Foreign Relations of the United States, 1948, Germany and Austria, Volume II

740.00119 EW/8–2648: Telegram

The Secretary of State to the Embassy in the United Kingdom ¹

secret

Washington, August 26, 1948—9 p. m.

3408. For Douglas; Paris for Caffery and Harriman. Recent developments on reparations follow:

1. On Aug. 9, five Secretaries submitted report to President transmitting report of Technical Mission and recommending:²

a. That 163 whole plants and 1 part plant having greatest possibility of contributing to European recovery if brought fully into production in Germany be referred to ECA for such further study or other action as he may consider necessary to discharge of his responsibilities under Section 115 (f) of Act.

b. That remaining plants recommended for retention by Tech. Mission be released forthwith for removals as reparations. (This recommendation affects approx 125 plants because it has been necessary to add to Tech Mission “a” list certain plants which OMGUS has indicated should have priority for retention if any plants are to be retained.)

c. That in view necessity negotiating with British and French for retention plants report of Tech Mission continue to be kept secret.

d. That with this report Secretaries of Agriculture, Commerce and Interior conclude their recommendations of reparations program and Ad Hoc Interdepartmental Committee be dissolved.

President approved report August 16.

2. Mr. Hoffman has found pressure of interested Congressional committees so strong that he feels unable to act upon recommendation for release of further plants until an ECA investigation has been conducted. To assist him in reaching conclusions which will be generally acceptable, he has, with concurrence State Department, invited following five leading industrialists to advise him: George Humphrey, M. A. Hanna Co.; Charles E. Wilson, General Motors; Gwilym Price, Westinghouse; John L. McCaffery, International Harvester; Fred Geier, Cincinnati Milling. Initial conferences were held with these men on August 21.³ State, Army, Congressional representatives and Collisson attended and made lengthy presentations.

3. Mr. Hoffman together with Wisner of State Department met today with representatives British and French Embassies.
Hoffman made following points:

a. ECA responsible to Congress under Section 115 F of Act.

b. In his judgment importance of dismantling program with respect to recovery has been grossly exaggerated. ECA would prefer if it had choice, not to be involved in reparations issue, but strong pressure on him even from supporters of ECA in Congress makes this impossible.

c. Had hoped to release at this time substantial number of 323 plants recommended for retention by technical mission but pointed warnings to him from Congressional leaders make it impossible to release any plants recommended for retention by technical mission or other known studies until examination of specific plants has been made under his responsibility.

d. Therefore, Hoffman has appointed five industrialists to advise him as stated above. He is convinced public opinion and Congress will accept judgment of this committee. He intends to transmit its recommendations to State Department as his action under Section 115 F.

e. Procedure will be to prepare check sheet on each plant. About 40 engineers are being hired who will proceed to Germany. Expected to complete entire re-examination within sixty to ninety clays. Hoffman very anxious complete before Congress reconvenes.

f. Terms of reference of advisory committee are to determine first, what plants are most important to recovery, and second which of these can best serve recovery by being kept in Germany. Concern will be with European recovery not merely German.

4. French and British representatives expressed dismay at further delay which this program entails. Both agreed ECA entitled make examination, but British argued that not necessary hold up dismantling while investigation proceeds. Hoffman replied that is absolutely necessary because members Congress told him pointedly they so interpret statute. Discussions indicated number of plants subject to inquiry approximately 350. British French pointed out forcefully political and emotional significance of Reparations Program in their countries. Hoffman invited them express views to members of advisory committee, which, if their Governments approve, they will do August 31. In closing, Hoffman urged British and French representatives to support his request for cooperation of their Governments in re-examination. Stated Governments need not accept and are free to act as they think best but in his judgment their cooperation absolutely necessary for continuation ECA appropriations.

5. Above sent you for your use in event respective foreign offices desire discuss with you, which we consider very likely in view gravity attached to new development by British and French representatives here.

Hoffman action outlined above fully supported by State Department in view our recognition his extremely serious problem with appropriation committees.

Fully appreciated here that you will have difficulty explaining and justifying this development.

Marshall

1. This telegram was sent to Paris as 3335 and to Berlin as 1532.
2. For the Report summarized here, see p. 790.
3. Hemmendinger’s memorandum of conversation covering this meeting is filed separately under 740.00119 EW/8–2748.