740.00119 EW/9–2349

The Administrator for Economic Cooperation (Hoffman) to the Secretary of State


Dear Mr. Acheson: This will confirm my telephone conversation with Ambassador Murphy on Tuesday morning, September 20,1 that ECA is sorry to see you release to IARA at this time the 185 plants (more or less) having a stated value of some 100 million Reich marks, which had heretofore been earmarked for delivery to the East.

You will recall that on August 19 the question was first raised in conference with you as to whether ECA had some obligation under [Page 605] Section 115 (f) of the Foreign Assistance Act with respect to these 185 plants. At that time according to Ambassador Murphy’s memorandum of the conference2 “it was agreed that the Department’s experts would provide Mr. Foster and Mr. Hendrick with whatever data might be necessary to clarify the position.”

On September 19 we learned that a memorandum had been prepared by the Legal Adviser, Mr. Fisher, to the effect that ECA had no obligation in the matter.3 A copy of this memorandum was given to one of our representatives at 8 o’clock that evening. The next morning when I called Ambassador Murphy and asked for some time to consider the question before the allocation was to be made, he advised me that he could not delay instructions to the High Commissioner to join with the French and British authorities forthwith in allocating these plants to IARA.

Due to the fact that this decision was communicated to me on such short notice and to the fact that some expression of Congressional intent on the dismantling issue may be contained in the ECA appropriation bill, I am not in any position to state with finality what may be the extent of my responsibilities with respect to these plants. I do believe, however, that such responsibilities may indeed exist, and that an extremely unfortunate situation may be created by the immediate release of these plants.

Bearing in mind that developments since the time of the August 19 conference have indicated that the door is not necessarily closed to the revision of the plans for dismantling, it would seem to me a mistake, at least at this time, to release to IARA plants made available by the decision that there is no obligation to send them to USSR against reciprocal deliveries (which could be applied in part at least for the benefit of the German economy) or otherwise.

I believe the subject should be studied also from the standpoint of our relations with Congress. As you know, the Senate has proposed an amendment to the ECA appropriations bill which if enacted into law may give some indication of Congressional intent that ECA should review the dismantling situation. Should it become incumbent upon me to make a survey and a further request to you under Section 115(f), it would be easier to negotiate retention of plants heretofore earmarked for USSR if those plants had not been actually released to IARA. If these plants were given to IARA nations they would be in the nature of a windfall. For this reason it might well be possible [Page 606] without any great negotiating difficulties to let some or all of them remain in the German economy in the interest of an overall solution of the problem. Even the retention of only a small proportion of these plants could conceivably facilitate a final solution to this vexatious problem. On the other hand, to let the plants go at once might eventually subject the Executive Branch of the Government to criticism for hasty action.

It is becoming increasingly apparent to me that sooner or later a further consideration of at least some aspects of the dismantling issue cannot be avoided. For this and other reasons stated above, I repeat my regret and concern that action has been taken now to place the 185 plants out of the control of the United States, British and French governments. I hope that if it is not too late for reversal of such action you will give me the opportunity to sit down with you and discuss the problem further.

Sincerely yours,

Paul Hoffman
  1. A memorandum of this conversation, prepared by Murphy, not printed, is in file 740.00119 EW/9–2049.
  2. Not printed; Hendrick and Foster had raised the question at this meeting with Murphy and Secretary Acheson whether ECA would have a responsibility regarding the eventual allocation and disposition of these plants if they should never be delivered to the Soviet Union. (740.00119 EW/8–1949)
  3. Hoffman was referring here to a memorandum dated September 14, from the Legal Adviser, Adrian S. Fisher, to Murphy, not printed (740.00119 EW/8–1949).