Foreign Relations of the United States: Diplomatic Papers, 1944, General: Economic and Social Matters, Volume II

800.24/7–1544

Memorandum by the Chief of the Liberated Areas Division (Mitchell) to the Director of the Office of Wartime Economic Affairs (Taft)¹⁴

undated

Proposed Position of State Department on Eisenhower Letter, etc.

General Eisenhower in his letter to the Combined Chiefs of Staff of July 1, 1944, proposes that the US and UK Governments create a civilian organization to implement and coordinate the long-range supply and economic program of the United Nations in Northwest Europe, and upon request to assist and advise the military in the execution of the current military program. From conversations with General Holmes¹⁵ who transmitted this letter, it is understood that the organization contemplated is a London committee consisting of a representative of SHAEF, of MEA(US) and of SLA(UK).¹⁶ It is also understood that it is agreeable that this committee should operate as a subcommittee of the CLAC¹⁷ in Washington, already set up as such a civilian organization with substantially the same objectives, membership and terms of reference. The new London subcommittee, however, could bring together the US and UK civilian supply agencies with SHAEF in a coordinated operation not now achieved and greatly to the advantage of all concerned.

The Department approves heartily of this proposal as a mechanism in London through the assistance of which the US and UK Governments in CLAC can (1) provide a coordinated program to meet the civilian supply needs of Northwest Europe immediately following the conclusion of military responsibility, and make possible such conclusion at the earliest date desired by the military; and (2) on request of the military (a) provide for items beyond the scope of present military plans in the military period; and (b) advise civil affairs officers and the governments themselves on the development of their own supply plans.

We feel strongly, however, that the revival of export trade among the liberated areas of Northwest Europe, and between them and outside areas including US, UK and neutrals is primarily the business of these European countries themselves, with merely stimulation and guidance from the US, UK and USSR. It must be recalled that trade among these Northwest European countries before the war constituted two-thirds of the total trade of these countries. If these countries themselves, with our assistance, can induce a revival of any substantial part of this, it is of extreme importance to the military and later to the civilian agencies because it reduces the overseas requirements which strain supply and shipping of the US and UK.

We propose, therefore, that at the same time the London subcommittee of CLAC is established the US, UK and USSR consult and concert their action in inviting the allied nations of Northwest Europe to form with them a European Trade Committee with headquarters in London for the time being, with a representative of SHAEF and of UNRRA as members.¹⁸ The committee would have as its objective the restoration of the economy of the liberated territories. Any such program must necessarily be developed in successive stages but each of such stages is interrelated. Thus, during the initial periods following liberation, the maximum amount of supplies needed by United Nations forces in Continental Europe and elsewhere should be procured in the liberated areas themselves. Similarly, the resources of all of the liberated areas should be drawn upon to the maximum extent possible for the provision of civilian requirements in any of such areas. In other words, all resources of all liberated areas should be treated as a pool out of which will be provided to the maximum extent possible, first, the requirements of the military forces and, second, the civilian needs of those areas themselves. Only after this result has been achieved should the requirements be determined for both military and civilian purposes which involve overseas imports. These requirements would then clear through SHAEF or be referred directly to the Combined Boards here¹⁹ or both, depending on their character and the source from which they are to be met.

[Annex]

Supporting Memorandum

In view of the fact that so much of the trade of the Northwestern European countries was with one another, it would seem most desirable that representatives of our allies participate on an equal footing in the pooling of their resources for mutual benefit and for the benefit of the armies which is contemplated in the attached proposal. Furthermore, it would seem that after such pooling has been accomplished the requirements which cannot be met on the Continent itself should then be presented to the Combined Boards to be handled by them and CLAC in accordance with the procedures already established.

At the present time representatives of the allied governments are discussing directly with the Combined Boards and the CLAC their requirements (a) to supplement and (b) to follow the military program. The work of the proposed European trade committee in determining first how much of the supplies can be provided from within the Continent itself would be a very useful contribution to the discussions now proceeding here with the allied governments. Furthermore, the participation of the allied governments directly in the determination of the production possibilities of each and the import requirements necessary to supplement such domestic production would tend to assure the maximum interchange between each of the European countries with resulting benefit to all. Similarly, it would seem proper, in view of the shipping and supply situation, that those countries controlling overseas supplies should first insist upon the maximum use of indigenous Continental resources before agreeing on an overseas import program.

The work of the proposed committee does not differ markedly from the functions of the committee outlined in Mr. Reed’s memorandum²⁰ entitled “Organization of the Liberated Areas Coordinating Committee for Northwest Europe”. It does differ materially in the composition of the committee and in its contemplated expansion to cover greater areas of Europe when military advance makes such expansion possible. The allied governments themselves would have the responsibility, as a condition to receiving the supplemental supplies which they will require from overseas, of removing hindrances to trade between themselves. Thus, the future development of European trade will be stimulated on a sound basis.

14. Transmitted by Mr. Mitchell to Mr. Taft in a memorandum of July 15 requesting that the revised attachments be substituted for a memorandum of July 12 on the same subject which had been initialled by Mr. Taft and transmitted to Assistant Secretary of State Dean Acheson.
15. Brig. Gen. Julius C. Holmes, Supreme Headquarters, Allied Expeditionary-Force.
16. MEA(US), Mission for Economic Affairs, and SLA(UK), Committee on Supply Questions of Liberated and Conquered Areas of the War Cabinet.
17. Combined Liberated Areas Committee.
18. For documentation regarding Anglo-American-Soviet discussions on the establishment of a European Economic Committee, see pp. 614 ff.
19. For information on the Combined Boards, see Department of State Bulletin, January 16., 1943, pp. 67–69; see also ante, pp. 16 ff., passim.
20. Philip D. Reed, Mission for Economic Affairs, London; memorandum not found in Department files.