Drawing The Line

In this fresh and challenging study of the origins of the Cold War, Professor Eisenberg traces the American
role in dividing postwar Germany. Drawing on many original documentary sources, she examines the Allied meeting on the Elbe, follows the Great Powers through their confrontation in Berlin, and ends with the creation of the West German state in the fall of 1949. Unlike many works in the field, this book argues that the partition of Germany was fundamentally an American decision. U.S. policy makers chose partition, mobilized reluctant west Europeans behind that approach, and, by excluding the Soviets from West Germany, contributed to the isolation of East Germany and the emergence of the post-World War II U.S.-Soviet rivalry. The volume casts new light on the Berlin blockade, demonstrating that the United States rejected United Nations mediation and relied on its nuclear monopoly as the means of protecting its German agenda.
Drawing the line
Drawing the line

The American decision to divide Germany, 1944-1949
CAROLYN WOODS EISENBERG

Hofstra University
CAMBRIDGE
UNIVERSITY PRESS
CAMBRIDGE UNIVERSITY PRESS Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, Sao Paulo Cambridge University Press The Edinburgh Building, Cambridge CB2 2RU, UK Published in the United States of America by Cambridge University Press, New York www.cambridge.org Information on this title: www.cambridge.org/9780521392129 Cambridge University Press 1996 This book is in copyright. Subject to statutory exception and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published 1996 First paperback edition 1997 A catalogue record for this publication is available from the British Library ISBN-13 978-0-521-39212-9 hardback ISBN-10 0-521-39212-8 hardback ISBN-13 978-0-521-62717-7 paperback ISBN-10 0-521-62717-6 paperback Transferred to digital printing 2005
For Allan
"But make no mistake about it, when we go that far and when we make a political amalgamation of western Germany as against eastern Germany, then we had better dig in and prepare for what seems to me to be the inevitable conflict which will come sooner or later. We have then drawn the line between the East and West in such an irretrievable and unchangeable fashion that we will immediately be thrown into the possibility of a conflict." James K. Pollock, General Clay's Advisor on German Government, to the Chicago Council on Foreign Relations, June 9, 1947
Contents
Preface and Acknowledgments Introduction: i 2 3 4 5 6 7 8 9 io 11 Conclusion: Bibliography Index Private Polowsky's Oath Plans Making Peace The Limits of Reform: The U.S. Zone A Fragile Friendship The Russian Challenge Bizonal Beginnings The Doctors Deliberate Marshall's Medicine A Separate State Cold War Germany Winning The American Decision to Divide Germany
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233 277 318
363
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485 494 5*3
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Preface and acknowledgments
M A N Y YEARS AGO, when I first began teaching about the Cold War, I wondered why there were so few studies of the division of Germany. Although it seemed obvious that the German partition was one of the main elements in the emergence of the East-West conflict, the topic was somehow side-stepped in the scholarly literature. Naively, I set out to write a book about U.S. policy and the division of Germany in the 1944-49 period. I quickly discovered why this was such an unpopular research subject. Not only were there tens of thousands of documents, scattered throughout governmental and private collections, but the issues were of daunting complexity. On the American side, virtually every important foreign policy actor had a hand in the German question and their decisions in this field were integrally connected to all the major policy questions of the time. My effort to understand the events in Germany and the shaping of the postwar order has taken far longer than I ever imagined. When I began this book, the Cold War was taking on new and dangerous dimensions. As regards Germany, the NATO decision to place Cruise and Pershing II missiles in the western half seemed to highlight both the permanence and perils of partition. But then came the stunning changes of the late 1980s: the ascendancy of Gorbachev, the reversals in Soviet foreign and domestic policy, the collapse of the Berlin Wall, the reunification of Germany, the termination of the Cold War, and finally the disintegration of the Soviet Union itself. Because my writing has overlapped such dramatic contemporary history, I have produced a book that is certainly different and I hope more insightful than it might otherwise have been. T H E DURATION OF
this project has also spanned large changes in personal life, and as I conclude these pages I am struck by how many family members, friends, and professional colleagues have contributed to the enterprise. I have also been aided by several institutions, including the American Council of Learned Societies, which provided a fellowship during the earliest phases of my research, and Hofstra University, which awarded two Faculty Research Grants for work in London. My earliest mentor was my father, Martin B. Woods, who conveyed to ix
me a love of history and a fascination with international politics. He had been a sergeant during World War II, who had cheated on his eye exam so that he could join the fight against the Nazis. From childhood, I imbibed the conviction that this was a meaningful contest in which young soldiers had sacrificed so that the world might be improved. In reviewing this manuscript, I see how much that outlook has informed my presentation. Among historians, I am especially indebted to the late John Gimbel. Although a senior scholar, who knew far more than I about the issues of the occupation, John was always interested in comparing reactions and debating ideas. Over many years, he provided moral and practical support for this study, and in his commitment to careful inquiry set an inspiring standard. I also received valuable assistance from the late Howard Schonberger, whose field was the American occupation of Japan. During two summers in Washington, we shared a desk at the National Archives, where I was the beneficiary of Howard's knowledge of the files and his many insights about United States policy in both nations. My manuscript has passed through several incarnations, and the one person patient enough to read several drafts was Marilyn Young. She was the perfect critic - suitably irritated to force cuts and greater clarity, but sufficiently enthusiastic and engaged to encourage my progress. German historian Molly Nolan has generously reviewed the complete text, correcting me when I sank too deeply into American parochialism and reminding me of the context for United States decision making. Many other scholars have read long sections of the manuscript and offered substantial advice on its content and structure. In certain cases this took the form of incisive and detailed arguments, which challenged my interpretation and illuminated the issues. In offering a list I am unable to do justice to the kindness and curiosity of these individual people who were so forthcoming with their efforts. Among them were Gar Alperovitz, Stephen Ambrose, Bruce Baskind, Noam Chomsky, Sandi Cooper, Manuela Dobos, Michael Ermarth, Eric Foner, Lloyd Gardner, Allen Hunter, Walter LaFeber, Stephen Leberstein, Melvyn Leffler, Thomas McCormick, Eric McKitrick, Barbara and Daniel Pope, Martha Saxton, David Schmitz, Ellen Schrecker, Martin Sherwin, Peter Weiler, Lawrence Wittner, Charles Wood, and James Wright. Portions of this book were also read by some thoughtful nonhistorians, whose questions and comments have helped me bridge the gap to a wider audience. These include my mother Sylvia Woods, my brother Jonathan Woods, and my loyal friends: Marlene and Bill Fried, Judith Liben, and Joan Smith. In addition to their editorial advice, they were a loving and supportive group that tolerated my distraction, indulged my eccentric interests, and spurred me on to finish the project. When I first started writing, I did not have a computer. I was fortunate to find a typist, Eleanor McGregor, who had a great knowledge and interest
xi
in the Cold War. For several years, she was the only one to read my chapters and when I felt overwhelmed by the intricacies of the topic, she was there to remind me of what was original and important. In conducting my research, I encountered many capable archivists and librarians. Although my questions and requests imposed a large burden, these professionals were always courteous and cooperative. I especially want to thank Erwin Mueller and Liz Safly of the Truman Library, David Haight of the Eisenhower Library, Jean Halliday and Nancy Bressler of the Seeley Mudd Library at Princeton, Michael Miller of the Federal Records Center, and Edward Rees, Ron Swerczek, and John Taylor of the National Archives. In the Research Room of the National Archives Mr. William Lind was a miraculous presence, who used his breaks to obtain materials rapidly so that I could return to New York in time for the birth of my first child. Some students and friends located crucial documents, among them: Chris Cartier, Lisa Engel, T. J. Palmer, Mark Pavlick, and Kirsten Stanley. Historian Amy Hackett did yeoman's service translating books and articles from German. Her contribution went beyond that of language, for she also offered penetrating observations about how the most recent German historiography related to my findings. During my research expeditions, I enjoyed the warm hospitality of friends. In Washington, D.C., I stayed for long stretches with Muriel and Bert Levine, and Holly and Seth Shulman. In London, I resided with Jenny and Keith Johnston, Rhona Mirsky, and Jonathan Mirsky. Over the past decade, I have done most of my thinking in two nurturing academic environments. My colleagues and students in the History Department at Hofstra University have provided constant stimulation and encouragement. The commitment of the institution to excellent teaching and scholarship has made this an inspiring place to work. I have also been a frequent Visiting Professor at Dartmouth College, the school where I began my career as a young Ph.D. I am always grateful for their willingness to invite me back, and to provide new forums for sharing ideas. I feel a profound sense of gratitude to my editor at Cambridge University Press, Frank Smith. When I first spoke with him about my book, he promised that the press would assist me in the development of the manuscript. This promise has been more than honored. Through many stages of revision, Frank has identified contradictions, pared superfluous details, and helped me to understand my own arguments. His criticisms were always useful, and they were always given with consideration and respect. That I have been able to conduct this study while raising three children reflects the gentle care-taking of our family's babysitter, the late Rose Romano. She held everyone together while I flew around to archives and toiled at the computer. She could never understand why the book went on so long or who in the world would read it, but she laughed and cheered me on.
xii
I owe much to my three daughters - Jennifer, Anne, and Elizabeth who have brought so much joy into my life. Their "quality time" was often eroded by my preoccupation with U.S. Military Government, and they have spent their childhood tripping over books and documents. Yet somehow they have remained my biggest fans, and in their love and pride have fortified my desire to do a good job. The most vital contributor has been my husband Allan. Since we were sixteen he has been reading my essays and throwing out the incoherent paragraphs, an obligation that has continued into our adulthood. For this project he has not only given editorial help; he has carried my computer and documents to countless summer houses, organized our home, removed the children for special outings whenever I was "just finishing" the manuscript, stayed awake for my theories, bolstered my confidence, and created an atmosphere of tenderness and affection in which I could work. It is to him that I dedicate this book.
NORTH SEA
Berlin t administration USSR ZONE
UNITED STATES ZONE
Germany - Occupation Zones, 1945
Introduction: Private Polowsky's Oath
HEWASINTHE
lead jeep when they first spotted the Russians, stretched along the east bank of the Elbe River. His commanding officer saw the sun glinting off the soldiers' medals and remembered hearing that the Red Army wore their decorations in combat. Certain now that these were Soviet troops and not Germans, the elated Americans shot up two green flares and shouted their greetings into the stiff wind that was blowing across the water. It was 11:30 in the morning, April 25, 1945. On the other side of the world, in San Francisco, the delegates to the founding meeting of the United Nations were asleep in their hotels. For these Allied representatives this was to be a historic day, the occasion for establishing a new international organization dedicated to the preservation of peace. Yet on the eve of their conclave, the Second World War was a continuing reality. Inside Germany the obstinate Wehrmacht was battling on, as the massive armies of Generals Zhukov and Eisenhower closed in from east and west. The man standing in the first jeep was Private Joseph Polowsky of Chicago, a rifleman with G Company, 273rd Infantry, Third Platoon, Sixty-ninth Division, First Army. 1 Polowsky had been awarded a Bronze Star in the Battle of the Bulge and was part of a unit that had fought its way across Germany. One day earlier the men had reached Trebsen, a town twenty miles west of the Elbe. There, G Company had been ordered to dispatch a patrol in the direction of the river to obtain more precise information about the location of the Red Army. The soldiers were under instructions not to attempt an actual linkup, lest there be accidental casualties.
1
The reminiscences of Private Polowsky are contained in Scott and Krasilshchik, Yanks Meet Reds, 77-82; and Terkel, The Good War, 444-49. Also helpful in the preparation of this segment were recollections and materials provided by Leroy Wolins, a friend of Polowsky and vice commander of Veterans for Peace.
But the emotions of the moment had proved overwhelming. In the final stage of the most devastating war in human history, the prospect of actually meeting the Russian troops and helping sever the German army was irresistible. On the morning of the 25th the group's leader, Lieutenant Alfred "Buck" Kotzebue, chose to ignore headquarters' restriction and to push ahead to the Elbe. Later the same day, two other patrol leaders from the Sixty-ninth Division would also ignore their instructions, as their troops surged forward in search of the Red Army. Kotzebue's men were the first to make contact. Joe Polowsky had been placed in front so he could talk to the Russians. Because nobody in the unit knew their language, the lieutenant was counting on Polowsky's German to permit communication. As they pulled up to the Elbe the Americans were perplexed about how to get across. The closest bridge had been obliterated in an earlier battle and the river, which was swollen by the spring rain, was flowing swiftly. Suddenly Kotzebue spotted some small boats chained to the shore. Unable to unfasten them by hand, he balanced a grenade on the knot of chains, pulled the pin, and took cover. The explosion released one of the sailboats, and six of the men eagerly climbed in. Using makeshift oars, they paddled through the heavy currents and reached the eastern bank. An appalling spectacle met their eyes as they tried to disembark. Extending along both sides of the ruined bridge were hundreds of corpses of German civilians. These old men, women, and children had been fleeing the Red Army in horse-drawn carts. The previous night the Russians had seen the light of their encampment, and mistaking the people for German soldiers had bombarded the location with their artillery. Now the bodies were "piled up like cordwood" along the water.z In order to greet the Soviet soldiers, the Americans "literally waded knee-deep through the bodies of the German refugees." Private Polowsky later recalled being overcome by the scene, unable to remove his gaze from the body of a young girl who was lying on the ground, clutching her doll with one hand and her fallen mother with the other. Despite the surrounding horror, there was a feeling of exhilaration as the Americans recognized that their rendezvous spelled the defeat of the Third Reich. Visibly moved, Kotzebue turned to his translator proposing that we "make a resolution with these Russians here," that "this would be an important day in the lives of the two countries."3 Polowsky recollected that the suggestion was "very informal, but it was a solemn moment. There were tears in the eyes of most of u s . . . . We embraced. We swore never to forget."
1 3
See account of Buck Kotzebue in Scott and Krasilshchik, Yanks Meet Reds, 23-28; Terkel, The Good War, 446. Ibid.
The Russians quickly produced some bottles of vodka along with German wine and beer. In a tumultuous outpouring of excitement, hope, and grief, the six soldiers from G Company joined the men from the Red Army in repeated toasts and pledges. Standing beside the bodies of the slain civilians, they promised that they would remember the destruction and forever honor the memory of the Elbe. With impassioned words flowing from many lips, Private Polowsky found his work unexpectedly arduous and affecting. Company G had encountered the Russians in the town of Strehla, sixteen miles south of Torgau. Because there were no reporters present, this first linkup received little publicity. Four and one half hours later a second American patrol, headed by Lieutenant Robertson, found the Red Army at Torgau. Hundreds of reporters were nearby, and it was this meeting that was immediately immortalized in the Allied press by photographs of the first handshake. The euphoria at Strehla was replicated at Torgau. Bill Robertson later remembered that We three Americans were standing with the Russians on the river bank laughing, shouting, pounding each other on the back, shaking hands with everyone. Frank, George and I were shouting in English, our hosts in Russian. Neither understood the other's words, but the commonality of feeling was unmistakable. We were all soldiers, comrades in arms. We had vanquished a common enemy. The war was over, peace was near. All of us would live for another hour, another day.4 Andy Rooney, reporter for the army's Stars and Stripes, described "a mad scene of jubilation on the east and west banks of the Elbe at Torgau as infantrymen of Lieutenant Courtney H. Hodges, First U.S. Army, swapped K rations for a vodka with soldiers of Marshal Kornian's Ukrainian army, congratulating each other, despite the language barrier on the link-up." 5 Later the men from the Sixty-ninth Division sat in warm sunshine on the banks of the Elbe, with the enemy guns finally silent, passing around bottles with their new Russian friends and watching the soldiers of the Red Army dance and sing. Reflecting on this panorama, Rooney wrote, "You get the feeling of exuberance, a great new world opening up." Between them the two Allied armies had traversed a distance of 2,200 miles. The Russian forces had begun at Stalingrad on the Volga, the Americans at Normandy. When they came together in the heart of Germany, they had split the remainder of the German army through the center of "a shrinking corridor" from the North Sea to the plains of northern Italy.6 Wherever they stood on the Elbe that day, to the Americans and Russians
4 5 6
Bill Robertson, oral history, in Scott and Krasilshchik, Yanks Meet Reds, 51. Quoted in Terkel, The Good War, 449. "Yanks Meet Reds," The Stars and Stripes, April 28, 1945.
who were there, April 25 was a glorious moment of triumph and brotherhood. For some, like Joseph Polowsky, it was a transforming experience, an entry into history, a perception of human possibility and obligation.
CONTRARY TO THE forecasts of Andy Rooney, "a great new world" did not open up in the aftermath of the Second World War. And as the Grand Alliance dissolved, the symbolism of the Elbe became a liability in the United States. In the shadow of the Cold War, it was embarrassing to remember the awe, the excitement, the affection, and the optimism of that earlier time. As for Private Polowsky, he returned to Chicago, registered for some college courses under the GI Bill, worked for a period in his parents' business, and eventually became a full-time cabdriver in the city. Although he was a Taft Republican, he could never shake off the emotions of the Allied meeting. As the international atmosphere deteriorated, Polowsky clung to his memories of the Red Army. It seemed to him calamitous that the Oath of the Elbe should be lost to posterity.7 In 1949, using borrowed funds he made his way to New York, where he persuaded three governments to introduce a UN resolution marking April 25 as a special day of peace.8 This motion would have recognized the coincidence of the meeting at the Elbe and the formation of the United Nations. Polowsky was convinced that there were enough votes to secure passage. But in the summer of 1950, when the motion was slated for discussion, the North Koreans marched south, ending any prospect that the Allied linkup of 1945 a n d the fraternal feeling it evoked would be celebrated. Over the next several years, Joe remained in touch with old army buddies and continued to correspond with some of the Russians he had met at war's end. In 1955, on the occasion of the tenth anniversary, the Soviet government extended an invitation to American veterans of the Elbe to come to Moscow to commemorate Victory Day. Though willing to issue passports for the men, the U.S. State Department was not prepared to offer assistance. Under Polowsky's leadership, a group of twelve vets from different sections of the United States gathered in Washington and decided to make the trip. Lacking funds, the former GIs called a press conference and solicited public support for their mission. A producer of the TV program "Strike It Rich" invited them on the show, and their winnings paid for the price of the plane tickets. Two days later, the men were in the air to Moscow, the first delegation of private citizens to go to Russia since 1945 with official recognition from both governments.
7 8
"Elbe Burial 'Coup by the Common Man,'" Kalamazoo Gazette, November 30, 1983; "Dreams Live On," Chicago Sunday Star, May 4, 1986. LeRoy Wolins, "Keeping Their Oath on the Elbe," remarks at funeral of Private Polowsky, November 1983.
In 1958 Joe Polowsky arranged for a return visit from Soviet veterans to the United States. With Cold War tensions still unabated, the project elicited little outside interest or financial support. The Soviet government paid the transportation costs for their military representatives, while Joe and his GI associates borrowed money for entertainment. Under these conditions, the event made no public impact. The Russian veterans toured New York and Washington, unnoticed and unacclaimed. The one breach of anonymity occurred at Yankee Stadium, when a sportscaster announced that the World War II soldiers were in the stands. As 15,000 fans gave a standing ovation, the Russians were brought to home plate to meet slugger Mickey Mantle. 9 The 1958 trip represented the high point of Private Polowsky's peacetime activities. With unbroken tenacity, during the next twenty-five years, Joe remained faithful to his oath. He wrote hundreds of letters to world leaders and politicians proclaiming the need for international friendship. 10 A stubborn and lonely figure, he conducted his own private vigil each April 25 on the Michigan Avenue Bridge in downtown Chicago. There he passed out flyers to his fellow citizens, explaining his encounter in Germany and its meaning for humanity. In 1983, at the age of sixty-five, Polowsky learned that he was dying of cancer. Undaunted, he told a friend, "I finally have a way to make sure they can't forget the Elbe." 11 In the months that were left, he busied himself with the complex negotiations entailed in a plan to have himself buried in East Germany. When he passed away, his family was not surprised to learn that Private Polowsky had requested a funeral in Torgau, just a few miles north of where he had met the Red Army thirty-eight years before. As he explained in a letter just prior to his death, "My view is that my burial ground at Torgau . . . was paid for with the spilling of the blood of the soldiers of World War II Allies of East and West." IZ On November 26, 1983, under a cold, rainy sky, Private Polowsky was buried by a bed of pine branches in a cemetery near the Elbe. His silvergray coffin was draped in an American flag and carried by six military pallbearers - three Russian and three American war veterans. 13 At the ceremony, the Reverend William Sloane Coffin read to the international mourners from the book of Micah: "and it shall come to pass in the better days that the mountain of the house of the Lord shall be raised above all
9 10
11
"
13
Tribune, April 21, 1983. LeRoy Wolins, telephone interview with author, January 1989. "U.S. WWII Vet Buried in East Germany," The Stars and Stripes, November 27, 1983. "Russians and Americans Bury G. I. by the Elbe," New York Times, November 27, 1983.
Alexander Gordeyev, oral history, in Scott and Krasilshchik, Yanks Meet Reds, 216. "J ose P n Polowsky Wants America to Link Up with the Russians Again," Chicago
mountains, and nations shall come and beat their swords into pruning hooks. And nation shall not lift up sword against nation." Polowsky's son Ted, a lay minister from Chicago, presented the Soviet delegation with a Russian Bible and gave a German Bible to the town's mayor. Major-General Aleksei Gorlinsky, the senior Soviet officer, eulogized Joe as "a grass-roots American" who had dedicated his life to "furthering friendship between the people of the United States and the Soviet Union so that wars would never happen again." Trembling in the chilly air, Gorlinsky declared, "We affirm our allegiance to the spirit of the Elbe." As he had arranged, Private Polowsky's funeral was a moving and inspiring affair. The American and Russian veterans who attended made arrangements for a more ambitious commemoration of the fortieth anniversary of their linkup in 1985.14 And, though he had been obscure in life, the private's death was featured in a front-page story by the New York Times, "Russians and Americans Bury G. I. by the Elbe." of Joe Polowsky's death, there were few who treasured the symbolism of the Elbe. That sudden explosion of fraternal feeling as the Allied armies joined in Germany had been virtually buried in historic memory. Yet in April 1945, the import of the occasion had been evident not only to the soldiers who were there, but to millions of people around the world. In a period darkened by vast atrocities and unimaginable suffering, the linking of American and Soviet troops was a source of inspiration, signifying the potential for human cooperation across barriers of language, nationality, and social systems. Amidst the ruins of the European Continent the urgency of international friendship, trust, and mutual accommodation required little explanation. And as battered veterans wept and danced and told their stories, the preciousness of peace was never more apparent. Under the influence of the Cold War, historical studies of the Grand Alliance have generally emphasized the sources of future discord.15 The Western powers and the Soviet Union had been hostile to each other before the Second World War. The partnership had been dictated by absolute necessity. The Soviet Union was fighting for its life and needed all the help it could get. The United States and Britain saw the Red Army as the last hope for stopping Hitler. Despite a surface collaboration, each of the principals continued to nourish private resentments, ideologies, and plans. Even at the height of their cooperation, Roosevelt, Stalin, and Churchill had quarreled over many issues.
ATTHETIME
14 15
Scott and Krasilshchik, Yanks Meet Reds, 185-87. In this respect revisionist and mainstream historians frequently converge. Two outstanding examples, written from a left and right perspective, are Gabriel Kolko's Politics of War and Herbert Feis's Churchill, Roosevelt and Stalin: The War They Waged and the Peace They Sought.
All of these elements seem more important in hindsight than they did at the time. When the war ended, the compelling fact was that the United States, the United Kingdom, and the Soviet Union had worked together successfully to defeat Germany. Faced with a common peril, they had submerged differences of experience and ideology. Whatever the discomforts of the Alliance, bonds of sympathy and appreciation had been forged among the participants, and the publics of all three nations had come to value the connection. Like the dramatic imagery of the Elbe encounter, these hopeful developments were nearly erased from historical consciousness. But in disregarding this part of the past, the meaning of subsequent events is also lost. What is forgotten is how unwelcome and unexpected the U.S.-Soviet rupture really was. From our present standpoint we are apt to see the Cold War as an automatic by-product of the divergent patterns of society and governance, an inevitable resumption of hostilities once the specter of fascism had been exorcised. During the Second World War, however, there were many wise people on both sides of the Atlantic who were convinced that such divergences could be managed peacefully. This assessment flowed directly from the knowledge, born of the Grand Alliance, that heterogeneous societies - even Marxist and capitalist ones - could compromise when survival required it. By recalling these original perceptions, we can penetrate the cloud of inevitability that hangs so heavily over the Cold War, and observe that the East-West conflict was the product of human decisions. In 1945 other aspirations had existed and other outcomes had seemed possible. To understand why the Great Powers failed to establish a durable peace, it is necessary to focus on the choices that were made, the reasons for their adoption, and the identity of the choosers. Though this is no longer the fashion, the search for Cold War origins must entail the exploration of responsibility.
I N T H E P A G E S that follow, I look at the emergence of the Cold War in the place where it assumed its most menacing form: occupied Germany. It was here that the conflict between the United States and the Soviet Union was most graphically expressed in the division of the country and the line across Berlin. Though the division of Germany was one of the most crucial decisions of the postwar period, it has received little serious study in the United States. 16
16
Although there has been no full study of U.S. policy and the division of Germany during the 1945-49 period, there are a number of fine monographs, which treat
important segments of the story. See especially Backer, The Decision to Divide Germany: American Foreign Policy in Transition and Winds of History: The German Years of Lucius Dubignon Clay; Gimbel, The Origins of the Marshall Plan; Gottlieb, The German Peace Settlement and the Berlin Crisis; Kuklick, American
This omission is especially curious because the division of Germany was not only the most dramatic embodiment of the collapse of Great Power cooperation; it was also a fundamental cause of global polarization. So long as the Allies were controlling Germany in a unified way, there was hope of reconciling other European quarrels. Leaders on both sides recognized that a pacific, neutral German nation could be a model for the rest of the Continent, as well as a bridge between eastern and western Europe. Furthermore, Germany was the place where both the United States and the Soviet Union had their greatest stakes. If they could satisfy important interests in this arena, less weighty controversies might be defused. Once Germany was cut in two, these prospects disappeared. With U.S.Soviet aspirations embodied in rival German sovereignties, the European split proved irreversible. Superimposed on the preexisting tensions was a powerful new anxiety on the part of Americans and Russians: that Germany would be reunified on principles favorable to the other. In muted form, this had been a concern since the inception of the occupation. But it became far more serious once the major powers were actively strengthening two rump states. From this apprehension sprang two military alliances and the fortification of the blocs with the most lethal weapons ever deployed. In investigating the sources of the German partition, I am approaching the subject as an American diplomatic historian. My central focus is the development of U.S. policy toward Germany during the 1944-49 period. For this purpose, I have relied heavily on the rich and still largely untapped materials in American government collections.17 Also invaluable were the Foreign Office documents in the British Public Records Office, which frequently provided more candid and detailed descriptions of both American and British policies in this field. I have elected to tell the story within the framework of a chronological narrative. Occasionally, I step out of sequence in order to give coherence to some of the significant subplots. As much as possible, I try to highlight the order in which events occurred, for it is in the evolution of attitudes and the pattern of action and response that explanations can be found. The American approach to the question of German unity and collaboration with Russia was intimately linked to their ideas about Germany's internal development. One of the major aims of this study is to integrate the story of Germany's division with an exploration of U.S. occupation policy. At war's end, American policy makers disagreed among themselves about the kind of society Germany should become - a difference that
Policy and the Division of Germany: The Clash with Russia over Reparations; Smith, Lucius D. Clay: An American Life. Especially valuable and so far underutilized are the vast collections of the Office of U.S. Military Government and the U.S. political advisor, held at the Federal Records Center in Suitland, Maryland.
