740.00119 EW/8–2848: Telegram
The United States Military Governor for Germany (Clay) to the Under Secretary of the Army (Draper)1
CC–5729. Have just seen State Dept message to Douglas2 advising him that Hoffman proposes to send forty engineers to Germany to re-examine individual plants proposed for reparations with a view to submitting data to top industrial committee for their consideration and final recommendations. I doubt very much if these forty engineers [Page 799] can obtain any data that is not now available or that we cannot make available from here. The problem really is not one of examining the individual plant because a good case can be made to retain any individual plant in the interests of the German economy. The real answer is in the over-all production which can be developed in Germany in light of the general economic picture to include availability of coal, transport and labor. As you know I have defended the general reparations program because of our international commitments and also because I believe that the level of industry left to Germany is all that it would be able to manage during the next several years. Obviously in a personal sense my own job would be made easier if no further plants were removed from Germany. This would, of course, be a popular move in Germany and any dissatisfaction would come from the countries to which we are committed to give capital equipment as reparations.
However, the two things which worry me in the Hoffman approach are the visit of the forty engineers to Germany to examine individual plants and the delay which will be involved in this kind of examination. Recently one state government has resigned in the French zone over dismantling. This kind of discontent is becoming evident everywhere. Our original policy contemplated the quick removal of the capital equipment to be made available for reparations so that reparations would be ended once and for all, as we recognized it would eventually become a political problem of much magnitude in Germany.
The visit of the engineers to the individual plants will develop great dissatisfaction if these plants are later made available for reparations. Moreover it will emphasize the entire question as a popular issue at a time when Communist propaganda will be at its maximum. The final decision will be made about the time the Germans are deciding on the acceptance of the proposed constitution. It may have a very real and perhaps even disastrous effect if at that time we proceed with further dismantling.
Personally, I believe that an arbitrary decision made promptly as to the number of plants to be retained will represent as good a job as can be done. If a questionnaire could be devised to be filled out for each of the plants under consideration we could do it quickly and quietly to place it before Mr. Hoffman’s committee to assist them in their deliberations. I do not want to be understood as opposing in any way Mr. Hoffman’s real examination of this problem to include the examination by his top committee. However, I must point out that the field visits of the forty engineers may burst into flame the smoldering fire of resentment against dismantling to include possible protracted labor disturbances and strikes. In fact, a further delay in this program may well make it impossible to remove these plants without the use of force and if this becomes necessary we will truly have lost our [Page 800] political objectives. Obviously if the examination should result in all or a great part being left in Germany, this condition would not result but of course we would face the loss of good will by the countries expecting to receive this reparations equipment.
This problem does not apply primarily to the American zone where our program for all practical purposes is completed. However, it becomes even worse since the majority of the plants are located in British zone and particularly in the Ruhr where labor unrest could completely destroy coal and steel production.
I cannot over-emphasize the political and social unrest which exists in Germany and which makes it difficult indeed to recreate or highlight punitive measures. If we are going to take further plants from Germany we must get it over with now.