740.00112 E. W./6–2845

No. 421
The Political Adviser in Germany ( Murphy ) to the Secretary of State ad interim
No. 539

Subject: German Coal

Sir: I have the honor to transmit a memorandum on the present German coal situation written by Mr. Rainey, an economic officer of my staff, together with a copy of the report by Dr. Potter and Lord Hyndley on the coal situation in North West Europe, dated June, 1945.

I wish particularly to call your attention to paragraphs e, f, and g of the Summary to the PotterHyndley report. The extremely critical nature of the coal supply problem in Western Europe unquestionably [Page 615] requires that all matters pertaining to the production and movement of German coal must be given the highest priority. Critical coal shortages in France, Belgium, Holland, Denmark, and Norway require export of all available coal from Western Germany if civil order is to be maintained in Western Europe during the coming winter. However, present indications are that Western German production will not meet the essential requirements of North West Europe for several months and it is evident that imports from U. S. and U.K. must be maintained.

I also wish to call your attention to page 4 of Mr. Rainey’s report, where reference is made to the organization of the North German Coal Control under Military Government, British 21st Army Group. You will note that British 21st Army Group officers have agreed that German management and organization must be utilized to run the Ruhr mines under military supervision. This reverses the policy of the recently dissolved Rhine Coal Control, which was opposed to the use of over-all German management organizations.

With the termination of Combined Command, the functions of SHAEF G–4 Solid Fuels Section will now be divided between the Combined Resources Allocation Board and the European Coal Organization, as far as the allocation of German coal is concerned. Production in the Ruhr and Cologne areas will be a primary responsibility of the British 21st Army Group. However, everyone concerned recognizes the necessity for a strong coal committee at the Allied Control Authority level, which will be able to deal with German coal production and allocation as a whole. The formation of a coal committee within the Combined Resources Allocations Board is the first step toward a coal committee including Russian and French members of the Allied Control Authority.

It is my intention from this time on to forward a weekly summary of the coal situation in Germany.

Respectfully yours,

Robert Murphy
[Enclosure 1—Extracts]
Mr. Froelich G. Rainey, of the Office of the Political Adviser in Germany, to the Political Adviser in Germany ( Murphy ) and the Director of Political Affairs, United States Group, Control Council, Germany ( Heath )

Subject: German Coal.

. . . . . . .

2. The impending coal famine. The attached report of the PotterHyndley Mission is a more authoritative and effective summary of [Page 616] the coal situation in Northwest Europe than I could hope to give. I can only add that my own observations and conversations (in the same area and generally with the same field personnel) lead me to believe that the critical nature of the coal problem is not overdrawn in that report. The following clear-cut facts stand out: With any sizeable imports of coal from UK and US to Western Europe highly unlikely after August 1945, with coal production in France, Belgium, and Holland not more than 50% of normal, and with negligible production in Scandinavia, Northwest Europe must look to Western Germany for coal to fill its absolute minimum requirements. But coal production in Western Germany, rising from 3 to 5% of normal during June, provides for an almost negligible export at the moment. The most optimistic do not see a Western German production more than 25% of normal by the end of the year and even if this rate is achieved there still remains a deficit in Western Europe which will have far-reaching repercussions on the social, political, and economic stability of the continent. Under these circumstances Western Europe unquestionably faces a very grim winter in 1945–1946.

The seriousness of the situation was underscored at the London Coal Committee meeting where Lord Hyndley and Dr. Potter vied with each other in painting an increasingly gloomy picture. Both men, impressed by the enormous destruction in the Ruhr and Saar areas, see little hope for an adequate recovery of Western German coal production in time to meet the urgent demands. Mr. Eaton Griffith (Ministry of Fuel and Power) took a slightly more optimistic view but recognized the necessity for almost superhuman effort on the part of the Allied Control Authority and specifically the British Army of Occupation in the Ruhr Area if a chaotic situation in Western Europe is to be avoided. All of the officers assigned to SHAEF G–4 Solid Fuels who have been working in Germany, Belgium, France, Holland, Denmark, and Norway are extremely pessimistic about achieving sufficient production to meet the absolute basic minimum requirements in Western Europe this winter and they feel that no matter what steps are taken the coal deficiency will cause extreme hardship and increasing political unrest.