17
partly reflected divergent domestic agendas. As we shall see, the way they resolved this dispute and conducted the occupation in their zone had profound implications for the partnership with the Soviet Union. The resulting tale is one of exceptional fascination and complexity. Yet certain judgments emerge sharply. At the risk of anticipating the subsequent narrative, let me outline briefly the book's main themes. My most important conclusion is that the division of Germany was fundamentally an American decision. The Soviet Union was strongly opposed to this development because the effect was to exclude it from the most populous, powerful, and wealthy part of the nation. While the United States was supported by Britain, other West European nations had serious reservations about the American course, fearing that West Germany could become a new military threat. Indeed, American leaders did not even have the support of their own public. Most ordinary citizens simply assumed that if Germany was dividing that this was a Russian policy. At the time of surrender, U.S. policy makers had intended to cooperate with the Soviets in the supervision of a unified Germany. However, their ability to reach agreements at Yalta and at Potsdam was conditioned by the lingering influence of New Deal liberals over American foreign policy. The combined efforts of Henry Morgenthau Jr., Harry Dexter White, Harry Hopkins, and President Roosevelt himself had tilted U.S. directives toward a program of deindustrialization and draconian reform. This seemed to meet Stalin's economic and security requirements, and to provide him with an incentive to curb the German Communists. With Roosevelt's death and the conclusion of the Second World War, however, the liberal New Dealers disappeared from the highest counsels. Administration conservatives such as Henry Stimson, John McCloy, and William Clayton, who were looking toward the establishment of a new multilateral trading order, consolidated their control over German policy. Though they favored collaboration with the Soviets and the maintenance of unity, they were also determined to rebuild postwar Germany so that it could be integrated with the capitalist economies of Europe. Not surprisingly, the ascendance of this group led to increasingly bitter conflict with the Soviet Union. There were also serious tensions with the French, who were opposed to German reconstruction, and with the British, who preferred to socialize Germany's major industries. Under these conditions, the Allied Control Council was quickly paralyzed and the German economy stagnated. By the beginning of 1947 American distress over this state of affairs was intensified by the emerging economic crisis in Western Europe. U.S. officials were convinced that without a dramatic increase in German productivity, free markets would disappear and the Continent would be plunged into chaos. To remedy the stalemate, they were drawn to the idea of partition. This would eliminate Soviet constraints, improve the prospects
io
for congressional appropriations, and create a more favorable environment for managing differences with the British and French. Interestingly, the strongest objections to partition came from General Clay and his conservative associates in the Office of Military Government. They believed that concessions on reparations might yet induce the Soviets to accept capitalist democracy in Germany. This would be a worthwhile bargain because it would salvage the freedom of the eastern zone. Back in Washington, Clay's approach had little appeal. In the prevailing antiSoviet atmosphere his analysis of Russian intentions was discounted, while anxiety over western Europe created pressure for immediate action. The probable effects of partition on the eastern zone, so troubling to members of Military Government, carried less weight at home. With the presentation of the Marshall Plan in June 1947, the American course was set. U.S. policy makers were determined to include a separate West Germany in an integrated plan for West European recovery. Yet, having made this decision, they faced severe obstacles to its implementation. In an unwitting alliance, both the French government and the politicians of western Germany were reluctant to form a new state. Not until the following June was the project uneasily launched. The Soviets had by then made it clear, through the formation of the Cominform and the militant activities of the European communist parties, that they would exact a high price for exclusion. With the implementation of a western currency reform and the summoning of a Parliamentary Council, they began their historic blockade of Berlin. Although the stated goal was to arrest the momentum toward partition, the initiative backfired. Once the Western powers were able to supply the city by air, the confrontation in Berlin provided a dramatic demonstration of Soviet brutality and American humanitarianism. Under cover of the blockade, U.S. officials were finally able to consolidate international and domestic support for their West German agenda.
T H I S RENDERING OF
events contrasts sharply with more conventional notions of how Germany came to be divided. The old orthodoxy was that it was the Soviets who had forced partition. That view persisted in popular consciousness and seemed continuously validated by the existence of the Berlin Wall. Among professional historians, there has been some softening of the indictment and a mounting sense that perhaps it was too much to expect that a communist country and three capitalist ones could work together within the boundaries of one nation. I wrote this book without access to the Soviet documents. Yet from the American and British records, it was apparent that during most of the occupation the Russians were pushing for unification. It was also clear that U.S. policy makers decided to divide Germany, at a point when communism was weak in the West and the Soviet desire to bolshevize the country
was still in doubt. In opting for partition, the Americans were not responding to a perceived threat of left-wing revolution but to the Soviet Union's pressure to go back to Potsdam. Since completing the draft of this manuscript, a wealth of material has become available from the former Soviet Union and East German archives. I have not attempted to recast my study, which remains focused on U.S. foreign policy. As regards the critical question of Soviet intentions, there is still much to be sifted and evaluated. So far as I am aware, the eastern sources do not contravene the impression gained from the western papers that at least until 1948 the Soviets were working for unification, and that toward this end they were carefully controlling the behavior of the east zone Communists.18 These circumstances do not diminish the reality of Russian repression in the East. While putting limits on social upheaval and maintaining the rudiments of political competition, they dealt brutally with opponents and coercively with the populace as a whole. Under the mantle of denazification, they trampled individual rights, hurled thousands into prisons and concentration camps, and created a stifling climate of fear and conformity. But these were not the facts that shaped U.S. decision making. To my surprise, the American documents were relatively silent about such transgressions. While the most casual perusal of the record yields manifold complaints about the Russian destruction of factories, the interference with personal freedom elicited less attention.19 Within the U.S. Military Government, there were individuals for whom the fate of the eastern zone was a lively concern, but this nurtured a preference for German unity. As for the key American policy makers, their choice of partition represented an abandonment of the eastern zone Germans so that they could more effectively direct affairs in the West. Against this backdrop, American actions might seem ill-considered or foolish. Yet my own appraisal is different. The U.S. leaders who became
18
Norman Naimark was kind enough to share with me the relevant sections from his
forthcoming book, The Russians in Germany: The History of the Soviet Zone of Occupation, i^4^-47, to be published by Harvard University Press. Naimark has made extensive use of recently declassified materials from the archives of the former Soviet Union and German Democratic Republic and has produced an exceptionally valuable study. Some of the most important documents that have recently become available have been published in a collection by Badstiibner and Loth, Wilhelm Pieck-Aufzeichnungen zur Deustchlandpolitik 1945-1953. There were individuals on the staff of Robert Murphy, the U.S. political advisor, who had the assignment of monitoring KPD political activity and agitation in the labor movement. In this capacity, Brewster Morris and Louis Wiesner filed scores of reports on Soviet and German communist abuses of democratic procedures. At times, their accounts were incorporated directly into Murphy's cables to Washington. Yet, by contrast to his subordinates, until mid-1947 the political advisor viewed German unification as the antidote for these transgressions.
19
12
the most ardent advocates of partition - Dean Acheson, Averell Harriman, John Foster Dulles, George Marshall, and James Forrestal - did not embrace this course casually, nor were they the victims of false information or anti-Soviet hysteria. Faced with the Soviet Union's obstruction of their plans for German reconstruction, they had reason to worry about the impact on Western Europe. The real limit of their statesmanship resided in their unwillingness to contemplate any of the Russian terms for breaking the impasse. Soviet negotiators were advancing a moderate program: reparations from current production, assurances that the Ruhr would remain under the supervision of the Allied Control Council, a more thorough implementation of denazification, the breakup of the large cartels and combines, the establishment of national labor unions, and the use of proportional representation in elections. To U.S. officials, bent on freeing the engines of German private enterprise, these proposals seemed tantamount to sabotage. And though they regularly asserted that the Russian offers were merely "propaganda," they had no desire to put them to the test. Underlying the American approach to the German negotiations was the self-serving conviction that legitimate Soviet needs could be met within the framework of a free market economy. Though genuinely desirous of an accommodation with the Russians, policy makers saw no reason to modify fundamental goals. What they were unable to envision was a process of mutual concessions in which both sides would accept substantial restrictions on their national objectives. This stance was partly conditioned by an awareness of Soviet vulnerability. Weakened internationally by the massive wartime damage and its nonpossession of the atomic bomb, the Soviet Union also held the poorer hand inside Germany. Because the eastern zone had less land, fewer people, and reduced industrial resources as compared to the western portion of the country, they seemed less likely to succeed in their area of occupation. That gave hope that the Russians would eventually surrender control on western terms, and that the partition of the country would not prove permanent. But even if this did not happen, the Americans thought it safer to forfeit the shredded alliance with the Soviet Union than to risk the failure of their plans for Western Europe.
O N E M I G H T credibly argue that the dramatic events of 1989-90 have retroactively vindicated American policy. By building up West Germany and isolating the Soviets in the east, a situation was created in which a unified country could be reestablished without the encroachments of Stalin's totalitarianism. Even before the Berlin Wall came down, there were many in the Western camp who believed that the German partition was not so unfortunate - that it had provided stability to the European state system, while maximizing freedom and prosperity in the places where it was attainable.
13
The perspective of this book is different. Any assessment of Germany's division must somehow encompass the Cold War itself. While the decision to create a West German state did not originate in a desire for an antiSoviet alliance, by taking this step the Western powers dramatically transformed the international environment. With the commencement of the Berlin blockade, the pattern of East-West rivalry assumed a more deadly form: creating an imperative for military strength and the formation of two blocs. In this face-off, the United Nations disappeared as an instrument for resolving conflict and nuclear weapons became the main arbiter of Great Power relations. It matters considerably that Germany's division lasted for forty years. As we consider the consequences, we must surely include the thwarting of progressive forces within West Germany, the obliteration of freedom in the East, the embittering of the U.S.-Soviet relationship, and the militarizing of the European Continent. When these elements are brought into focus there seems less ground for satisfaction. It enhances our vision to stand for a moment with Private Polowsky on the west bank of the Elbe and to try to see the world as it must have looked that hopeful spring morning in 1945. When we look with his eyes, we can more readily apprehend what was lost: the tremendous fervor for peace, born of monumental sacrifice and bloodshed, and the surging expectation that nations would settle their future differences without imperiling the lives of their people.
1 Plans
The question is not whether we want Germans to suffer for their sins. Many of us would like to see them suffer the tortures they have inflicted on others. The only question is whether over the years a group of seventy million educated, efficient and imaginative people can be kept within bounds on such a low level of subsistence.... A subordinate question is whether even if you could do this it is good for the rest of the world either economically or spiritually. (Henry L. Stimson, September 1944 Y Hopkins : My God, he [Stimson] was terrible. Morgenthau : All you've got to do is let kindness and Christianity work on the Germans.... Hopkins : But fundamentally I think it hurts him to think of the nonuse of property. .. . He's grown up in that school so long that property, God, becomes so sacred. (From Morgenthau Diaries, September 1944 )z
W H E N THEY IMAGINED
the postwar world, officials in the Roosevelt administration worried most about Germany. Germany had been the aggressor in two World Wars, and had already demonstrated a capacity to rise from defeat to become the dominant power in Europe. In theory, the Soviet Union could be a greater menace if it utilized its military might in the service of its Marxist ideology. Yet during the period when American and Soviet forces were allied against Hitler, this prospect had little reality. Even the diminished band of Soviet-haters in the State Department3 fretted over Russian subversion rather than armed attack.
Stimson and Bundy, On Active Service in Peace and War, 578. U.S. Senate, Subcommittee to Investigate the Administration of the Internal Security Act, Morgenthau Diary, L521. For important discussions of the anti-Soviet sentiments in the State Department see
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The prevailing view in the administration was that in the aftermath of shared victory, Stalin would moderate his revolutionary agenda. So far, the experience of the twentieth century was that ruinous wars arose among capitalist nations. And as they planned for the peace, the Americans devoted most of their attention to reordering relations between the noncommunist states, intending the Soviets to affiliate with their enterprise. Harking back to the failures of Versailles, they wished to create a new set of political and economic arrangements that would constrain acts of aggression. In elaborating these, however, the Americans were internally divided between liberal New Dealers and their conservative opponents inside the executive branch. The exigencies of wartime had led both groups to mute philosophical differences. But competing visions of a successful domestic order underpinned diverging conceptions of a future international system. With the approaching Allied victory, conflict erupted over the planning for Germany. Clearly, the former enemy would have to be carefully controlled, and some type of partnership arranged with the Soviet Union. But the nature and purpose of the German control were fiercely contested. By the time the Third Reich collapsed in May 1945, neither side had achieved ascendancy. The bitterness of the internal argument, however, nurtured habits of obfuscation and deliberate misrepresentation that damaged the Soviet partnership from the outset.
I. AN OLD DEAL FOR GERMANY

For much of the Second World War, administration conservatives were in charge of international planning. They assumed that Germany must play a vital role in the postwar European economy, and inscribed their preference for its industrial revival into the earliest policy papers. Later it would be said that the rebuilding of West Germany was an unanticipated result of the Cold War. But the impetus for reconstruction predated the EastWest rift. Two MONTHS AFTER Pearl Harbor, President Roosevelt had placed responsibility for all postwar plans in the hands of the State Department. That choice almost certainly reflected FDR's relative indifference to both the mission and the department. The president had seldom concealed his disdain for the Foreign Service, and in the leadup to the Second World War had frequently entrusted outsiders with key international assignments.4 Now with the Nazis ruling over most of Europe and Japanese forces
4
Yergin, Shattered Peace, 17-41; Weil, A Pretty Good Club; DeSantis, The Diplomacy of Silence. Etzold, The Conduct of American Foreign Relations, 67-74; Dean Acheson, Present at the Creation, 30-41; Weil, Pretty Good Club, 105.
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sprawled across the Asian mainland, the United States military was effectively conducting most American foreign policy. By committing the State Department to the complicated but distinctly secondary business of organizing for the peace, Roosevelt was removing it even farther from the main field of action. This new planning role exceeded the modest resources of the State Department.5 Its relatively small Washington organization had been preoccupied with the day-to-day obligations of supervising U.S. transactions abroad and lacked the capacity to carry out detailed technical studies. Despite a growing number of senior officers with a background in international law and economics, it was still mainly staffed by upper-class, Ivy League gentlemen of limited practical training and experience. For assistance it turned to the Council of Foreign Relations (CFR), a private New York organization that had been preparing for the peace even before the United States entered the Second World War.6 Established in 19 21 in the wake of Versailles, the council was composed of internationally minded bankers, corporation executives, and Wall Street lawyers, along with professors and journalists who specialized in foreign affairs. The initial purpose of the group was to conduct research on important international problems and to share conclusions with government officials and the interested public. During the interwar period, the council was a repository of interventionist sentiment. As armed conflict engulfed both Europe and Asia, it established a Committee on War and Peace Studies to analyze U.S. interests in the outcome. This ambitious project, headed by Foreign Affairs editor Hamilton Fish Armstrong, was organized into four subcommittees and a host of specialized study groups. Beginning in 1939, it funneled hundreds of background memoranda and proposals over to the State Department. Once the latter became formally responsible for postwar planning, its relationship to the Council on Foreign Relations was institutionalized through an Advisory Committee for Postwar Foreign Policy.7 Chaired by Secretary of State Cordell Hull, it included new-breed professionals from the department such as economist Leo Pasvolsky and corporate attorney Dean Acheson along with key figures from the War and Peace project, notably Armstrong, banker Norman Davis, and Johns Hopkins President Isaiah Bowman. In social origins and outlook, the two groups were indistinguishable. An elite background and pro-business orientation framed their approach to international affairs. The planners regarded their immediate task as the avoidance of future
5 6 7
Acheson, Present, 30-44. Schulzinger, The Wise Men of Foreign Affairs; Shoup and Minter, Imperial Brain Trust: The Council on Foreign Relations and U.S. Foreign Policy. Notter, Post-War Foreign Policy Preparation, 69-78.
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wars.8 Although optimistic about the prospects for an Allied victory, they were convinced that the advance of military technology had made armed encounters between nations an increasing threat to the survival of the United States. To secure America's physical safety and protect its domestic way of life, there would have to be new international arrangements that could reduce conflict between nations and deter violent solutions when they occurred. Yet as exemplified by their Wilsonian predecessors, the detailing of those arrangements was an intrinsically ideological enterprise. For any peacekeeping setup presumed a definition of essential national requirements, which in turn reflected underlying attitudes toward the internal organization of society.9 State Department planners brought to their work a perspective akin to that of the industrialists, bankers, and Wall Street lawyers who had flooded into the Roosevelt administration when the war began. Hostile to the New Deal, they disapproved of the movement toward government controls and redistribution of wealth advanced by Washington's liberals. Conservatives of a modern type, they accepted the expansion of federal power when it was in the service of corporate rationalization and expansion of markets. Many had adopted Keynesian notions, seeing fiscal policy as a means of bolstering private enterprise.10 Believing that American prosperity and democracy required free scope for corporations, they interpreted the global depression as the product of autarky. In their analysis, nations had pursued narrowly self-serving policies during the interwar period. By preventing the free flow of goods and capital across national boundaries, they had shrunk the world market, restricted productivity, and created the internal dislocations that were both cause and consequence of fascism.11 In fashioning their remedies for war, the planners took economic integration as a prime ingredient to which other elements would be added. If nations, especially those troubled lands of Europe, would eliminate artificial
8
10 11
Kolko, The Politics of War, 242-340; Domhoff, The Power Elite and the State, 113-51; Kuklick, Division of Germany, 1-18; Pollard, Economic Security and the Origins of the Cold War, 9-32. For discussion of the domestic foundations of New Deal foreign policy see Gardner, The Economic Aspects of New Deal Policy; Weil, Pretty Good Club, 85-102; Maier, "The Politics of Production: Foundations of American International Economic Policy after World War II," 607-633. With regard to U.S.-German policy, the one study that links domestic and international imperatives is Kimball's indispensable Swords or Plowshares? Polenberg, War and Society: The United States 1941-45, 73-98; Collins, The Business Response to Keynes, 77-112. Gardner, New Deal Diplomacy, 15-16. See also Kuklick, Division of Germany, 118; Pollard, Economic Security, 8-9; McCormick, America's Half-Century, 27.
For diverging perspectives on the goals of postwar policy planning, see especially,
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barriers against foreign currencies and products, permitting free market forces to direct the flow of economic activity, each would become more prosperous and less belligerent.11 This would render more effective the other components of peace making: the reduction of armaments and an international organization to guard over national sovereignties. As demonstrated by recent history, these latter approaches were useful but contingent. When societies became internally disturbed, as in Weimar Germany, they would find ways of evading the external constraints. Hence for administration conservatives, America's national security required global measures that could facilitate profit making. Though obviously beneficial to those U.S. corporations and banks already oriented to international markets, they would presumably stabilize society both at home and abroad, eliminating the preconditions for intrastate conflict. This outlook underpinned State Department planning for postwar Germany. Beginning in 1942, a shifting set of intradivisional committees redrafted and refined recommendations, first outlined in the early War/Peace studies of the Council on Foreign Relations.13 Those initial studies assumed that German industry and markets were essential to the revival of Europe and the establishment of free enterprise economies there. Throughout the twentieth century, Germany had supplied its neighbors with critical items - coal, steel, machine tools, and chemicals - while purchasing agricultural goods, raw materials, and the products of light industry. Such exchange had been the life-blood of Europe's economic existence. To curtail or eliminate it would deprive other countries of vital resources, while creating a pressure for massive state planning everywhere on the Continent. The War/Peace committees had emphasized methods for curbing German aggression that would make use of Germany's economic capacities instead of reducing the country to a position of economic inferiority. An early report, Postwar Control of the German Economy, acknowledged that such measures as rationing German imports of raw materials, limiting the manufacture of civil aircraft, or prohibiting the production of synthetic nitrogen, rubber, and petroleum "would seriously handicap Germany's ability to make preparations for another war." 14 These were rejected because they would be too difficult to administer while ensuring Germany "a reasonable level of economic activity." Preferable to "strict economic controls" were multinational agreements for items like air transport and commercial policy that would subject Germany to international scrutiny while reestablishing it "in the family of nations on equal terms." For example, it was widely believed that German scientific breakthrough
12
13 14
Bloch, The Origins of International Economic Disorder, 36-37; Kuklick, Division of Germany, 3-18; McCormick, America's Half-Century, 47-53; Kolko, Politics of War, 242-54. Notter, Post-war Preparation, 96-148. Percy Bidwell, Postwar Control of Germany Policy, October 1942, RG 165 CSCAD ABC Economic Estimate, Modern Military Branch National Archives (MMNA),
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in the fields of synthetic rubber, petroleum, and nitrogen had given it the self-sufficiency to initiate armed hostilities. Though the War/Peace team accepted this view, it was reluctant to ban products that might facilitate Germany's postwar recovery. Its alternative was to have Germany abolish domestic subsidies and eliminate import duties on the supply of natural products from abroad, thus allowing market forces to reduce the scale of synthetic manufacture to a level where it would not assist rearmament. The same solicitude for German productivity characterized the War/ Peace approach to reparations. Among the public as a whole, the very idea was in disrepute. The high bill imposed on Germany after World War I was thought to have destabilized the German economy and stirred the poisons of nationalism. However, it was certain that in the wake of massive Nazi destruction that foreign nations would again seek compensation for damage, most likely in the form of goods rather than money. Unlike many of their contemporaries, the U.S. planners were not unduly alarmed. As explained by CFR economist William Diebold, if the criterion for determining reparations was economic usefulness to the recipient nations, then deliveries in kind could be constructive. 15 The mistake would be to use reparations as a way of punishing Germany or as a means of weakening its military power, goals that were better accomplished through political and security means. Nothing should be done "to damage the efficiency of Germany's productive plant, which should play an important role in European prosperity." Diebold wished to maintain factories inside Germany that could produce reparations goods for Europe. This type of current production reparations would be carefully limited so that it would not undermine Germany's own recovery or overwhelm the indigenous industries of the beneficiaries. Recognizing that international trade could not be restored so quickly after the war, he thought that in the interim the free shipment of German goods might help stimulate economic growth elsewhere. By the fall of 1943, t n e State Department planners had turned the specialized War/Peace memos into broad statements of economic and political policy. Taking as their proximate aims the "economic disarmament" of Germany and her "full participation in the burdens of European reconstruction," they stressed the virtues of economic integration: The solution, which is most preferred and least opposed at all Committee levels . . . is the controlled demobilization of German "self-sufficiency," i.e., war economy, and the return of Germany to a state of marked dependence upon the markets and resources of overseas countries and Western Europe.16
15
16
William Diebold, Reparations Policy in Germany, War and Peace Studies, Council on Foreign Relations Archives (CFR); See also War-Peace study, Reparations Policy Toward Germany, March 18, 1943, Economic and Financial Group (CFR). "Germany: Economic Problems: Postwar Economic Control of Germany," September 23, 1943, RG 59 Notter Files (Lot), Box 117, Department of State, National Archives (DSNA).
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Associated with this purpose was a commitment to create a "broadly based democracy" operating under a bill of rights that would protect the liberties of the individual.17 The new government would be unavoidably centralized, for "the economic and social necessities of modern life have everywhere imposed a progressive abandonment of federal devolution." With Allied victory still far in the future, there was an air of unreality to the paper writing. Despite their expanding files, the planners remained insulated from the realm of practical decision making. The first intrusion on their isolation was an inquiry from the president seeking their views on the partition of Germany.18 Although focused on winning the war, Roosevelt harbored a private preference for a draconian peace.19 Convinced that Germany was incorrigibly militaristic, he thought the country must be substantially weakened in order to prevent future aggression. For this purpose, FDR's preferred method was to carve it into several parts. That disposition was greatly strengthened by his impression that doing so would cement a postwar alliance with the Soviets. Once the Nazis were defeated, he believed that Stalin's most important goal would be to break German power. Roosevelt's thinking had little in common with the outlook in the State Department, where the priority was economic restoration. Plainly, the disruption of German political unity would have a grave impact on economic relationships, diminishing the country's ability to serve as supplier and market for the rest of Europe. Indeed the presumption of German unity had underpinned the department's planning from the beginning. However, the president's obvious intention to explore the matter with the Russians stimulated a new round of studies.20 These merely confirmed the dangers of dismemberment as a source of nationalist resentment and a threat to Europe's recovery.21 While unwilling to make German dismemberment the basis of a deal with Stalin, the planners genuinely desired cooperation with the Soviet Union." There were pockets of anti-Bolshevik sentiment among Foreign
17 18 19
20
ZI
"
"The Political Reorganization of Germany," September 23, 1943, RG 59 Notter Files, Box 117, DSNA. Hammond, "Directives for the Occupation of Germany: The Washington Controversy," in Stein, American Civil-Military Decisions, 317-18. Snell, The War-time Origins of the East-West Dilemma Over Germany, 30-32; Dallek, Franklin Roosevelt and American Foreign Policy, 438; Kimball, Swords or Plowshares? 7. U.S. Department of State, Some General Comments on the Partition of Germany, October 10, 1942, RG 59 Notter Files, DSNA; U.S. Department of State, Germany: Partition, August 17, 1943, RG 59 Notter Files, DSNA. Department of State, Germany. Ibid. Notter, Post-war Preparations, 10; Mosely, "The Occupation of Germany," 159; Kuklick, Division of Germany, 64-65; DeSantis, Diplomacy of Silence, 94-101; Penrose, Economic Planning for the Peace, 235.
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Service veterans in the European Division. But the predominant attitude of the lawyers, economists, and academics on the postwar committees, including Leo Pasvolsky and Dean Acheson, was a burgeoning sympathy for the Soviet Union. The stirring spectacle of the ravaged Russian people rallying to the defense of their homeland, the bravery of the Red Army as it confronted the ferocity of the Wehrmacht, and the apparently indomitable spirit of Marshal Stalin summoning his nation to victory had altered the emotional atmosphere. Significantly, Stalin was conducting the war as a traditional Russian nationalist rather than as a Bolshevik tribune,23 raising hopes that he would pursue ordinary diplomacy in the postwar period. If there was reason to be wary, the incentives for friendship were nonetheless overwhelming, especially in regard to a defeated Germany. Whatever the internal arrangements for its economy and polity, there would always be a risk of a militarist resurgence. Once American forces withdrew across the Atlantic, as U.S. officials fully anticipated, what entity other than the Red Army could provide a deterrence to future aggression? Indeed, the desire of the planners to minimize economic controls and to integrate Germany with the capitalist economies of Europe paradoxically strengthened their interest in a Soviet alliance. As suggested in the original War/Peace recommendations, it would be "neither wise nor safe" to advocate a "liberal" economic program "unless the victor nations intend to collaborate in military and political measures to prevent the recurrence of German aggression."24 The "most important" assumption behind that program was "that Russia will collaborate with the United Kingdom and the United States in establishing and maintaining a system of international security." Given these hopes, department planners had been troubled by the appearance of the Free Germany Committee, which accompanied Soviet preparations for a post-Stalingrad counteroffensive. That committee, formed in July 1943 t o s o w disorder behind German lines, was a strange amalgam of communist German exiles residing in Moscow and captured German generals from the prisoner-of-war camps.25 Under Russian tutelage, it had promulgated an ostensibly moderate political manifesto, calling for a new German government that could restore and extend "the political and social gains of working people."26 In addition to freedom of speech, press, and religion, these encompassed "the guaranteed right to labor and lawfully acquire property, the restoration of property to their lawful owner along with the confiscation of property of those responsible for the war." At a time when there was still no second front and rumors were afloat of a separate peace in the east, the Soviet initiative generated unpleasant
23 24 25 26
Deutscher, Stalin, 460-97; Werth, Russia at War, 243-47, 668-78. Bidwell, Postwar Controls of the German Economy. Werth, Russia at War, 732-37; Sandford, From Hitler to Ulbrecht, 8-12; Mastny, Russia's Road to the Cold War, 80-83. Cited in Daily Worker, July 21, 1943.
