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

702. Urtel 763 Oct 12.44 Dept believes permission to establish horizontal industrial or trade associations premature and will result in modified form concentration industrial power even in contemplated advisory capacity. Suggest that advice needed by Regional Economic Offices be obtained if necessary only from individual Germans or from temporary ad hoc committees called in on specific problems. Such committees should not have opportunity to agree in advance on answers to problems submitted. Formation of associations will cut off Economic Offices from dissident advice as membership will in effect become compulsory by pressure of groups. Prohibited functions stated your paragraph 545 could be exercised by associations through such advice.

Recommendations above subject to reconsideration in future when development German economy may show usefulness such associations.

  1. Not printed; it transmitted the text of a directive, dated October 8, issued by USFET, permitting the establishment of horizontal associations of independent firms in the same field of industry or trade; no vertical associations were to be permitted (862.50/10–1245).
  2. This paragraph stated that the associations would “not be permitted to exercise any authority or control over, or to participate in, distribution, sales, marketing, prices, allocation of materials or orders for production quotas, except in an advisory capacity.” (862.50/10–1245)