The United States Political Adviser for Germany (Murphy) to the Secretary of State

1348. Reference Department’s 971, November 29, 8 p.m. General Clay’s comments are as follows:

“Relative to the paraphrased cable from the State Department concerning the export-import program for Germany, my views are:

“Paragraph 1. Concur.

“Paragraph 2. Concur.

“Paragraph 3. This office does not believe that paragraph 3 is feasible or that the proposed procedure would develop a satisfactory export program. The Allied Control Council or, in the absence of quadripartite agreement, the Zone Commander, must be free to sell goods to those countries which are able to pay for the goods in an approved currency. Moreover, the delays involved in an allocation procedure would interfere seriously with efforts to reach agreement and to conclude same. It is also believed that normal business machinery should be utilized at the earliest possible date and artificial governmental machinery will never provide a satisfactory means for the development of an export-import program. Moreover, freedom to sell for the highest price possible is essential and is not in keeping with the allocation procedure.

“Paragraph 4. Suggest the word ‘prices’ be substituted for ‘bids’.

“Paragraph 5. Concur, execpt that the limitations appear unnecessary.

“Paragraph 6. While this office would be inclined to concur in principle, it must be pointed out that acceptance of a barter program by the United States would be to the decided disadvantage of the US [Page 1558] Zone. The US Zone has little to export in comparison with other zones. Manifestly, its share of revenue from export in other zones would be greatly reduced if those zones could dispose of substantial quantities through barter to meet their own particular needs. For example, if the English could barter coal for essential commodities for the British Zone, the revenue available from sale of coal to be made available to other zones would be substantially decreased.

“Paragraph 7. It is difficult to comment on this paragraph as to the question of the utilization of private importers as compared to government agencies is one which must be resolved in Washington, and apparently is involved in the provisions of the ‘Trading with the Enemy Act’.28 It is the view of this office that private importing and exporting companies should be permitted to conduct business operations in Germany at the earliest possible date. Such companies would have great flexibility in buying in Germany in an approved currency but could not provide approved currency but could provide commodities in kind. These business enterprises would obviate the necessity for barter.

“In general, it is the view of this office that arrangements must be made at the earliest practicable date for direct negotiations for both exports and imports between approved German agencies and foreign business enterprises under the supervision of Military Government. It would not appear possible for Military Government to provide either the quality or quantity of personnel necessary to the transaction of a large export import program. The establishment of an elaborate allocation machine separate from Military Government with the United States Commercial Company as an advisor to the allocation machine, might well develop into such conflict of opinions that it would nullify a healthy export import program which will stand on its own feet to provide Germany with a minimum economy. If this is our objective, we should plan to use normal methods at the earliest possible date and to permit direct negotiations between the Allied Control Council and/or the Zone Commander and prospective buyers in the interim. Manifestly, some government agency in each country concerned will have to be utilized for the completion of the individual transactions.”

  1. October 6, 1917; 40 Stat. 411, as amended December 18, 1941; 55 Stat. 839.