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suspicions. Was Free Germany the entering wedge for a strategy of RussianGerman rapprochement? Did it betoken a long-term plan for promoting communism within occupied Germany? Or was it simply what the Russians claimed it to be, an agency of propaganda geared to weakening the German war effort? Inside the U.S. government opinion ranged from an OSS warning that there could be "a break-down of resistance, in which event Russia with forces in the field would be in a position to arrange a peace and a German government to its liking," to Ambassador Standley's reminder that the Free Germany Manifesto "incorporates the four freedoms and closely follows the principles of the Atlantic charter." Among the State Department planners, there was new concern that once Germany was occupied, the Free Germany Committee could "give the Communists control of the democratic movements and therefore establish a Russian hegemony in Germany."27 These speculations lent special weight to Secretary of State Cordell Hull's visit to Moscow in October 1943, where he would be discussing postwar objectives with the Soviets.28 Hull carried a carefully modified version of the department's planning documents in his briefcase, proposing to the Russians a joint occupation of Germany and the creation of a tripartite Allied Control Council. This council would oversee the formation of a democratic German government that adhered to a bill of rights and allowed the German people "a tolerable standard of living."29 The Allies would act together to disband the German armed forces and to prevent the future production of weapons, including the "material essential to their manufacture." They would also establish a Reparations Commission to determine the quantity of deliveries, recognizing that reparations was "one of a series of measures of economic restoration to be judged by the contribution they can make . . . to the kind of world community desired by the United Nations." The Moscow meeting gave the State Department its first opportunity to engage in important wartime diplomacy.30 The intense pressure for success led Hull to downplay unpalatable features of the department's plans during the talks with Foreign Minister Vyacheslav Molotov. In presenting the U.S. position on disarmament, the secretary spoke of banning "material
Secretary of State to Ambassador Standley, July 30, 1943, FRUS 1943 111:557; John Graton Rogers to Joint Chiefs of Staff, "Manifesto to German People by Moscow National Committee of Free Germany," RG 40/1 "Miscellaneous File," MMNA; Standley to Secretary of State, September 3, 1943, FRUS 1943 IIL572-74; U.S. Department of State, "The Political Reorganization of Germany," September 23, 1943; Feis, Churchill, Roosevelt and Stalin, 220. Hull, The Memoirs of Cordell Hull, 11:274-1291. Conference Document 26, U.S. Proposal With Regard to the Treatment of Germany, FRUS 1943 1:720-22. Weil, Pretty Good Club, 152-53.
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essential for arms manufacture." To Molotov this almost certainly meant synthetic oil and rubber, and perhaps even steel and chemicals. Yet the actual intention of Hull's subordinates was to try to limit prohibitions to the weapons themselves. So too on reparations, the postwar planners had in mind chiefly the free export of German goods to help revive a multilateral capitalist economy in Europe. But by accepting the principle that it was "the duty of Germany to provide reparations for the physical damage inflicted by its armed forces upon the USSR and other allied countries,"31 Hull fed Soviet hopes that German deliveries could enable them to rebuild their own industrial apparatus. Even on dismemberment, the secretary exhibited flexibility. Believing that the Russians favored this approach, he acknowledged that "experts on the German matter were extremely skeptical of its practicality,"32 but there was still support for it "in high quarters" and "an increasing disposition in the United States to keep an open mind on this point." In reality, State Department planners were not open to the idea. Just prior to the Moscow meeting, however, Roosevelt had stated categorically that he personally favored the division of Germany into three sovereign states joined together by a network of common services.33 Molotov's response was cordial. He explained to Hull that his government was behind the West in planning for the future of Germany but lacked clear conceptions. He thought the U.S. program sounded promising so long as it was understood "as a minimum and not a maximum proposal."34 Hull was delighted with the atmosphere of the meeting, seeing in Molotov's cooperative demeanor "a distinct shift away from the Free Germany Committee."35 While it seemed clear that the Soviets desired a harsh peace, this was fortunately incompatible with efforts to woo the Germans to communism. Averell Harriman, the newly appointed American ambassador to the Soviet Union, observed that the "attitude towards Germany . . . is fundamentally satisfactory. There is, of course, no doubt that they are bent
31
32 33 34 35
Conference Document No. 26, U.S. Proposal With Respect to the Treatment of Germany. The Soviets may have received a somewhat clearer impression from the specific U.S. proposal on reparations, which stipulated that deliveries should not so affect Germany's living standards and productive plant "as to create serious economic and political problems." This qualification notwithstanding, the attitude conveyed in the U.S. reparations proposal did not reflect the restrictive thinking of the State Department. Conference Document 39, U.S. Proposal with Respect to I Reparations, FRUS 1943 I : 74~74Summary of the Proceedings of the Second Session of the Tripartite Conference, October 25, 1943, FRUS 1943 1:632. Cordell Hull, Memorandum of Conversation with President Roosevelt, October 5, 1943, FRUS 1943 1:54*Cited in Hull, The Memoirs of Cordell Hull, 1:286. Secretary of State to Averell Harriman, November 24, 1943, FRUS 1943 III:604.
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on the complete destruction of Hitler and Nazism. They are ready to deal with Germany on the basis of three-way responsibility."36 Molotov had many reasons to be genial, most crucially the urgent desire of his government for the Western powers to finally open a second front in Europe. Yet it was helpful that Hull had not shared with him the State Department's hopes for postwar German revival. Indeed this aspiration, so veiled in Moscow, was invisible the following month when Roosevelt, Churchill, and Stalin gathered in Teheran. Because the main purpose of this conclave was to discuss military questions pertaining to the war, Roosevelt had again excluded the State Department.37 This enabled him to put forward his own punitive notions about the peace with Germany. At Teheran, it was British Prime Minister Churchill who voiced an interest in German recovery.38 Stressing the unreliability of the Germans, Stalin replied sharply that even with Allied supervision, "any furniture factories could be transformed into airplane factories, and any watch factories could make fuses for shells." Unless the victors took firm measures Germany "could easily revive within ten or twenty years and become a threat to the world." Churchill maintained that there was a distinction between "leaders and followers" and that after "a generation of selfsacrifice toil and education, something might be done with the German people." Unconvinced, Stalin recalled how once at Leipzig two hundred German workers had failed to attend a mass meeting because there was "no conductor on the platform to punch their ticket." Such national character flaws made it essential to cut the country permanently into pieces and station troops at the borders. President Roosevelt proposed that Germany be divided into seven areas: five autonomous states and two internationalized regions under UN jurisdiction (the Kiel Canal/Hamburg region and the Ruhr/Saar region).39 This was too harsh for Churchill, who wished to confine dismemberment to Prussia or to create a new type of confederation. Pressed by his two colleagues, the prime minister ultimately agreed that dismemberment would be desirable if a practical plan could be developed, and joined them in directing the newly formed European Advisory Commission (EAC) to produce one.4
36
37 38
Harriman did warn, however, that "it may be that their present intent toward Germany is tougher than we have in mind, particularly in regard to the magnitude of reparations." Harriman and Abel, Special Envoy, 249.
Notter, Post-war Preparations, 200. Minutes Tripartite Discussion, November 28, 1943, FRTJS 1943, Teheran:509-11; Bohlen Supplementary Minutes, Ibid., 511-13. Minutes of Tripartite Political Meeting, December 1, 1943, Ibid., 600-604. Ibid.; Harry White, Memorandum for the Secretary's Files, August 15, 1944; Ibid., 833-85; Freeman Matthews, Memorandum of Conversation with Lord Strang, April 22, 1944, RG 59 740.00119, DSNA.
39 40
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Roosevelt was greatly buoyed by his first encounter with Stalin. 41 Having purposefully distanced himself from Churchill, he felt that he had achieved a special personal rapport as well as a gratifying convergence of views. Across a wide range of political and military issues - plans for the second front, Soviet entry into the war against Japan, the future of colonialism, arrangements for a postwar organization - the two men had readily agreed. The president signaled his enthusiasm at a final dinner meeting: We have proven here at Teheran that the varying ideals of our nations can come together in a harmonious whole, moving unitedly for the common good of ourselves and the world. So as we leave this historic gathering, we can see in the sky, for the first time, that traditional symbol of hope, the rainbow.42 Central to Roosevelt's outlook was the belief that if the Western powers satisfied Russian security concerns that the Soviet Union would cooperate in the maintenance of a peaceful postwar order. 43 The Teheran negotiations confirmed FDR's earlier impression that the Soviets were most fearful of German military resurgence and would demand tough controls. If these were provided, Stalin would be more likely to compromise on other questions of American concern. In the aftermath of the conference, the president was again distracted from postwar planning by military pressures. Arrangements were now underway for the promised Anglo-American landing in occupied France. Coincidentally, the already attenuated communication between the White House and the State Department was disrupted as in close succession Presidential Assistant Harry Hopkins was hospitalized, Secretary of State Hull fell sick, and longtime Roosevelt friend Under-Secretary Sumner Welles resigned.44 In the confusion, the president failed to instruct the U.S. representative to the EAC about partition nor did he give the lead on other German subjects. Established at the Moscow conference, the EAC was mandated "to study and make recommendations . . . upon European questions connected with the termination of hostilities." 45 From its inception, the organization functioned poorly. Situated in London, it was composed of the U.S. ambassador John Winant, Soviet ambassador Fedor Gusev, and Sir William
41
42 43 44 45
For Roosevelt's reaction to Teheran, see Bohlen, Witness to History, 146-54; Kimball, The Juggler, 88-105; Dallek, Franklin Roosevelt, 438-41; Feis, Churchill Roosevelt Stalin, 274-76. Cited in Kimball, The Juggler, 103. Sherwood, Roosevelt and Hopkins, 799. McNeil, America, Britain and Russia: Their Cooperation and Conflict, 400; Kimball, Swords or Plowshares! 19. Cited in Nelson, Wartime Origins of the Berlin Dilemma, 14.
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Strang, an assistant under-secretary in the British Foreign Office. With substantial external responsibilities and small staffs, the three men could barely manage their broad and diffuse EAC assignment.46 Lacking presidential guidance on the all-important German question, Winant was inundated by advice from the State Department. Two strongminded assistants, George Kennan from the Foreign Service and Philip Mosely from the Interdivisional German Committee, put him in contact with the postwar planning groups and maintained the flow of policy papers to his desk.47 These reaffirmed previous positions: a thorough but narrowly defined disarmament program, a restoration of Germany's 1933 frontiers, the use of existing central administrative organs, the preservation of the country's productive capacity to be accompanied by limitations on its self-sufficiency, the eventual inclusion of Germany into European-wide organizations for transport, power, and communications.48 During early 1944, as prospects for victory grew brighter, department planners began sounding some new themes, notably the need for tightly integrated Allied control machinery.49 Though officially presented as a means of constraining the Germans, this was also a way of checking Soviet independence. The meetings in Moscow and Teheran had reduced suspicions that Stalin would try to use Free Germany as an instrument of political hegemony. But short of this, there would be a constant temptation for Stalin to interfere with Germany's reintegration into the capitalist economies of Europe. By binding the Russians to a powerful Allied structure, there would be less chance for dangerous deviations. Toward this end, the planners introduced the startling idea of mixing the three occupation armies and placing them under a single command, which would exercise jurisdiction over the entire country.50 It was also during this period that the planners began to appreciate that the victors might need to rehabilitate the German economy. They had consistently asserted that Germany's industrial capacity was essential to
46 47 48
49 50
Penrose, Economic Planning, 233; Kennan, Memoirs, 171-97; Gaddis, The United States and the Origins of the Cold War, 105-7. Hammond, "Directives for the Occupation," 338; Snell, War-time Origins, 54-55. U.S. Department of State, Germany: General Objectives of U.S. Economic Policy with Respect to Germany, April 10, 1944, RG 218 Joint Chiefs of Staff CCAC 014 Germany, MMNA; U.S. Department of State, The Treatment of Germany, April 21, 1944, RG 218 CCS 388.4 Germany, MMNA. Mosely, "The Dismemberment of Germany," in Mosely, The Kremlin in World Politics, 139; Mosely, "The Occupation of Germany," 580-605. Pending the establishment of civilian authority, the United Nations commander in chief would be "in complete control" of the occupation regime under the direction of a Combined Chiefs of Staff that had been expanded to include the Soviet Union. U.S. Department of State, Occupation Period: General Principles of Occupation of Germany, December 17, 1944, RG 59 (Lot) Notter, DSNA; U.S. Department of State, Occupation Period: Organs and Agencies of Control of Germany, December 17, 1944. Ibid.
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Europe and that factories should not be deliberately torn down. But what if the impending invasion of the fatherland produced massive destruction? Must the Allies then take responsibility for rebuilding the country? The newer position papers pointed in this direction. In order to prevent internal breakdown, Military Government should be ready with measures for controlling financial disorders, averting a collapse of inland transit, assuring the supply of food and other necessities to civilians, and allocating goods so that German production and trade could continue.51 While recommendations accumulated in Ambassador Winant's files, he had little inclination or authority to introduce them into the EAC. Winant felt marooned by Roosevelt, but remained a White House loyalist who distrusted advice from the State Department. The planning papers were non-negotiable in any case since they were bottled up inside the State-War Department Working Security Committee (WSC), where they were encountering serious objections from the military.52 For the Joint Chiefs of Staff, ambitious postwar programs that created civilian obligations for the army were distinctly unappealing.53 The latter's unfriendly attitude led the State Department to scrap the idea of a mixed Anglo-American-Soviet occupation force. It proposed instead "a combined or coordinated form of military government" that would allow for three separately administered zones of occupation.54 The exception to this pattern would be the capital city of Berlin, where "direct local administration" would be in the hands of a combined authority. In addition to its Berlin obligations, the Allied Authority (Control Council) would supervise all those governmental and economic activities occurring at the national level. Meanwhile the individual American, British, and Soviet civil administrations would exercise discretion over "essentially local functions" and function as "primarily enforcement agencies" for the Control Council. After quickly approving State's proposal for the Allied machinery, the Working Security Committee stalled again. The planners had produced thirty position papers, outlining tasks that they wished to entrust to the
51
51
53
54
U.S. Department of State, Germany Post Surrender Problems: Control of the German Economy Immediately After Surrender, February 3, 1944, RG 59 Notter (Lot), Box 141, DSNA. Hammond, "Directives for the Occupation," 330-35; John J. McCloy to Mr. Dunn, April 5, 1944, RG 107 ASW 370.8 Germany, MMNA. The difficulties in the WSC have been widely discussed by historians; see Kuklick, Division of Germany, 3637; Nelson, Berlin Dilemma, 41-42; Snell, War-time Origins, 53-55. Walter Dorn, "The Debate over American Occupation Policy in Germany in 194445," 487; Snell, War-time Origins, 21-26; Hammond, "Directives for the Occupation," 320-22. Department of State, Germany: Occupation Period: Proposed Control Machinery for the Administration of Military Government in Germany, January 27, 1944, RG 165 CSC AD 014 Germany, MMNA.
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Control Authority. Ignored by the Joint Chiefs, they spent months recombining these into more comprehensive documents, which proved equally unacceptable.55 By early summer the SHAEF armies had arrived in Normandy, and were fighting their way across France. The stalemate in the American bureaucracy generated fits of frustration among normally sedate State Department officers. With an almost irrational desperation, they wished to introduce their proposals into the EAC, believing that if they could act while the war was in progress, they would create long-term obligations for the Soviets. Furious that the Joint Chiefs were squandering an irretrievable opportunity, the logical recourse was to appeal to the president. But they hesitated to do so, knowing of his antipathy to their restorationist plans. Although the planners may have exaggerated the benefits of speed, the delay in the EAC clearly stymied communication with the Allies. In the case of the British this interference was not very serious, for their internal processes paralleled those of the Americans.56 With the assistance of the Royal Institute (a counterpart of the Council on Foreign Relations), subcommittees of the Foreign Office had made detailed plans for the revival of the German government and economy. Moreover, throughout the war there had been informal discussions between the two national groups and a considerable coalescence of viewpoint. The Russians, on the other hand, were outside this informational loop and held punitive notions that were substantially removed from the Western rebuilders. To this point their official discussions were chiefly with U.S. military people, who were focused on victory, and others including the president, who intended to break Germany's postwar power. The Soviets' lack of exposure to the softer approach contemplated by the State Department was opening the door to future misunderstanding and conflict. In July 1944 the State Department tried to break the impasse by doing an end-run around the Working Security Committee (WSC).57 Taking two new papers on German reparations and German economic policy, it sought approval from the Executive Committee of Foreign Economic Policy (ECEFP). This intradepartmental body was chaired by their own Dean Acheson, and included representatives from those government agencies other than the military that were concerned with overseas economic activity. By sidestepping the Joint Chiefs, they hoped to create an unstoppable momentum for their approach. The documents presented to the ECEFP were the most elaborate explication hitherto presented of the multilateralist vision. The purpose of
55 56 57
Hammond, "Directives for the Occupation," 337; Dorn, "Debate Over American Occupation Policy in Germany in 1944-45," 481-501. Turner, "British Policy Towards German Industry, 1945-49," in Turner Reconstruction in Post-War Germany, 67-73; Cairncross, The Price of War, 17-60. Hammond, "Directives for the Occupation," 343.
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reparations was to facilitate the control of German economic war potential, "to redress. . . . the balance of the European economy," to expedite "the eventual integration of Germany into the world economy," and to promote the establishment of democratic institutions.58 The period of deliveries would be limited to ten years, enabling Germany's victims to receive items when they were urgently needed while averting long-term disruption in the patterns of international trade. Though Germany could likely provide "a very substantial amount of reparations" it must be permitted sufficient production "to maintain a minimum standard of living." Its first exports would have to cover the costs of the imports needed for this purpose. Deliveries should be made in kind rather than cash. Unnecessary capital equipment could be removed immediately. However, the planners were unwilling to countenance "the large-scale and permanent impairment of all German industry." Their intention was to take the bulk of removals from current production, thereby strengthening the economic bonds between Germany and its neighbors at precisely the moment when postwar dislocations might tend to sever them. Such reparations could even become an argument for reconstructing Germany industry, a possibility that was handled with the back-handed recommendation that there should not be "extensive rebuilding of German plant and industry" for purposes of current production. The planners remained dubious about economic controls as a device for curbing future aggression.59 These might "buttress" security by impeding German preparations for war, but their more important purpose was to "create conditions under which Germany will contribute to the reconstruction of Europe and the development of a peaceful and expanding world economy." Occupation authorities should be prepared "to enforce a series of economic and financial policies . . . adequate to maintain or reconstitute a minimum German economy promptly." This meant the temporary retention of the existing German administration and the use of experienced managers regardless of their role under the Nazi regime.60
58
59 60
ECEFP, Summary: Report on Reparation, Restitution and Property RightsGermany, July 31, 1944, Hopkins MSS, Box 333, Folder 1, Franklin D. Roosevelt Library (FDR). ECEFP, Germany: General Objectives of the United States Economic Policy With Respect to Germany, August 14, 1944, Hopkins MSS, Box 33, Folder 1, FDR. As elaborated in the ECEFP paper, "For this purpose Germany should be required initially to retain and place at the orders of the occupation authorities the administrative machinery charged with economic responsibility which may be in existence at the time of surrender." While "a primary . . . responsibility of the occupation will be to carry out as soon as possible a reorganization of the machinery so as to eliminate Nazi party influence," it might initially be necessary "to utilize existing agencies of control, or those which can be restored to effective operation, having regard only to their capacity to hold the economy together." Ibid.
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Over the long term, the Allies must try to eliminate those features of the German economy "inconsistent with the fundamental aim" of incorporating it in an integrated world system. For this purpose external measures such as the exposure of high-cost industries to the pressure of world competition, the gradual reduction of agricultural protection, the elimination of discriminatory trade practices, and the subjection of German business to international cartel regulation were necessary. Also useful were certain internal reforms: the reestablishment of free trade unions, the breakup of the vast Junker estates, and the destruction of monopolies through the disestablishment of their top financial structures. In August the ECEFP approved the State Department position papers. Meanwhile in Europe, Allied troops were preparing to cross from France into northwest Germany. With the invasion imminent, General Eisenhower had become increasingly disturbed by the vagueness of his instructions.61 His battlefront obligations were clear enough but he lacked guidelines for problems of occupation. To fill the void, he had pressed SHAEF's German Country Unit to finish writing its handbook for Military Government. This German Country Unit was doing its work in Britain, where its members had established contact with Philip Mosely, the former State Department planner, who was now mired in the ineffectual activities of the EAC.6z There was a rapid convergence of perspective. Although a military structure, the Country Unit included people with a corporate background - men such as Graeme Howard, former vice president of General Motors, whose company claimed ownership of the large German Opel factory.63 Along with military colleagues, who preferred stability, this business element was anxious to preserve Germany's economy. The final draft of the SHAEF handbook was bald in its intention:
Your main and immediate t a s k . . . is to get things running, to pick up the pieces, to restore as quickly as possible the official functioning of the German civilian government in the area for which you are responsible.. . . The first concern of Military Government will be to see that the machine works and works efficiently.64
61
62
63
64
Eisenhower's only guidance was from a directive of the combined Chiefs of Staff, Directive for Military Government in Germany Prior to Defeat or Surrender, June 24, 1944, RG 226 CCS 383.21 Germany, MMNA. Clark, "Conflict Over Planning at Staff Headquarters," in Friedrich, American Experiences in World War II, 212-20; Backer, Winds of History, 11-13; Snell, Wartime Origins, 62-63; Zink, The U.S. in Germany, 1944-55, 18-20. Graeme Howard was an especially controversial figure, who had written a proappeasement book in 1940, and who during the war had continued to do business with Nazi-dominated firms in Latin America. Leon Henderson to Harry Hopkins, Head of the Economic Section of the Allied Control Commission for Germany, January 5, 1945, Hopkins MSS, Box 333, Folder 1, FDR; Martin, All Honorable Men, 24-25. Contained in Morgenthau Memo for the President, August 25, 1944. Morgenthau Diary, Morgenthau MSS, FDR.
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This meant importing food and other commodities, converting industrial plants from war to consumer goods production, subsidizing essential economic activities, and reconstructing German trade with a priority for the United Nations. As for the German civil service, whenever possible, Military Government would make appointments and removals "through German officials, who are vested with this authority under German law." Nothing would be done to "unnecessarily disturb the regular . . . procedure" or to "deprive the official or the employee to be removed of any ultimate rights to which he may be justifiably entitled." Technically speaking, the handbook was in a category of its own, for it pertained only to the immediate period of the invasion. Moreover, it bespoke a narrow pragmatism that was different even from the State Department planners, who expected to adjust Germany's institutions so that the country could fit into a free market global economy. Yet in conjunction with the newly approved ECEFP documents, it betokened a definite direction for U.S. policy - one that diverged from Roosevelt and that challenged the Russian desire for tough economic and political controls.65 Before this bad news was conveyed to Moscow, the American machinery again ground to a halt, as the administration's liberals suddenly woke up.
II. MCCLOY'S FINE PRINT

Until August 1944 U.S. planning for Germany had been the exclusive province of administration conservatives whose approach to peace making presumed a global economic system conducive to corporate expansion. To prevent future German aggression, their preferred method was to absorb the country into a European free market, while cooperating with Britain and Russia in an Allied occupation.66
65 66
Kuklick, Division of Germany, 40-44. Among radical and conservative analysts of American foreign policy, a fundamental divide is between those who see the expansion of capitalism as the primary goal and those who stress the imperatives of "national security." In practice, the latter term has generally been equated with the notion of physical safety. The underlying perspective of this book straddles that dichotomy. While I believe that U.S. policy makers have been oriented toward national security, they have understood that obligation as one of protecting United States society from external attack and internal dissolution. It is the latter function that gives "national security" its variable character. Thus different domestic constituencies will have divergent ideas about what the country needs to survive, and there have always been immense discrepancies between countries in the way they define their national security requirements. As regards the conservative planners in the Roosevelt administration, the immediate purpose of their activities was to avoid future wars, but in a manner that would be consistent with the needs of internationally oriented corporations and banks. Some useful analyses of the concept of "national security" are contained in conflicting interpretations of Schurman, The Logic of World Power; Barnet, The Roots of War; Tucker, The Radical Left and American Foreign Policy.
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However, within the Roosevelt administration there remained a core of liberal New Dealers, whose outlook on international affairs reflected a continuing distrust of big business. During the early 1940s the dramatic impact of defense expenditures was drawing this group toward a Keynesian solution, in which fiscal policy would be the stimulus to economic growth. This enthusiasm coexisted with an interest in redistributing income and a willingness to use state power to bolster less privileged groups in society.67 Though the old New Dealers looked favorably on the expansion of international trade, they viewed internal reform rather than a multilateral world economy as the source of domestic health.68 To administration liberals, the overriding foreign policy objective was the obliteration of fascism - detested for its dictatorial, racist, and militaristic features.69 Most emphasized, as well, the extension of the U.S.-Soviet alliance, assistance to democratic movements in Europe and Asia, and the establishment of an international organization that could protect the sovereignty of individual states. From this perspective, the restoration of a capitalist Germany was an appalling prospect. With Nazism still gripping the country, and its eradication looming as a vast and perhaps unattainable goal, the country's economic revival was unimaginable. Outside the postwar planning committees, many liberals had no idea that such a restoration was being contemplated. When, on the eve of Eisenhower's entry into Germany, they finally saw the documents they waged a furious battle to rewrite them.
S U R V I V I N G New Dealers were mainly concentrated in the domestic bureaucracies, notably the departments of Labor, Agriculture, and Justice. In foreign affairs, they were a significant presence in operational agencies such as the OSS (Office of Strategic Services) and the OWI (Office of War Information), but had no role in the policy organizations of State and War. Their one base was in the Treasury Department, which with Roosevelt's acquiescence had become an important actor in the international field. Not surprisingly, it was from the Treasury that the first blast of opposition to the German plans was sounded. At the helm of the organization was Henry Morgenthau Jr., a Dutchess Country landowner who was a personal friend of the president.70 An
67 68
Bloch, Origins of Economic Disorder, 33-42; Graham, Towards a Planned Society, 84-85; McElvaine, The Great Depression. For important albeit divergent discussions of this issue see Hogan, The Marshall Plan, 11-18; Gardner, New Deal Diplomacy, 261-90 and A Covenant With Power,
27-51.
69 70
The liberal ethos is portrayed in Weil, Pretty Good Club, 85-102; Sherwood, Roosevelt and Hopkins, Siegel, Troubled Journey, 7-13. The best treatment of Morgenthau's role in the administration remains Blum, Roosevelt and Morgenthau.
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affluent German-Jew, Morgenthau had started out as a settlement house worker, moved on to a successful career in banking, and entered the administration as a fiscal conservative. The secretary's philosophy was of a hybrid sort. While retaining an allegiance to balanced budgets, he also favored a redistributive tax program and an expanded federal responsibility for social welfare. More crucially, he had recruited a phalanx of young economists, many of them Keynesians, who were vigorous supporters of national planning as a means of ensuring full employment. Under the leadership of Assistant Secretary Harry Dexter White, the Treasury was already battling the multilateralists in the State Department over the future shape of the International Monetary Fund.71 Given their attraction to a world system of national capitalisms, an ideological animus toward Nazism, and a predilection for conciliating the Soviets, Treasury personnel were hostile to German reconstruction. Also significant was the Jewish background of Morgenthau, White, and many of their staffers. With the increasingly rapid liberation of large sections of Europe came horrifying new information about the dimensions and character of Hitler's Final Solution. For those who identified with the victims of the Holocaust, it was difficult to avoid the conclusion that there was something transcendently evil about the German nation. Morgenthau learned about the developing plans for Germany on a flight to London, when Harry White handed him the recently approved ECEFP papers. This reinforced earlier reports from Colonel Bernard Bernstein, the Treasury representative on the German Country Unit, about the army's lenient new handbook. In England the secretary initiated further inquiries. From British Foreign Secretary Eden, he heard there was a Teheran decision to dismember Germany, but was subsequently told by Ambassador Winant that this recommendation was being ignored by the EAC. Morgenthau's most revealing encounter was with Philip Mosely, who incorrectly saw the secretary as a possible ally in his ongoing struggle to get policy papers out of Washington. Having recited chapter and verse of his bureaucratic difficulties, Mosely was startled to realize that Morgenthau was an opponent. The latter emphasized that rather than assist Germany to recover that the Allies should take vigorous steps to destroy its industrial power and to partition its territory.7Z Once back in Washington, the secretary hastened to inform his cabinet colleagues of his findings. His initial call was to Secretary of State Cordell Hull. The former Tennessee politician had hovered on the margins of
71 71
Bloch, Origins of Economic Disorder, 32-69; Domhoff, The Power Elite and the State, 155-85. Blum, Roosevelt and Morgenthau, 566; H. D. White, Memoranda for the Secretary's File, August 13, 1944 6c August 15, 1944, FRUS Teheran, 881-86; Snell, War-time Origins, 70-71; Penrose, Economic Planning, 244-47; Mosely, "The Occupation of Germany," 595-96.