3. Production in Germany. …

. . . . . . .

One point which was not clearly emphasized in the PotterHyndley report is the fundamental question as to whether it is possible to raise coal production greatly in excess of general economic rehabilitation in the Ruhr and Saar areas. It is my impression that the signers of this report do not entirely agree on this point. Most of the technical [Page 617] men in the field believe that general economic rehabilitation must be carried out in order to raise coal production materially. Whether the rate of coal production can greatly exceed the rate of rehabilitation remains one of the most discussed problems in the field. I have the impression that most of the British personnel who will be engaged in managing coal production in the Ruhr, such as Brigadier Marley of the British Element Control Council, will bring about great pressure to favor rehabilitation in the industrial Ruhr. Thus another important political decision is involved.

Dr. Potter takes the point of view that many of the mine supplies required to operate the Ruhr mines can be produced in Belgium, France, and the Netherlands, and that there is no need for rehabilitating factories in Germany to produce these things. Many other men concerned believe that these must be produced by German factories and the German Sub-Section has already made a survey of potential mine supply production in the area. There was a similar question with regard to reconstruction of housing, transportation, etc.

Most of the men in the field agree that during the next few months the German miners will work for the bare necessities of life and that the manufacture of consumer goods in order to provide an incentive for miners is not necessary at the moment. However, these bare necessities of life are numerous under the present circumstances, following the enormous destruction in the Ruhr area, and if we may judge from conditions in Belgium, Holland, and France, mine labor cannot long be maintained unless consumer goods are made available. With fixed food prices and with a growing feeling among the miners that paper marks will be worthless, there would be no incentive for the miners, once they earn enough money to supply themselves with the little food they can buy. Mine operators in the Ruhr already describe this condition as partly responsible for the high rate of absenteeism in the Ruhr mines. This fact, coupled with the general feeling of uncertainty and insecurity, brings about a condition in which the miners work only long enough to supply themselves with rationed food and then absent themselves from the mine in order to repair their houses or care for their garden plots. Attempts to penalize the workers and to force them into the mines have not been successful. Men in the field believe that adequate labor supply can be obtained only after some semblance of normal conditions are achieved.

There are no reports of resistance in the Ruhr, Saar, and Cologne mining areas. Everyone emphasizes the fact that the Germans appear to be extremely tractable and cooperative, realizing that their only salvation is to produce as much coal as possible during the next year.

[Page 618]

4. Allocations. …

. . . . . . .

The most difficult problem will be a decision as to how much coal is exported from Germany. The PotterHyndley report takes the natural position that large quantities of coal must be exported from Germany, regardless of the effect upon German economy. On the other hand, the occupying forces and the Allied Control Authority, concerned with maintaining civil order in Germany, will present demands for large quantities of German coal for military and essential civilian requirements within Germany. It is clear that no one of the organizations referred to above can make a decision as to what part of the coal produced in Germany shall be exported. In the last analysis this decision must be made by the highest authorities in Great Britain and the United States, at least until Russia is brought into an operating Allied Control Authority. The difficulty in determining coal exports from Germany is emphasized by the coal requirements for Germany submitted by the Production Control Agency. These requirements exceed the probable production of German coal during the rest of the year and thus it is obvious that some very high level policy decision must be reached as to the degree of reactivation of German industry in view of the urgent demands for German coal in the liberated countries. A further and purely technical question arises as to how much coal can be exported without crippling the German coal industry itself.

Under Combined Command, coal production and movement in Western Germany, and to a large extent in all North West Europe, has been controlled jointly by U. S. and U. K. personnel serving under the Supreme Commander. Most of these individuals, both British and American, have come to think in terms of Western Europe including Germany up to the Russian Zone of Occupation. All of their studies of coal requirements, supply, and movement have been limited to Western Europe and all their calculations are based upon a knowledge of the transportation and production possibilities in Western Europe alone. There have been no detailed investigations of the extensive brown coal fields of Central Germany (largely included in the Russian Zone) and there are no adequate reports of conditions in the Silesian and Polish hard coal fields. There has been a tacit assumption, following Russia’s failure to participate in the European Coal Organization, that the critical coal problem must be solved by the Western nations, together with British and American forces of occupation in Germany, without taking into account the coal resources and coal demands of the East.

