840.50 Recovery/7–3148: Telegram
The Secretary of State to the United States Political Adviser for Germany (Murphy)
1445. Personal for Murphy. Concern expressed by Dept re rumored increase coal export price arose from the importance and wide ramifications of such a step. While Dept has no desire to request consultation on operational details, it cannot agree that an increase of 2½ dollars per ton in price German coal and coke exports is an “operational detail” (reurtel 1890 July 31).1
So long as dollar payment for Bizone coal exports is required any change in coal export price has an immediate effect on the dollar balance of payments positions of virtually all ERP countries and therefore a direct effect on allocations of ECA aid. For example, an immediate increase in German coal export prices would upset the basis on which 3rd quarter ECA allocations to Bizone and other ERP countries were made. While this fact is well known to Harriman, it is also of direct interest to Wash. Dept notes from urtel 1890 that OMGUS proposes to work closely with Harriman and that no action to increase price will be taken without his concurrence. We consider this highly important and should cover direct ECA interest. However, [Page 476] Dept believes it should be directly informed and consulted before action of such important implications as increase coal export price is taken. Dept’s interests not co-extensive with ECA’s.
European coal prices are involved in several matters being considered here. In general it is felt that they are too high now and that effective recovery will be impeded if transactions continue to be based upon cost of US coal delivered in Europe. In particular there are discussions re possibility of reduction of Brit export prices and of the pricing of Polish exports in connection with any possible loan to Poland by International Bank. The raising of prices by JEIA, which everyone knows is in effect controlled by US, would be to make any efforts to reduce export prices of other countries much more difficult.
The raising of German coal export prices has an immediate and detrimental effect on countries which are dependent upon imports from Germany, particularly in view of the present large difference between export prices and internal German prices. Any increase in German export prices would unquestionably result in strong representations being made to Dept. Expressions of deep concern have already been made on the basis of current rumors and strong protests were made last year when German export price was raised. Unless a USGovt position has been previously agreed it becomes extremely difficult for USGovt in Wash to deal with representatives of foreign countries who approach us here on Govt level.
The above explains why Dept feels it should be consulted in a matter as important as the increase of coal export prices. Difficulty recognized of defining accurately the line between “operational details” and those matters which involve policy considerations of sufficient importance to require consultation with Dept. The general principle can be stated, however, that where a matter can reasonably be foreseen to have considerable economic repercussions in other countries, any decision should be based upon a full evaluation of such repercussions which would require wide consultation.
- Not printed.↩