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power throughout the Roosevelt years. His major contribution was his unstinting support for lowered tariffs, but since the Moscow Foreign Ministers meeting, he had become a leading proponent of U.S.-Soviet cooperation.73 Morgenthau complained to Hull about the State Department's economic plans and the EAC's disregard of Teheran. The Secretary of State was startled to learn that the three Allied leaders had opted for partition. Explaining to Morgenthau that "I have never been permitted to see the minutes of the Teheran Conference," he was enraged by his exclusion.74 The Treasury secretary assured Hull that he would keep his embarrassment "absolutely amongst ourselves," and promised to relay whatever additional information he unearthed. While acknowledging that German policy was outside his own official responsibility, he was concerned "as an American citizen," and intended to "stick my nose into it until I know it is all right."75 Hull seemed sympathetic. He recalled how in Moscow, he had won the friendship of the Russians by promising to hold a "secret trial, before which I would bring Hitler and his gang . . . and I would shoot them all." Considerably encouraged, the Treasury chief approached the Secretary of War, Henry Stimson. At age seventy-seven, Stimson was the administration's most visible link to Wall Street Republicanism and to the conservative mainstream of U.S. foreign policy.76 The Yale-educated corporate attorney had started out in the law firm of Elihu Root, Theodore Roosevelt's formidable Secretary of State, whom he continued to consult until the senior man's death in 1937. Over four decades, Stimson had moved back and forth between private practice and government service, acting as U.S. Attorney for the Southern District Court of New York, Secretary of War under Taft, special U.S. representative to Nicaragua, Governor-General of the Philippines, and Secretary of State under Herbert Hoover. Though Stimson had been hostile to the New Deal, he had an amicable relation to the president and was an ardent interventionist during the late 1930s. When hostilities broke out in Europe, Roosevelt asked him to take over the War Department, promising that his political neutrality would be respected. Because of his age and the rigors of his job, Stimson was relying heavily on his team of young assistant secretaries - Harvey Bundy, Robert Lovett, and John J. McCloy. Of these, the Assistant Secretary for the Army, "Jack" McCloy, was both his closest confidant and the person most involved in
73 74 75 76
Weil, Pretty Good Club, 75-113; Bohlen, Witness to History, 127-29; Sherwood, Roosevelt and Hopkins, 756-57. U.S. Senate, Morgenthau Diary, L415-18. Ibid. An outstanding biography of Stimson is Hodgson, The Colonel. See as well Kamman, "Henry L. Stimson: American Internationalist," in Curti, Makers of American Diplomacy, 103-27; Bird, The Chairman, 18-19, I I Q -
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the plans for Germany. Unlike his colleagues, McCloy came from a lowermiddle-class family, had worked his way through Amherst College and Harvard Law School, and had risen through the labyrinths of Wall Street law by establishing personal friendships with men more rich and powerful than himself.77 While working for the law firm of Cravath, Swaine and de Gersdorff, McCloy had achieved a national reputation for his work on the "Black Tom" case involving claims of German sabotage during the First World War. His familiarity with German espionage commended him to Stimson, who first brought him to Washington as a special advisor. Subsequently, McCloy had made himself invaluable to the War secretary, whom he regarded with the reverence that Stimson had reserved for Root. As Assistant Secretary for the Army, McCloy quickly became a Washington insider with strong connections on Capital Hill and to the New Dealers in the administration. Yet like his boss, McCloy had voted Republican and had little use for Roosevelt's domestic agenda.78 On August 23, 1944 Morgenthau lunched with Stimson and McCloy, describing his London trip, his discovery of the SHAEF handbook, and the disclosures about Teheran.79 Stimson was distracted by back pain, but McCloy asked careful questions. Immersed in the responsibilities of war making, neither man had given much thought to the questions that Morgenthau was raising. Both assumed that European capitalism would be restored after the war, and that German resources would be essential to that mission. But what the precise arrangements might be and the nature of German sovereignty were matters they had not engaged. During the spring, Stimson and McCloy had been favorably impressed by a suggestion from their French friend Jean Monnet that the Ruhr and Saar be severed from Germany, and their economies internationalized.80 Faced with Morgenthau's objections to German rehabilitation, Stimson raised this alternative. The Treasury secretary expressed interest, but thought it would be wiser to remove all industry from Germany and reduce them "to an agricultural population of small landowners." Stimson countered that in the present stage of German development, this would necessitate the removal of large numbers of people from the country. "This is not nearly as bad as sending them to gas chambers," reflected Morgenthau. Despite disagreements, the two cabinet secretaries parted the lunch in a congenial mood. Morgenthau thought the Ruhr idea promising and was heartened by Stimson's willingness to contemplate a long occupation.81
77 78 79 80 81
For analysis of McCloy's extraordinary upward mobility see Holland, "Citizen McCloy," 22-42. Bird, The Chairman, 23-146. Stimson Diary, August 23, 1944, Henry L. Stimson Papers, manuscripts and Archives, Yale University Library; U.S. Senate, Morgenthau Diary, L426-27. Stimson Diary, May 22, 1945; U.S. Senate, Morgenthau Diary, 1:426. U.S. Senate, Morgenthau Diary, 1:428.
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The latter viewed Morgenthau as flexible, and felt sufficiently comfortable to accept his suggestion for a new cabinet committee to consider plans for postwar Germany.82 The urgency of guiding Eisenhower created an incentive for more formal and centralized decision making. Morgenthau got his most positive response from the president.83 Hammering the point that Roosevelt's wishes were being disregarded, he handed his chief the Treasury's only copy of the SHAEF handbook along with a covering memorandum, pointing out the most offensive passages. In an angry letter to Stimson, FDR observed, "This so-called Handbook is pretty bad. I should like to know how it came to be written and who approved it down the line."84 The text gave "the impression that Germany is to be restored just as much as the Netherlands or Belgium and the people of Germany brought back as quickly as possible to their pre-war estate." Demanding that the book be withdrawn, Roosevelt saw "no reason for starting a WPA or a CCC for Germany.... The German nation as a whole must have it driven home to them that the whole nation has been engaged in a lawless conspiracy against the decencies of civilization." In the cabinet, FDR authorized a postwar planning committee, consisting of the secretaries of the State, War, and Treasury departments, along with his personal representative Harry Hopkins. Hull was insulted, complaining that this group would be duplicating the work of his department's postwar planning committees. Having heard the secretary again proclaim his enthusiasm for "a drum-head court," Morgenthau suggested that if Hull would read the EFECP paper, he would find that his views and those of Leo Pasvolsky "are about as far apart as the North and South pole."85 Even Stimson was irritated that the Secretary of State kept alluding to documents that "he has never read himself." In preparation for the forthcoming cabinet committee, Morgenthau asked Harry White and his staff to draw up a specific proposal for postwar Germany. Unlike the secretary, White and his associates sought to exclude motives of vengeance and to concentrate on measures that would reduce Germany's ability to threaten the peace.86 Under their plan, "Suggested Post-Surrender Program for Germany," there would be far-reaching denazification entailing the removal of party members and their sympathizers
81 83 84 85
86
Stimson Diary, August 23, 1944. Henry Morgenthau Jr., Memorandum of Conversation with the President, August 19, 1944, Morgenthau Diaries, 1386-88 Morgenthau MSS, FDR. President Franklin D. Roosevelt to Secretary of War, August 25, 1944, FRUS 1944 1:544-46. Stimson and Bundy, On Active Service, $66; James V. Forrestal Diary, August 25, 1944 Forrestal MSS, Box 1, Seeley G. Mudd Manuscript Library, Department of Rare Book and Special Collections, Princeton University Libraries, (PU); U.S. Senate, Morgenthau Diary, 1:447. Blum, Roosevelt and Morgenthau, 581-85; U.S. Senate, Morgenthau Diary, 1:487, 497-502.
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from all public positions as well as jobs in journalism, teaching, the legal profession, industry, and finance. The country would be demilitarized by eliminating its armed forces, its entire weapons industry, and parts of its "supporting industries." 87 Germany would be divided into two large autonomous states with large slices of territory removed from its jurisdiction. The Ruhr would be taken over by an international security organization that would own and control the major industrial properties to prevent them from contributing to Germany's military potential. The whole country would provide reparations that would come not from current production but from "the transfer of existing resources and territories." The White team was vague on the overarching question of deindustrialization. Their memo did not indicate whether reparations transfers would come from enterprises other than those ancillary to the armaments industry, or how they were defining "supporting industries." More precise was the injunction that "the Allied Military Government shall not assume responsibility for such economic problems as price controls, rationing, unemployment, production, reconstruction, distribution, consumption, housing or transportation or take any measures designed to maintain and strengthen the German economy" (italics added). This was a direct jab at the army handbook and the State Department planning papers. Over at State, preparations were also under way for the cabinet committee. With the president in active opposition to its agenda, the writing of recommendations had become a more complex task. Freeman Matthews, the director of the Central European Division, organized the drafting of a punitive-sounding memo that took all the negative items from previous papers and featured them as "the key objectives of American policy": the demilitarization of Germany, the dissolution of the Nazi Party, extensive controls over the media, supervision of the educational system, and the breakup and redistribution of the Junker estates.88 On the most restrictive measures, State temporized. As regards dismemberment, it counseled delay "until we see what the internal situation is and what is the attitude of our principal allies." Similarly on reparations, the United States should not "take a fixed position at this time, but should await the views of governments that have a more direct interest." The most subtle draftsmanship pertained to economic goals: 1) The standard of living of the German population shall be held down to a subsistence level. 2) The German economic position of power in Europe must be eliminated.
87 88
U.S. Treasury, "Suggested Post-Surrender Program," September 1, 1944, RG 107 ASW 370.8 Germany, MMNA. U.S. Department of State, Suggested Recommendations on Treatment of Germany from the Cabinet Committee for the President, September 4, 1944, FRUS Quebec: 95-97.
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3) German economic capacities must be converted in such a manner that it will be so dependent upon imports and exports that Germany cannot by its own devices reconvert to war production.
For a naive reader who was unfamiliar with the hundreds of pages of postwar plans, the document gave the impression of a department hellbent on a harsh economic settlement. Yet this was misleading for there was no mention of removing or even limiting any portion of German industry. Indeed, the provision for eliminating German self-sufficiency carried a positive implication, for it meant that Germany would be allowed to recover and become an integral part of a revived European economic order. The perils of such a camouflaged statement became immediately evident when the cabinet committee convened on September 5.89 As the spokesman for his department, Secretary of State Hull placed the harshest construction on its contents. Offering an analogy to Southern reconstruction, he recalled how "everything was destroyed in the South and it gradually took the people 75 years to get back again." This was what he "would like to see done in Germany." Nazism was "down in the German people a thousand miles deep and you have just got to uproot it and you can't do it by just shooting a few people." Secretary Stimson was horrified by Hull's performance. To this point, he had taken a relaxed view of Morgenthau's activities. Acknowledging that as an American Jew, the Treasury secretary was "not unnaturally very bitter" toward the Germans,90 Stimson was consoled by his peripheral position in the policy hierarchy. The defection of Hull was more ominous, for the State Department's role was pivotal. Suddenly isolated, Stimson began to argue for the preservation of the Ruhr, stressing that tens of thousands of people might be thrown out of work. Inside the small committee the important audience was White House representative Harry Hopkins. A social worker from Iowa, during the 1930s this energetic, persuasive man had climbed from the directorship of the FERA (Federal Emergency Relief Administration) and the WPA (Works Progress Administration) to become Roosevelt's top domestic advisor.91 The quintessential New Dealer, he was a notorious big spender and a persistent advocate of aid to the needy. Though Hopkins was always a controversial figure, the president's confidence in him was unsurpassed. During the Second World War, FDR asked him to move into the Executive Mansion, so that he could provide continuous assistance on matters of defense and diplomacy. As the organizer of Lend-Lease, emissary to Churchill
89 90 91
U.S. Senate, Morgenthau Diary, 1:524-28; Stimson Diary, September 5, 1944. Stimson Diary, September 4, 1944. Mcjimsey, Harry Hopkins; Sherwood, Roosevelt and Hopkins, 1-13.
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and Stalin, and planner of the president's international conferences, he at times seemed omnipresent. The participants in the cabinet committee were aware that Roosevelt's resolution of the German question could well depend on his representative's reactions. It was quickly evident that Stimson's pleas for the German economy were alienating Hopkins. When challenged by his colleagues, the Secretary of War accused them of trying to fight "brutality with brutality." 92 Did this mean, queried FDR's advisor, "that if we stop all steel production in Germany that this would be a brutal thing to do?" Later Stimson rebuked Hull for ignoring his own department's planning papers, causing Hopkins to explode: "Let's forget the papers, there are too damn many papers. We can't read them all. We have got to start fresh." The startled Secretary of War exited the meeting in a grim mood, confiding in his diary that "in all the years I have been here, I have not had such a difficult and unpleasant meeting, although of course there were no personalities." 93 Morgenthau and Hopkins were cheerier, as they reflected on the phone about Stimson's discomfiture: HM: HH: HM: HH: HM: HH: HM: HH: That was a most encouraging meeting. God wasn't it. I nearly fell through the floor. I wanted to get up and kiss Cordell for the first time.... My god, he [Stimson] was terrible. All you've got to do is let kindness and Christianity work on the Germans. Oh boy, and What. And... and of course Henry. But fundamentally I think it hurts him to think of the non-use of property. He's grown up in that school so long that property, God, becomes so sacred.94
Hopkins felt "pretty confident about where the president is going to land on this." If Hull would "keep going to bat" and Stimson repeated his performance, Roosevelt would be convinced. Certainly the War secretary had no intention of withdrawing. Concerned that the administration was about "to run amuck," he asked McCloy to prepare a rebuttal. This deplored the desire of "some of my colleagues that the great industrial regions of Germany known as the Saar and the Ruhr . . . should be totally transformed into a nonindustrialized area of agricultural land." 95 During the past eighty years, their raw materials had
U.S. Senate, Morgenthau Diary, L526. Stimson Diary, September 5, 1944; see also John J. McCloy Diary, September 5, 1944, in John J. McCloy Papers (Box DYi), Amherst College Archive (AC); McCloy to Freeman Matthews, September 6, 1994, RG 107 ASW 370.8, FRC. U.S. Senate, Morgenthau Diary, 1:5 21. Stimson Diary, September 5, 1944; Stimson and Bundy, On Active Service, 570-73.
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been the foundation of European commerce, allowing Germany to be main supplier for ten European nations and the best customer for another seven. To disrupt the pattern was sheer folly:
I cannot treat as realistic the suggestion that such an area in the present economic condition of the world can be turned into a nonproductive ghost territory when it has become the center of one of the most industrialized continents in the world, populated by peoples of energy, vigor, and progressiveness.
One alternative might be to place the Ruhr under some form of control, trusteeship, or even transfer of ownership, but it was inconceivable to turn "such a gift of nature into a dustheap." The impact on the German people would also be ruinous. By destroying their patrimony and placing them "in a condition of servitude," the culpability of the Nazis would be completely obscured. Instead the Germans would become bitterly resentful of the Allies. The victors would in effect be "poisoning the springs out of which we hope that the future peace of the world can be maintained." Such oppression would not prevent war, but would breed it. McCloy's memo in hand, Stimson joined the rest of the cabinet committee for a session with Roosevelt the next day.96 To his dismay, the president began ruminating that the Germans could live happily on soup kitchens, observing that his ancestors had managed without many luxuries that now seemed necessities. FDR recalled that when he was a boy in Dutchess County, people had gotten along fine even without bathrooms. Stimson urged the president to think carefully about the Ruhr. Its resources were invaluable and must somehow be preserved, even if this meant internationalizing the area. The Allies ought "not burn down the house of the world for the purpose of securing a meal of roast pork." Counterattacking, Morgenthau and Hopkins demanded that the German steel mills be immediately eliminated. But their request went too far for Roosevelt, who preferred to defer any decision until the war's end. At this uncertain juncture, Stimson and McCloy sought assistance outside the executive bureaucracies. Calling on their friend, Justice Felix Frankfurter, they found that despite his Jewish background he viewed the German question "with perfect detachment and great helpfulness."97 Frankfurter urged them to consult Hamilton Fish Armstrong, the editor of the Council on Foreign Relations' Foreign Affairs magazine and a former director of the War/Peace studies. Armstrong was shocked by Washington developments.98 He regarded Morgenthau's approach as "an attempt to destroy the greatest asset for the
96 97 98
Stimson Diary, September 6, 1944; Stimson and Bundy, On Active Service, 573-74; U.S. Senate, Morgenthau Diary, 1:53639. Stimson Diary, September 7, 1944. Ibid.
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reconstruction of the European world at a time when we needed it most." The editor offered a list of the influential people who had been involved in the planning for postwar Germany on the CFR/State Department side, urging Stimson to contact them. The secretary was most comfortable speaking with Isaiah Bowman, the president of Johns Hopkins University and the former chairman of the War/Peace Territorial Committee." He explained to Bowman that "young and to me unknown" State Department staffers who had worked on the plans for Germany had not broken through to the upper layers of decision making so that policy was now spinning in a very different direction. Bowman thought the most prudent response was to develop the idea of a Ruhr trusteeship. Through this mechanism Germany could maintain its sovereignty over the area, while an international organization would control the kind of production that would take place and its distribution to the rest of Europe. Stimson reflected that it might then be appropriate to include the Soviet Union on the board of trustees in order to maintain its confidence. Bowman also considered this wise. Meanwhile McCloy was talking with banker friends in New York, alerting them to the situation in the cabinet and eliciting their views on deindustrialization.100 He also continued to cultivate his tie to Morgenthau, with whom he remained on a cordial basis. Though McCloy had written Stimson's memo and shared his views, he presented himself to the Treasury chief as an intermediary who had tried to modify the paper. He claimed the War secretary was "coming around on many of the points such as the partition of Germany, internationalization of the Ruhr . . . the Rhineland to go to France . . . and some reduction in the economic potential of Germany." Admitting his own opposition to the Ruhr's destruction, he still considered himself and the Treasury to be "fairly close together."101 McCloy's personal charm helped defuse Morgenthau's wrath when the military produced a revised handbook that closely resembled the offensive original. Rather than requiring yet a third draft, McCloy proposed a flyleaf that would state superseding principles, reflective of Roosevelt's concerns. He explained that Eisenhower "had let out a great cry of pain" and needed immediate assistance. However, he was willing to write an improved army directive for the postsurrender period, which could become the basis for a different handbook. Uneasy with this procedure, which implied among other things the temporary employment of Nazis, both Morgenthau and Hopkins nevertheless yielded to McCloy's assurances.102 At the latter's
99 100 101 102
Minutes of Meeting: Stimson and Isaiah Bowman, Stimson MSS Box 170, Yale; Stimson Diary, September 18, 1944. McCloy Diary, September 11, 1944. McCloy Diary, August 28, 1944; U.S. Senate, Morgenthau Diary, 1:533. Report by the Combined Civil Affairs Committee, Handbook on Military Government in Germany, September 1, 1944, RG 218 CCS 383.21 Germany Sec 4,
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behest, they also allowed the army to draft Eisenhower's first proclamation to the Germans despite indications from the initial text that it would be too benevolent.103 In forfeiting these skirmishes, Morgenthau was partly guided by the perception that the real battle was for the allegiance of Roosevelt. The president would soon be going to Quebec to meet Churchill. Morgenthau's goal was to have FDR use the Treasury documents as the basis for his discussion there. After the first cabinet meeting, Harry White had been instructed by his boss to make these sterner. His updated version called for the Ruhr to be "not only stripped of all presently existing industries but so weakened and controlled that it cannot in the foreseeable future become an industrial area."104 In the rest of Germany, there would be a twentyyear period of Allied control designed to block industries that might contribute to Germany's war potential. White and other Treasury staffers were troubled by these recommendations, believing that they would dislocate millions of Germans and inflict severe hardships on the rest of Europe.105 Unlike Stimson, White was willing to scrap market mechanisms for the Ruhr, but thought an international body should use its resources to provide current production reparations. His humanitarian arguments left Morgenthau cold: "Sure it is a terrific problem. Let the Germans solve it. Why the hell should I worry about what happens to their people?" Maybe it was cruel to move millions of people, but "We didn't ask for this war; we didn't put millions of people through gas chambers." To persuade Roosevelt, the Treasury prepared a Briefing Book laying out the arguments for a harsh peace.106 A key proposition was the propensity of the Germans to embrace authoritarian and militaristic solutions. It was therefore futile to expect some new segment of the German population to alter the aggressive pattern. Staff reservations notwithstanding, the book also proclaimed that "it is a fallacy that Europe needs a strong industrial Germany." Other countries, including the United States, could supply the Continent with the goods it needed. While some areas might
MMNA; SHAEF to War Department, September 5, 1944, RG 218 CCS 383.21, MMNA; U.S. Senate, Morgenthau Diary, L538-47, 558-62. According to the initial draft, "We come as conqueror but not as oppressor. In the areas of Germany occupied by the forces under my command as in other countries liberated from the horrors of Nazi tyranny, we shall overthrow Nazi rule, dissolve the Nazi party and abolish the cruel, oppressive and discriminatory laws and institutions which the party has created." Secretary of the Treasury to McCloy, September 7, 1944, in Morgenthau Diary, 1:570-71. U.S. Treasury, "Suggested Post-Surrender Program for Germany," September 4, 1944 in U.S. Senate, Morgenthau Diary, 1:503-509. Ibid., L487-90. U.S. Treasury Briefing Book for Quebec, September 9, 1944, FRUS 1944 Quebec,
131-40.
103
104 105 106
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suffer a mild disadvantage, other nations, such as Britain, would benefit from the elimination of German competition. Morgenthau brought the Briefing Book to the cabinet committee's second meeting with the president. Although at the outset Roosevelt seemed to vacillate between positions, as he leafed through the Treasury packet he suddenly fastened on the critical sentence: "It is a fallacy that Europe needs...." Reading it aloud, he remarked, "This is the first time I have ever seen anybody say this.... All the economists disagree but I agree with that."107 As far as he was concerned, it was best to "put Germany back as an agricultural country." The session greatly disheartened Stimson,108 but put Morgenthau in a triumphant mood. The latter related to his staff how they had "gone inch by inch" all week, but now FDR believed "it was a fallacy that Europe needs a strong industrial Germany."109 White commented cynically that, "Having read the title he was convinced of it." Someone suggested that FDR might probe the matter more deeply. White thought it unlikely: "He stops with the title because he agrees." The Treasury chief was further rewarded by an unexpected invitation to Quebec. Roosevelt had originally asked Cordell Hull to accompany him. But the Secretary of State, who was ailing and under intense criticism from his own department, begged off, claiming that his presence was not needed at an essentially military conclave.110 As the only cabinet member at the meeting Morgenthau suddenly had free access to the president. Churchill, however, was hostile to the idea of deindustrialization, claiming it would result in England being "chained to a dead body."111 Morgenthau insisted that his plan would benefit Britain economically by eliminating German competition in coal and steel and opening markets throughout the rest of Europe. The Foreign Office demurred, arguing that "if Germany was unable to manufacture, it can't pay for imports. World trade will suffer and our exports with it." Churchill was ultimately swayed by his need for an extension of Lend-Lease. This was his most important aim in Quebec, and he was not about to antagonize the Americans with an abstract quarrel over Germany's future.111 The Quebec communique was a definite victory for Morgenthau, but it
07 08
U.S. Senate, Morgenthau Diary, 1:609. Stimson and Bundy, On Active Service, 372-74. U.S. Senate, Morgenthau Diary, I:6n. Hull, Memoirs, II: 1601. Freeman Matthews, Memorandum on Meeting with Roosevelt, Morgenthau, and Stimson, September 20, 1944, RG 59 Office of European Affairs, Box 9 DSNA; Roosevelt /Churchill Dinner Meeting, September 13, 1944 FRUS 1944 Quebec: 327. Eden, The Memoirs of Anthony Eden, II: 5 5 2; Feis, Roosevelt, Churchill, Stalin, 371; Penrose, Economic Planning, 256.
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was not his maximum program. 113 While calling for Germany to become "a country primarily agricultural and pastoral in . . . character," its recommendations were confined to particular industries in the Ruhr and Saar: The ease with which the metallurgical, chemicals, and electric industries in Germany can be converted from peace to war has already been impressed upon us by bitter experiences... . The industries in the Ruhr and Saar would therefore be necessarily put out of action and closed down. This would leave the coal mines and other types of light industry in the area still intact. The Quebec communique also kept open the possibility that heavy industry outside the Ruhr might be retained. The decisions in Quebec were nevertheless sufficient to propel Cordell Hull into the Stimson camp. 114 The secretary had excluded himself from the meeting, but was incensed that Roosevelt had used Morgenthau to negotiate U.S. foreign policy. Especially distressing was the extension of Lend-Lease, which Hull had tried to use as a way of breaking down Britain's imperial preference system. He now believed that Roosevelt and Morgenthau had undercut this position in exchange for Churchill's consent to their German program. Stimson too was beside himself, lamenting to McCloy, "It is a terrible thing that the total power of the U.S. and U.K. in such a critical matter . . . is in the hands of two men, both of whom are similar in their impulsiveness and a lack of serious study." 115 Stimson had talked with a great many knowledgeable people and he had yet to meet a man who was not "horrified by the Carthaginian attitude of the Treasury." This was "semitism gone wild for vengeance" and if carried out would "surely lay the seeds for another war." With tempers mounting, news of Quebec was leaked to Arthur Krock, the conservative senior columnist for the New York Times. On September 22 the paper published his critical piece, questioning why the Treasury secretary had been brought to Quebec. 116 Krock charged that on the German issue, as on "so many other difficult areas of policy," the president had "hesitated... to make a choice of guiding principles" and then insisted on "a new set to be ready in forty-eight hours." In a more "orderly
113
114
115
"6
1944 Quebec: 466-67. In his memoirs, Hull observes that "the whole development at Quebec, I believe, angered me as much as anything that had happened during my career as Secretary of State." Hull, Memoirs, II: 1614. Stimson Diary, September 17, 1944. For Stimson's first reaction see Stimson Diary entry for September 14, 1944. Arthur Krock, "Why Secretary Morgenthau Went to Quebec?" New York Times, September 22, 1944. The question of who leaked to Krock was disputed at the time, and has never been resolved. See for example Kimball, Swords or Plowshares? 43; Bird, The Chairman, 226.
Memorandum Initialed by Roosevelt and Churchill, September 15, 1944, FRUS
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administration" responsibility for the subject would rest with the State and War departments, especially since neither Hull nor Stimson "can even faintly be suspected of any inclination to be easy with the Germans." Morgenthau quickly perceived the vulnerability of his position. Although the polls showed the American public to be sympathetic to a tough peace,117 Krock's column was the first in a series of unfavorable news stories portraying Roosevelt as an erratic leader. Such commentary was especially unwelcome during an election year in which the president was seeking a controversial fourth term.118 More upsetting were press reports that the Germans were using the Quebec communique to rally their troops on the Western Front - this at a time when the SHAEF advance into Germany had slowed and its forces were sustaining severe casualties. From General Marshall came a painful rebuke. Apparently, there were "loud speakers on the German lines telling them not to surrender and this doesn't help one bit."119 Among his own people, the Treasury secretary was alternately worried and indignant. He hated the idea that he had endangered American soldiers, but thought the blame resided with "the leakers" - presumably Stimson or Hull. Roosevelt quickly retreated. At a press conference on September 29, he disclaimed knowledge of any internal dispute and without consulting any of the relevant departments announced the abolition of his cabinet committee. Privately the president complained to Hull: "No one wants to make Germany a wholly agricultural nation again and yet somebody down the line handed this out to the press."110 FDR continued to back-peddle during a luncheon with Stimson on October 3. According to the secretary's diary, the president "grinned and looked naughty" as he suggested that "Henry Morgenthau has pulled a boner."111 Roosevelt assured Stimson that "he had no intention of turning Germany into an agrarian state" and that he only wished to use the proceeds of the Ruhr for the assistance of Great Britain. Confronted with the pertinent passages from Quebec, the president seemed "frankly staggered and said he had no idea how he could have initialled this." Stimson observed how throughout the war, FDR's leadership "had been on a high moral plane" and hoped this would not be poisoned "with anything like
117
118 119
no
Even the State Department's internal polls showed Americans leaning toward a tough peace. As of August 1944, forty-two percent of the populace endorsed the partition of Germany, while fifty-one percent opposed the reconstruction of German industries having a war potential. U.S. Department of State, "Public Attitudes on Foreign Policy," September 9, 1944, RG 59 740.000119, DSNA. Blum, Roosevelt and Morgenthau, 603-5. U.S. Senate, Morgenthau Diary, 1:65 6-57, 661. Roosevelt to Secretary of State Hull, September 29, 1944, RG 59 Office of European Affairs, DSNA; Kimball, Swords or Plowshares} 43. Memorandum of Secretary of War's Luncheon Conference With the President, October 3, 1944, McCloy Diary, McCloy MSS, AC.
