Executive Office of the President- Rosenman, Samuel - Report to the President on Civilian Supplies for Liberated Areas of Northwest Europe (1)

PRESIDENT'S SECRETARY'S FILE Subject File Executive Office the President: Rosenman, Samuel: Report... (1) Box 133 PSF REPORT TO THE PRESIDENT X SAMURE I. ROSENEAN ON CIVILIAN SUPPLIES FOR THE LIMERATED AREAS OF NORTINEST EUROPE (Prepared pursuant to letter of President Franklin D. Roosevelt, dated January 20, 1945) DECLASSIFIED By Deputy Archivist of the U.S. NOV 22 1972 By I.J. Stewart Date SECRET Dear Mr. President: I submit herewith my report on the mission to the United Kingdom, France, relgium, the Nethorlands, Luxembourg, Norway and Denmark, with which President Roosevelt charged no. The purposes of my mission were: - a, To survey and study the needs for necessary civilian supplies in the liberated areas of Northwest Europe, and the method and extent to which those needs are now being net; and to make recommendations with respect thereto. b. To study the requirements, financial and otherwise, of these countries to repair the destruction and devastation of the war and to build some of the economic foundations of peace. My report is submitted in two parts; (1) This brief report of facts and recommendations; and (2) A detailed series of twenty-seven Schedules or Tabs hereto annexed, and hereinafter referred to. On this Mission I was accompanied by representatives of the Department of State, the Treasury Department, the Mar Department, and the Foreign Economic Administration - all of which have a deep interest in the purposes of the Mission. The history of the Mission is set forth in Tab. No. 1 in- cluding the names of the members thereof, the names of the Ministers and other officials of foreign countries with whom meetings and con- ferences were held, the places visited, etc. SECRET Summary of facts and recremendations: 1. 20th the immodiate and long-range economic situations in the liberated countries of Northwest Europe are extremely serious. The needs vary from country to country. The situation will become more critical upon the complete liberation of Holland (which is expected to present the gravest of the problems), Denmark and Norway, Its seriousness will be further increased as we uncover millions of displaced persons - slave labor brought into Germany by the Nazie from Russia, Poland, Czecho-Slovakia, Greece, Holland, Belgium, France, Norway, etc. These people (estimated at seven million) have no source of food of their am, and will place a severe burden upon an already seriously limited food supply. A dangerously low level of nutrition exists generally in these liberated countries except in the rural, food-raising areas. The production of coal is not meeting even minimum re- quirements. Ports have suffered extensive damage from bombing and demolition. The means of internal transportation by rail, canal and highways have been to a great extent looted, damaged or destroyed. "hat are left have been largely devoted to Allied military use. The serious consequences of the resultant lack of adequate internal transport cannot be exaggerated. Physical destruction is much greater than that in the last war. Manufacturing has been paralyzed by destruction or damage, lack of raw materials, and inadequate plant maintenance. - 2 - SECRET The details of these various deficiencies are all set forth in Tabe on the different specific countries and also Tabe numbered 7, 8 and 9 referring to food, coal and internal transport respectively.. No attempt is made in this report to list the details of the requests which have been made by the various countries for supplies. 2. The needs of the liberated countries of Northwest Europe are grave not only from a humanitarian point of view, but also because they necessarily involve many internal and inter- national political considerations. To a great extent the future permanent peace of Europe depends upon the restoration of the economy of these liberated countries, including a reasonable standard of living and employment. From the point of view of our own United States economy, it is obvious that unless Northwest Europe again resumes its place in the international exchange of goods and services, the American economy will, be deeply affected. Furthermore, a chaotic and hungry Durope is not fertile ground in which stable, democratic and friendly governments can be reared, 3. Just as the United States has been the largest pro- ducer of the United Nations in wartime, DO will it be looked to as the principal source of civilian supplies for these countries, The relatively unimportant position of the United Kingdom as an immediate post VE-Day supplier is discussed in Tab No. 10. Any realistic appraisal of the situation would indicate that the responsibility for providing a substantial share of most civilian supplies will rest on the United States. - 3 - SECRET It should be a mrt of the United States policy to accept this responsibility as far as it is possible to do so, The claims of these countries must be weighed in their proper perspective along with other demands already existent, as well as with the demands of other newly liberated areas not only in Europe bit in the Far East, 4. To be effective, the neceptance of this responsi- Mity 41 a government policy should be enviriated by the President. The policy should be framed so ar to assure that the supplies necessary to neet, the minimum req resents of the liberated breas will be provided as fully as the successful prosecution of military operations and the maintenance of our essential donentic economy vill permit. 5. Once this policy has Leen enunciated, an inter- departmental committee, established and maintained at a high level, should act as the advocate of the liberated countries in supporting their claims as presented, in order to ensure that the policy is in fact continuously carried out, Immediate needs of the Liberated Areas of Northwest Europe: 6. The most immediate and urgent needs common to the countries of Northwest Europe are certain types of food, coal, coal mining equipment, and the means of internal transportation, The requirements vary in the different countries, but, in general, these are the supplies most needed at once. 7. The available supply of food is insufficient in many categories to meet the requirements. The developing demands of the liberated countries intensify the problem. - 4 - SECRET In order to determine the extent to which the needa of the liberated areas may be net from the United States, we should reexamine the requirements of our own armed forces, the United Kingdom, and U.S.S.R., and our own civilian population. We should take appropriate steps to assure the maximum production of food in the liberated areas. As hereinafter recom- mended in Tabe No. 6 and 7 we should make available the supplies which Denmark, for example, will require in order to increase the production of dairy products; and the fishing gear with which Norway can increase her catch of fish. Le should try to obtain increased quantities of food from other surplus-producing countries, such as the Argentine. Tie should examine the extent to which any surplus food grown in areas liberated by the U.S.S.R., may become available for Northwestern Europe, other than from Germany and Austria which are within the jurisdiction of the European Advisory Committee. Any such surplus from Eastern Europe might be shipped to the deficit areas of Western Europe. To this end a technical mission should be sent to the U.S.S.R. by this Government to examine the facts with the Soviets, unless there are political considerations which would make it inexpediant to do it at this time. 81, Coal is one of the most important keys to economic recovery in Northwest Europe. It will not be possible to meet even the minimum requirements of the liberated countries for coal for the first twelve months after V-E Day, and possibly for some time thereafter. No substantial alleviation of this situation is possible without the maximum production of coal in Germany, To obtain such - 5 - SECRET maximum production of coal, however, certain serious political decisions will have to be made because such maximum production would require the following steps: A) Inmediate shipment to Germany of those essential mining supplies and maintenance materials which are not presently obtainable within Europe. The alter- native to importation of certain of these supplies would be to seek to secure them from German produc- tion which, in turn, would involve steps to rehabili- tate or maintain important sectors of German industry. b) The rehabilitation of German mines which have been danaged by battle action or demolition. c) The rehabilitation and restoration of German trans- part facilition to the extent necessary to transport mining supplies and workers and the coal which is mined, d) The supply of adequate food, clothing and footwear to the German miners to enable them to work. e) Provision of electric power necessary to produce coal in Germany even where that involves speedy and active rehabilitation of utilities within Germany. f) The use of enforced German labor where necessary. It is obvious that these political questions - -- involving rehabilitation of part of German industry - are not within my province to answer, Failure to take the steps outlined, however, will impose serious if not insurmouhtable - limitations upon our ability to extract from Germany coal in any substantial amounts for liberated countries. In order to secure the maximum production of coal within Europe, the United States should continue its active advocacy for the inrediate establishment of the European Coal Organization dis- cussed in Tab 8 on coal. - 6 - SECRET The lack of coal will be & matter of gravest political and economic concern to the governments of the liberated countries. Therefore, the extent to which coal can be supplied to these countries from the United States should be carefully examined 1- including the possibility of shipping coal during the immediate months after V-E Day, when there will probably be a substantial, though temporary, easing of the shipping situation. 