740.00119 Control (Germany)/7–2345: Telegram

No. 880
The Deputy to the Assistant Secretary of State for Economic Affairs ( Thorp ) to the Assistant Secretary of State ( Clayton )1

121. For Clayton from Thorp.

Dept and CAD representatives met last Friday with British on German supply problems. At time of receipt of your Victory 215,2 we were in process of clearing British telegram to London reporting U. S. views expressed at that meeting, which favored zonal approach to procurement and financing. In view of your reference in Victory 215 to “combined handling and financing for the three western zones”, we sought to hold up British telegram pending consultation with you but British are anxious to acquaint London with views expressed here in order that their people at the Conference may be properly briefed on them. We have therefore agreed to telegram going forward with appropriate reservations concerning informal nature of the proposals. CAD supports the proposals and has so advised General Hilldring. The pertinent portion of the British telegram will read approximately as follows:

  • “4. The following principles were put forward by the Americans. (a) Zonal estimates to be coordinated in CRAB on basis of agreed interim policies covering consumption standards and levels of industrial activity. Subject to general guidance agreement should be left to zone commanders, who should so far as possible use CRAB as an informal instrument for obtaining such agreement. Object is to avoid any appearance of establishing without consultation with the Russians policies which might be or appear to be permanent. (b) Deficiencies in one zone to be met as far as practicable by surpluses from other zones, (c) Zonal programmes of requirements for imports to be submitted simultaneously to Combined Boards by the Governments of the occupying powers separately from any other programmes, (d) Instructions to be issued to Combined Boards and any other interested Governmental agencies in U. S. A. and U. K. to ensure equal priorities for programmes of all zones, (e) Zone Commanders to have the right to agree as to diversion of supplies from one zone to another in case of emergency.
  • 5. Actual procedure which Americans contemplate can best be described under three heads, (a) Procedure inside Germany (para 6 below), (b) Procedure outside Germany (para 7 below), (c) Financial arrangements (Para 8 below).
  • 6. For procedure inside Germany CRAB should be used acting as specified in Mel 891 of 30 June.3
  • 7. Procedure outside Germany would be as follows. Import programmes for three zones after agreement in CRAB would be submitted through zone commanders to respective Governments (with copies to other zone commanders for transmission to their Governments). Governments would put programmes through their representatives in Washington to combined boards (presumably after exclusion of non- RCL items which would be procured independently by respective Governments). These programmes would be considered simultaneously by Combined Boards subject naturally to necessity for action on other programmes if any programme were unduly delayed. Combined Boards would be directed to give equal priority to all zonal programmes in making allocations. After allocations were made arrangements for procurement and shipment would be responsibility of respective Governments acting through their own agencies.
  • 8. As regards finance Americans are strongly of opinion that only practicable arrangement is that each country should bear initial financing of procurement for its own zone. This would apply to the French as well as ourselves and to American supplies from U. K. as well as to British supplies from U. S. A. There are two main reasons for this view. First the financing by the U. S. A. of supplies from the U. S. A. for the British and French Zones would inevitably necessitate screening by the War Department in Washington of the programme for the British and French Zones. This would stultify or duplicate one of the functions which it is intended CRAB should perform. It would also in American view increase difficulties of development into quadripartite arrangement since it would in effect transfer to Washington the whole function of approval and control of supplies for Germany. Secondly, War Department have no funds beyond a very limited period to finance supplies for British or French zones and after that limited period (which is almost covered by requirements already stated by SHAEF up to November arrivals and in part already approved and allocated by CCAC) neither War Dept. nor any other U. S. Department has funds for this interim financing.
  • Any proceeds of current exports from Germany would in the American view be made available as a pool out of which repayment would be made to the three (ultimately the four) governments in proportion to the interim financing burden assumed by each. Americans agree that the task of repaying out of Germany’s total resources those who have provided the interim finance of imports should be the joint responsibility of the controlling powers.
  • 9. This telegram has been seen by State Dept. and War Dept.”

The formulation of these proposals was governed in considerable part by desire to set up interim tripartite machinery which would be [Page 817] readily expansible to a quadripartite basis. Victory 215 appears to diminish the importance of this consideration but does not incline us to revise our conclusions.

  1. Sent to the Secretary of State at Babelsberg over the signature of Grew.
  2. document No. 877.
  3. Not printed.