15 March 1949, FRUS 1949, vol. 3, pp. 557–9 and 566–7; for the agreement of 3 March 1949, ibid., editorial note, p. 591; see also Balabkins, N., Germany under Direct Controls: Economic Aspects of the Industrial Disarmament 1945–1948 (New Brunswick, NJ, 1964), p. 27Google Scholar.

62 Cable to British Embassy Washington, 4 September 1948, PRO FO 371 71094.

63 Vide Kessel, M., Westeuropa und die deulsche Teilung. Englische undfranzosische Deutschlandpolitik auf den Aussenminister Konferenzen von 1945 bis 1947 (Munich, 1989), p. 27CrossRefGoogle Scholar, accepts that from the onset of the occupation the British aimed to take reparations only on a scale that the country could bear, rather than seeking compensation for total damage, etc., which the UK had suffered.

64 CCG (BE) Ind. N. Rhine-Westphalia memo, 11 April 1949, PRO FO 1013/1537, gives a breakdown as shown in the text.

65 Vide Eschenburg, T., Geschichte der Bundesrepublik Deutschland. Band I, Jahre der Besatzung 1945–1949 (Stuttgart, 1983), pp. 48Google Scholar, 269–70.

66 In November 1949 the Western High Commission signed the Petersburg Agreements with the new West German government, which further lifted restrictions on PLI sectors. But shipbuilding remained limited. US High Commissioner to Sec. of State, 22 November 1949, FRUS 1949, vol. 3, pp. 343ff.

67 CP (46)384, 17 October 1946, PRO CAB 129/13. It was also mooted (para. 4) that if Britain herself took German exports it would help Britain to sell more abroad.

68 FRUS 1949, vol. 3, pp. 599ff.

69 D. C. Watt, ‘Hauptprobleme der britischen Deutschlandpolitik 1945–1949’, in Scharf, C. and SchrÖder, H. J. (eds.), Die Deutschlandpolitik Gwssbritanniens und die Britische Zone 1945–1949 (Wiesbaden, 1979), p. 15Google Scholar.

70 For example, Board of Trade memo on reparations, 15 May 1947, PRO BT 211/238; see also FO minute, 25 July 1947, PRO FO 1057/36, for a strong attack on such attitudes at CCG (BE), even accusing some officials of ‘sabotage’ of reparations in their desire to keep equipment in Germany.

71 Vide Farquharson, Western Allies, esp. pp. 84ff.

72 Deighton, Impossible Peace, pp. 111–12.

73 Milward, Reconstruction, pp. 94–5 for ERP total; for the S3 billion estimate, Treasury (Playfair) to Hall-Patch, 3 April 1945, PRO FO 942/87.

74 For the US action, FRUS, 1948, vol. 2, pp. 738ff, and record of talks, 16 October 1948, ibid., pp. 822–3, where the British present were surprised to be told of this. For higher dismantling costs. Economics Minister N. Rhine-Westphalia to Regional Econ. Officer, CCG (BE), 12 December 1947, PRO FO 1013/860 (these are costs for N. Rhine-Westphalia, where most zonal equipment was located).