9. No substantial economic rehabilitation can take place in Northwest Europe, and in some areas not even a minimum subsistance economy can be maintained, unless the internal transportation situ- ation is promptly improved. The liberated countries should be given high priorities for their requirements in rolling stock and locomotives, and for the supplies with which to rehabilitate their railroad main- tenance and repair shops and for the raw materials for the local pro- duction of locomotives and railroad cars. A survey should be made immediately by the United States Army of the number of army trucks in the theatre which might be made available after V-F. Day for assignment or transfer to the governments of the countries of Northwest Europe. The possibility should be explored of reconditioning more used trucks in the European Theatre, in the liberated areas, and in the United States, if shipment from this country is feasible. 10. Port capacity and clearance are now sufficient so that they should not be regarded as restrictions upon procurement by the national governments or upon the allocation to them of ships. The shortages now developing in supplies rather than in shipping will be the limiting factor within the immediate future as to what can be sent into these countries. If, however, shipping - 7 - SECRET should again develop into a choke-point, then the shipping position should be reexamined at the highest level to ensure that the liberated countries receive the maximum allocations consistent with the successful conduct of the war and the needs of our other Allien. Full advantage should be taken of the whine now allocated and of the temporary ease in shipping expected during the first few months after Y-E Day. 11. To supplement the electric power of the literated areas of Northwest Europe and thereby conserve their coal and transporta- tion, we should seek to obtain increased exports of electricity from Germany's electric power system, which was the second largest in the world before the war. 12. Petroleum is essential for economic rehabilitation in the liberated countries - particularly in internal transportation. At present. all petroleum imports are handled by SHAEF, but this re- sponsibility will, sooner or leter, revert to the national governments. Our petroleum and shipping experts should begin to plan imrediately to the end that necessary programs can be established for petroleum imports by the national governments, and workable methods agreed upon to carry them out as soon as the military situ- ation permits. 13. Certain decisions must be taken immediately at the highest level regarding the use of German productive capacity ( in addition to coal) and the extent, if at all, to which it should be restored and operated as a source of supply for the liberated countries of Northwest Europe. 14. Interim reparations machinery should be immediately established to deal with the problem alrendy faced by SHALF of dis- posing of movemble goods and equipment uncovered in Germany Ly the - a - SECRET Allied Armies, which SHAFF does not need, but which one or more of the liberated countries do need, This problem has grown in scope and importance AS we have moved into Germany. Whatever machinery is established should of course be integrated with, or under the auspices of, the deparations Commission. 15. Unless there are insuperable political or legal difficulties, the combined military authorities should be given a definitive directive as to the D.S.-U.S.S.R. and U.K.-U.S.S.R. Yalta agreements concerning food for displaced persons. (See Tab No. 11) This directive shogld endorse the present SHARF policy of dealing with all disnlaced persons, including Soviet citizens, on an international-United Nations basis and providing food for them on the maximum scale commensurate with the availability of supply. The present ration in the SHARF area for displaced persons is calculated on the basis of 2000 calories a day. Repatriation of displaced persons should be undertaken as speedily as possible. 16. The land of France and Delgium, and the sea adjacent to those countries, are filled with German mines, A complete resto- ration of agriculture, shipping and fishing is severely restricted by such conditions. As part of the pence terms, Cormany should be compelled to furnish the je rsonnel to remove these mines. Procedure and Administration for Meeting the Needs of the Liberated Áreas 17. On November 10, 1943, the initial responsibility was placed upon the military to provide such civilian supplies as were needed in the liberated countries of Northwest Europe to prevent disease and unrest. - 9 - DECRET This responsibility has been net; there has been no wide- spread disease or unrest. In view of the many limitations of shipping, supply, harbor facilities and inland transportation, the job has been well done, The military Commanders in the field, with several of whom I discussed this matter, are keenly aware of the necessity of main- taining at least a minimum economy in the countries through which their lines of communication pass, and which, after V-K Day, will serve as bases for our redeployment. The experience in France and Belgium shows, however, that the immediate requirements for the economic rehabilitation of the liberated countries go far beyond the quantities and types of sup- plies which the military might properly be expected to supply in the performance of its responsbility. Vilitary responsibility for civilian supplies should be terminated in each liberated country as soon as that becomes prac- ticable. This matter is discussed in further detail in Tab No. 15. 18. It is a relatively new concept that our Army, as a part of its military mission, has a definite responsibility for the bare of civilian populations and, where necepary, temporary govern- mental administration, in those countries in which operations are conducted or through which they must be supplied. Modern total war has brought the military into direct contact with the political and economic lives of such countries, In the War Department a special staff division to deal exclusively with civil affairs was first created in the spring of 1943. In Italy for the first time in our military history a division was created on the General Staff of the theatre commander for the same purpose. This division was known as 0-5. Such a staff division is now functioning as a part of the General Staff at SHARP. - 10 SECRET My own observation was that the Civil Affairs Division is a vital and indispensable part of the military function of our Armed Forces, Although, as above indicated, initial recognition has been given this fact by our Army and very substantial progress in the field has been made, I feel that our national interest re- quires further strengthening of this silitary activity. It should receive a permanent status of its OWN on the General Staff. Even more manpower and other facilities should be provided than have been to date. In the early stages of liberation, when the armed forces control supplies, transport and other facilities vital to economic life, military contacts with the civilian authorities of liberated countries may become even more important than our diplomatic repre- sentation. In nearly all of the SHAEF missions to the liberated countries which are, in some respects, quasi-diplomatic in character, we are outranked by the British, Every effort should be made to staff our Military Civil Affairs activities with outstanding officers of adequate rank. 19. If our Government is to discharge successfully its responsibilities in the broad field of economic relations with the countries of Northwest Europe, our Embassies must be provided with the necessary personnel - equipped by training and experience for the task. They must be recruited and assigned now, for they will soon inherit many responsibilities now handled by SHAF.F. It will be necessary, in this period of emergency, to supplement the trained nanpower of the Foreign Service. This subject is discussed in detail in Tab No. 16 of this Report, - 11 - SECRET 20. The Department of State and the Foreign Economic Administration are the two departments which have the largest responsibilities in dealing with economic problems in the field. In Paris and Brussels the senior economic officer in each Embassy is the joint designee of the Department of State and the Foreign Economic Administration. This is, a sound arrangement, and one which I recommend be followed in all cases, 21, In paragraph 5 above, I referred to the necessity of establishing a strong advocate for the claims of the liberated areas. I believe that the present Liberated Areas Committee, sup- ported and strengthened as hereinafter recommended, should be desig- nated as this advocate. At present the Liberated Areas Committee is under the chairmanship of an Assistant Secretary of State, and has on it representatives at that level from the Foreign Economic Administration, the Treasury and the War and Navy Departments. In actual practice, however, the Committee has dropped to a level in which the members have generally been re- presented by alternates. It is essential that representation be maintained at the level of original membership. within the total allocations made to all the liberated areas, this same Committee should also authoritatively advise the Foreign Economic Administration on policy as to the relative priori- ties among the several liberated countries, It is most important that the Committee possess an out- standingly able Secretariat, adequately staffed, which will exercise on behalf of the members a general coordinating responsibility and do the day to day work of the Committee. - 12 - SECRET This problem is discussed in more detail in Tab No. 17; and a description of the combined U.S.