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mere hatred or vengeance." He also reflected how Morgenthau had been a great friend to him in Washington. He was therefore disturbed to find the Treasury secretary taking the lead in this German campaign, "knowing how a man of his race would be misrepresented for so doing." The president's discomfiture emboldened the State Department to seek his approval for another of their misleading memoranda.1" This also featured a series of negative-sounding policies but kept intact prospects for economic reconstruction. As stated in the new conclusion:
It is of the highest importance that the standard of living of the German people in the early years be such as to bring home to them that they have lost the war and to impress upon them that they must abandon all the pretentious theories that they are a super race created to govern the world. Through the lack of luxuries we may teach them that war does not pay.
This passage cleverly echoed FDR's original letter to Stimson, denouncing the army handbook. However, it limited the duration of Germany's economic ordeal to "the early years" after the war and shifted the emphasis away from "soup kitchens" to "lack of luxuries." The president was undeceived. Refusing to sign, he explained that while he agreed with the economic passage in principle, he did "not know what this part means" and would like a clarification. There was no necessity for haste since the Allied armies were still at war.123 Though electoral considerations were prompting Roosevelt to defer a decision,124 he was at heart a Morgenthau man. Like the Treasury secretary, he believed that the Germans were permanently aggressive and he failed to see how a multilateral trading order would divert them. In the latter years of his administration, the president had become increasingly attentive to the need for foreign trade, but he did not regard it as a panacea for America's domestic problems or those of other nations. To him, the key to world peace was a continuing friendship with the Soviets, which would be solidified by a tough stand toward the Germans.125 As Roosevelt drew back, responsibility for planning the occupation passed to the War Department, where Jack McCloy and the Army's Civil Affairs Division were preparing an interim directive for the postsurrender period.126
IZZ
123 114
IZ5 Iz6
Secretary of State to the President, September 29, 1944 in McCloy MSS, Box WD3, AC; Matthews to Secretary of State, October 5, 1944, RG 59 Office of European Affairs, Box z, DSNA. FDR to Secretary of State, October zo, 1944, FRUS Yalta: 158-59. During this period Hopkins was attempting to persuade Secretary Stimson to provide assistance to Roosevelt's reelection campaign. Stimson had been recruited to his post with the promise that he could remain nonpartisan, and he was unwilling to alter this position. See McCloy Diary, McCloy MSS, October 18, 1944. Kuklick, Division of Germany, 57-59; Kimball, Swords or Plowshares} 37; Gaddis, Origins of Cold War, 100-102. For more detailed discussion of the early origins of JCS 1067 see Hammond, "Directives for the Occupation," 371-77; Clark, "Conflict Over Planning," ZZ4-31.
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The product was JCS 1067, a lng, punitively worded paper that, like many State Department documents, was filled with prohibitions and dotted with loopholes. In employing this tactic, McCloy was also coping with the fact that his distracted chief executive did not sympathize with his views. The stated goals of JCS 1067 were those of the Treasury:
Germany will not be occupied for the purpose of liberation but as a defeated nation. The clear fact of German military defeat and the inevitable consequences of aggression must be appreciated by all levels of the German population. The German population must be made to understand that all necessary steps will be taken to guarantee against a third attempt by them to conquer the world,IZ?
To implement these purposes, the commander-in-chief was instructed to arrest individuals believed to have committed war crimes, or whose continued freedom was a danger to the occupation. The categories specified were broad, including high government officials, all leaders of the Nazi Party down to the local level, and members and sympathizers holding key positions in private fields such as industry, finance, education, the press, and publishing. Unless there was "evidence to the contrary" the commander was to assume that "any person holding such positions are Nazis or Nazi sympathizers." The commander was to exercise control over all economic functions, but was to "take no steps looking towards the economic rehabilitation of Germany." In other words, "responsibility for such economic problems as price control, rationing, unemployment, production, reconstruction, distribution, consumption, housing or transportation will remain with the German people and the German authorities." Any material progress would depend on their own initiative. Despite its strict tone, JCS 1067 was a far cry from Quebec. One seemingly innocuous provision was that the actions of the commander in chief "must be of short-term and military character, in order not to prejudice whatever ultimate policies may be later determined upon." This stipulation effectively precluded, at least for the immediate future, any wholesale destruction of German factories and mines. Meanwhile the commander was given a wide mandate to shape policy according to military needs.iz8 Some of this latitude was amplified in the section on economic control, permitting him to ensure "the production of goods and services essential... for the prevention of epidemic or serious
127
Directive to SCAEF regarding the Military Government of Germany in the Period Immediately Following the Cessation of Organized Resistance, September 22,1944, FRUS Yalta: 143-54. 1 . T n i s authority will be broadly construed and includes authority to take all meas28 ures deemed by you, necessary, desirable, or appropriate in relation to military exigencies and the objectives of firm military government." Ibid.
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diseases and serious civil unrest and disorder, which would endanger the occupying forces and the accomplishment of the objectives of the occupation." While Eisenhower was thereby discouraged from destroying industrial properties under the "not to prejudice" clause, there was no equivalent limitation on his ability to restore them under "disease and unrest." Politically, JCS 1067 was also a double-edged sword. Despite its impressive arrest list, in a period when Morgenthau, Hull, and the president were contemplating executions, the incarceration of large numbers of people forestalled more drastic action. By holding in abeyance decisions about trial procedures and specific punishments beyond the immediate surrender period, the directive left opportunity for wartime passions to subside. The commander also had the option of disregarding the stated criterion for arrests if he notified his Washington superiors and explained his reasons. JCS 1067 was an interim directive, designed to cover the period between the German defeat and the operations of a four-power Allied Control Council. A more reliable indication of McCloy and Stimson's intentions was contained in their instructions to the Civil Affairs Division (CAD) for a long-term program. 129 Unlike JCS 1067, which was distributed to several departments, these guidelines were closely held. They called for permanent controls over key industries, imports, and exports, "to ensure that German production is restricted wholly to peacetime needs." Such controls would include "supervision o v e r . . . the rebuilding of destroyed plants." Steps must be taken: (i) to eliminate German economic domination of Europe which has been a part of its general war plan, and (ii) to substitute an economy wholly dependent upon an orderly process of trade with other countries and upon imports and exports to the end that Germany cannot, by her own devices, or by any collaboration with others, reconvert to war production or become again a warlike nation. Though invisible in the interim directive, here in the guidelines was the planners' original preference: to make Germany peaceful by forcing it into free trade with Europe. Also revealing of the War Department attitude was the work of the U.S. Group Control Council. The organizational successor to the German Country Unit, it was responsible for prescribing the implementing arrangements for JCS 1067. As in the Country Unit, corporate representatives occupied key positions in the Control Group. Under the leadership of General Graeme Howard, on leave from General Motors, the Control Group clarified the meaning of the "disease and unrest" formula: The assumption of responsibility for conducting German industry in such a manner as to prevent or alleviate epidemic or serious disease and civil unrest and disorders
1X9
McCloy for the Director of Civil Affairs Division, October 26, 1944, RG 107 ASW 370.8 Germany, MMNA.
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in effect is assuming the responsibility for ensuring the successful operation of German industry under very difficult circumstances" (italics added). 130
Since American forces would be directing German enterprise "only successful men of business and finance of the highest caliber would offer any chance of effectively executing this burden."131 In early winter, Howard returned to Washington to recruit people from the large industrial corporations for service in the Economics Division. Meanwhile McCloy was keeping close tabs on the top position in Military Government. Since the summer, a main Treasury objective had been to gain Roosevelt's support for a civilian high commissioner, sympathetic to their views.132 By November, the War Department was insisting with considerable plausibility that so long as the army was running the occupation, the top civil authority should either be a regular army officer or someone so closely associated with the army that he could be easily incorporated into its hierarchy. By persuading the president of this course, the War Department secured wide authority for determining what JCS 1067 would mean in practice.133 McCloy's subtle strategy elicited opposition in some conservative quarters. There was serious dissent from the British, whose Foreign Office had, like the U.S. State Department, spent years writing plans for the economic and political reconstruction of Germany. Without the internal pressures generated by Morgenthau, they were unwilling to approve such a toughsounding interim directive. As explained by General McCready, JCS 1067 arrested too many people, senselessly shut down the schools and mass media, offered no provision for a central German government, and was far too vague in its "disease and unrest formula."134 McCloy pointed out that
130
131
132
133
134
Crain to Ambassador Robert Murphy, December 8, 1944, RG 84 US POLAD 850c, Federal Records Center, Suitland, Maryland (FRC). See also, U.S. Group Control, Report of the Economic Committee, December 9,1944, RG 84 US POLAD 850a, FRC. This instruction was provided to a four-man Economics Committee, chaired by Robert Murphy, Eisenhower's new political advisor. C. W. Wickersham to Ambassador Robert Murphy, December 6, 1944, RG 84 US POLAD 850, FRC; Captain Tuck to Ambassador Robert Murphy, Preliminary Review of Economic Plans, December 8, 1944, RG 84 U.S. POLAD 850a, FRC; Murphy to Secretary of State, December 18, 1944, RG 94 US POLAD 850a, FRC. An immediate stimulus was the appointment of Robert Murphy to be Eisenhower's chief political advisor for Germany. As the commander's political advisor during the invasion of French North Africa, Murphy had aroused widespread liberal criticism for his role in forging a deal with the Darlan regime. S. Shepard Jr. to Mr. Shaw, September 17, 1944, RG 59 740.00119, DSNA. Under-Secretary of War Robert Patterson to Secretary of War Stimson, October 17, 1944, McCloy MSS, Box WDi, AC; McCloy Diary, October 18, 1994; McCloy to General Eisenhower, October 25, 1944, McCloy MSS, Box WDi, AC; Smith, Lucius D. Clay, 206-7. M c C l o y t o Col. Chanler, October 12, 1944, M c C l o y MSS, Box W D 3 , A C ; U.S. Department of State, Memorandum for the President, October 27, 1944, RG 59
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there was "a hedge clause" in the denazification provisions and he did not think "there would be much difficulty in coming to an agreement as to what was practical." The assistant secretary was, however, genuinely offended by the British attitude, which struck him as absurdly complacent about Nazi crimes and the possibility of a military resurgence.135 McCloy's fight with the British increased Morgenthau's confidence in him. The War Department had prudently consulted the Treasury on the provisions of JCS 1067, and the secretary viewed it as a valuable document. He was therefore gratified by McCloy's unwillingness to water it down. Some of Morgenthau's subordinates were more skeptical. Staffer Ansel Luxford maintained that McCloy was the person who had leaked Quebec to the press.136 His boss thought otherwise: "If I have any success as Secretary of the Treasury, it is my judgement of human nature and I don't think McCloy would go out and deliberately cut my throat." To which Luxfurd retorted cynically, "if you say cut your throat." Morgenthau was also comforted by McCloy's difficulties with the State Department.137 By late fall, Ambassador Winant had only received clearance for a surrender instrument, an allocation of zones, and a structure for the Allied Control Council to be introduced into the EAC. As an alternative to the postwar planning papers, the White House suggested that JCS 1067 be presented to the Allies. This decision initially commended itself to Freeman Matthews of the Central European division, who viewed the directive as a welcome substitute for the Quebec communique. However, during the winter of 1944-45 a s a State-War Committee began preparing the directive for submission to the EAC, State's dissatisfaction billowed.138 Along with the British, its representative disliked the stringent-sounding economic and political clauses.139 It was one thing to write punitive generalities for the president, quite another to send them to the Allies. The department preferred the more detailed recommendations of the postwar
Office of European Affairs, Box 9, DSNA; Philip Mosely, Conversation between Sir William Strang and Mr. Mosely, October 21, 1944. Enclosure to letter from Freeman Matthews to Jack McCloy, November 23, 1944, RG 107 ASW 370.8 Germany, ASW. McCloy to General McCready, October 27, 1944, RG 107 ASW 370.8 Germany, MMNA. U.S. Senate, Morgenthau Diary, 1:626. McCloy, Meeting with Jimmy Dunn, Doc Matthews, General Strong, Rear Admiral Train, et al., McCloy Diary, October 10, 1944. Winant to Secretary of State, October 7, 1945, FRUS 1944 L348-351; Mosely to Harris, September 4, 1944, cited in Harris to Riddleberger, September 14, 1944, RG 59 740.00119, DSNA; Mosely to Riddleberger, September 5, 1944, FRUS 1944 1:331-32; Secretary of State to Winant, October 10, 1944, Ibid., 1:3 5 2-5 3. Meeting on Revision of JCS 1065 held at the State Department on November 25, 1944, RG 107 ASW 370.8 Germany, MMNA; Kimball, Swords or Plowshares} 46; Hammond, "Directives for the Occupation," 376.
135 136 137 138
139
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planning committees. Yet when they attempted to restore some of that earlier precision, they were stopped by McCloy, who warned of the incitement to the Treasury. 140 In taking his stand, McCloy was not only fending off Morgenthau; he was also accommodating the Joint Chiefs, who feared extensive occupational responsibilities. The vagueness of JCS 1067 enabled him to avoid arguments with his own subordinates, while keeping future options open. Of special importance was the wide authority granted the zone commander to interpret the instructions as he saw fit. A way of insulating the army from the Treasury, it was also a concession to the Joint Chiefs. By granting substantial autonomy to the American commander, McCloy was thwarting the State Department's desire for centralized administration. The planners had seen this as crucial for economic revival and for controlling Soviet behavior. Among these officials, it remained an article of faith that the best defenses against Russian troublemaking were airtight agreements and powerful inter-Allied machinery. From his post at the EAC Philip Mosely urged that "every effort be made to state U.S. policies on Germany and to work out agreed Allied policies." 141 To occupy the country without such understandings would be "folly." CFR editor Hamilton Fish Armstrong weighed in with the observation that while "It looks easier to negotiate generalities," the U.S. government would be safer saying what it meant: If we really want a productive discussion and eventual agreement with our Allies we should formulate our policy on individual problems in specific terms. That policy will be no more difficult in the long run. The contrary policy is useless and can be dangerous.142 Despite the State Department's trepidations, so long as the Joint Chiefs and the White House were bottling up their policy papers, its officials saw little choice but to work with JCS 1067. But many believed that McCloy was pursuing an imprudent course - that in his zeal to finesse the administration liberals, he was writing statements that would haunt inter-Allied relations for years to come.
III. YALTA AND ITS USES

By the beginning of 1945 relations with the Soviet Union were moving to the center of Washington's attention. In northwest Germany, Eisenhower's
140
141 141
Memorandum of Meeting in Office of Under-Secretary of State, November 29, 1944, RG 107 ASW 370.8 Germany, DSNA; Memorandum of Meeting on Revision of JCS 1067 held at the State Department on November 25, 1944, U.S. Senate, Morgenthau Diary, 1:797. Mosely, Do We Need an Allied Policy for Germany? Enclosure to letter to Secretary of State, January 22, 1945, RG 59 740.00119, DSNA. Armstrong to Secretary of State, January 26, 1945, RG 59 740.00119, DSNA.
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armies were still reeling from the Wehrmacht's counteroffensive, and the Western Allies had called upon the Red Army to offer relief. Marshal Stalin promised to accelerate his winter plans. 143 This Soviet operation got under way on January 9, and by the middle of the month troops were streaming across Poland en route to the German border. On January 29 Zhukov's forces crossed the 1938 Polish-German frontier into Brandenburg. Within the Roosevelt administration, the excitement over the Red Army's advance was accompanied by uncertainty over how the Allied forces would be distributed at the point of victory. But officials could finally imagine the end of the war and the demise of the Third Reich. As they watched the climactic battles along the Eastern Front, most American policy makers had little doubt that the continued friendship of the Allies, certainly within occupied Germany, was a mission worth pursuing. atmosphere, Henry Morgenthau argued with increasing fervor that his approach to the German settlement was the only one that would solidify relations with the Russians. He also accused some of his opponents of harboring a desire to create "a bulwark against Bolshevism" on the Continent:
IN THIS CHARGED
This thing needs to be dragged out in the open.... If we don't face it I am just as sure as I can be that we are going to let a lot of hollow and hypocritical propaganda lead us into recreating a strong Germany and making a foe of Russia. I shudder for the sake of our children to think of what will follow.144 The presumption of anti-Soviet purposes was partly based on Morgenthau's summer conversation with Philip Mosely, who had suggested that a seriously weakened Germany would open the door to Soviet dominance in Europe.145 But even Mosely's outlook was more complex than Morgenthau recognized. Despite the latter's anticommunism and anxiety about Soviet hegemony, this did not cause him to abandon U.S.-Soviet cooperation. 146 As
143
144
145 146
For discussion of the importance of this Soviet assistance to the Western powers consult Clemens, Yalta, 80-84. See also Messer, The End of an Alliance: James F. Byrnes, Roosevelt, Truman and the Origins of the Cold War, 41; Werth, Russia at War, 955. Henry Morgenthau Jr. to Secretary of State, January 11, 1945, RG 59 740.00119, DSNA. In a followup memo, Morgenthau challenged Leo Pasvolsky's outlook, noting that "his writings have not been sympathetic with the Soviet Union." Morgenthau to Secretary of State, January 19, 1945 in U.S. Senate, Morgenthau Diary, 1:897. Penrose, Economic Planning, 244-47; Mosely, "The Occupation of Germany," 595-96. Indeed during the very period of his talk with the Treasury secretary, he had written his superiors that "As far as the Russians express themselves, their views fit in very well with ours, and I think the more we can show our policy to them the better we will get along." Mosely to Riddleberger, September 5, 1994.
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of the winter, Mosely was insisting that if the United States negotiated in good faith it could get an acceptable deal with the Russians: Gousev has stated over and over again that Germany must be treated as a whole . . . and that all the major political and economic problems must be handled on an
agreed basis. 7 see no reason to doubt the genuineness of these assertions.1*7
He considered "the consequences of a break-down in handling Germany . . . so far reaching and disastrous" that every effort must be made to avoid it. If Mosely was curiously optimistic, one of the keys to his attitude was reparations. Like many State Department colleagues, he thought the Soviets would want large-scale reparations from current production and would make significant political concessions to get them. The prevailing expectation in the department was that the Soviets would reject the Morgenthau plan because it would kill the German goose before she laid her golden eggs.148 The planners attached particular significance to a meeting of Leo Pasvolsky and Soviet Ambassador Arkady Sobolev in which the latter expressed opposition to complete deindustrialization.149 Sobolov stated that the real determinant of peace would be the ability of the victors to stay together. If this occurred, it would not be necessary to destroy German productive facilities. He proposed instead "a reorganization" of German economic life consisting of "a drastic curtailment" of the metallurgical industry, controls on exports, and a ban on items such as synthetic oil essential to war production. Meanwhile Germany could be encouraged to increase its production of coal, chemicals, textiles, and other consumer items. Though not precisely congruent with State Department thinking, Sobolev's remarks fed the hope that free delivery of manufactured goods rather than capital equipment would satisfy his government. Stalin was evidently keeping his options open. In Moscow, the Free Germany Committee under the leadership of Walter Ulbricht (KPD) had published a new action program, which sounded more radical than its original manifesto.150 This called for the arrest and punishment of Nazis and war criminals along with the confiscation of their property. All war industries, public utilities, transportation facilities, mines, pharmaceutical
147 148
149 150
Mosely to Riddleberger, December 29, 1994, RG 59 740.00119, DSNA; see also Mosely, Do We Need an Allied Policy for Germany? January 22, 1945. "Sweeping deindustrialization would be regarded by Russia as incompatible with her interest in Germany as a source of supply of industrial goods." U.S. Dept of State, "Recommendations of the State Department on the Economic Treatment of Germany," November 10, 1944, FRUS, The Conference at Malta and Yalta: 165-71. Leo Pasvolsky, Memorandum of Conversation with AA Sobolev, RG 59, Office of European Affairs, Box 14A, DSNA. Mastny, Russia's Road, 234.
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manufacturers, energy production, and major banks were to be nationalized. There would be far-reaching land reform and a revived labor movement would exercise some managerial rights in industry. Germany's previous multiparty system would be transformed into a unified bloc of organizations, representing diverse political tendencies. American intelligence officers were uncertain whether the Free Germany program embodied Soviet views or those of the communist exiles, and many doubted that the group would survive the war. 151 Yet so long as Stalin was keeping Free Germany alive, he possessed an instrument for contesting political control, should the alliance with the Western powers prove ephemeral. During January 1945 the State Department's Office of European Affairs prepared a memorandum assessing the political prospects. 152 This suggested four major objectives that the Soviets would have in Germany: 1) maximum reparations for their own reconstruction, 2) the elimination of "the most reactionary classes" of German society, 3) an influence on Germany "as great as that exercised by the United States and Great Britain," and 4) the permanent destruction of Germany's capacity for aggression. To achieve them, they would urge sweeping change153 but would not try to Bolshevize the country unless relations with the Western powers deteriorated. In short, the Russians were developing two "contradictory policies," one based on cooperation with the West, the other "looking to the establishment of Germany as a bastion for the defense of the USSR." Their ultimate choice would depend on how they perceived Western intentions: The Soviet Union will be particularly watchful for any evidence that we or the British will tend to develop "reactionary" regimes in our zone of Germany which might eventually become a threat to the Soviet Union. It will continue to develop its dual policy until such time as it becomes clear that the broad line of our policies with respect to Germany are in harmony.154
151
Memoranda for the Assistant Secretary of War, November 18, 1944, December 15,
152
153
154
1944, February 16, 1945, February 26, 1945, RG 107 ASW 370.8, MMNA; Donovan to JCS, February 7, 1945, RG 59 740.00119, DSNA. Llewelyn Thompson to Matthews, January 23, 1945, RG 59 Office of European Affairs, Box 14A, DSNA. The ideas contained in this memo closely paralleled the main conclusions of the OSS Study, "Russian Economic Policies in Germany in the Period of Military Occupation," R & A 2337, October 28, 1944, RG 107 370.8 Germany, MMNA. According to the document, the Soviets would implement demilitarization, dismantle key industries, help institute international control over Germany's economic life, liquidate the top officer class, and make "efforts to bring to power... a class which would not automatically be opposed to the Soviet Union for ideological reasons." They might also support the socialization of large industries and the breakup of the landed estates. Ibid. Ibid.
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If the Soviet concerns about security and its own reconstruction were satisfied, there was a reasonable chance that they would refrain from revolutionary activity. Not everyone in the State Department was this sanguine. The most outspoken dissenter was George Kennan, formerly Winant's EAC advisor and now charge d'affaires in Moscow. The diplomat took broad exception to State's overall plan for Germany, including its intent to establish political democracy there. According to Kennan, "the only reasonable tradition of ordinary human government in Germany was actually that of a strong monarchical government limited by an efficient bureaucracy and a powerful upper class."155 If the Allies tried to liberalize the political structure, these efforts would founder on the internal realities of German life. The result would probably be "a dictatorship of the Left bearing many of the attributes of National Socialism." As of January 1945, Kennan was predicting that the Russians' behavior in the postwar period would be much worse than anyone imagined. Even if they did not aspire to communize all of Europe, they were wreckers by nature: "Russian security . . . means the absence of cohesion, of balance, of harmony in the rest of Europe."156 One clear risk was that in Germany the antidemocratic predilections of the populace could combine with the obstructionism of the Soviet Union to create a potential for revolution. His startling remedy was to immediately divide the country "along the line of the Russian zone of occupation" and to make plans with the British for a West European federation that could incorporate the west German territory. Kennan recognized this was not "a happy program," for it would amount "to a partition of Europe." However, he considered it the only way for the United States to salvage areas vital to its security. Kennan's approach was far outside the boundaries of official thinking within his own department. Indeed, so mindful was he of his own isolation that he intended to leave the Foreign Service at the end of the war.157 Yet underneath his overblown rhetoric, his essays to the department raised two shrewd questions that his superiors preferred to ignore: Even if Stalin was acting as a Russian nationalist, would he feel secure if Germany was restored as part of a democratic, capitalist Europe? And what would be the Russian role if indigenous people - especially Germans - rejected these democratic values?
155 156
157
Comments on the Treatment of Germany Paper. February, 1945, Kennan MSS, Box 28, PU. Kennan to Bohlen, January 26, 1945 in Kennan MSS Box 28, PU. See also Kennan, Memoirs, 1:18 5-90. For more detailed exposition of Kennan's wartime analysis of U.S.-Soviet relations, consult Stephanson, Kennan and the Art of Foreign Policy, 2-4-53Ibid.
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The diplomat's forebodings were surely unwelcome. By the end of January, Eisenhower's armies had beaten back the German assault in the Ardennes, and were resuming the offensive that would close the circle around the Wehrmacht.158 The president was preparing to depart for Yalta to nail down final agreements with Churchill and Stalin, while the State Department was eagerly completing the massive Briefing Books that would go with him. Unlike Teheran, which was concerned with military affairs, Yalta had an avowedly diplomatic purpose. This allowed the State Department to be formally represented and to begin translating postwar plans into policies. Relations with the president were warmer than they had been in years. The replacement of Secretary of State Hull by Hopkins' friend Edward Stettinius and the appointment of Russian specialist Chip Bohlen as liaison to the White House had opened up new lines of communication.159 On the subject of Germany, however, the State Department papers repeated old themes. Though couched in negative language, they envisioned the political and economic restoration of a united Germany.160 There would be numerous safeguards: the country would be disarmed and denazified, civil liberties restored, and democratic government rebuilt from the local level up. German "self-sufficiency" would be eliminated through the removal of subsidies to high-cost domestic producers and the abolition of discriminatory trade controls. And in a nod towards Morgenthau, "consideration should be given to selective prohibitions during the control period upon the manufacture of a few key industrial items . . . and general prohibitions and restrictions on certain categories of German exports." But the central concept was that the Allies would take responsibility for reviving the economic life of the occupied country.161 This commitment framed the State Department's approach to reparations, which "should be supported only to the extent that it does not conflict with more important objectves."162 Hence the necessity of taking deliveries from current production and ensuring that they would not prevent the Germans from attaining "a minimum prescribed standard of living." Since there would only be a five-year span in which such deliveries could be made, the emphasis on current production would give the Russians a stake in the rapid reconstruction of German factories.
158 159 160
161
l6i
Eisenhower, Crusade in Europe, 395-97. Gaddis, Origins of Cold War, 126; Bohlen, Witness to History, 165. U.S. Department of State, The Treatment of Germany, January 12, 1945, FRUS Yalta: 180-89; U.S. Department of State, Economic Policies Toward Germany, FRUS Yalta: 191-92. In the Yalta Briefing Book this was deftly phrased as, "We should go along with the British and Russians in accepting large responsibility for the guidance and reorientation of German economic life." Ibid. U.S. Department of State, Briefing Book Paper on Reparations, January 16, 1945, FRUS Yalta: 193-95.
