862.6362/8–2247: Telegram

The Acting Secretary of State to the Embassy in the United Kingdom 66

[Extracts]
top secret

3638. For the Ambassador and General Clay from State and War. In coal talks after exploratory discussions on our trusteeship proposal putting ownership question on ice for five years, the British, after indicating opposition, have asked for statement of the US position. There follows a draft of the US position on which there is substantial governmental agreement on all points except the question of permission to the Germans to vote on the public ownership of the coal mines:

Ownership and Organization. The purpose is to bring about the earliest possible increase of coal production to pre-war levels in the interest of the recovery of the economy of Germany and of the rest of Europe, and to that end to assure, under German responsibility, the best management together with continuity of management for the extended period requisite to achieve this objective. To this end:—

a.
Possession, direction, management and complete control of the coal mining properties, related facilities incident to the processing of coal products, and miners’ housing to the extent that this is company-owned, should be vested in an individual German Trustee. The Trustee should be the same person as the General Manager above mentioned.
b.
To the extent that the Trustee, acting with the approval of the US/UK Control Group, may from time to time determine to be necessary, the possession, management and control—and, where this is deemed essential, the title and ownership—of miners’ housing which is not company-owned and of areas suitable for the construction or rehabilitation of such housing or otherwise necessary for operation of the mining properties, should also be vested in the Trustee, subject to just compensation to the owners. The Trustee may exercise such rights to the extent authorized under the German law and, if not so authorized, the Military Governments, when requested to do so, should take requisite action.
c.
Subject to the Trustee’s responsibility for maximum production and without any determination hereby as to the future ownership of the mines, the assets should be held by the Trustee, pending determination of the ownership of, interests in, and claims against such assets or the proceeds thereof (including compensation for the use or surrender thereof) for those entitled thereto as the ownership, interests and claims may ultimately be determined.
d.
The Trusteeship should continue for a five-year period, during which action on the ownership question will be suspended.
e.
The Trustee should function under the supervision and policy control of a US–UK Control Group, which would act for the Bi-Partite Board.
f.
The actions, policies and procedures of the Trustee should be subject to any enactment affecting the coal industry promulgated by the Economic Council and approved by the US–UK Military Government.”

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

In light present political situation in England we should like the Ambassador’s views regarding repercussions in the U.K., particularly with respect to para d, which would arise should this paper be submitted to the British at this time. We should also like the comments of the Ambassador and General Clay regarding a possible compromise with the British by which para d would be modified to allow the Germans to vote on the question of public ownership either (1) at any time during a five-year period or (2) toward the end of the five-year period, it being completely understood that regardless of the outcome of such a vote the mines would remain under the exclusive management and control contemplated by the above plan without any exercise of control by private or public ownership during the five-year period.

We have not included in the above plan but have informally suggested to the British that the US–UK Control Group mentioned in para e of the plan should have an unequal membership in order to provide a single Chairman, although did not consider necessary to mention that we intended Chairman to be US. We believe single US Chairman important to efficient operation and that British financial situation in any case indicates necessity of considering increased US control soon in which case a US Chairman would be logical. However, recognize probable difficulties of obtaining British agreement particularly as bizonal finances not formally being discussed. The British have not commented yet. Your respective views are requested regarding British reaction and effect on bizonal administration should we officially propose U.S. Chairman.

For your information we expect that the German coal management paper agreement reached in Berlin67 with change in last para concerning foreign ownership which Clay has approved will be formally agreed by British tomorrow. If so will advise you accordingly so that French views on coal management may be obtained and final decision reached by US–UK on management question. Desire to reach determination by Monday as to whether trusteeship proposal will [Page 952]be presented to British. If presented and British object term “Trustee” might revise paper using some such term as “Coal Administrator” which State prefers anyway.68

Lovett
  1. General Clay’s comments on this telegram were contained in telegram 72088, August 25, from London, p. 1059.
  2. The reference here is to German Bipartite Board document BIB/P(47)79, July 16, 1947, p. 940.
  3. In a memorandum from Stillwell to Lovett, dated August 5, 1947, not printed, reviewing discussions between the State and War Departments on the coal production problem in Germany, the significance of the term “trustee” is examined as follows:

    “It is agreed that the German Manager shall have possession and full control of the mining properties, free from any control by or responsibility to any owners. No proposal has been made by either State or War that title to the properties be changed at this moment. Nevertheless, the War Department insists upon designating the German Manager as a ‘trustee’. The term ‘trustee’ is insisted upon because of General Clay’s contention (a) that the present owners must be protected, and (b) that any other term might indicate a move towards socialization. However, a paper has been written specifying the responsibilities and restrictions on the so-called trustee which, in effect, makes him an administrator rather than a trustee. In order to avoid confusion and misunderstanding, especially in the minds of the German people, and to avoid the implication that a trust is created for the benefit of the present owners, State conferees have maintained the position that the individual should be called an Administrator, particularly since this term most accurately defines his duties and responsibilities. However, in view of the War Department’s adamant insistence on General Clay’s desire for a ‘trusteeship,’ State conferees have conceded this point.” (862.6362/8–547)