-U.K. machinery is contained in Tab No. 18. 22.. The machinery in Washington - national, combined, and international - for allocating supplies to liberated areas should be simplified and streamlined, I recommend that an examination of this machinery be undertaken by some one designated by the President to recommend changes designed to eliminate the duplica ion and complexities which now exist. The problem is discusser in greater detail in Tab No. 19. (Tab No. 20 describes the corpirable U.K. machinery.) 23. UNRRA's supply activities in Northwest Europe are comparatively unimportant. (See Tab 21) The displaced persons problem is one peculiarly inter- national in character. UNIONA should be encouraged to take as large a measure of responsibility in this field as is compatible with military necessities and with the decisions of each of the liberated countries based on considerations of sovereignty. As war needs decrease, UNRRA's needa will increase, and it is essential that appropriate consideration be given to its needs for supplies, transport and ocean shipping. 24. Tabs No. 8, 22, 23, and 24 deal with the European Economic Committee, the European Central Inland Transport Organiza- tion, the European Coal Organization, and the United Maritime Authority respectively. All four of these inter-governmental organizations are designed to deal during this emergency period with segments of the economic problem of Europe. If these organizations are created and supported, they can perform helpful roles in or for the liberated - 13 - SFCRET countries of Northwest Europe. I am advised that the Department of State, fully aware of the contribution that such cooporative undertakings can nake to the rehabilitative of Europe, it following their development closely with the purpose of expediting their establishment on a basis acceptable to the countries post directly concerned. The Pinancing of inconst 10:100 25. 1 recommend that further discussion with the Covempents of the liberated areas under reference on the midect of financial assistance for reconstruction and rehabil tation be undertaken several months hence. The responsible finance authorities of these countries have indicated to me that their governments are not ready to discuss this matter at the present time. The United Kingdom and the liberated nations are assembling data on the extent of destruction, the cost of reconstruction, and on their foreign assets which may be available, both governmental and private, for the reconstruction task, They are likewise making estimates of probable deficits in their balance of payments in early postwar years. Then these tasks are concluded they will probably wish to discuss further the. subject of financial assistance from the United States or through international credit institutions, Certain preliminary estimates are contained in Tab No. 25. Substantial benefit would come from the passage by the Congress of the proposed financial legislation -- including the aretton Noods legislation, the repeal of the Johnson Act, and the amendments to the existing legislation regarding the Export-Import Bank. It is essential that these facilities or others through which - 14 - SECRET the liberated nations can secure credits from abroad be established at the earliest possible date. 26. Since allocation of civilian supplies to liberated countries, in all probability, will cut into the ration of the American consumer, a widespread official and public campaign should be undertaken to inform the American people of the gravity of the needs of our Allies in liberated Europe. Conversely, there is no adequate knowledge or understand- ing by the ordinary civilians in these liberated areas of what the Americans and British have done for the civilian population of these countries. Nor do they realize that in the United States, too, there are grave shortages of meat, butter, cheese, gamoline and many other civilian items. e should improve the transmission abroad of the story of the American war effort and of American sacrifices to in- prove the lot of our Allien. 27. I attach a Bibliography of documents assembled in the course of my Mission as Tab No. 27. 28. I desire to acknowledge my deep gratitude for the conscientious, efficient and devoted work of the members of my Mission (see Tab 1)/ They have spent many days preparing docu- ments, holding conferences, and assisting ne in obtaining informa- tion from officials of the foreign countries I visited - all of whom have cooperated to the fullest extent in furnishing the in- formation requested. The members of my Mission have performed the major share of preparing the voluminous tabs accompanying this report,' Their discussion and advice have also been invaluable to me in the preparation of these recommendations, -15- SECRET I an likewise grateful for the assistance and cooperation which were unstintingly given to me by the Suprese Commander and the members of his staff at SHARF; by the Commanding Officers and their staffs at Headquarters, Communications Zone, United States Any; by our Ambassaders to Great dritain, France, Belgium, the Netherlands and Norway and the members of their embassy staffs; and, especially, by the officials and staff of the Kicsion for Economic Affairs in London. Respectfully yours, SAKUEL I. ROSEMAN April 26, 1945. DECLASSIFIED By Deputy Archivist of the U.S. By 1. J. Stewart Date NOV 22 1972 - 16 - SECRET THIS DOCUMENT IS THE BEST AVAILABLE. EVERY TECHNICAL EFFORT HAS BEEN TAKEN TO INSURE LEGIBILITY. Tabulations to accorpany the Report of Samuel T. Rosensan dated April 26, 1945 on Civilian Supplies for the Liberated Areas of Northwest Europe DECLASSIFIED By Deputy Archivist of the U.S. By I. J. Stewart Date NOV 22 1972 SECRET LIST OF TATS If "TSSION REPORT Tab No, 1. History of Rosenman Mission 2. Frunce 3. Belgium and Lancembourg 4. The Netherlands 5. Norway 6. Denmark 7. Food 8. Coal 9. Internal. Transportation 10. The United Kingdom as un Immediate Post 7-5 Day Supplier of the Liberated Areas of Northwest surope. 11. Displaced Persons 12. Shipping 13. Public Utilities 14. Petroleum Situation 15. "ilitary Responsibility for Civilian Supply 16. U. S. Civilian Personnel in the Field 17. U. S. Economic Policy Machinery for Liberated Areas 18. Existing Machinery for Formulation of Combined U.S.-U.K. Economic and Supply Policy for Idberated Areas 19. Problems Relating to the Supply Mach inery and Procedures in Washington 20, British Mar Cabinet "mohinery Dealing with Supplies for Liberated Areas 21. UNRRA in Northwest Europe By I. J. Stewart Date NOV 22 1972 By Deputy Archivist of the U.S. DECLASSIFIED 22, The European Aconomic Committee 23. European Central Inland Transport Organization 24. United Maritime Authority 25. PHeliminary Estimates of the Cost of Reconstruction in Liberated Nations 26. Report on Military Import Program to Support Wilitary Procurement in the field 27. Bibliography SECRET To SECRET HISTORY OF ROSENTAN MISSION DECLASSIFIED By Deputy Archivist of the U.S. By N.J. Stewart Date NOV 22 1972 Prepared by the Rosenman Mission London, England, April 15, 1945 INDEX 1. Scope and Purpose of the Mission. 2. Preliminary York in Washington. 3. Investigation in the United Kingdom. 4. Investigation on the Continent. 5. Preparation of Report. DECLASSIFIED By Deputy Archivist of the U.S. By 1. J. Stewart Date NOV 22 1972 SECRET HISTORY OF ROCKMYAN VISSION 1. Scope and Purpose of the Vission On January 20, 1945 President Roosevelt addressed a letter to Judge Rosenman appointing him his personal representative, with rank of Minister, and asking him to undertake a mission to Northwest Europe on supply and financial matters. This letter is quoted in full below: "Dear Judge Rosenman: In addition to your position as Special Counsel to the President, I want you to undertake a mission to the United Kingdom, France, Belgium and the Netherlands as By personal representative with the rank of Minister. On this mission I want you to examine and report to ne the steps to be taken in the joint interesta of our country and the fighting Allies in winning the war with respect to the flow of vital supplies other than finished munitions to these countries. I would also like to ascertain what the needs of these countries will be for supplies and services to repair the destruction and devastation of the war and to build some of the economic foundations of peace in terms of possible credits or other financial assistance at hand or through recommendations for appropriate legiolation. FRANKLIN D. ROOSEVELT A subsequent letter expanded the scope of the Mission to include similar supply and financial matters relating to Norway and Denmark, SECRET 2. Preliminary York in Washington For about two and a half weeks after receipt of these instructions, intensive preliminary work was done in Washington. with the advice of officials or the State, har and Treasury Departments and the Foreign Koonomie Administration, Judge Rosenmen selected the members of his nission staff from the divisions of these agencies which were most directly concerned with and most intinately acquainted with the problems set forth in the terms of reference of his Mission. Those selected to staff the Dission were Colonel James C. Lavis (Gar Department), Livingaton T. Merchant (State Department), Dudley 1. Phelps (State Department), William H. Taylor (Treasury Department), Charles S. Denty (PSA), and Dacgett H. Howard (PEA). At various times during the course of the Mission, the full-time services of the following men were made available to the l'ission, Rupert Emerson (FEA), Paul F. White (FEA), Walter N. Thayer (MEA), and Lt.