740.00119 EW/9–2848: Telegram
The Acting Secretary of State to the Secretary of State, at Paris
Telmar 22. For the Secretary from Saltzman. Re Martels 14 and 161 info recd from Brit Emb Sep 13 reveals that of 185 plants in Brit Zone (including 179 referred to Telmar 102) 28 plants completely dismantled; 8 more than 70 percent dismantled; 128 less than 70 percent dismantled; and 21 dismantling not begun. No allocation (and therefore no shipment) of the 179 plants to IARA has occurred and none can be allocated except by joint action 3 Western military governors under terms London Agreement.
Info re dismantling 90 plants French Zone not available here. However, understood from various reports that French have generally [Page 813] withheld dismantling plants until allocated by IARA. Believe this practice still in effect. Situation respecting allocation and shipment these plants similar Brit.
Hoffman Committee of Industrialists (consisting Presidents General Motors, International Harvester, Westinghouse, M. A. Hanna Co., Cincinnati Milling Machine) have in person reviewed carefully steps involved in making reexamination plants Brit and French Zones. They stress that their reexamination pointless if while in progress, plants under review are dissipated by shipment or dismantling. They consider this particularly applicable dismantling basic steel plants (and to some extent basic chemical plants) which they believe equivalent to destruction. For practical purposes their concern involves only dismantling of the 179 Brit plants and 90 French plants, since allocation and therefore shipment cannot take place under London Agreement without Clay’s concurrence. Their concern has wider application, however, to the 15 plants (10 unallocated and 5 allocated to IARA) referred to below on which request was made yesterday to Brit Emb for suspension further allocation, dismantling and shipment.
Comm states it will not carry out Hoffman’s proposed examination unless dismantling and shipment cease with respect to all plants under examination. Comm not particularly concerned with suspension allocation since they consider suspension dismantling and shipment will effectively halt dissipation plants under review. Dept however believes suspension allocation also important in view rights other nations established through allocation procedure.
Bevin’s agreement to general proposition, but not including suspension dismantling, would not satisfy Hoffman or Comm, since 75 percent plants Brit Zone now undergoing dismantling. Present situation contrasts sharply with April 1, 1948 (beginning of U.S. Technical Mission review) when dismantling had started in only 11 of 179 plants. Hoffman and Comm aware this and although no agreement by Brit not to dismantle plants under review, regards their departure from apparent previous practice generally to withhold dismantling until allocation as means to vitiate examination while it is in progress.
In view fact that Hoffman and his Comm feel that no effective examination as required by Section 115 (f) Economic Cooperation Act can be made if dismantling and shipment plants under review are not suspended during period such examination, Dept believes that cooperation Brit and French this respect must be obtained. It is felt that if it becomes known that Hoffman or his Comm believe they are prevented from making effective examination because unwillingness Brit or French to suspend action during period review, there would be risk that unfavorable public and Congressional reaction against Brit and French would have adverse effect on recovery program as a whole.
[Page 814]For your info at Hoffman’s request, Dept yesterday asked Brit Emb suspend further action on 15 plants in Brit Zone in addition to 179 plants mentioned telmar 10. These plants were previously released by U.S. Technical Mission and Brit Gov was notified last June that U.S. had no objection their allocation. 10 of them have not been allocated to IARA. In other 5 cases, IARA has solicited bids with due dates in near future but no official sub-allocation to individual recipient country has taken place to date. These 5 plants were included in report of a special consultant as being important to Ruhr coal mining industry and Brit Emb has been asked either to request IARA defer sub-allocation these plants until ECA examination completed or agree our doing so with Brit support. We have informed Brit we would not take this latter action without their support.
In addition, Hoffman has requested us obtain suspension further action on 5 plants in Brit Zone and one plant in French Zone which have been allocated to IARA (and in 2 Brit instances sub-allocated by IARA to recipient countries). He has been informed that in these cases he has not given us adequate data on which to base reasonable request to Brit or French that the international allocating machinery be suspended. [Saltzman.]