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In a striking departure from JCS 1067, the department insisted on the absolute primacy of the Allied Control Council. Directives to the commanding generals "should so define their duties that the Control Council's authority would be paramount throughout Germany, and that the zone of occupation would become, insofar as feasible, areas for the enforcement of the Council's decisions rather than regions in which the commander would possess a wide latitude of autonomous power" (italics added).163 To their previous arguments for centralized authority, they added the point that a powerful ACC could supervise a German administration, obviating any immediate necessity for a national German government. The delay would preserve the reputation of anti-nazi groups, who would be spared the responsibility for decisions under the occupation, while preventing the "undesirable importation into Germany of a substantially readymade provisional government, perhaps recognized and functioning under special foreign auspices." Significantly, State was hoping that a strengthened Control Council would constrain the activities of Free Germany. This subtlety was lost on the president, who failed to read the Briefing Books.164 Roosevelt was already aware of the planners' old ideas and was too fatigued to assimilate the new ones. Moreover, he had his own views about the German settlement, which he was confident would mesh with Stalin's. FDR had cbme to the Crimea to consolidate the Grand Alliance, and the resuscitation of the still undefeated enemy was not one of his priorities. At the first session on February 4, Roosevelt signaled his attitude, telling Stalin that he was "very much struck by the extent of the German destruction of the Crimea and therefore he was more bloodthirsty . . . than he had been a year ago."165 Perhaps the Soviet leader "would again propose a toast to the execution of 50,000 officers of the German army." In a similar spirit, Stalin responded that "because of the honest blood shed in fighting the Germans, everyone was more bloodthirsty than they had been a year ago." The devastation that the president was observing in this region was mild compared to what the Germans had done to the Ukraine. These people "were savages and seemed to hate with a sadistic hatred the creative work of human beings." When the conferees got down to business, they had before them several agreed on papers by the European Advisory Commission: an Instrument of Surrender, an Amended Protocol on Zones of Occupation, and an Agreement on Control Machinery in Germany. The product of months of technical discussion, the most controversial item, curiously enough, had been the Protocol on Zones, which had put the Americans and British at
163 164 165
U.S. Department of State, "The Treatment of Germany," January 12, 1945. Byrnes, Speaking Frankly, 23. Bohlen Minutes, Stalin-Roosevelt Meeting, February 4, 1945, FRUS Yalta: 570-
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loggerheads.166 Churchill asserted a strong claim to the northwestern area, which encompassed the rich industrial resources of the Ruhr. But he had been challenged by Roosevelt, who had refused to take the southwest on the ground that this would embroil the United States in the political affairs of France.167 After a prolonged stalemate, FDR had finally yielded to the importuning of both State and War, 168 for whom the issue of zonal distribution was of secondary interest. More crucial, in their estimation, was the willingness of the Soviet Union to allocate two-thirds of Germany to the Western powers and to accept a joint administration of Berlin, during a time in the war when it seemed that the Red Army might conquer more of the country. As finally specified in the protocol, the three powers received roughly equal zones: the United Kingdom in the northwest, the United States in the southwest, and the Soviet Union in the east, while the city of Berlin (lying inside the Russian zone) was carved into three sectors, to be occupied by each of the Allies.169 The Surrender Instrument stripped Germany of its sovereignty and vested "supreme political authority" in Allied hands. As prescribed in the Agreement on Control Machinery, that responsibility would be exercised by the three commanders in chief, "each in his own zone of occupation, and also jointly in matters affecting Germany as a whole, in their capacity as members of the supreme organ of c o n t r o l . . . " This Allied Control Council was expected "to ensure appropriate uniformity" between the zones, "reach agreed decisions on the chief military, political, economic and other questions affecting Germany as a whole," control the central German administration, and supervise the governance of Berlin. These provisions, first proposed by the British, left deliberately ambiguous the allotment of authority between the individual zone commanders and the ACC. I7
166 167 168
169
170
Sharp, The Wartime Alliance and the Zonal Division of Germany; Nelson, Berlin Dilemma, 37-74. Dallek, Franklin Roosevelt, 475-76. Logistic Implications of the Northern 6c Southern Zones of Occupation in Germany, Attachment to Memorandum for McCloy, August 19, 1945, RG 107 ASW 370.8, MMNA; McCloy, Brief for Conference with the President, August 25, 1945, RG 107, ASW 370.8, MMNA; Stimson Diary July 3, 1944 & August 25, 1944. See as well Mosely, "The Occupation of Germany," 593-99. Protocol on Zones of Occupation in Germany and Administration of the Greater Berlin Area, approved by the European Advisory Commission, September 12,1944, and Agreement Amending the Protocol on Zones of Occupation, Approved by the European Advisory Commission, November 14, 1944 in U.S. Senate, Committee on Foreign Relations, Documents on Germany, 1-5. Ibid., 5-8. As noted by Nelson, approval in the EAC was partly the consequence of their deliberate ambiguity on crucial points. Without a definition of "appropriate uniformity" or "the chief military, political, economic, and other questions affecting Germany as a whole," the allotment of authority as between the individual zone commanders and the Allied Control Council was undetermined. Nelson, Berlin Dilemma, 38-39.
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Though the text of the three EAC agreements was important, the heads of state were preoccupied with other matters. Reverting to the conversations at Teheran, Stalin wondered whether Roosevelt and Churchill still agreed to the principle of dismemberment.171 Although he had "associated himself with the views of the President" the decision there had "only been an exchange of views." The Germans might sue for peace at any time, and he thought there should be a firmer understanding. Churchill continued to temporize, observing that he "personally felt the isolation of Prussia and the elimination of her might from Germany would remove the arch evil." The prime minister did not see, in any case, how they could divide up Germany in four or five days and recommended another deferral. Stalin agreed that the precise form of partition could not be settled. With Roosevelt's concurrence, however, he wished to add a clause to the surrender terms, stipulating that Germany "would be dismembered."172 When Churchill proved immovable, the two accepted a preamble for the surrender document, which stated more equivocally that the Allies "will take such steps, including the complete disarmament, demilitarization and the dismemberment of Germany, as they deem requisite for future peace and security." While this retained the option of dividing the country, it stopped well short of a definite commitment.173 The most critical encounters concerned reparations. At Yalta, the Soviets first unveiled their plan, which called for three types of reparation: capital goods, current production, and forced labor.174 As outlined by Ambassador Maisky, the program gave particular emphasis to capital removals, which he linked to industrial disarmament. In order "to restore the Soviet economy... and safeguard the security of Europe" it was necessary to reduce German heavy industry by approximately eighty percent, including steel, machine tools, electrical equipment, and chemicals. Other industries that were more directly useful for military purposes such as aviation and synthetic oil would be completely removed. In determining allocations, the Russians proposed two criteria: the extent to which a country had contributed to the German defeat and the extent of each country's losses. This would entitle the Soviet Union to claim fifty percent of all deliveries from a total, which Maisky estimated at 20 billion dollars.175
171 172 173 174 175
U.S. Department of State, Minutes of the Second Plenary, February 5, 1945 FRUS Yalta: 611-14. Minutes of the Second Plenary Meeting, February 5, 1945, Ibid.: 611-13; Eden, Memoirs, II: 604. Department of State, Minutes of the Third Plenary, February 6, 1945, Ibid.: 656. U.S. Department of State, Minutes of the Second Plenary Meeting, February 5, 1945, Ibid.: 620-22. Ibid.
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Churchill responded furiously, arguing that the Soviet scheme would lead Germany to starvation.176 Insisting that the Soviet Union would get "nowhere near the sum" they were suggesting, he opined that "if you wish a horse to pull a wagon you would at least have to give it fodder." The president was cautious, agreeing that while the Soviets should get "maximum reparations," the Germans must be allowed to eat. Echoing Morgenthau, Maisky countered that Germany would retain its light industry and agriculture, and would be freed from the burden of military expenditures. Under those conditions, "there was no reason why Germany could not give a modest but decent standard of living to her people." This quarrel remained unsettled until the final plenary. In the interim, Churchill had consulted his cabinet and returned with the judgment that the Soviet approach was economically ruinous. Visibly angered, Stalin remarked that "if the British felt that the Russians should receive no reparations at all, it would be better to say so frankly."177 He conceded that the experts might be right, but his government was seeking a figure for discussion. If the figures subsequently proved unrealistic, the Reparations Commission could adjust them. The impasse blackened the mood at dinner. Stalin indicated his dissatisfaction to the prime minister, saying that he "feared to have to go back to the Soviet Union and tell the Soviet people that they were not going to have any reparations because the British were opposed to it."178 At this tense juncture, Harry Hopkins scrawled a note to the president: "The Russians have given so much at this conference that I don't think we should let them down."179 By embracing the specific figure, FDR would be directly contravening the views of both State and War. However, his own sympathies were with the Soviets. Indeed, Maisky's explicit linkage of capital goods reparations with industrial disarmament increased Roosevelt's enthusiasm for the program. As originally framed by the American planners, reparations would come from current production and be a mechanism for industrial recovery. That formulation had generated White House resistance to the entire concept.180
176 177 178 179
Minutes of the Second Plenary, February 5, 1945, FRUS Yalta: 621-22. U.S. Department of State, Minutes of Eighth Plenary, February 10, 1945, Ibid.:
900.
U.S. Department of State, Tripartite Dinner Meeting, February 10, 1945, Ibid.:
921-25.
180
Hopkins to FDR, February 10, 1945, Ibid.: 920. This was not a spur-of-themoment idea. Hopkins came into the conference wanting to conciliate the Soviets on reparations. Hopkins, Notes for Conference with the President, Book 10 Yalta Conference 4, Hopkins MSS, FDR. See, for example, President Roosevelt to Secretary of State, November 29, 1944, FRUS 1944 1:414.
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Though Roosevelt swung behind Stalin, Churchill would not accede. According to the final protocol, an Allied Reparations Commission "should take in its initial studies, as a basis for discussion, the suggestion of the Soviet government that the total sum of reparations should be twenty billion dollars and that fifty percent of it should go to the Union of Soviet Socialist Republics." 181 It further recorded that "the British delegate was of the opinion that pending consideration of the reparations question by the Moscow Reparations Commission, figures on reparations should not be mentioned." Despite their stubbornness, the British received a key concession during the conference. Fearing that the Americans would rapidly disengage from continental affairs, its Foreign Office wished to bolster the position of France by giving it a fourth zone of occupation and a seat on the Allied Control Council. Both Roosevelt and Stalin disliked the idea, but chose to conciliate Churchill. The deal was facilitated by the American willingness to have the French zone carved from its own and the British areas. 182 The patchwork of German agreements formed part of a wider negotiation on a host of postwar issues, notably, the future of China, the voting procedures for the United Nations, and the arrangements for Poland. The overall thrust of these deliberations was to find ways of reconciling differences, which could maintain a unified world order and prevent the emergence of blocs.183 Though obscure in many particulars, the German decisions advanced that larger purpose by laying the foundation for a unified occupation. Moreover, the very severity of the reparation clauses reduced the possibility that the Soviets would promote revolution in Central Europe. By demanding tough restrictions on German industry, Stalin was undercutting the potential appeal of the German Communists. The Americans departed Yalta in an exultant spirit. As recalled by Harry Hopkins, We really believed in our hearts that this was the dawn of a new day, we had all been praying for and talking about for so many years. We were absolutely certain that we had won the first great victory of the peace and by 'we' I mean all of us, the whole human race.184 The conference had demonstrated that "the Russians could be reasonable" and there was not "any doubt in the mind of the President or any of us that we could live with them and get along with t h e m . . . as far into the future as any of us could imagine."
181 181 183 184
Protocol of the Proceedings of the Crimea Conference, February 11, 1945, FRUS Yalta: 979. U.S. Department of State, Minutes of Second Plenary, February 5, 1945, Ibid.: 611-17; Sherwood, Roosevelt and Hopkins, 862. For the most important elaboration of this perspective see Clemens, Yalta. Sherwood, Roosevelt and Hopkins, 870.
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Whatever the emotions in the presidential party, there was less enthusiasm in the State Department for the German clauses. Already chafing under the limitations of JCS 1067, t n e Central European Division undertook a bold, bureaucratic maneuver designed to salvage their postwar plans. Charged by the president with the task of translating the Yalta accord into practical programs, they wrote a new directive that substantially deviated from the Allied decisions.185 This March 10 paper, signed by Secretary Stettinius, contained elaborate provision for Allied economic control.186 Among the purposes of the occupation was to "provide a minimum standard of living for the German people, including such foods, shelter, and medical supplies as are required to prevent disorder and disease on a scale that will make the task of occupation and the collection of reparations substantially more difficult." The State Department had transformed Roosevelt's point to Stalin that he would not want to reduce the German economy below a certain minimum into an Allied commitment to provide that minimum. The wide-ranging economic tasks would be carried out by the Allied Control Council whose authority "would be paramount throughout Germany." The individual zones would be "areas for the enforcement of the council's decision rather than regions in which the zone commanders possess a wide latitude of authority." This language was taken directly from the neglected Briefing Books.187 Not accidentally, it gave the Allied Control Council more authority than had been approved at Yalta. Had the president and Hopkins been normally alert, State's effort would have quickly aborted. However, by early March Hopkins was back in the hospital, while the president's physical and mental capacities were palpably deteriorating.188 When assured by Stettinius that the directive conformed to both letter and spirit of the Allied accord, Roosevelt affixed his signature without examining the text. Now it was McCloy's turn to be wrathful, as he realized how adroitly the State Department had overturned JCS 1067. In a memo to Stimson, he challenged its emphasis on centralization.189 By giving the Control Council direct authority over the commanders, State was violating "all the instincts and training of the army generally as well as the pattern of its planning
185
187 188
189
Hammond, Directives for the Occupation, 414-18; Dorn, "Debate Over Occupation Policy," 495-96; Kuklick, Division of Germany, 86-88, 186. U.S. Department of State, Memorandum for the President, March 10, 1945, FRUS 1945 111:434-38. The implications of this paper were explored in an intradepartmental meeting on March 15. Informal record of a meeting in the office of the Secretary of State, March 15, 1945, Ibid.: 452-57; Amin Cutter, Memorandum of Conference at the State Department, March 15, 1945, McCloy MSS, Box WD3, AC. U.S. Department of State, The Treatment of Germany, January 12, 1945. Mcjimsey, Harry Hopkins, 373; Burns, Roosevelt: The Soldier of Freedom, 58484> 594-95McCloy to Stimson, March 15, 1945, RG 107 ASW 370.8, MMNA.
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f o r . . . Germany." It was not reasonable to limit the commanders "to scrutiny and supervision in their zone without giving them the authority to administer." The response in the Treasury was equally sharp. Though unfamiliar with the events at Yalta, staffers saw the directive as a stunning repudiation of previous presidential policy.190 If followed, the German economy would most certainly be rebuilt with tragic consequences for world peace. Morgenthau pursued the matter with Secretary Stettinius, whom he had earlier perceived as an ally.191 How had Stettinius agreed to such a nefarious document? The secretary explained that he had been so tired from his trip to the Crimea that he paid little attention when a subordinate handed him the paper. Morgenthau emphasized that it constituted "a different philosophy . . . a complete change." While the Treasury was pondering its next move, McCloy turned to Morgenthau. 191 The two commiserated over the appalling way that policy was being formulated. According to McCloy, the president was not really committed to the March 10 directive. Morgenthau explained that this was also true of Stettinius: HM: . . . as I say they just handed this thing to Stettinius and Stettinius said he was tired. JM: Yes. HM: He implied he hadn't read it. JM: Yeah. HM: He gave it to the President and evidently the President didn't read it. JM: Yeah! HM: And the whole future of Germany is at stake. JM: Precisely, isn't it the mostHM: It's damnable, an outrage. JM: Absolutely, it really is.193 McCloy thought the situation was very "delicate" and that the State Department would have to be carefully handled. However, since "they had gone off on a frolic of their own," he claimed "a right to sulk on it." In truth, the two departments were objecting to different things. For War, the critical issue was excessive centralization, whereas for the Treasury it was German reconstruction. However, McCloy preferred to minimize the disparity between himself and Morgenthau, attributing whatever gap had previously existed to Stimson.194
190
191 I9i 193 194
Secretary Morgenthau to the Secretary of State, March 20, 1945, FRUS 1945 Hk 460-64; Secretary Morgenthau to President Roosevelt, March 20, 1945, Ibid., 111:464-65. U.S. Senate, Morgenthau Diary, 11:970; McCloy Diary, March 17, 1945. McCloy Diary, March 15, 1945; U.S. Senate, Morgenthau Diary, 11:976. U.S. Senate, Morgenthau Diary, 11:990. To describe his boss's attitude, McCloy proffered a direct quotation: "I disagreed with Mr. Morgenthau on his Quebec business and with you on that, and I don't
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The confidential relationship between McCloy and Morgenthau continued as the Treasury secretary prepared to see Roosevelt. Just prior to the meeting, McCloy phoned with advice and encouragement. 195 The more he had thought about the directive, "the more outrageous it becomes in my mind." Morgenthau replied that State's actions were "vicious." Both men agreed that the obvious solution was to return to JCS 1067, which could be revised in light of Yalta. On March 20 Morgenthau met with the president, and was disappointed to find that he had only a few private minutes before being joined for lunch by daughter Anna and her husband Colonel John Boettiger.196 Roosevelt's son-in-law, who was assigned to the Civil Affairs Division of the War Department, lobbied vigorously against deindustrialization. The secretary was finally successful in convincing the president to rescind the March 10 memorandum. However, he was dismayed by FDR's confused state and apparent susceptibility to Boettiger's arguments. Meanwhile, there was movement inside the State Department, where William Clayton, the new Assistant Secretary for Economic Affairs, was seeking a compromise. 197 During the 1930s, this millionaire cotton merchant had been a vigorous opponent of Roosevelt's agricultural policies, and had only become reconciled to the administration by Cordell Hull's Reciprocal Trade Agreements program. 198 In 1940 he had gone to work for the RFC, and subsequently assumed increasingly influential positions in a variety of executive departments. A novice at State, he could not understand the flap over centralization. He readily perceived the importance of economic restoration, but the primacy of the Allied Control Council seemed less urgent. With Stettinius' backing, Clayton pressed for an accommodation on the powers of the zone commander. These developments culminated in a State-War session with the president on March 22. Although Morgenthau would have liked to be present, FDR had excluded him.199 Before joining the group, McCloy called the Treasury chief to express his disappointment. Even the subordinate John Boettiger had been invited. This was, opined McCloy, "a peculiar way to run a grocery store." Morgenthau hoped the assistant secretary would not let himself be muzzled by Stimson: "Goddamit, you are interested in the future of your children. Go ahead and talk up over there." agree with this but that isn't my business.... I've come to the conclusion that my business is to put something which is administratively possible and effective from
195 196 197 198 199
the military point of view, and I don't think this is it." U.S. Senate, Morgenthau Diary, IL991. U.S. Senate, Morgenthau Diary, 11:1028-29. U.S. Senate, Morgenthau Diary, 11:1045-52. Memorandum of Telephone Conversation, Stettinius/Clayton, March 22, 1945, RG 59 740.00118, DSNA. Dobney, Selected Papers of Will Clayton, 1-8. U.S. Senate, Morgenthau Diary, 11:1065-67.
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As recounted by McCloy, Roosevelt had begun the meeting by complaining that he had "been sold a bill of goods." 200 He disliked many features of the directive, most notably its overemphasis on centralization. The president had demanded that it be rewritten and was reconstituting the Intradepartmental Committee, under the chairmanship of Will Clayton. McCloy stressed that Clayton was "a sensible man" who bore no responsibility for the excesses of March 10. He recommended that Morgenthau meet with him soon, since it was time for State and Treasury to get together. In an apparent afterthought, McCloy mentioned that Roosevelt had rejected deindustrialization. He had told the White House group that, I don't want you to eliminate German industry - not at a l l . . . I want you to change the character of it, but I don't want you to eliminate it. I'm not for throwing salt into the mines and doing all those things. I don't want to destroy industry. I want to have German industry maintained to the fullest extent necessary to maintain the Germans so that we don't have the burden of taking care of them.201 Startled, Morgenthau inquired, "That's the president?" McCloy assured him that it was. The secretary thought this "a little bit different than he ever talked before." Despite this addendum, Morgenthau felt he had won a victory. Following McCloy, he regarded it as meaningful that Roosevelt was rejecting central controls and was willing to let the Germans "run the thing." 202 This was the measure of how much ground the Treasury had lost since Quebec. Then the locus of internal debate was whether the Allies should remove German industry; now the salient question was whether they should actively revive it. Yet Morgenthau would not recognize the slippage, nor could he see the ambiguities of McCloy's role. Touched by his colleague's friendship he commented, "When I am treated squarely, it is so unusual that I have to say thank you." 203 When the Clayton committee convened the next day, the War Department's redraft of March 10 became the basis for discussion. 204 This paper restored the approach that had been embodied in JCS 1067. It reaffirmed the autonomy of the zone commander on all matters where the Allied Control Council had made no superseding decision. It mandated the decentralization of political life and limited economic controls to those required
200
201 202 203 204
McCloy Diary Entry, March 22, 1945; U.S. Senate, Morgenthau Diary, II: 107077Ibid., IIH075-76. Ibid., 11:1076-77. Ibid., 11:1076. War Department, Summary of U.S. Initial Post-Defeat Policy Relating to Germany, RG 59 740.00119, DSNA; Eric Biddle to Harold Smith, March 24, 1945, Ibid., DSNA; McCloy to Stimson, March 26, 1944, RG 107 ASW 370.8, Germany, DSNA.
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for disarmament, reparations, support of the occupation forces, and the prevention of "disease and unrest." Morgenthau urged his colleagues to impose restrictions on German heavy industry, but was stymied by Clayton and McCloy, who claimed this was not consistent with the president's expressed wishes/05 Although the Yalta agreement with its emphasis on reparations from capital equipment bore directly on the subject, this was sidestepped by the War Department paper. Instead, it warned that current production reparations should not be used "to foster the rehabilitation of German industry or to increase the dependence of other countries upon the German economy." Despite the obvious setbacks, Morgenthau perceived the return to JCS 1067 as an "enormous improvement" over the State Department's shenanigans.206 In reporting to his staff, he expressed the hope that FDR would finally rid himself of "the State Department crowd." These were a "vicious element, who supported cartels, appeasement, the building up of Europe, and the conduct of business with Nazis." They were all loyal to Herbert Hoover, who had "got us into this mess" and were "fascists at heart." Stimson and McCloy were also gratified by the progress in the Clayton committee.207 An important source of their confidence was the relative autonomy of the zone commander. Since Roosevelt had agreed to leave the administration of Germany in the military's hands, the War Department could use this authority to preserve the foundations of Germany's industrial economy. It was also a safe assumption that the British Military Government would do the same in the Ruhr. On the American side, General Eisenhower would remain nominally in charge of the occupation. But since he had a host of other obligations, the key personnel choice would be his deputy for Military Government. On March 23 Stimson obtained Roosevelt's approval to appoint General Lucius DuBignon Clay to the position.208 A career army officer with training as an engineer, Clay was oriented to problems of production and supply. At the time of his recruitment, he was serving as the assistant to James Byrnes in the Office of War Production and Mobilization. So invaluable was he as the procurer of supplies, that Stimson initially feared Byrnes would not release him. The previous fall, Clay had received wide acclaim for his help to Eisenhower in breaking a severe bottleneck in Cherbourg.
205 206 207
208
U.S. Senate, Morgenthau Diary, 11:1115-20. Ibid., 11:1083-84. Stimson Diary, March 29, 1945. Members of the State Department were also pleased. According to Jimmy Dunn, the new memo differed from the old "only in language but not in spirit." Memorandum of telephone conversation, Stettinius/ Dunn, March 23, 1945, RG 59 740.00119 Germany, DSNA. Two fine biographies of Clay are Smith, Lucius D. Clay and Backer, Winds of History.
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During a three-week stay, he had quintupled the flow of goods through the port, allowing SHAEF to resume its forward movement. By tapping Clay, the War Department was gaining a gifted, driving, problem-solving technocrat who would obviously be drawn to the work of reconstruction/09 As his financial advisor, Clay was granted the services of Lewis Douglas, a McCloy brother-in-law and executive for Mutual Life Insurance/ 10 Formerly Roosevelt's director of the budget, Douglas had resigned after bitter clashes with New Dealers over fiscal policy. A leader of Democrats-forWilkie, Douglas had reentered the adminisration after Pearl Harbor to work on Lend-Lease. By the spring of 1945, Douglas was back in private life and was reluctant to absent himself from Mutual Life. But recognizing the gravity of the mission and the need to salvage Germany's industrial base, he agreed to a two-month stint. The other key appointment was that of General William P. Draper to replace Graeme Howard as chief of the Economics Division for Military Government. In civilian life, Draper had been the vice president of Dillon, Read & Company, a U.S. investment firm that had been extensively involved with the marketing of German securities during the 1920s/ 11 Among its projects, Dillon, Read had invested heavily in Vereinigte Stahlewerke, the giant German steel trust. Draper came highly recommended by James Forrestal, the Secretary of the Navy and himself the former chairman of Dillon, Read. With many subordinate posts to fill, the general continued Howard's practice of recruiting U.S. businessmen, who had prior experience in Germany/12 From the beginning, these new Military Government officials were at odds with the spirit of JCS 1067. Upon his arrival in Germany, Clay had immediately made it clear that he would interpret this directive in a lenient fashion/13 As reported by political advisor Robert Murphy, both Clay and Douglas were convinced that "the destruction of German industry, resulting from military operations, and the chaotic conditions . . . are so staggering
z 9
McCloy Diary, March 24, 1945. The most extensive account of Clay's selection is contained in Smith, Lucius D. Clay, 202-20; See also Backer, Winds of History, 7-10; Byrnes, Speaking Frankly, 46-47. ZI Though the offer was proffered by James Byrnes, McCloy seems to have encouraged his brother-in-law to take the position. McCloy Diary, March 30, 1945. For discussion of Douglas' recruitment see Browder and Smith, Independent: A Biography of Lewis W. Douglas, 103-4, 226-29. ZI1 Chris Simpson, "Notes on International Corporate Elites and the Reconstruction of German Capitalism, 1945-48" (unpublished manuscript); McNeil, American Money and the Weimar Republic, JZ-J$. 111 William Draper, Memoranda for the Assistant Secretary of War, Re: Personnel for the Economic Division of the Control Council, March 2, 1945 &C March 11, 1945, RG 107 ASW 370.9, MMNA. 113 Clay for Hilldring, April 26, 1945 & May 7 1945 in Smith, Papers of Lucius D. Clay, L7-8, 10-14; Clay, Decision in Germany, 18-19.
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that the obligation resting on the Allied organization to prevent disease and unrest and disorder becomes the keynote of the operation."214 While Military Government was opening a wide hole in the army directive, in Washington top officials were continuing to write it. Having completed the implementing instructions for Yalta, the Clayton committee had decided to finish JCS 1067 and issue it to Eisenhower. However, when the group turned to this task at the end of April, one stimulus had disappeared. On April 11 Franklin Roosevelt had died of a cerebral hemorrhage on a visit to Warm Springs, Arkansas. With the president's death, the Morgenthau group lost their principal ally, for whatever his vacillations, FDR had always desired a tough peace for Germany. Though the Clayton committee proceeded with its work on the directive,215 the erosion of the Treasury's position was apparent. With Assistant Secretary of State Clayton serving as point man, it sustained a series of defeats on the outstanding disputed clauses pertaining to land reform, the army's responsibility for fighting inflation, and the extent of denazification. With regard to the latter, the War Department wanted to nail down the commander's right to delay the arrest of people whose services he needed. Clayton concurred, insisting "if you take in industry, commerce and finance, that if you will go in on the basis of arresting and incarcerating every Nazi or Nazi sympathizer, holding an important position... before you had somebody to put in his place, I think the wheels will stop."216 Despite counterarguments that "if you try to spell this thing out, temporize with i t . . . you will have these boys stay on there forever . . . " the Clayton view prevailed. The last-minute changes did not alter the fundamental thrust of JCS 1067, a s first submitted by McCloy. Morgenthau still considered the directive to be an important victory. As the Clayton committee finished its work, he was fulsome in his praise: "These documents are so far better than I had any hope for and I would almost say so completely satisfactory to me that I am not going to argue."217 By being a loyal team player, Morgenthau earned the right to participate in one final piece of business: the completion of the instructions for the U.S. representative to the Moscow Reparations Commission. This offered the opportunity for a major breakthrough. During April, a subcommittee of the Clayton group had been drafting the instructions with Isidor Lubin,
214 ZI5 Zl6 iI7
Murphy to Matthews, April 22, 1945, RG 59 740.00119, DSNA; Murphy, Diplomat Among Warriors, 279-81. McCloy to Truman, April 26, 1945, RG 107 ASW 370.8, MMNA. SWNCC, Minutes of IPCOG, April 24, 1945, RG 59 SWNCC (Lot), Box 115, DSNA. SWNCC, Proceedings of IPCOG, April 26, 1945, Ibid., DSNA; See IPCOG, Directive to the Commander in Chief, Revised, May 6, 1945, RG 59 740.00119, DSNA.