-Col. Charles A. Foehl, Jr, (SHAEF). Much preliminary work was done in Washington blocking out the matters to be investigated and assembling necessary papers. Commencing January 31, 1945 and lasting through February 5, a series of conferences were held in the White House, at which officials of the various agencies dealing with supply of liberated areas discussed with the Mission some of the nost important subjects to be investigated, including the supply machinery for liberated areas, economic conditions in France, Belgium and the Nethorlands, and ship,ing. Discussions were. also held with Washington repre- sentatives of the British Government to obtain a preliminary idea of their views with respect to some of the joint problems. On February 9th, 1945 Judge Rosenman and the other members of the Mission except Ir. Denty and Kr. Ferchant left the ATC airport in Washington for the United Kingdom. Yr. Keerson and Yr. Thite accompanied the party. The Miscion arrived in SECRET Prestwick, Scotland, on Saturday February 10th, after crossing the Atlantic via Berouda and the Asores. The trip from Prestwick to London was made by train that night, and the Einsion arrived in London Sunday morning. On Sunday night, Judge Rosenman received a cable from the President requesting that he join the President's party in Algiers on their way back from the Malta and Yalta Conferences for a special assignment. Arrangements work made for Judge Rosenman to leave by plane the following morning; and the staff of the Mission were instructed to proceed with their work in his absence. Offices were provided in the American Embassy. 3. Investigation in the United Kingdom For the next three weeks, nembers of the l'ission discussed the liberated areas problem with technical experts of the American Embassy and the Fission for kconomic Affairs, officials of the aritich, Dutch and Norwegian Government, and of UNRRA, and officers of the SHARP Fissions to Norway and Denmark. Daily meetings of the Mission were held to coordinate its activities and plan its investigations. From these dia- cussions, members of the l'ission gained a thorough knowledge of the views held by officials in London. The important topics covered included coal, inland transport, food, shipping, finance, POL, UNRIMA and the various proposed international organizations. Through discussions with U.S. Embassy representatives to the Netherlands and Norway and the officials of both these govern- centa, the supply and reconstruction problems of these countries were thoroughly explored. A similar approach, on the military side, was made through discussions with the SHALF Missions to Norway and Deneark. Conferences were also held with repre- sentatives of the ritish Government to clarify certain sapects of the combined responsibility in supply of liberated SECRET - 3 - Pr. Verchant joined the Mission in London on February 18. On l'onday February 26th, the members of the Mission, except for Judge Rosenman and Colonel Davis, left London on a short trip to inspect certain aspects of the British economy in the field, Mr, Emerson accompanied the party. In the course of this trip, the Vission inspected port operations at Avonmouth and Bristol, the Armstrong-Whitley aircraft plant near Coventry, and the Alfred Herbert rachine tool plant in Coventry. A brief tour was also made of the bombed-out areas of Coventry, including the famous cathedral. The Mission then got a first hand view of air operations of the 8th Air Force at a bomber station outside of London, returning to London on .ednesday February 20th. Monday evening, Parch 5th, Judge Rosenman rejoined the lission in London. He was accompanied by Pr. Denby. The day following his orrival in London, Judge Rosenman held a press conference at the American Embassy to explain the scope and purpose of his Lission to representatives of both the British and American press. During the next ten days, Judge riosenman and members of the lission conferred at length with officials of the Aritish Government on liberated areas problems. These conferences included talks with the Prime Kinister; Mr. Anthony Eden, Secretary of State for Foreign Affairs; Sir John Anderson, Chancellor of the Exchequer; Sir Jaces Orice, Secretary of State for Mar; Lord Maynard Meynes, Financial Advisor to the Chancellor of the Exchequer; Kr. Richard Law, ! inister of State; Mr. Oliver Lyttelton, Minister of Production; Lord Leathers of Purfleet, Vinister of War Transport; Colonel J. J. Llesellin, Minister. of Food; Fr. Clement R. Atlee, Deputy Prime Finister and Lord President of the Council; Ir. Thomas drand, Secretary of S.J.A.O. Cocrittee; and numerous others. On all but a few - 4 - SECRET occasions, Judge Rosenman was accompanied by one or more members of his staff. On matters relating to the Netherlands, Judge Roconsan conferred with Queen Wilhelmina and top officials of the Netherlando Government, as well as with Ambassador Hornbeck and members of his staff. Conferences with Dutch officials included talks with Prime Minister Gerbrandy; Doctor ven 2. Cena, Foreign Minister; J. M. de Booy, Finister of Shipping Count van Bylandt, Secretary General of the Foreign Office: Doctor Gispen, l'inister for Trade, Incustry and Agriculture: County Wijssels, Finister for Social !fairs; Fr. de lazy Fortman, Director General of the Fetherlands Office of tellef and Rehabilitation; Doctor G... M. Reyamans, Nethorlando Vinister of Finance; Y. Vichielo van, Verduynen, Nethorlands Amountance in London, One or more members of his staff accompanied June Kobenman in most of these discussions. In the case of matters relating to Norway, Judge Rosensan and members of his Mission consulted with Ambassador Osborne and his staff and top officials of the Norwegian Government, including Mr. Trygve Lie, Foreign Minister; Mr. Frihagen, Minister of Supply; Doctor Evang, Director General of Public Health Service; Mr. Terje-Wold, Minister of Justice. In addition, Judge Rosenman consulted officials of UNRRA, including Sir Frederick Leith-Ross and Pr. Hugh Jackson. Certain specialized problems, previously covered by members of the Mission during Judge Rosenman's absence from London, were again discussed with the technical experts in informal meetings. These included talks on shipping, internal transport and coal and the QPA production program on the Continent. Officers of the SHALF Vissions to Norway and Lenmark made oral presentations of the particular economic problems of those areas. A representative of SHARP, 0-5, Lt.-Col. Charles A. Fochl, Jr., met the Vission in London and re: sined with Whe Viscion through - 5 - SECRET out the remainder of its stay in Europe in order to provide assistance on matters pertaining to SHAEF's role in the liberated areas problem. 31th the object of supplementing the impressions gained from discussions with of ficials and obtaining a first hand sense of the wartine food supply and general living conditions in the United Kingdom, Judge Rosenman took an extensive, informal tour of the poorer sections in Londán, inspecting the markets and housing facilities, particularly the underground. facilities provided for protection during the blits. On Mednesday March 14, the Vission left London for Paris, In addition to the seven members of the Mission, Vr. white, Fr. Thayer and Mr. Emerson made the trip. 4. Investigation on the Continent Members of the Mission mere quartered at the Haphael Hotel for the duration of their stay in Paris. Offices were provided in the Embassy, Commencing Thursday Varch 15, three full days were taken up with conferences at SHARF Headquarters in Versailles. In the course of these conferences, Judge Rosenmon and members of his Vission talked with Lt.-General Talter 3. Smith, Lt.- General Sir Hunfrey K. Gale, Lt.-Ceneral A. E. Grassett, Major- General F. S. Scowden, Brigadier-Ceneral F. J. VeSherry, and members of their staffo. The various branches of SHAKF con- cerned with the liberated areas problem made oral resentations of the most important topics and documented these presentations with detailed written reports. The first meeting covered general supply procedures, Subsequent meetings covered specific problems such as coal, internal transport, food, POL, displaced persons, public health and public utilities. Some of these same matters, particularly those - 6 - SECRET relating to tranqportation and port clearances were likewise discussed fully with Lt.-General John C. H. Lee, Commanding General, Headquarters, Communication Zone, and nembers of his staff. Judge Rosenman and members of his Mission conferred at length with top officials of the French Government on the various problems as they concern France, French of:icials consulted by the Vission included Ceneral de Gaulle; K. donult, Vinister for Foreign Affairs; L. damadier, Vinister of Food: P. Incoste, Pinister of Industrial Production; r. Menden-Prance, Pinister of National Economy; y, Veven, limister of Pinance; P. Bayer, Finister of Transportation; E, Dautry, Vinister of Reconstruction and Orbanism: Y. Billoux, "Inister of Public Health; and various nembers of their starfs. in addition, dis- cussions were held with American representatives in the Subasy dealing with the liberated areas problem. In order to see first hand the living conditions and food supply in Paris, Judge Rosenman made an informal tour of the poorer areas of Paris, visiting the shops and certain of the poorer residential sections. Also, accompanied by members of his Fission, he made an inspection trip through the bombed-out areas, under the guidance of y. Dautry, Finister, of Reconstruction and Urbanism, On Thursday Karch 22nd, the members of the Fiusion, with the exception of Charles Denby, made a field trip through Northern France, accompanied by Mr. Henry R. Labouisse, Vinister- Counsellor for Economic Affairs in the American Embassy, Paris; Talter Thayer, EFA; Lt.