103.9169/7–445: Telegram

No. 426
The Secretary of State to the Chief of the Mission for Economic Affairs in the United Kingdom ( Blaisdell )

5415. For Blaisdell.

Following is text of letter being sent to you from Clayton:

“In a meeting held in my office on June 28, at which you were present along with representatives of the Department, the Foreign Economic Administration, the War Department, and the United States side of the Combined Production and Resources Board, agreement was reached on several aspects of this Government’s policy with respect to stimulating German coal production for export and distribution thereof. It is contemplated that participation by the Soviets in the German coal export program, along these lines, will be sought at the forthcoming conferences in Berlin. I wish to confirm those policy recommendations which you were specifically asked to act upon

[Page 627]

I. United States Policy with Respect to German Export Coal

It was agreed that the European Coal Organization should be the agency which, in effect, determines the physical distribution of German export coal among the claimant nations by recommending allocations to the appropriate Allied Control authorities after the latter have informed the ECO of expected export availabilities and probable transport restrictions under the contemplated directive for such production. The question of whether these exports shall be charged to the receiving countries on reparations or commercial account will remain in suspense and supplies necessary for production as well as exports will move forward without reference to solution of this problem. You are authorized to take the following action in this connection:

Inform your French and British colleagues on ECO of the United States policy above stated, and invite their participation in discussions of implementing this policy with the United States, French and British military officers concerned.
Seek acceptance of this policy by the ECO after consultation with the military and your French and British colleagues. It is understood that the allocating authority of ECO will not affect operations of the CPRB coal allocating machinery outside of Europe.
Make clear to ECO and the military that this policy for determining distribution of coal exported from Germany does not apply to allocation of coal within Germany, which latter function remains the responsibility of the Control Commission and the Zone Commanders.

II. Responsibility for Coal Production within Germany

It was agreed that it was desirable to have a strong central organization responsible for coal production in Germany but that the United States authorities in Washington should not attempt to establish the details of such an organization beyond recommending that it should consist of representatives from either the three or the four zones participating. You are authorized to discuss with the United States Zone Commander the development of practical solutions to the organizational problems which will arise from the inter-zonal and international character of this proposed control of German coal production for export. You should give particular attention to the methods of resolving disagreements which may arise among the zone commands in attaining maximum production of German coal.

III. Procurement of Imported Supplies Needed to Achieve German Coal Export Target

It was agreed that the United States would press for a development of an efficient channel for procurement, from sources outside Germany, of those supplies, including food, which are essential to exportable coal production in Germany. It is conceded that such a procurement [Page 628] mechanism cannot proceed effectively if it is necessary, for example, for the French authorities in the Saar to seek coal production incentive supplies from the United States through the French Supply Council. You are authorized to discuss with your French and British colleagues, and the military, alternative methods of procurement and delivery of such supplies for all of the coal producing zones as a matter of the highest priority.

It is of course a prime objective of this Government to include the Soviets in any organization having to do with production, export, or allocation of German coal. If, in the course of the Berlin discussions, such an agreement can be reached, the above instructions and possibly the present constitution of ECO will have to be modified accordingly. Should you feel, after consultation with Ambassador Winant, that communication of the above to Soviet representatives in London is advisable as a summary of our tentative views, you are authorized to take such action. Please keep the interested US agencies and the US side of CPEB informed of developments.”

W L C[layton]