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a young Labor Department economist whom Roosevelt had picked to go to Moscow. An unabashed New Dealer and a proponent of the Morgenthau school, Lubin was fighting for the reduction of heavy industry through a program of capital removals. Although he carried little personal authority, he was immeasurably assisted by the reparations clauses of Yalta, which had become known to the group.218 Reflecting this, the final text specified: "To the maximum extent possible, reparations should be taken from the national wealth of Germany existing at the time of the collapse, with primary emphasis upon the removal of industrial machinery, equipment, and plants.219 Although it offered no actual figure, the amount should be "substantial" and lead to the elimination of that German industrial capacity "considered to be dangerous to the security of the United States." The reparations document came closer than JCS 1067 to making Morgenthau's views the official policy of the United States. Yet there were significant ambiguities. The 20 billion dollar figure that Roosevelt had promised Stalin would be "the basis of discussion" was omitted, leaving room for widely divergent interpretations of the term "substantial." Lubin's instructions also contained the admonition that the removals "should be held within such limits as to leave the German people with sufficient means to provide a minimum standard of living without substantial outside relief."220 Intrinsically unexceptional, the condition could easily be used to inhibit large-scale deliveries. As with JCS 1067, much would depend on who was implementing American policy or, in this instance, doing the negotiating. During early May as the Clayton committee wrapped up its mission, President Truman offered an interesting intimation when he requested a conservative California oilman Edwin Pauley to replace the liberal Isidor Lubin as the chief of the U.S. delegation.221 BY THE END of the European war, all of the administration's policy statements - the March 23 directive, JCS 1067, and the reparations instructions - bore the imprint of Jack McCloy as he staved off the assault
In September Lubin had made his Morgenthau sympathies known when he complained about State Department planning documents to Harry Hopkins. Lubin to Hopkins, September 14, 1944, Hopkins MSS, Box 333, Folder 1, FDR; see also J. E. DuBois, Memorandum on Conversation with Lubin in the U.S. Senate, Morgenthau Diary, 11:1095-96. While "political reasons" might necessitate some reparations from current production, these should not become a reason for maintaining Germany's industrial war potential. IPCOG, Instructions for the United States Representative on the Reparations Commission, May 18, 1945, FRUS 1945 111:1222-27. Ibid. Truman, 1945: Year of Decisions, 125; Kuklick Division of Germany, 126-28.
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from the Treasury. The result was a set of documents with draconian prohibitions and clever escape hatches. In overseeing this draftsmanship, the assistant secretary was operating from a mixture of motives. Like Morgenthau, McCloy feared Germany and was horrified by its crimes. 2 " He genuinely wanted the country to be punished, disarmed, and reformed. But along with Stimson and the planners in the State Department, McCloy also wanted to preserve Germany's industrial strength and in that crucial respect, he had perpetrated a large deception. As finally issued, none of the U.S. policy papers signaled that intent. The original inspiration for this subterfuge was an unsympathetic president and an unpromising domestic climate. But the president had died, his liberal allies were in disarray, and now that Hitler was defeated, the relevant audience was going to become the Russians, whose armies were waiting in Berlin.
222
McCloy's concern about the possibility of Germany's military revival emerges clearly from his diary entries during his European trip in April 1945. While eager to preserve the German economy, he was interested in finding alternative means of curbing its militarism. McCloy Diary, April 10 & 16, 1945.
Making Peace
If the four of us cannot get together now in running Germany, how are we going to get together in an international organization to secure the peace of the world? We are going to have to give and take and to do a lot of things which the American public will not believe in, but we can't go there with four nations without being prepared to give and take. (Lucius D. Clay, May 16, 1945 )J After long discussions and a consideration of the consequences, we came to the conclusion that this meant we had to let the Russians look to their zone for reparations and we look to ours for reparations for other countries - it also means the establishment of some form of three-party economic rule in Germany. (John J. McCloy, July 23, 1945)2
the Allied armies across the wreckage of the Third Reich was accompanied by a surge of governmental idealism. In Washington, officials went about their daily business but the perception of grand events - of immense evil vanquished, of extraordinary opportunities being born - infected even the most prosaic. At this emotional juncture, much of the hopefulness and yearning for world peace was focused on the U.S.-Soviet relationship. Despite new tensions over Poland, the aspiration for friendship was overriding. Russian assistance was still needed to finish the war in the Pacific, but the more profound concern was to prevent future great power rivalry. Twice in the twentieth century, this had led to calamitous conflagrations. Whatever the shortcomings of the Soviet regime - its totalitarian polity, its collectivist economy - it was emerging as the second strongest nation in the world, creating an imperative for accord. Among the Americans responsible for Germany policy, this outlook was
T H E CONVERGENCE OF
1 z
Clay Press Conference, May 16, 1945. Cited in Backer, Winds of History, 16. McCloy Diaries, July 23 & July 24, 1945. Papers, Series 2: In John J. McCloy Diaries (Box DYi, Folder 18), Amherst College Archives (AC). 71
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especially pronounced. Since the Red Army would be occupying a large portion of German territory, the urgency of cooperation was self-evident. More subjectively, for some U.S. military people the colossal Soviet contribution to the war effort inspired feelings of comradeship and trust. Yet with the death of President Roosevelt, the American government became increasingly committed to the rehabilitation of the German economy - a mission that complicated relations with the Soviet Union. By the summer of 1945, conflicts over reparations had cast a pall over the Allied project. At Potsdam, this conflict came close to destroying the enterprise before it was launched.
I. HANDS ACROSS THE ELBE

During the final phases of the German campaign, General Eisenhower labored to preserve the Grand Alliance. Differences of experience and interest strained the bonds, but he understood his task to be the maintenance of unity. By adhering to previous commitments and attending to Soviet concerns, he helped generate an atmosphere in which an Allied Control Council could be formed. F O R M U C H O F the war, the Americans and British had delayed opening a second front in Europe, leaving the Soviets to bear the brunt of the fighting. One consequence was that the European Advisory Commission (EAC) had negotiated the zonal agreements, anticipating that the Red Army might control much of Germany.3 However, following the Battle of the Bulge, the Nazi leadership unexpectedly shifted strategy. In a dramatic attempt to check the Russian advance, they began moving their armies from the Western Front and reducing their resistance to SHAEF. By the end of March less than thirty German divisions were facing the Americans and British, while more than 150 divisions were battling the Soviets in the east.4 This opened the possibility of an Allied race across Germany and the chance for the Western powers to gain a more favorable territorial outcome. Prime Minister Churchill insisted on this course, pressing the Americans to seize the moment. However, the Roosevelt administration was unwilling to breach its promises or to jeopardize the Grand Alliance with battlefield opportunism.5 In the changing tide of combat, there were grave misunderstandings and lapses of sensitivity. Especially troubling in this regard was the conflict that
3 4 5
Murphy, Diplomat, 283-84; Ambrose, Eisenhower and Berlin, 194s, 41. Lyon, Eisenhower: Portrait of the Hero, 336. An important discussion of this issue is contained in Kolko's Politics of War, 37088, although I believe he overstates the extent to which the Americans attempted to capitalize on the shifting German strategy. See, Sharp, Zonal Division of Germany, 120-37; Ambrose, Eisenhower: Soldier, General of the Army, President Elect, 387-408.
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developed over Operation SUNRISE, a secret German effort to disengage from northern Italy.6 During March 1945, General Kurt Wolff had sent feelers to OSS spymaster Allan Dulles indicating an interest in an early surrender. This overture was attractive to the Americans because of the potential to avert needless bloodshed as well to preempt a left-wing uprising in the area. As discussions commenced in Switzerland, the Soviets demanded to be represented, but were turned down on grounds that talks were merely exploratory and that they were handling similar initiatives on their own.7 In one of his angriest messages of the war, Stalin charged that SUNRISE violated the understanding at Yalta that the Allies would try "to hold the enemy on the spot, and prevent him from... moving his forces to points where he needs them most. . . . The Soviet command is doing this. Field Marshal Alexander is not."8 The president sought to mollify Stalin, assuring him that "there is no question of negotiating with the Germans in any way which would permit them to transfer elsewhere troops from the Italian front."9 The Soviets were assured that if negotiations developed, they would be invited to the final talks. Meanwhile General Wolff toughened his terms, demanding the right to remove troops from Italy once combat had ceased. Although the Americans refused to countenance this arrangement,10 Stalin released a second suspicious cable, eliciting Roosevelt's reflection that "it would be one of the great tragedies of history if at the very moment of victory . . . such distrust, such lack of faith should prejudice the entire undertaking after the colossal loss of life, material, and treasure involved."11 Still Marshal Stalin thought it odd that the Germans "continue to fight savagely with the Russians for some unknown (railway) junction, Zemljenica in Czechoslovakia which they need as much as a dead man needs poultices," while they readily surrendered important towns in central Germany such as Mannheim and Kassel.12 In view of these inequities, American exclusivity in handling SUNRISE was undeniably provocative. But contrary to Stalin's implication, it did not reflect their willingness to help the Germans shift troops.
Dulles, Secret Surrender; Smith, OSS, 115-22; Harriman, Special Envoy, 432-41. Harriman to Acting Secretary of State, March 12, 1945, RG 218 CCS 337 Germany, MMNA; Deane to Marshall, March 13, 1945, Ibid. Germany, MMNA; Harriman to Secretary of State, March 13, 1945, Ibid. 377 Germany, MMNA. Harriman, Special Envoy, 484. Roosevelt to Stalin, March 31, 1945, FRUS 1945 111:740-41. Harriman, Special Envoy, 437-38; Dulles, Secret Surrender, 140-42. Stalin to Roosevelt, April 3, 1945 and Roosevelt to Stalin, April 4, 1945, FRUS 1945 111:742-43, 745-46. Stalin to Roosevelt (Undated), Ibid.: 749-51.
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For U.S. officials, a more serious question was whether to drive for Berlin.13 At Yalta, it had seemed certain that this prize would fall to the Russians. SHAEF was just resuming its offensive in the west, while Zhukov's troops were already in striking distance of the capital. When conditions changed in March, Prime Minister Churchill visited Eisenhower's headquarters in Rheims, urging him to advance on the city and seize as much of the eastern territory as possible. 14 Churchill had a host of military and political reasons for taking Berlin. Underpinning them was a willingness to overturn the Allied agreement on zones. Once the war was over, the Western powers might hold on to the additional lands they had acquired, or use them to extract concessions from the Russians. Either way, possession of the former capital would be an immense asset.15 Within the U.S. government, this approach had scant resonance. From the president, down through the War Department, the Joint Chiefs of Staff, and Eisenhower himself, the reigning assumption was that the United States would adhere to the EAC lines. Since conquered areas outside the western zones would go back to the Russians, Eisenhower continued to employ military criteria when choosing where to send the troops. 16 In response to Churchill's pleas, the SHAEF commander emphasized that his overriding priority was to join up with the Red Army as swiftly as possible and cut the German forces in two. He was also eager to prevent the Nazi leadership from establishing a southern stronghold in the Alps, as recent intelligence reports had suggested. He thought Berlin's usefulness to the Germans "had been largely destroyed" but he would consider taking it, when more critical objectives had been achieved. 17 By mid-April, General Simpson's Ninth Army had reached the Elbe and had established a bridgehead at Magdeburg. This inspired the prime
13
hower and Berlin. Also helpful are Ambrose, Eisenhower: Soldier, General, 387408; David Eisenhower, Eisenhower at War 1943-45, 759~%71 Lyon, Eisenhower,
14 15 16
For discussion of this issue, see outstanding full-length study by Ambrose, Eisen331-42.
17
Ambrose, Eisenhower and Berlin, 57. Murphy, Diplomat 284; Ambrose, Eisenhower and Berlin, 82. Most historical accounts of Eisenhower's failure to race for Berlin suggest that he was acting as a military man, who preferred to ignore politics. The studies by Ambrose suggest a different reality, i.e., that Eisenhower was acting on the political decision of his government to observe the zonal agreement negotiated in the EAC and that this decision was congenial to him. Eisenhower to Winston Churchill, April 1, 1945 and Eisenhower to Marshall, April 7, 1945 in Chandler, The Papers of Dwight David Eisenhower, IV:2572~74, 2401. This judgment was endorsed by the Joint Chiefs of Staff, who cabled Eisenhower that "such psychological and political advantages as would result from the possible capitulation of Berlin ahead of the Russians should not override the imperative military consideration, which in our opinion is the destruction and dismemberment of the German armed forces." Ambrose, Eisenhower and Berlin, 65.
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minister to reopen the question with Eisenhower.18 However, the general was still anxious about the southern redoubt, and wanted to send General Montgomery north to Liibeck to cut off the German troops in Denmark. Eisenhower was also anticipating that an assault on Berlin would cost tens of thousands of lives as fanatical Nazis mounted their last-ditch defense of the city. Since there was to be a four-power occupation after victory, the sacrifice of so many American soldiers seemed gratuitous. Moreover, even if SHAEF forces raced to Berlin, the Red Army could still get there first. Hence they would be planning for something "that in all probability would never come off."19 The Soviets began their siege of Berlin on April 26, and during the week of terrible fighting that ensued lost one hundred thousand men. As they crashed into the capital, Adolf Hitler abandoned both hope and responsibility, committing suicide on April 30. Authority for the German state was claimed by Admiral Doenitz, who set up headquarters in Flensburg near the Danish border. The new government quickly sought surrender, but even in these final stages, continued to offer fierce resistance in the east while laying down weapons in the west.zo As before, the intention was to increase tensions among the Allies, limit the Russian advance, and now that defeat was imminent, facilitate the escape of important Nazis behind western lines. Eisenhower had little tolerance for this game. On May 4 he informed the Germans that they must surrender simultaneously to the Red Army and to SHAEF.21 When they delayed, he threatened to break off negotiations and seal the Western Front, "preventing by force any further westward movement of German soldiers and civilians."22 Faced with this ultimatum, the Doenitz government capitulated, surrendering at Rheims on May 7. The abrupt conclusion of the war generated additional ill will. While the Soviet General Susloparov had been present at Rheims, affixing his signature to the surrender document, Moscow officials were displeased. From their point of view, the Red Army's entrance into Berlin was the crowning achievement of the war, and they had wanted the surrender to take place there. Unfortunately the message did not arrive until after the Rheims ceremony. Eisenhower readily promised to join Zhukov inside the capital
18 19
20 21 11
Ibid., 90-96. Eisenhower to Combined Chiefs of Staff, April 14, 1945, i n Papers of Dwight David Eisenhower, IV:26o9-i2; Eisenhower to Montgomery et al., April 15, 1945, Ibid., 2614-16; Ambrose, Eisenhower: Soldier, General, 393. Kolko, Politics of War, 382-88. Eisenhower to CCS and British Chiefs of Staff, May 5, 1945, Papers of Dwight D. Eisenhower, IV:2686-87; Eisenhower to Deane, May 5, 1945, Ibid., 2688-89. Eisenhower to Combined Chiefs of Staff, May 6, 1945, Ibid., IV:2694-9 5.
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for a more formal signing. However, these proceedings were also marred by controversy, when the Western press ignored Stalin's wishes and prematurely announced the German defeat.23 Through these travails, Eisenhower struggled to maintain amicable relations, cabling Marshall that "to be perfectly frank the last four days just passed have taken more out of me and my staff than the last eleven months of my campaign." Yet he blamed the Germans for the problems and claimed that "as far as hostilities are concerned the Russians and I are in complete understanding."24 In the wake of the Nazi surrender, the Americans were anxious to set up the Allied Control Council in Berlin. The terms of defeat had left the Germans without any central authority, and Military Government officers in the field were feeling an urgent need for some substitute.25 This was also a State Department priority, whose planners regarded efficient Allied machinery as a key to harmony among the occupiers. However, the cessation of the war had left the victorious armies inside each other's assigned zones. The Red Army held all of Berlin, though according to the EAC agreement it was only entitled to one sector. Meanwhile Eisenhower's forces were sitting in Saxony and Thuringia, deep in the Russian zone. Under these conditions, the Soviets argued that the formation of the Allied Control Council should await the redistribution of troops. But Churchill was opposed to any such movement, thereby stalling the attempt at collective governance.26 Since early spring, the prime minister had been telling the Americans that they should not withdraw their armies until the Soviets demonstrated good behavior in Germany and Austria.27 Eisenhower and Marshall considered the prime minister's stand to be objectionable, as did the State Department's Freeman Matthews, who thought the "Russians would surely consider such a bargaining position as a repudiation of our formal agreement." President Truman had first accepted his subordinates' advice, but
Telephone Conversation between McCarthy (Washington) and Churchill, London, May 7, 1945, i n Eisenhower Papers, Dwight David Eisenhower Library (DDE); Eisenhower to Deane May 7, 1945 (2 cables) in Papers of Dwight D. Eisenhower, VI:4-io; Leahy Diary, May 10, 1945, Leahy MSS, Library of Congress (LC). Indeed the Germans continued to fight the Russians on the Eastern Front for three days after their "Unconditional Surrender." Eisenhower to Marshall, May 8, 1945, Papers of Dwight D. Eisenhower, VI: 10-13; Eisenhower to Combined Chiefs of Staff, May 8, 1945, Ibid., 23-24. Stimson to the Secretary of State, May 22, 1945, RG 59 740.00119, DSNA; U.S. Department of State for President, May 23, 1945, PSF, Box 178, Harry S. Truman Library (HST). Sharp, Zonal Division of Germany, 142-58. Churchill to Truman, April 18, 1945, RG 59 740.00119, DSNA; Murphy to Matthews, April 25, 1945, Ibid.
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subsequently bowed to Churchill's proposal that large-scale movements be postponed until the end of the fighting.28 On May 11 Churchill had extended the argument by insisting that the troops stay where they were until there had been a conference of the three heads of state. As Truman delayed his response, there was mounting impatience at Eisenhower's headquarters in Berlin and in the War Department.29 Chewing over the delay with McCloy, Stimson was reminded of how Roosevelt had played a "mediation role" between the Soviets and Britain during the war.3 While there might come a time when the United States would have to choose, he still thought "President Roosevelt's position in that regard was a wise one." On the troop question, the secretary did not see "how we could go back on our very definite agreements." Surely it was in America's interest to press for the creation of the Control Council rather than fan Soviet suspicions of an Anglo-American alliance.31 Stimson's reaction to the German situation reflected his alarm over other postwar developments. A vigorous advocate of U.S.-Soviet cooperation, he had been dismayed by Truman's initial handling of the Polish problem.32 When the new president took office, the Soviets were in the process of imposing communist politicians in Warsaw. In April, Truman had heeded the advice of his most belligerent advisors and had given Foreign Minister Molotov a tough dressing down during his visit to the White House. Unlike Ambassador Averill Harriman and other presidential confidants, Stimson was resigned to a large measure of Russian influence in Eastern Europe. However, he hoped to preserve some freedom in the area by adopting a conciliatory stance. For this purpose the Allied project in Germany loomed very large. If the four powers collaborated successfully in Central Europe, reducing Soviet security concerns, this would moderate their behavior in the east. In mid-May Truman decided to ease the tensions resulting from the Molotov encounter by sending Harry Hopkins to Moscow.33 Other than the deceased president, there was probably no American who more
Matthews Memorandum, April 21, 1945, RG 59 Central Europe Box 14A, DSNA; Davies diary entry, May 23, 1945, Davies MSS, LC; Truman, Memoirs: 194s, 2.4 * Truman, Memoirs: 194s, 331-32.; War Cabinet, Chief of Staff Committee, Eisenhower and Churchill, May 16, 1945, DDE 160 Box 54, DDE; Churchill to Truman, June 4, 1945, contained in Clay Papers, 1:17. McCloy, Memorandum of Telephone Conversation with the Secretary of War, in John J. McCloy Papers, Series 8: War Department (Box WDi, Folder 29) Amherst College Archives. Ibid. Stimson Diary, April 16 & April 26, 1945; Bundy and Stimson, On Active Service, 609; Alperovitz, Atomic Diplomacy, 97-100; Yergin, Shattered Peace, 79-82. Truman, Memoirs: 194s, 287-94; Mcjimsey, Harry Hopkins, 376-80; Sherwood, Roosevelt and Hopkins, 885-912.
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thoroughly enjoyed the confidence of the Russian leadership. Although the Polish dispute was high on the agenda, Hopkins was given a broad mandate to resolve outstanding differences. During his surprisingly fruitful talks with Stalin, the American stressed the need to establish a four-power authority in Germany. As the expression of his own government's commitment, he announced the selection of General Eisenhower to be the U.S. representative to the Allied Control Council. In a reciprocal move, Stalin designated Marshal Zhukov to serve as the Soviet spokesman.34 These decisions paved the way for the first meeting of the ACC on June 5.35 The chief function of this gathering was to issue an EAC-drafted proclamation that announced the Allied victory and assumed "supreme authority" over the country's political life. Eisenhower urged Zhukov to begin the work of governing. He offered to leave General Clay and Political Advisor Robert Murphy at Soviet headquarters to negotiate the entry of Western troops into the city and to launch the Allied Control Council as an operating body. Zhukov politely demurred, explaining that while Western troops were still in Saxony and Thuringia, he did not have a realistic grasp of conditions in his own zone. Sympathetic to this argument, Clay reminded Washington that there was "some justification for Zhukov's position that he is unable to discuss administrative problems... when he is still not in control."36 The impasse was finally broken by Harry Hopkins, who had stopped off in Germany on his way back from Moscow. Hopkins was in an exuberant mood, feeling that he had obtained significant concessions from Stalin on Eastern Europe and that the friction that had marked the earliest period of victory was about to abate. Delighted, Eisenhower asked for his help with the troop issue. Hopkins cabled the White House that he was "convinced" the failure to set a date for withdrawal into assigned zones would be "misunderstood by Russia as well as at home" and was causing needless difficulties.37 This elicited a positive response from the White House. Ignoring new pleas from Churchill, Truman announced that the troops must begin their withdrawal no later than June 21.38 The news came as a deep disappointment to the prime minister:
34 35
36 37
38
Hopkins-Stalin Conversation, May 25, 1945, Hopkins MSS, Box 338, FDR; Hopkins to President, May 30, 1945, Ibid. Eisenhower to Joint Chiefs of Staff, June 6, 1945, Papers ofDwight D. Eisenhower, VL135-39; Murphy to Secretary of State, June 6, 1945, FRUS 1945 IIL330-32; Declaration Regarding Defeat of Germany and Assumption of Supreme Authority by Allied Powers, June 5, 1945 m State Department Bulletin, XII (1945), 105155. Although the June 6 cable was signed by Eisenhower, it was authored by General Clay. Murphy, Diplomat 291-92; Clay Interview with Smith, February 11,1945 m Backer Papers, Box 4, Columbia University (CU) Mcjimsey, Harry Hopkins, 388-90; Clay to Marshall, June 8, 1945, Clay Papers, 1:21-22. Truman to British Prime Minister, June 11, 1945, FRUS 1945 IH :I 33-34-
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I view with profound misgivings the retreat of the American army to our line of occupation in the central sector, thus bringing Soviet power into the heart of western Europe and the descent of the iron curtain between us and everything to the eastward.39
The president was less worried, believing that the Soviet need for economic assistance would impel it to behave constructively in occupied Germany.40 Ultimately, it was Stalin who delayed the troop movements until the first week in July in order to remove unexploded mines from the outskirts of Berlin. But during the month-long negotiations with the Soviet military authorities over the deployment of forces and the formation of the Allied Control Council, General Clay established strong personal relationships with both Zhukov41 and Marshal Sokolovsky, his own counterpart in the SMA hierarchy. Though deliberations were cordial, there were minor quarrels over access routes into Berlin. Clay's requirements for moving the Western armies - in terms of rail, highway, and air facilities - were unacceptable to Zhukov, who claimed they were needed by the Russian troops. The two settled on a temporary arrangement under which SHAEF could use one main highway, one railway, and two air corridors. In striking this agreement, Clay forgot his instruction to raise the long-term question of unrestricted access.42 An innocuous omission at the time, this would later plague the Western powers during the Soviet blockade of Berlin. A more controversial topic was the supply of the capital. Zhukov insisted that the Western powers provide food and coal for their own sectors. The Americans and British regarded this as unreasonable since Berlin lay inside the Russian zone and had always received the bulk of its provisions from the eastern hinterland. Despite the irritation of his superiors, Clay
Prime Minister to President, June 4, 1945, in FRUS Potsdam L92; Davies to Truman, Full Report to Truman on Mission to Churchill, June 12, 1945, Davies MSS Box 17, LC. According to Bernard Bernstein, who discussed the Berlin impasse with the president in early June, Truman was not at all "pessimistic about his relations with the Russians because he felt we held all the cards and that the Russians had to come to us." Citing the severe economic conditions in the Soviet Union and the possibility of starvation, the president reflected that they would need financial assistance from the United States, which was "why he felt he had the cards in American hands, and he was very clear that he proposed to play them as American cards." U.S. Senate, Morgenthau Diary, IL1555. In his memoirs, Clay describes Zhukov as "polite, even affable, with a sense of humor and with the obvious desire to seem friendly. I liked the Marshal instinctively and never had reason to feel otherwise." Clay, Decision in Germany, 24. Notes of Conference between Marshall Zhukov and Soviet Representatives, General Clay and U.S. Representatives, June 29, 1945, Clay Papers, 1:27-35; Backer, Winds of History, 24; Murphy, Diplomat, 293; Clay, Decision in Germany, 25-27; Smith, Lucius D. Clay, 269-76.
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accepted this arrangement on an interim basis. He was mollified by Soviet willingness to cooperate in the city's governance by joining a four-power Kommandatura, and forming subcommittees for such practical tasks as utilities, fuel, public safety, and food distribution.43 Clay's pragmatic, task-oriented approach to the Russians was consistent with his general stance on the occupation. As McCloy and Stimson had correctly perceived, the deputy was determined to make things run. From his first arrival in Germany, he exhibited the traits of character that had made him such an attractive appointment.44 A person of tremendous drive, a compulsive worker who arrived early in the office and stayed late every evening, Clay pored over the technical reports that were flooding in from across the country, using his extraordinary memory to master the details of his new environment. With few private distractions and an overwhelming need to direct events, he gravitated to the work of rebuilding. In this endeavor, he could rely on his Economics chief, Brigadier General William P. Draper. The former banker was an urbane, charming man, who conducted his business in a low-key, good-humored style. Whereas Clay was direct and at times abrasive, Draper was subtle and, when necessary, amiably deceptive. An attentive and energetic administrator, he rapidly acquired a broad knowledge of the German economy. Despite his relaxed air, Draper worked as hard as his boss, often pursuing Clay with business after the general had turned in for the evening. During the first months in Germany, Draper shared his ample accommodations with Clay's two young assistants, Robert Bowie and Donald McLean, an arrangement that facilitated continuous coordination.45 As partners, Clay and Draper embodied the two sides of War Department thinking: the desire for Soviet cooperation and the determination to restore the shattered German economy. With Military Government acting vigorously on the latter, JCS 1067 became a source of substantial anxiety. Its injunction to the U.S. commander to take "no steps looking towards the economic rehabilitation of Germany" was directly at odds with army behavior. During a visit in April 1945, McCloy had encouraged Clay to use the "disease and unrest" formula as the basis for positive action.46 The
43 44
45 46
Clay to War Department, July 9, 1945, Clay Papers, 1:49-50; Clay to Marshall, July 11, 1945 ibid., 51-52.; Murphy to Grew, July 12, 1945, FRUS Potsdam IL639. Goldthwaite Dorr to McCloy, April 22, 1945, RG 107 ASW 370.8 Germany, MMNA; Backer Interviews with Donald McLean, August 16, 1979, and Robert Bowie, February 28, 1979 in Backer MSS, Box 3, Rare Book and Manuscript Library, Columbia University (CU). Ibid.; William Draper, Oral History, HST. An especially unflattering discussion of Draper is contained in James Stewart Martin, All Honorable Men. As McCloy later recalled, "I pointed o u t . . . these escape clauses in case of real need. I was aware of them because I had participated in the drafting of the document." John Backer, Interview with John J. McCloy, Backer MSS, Box 3; Jean Smith Interview with McCloy, February 5, 1971, ibid., Box 4. See also, Backer, Priming the German Economy, 59.