-Col. Foehl, SHAEF; and Lt.-Col. Dougherty, Communications Zone, The trip gave the Vission a comprehensive view on the ground of war damage to inland transport facilities, ports and industrial facilities. On the first day, the Mission inspected the port facilities in the devastated cities of Houes and le Havre. The party grent the night at Headquarters, - 7 - SEConT Normandy Blue Eection, Communications Zone, in Desuville, as quests of Major-General Aurand. The next morning the Mission left Deauville and motored through Caen and Sayeaux, where an opportunity vas afforded to view close at hand the destruction modern MEP can do in a sizeable city. Industrial, business and residential areas of Caen were found to be completely demolished, Similar destruction was apparent in smaller towns and villager along the way. Part of the route followed the seacoast very clotely and gave the Mission a clear view of the now rusting Atlantic Wall defenses. The Kission was conducted on a tour of the Invasion Beaches, Utah Beach and Omaha. Beach, by Colonel Eugene Caffey, the Comrander of the Engineers arigade which played such an important and heroic part in establishing the beachhead at Utah Beach, Other points of interest covered during the day included a prisoner of was field hospital and two American cemeteries, The Mission arrived at Cherbourg toward evening and made an extensive tour of the port facilities. Judge Rosenman returned to Paris by plane, and the other members of the Eission returned during the night by train. On Saturday March 24, Charles Denby received a request to return immediately to the United States. He left for London the same day and proceeded from London to the United States several days later. Mr. Taylor and Mr. Thayer also left for a few days to attend to official business in London, On Monday March 26, Judge Rosenman, accompanied by General VcSherry, Colonel Davis and Lt.-Col. Foehl, left Paris to make a tour of forward Army areas in northeastern France, Belgium, portions of Germany, and Luxembourg to examine first hand and on the ground civilian supply prablems, including the handling of displaced persons, which the Ang meets in the wake of its military advances, The party went - 6 - SECRET by air to Namur, 12th Army Group lleadquarters, At Napur, Mosenwan conferred with Major-Jeneral levan C. K. Allen, Chief of Staff, 12th Army Group. The party left Namur by air and proceeded by Punchen-Gladbach, Headquarters 9th U. 5, Army, where they visited the Army orean, Deceral Simpson, the Concanding General, was host for the night, On Tuesday Varch 27th, the party left Munchen-Gladbach by car for Cologne, where they made an inspection trip through the city, visiting the fancus cathedral. Prop Cologne, the group proceeded by car to Fuskiroben, Int Any Handquarters, where conferences were hele with the Commonding General, General Hodges, after which A visit was nide to a displays persons camp at Brand, near Aachen. After visiting the the party left by automobile for Liege, were they DOBT night. From Liege, the ;arty proceeded the nect nom:- Reims, where Judge Rosenmar. conferred with the Supreme Commander, General Eisenhower, and General Bradley, Constanding General, 12th Army Group. The party then flow to Laxemburg, where conferences were held with top government officials and staff officers of General Patton's 3rd Army Headquarters, On Thursday March 29th, Judge Hosennan's party left Luxembourg by car for Brussels, arriving at 3 p.m. Mesars...Perchant, Phelps, Howard and Thayer had, meanwhile, left Paris on the morning of Technesday, March 28th, and motored via Reims to Bruscels, Mr. Taylor left Paris to return to Washington, having received & request to return immediately on official business. Years. Enerson and White left Paris for Brussels on Thursday March 29th and arrived the same day. In Brussels, Judge Roserman stayed at the Embassy as guest of Ambassador Sawyer; and other members of his party stayed at the Palace Hotel. Judge Rosensan and members of bis Vission had lengthy discussions with the top Adgian officials concerned with matters of rehabilitation and reconstruction, - SECRET including: the Prince Regent; Doctor von Acker, Prime Finister; y. De Smaele, Finister of Economic Affairs) V. Lalmand, Minister of Food Supply; K. Honvaux, Ninister of Communications; and y, Kyakens, l'inister of Finance. Discussions were also held with the Aserican representatives in the Rebasey and with the military authorities, including the SHARF lission to Delgium, the SHARP Fission to the Netherlands, and the 21 Army Group. In order to get a concrete impression of food supply and living conditions, Judge docenman made an inspection of the food shops and residential areas in the poorer sections of trussels. On Sunday April 1, Judge doomman, Jr. and Colonel Davis left drusnels for & tour of the liberated area of Holland. In Kinhoven and Tilburg, Judge Roserman conferred with officials of the Dutch Government on problems of rehald litation and reconstruction. Messrs. Merchant, Phelps and Howard, along with Fesors, Thayer, hite and Lt.-Colonel Foehl, left Brussels for Antwerp, visiting en route the notorious former Mazi con- centration camp at greendonck. In Antwerp, they were the guests of Colonel D. Gullatt, Comeander of the Port of Antwerp, who arranged for then to inspect a floating power plant anchored in the estuary and the extensive port facilities of Antwerp. Toward the end of the inspection tour, Judge Rosenman, Dr. Emerson and Colonel Davis returned from their visit to Holland and joined in the inspection of port facilities. The entire party returned to Pussels that ovening. On' l'onday April 2nd, the l'ission left Trussels by air for London, arriving in the early avening. 5. Preparation of Heport Immediately after arrival in London, work was concenced on the report to be submitted to the President. The report was well on the way to con; letion when the shocking news came of the death of President Hoosevelt, On the morning of Friday April 13th, Judge Horennan left London for Warhington to attend the - 10 - SECRET President's funeral. Kenters of the Lission staff remained in London to complete the report, and Yr. Taylor rejoined then on Saturday April 14. Yesurs. Merchant, |loward and Phelps, accorranied by Lessrs. Chite and Thayer, left for Washington on the evening of l'onday, April 16th, arriving in Aushingtor Mednesday. Prepared by the Cashington, D. i, (*11 12, 1 11 No. 0 3 SECRET REPORT ON FRANCE Propared by Roseman l'ission London, England, April 15, 1945. SECRET INDEX Section I. The Problem. Section II. The Imediate Needs. A. Coal. B. Transport. C. Food. D. Raw Materials. Section III. The Invodinonts to Solution. A. Limitation of Port Capacity, Shipping, Supply and Finance. B. administrative and Procedural Considerations. 1. Termination of Lilitary Responsibility. 2. Working Relations with the British Enbassy in Paris. 3. Administrative Problems of the French Authorities. 4. Problems Reflected from Washington. Section IV. Reconstruction and Longer Term Financial Considerations. Section V. Conclusions. SECRET FECRET REPORT ON FRANCE PECTION I. The Problem. France presents today many of the problems which have emerged or may be expected to emerge in the months to CO: e in the other liberated countries of Northwest Europe. The necessity for a tranquil and prosperous France is self evident. It is the largest and, economically, the most 1m ortant of the group. Before the war France relied heavily on overness imports. Under German occupation her internal economy was forced into an occupied and blockaded Europe, In the period from liberation to date, with military operations continuing, only a trickle of imports has been possible of achievement. Since July 1944, substantially all the supplies which have boon imported for the civilian population of France have been brou, ht in by SHAR operating under its directive to rovide sufficient supplies for civilians "to prevent disease and unrest" in its theater of operations. SHAEF has fulfilled this instruction. There has been in France meither dinease nor unrost of a nature or magnitude to harm the conduct of the war. That the civilian population could have absorbed many times the tormage of food and other supplies actually brought in 19 obvious. And today the possibility cannot be SECRET overlooked that, unless neasures are taken at once to meet France's nost emergent needs, the custilative economic strains, lack of heat, and lack of sufficient and proper food in the past my ovidence themselves sooner than one wight suppose or hope in civil distarbances, in enidemics or in an onduring damage to the public health. RECTION II. The Imodiate loods. The imediate essential needs of France are: &. Core coal, B. Improved internal trans ortation, 6. A larger and better balanced national diet, D. The import frzi abroad of sufficient raw materials to resume production in key employment industries. If the first two problems could be