840.6362/6–1747: Telegram

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

top secret

1452. Personal for the Secretary. Eyes only. Howard Petersen has sent a personal telegram to General Clay to the effect that the State Dept is considering inviting British Govt to join it in putting forward an energetic program of action designed to expedite the restoration of coal production in Europe.32 Replying to Petersen’s inquiry, Clay points out that while any practical action to institute an energetic program aimed at expediting increased coal production in Europe would be welcome, the basic problem in the Ruhr Aachen fields derives from the uncertainty as to the future status of these fields. He emphasizes the absence of incentive to mine management. In Germany [Page 925]we have long urged the British to place increasing responsibility on the Germans for coal production but as yet with no practical results. Labor has been persuaded that socialization is the solution. Clay recommended that the mines should be placed immediately under a German trusteeship with public announcement that it would continue until a central German government had been established and German people could freely determine under more normal conditions the future of mine ownership. Under that plan mine management would be made responsible under the trusteeship and should be given bonuses for increased production. He realizes that this would be difficult to accomplish as it runs contrarily to British Govt program at home.

On the subject of capital loan to coal industry secured by exports to be used for mine rehabilitation and mine machinery, Clay’s opinion is that this would retard coal production as it would be an unpopular move in Germany since it would pledge the most important German asset for a single purpose. Also additional machinery is not considered necessary until production has increased over present figures by at least 50,000 [tons?] per day. If such an increase occurs machinery could be provided in Germany. In other words capital is not the immediate problem in coal production.

In Clay’s opinion main problem in Germany is threefold: (1) removing present uncertainty regarding ownership and placing direct management responsibility in German hands under joint US/UK military govt general supervision; (2) better publicity program designed to make management and miner conscious of their joint responsibility; (3) general improvement in economic level of entire Ruhr area.

I would like to add that one feature of our policy has not been entirely clear to us here in connection with the operation of the bizonal area, namely, socialization of industry. General Noce, who is now here, tells me that the War Dept has, since last January, endeavored to obtain a written statement of policy from the Dept on this subject without success. Ambassador Douglas, who is also here and who will, he tells me, telegraph you directly on this subject, believes from what he learns from Mister Bevin and others that the British Labor Party will project its policy of extensive socialization of industry in Germany and will not be willing to defer such a development until a German central government has been created and the German people have opportunity under more normal conditions of indicating their wishes. The trusteeship solution appears to us here as an admirable compromise which would at least in part relieve the uncertainty now exercising a most depressing influence on production.

  1. The proposal for a broad American-British program to increase coal production in Western Europe was set forth in Department of State Policy Planning Staff paper PPS/2, June 2, 1947. Under Secretary of State Acheson sent a copy of the paper to Ambassador Douglas on June 11 for comment. At about the same time, the War Department was asked to transmit a cable to General Clay asking him for his views on the possibility of implementing the German part of such a program.