This Western orientation has been natural under SHAEF authority and under war conditions when transport and coal distribution were [Page 619] military responsibilities, but it continues into the post-defeat period because of the present uncertain relations with Russia.

Now, with the termination of Combined Command, the Governments of the liberated nations take over control from SHAEF within their respective boundaries; the British 21st Army Group takes over the primary supervision of coal production in and movement from the Ruhr; and in effect, France, Belgium, Holland, Denmark, Norway, Sweden, Switzerland, Italy, and even U. S. forces in Germany, must look to British-controlled sources (U. K. and the Ruhr) for coal imports to maintain their essential industry and transport. Some coal is being imported to France and Scandinavia from the U. S. but this is an emergency measure which probably cannot be expected to alter the basic situation. This condition will continue to exist unless, or until, a strong, integrated Allied Control Authority succeeds in establishing quadripartite supervision over all German coal resources in Silesia and Central Germany as well as in the Ruhr and the Saar. With joint four-power control over these major sources of European coal, the tendencies toward a Western European economic orientation, which are now inevitable, can be avoided.

The recently established Combined Resources Allocations Board, which provides for Russian participation on an Allied Control Authority level at the earliest possible moment, may succeed in counteracting, or at least delaying, the present tendency to think in terms of Western Europe alone until Allied economic perspective is broadened by a functioning Allied Control Authority.

F[roelich] G. R[ainey]
[Enclosure 2—Extract]1

L. C. P. R. B. (Coal) (45) 37

The Coal Situation in North West Europe

Report by the Potter/Hyndley Mission to North West Europe June, 1945

(Where the word coal is used, it excludes brown coal unless expressly stated)

summary of main recommendations

That it be recognized by the highest authorities in the United States and Great Britain that, unless immediate and drastic steps [Page 620] are taken, there will occur in North West Europe and the Mediterranean next winter a coal famine of such severity as to destroy all semblance of law and order, and thus delay any chance of reasonable stability.
That, to avert or at least minimize this danger, a minimum of 30 million tons of coal be accepted as the requirement between now and April, 1946, over and above that which is now in sight. The U. S., U. K., and South Africa are now supplying at a rate which will contribute 5 million tons to this requirement. There is, at present, no prospect of any increase from these sources. The remaining 25 million tons can only come from the two other normal exporting areas: Germany and/or Poland. For the next few months, the maximum contribution of coal from U. S., U. K., and South Africa will be essential, but, in view of the inherent limitations to the amount which can thus be made available, this can be only a palliative.
That an approach be made through the highest channels to ascertain what relief for North West Europe can be obtained by way of coal from Polish and German Silesia. Ten million tons between now and the end of April, 1946, would about halve the problem.
That it be recognized by the Controlling Powers that the only practicable solution lies in taking quite extraordinary steps to stimulate the production in, and movement of coal from, Western Germany.
That a directive be issued from the highest level that, short of endangering the safety of the occupying forces, all matters pertaining to the production and movement of German coal are to be given the highest authority [priority?].
That a pre-requisite to the stimulation of German coal production is to increase the amount of food available to the German miner. This is essential for the heavy work of mining, and would provide the only incentive necessary to work.
That a directive be issued that Western Germany is to make available for export a minimum of 10 million tons during 1945, and a further 15 million tons by the end of April, 1946. It should be made clear that this amount must be made available irrespective of the consequences to Germany, and irrespective of plans for other industries or the internal economy of Germany, and that any action deemed necessary by the Zone Commander to deal with any unemployment or unrest which may result will be fully supported.
That there be set up a strong solid fuel committee at Allied Control Headquarters to coordinate the coal and mining supplies requirements and the general policies pertaining to solid fuels within the various zones. Should it occur that no representative from the [Page 621] Russian zone attends this committee, then it should function in respect of the remaining three zones.

. . . . . . .

C. J. Potter
Thomas C. Blaisdell, Jnr .
J. Eaton Griffith

  1. Only the “Summary of Main Recommendations” is printed here. For the text of the report proper, see “Report of War Activities, Revised to September 30, 1945” (Washington, Department of the Interior, Solid Fuels Administration for War, mimeographed, 1945), appendix A, p. R–19.