solved, the third would automatically improve. All four prine problems, however, are interrolated. The question of increasing domestic production of onal, for example, is directly connected with the Government's ability to provide larger food rations for the minors, to find the railway rolling stock to nove larger quantities from the pit heads, to import naintenance machinery parts, and the necessary nining nachinery to replace worn out equipment and to provide pit props. It is even connected with the ability to produce and distribute consumers goods which will provide an incentive to the worker to earn money In order that he DAY spend it, for unless he oun buy clothing and furniture and other necessition he is not interested in accumulating; sa.,d pioces of paper money. SECRET CRCRET Bearing in mind the insoparability of these problems and their independence upon each other, it may nevertheless be useful briefly to consider the present position of each. A. COAL It is & truis. to say that the economy of Europe runs on coal. France depends on coal for the production of (1) nearly half her electric power, (11) the operation of her rail- roads, (111) the functioning of industry, and (1v) a large part of her domostic hoating noods. France is one of the world's important coal producers. In snite of that, howover, she YILLO forced in peuce time to import one-third of the coal she consumed. For example, in 1937 France nined 45,000,000 tons and imported 30,000,000 tons. In December of 1944 her nines 1702°C producing at only two-thirds of the peace time rate. Since liberation SHAFF has been unable to import into France sufficient coal to equal the quantity of coal which has boen produced by Franco and which has been turned over by France directly to SHAEP for nilitary purposes. The consequence is that France is attempting to live on little more than two-fifths of her normal coal requirements. Unless increased quantities of coal can be rade available in the coning months, the shortage of this key commodity will act as a bur to any effort to revive See tabulation on Coal for & nore detailed e:quination of the situation. -3- number DECRET the industrial economy of France, even if she wore to get the nodessary transportation and raw materials to pendit hor industrial nachinery even slowly to turn over, Electric nower production has been successfully unintained, for the plants osce_ed the serious damage which had been foured, and rogair work - with notable U.S. amy assint- ance - WGS very meedy. In the search for noans of saving coal, the French are now discussing with the Swiss the possibil- ity of substantial transmission of eledtric power from witzerland. After VE-day the possibility of power inports from Germany should DO exclored.» Probably the most serious consequence of the coal famine last winter day in the effoct on the health of the people. There was no coal available for the heating of house in Paris last winter. The severity of the water and the shortage of food, particularly fats, CO. bined to create a situation highly disturbing in terms of its ontential social and politionl conse- quencios as well as its effect on hoalth. Although neither authoritative nor broadly. based statistics are available, there seess little doubt that during the nast winter in Paris and in other large urban centers there was a substantial rine in the mortulity rates for the very young and the very old as well as a general deterioration of physical well-being. = Seo tabulation on Aublic Utilities for greater detail. -:- SECRET SECRET This conclusion is based not only on a visit to the national public health center of France and & scrutiny of their health charts but on many conversations with private citizens and social workers. A widespread belief 80018 to exist, with convinc- ing though intangible support, that de second successive winter, without any coal iur docestic heating and with in- adequate food, could not be well ondured physically or politically. Reserves of health, morale, food and fuel were drawn down deeply. They no longer exist to the extent they did last fall. Then the people were sustained by the excite- nent of recent liberation and the hope of invinent improvement. D. TRANSPORT* # Before the war France had a total of 16,575 locomo- tives with 14,700 serviceable. Prior to liberation she had 11,700 of which only 7,600 were serviceable. At the present time, including allied engines and with allied assistance in reconstruction and repairs, the French have 14,712 locomotives with about 9,500 servicesols. Pro-war France had about 400,000 serviceable ruilway wagons. The Cermans removed more than half the total and to- day the French have just under 200,000 serviceable wagone, in- cludin- allied rollin- stock. Currently the Allied Armies are utilizing closé to two-thirds of the available rolling stock and locomotives, measured by figures on tonnage carried. # See tabulation on Inland Transport for a more detailed examination of the situation. - 5 - SECRET SECRET of pre-sar reilroad trackage France today has 93% of her rileage open to traffic, despite a total of over a thousand bridges and tunnels badly damaged by allied bombing or German demolition. The American Army was the major instrumentality in this repair job. It should be enphasized, however, that the repairs in rany cases have been on an emergency basis, The regnitude of the task of restoring Irunce's physical railroud plant to a point 01 ciicient operation is great. Truck lceses are corparable to railmy rolling stock losses. The Provisional French Government entimates that the truck population today is about 137,000 compared to 230,000 a year are and over 470,000 prevar. These statistics are only estimates as exact figures are unavailable. No new motor vehicles were made available for French civil use during the entire period of occupation. During that period the production of spare parts and betteries was diverted almost entirely to the German Army. The mortality of civilian trucks accordingly has been heavier than normal. Presumably this will continue for there is an increasing load being placed on road transport by reason of the feality of the ruilroads. Barge transportation has been to & considerable extent restored in the Seine system and the South of France despite et tonsive damage to the canal looks and dons. "bout 60% of the combined Franco-"el-ian inland mter- way system is now in service. Torman derolitions of locks and - 6 - SECRET dama were not as serious as feared, and Allied assistance in restoring operations, including turning over of supplies and come floating equipment, has ben considerable. The recon- struction of the network in the North and Northcast will rer dro many months. The importance of restoring mobility to the oconomy of France cannot be overrated. Thisapplies particularly to the efficient collection and distribution of indigenous food rosources - since France's agricultural production is uneversly disporsed, as hereinafter discussed. C. FOOD* Before the usr France ULS substantially solf sufficient in food. The most sorious shortage VAS in edible futs and cils, which was not by overseas importe, largely from hor am empire. !.1thout attempting to forecant the coming harvest, it is clear that France this year will be short, by substantial tonnages, of mat, fato, and sugar. The larger cities and the South of France will also be short of wheat. The shortage of whoat largely arises from the transport difficulties of moving it from the curplus in the north to the deficit areas in the south und to the cities. The sugar shortage is traceable to insufficient coal last year to refine in full the actual sugarbeet crop. The most shortage is aggra- vated by the decline in the livostock population and by lowered animul weight resulting from feed shortages. On the farms, in general, seed is sufficient, labor short, equipment run down, # See tabulation on Food for a more detailed coundination of tho situation. - ? - SECRET and pulling power short. In addition, an accrued deficit exists for fortilizers. Another clement in the food situation - a very important one - 10 the tendotay of farmers to hold on the furn & larger than normal proportion of thoir produce. This is due apparently to & combination of fear for the future value of the franc, an absence of consumers'goods and necessary supplies on which to spend any money which the farner might get for his goods, and a possible reluctance on the part of government officials to take a stern line with the farmer. The national diet is now lon and gravely deficient in fate, meat and milk - and humben for a long time, Authori- tative figures are non-cxistent but there scens to be reasonable agreement that the average calory intuke per capita fails alight- ly short of 2,000 & day. The official ration 10 now reported at 1,255 colorios. This is supplemented by non-r:tioned veget- ables, by (ifts from friends in the country and by some purchases in the country, and, of course, by purchases in the blook market. The diet is hoavily weighted with wheat and potatoes, The most and butter ration is extremely low, 8,8 ounces weekly for meat, untristed, and 8.8 ounces monthly for futs. For some weeks recently. ration tickets in Paris for these two itoms have not been honored - due to Incl: of supplies. is would be expocted, & black market in food exists. The Provisional Government has tried hard, but has been able thus far only to curb it in nome degree, but not to oradicate it. Prices are reported to rango in the black market at from three - 8 - SECRET times to ten times the official prices. Butter with an official price of 734 a pound is said to bring $6.00 to $10.00 a pound