24th June 2007
Last week I wrote about the Level of Industry Negotiations, which took place in Berlin from September 1945 until the end of March 1946, as described in the book 'Berlin Reparations Assignment', written by two members of the US delegation, B U Ratchford and Wm D Ross.
Sir Alec Cairncross was the economic adviser to the British delegation. He later became a distinguished economist, economic historian and Chancellor of Glasgow University. His book 'The Price of War' published in 1986, is a history of the negotiations from the British perspective. A second book 'A Country to Play With' published a year later in 1987, is a more personal account of his own role.
Cairncross's description of the absurd nature of the negotiations, and how the agreement was discarded almost as soon as it was reached, is very similar to that of Ratchford and Ross. On being asked to take on the job, he says: "It seemed to me as plain as a pikestaff after a three week's visit to Germany in July 1945 that any sensible man, asked what industrial plant was surplus to the requirements of a peaceful Germany was bound to give the short answer: 'None'."
He describes his frustration as his expert economic advice was discarded by the political negotiators, and the agreement finally reached, on Steel production levels in particular, ignored all his carefully gathered statistical evidence. On the plan as a whole he comes to the conclusion: "that the Plan itself was utterly unrealistic seems obvious enough in retrospect." The finally agreed levels of industry were "neither consistent nor coherent.... They were the outcome of a bargaining process in which each decision was unrelated to the others and the resulting jumble could not be assumed to make any sense whatever. Nobody could say what the German standard of living would work out at, or whether Germany would achieve a level of exports sufficient to pay for the imports required at that level, or how many Germans would be unemployed. There was no real agreement even on the size of the German population. There was open disagreement whether reparations could be taken from the so-called peaceful industries. And, of course, no one knew how much industrial capacity remained in Germany, least of all in the Soviet zone."
As with Berlin Reparations Assignment, the author's personal comments are as, if not more, interesting, than the account of the negotiations. Here are some examples :
It seems remarkable that, despite spending 5 months in Berlin, Cairncross met hardly any Germans: "Contact with the Germans was limited ... We knew very little of what was going on inside the minds of the Germans we passed in the street."
For the British and Allied delegations, life was a round of endless parties and opulent living in the officers' mess where: "As soon as you came into the sitting room, a German Jeeves shimmered in to offer alcoholic nectar and when you returned from the intake of calories in the adjoining dining room he shimmered back again with coffee and brandy. The food was abundant and prepared by a first class chef."
One reason for going was not to see Germany after the war, but because he wanted to meet the Russians at first hand: "People did not talk at that time about an iron curtain. But they were conscious of the segregated world in which the Russians lived and of the clash that had begun to be felt between that world and ours ... Russian propaganda in the summer of 1945 had taken a stridently anti-British note while in Britain there was general mistrust of Russia."
"[The British] had found to their consternation, and to the amusement of the Germans, that the balance of power in Europe had been only too successfully overthrown; it promised to be as difficult to make peace with their Russian allies as to defeat their German enemies ... To make a slum of Germany, moreover, would be to make her an easy prey to communism and turn the scale against democracy throughout the whole of Western Europe. This would have been the last word in folly: to have cast Germany with open eyes to a totalitarian regime in reparation for a war fought to overthrow another form of totalitarianism."
But despite this Cold War view of the Soviet Union and many other unfavourable comments on the Russians in the books, Cairncross speaks of being on good terms with his opposite numbers in the delegation and how, when he left Berlin shortly before the end of the negotiations: "The Russian team gave me a party when I left Berlin and loaded me with presents of vodka and caviare."
On the contentious issue of whether the Allied negotiators were influenced by commercial considerations; a desire to hold back the recovery of German industry after the war, to make it easier for companies in their own countries to compete in international markets; Cairncross states clearly in 'The Price of War' that: "There is no evidence that commercial considerations exercised a decisive influence on British reparations policy in 1945." The overriding factor for the British was a desire to do all they could to prevent future military aggression by Germany.
On the other hand, in 'A Country to Play With' he claims that the French and US delegations were influenced by industrialists, out for what they could get:
On the negotiations on steel he refers to: "The presence in Berlin of a number of American steel men ... who hoped to boast on their return to the USA that they had settled the future of the German steel industry," and on French proposals to forbid the export by Germany of pharmaceutical products and potash he comments: "In the British view, none of these differences had much to do with security: all of them reflected French commercial interests."
And the British delegation too, not surprisingly, were not immune to commercial pressures: "Even at this late stage departments in Whitehall were still pressing for more severe limitations on German industry. The Ministry of Supply and Aircraft Production was asking for a prohibition of the manufacture of watches and most other precision instruments, partly no doubt in the interests of the newly established British watch and clock industry, partly because of the importance in the Second World War of capacity to make fuses and precision instruments. The dyestuffs industry was said to be basing its plans on the complete elimination of the Germany industry..."