862.5151/9–2649: Telegram

The Acting Secretary of State to the Office of the United States High Commissioner for Germany, at Bonn

top secret

4. Urgent for McCloy. Deliver immediately upon his arrival.

Immediately following message relays cable from Secy of his conversation yesterday with Schuman which should be helpful in ur negotiations.1 In view of gravity of French appeal at this stage, we believe it would be wise to refrain from vote in High Commission on situation until this afternoon in order to allow sufficient time for Schuman’s report to his govt to have effect on instructions to Poncet. If Poncet does not alter his position by afternoon, we see no alternative to going ahead without their agreement, which we understand would be on following basis:

Conversion factor would be fixed at 23.8 cents.
Commission would simultaneously institute study of coal prices looking forward to equalizing export and internal prices taking into account all related factors.
Commission would also take action to prevent devaluation of DM from increasing existing spread between export and internal prices. We understand that this would be done in manner which would not increase prices to France, i.e., by shifting to DM price basis (see our 1767 Sept 26 to Frankfort for our suggestions2).

All here appreciate your handling of this difficult situation and the very great efforts you have made with the French and Germans.

Sent Bonn as 4. Repeated Frankfort 1768, Paris for Bruce 3642, London for Holmes 3504, USUN, New York 502.

  1. Not printed; it repeated telegram 1188, supra, to Bonn.
  2. Not printed; it suggested that McCloy might assure the French that while the study on eliminating dual pricing for coal was being conducted, the United States would agree to hold the export price of German coal at the pre-devaluation level. This seemed preferable to assurances concerning neutralizing the effect of franc devaluation or the elimination of coal subsidies. (862.5151/9–2649)