in the black market. The Provisional French Government has closed numerous black market restaurants in Parts, end the ogonomic police have conducted searchos of persons and vehicles ard seizures of illegal shipmonts coming into the city. It is belioved that the proportion of bread sold through black market channels has now dropped to an insignificant percentage of the total, primarily because the sup ly available through legitimate channels 10 now fairly adequate. D. RATI 'WTERIALS. France needs a variety of raw materials not available within her borders on which to operate her industries and thoreby employ her industrial workers. Today Loar industrial production is lesu tian one-quarter of normal. The fact that this condition is not reflocted in exployment statistics is due to a scread-the- work policy and to the retention on the payrolls of thousands of workers occupied with non-productive tasks. France requires raw ratorials such as cotton and wool. 1th rain raterials she could not only rogain economic health, but produce in hor own plants many products such as textiles, which are today short in the world, an well as France. It is directly to our own interests, as well as the French, to achieve a high level of internal production in France. A piece-meal approach, directed to the impdiate production of certain items required by the Allied Armies in the field, has been coordinately insugurated by the General Purchasing Agent of the U.S. any for - y - SECRET SECRET our army, and by the Linistry of Supply Aission for the British forces. It is already yielding dividends in actual supplies for the Araies, and, incidentally, bus affected a moderute, though putchy, employment of French labor. In no sease, how- over, is it a remedy for the busic problem. It is doubtful whether this progrum oun or will reach significant proportions. It 1a limited by the amount of coul and transport that san be made available to implement it. Purthernore, it will be shurply curtailed on VE-day. It is in no sense a cajor or lasting stimulus to revival." It should be noted that the import of increased supplies under the French National Inport Program will fail proportionately to improve the civilian situation to the oxtent that part of such imports 8° to Lect the large decands for re- arming the French military extublishment. This expansion of the French Jrry will impinge sharply on the ulready serious san- power shortages in certain specialized fields and upon France's gravely restricted coal and transport resources. SECTION III. The Impodiments to Solution. In striving for economic recovery France is operating upainst as time limit, eince the accumulation of stresses and strains is great. When that tire limit will expiro no one can predict. Thore is universal aproemant, however, that the solutions must be found quickly. Some improvement in the present - - und some basis for growing hope for the future - must be apparent to the French in a mutter of months, not yours, if Franco is to avoid 41 serious internal situation. The busic responsibility for cooiding the course to be followed is the rosponsibility of the Fronch themselves. See tabilation on this GP, program for greater detail. -10- DECRET I think that it is our responsibility to do all within our own limits of ability to help in the light of our own rilitury and civilian needs und the noede of our Allies and other overrue countries. to Limitations of Port Capacity, Shipping, Supply and Finance. In my opinion the intake cupacity of the ports now available for French civilian imports is sufficient to hundle the civilion supply import program currently in prospect. Granting the fall of Bordeaux and the ultimate northaurd cove- ment of our Amy's supply line, I balieve that port capacity is ade,uste. The world shipping shortage, of course, imposes a limitation. CA the busis of present information available, however, 1L would uppear that for the coming period of three to six months France can probably be allocated sufficient occun tontuge to bring in a quantity of supplies sufficient to meet her minimum essential needs. In fact, irmediately following VE-duy and for a period of two or three months there- after, the Allied shipping authorities anticiputo a substantial though temporary bulge in ocean tonnage available in the Atlantic for civiliar. shipments." For the immociate future, financial factors would not appear to impose an important restraint on France's current import plans. Imports from her own colonies present no foreign exchange problem. The relatively small tonnages now planned See tubulation on Shipping for nore dotailed discussion of the shipping and port situation. -11- o SECRET from sterling sources likosise present no serious payments difficulties. The Lend-Lease Agrounent which we signed with the French on Fobruary 28, 1945 provides that consumers goods, FUN materials, und industrial goods up to & maximum value of about 20 billion dollars may be provided under stated conditions and on the busis of both the usual direct Lond-Leuse and the extension of long term credit uncor Section 3c of the not, If for any roason the French fuil to receivo substantial delivories under this Agreement their dollar problem will be gravely com- plicated. It is estimated that at the end of 1944 France hold squathing over 2 billion dollars in gold are official dollar bulunces. This is, of courso, boing surrontly deplated by expenditure for procurement other than under Lend-Louse, The primo limiting factor on the satisfuction of France's emergency short term import program is the world supply shortage in certain goods und other products. The limiting fuctors next in inportance are internal trunsportation und coal. Without these two, imports can neither be distributed nor, in the case of Ph. materials, utilized. B. .drinistrative and Procedural Considerations. There are also certain administrative problems which may influence acversely the execution of current import plans: 1. Tormination of Lilitary desponsibility. SHARP has played an cosential role in our economic relations with France since liberation. Until recently It has been the sole provider of civilian importe for France. In -12- SECRET dealing with the problems urisin from this responsibility. estublished la so-called Your-Party Supply Cornittee in Puris, ob it Les for the other countries within its juris- diction. SHALY was one member, and it also provided both the Chariman and the Secretarist. Reprosentativen of the Provisional French Covernment, the British Embury -nd the American Liburary completed the membership. It kun roved extremely useful and 1a otill Functioning. Last "overber however, the Provisional French Covert- rent presonted la Lational Invort program for civilion 66, nlior for the period ending June PO, 1945. This had mulnequently accepted for planning purposed by the U.S. até U.Z. Governments: and in January a modest shipping allocation rase cirectly to the French Government. Therefore, thore care into being two ;romman of irports for Trench vivilians - one under SheEF responsibility und the other under French procurement und shipment. This naturally produced problems of integration. a further complication hus been the OPA Program above contioned or, core accurately, scriec of programs, which constitutes still a third channel of importa- tion from the United States into France. It is understanduble, therefore, that sometimes the surply authorities in Cashington have been, and are, confused up to who was clairing what und for -hich period. It has DOw been decided, however, by the Combined Chiefs of Douff that on buy 1, civil injorts by JH.EF 1111 be discontitued. The French Autional Import Progrom, In ships allocated directly -13- SLCRET to the French, will then becore the rain street of injorte into vr.nco. Outside of this Program there will still renain, for the tire being at least, imports under they question for the Give production programs. These, however, ebould not prove ,articularly large in the upgropate nor seriously cis- turbin, to the strous. The G.. Progres #111 DC limited in nije % the coul une internal trunsport shortate. ind it -111 shorply decline after VE-day Lr. why event. after buy 1 attent's circot responsibility by appoorent, =111 be restrictou to coul una FUL inports into Trando, -hion for respons of silitary necessity it must still control. In audition, however, CHALF will retain that amounts to 11 conting- ent underwriting liability, since for operational reasons CHIP must prevent, in ull events, the development of disease und un- rest behind its lines. 1f, therefore, for chatever retson, imports under French suspices are insufficient to acqorrlish this nbjective, SHIP will of becomenty be forced into action. SHAKY cust thorufore keep itself currently informed of the status of the French import program. For the suzo reasons, it cust also ...ep itself consrully inforced on the level of rationing and the state of public order 1a. France. brom tio point or vie. of the French - año also of this Government's relations with then - it is codessary that sh.27 should not sted ito remaining rosponsibilities abrugtly. The French, to 9 ui,nificant augreo, are currently dependent upon APAY cooperation are wt fucilition for the borthing and Jischurging or curpose, the clourin, of ports, und Internal distribution. -14- SECRET 2. Working Relations with the British 2 basay in Paris. The British, us a supplying nation, have a roal interest in Pronel: surply catters. ..t proscript Cure to eleco und fectivo coopermision between the 'ritisi and the .corican Dubossies on concrite Latters of joint concern in Irtroo. There Cees net appear to buto been in this collaboration any limitation innesed in any :uy en our one Prooder. 