862.6362/8–448

Summary Minutes, Ninth Executive Session, Anglo-American Conversations Regarding German Coal Production

[Extracts]
secret
AGC/Minutes No. 9
  • Present:
  • U.S. Group:
  • Delegates:
  • Major General W. H. Draper, Economic Adviser to the Commander in Chief, European Command
  • Max Forester, Chief, Coal Section of Economics Division, European Command
  • James A. Stillwell, Special Assistant to the Under Secretary of State for Economic Affairs
  • Tracy S. Voorhees, Special Assistant to the Secretary of War
    . . . . . . .
  • U.K. Group:
  • Delegates:
  • Sir William Strang, Political Adviser to the Commander in Chief, Germany
  • Sir Mark Turner, Economic Adviser on German Economic Matters to the Foreign Office
  • D. L. Anderson, Vice-President, Economic Subcommission of the Control Commission for Germany (British Element)
  • F. H. Harrison, Chief of Fuel and Power Division of the Control Commission for Germany (British Element)
  • H. E. Collins, Senior Director of the Production Branch of the North German Coal Control
  • A. G. Gilchrist, Foreign Office, Secretary of the Delegation
  • J. H. Penson, British Embassy

. . . . . . .

Ownership of Mines

Action: It was agreed that this subject would be further discussed at a later date.

Discussion: The United States members put forward the following arguments as to why decisions by the Germans for public ownership, or at least implementation of those decisions, should not be allowed at this time:

1.
Discussion and debate involved in reaching a decision by the Germans would hurt production because it would distract the attention of the workers and because the prospect of political interference would affect the efficiency of management. While the U.S. Government is willing to see the question of ultimate ownership considered by the Germans, it cannot allow that issue to affect production.
2.
The decision should wait on more nearly normal conditions.
3.
The decision should be made by not just one Land (Rhineland-Westphalia) as is contemplated, but by some political entity more representative of the German people as a whole, since the Ruhr should be considered an asset belonging to the whole German people.
4.
While it is recognized that a decision in principle by the Germans for public ownership would have no legal effect on the authority of the proposed U.S.–U.K. Control Group, it is believed such a step would have the practical effect of lessening the Control Group’s authority.
5.
In answer to the argument that the only solution to the present situation is public ownership because of the need for capital (see below), it may be argued that the coal still in the ground is a very valuable asset and that charging higher prices for the coal would enable the coal industry to obtain capital from private German sources or from sources outside Germany.
The U.S. Members stated that the only objective in proposing a fixed tenure of management is to assure continuity of management during which time increasing coal production is to be specifically emphasized; that, while this Government has some doubt as to the advisability of an early decision by the German people on the socialization question, this Government will not take a position in favor of either public or private ownership, and will not interfere with German discussions and decisions on the issue, provided they are arrived at by democratic processes and provided that actual implementation of the decision is deferred until after production is no longer a problem.

A British member drew attention to the resolution passed by the Industrieverband Bergbau calling for the transfer of the mines to Land North-Rhine/Westphalia, failing which an adequate increase in coal production is out of the question.

He emphasized the opinion previously expressed that the uncertainty with regard to ownership of the mines would, if long continued, adversely affect production and that it would be wise, therefore, to institute some form of public ownership as early as possible. His Majesty’s Government could not therefore agree to any formal or express postponement of the decision and nothing said by the British delegation at these discussions should be taken as implying consent to such a postponement. He cited the remarks made by Mr. Bevin in the House of Commons in which he said that although he had allowed time for discussion he had not abandoned the policy of public ownership for the mines.

The British member referred to the proposal made by His Majesty’s Government to the U.S. Government that a suggestion for international control of the Ruhr industry might be brought forward at the Paris conference and said that he had heard of the U.S. Government’s negative reaction to this proposal.

A U.S. member said that, if it was envisaged that the eventual settlement with Germany should include some form of international control for the Ruhr, the problem arose of finding an interim solution.

The British member said that as the proposal had been turned down this point did not arise. Speaking personally, however, and not wishing to be thought to be giving an official view, he considered that, although the final decision on ownership might be left until a German Government, all-German or bi-zonal or tri-zonal, existed and the German people could therefore be consulted, it might well be possible to pass provisional and interim measures for public ownership on a Land basis. It was not the intention that the U.S.–U.K. Control Group should take a decision on this issue on behalf of the German people. He was suggesting that the principle of public ownership [Page 949]should be established now and that the exact and final form might be settled later by the German people. However, even the provisional introduction of public ownership on a Land basis should be carried out with the consent and at the request of the German people. The recent resolution of Landtag North-Rhine/Westphalia already gave warrant for such a step. The U.S. authorities in Germany had already stated more than once that there would be no objection on their part to the establishment of public ownership of the mines if it was clear that the initiative came from the Germans. On the basis of this assurance, the British authorities would have regarded themselves as entitled to move a step further on this question. He did not agree that the decision, if made, would lessen the authority of the control group, since their approval would still be needed for any appointments to the management of the industry. He said that the U.S. argument, that the change to public ownership would create political discussion and divert the main effort from coal production, could also be used against the change to a U.S.–U.K. control group and a German coal management. These latter measures were being taken, and rightly taken, for other than production reasons and it should not be thought that they would increase production, at any rate in the short run.

Another British member said that a U.S. member had said that the U.S. authorities regarded private ownership as a better incentive to production; he himself considered that the question should not be decided on ideological grounds but after examination on the basis of the facts. He recalled that the mines were losing money at the rate of RM72 million a month and that these losses were being met from the public purse. If the Dodge plan65 was implemented there simply would not be enough private capital in Germany to finance the mines in such conditions. He said that two factors arose which could not be neglected. Firstly, the C.D.U. in North-Rhine/Westphalia and the S.P.D. in the other Laender of the British Zone were all in favour of public ownership. Secondly, the financial condition of the mines showed that public ownership was inevitable. It was therefore impractical to suggest postponement of a decision in the hope of restoring private ownership. He wished to refute most strongly any suggestion that His Majesty’s Government were acting from ideological motives alone.

. . . . . . . . . . . . . .

  1. In 1946, a team of advisers headed by Joseph M. Dodge, Financial Adviser to General Clay, prepared a report setting forth a plan for financial reform in Germany. The major proposals of the Dodge plan are described in Edward H. Litchfield and Associates, Governing Postwar Germany (Ithaca, New York, Cornell University Press, 1953), pp. 421–422.