No. 434
The Chief of the Mission for Economic Affairs in the United Kingdom ( Blaisdell ) to the Assistant Secretary of State ( Clayton )1

Dear Mr. Secretary:

This is to acknowledge your cable 5415 of July 42 in which you repeat the text of a letter which you have addressed to me regarding several aspects of the US Government’s policy with respect to the stimulation of German coal production for export and the distribution of exportable German coal surpluses.
I am sorry to say that … your cable did not reach me until July 8. However on that date I had an opportunity to discuss your cable with Ambassador Winant and we mutually agreed that I should go to Frankfurt to talk with Lt. General Clay to get his slant on the various policy recommendations which you specifically asked me to act upon.
On July 11, together with Wayne Jackson of the Department and R. S. McCaffery of this Mission, I had an extended interview with General Clay at US Control Group Headquarters, Frankfurt, Germany.
Before I attempt to summarize for you certain of General Clay’s comments with respect to specific aspects of your cable, I want to make clear that General Clay is not only vividly aware of the gravity of the coal position, both as regards US zone requirements and as regards the situation of Europe as a whole, but that he is, as well, making every effort to contribute what he can to the solution of this problem within the powers granted him as he sees them.
With respect to your paragraph C–2:3
General Clay pointed out the split jurisdiction which exists as between the Reparations Commission and the Allied Control Commission and the likely difficulties resulting from this none too clearly defined authority. We agreed that this difficulty was a real one but expressed the hope that this jurisdictional aspect of the problem might be resolved at the forthcoming conference in Berlin.
With respect to your paragraph G–2:
General Clay stated that the Combined Coal Committee under the recently set up Combined Resources Allocation Board (CRAB) of ACC constituted in his opinion suitable machinery in terms of “a strong [Page 641] central organization responsible for coal production in Germany,” and that any other agency which might be set up to cut across zonal lines would be extremely impracticable under existing zonal arrangements. In the light of existing conditions we believe this view to be a reasonable one if ways and means can be found to fortify and strengthen the hand of the US side of CRAB. At the moment General Clay and the US element of the Control Group feel that they have little power, except that of persuasion, to induce the other controlling powers to accept any specific US suggestion leading toward the maximum coal production in those zones (the Ruhr and the Saar) not under US control.
All concerned strongly hope that, as a result of the forthcoming conferences in Berlin, the Russians will become active participants in CRAB (that is to say a four-partite [sic] equivalent of CRAB), and it would therefore seem most important that U. S. representatives at the Berlin conferences recognize that the effectiveness of such a four-partite CRAB and its Coal Committee will be in fact, as well as from the US point of view alone, largely determined by the effectiveness of the tools we can put in the hands of our very able US control group. The situation discussed in paragraph (c) below, will serve to illustrate this point.
It also becomes clear after discussions with General Draper, Col. James Boyd, and others in Frankfurt directly concerned with the working of CRAB, that one of the next steps should be the establishment of effective working arrangements between CRAB and the other recently established European economic organizations such as EECE, ECO and PEITO. We were asked numerous questions with regard to the development of these organizations and the extent to which they could supply working data with respect to requirements etc. to be considered by CRAB at the time allocations are made within Germany.
With respect to your paragraph H–3 which states that “the US would press for 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:”—General Clay stated that this was, of course, most desirable but that his latest directive4 (which we have not seen), just received from the JCS clearly cut the ground out from under the proposal put forward in paragraph H–3. This is because this directive places the allocation of all imported food (most of which will be from US) on a combined basis, and the British are already in receipt of a large proportion [Page 642] of this food, including most of the wheat, at ports controlled by them. The US Control Group had hoped that, at least in respect of food procured in the USA, it would be in a controlling position and thus in a stronger bargaining position in terms of the implementation of such suggestions as it might put forward regarding, let us say, the stimulation of Ruhr coal production.
I had no advance knowledge of the existence of the above mentioned directive on the combined distribution of food, and I share General Clay’s attitude with regard to its having weakened the US hand in the sense of our US Control authorities being able to indicate the specific material contributions which they might make under given circumstances to the solution of the coal production problem in the British and French zones.
Incidentally, General Clay is most pessimistic about the probability of getting increased production in the Saar under French occupation, and all informed opinion on this side with which I have been in touch concurs in this view. Under present arrangements I think we can expect little or no coal from this source. You will recall that I reported this to you in Washington.
To continue with one more aspect of the problem posed in connection with incentive supplies for coal production mentioned in your paragraph H–3 I think it should be recognized that the procurement of such supplies is only part of the wider problem of a general German import program and the relationship of such a program to foreign exchange questions. However, while recognizing that the procurement of supplies which might be sent into Germany for the express purpose of stimulating coal production must be integrated with the broader import policy I nevertheless feel that the US should contrive to set up a procurement channel for the former which will keep such supplies on the same level of high priority as we have proposed to put coal production itself.
The other aspects of your cable, namely those portions which require discussion with our French and British colleagues on ECO, will be covered in a later communication.
I am forwarding a copy of this letter to General Clay in Frankfurt.

Yours sincerely,

Thomas C. Blaisdell
  1. Printed from a carbon copy forwarded to the Department of State. The original was sent to Clayton at Babelsberg by courier on July 14.
  2. Document No. 426.
  3. The paragraphs referred to by Blaisdell are not so numbered in the file copy of Clayton’s message.
  4. The Department of Defense has supplied the information that no Joint Chiefs of Staff or Combined Chiefs of Staff directive having the substance and approximate date suggested by this paragraph has been identified.