0^ antion. Tiero acera ne need to extend it boyend dit exista street and the natural expectation world be rot, LS t U oction Complete surply, allocatic and shipping artinory 1r reques Its secre, ti.o area 1: wiel joint action in the field INS required vocld corresponsively 0. Administrative .roblems of the Franch authorition. administrative difficulties exist, une it 10 ressonable to exhuot Unt nov 07.08 vill criso, in condoction with the [rovisional Fronel Government's discharge of its ate responsibility. Posicilly that is a proble:. for the Proneh and Regions our - to reme(y. any attant on our part to centinuo any coonerie ro income- billtion in Prejec bryend the time shore proly military aidera- tions require it, 1/01/20 clearly be 0 ferr of naturralism which world not help the Prevel and which world work 1.00ing due a to our relations with them Cur ourent should be in t:- direction et impressin uner the their responsibility my 10% store Mis de things for the 11:01 are renerly Coir a/, concern. in or nart, t.o cricur 611c stir- and monly meliuory Lunt be 20 street tithoud it Le :0:0 erocure ent fer in no, 28 nill - 5 the other urus, us anced- are effective' DE *casible. - 15 - STORET 4. Troblers Reflected from Mashington. The -resent ricture wild be without a brief reference to the effoot in the field of the overation of the instru ontalities of our Government in quolin: with civilien supply Troblems for the liberated srous. In our in surid the need exists for oro procise and arent instructions. Improverent could also oncur in the In wrollenge of rolevart inter atten outwer: S.. l' and the Lebuary in Caris. "imally tie Febauary will require additional of oxperience une bue" TOURS, to uct the be vier lose which 1f will inkerit 08 i' divusto Itsclf of the civillan supply FORNCES' bilitive which 11 Las hithorto corried. SUCTION TV. Lecenstry other and Term Financial Considerutions. "p to this point this ruport Lia concurred itsolf only with (Le current -roble: of the neccs of Trance und the cbstacles to -ir sutisfiction. Care the 1 -eciate cruaturo nueds of ranco 1000 been moderately sutisfied, bevever, cust turn Le the roble of re-on'ul) herself La a ret industrial and of riet Itural power. This irvelves net cerely recoiring t'e nova we of war but. ulso the restoration or reducation of be occroby 11: such canner as the French Covernment 10y decide. The formulation of eny are 10n-or rario prom involves a consideration ef tie Nest are cert Dot, the because, and the other cupital "OUCE which :1 to over either tr construct herself or import - 10 - SECRET from abroad. This in turn requires not merely a quantitative estimate of the dimensions such a program night reach but also of the limitations which night be imposed by France's foreign exchange and gold position, including her ability to generate foreign exchange through a revival of exports. At this point, a few observations are indicated. In the first place, contrary to genoral impression, the damage which France has sustained in this mar as a result of Tround fighting, Sombin- damage, sabotage, and German decolition, is soveral times that which she suffered in the first World Car. It is estirated that against 370,000 houses damaged or destroyed in World Car J, there are today in France one million damaged or destroyed homes. In the devasted areas, shelter is a serious problem. French authorities have made a preliminary ostimate of the costa of reconstruction based upon current costs rather than value at time of destruction. According to this estimate an ex- penditure of about 1500 billion francs would be required. This estimate appears excessive. Furthermore, it would probably be misleading to translate ti.1s sun into - Jollar equivalent at LLC official rate of exchanje (franc - 2 conts) for this rate over- vulues the franc, and only a portion of reconstruction require- monts ior materials and equipment mill he met by innortations from other ccurtries. The remirs tich the filled Arries have marle in France's ports and on her railroads and her highway system have been little short of miraculous, particularly in point of speed of accomplishment and ingenuity. It would be a ristake, - 17 - SECRAT SECURT however, to imine that they are permanent improverents; on the contrary they are improvisations. The JT Ingin era build a wooden trestle to enable one tract: te cross a rivor there a tre-trael stool structure 1/08 blevm up. It will carry troins at slow spued with reasonable safety for -ro- hobly two or three years. Its life, however, is short une is price is note in color to train soledules. "uch the sare is true in the ports. ..t Cherbourg virtually all the berths fra. witel ar ships unload today aro of t.: porury wooden pile un. plant construction built by our military. Excent to clear was so:e of who are and rubble no effort has been rade - or has been to restere Truree's norts in any perminent sonso. "inally there are rary decisions of a hts political nature which ti:- .rovisional French Government has shill to talu, and wich, them (a) en, will notably effect the fro: over!: of French reconstruction. t' ese are the ellat to which privute enter-rise vill be normitted tr revern the ro- habilitation and roorganisation ou" brustry, the quostion of t.o rate of execuse l'or the fame visi all the implications roserting 01. export revival which the prosent birth rote corries, the extent to which the government =:111 be able 0:" willin: to 1e1d Coun the ::ročuotica O," consumers oodo for the sake of increasing the -rocortio of capital roods, an "inolly, the important question of tin extont tr teh Pronee will continue to derrive her civilian econcly .'or cake of building up and paintaining at lurge military es\ublishront. - 18 - SECRET SCOTION V Conclusions. There follows a summary of my conclusions with respect to France for the period immediately ahead: 1. Military responsibility for the importation of coal and POL should end as soon as military considerations permit, It is essential, however, that the U.S. Army should continue to assist on such problems as port operations, inland transport and trucking assistance. 2, The Four Party Committee should be continued as long as the military rotain any of the responsibilities cited above. The military should Lave no responsibility for scroening: future French national civilian import programs except for port reception and clearunce capacities. 3. The Four Party Committee should shortly como under French chairmanship since will play a disinishing role in the committee's functions. Decause SHALF does retain a contingent responsibility for the prevention of disease and unrest, however, it must keep completely informed on supply natters. 40 The GPA and the British Ministry of Supply !!ission should keep the Four Party Committoe or its successor completely and currently informed of their actions and plans. 5. The allocating authorities in Cashington should accord to French requests for food, coal production and transport equipment, as high priority as they can in the light of other demands. 6. Every offort should be made to help the French take advantage of the anticipated temporary post VE-Day shipping bulge - 19 - SECRET to got coal from the United States to France. T.ven if the quantity shipped in were small, its importance in French eyes as an offort to help would be out of all proportion to the tonnage. Coal is a political as well as a supply problem. 7. Precise instructions should be sent from Lashing- ton to our Enbassy in Paris on the procedures for screening French import requests which should be employed in the future. The flow of background and current information from Mashington to the Dabassy should be speeded and increased. Additional policy guidance on the application of lond-lease is also ro- quired. A willing car should be turned the Embassy's request for additional personnel to work on supply F oblems. Finally instructions to the Enbassy in Paris from Mashington on all matters in the civilian supply field should be expedited and coordinated to the and that they report the dombined views of all departments concerned, 8, Attention should be given to improving the presen- tation to the French public of the facts concerning the United States war-effort, the extent of the assistance we have pro- vided and are providing France, and the sacrifices made by our own civilians at home. There is too little knowledge anong the optinary French people of any of these facts. R conclusions, with respect to the longer term problems of reconstruction and any financial assistance that France may ask of us for that purpose, are: 1. Specific discussions with the Fronch authorities on questions of credit or other forms of oconomic assistance in - 20 - SECRET reconstruction should be postponed for several months, France has not yet been able fully to inventory her situntion, and the Provisional French Government has not yet taken the high policy decisions which must procede any substantive discussions with us. 2, I urge the pronpt approval by Congress of the Administration's program of financial legislation. Passage of the legislation would permit Franco to negotiate credits with private capital sources and the Export-Import Bank and thus aid in the solution of her earlier financial problems. Later recourse to the Monetary Fund and the International Bank for Reconstruction and Development, if approved by other nations and subsequently established, would provide at least a substan- tial part of the funds necessary for long rango economic rehabil- itation. Propared by Rocenman llission London, Incland, April 15, 1945. - 21 -