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pervasive suffering and hunger of the German populace would justify a broad range of interventions. But during the ensuing weeks, as the gap between the restrictive directive and actual field operations widened, there was mounting dissatisfaction. Reflecting the sentiments of the senior staff, Lew Douglas had flown back to Washington to get JCS 1067 rewritten. Yet after so much internal strife, this was unthinkable. As one State Department economist explained, "Military occupation of Germany cannot be justified to the American people if it is simply a means of providing relief and organizing necessary rehabilitation of Germany."47 The Clayton committee had produced an important compromise, which if challenged would cause a revival of "the old divisions and disputes." Though disappointed, Clay still thought he could live with the directive. Backed by the Economics Division, he took the position that the fighting had already eliminated most of Germany's war potential and that "the industry which remains, even when restored, will barely suffice for a very low minimum standard of living."48 It therefore followed that if the country was to be rescued from anarchy and disaster that "we must have sufficient freedom here to bring industries back into production." This description of the situation, which Clay and his subordinates frequently reiterated, was at variance with the War Department's own data. In the aftermath of victory, its surveys indicated that, in the western zones, most of Germany's industrial capacity was intact.49 There was admittedly massive disruption created by the presence of four occupying armies, the destruction of the transportation system, the severe manpower shortages in every sector of the economy, and the collapse of coal production in the Ruhr. However, the problem of Germany's war potential had scarcely been touched. Within U.S. Military Government there was a genuine fear of chaos. But in seeking a free hand, it began a habit of overstating the economic damage. In violating the spirit, if not the letter of JCS 1067, the War Department was eager for presidential support. On May 15 Secretary Stimson reviewed the German problem with President Truman, hoping he would be more sympathetic than Roosevelt. Stimson warned of impending famine and
Lew Douglas, Memorandum, May 1, 1945, RG 107 ASW 370.8, MMNA; Murphy, Diplomat, 281-83; Brower and Smith, Independent, 226-35; Despres to Clayton, May 8, 1945, RG 59 740.00119, DSNA. Clay to McCloy, April 26, 1945 St June 16, 1945 Clay Papers, 1:7-8, 23-24; U.S. Control Group, Minutes of Staff Meeting of Control Council, May 26, 1945, in Backer Papers, Box 8, CU; Clay Interview by Richard McKinzie, Oral History, HST. New York Times, June 4, 1945; Economics Intelligence Branch to Director of Economics Division, "The Economic Situation in Germany", July 2, 1945, RG 107 ASW 370.8 Germany, MMNA; McCloy to Clay, Preliminary Draft of Letter No. 2, June 13, 1945 ibid.
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disease throughout Central Europe, which could lead to political revolution and communist infiltration.50 Certainly if Germany was to become a peaceful member of the world community it would require the material basis for a decent standard of life. Though he especially emphasized the shortage of food in the occupied areas, the secretary linked it to the need for "some industrialization." The sympathetic president assured Stimson that he had never liked the Morgenthau plan. In holding up the specter of revolution, the secretary was not responding to the specific conditions in Germany, where the early reports highlighted passivity and demoralization among the populace.51 Rather, his thinking reflected the experience of World War I, when harsh economic conditions spawned radical insurgency. From the outset, a fear of communism formed part of Stimson's general perception that without rapid rehabilitation Germany would fall prey to anarchy and war. Yet significantly, Stimson's antipathy to revolutionary change did not lead him to reject the Russian alliance. Like many of his administration colleagues, he still viewed Stalin as a cautious Marxist, whose support for left-wingers in Eastern Europe might express his wish for a buffer zone rather than allegiance to the international proletariat. Indeed Stimson viewed the precarious economic situation in Central Europe as another reason to work closely with the Soviets. The Soviet Union was occupying "most of the good food lands" in the area. As he explained to the president, "we must find some way of persuading Russia to play ball."52 Despite the wish to work with the Soviets, from the outset Military Government's efforts to restore the German economy created impediments to the quadripartite experiment. Clay had quickly set up informal committees with the French and British to discuss coal, transportation, communications, production, agriculture, and other matters. Although McCloy expressed concern that tripartite action would have negative repercussions, the general insisted the groups were essential for maintaining uniformity until the Allied Control Council was fully operative.53 Clay was also mindful that if, for some reason, quadripartite governance did not materialize, then the committees could become nuclei for an exclusively Western structure. As of June, this was neither his preference nor expectation, for he believed that "with patience and understanding we will be able to work out central controls over a long period of time."54
50
51 52 53
54
Truman, Memoirs, 194s, 1:2.63-64; Stimson to Truman, May 16,1945, Stimson MSS, Yale. Robert Murphy to Secretary of State, May 1, 1945, FRUS 1945 111:937-38. Stimson to Truman, May 16, 1945. McCloy, Diary Entry, May 21, 1945; McCloy, Draft of letter to Clay, June 13, 1945, RG 107 ASW 370.8, MMNA; Clay for McCloy, June 29, 1945 Clay Papers, 1:35-40. Ibid.; See also Clay to Joint Chiefs of Staff, June 6, 1945.
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Military Government's most immediate problem was the shortage of food. Germany had never enjoyed self-sufficiency in agriculture. Throughout its modern history, it had purchased grain and other foodstuffs from neighboring states. During the period of Hitler's conquests, patterns of trade had been replaced by policies of forced requisition, and the occupied peoples had helped to feed the Germans through the rigors of war. In defeat, the Germans faced a lapse of supply. Their ruined neighbors needed the food for themselves, and had neither the means nor the disposition to trade. Furthermore, the bulk of German agriculture was in areas occupied by the Red Army. Some of these territories had already been handed over by the Russians to Poland. And on the remaining lands, production was interrupted by the shortage of manpower and the flight of many owners and managers to the western zones. Since the Allied Control Council was still inoperative, there was no machinery for getting agricultural goods from east to west.55 Confronted with this daunting array of obstacles, the Americans and British arranged for the provision of food from their own stocks. Yet these were of limited quantity, and as early as June, SHAEF undertook responsibility for importing wheat into Germany.56 The two Western governments provided interim financing on the understanding that Germany would pay back what it received as a "first-charge" on exports. Among its rehabilitative measures, Military Government's offering of food most closely conformed to the "disease and unrest" clause. However, there was a distinction between organizing the production and distribution of food, and paying for its importation. In the summer of 1945, there were millions of hungry people across Europe clamoring for international relief. By choosing to bring a certain quantity of grain into Germany, Military Government was implicitly deciding that it would not go elsewhere.57 As occupiers, the Americans and British bore a responsibility to the German populace, which they paradoxically did not have to other liberated peoples. However, the choice of aiding Germany instead of increasing the allocations to its victims was also rooted in their belief that the German economy was vital to the salvation of European capitalism. The manner of financing also represented a choice of beneficiaries. By making the cost of the food a "first charge" on German exports, the
55 56 57
Economic Intelligence Branch to Director of Economics Division, June 6, 1945. See important discussion of food problem in Backer, Priming German Economy, 30-59. By the summer of 1945, SHAEF was bringing in 636,000 tons of wheat, Col Ransone's Diary, June 11, 1945, Backer MSS, Box 8, CU. This question of priorities was foreseen as early as February 1945 by State Department economist Emil Despres in a letter to William Clayton, February 7, 1945, DNC MSS, Folder: Clayton-Thorp, Box 145, HST. Yet while the State Department was aware of the question, there was no dispute over the desirability of shipping food to Germany.
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Western powers were reducing the supply of goods available for reparations. This aspect of the policy was discussed in the Treasury during late June. Morgenthau thought the Soviets would be enraged, and wondered if they would say, "Well that's very nice gentlemen. You put four hundred million dollars in that and that's very nice. We are glad that you are going to feed the Germans from now until November 1st but that's your lookout."58 Although "interim financing" was a topic that fell roughly within the purview of the Treasury, its views carried no weight. From the perspective of both State and War, there was never any serious contest between German requirements and Russian ones. If both could be met, that was most desirable. But if forced to pick between two desperate parties, America's economic interests dictated Germany. It was this attitude, which formed the unexpressed, and indeed unexamined premise, of the Truman-Stimson discussion in May. By itself, the effort to mitigate the hunger and misery of ordinary Germans was scarcely controversial. But it was a significant choice to alleviate Germany's distress ahead of those whom it had attacked. The coal situation presented similar complexities.59 For decades the rich Silesian mines had provided fuel for the industries and populace of Eastern Europe, while the large deposits in the Ruhr had supplemented the resources of France, Belgium, the Netherlands, and Scandinavia. At war's end, the Soviets handed the Silesian mines to Poland, as part of their forced readjustment of the German-Polish border. Meanwhile, the heavy fighting in the Ruhr had interrupted production and supply, so that by June many of the installations had exhausted their reserves. Overall, western coal mines were yielding approximately three percent to five percent of their wartime levels, creating a crisis for the American and British authorities.60 In allocating this scarce resource, the Military Government had to choose between Germany's need for fuel to run its factories and the expanded requirements of the West Europeans, whose own coal facilities had been damaged by the war. In pressing their case, the West Europeans had strong support from the U.S. State Department, which was fearful that economic privation would stimulate left-wing insurgency, especially in France.61 A similar outlook underpinned the Potter-Hyndley report, prepared by a
58 59
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U.S. Senate, Morgenthau Diary, II:i619-26. McCloy, Diary Entry, April 14, 1945; War Dept., Office of the Quartermaster Group, "The European Coal Situation," July 11, 1945, RG 165 ABC Germany (18 December 43) Sec. 27, MMNA; Froelich G. Rainey to Ambassador Murphy, German Coal, June 27, 1945, R G 8 4 u s POLAD 863.6, FRC. Memorandum by the Joint Civil Affairs Committee of the Joint Chiefs of Staff, Arrangements to Get Coal for Other European Countries (Undated), FRUS Potsdam I:6o8-io. Grew to Stimson, June 8, 1945, FRUS 1945 11:711; Gimbel, Marshall Plan, 34.
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team of Anglo-American economists. This strongly recommended that the military commanders assign the highest priority to coal production in Germany, and that they immediately export it, even if this entailed the indefinite postponement of German industrial recovery.62 Following discussions with top State Department officers, President Truman issued a directive to Eisenhower. It ordered Military Government to give precedence to the production and transportation of coal and specified that ten million tons should be shipped from the western zones by January 1, 1946. Since the bulk of the mines were in the British zone, the president's initiative was meaningless without British cooperation. Although harboring reservations, they agreed to sign off with the proviso that the matter be subsequently rediscussed within the Allied Control Council.63 The army was annoyed by the president's decision.64 It argued that such a complete subordination of German industry would prove counterproductive by undermining the basis for coal mining itself. Moreover, Clay considered Truman'sfiguresto be unrealistic, producing studies that showed that under optimum conditions no more than 7.9 million tons could be procured from the western zones. Nevertheless, for the army the signal advantage of the coal directive was that, under the rubric of aiding Western Europe, it gave enhanced legitimacy to the military's rehabilitative approach. More tangibly, the imperative to increase the coal supply facilitated the importation of food, clothing, and equipment into the western zones. The disagreements over the coal directive were the first internal skirmish over a West European versus German priority. Yet the argument was less one of principle than of tactics.65 The army shared the State Department's concern over West European needs, but differed over the wisdom of draining Germany too rapidly - an assessment that undoubtedly reflected its direct jurisdiction over the latter. Less debated was the Russian dimension of the coal question, a topic that did not arouse any competing bureaucratic interests. The Soviets had already indicated that they wanted Germany's coal supply used for reparations. Given their actions in Silesia, the Americans saw no reason to ship coal east. However, in light of the Yalta decision giving the Russians fifty percent of the total, the Soviet Union would still be affected by how the
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Report by the Potter-Hyndley Mission to Northwest Europe, June 1945, FRUS Potsdam 1:619-20; see important discussion in Gimbel, Marshall Plan, 21-25. Joint Chiefs of Staff, Directive to Commander of U.S. Forces in Germany, July 26, 1945, FRUS Potsdam 11:1028-30; British Embassy to Secretary of State (Undated), ibid.: 624-35. Clay to McCloy, July 15, 1945; Gimbel, Marshall Plan, 22-23. In the Origins of the Marshall Plan, historian John Gimbel provides a compelling account of the numerous ways in which the State and War departments differed over a German versus West European priority. Yet Gimbel recognizes that even for the army, the recovery of Germany was fundamentally a means of assuring the stability of western Europe as a whole.
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Western deliveries were billed, whether as exports or reparations. Furthermore, the increase of imports associated with the coal program would have a substantial impact on Russian reparations, assuming these were reimbursed by expanding German exports.66 Though Truman may have been oblivious to these technical implications, officials in State and War were more attuned. By the end of June, when the U.S. coal directive was issued, American negotiators in Moscow were already squabbling with the Soviets over the Yalta reparations clauses. Pursuant to that agreement, a three-power commission had convened in Moscow to work out its implementation and had fallen into conflict over the magnitude of payment. As the U.S. representative to this body, Roosevelt had originally designated labor economist Isidor Lubin. But in May, Truman had replaced Lubin with Edwin Pauley, a personal friend and treasurer of the Democratic National Committee. This substitution replicated the rightward shift in the administration, which had been under way for several years, and had just been punctuated by Roosevelt's death. Hence Lubin, who was associated with FDR's liberal domestic policies, was pushed aside by a California oilman who had been instrumental in removing Henry Wallace from the 1944 presidential ticket. By tapping Pauley, Truman repaid a political debt, but also picked a person who would strike a tougher bargain with the Soviets.67 In its final composition, the U.S. delegation to Moscow was weighted with unsympathetic businessmen. There were a handful of mavericks, including attorney Richard Scandrett, the Treasury's Josiah DuBois - who had helped groups of Jews escape from the Nazis - and Lubin himself. But as it sailed for Europe, the delegation's main objective was to drastically whittle Stalin's demands. Their attitude was strengthened by a stopover in Germany, where they were treated to Military Government's familiar litany: the vast damage to German industry, the tremendous suffering of the populace, the shortage of food, the breakdown of transportation, and the overwhelming need for American imports. The essential thrust of this commentary was that current production reparations were impractical. German goods were urgently needed for its domestic economy and to pay for Anglo-American imports.68
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Indeed the Soviets had told the Americans that they thought full reparations should be arranged before a consideration of coal exports. Murphy to General Millburn May 1, 1945, Backer MSS, Box 8, CU; Gimbel, Marshall Plan, 31; Leffler, A Preponderance of Power, 64-65. Truman, Memoirs: 1945, 342; Kuklick, Division of Germany, 126-28; Backer, The Decision to Divide, 42-43. Also important was Pauley's talk with Lew Douglas just prior to his departure for Europe. After hearing Douglas' views, Pauley indicated that he would make no definite commitments on reparations until more was known about the condition of the German economy. Browder and Smith, Independent, 232.
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Interestingly, opinion in Military Government was more equivocal on the issue of capital equipment. Its officials were aware that for peacetime purposes, German industry had been overbuilt, and that because of the coal shortage and transportation bottlenecks, many factories could not be put back into production. Though willing to deliver capital equipment as a means of satisfying Russian needs, Clay and his associates preferred to avoid specific commitments until they knew more about internal conditions.69 When they finally arrived in Moscow, the reparations team found a more inflexible mood at the U.S. embassy. Still fuming over Poland and Soviet encroachments elsewhere in Eastern Europe, Ambassador Averell Harriman took a dim view of the reparations program.70 He thought it irrational to reward the Russians with material goods from Germany at a time when it was flouting Western opinion. By preventing deliveries, the United States could send a powerful message that partnership with the West could not encompass a sphere of influence in the East. Pauley himself had come to Russia expecting to do some tough trading with his Soviet counterpart Maisky, and then to cut a favorable deal for his side. But lacking experience in international affairs, a novice to all things Russian, hampered by ambiguous instructions, and distrustful of the State Department to which he was reporting, Pauley fell prey to Harriman's influence. Although the latter was interested in sabotaging agreement, the Californian accepted his guidance on the negotiations.71 The Reparations Commission was immediately at odds over whether to invite France, the definition of "war booty," the conditions for labor reparations, and the fate of Western-owned property in the Soviet zone. Not surprisingly, the biggest fight concerned the Soviet demand for 10 billion dollars' worth of reparations, to which they felt entitled under the Yalta agreement. In the most stunning development of the proceedings, Pauley rejected that sum and stated that his government would not discuss any specific figures until more was known about the German economy.72 In adopting this position, Pauley was disregarding the recommendation of the State Department, which had counseled him to discuss a lower amount:
Clay to Hilldring, May 7, 1945, C/tfy Papers, L13; Clay to McCloy, June 29, 1945, Ibid., 41-42. Harriman to Secretary of State, April 3, 1945, FRUS 1945 Ibid.; Kennan to Secretary of State, May 3, 1945 & May 8, 1945, Ibid.:i2O3-4;i2ii-i2; Isaacson and Thomas, The Wise Men: Six Friends and the World They Made, 292-93. According to Clay's memoirs, "While our visit to Moscow had increased hopes for the success of our relationship in Germany, neither Mr. Harriman nor Deane was optimistic.... Mr. Pauley who had been in Moscow for a few weeks .. . had already concluded that an agreement was impossible." Clay, Decision in Germany, 49; Kuklick, Division of Germany, 129. Pauley to Secretary of State, June 19, 1945, FRUS, Potsdam 1:510-11; Pauley to Maisky, July 3, 1945, Ibid., 522; Kuklick, Division of Germany, 132-33.
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The Department is not opposed to the discussion of an amount for reparations. While it is felt that a figure of twenty billion is too high and one approaching thirteen or fourteen billion dollars would be more appropriate, the twenty billion figure may be adopted as a starting point for exploration and discussion.73 Though the department's suggestion was also a marked deviation from Yalta, it offered a framework under which the Allies could settle on an intermediate sum. Upset by Pauley's challenge to Yalta, Maisky tried to impress upon him the gravity of the dispute. The Russian nation had been devastated by the Nazi invasion, and only the quick infusion of German goods could save the population from untold hardship. Irked by these lamentations, Pauley insisted that the burden was on the Russians to show that Germany could pay the quantities they were asking and still remain economically viable. The very day that the State Department had urged him to compromise, Pauley wrote a hostile letter to Maisky, complaining that the delegation had been in Moscow for three weeks and had "not received a single figure supporting the Soviet proposal." 74 The Russians did give Pauley a breakdown of projected capital removals divided by industry, and a specific list of items they were seeking from current production. They had not presented information about the quantities left in Germany once reparations were complete, nor did they calculate how the removals would affect Germany's long-term economic role in Europe.75 Of course, Germany's economic viability was of little concern to them, and they were unwilling to hold up deliveries while economists estimated how many steel mills were needed in the Ruhr. Following an American suggestion, the Reparations Commission spent most of its time drafting the principles that would govern the program. The Russians maintained that without an agreement on quantity, this was an empty exercise. However, the three representatives managed a restatement of some key Yalta ideas. They reiterated that the purpose of reparations was to prevent German aggression and compensate its victims, that payment must be in kind rather than money and should come to the "maximum extent" from capital goods, that reparations should not increase the necessity for outside assistance, and that the "average living standard in Germany" in this period must "not exceed the average" of other European countries. 76
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Acting Secretary Grew to Pauley, July 2, 1945, Potsdam 1:519. Pauley to Maisky, July 3, 1945. See Backer's careful treatment of this problem in Decision to Divide Germany, 424 5. Backer also makes the important point that the kind of information Pauley was demanding was difficult to come by. When the Allied Control Council got to work on the issue in September, it took more than six months to make reasonable projections. Pauley to Secretary of State, July 4, 1945, FRUS Potsdam 1:527-28; Acting Secretary of State to Secretary of State, July 7, 1945, ibid., 530.
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The negotiations again unraveled when Pauley introduced the "firstcharge" principle advocated by the State Department:
In working out the economic balance of Germany, the necessary means must be provided for the payment of imports approved by the governments concerned before reparations deliveries are made from current production or stocks of goods.77
The provision that Germany first pay for the goods it received was superficially innocuous. However, if foreign imports were substantial, this would cripple any program for current production reparations. Maisky argued that Germany's first obligation was to compensate the countries it had damaged. If as a consequence it could not receive significant imports, this was the price it would have to pay for aggression.78 By early July, it was evident that the Reparations Commission was a failure. Though Pauley took pride in achieving seven agreed principles, the Allies were far apart in their priorities. On all sides, there was a presumption of bad faith. The Soviets expressed a great sense of betrayal that sacred wartime promises were being broken, whereas the Americans and British delegates privately denounced them as looters.79 in Moscow formed a notable contrast to the atmosphere in Berlin, where by July the four powers were moving into their proper zones and cranking up the machinery of the Allied Control Council. Within U.S. Military Government, morale was on the upswing as Clay and his associates initiated the quadripartite experiment. Yet the Pauley fiascowas the most disturbing indication so far of how difficult it would be to reconcile Anglo-American plans for German reconstruction with the Soviet desire to be compensated for their sufferings and to rebuild their own country.
THE PROCEEDINGS
II. POTSDAM UPHEAVALS

These competing agendas helped spoil the atmosphere at Potsdam where Truman, Churchill, and Stalin gathered in the wake of their European
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Pauley to Secretary of State, July 6, 1945. Pauley replied that as a practical matter, Germany could not keep producing unless certain goods were brought in. This was a case where "you must feed the cow to get the milk." Pauley to Maisky, July 13, 1945, FRUS, Potsdam 1:547. As an ironic accompaniment to this unhappy encounter, a few of the American delegates availed themselves of the Russian black market. Since they were traveling on diplomatic passports, there was no limit on the goods they were bringing into the Soviet Union. Under the conditions of scarcity existing in Moscow, it was easy to sell their possessions at high prices. As recalled by Lubin, when he got on the plane to come home, one colleague boasted, "Lube the only thing that I have here in this suitcase is one shirt. Everything else I brought here, I've sold." When they returned to Washington, Lubin filed a report on black marketeering, but the subject was not pursued. Interview with Isidor Lubin by Richard McKinzie, June 26, 1974, Oral History, HST.
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victory. Rather than being an occasion for celebration, it was an unhappy conference in which the Allies bickered over many subjects. Although the reparations battle was susceptible to compromise, American negotiators were initially inflexible. This reflected their resentment over Eastern Europe, the diplomatic inexperience of Truman and Secretary of State Byrnes, and above all the successful American explosion of the first atomic weapon.
IN VIEW of the uncertainties engulfing the Allied occupation, the Big Three meeting, scheduled for July, held special significance. First proposed by Churchill to cope with East European problems,80 by the time it convened, the conferees faced a full plate of issues: relations with Poland and the former satellites, Soviet entry into the Pacific War, political decisions for the Far East, and most critically the character of the German settlement. Prior to Potsdam, the Americans had still not formulated a clear German policy. One reason for this was the continued involvement of Henry Morgenthau. During the early summer, the Treasury secretary besieged his colleagues with complaints that Military Government was violating JCS 1067 and the Yalta declaration.81 Though he lacked support at the executive level, Morgenthau represented a potentially dangerous constituency of liberals and Jews for whom German reconstruction was a morally charged issue. This danger was exemplified by the widely publicized statement of financier Bernard Baruch, which called for the elimination of German heavy industry, the removal of its international holdings, and drastic restrictions on its commerce.82 Baruch's involvement was particularly distressing to Secretary Stimson, who had previously regarded him as "an able economist and statesman, who could rise above the impulses of racial seeking for vengeance."83 Fearful that Baruch's stand portended new difficulties in the cabinet, Stimson reviewed the German question with the president. In their chat on July 3, they commiserated on "the problem of our Jewish people here."84 Hearing Stimson's description of the events in Quebec, Truman observed that "they were all alike - they couldn't keep from meddling in it." The two agreed to exclude Morgenthau from the German deliberations by dividing responsibility between State and War. Truman was also contemplating Morgenthau's removal as Secretary of the Treasury. As this rumor circulated through Washington, Morgenthau approached the president, reminding him, "The last time I was here, you
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Churchill to Truman, May 6, 1945, FRUS, Potsdam L3-4. In related actions, Morgenthau promoted senatorial hearings on the American occupation and pressed his colleagues to reconvene IPCOG. U.S. Senate, Morgenthau Diary, II: 1548-49;!568. "Baruch Asks Plan for Foes in Defeat," New York Times, June 1, 1945. Stimson Diary, July 2, 1945. Stimson Diary, July 3, 1945.
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said you felt like a brother to me, and I would like to reciprocate this feeling and have an official family talk." The secretary remarked on "all this gossip . . . about my being through" and wondered if Truman was planning to have him stay on until V-J day. When the desired reassurance was not forthcoming, Morgenthau reacted indignantly: "Well Mr. President if you have any doubts in your mind after my record of twelve years here, and after several months with you when I have given you my loyal support, you ought to know your own mind now, and if you don't know it, I want to get out now." This afforded Truman the opportunity he had been seeking, and he quickly told the secretary to write out his own letter of resignation along with its acceptance.85 Morgenthau's firing on the eve of Potsdam left the German rebuilders in command of the U.S. delegation. The one other person with sufficient stature and conviction to offer a challenge was Harry Hopkins. Given his knowledge of Yalta, FDR's associate might have tempered the preferences of his colleagues. But having just completed a major diplomatic mission to Moscow, the ailing Hopkins declined Truman's invitation to Potsdam.86 When the Allied representatives converged on Berlin, they found a physical environment that was overwhelming in its symbolism. The sustained Allied bombing and the intense fighting when the Russians took the capital had left a ruined city. Berlin resembled a vast moonscape, its blasted buildings like craters, the eerie stillness evocative of a place where humans had never lived.87 Many who had known and remembered a sophisticated urban center were stunned by the rubble and the silence. The site of the conference was the Cecilienhof Place in suburban Potsdam, one of the few areas undamaged by war. The Americans were housed in nearby Babelsburg, the former German film colony, where U.S. servicemen had rapidly organized a restaurant service, a barber shop, and twentyfour-hour laundry and pressing facilities.88 Despite tidy, commodious rooms and little luxuries from home, including new toothbrushes in plastic wrappers, the gloomy atmosphere of the city was pervasive. Indeed for reasons both practical and psychological, the visitors did not remain in these protected quarters, but ventured back and forth into the battered capital. The first American dignitary to arrive was Joseph E. Davies, the former ambassador to the Soviet Union. As a private citizen, he had come to Potsdam at President Truman's request to facilitate unofficial contacts with the Soviet leadership. Davies had been a devotee of Franklin Roosevelt,
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Blum, Roosevelt and Morgenthau, 642-43; Truman, Memoirs: 194s, 362-63; Forrestal Diary, July 6, 1945, Forrestal MSS, PU. Sherwood, Roosevelt and Hopkins, 919. McCloy Diary, July 17, 1945; Leahy Diary, July 16, 1945, Leahy MSS, Box 6, Library of (LC) Ferrell, Off the Record: The Private Papers of Harry S. Truman, 52; Davies Journal, July 6-10, 1945 Davies MSS, Box 17, LC. Davies Journal, July 6-10, 1945, Ibid.
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an association that stretched back to World War I, when the two men worked in the Wilson administration.89 A self-made corporate lawyer who married Generals Foods heiress Marjorie Post, Davies remained an ardent New Dealer. In 1937 the president sent him to Moscow where, during the height of the purges, he developed friendships with a number of influential Russians including the future Foreign Minister Vyacheslav Molotov. Although Davies deplored the repressiveness of the Stalinist regime, he did not regard its brand of state socialism as a threat to American interests. Unlike most of his colleagues in the embassy, he was a strong advocate of U.S.-Soviet cooperation, a position he continued to hold after his return to the United States. During the Second World War, FDR had availed himself of Davies' benevolent connections, sending him on special diplomatic assignments to the Soviet Union. When Roosevelt died, the ambassador attempted to convey his Russian policy to Truman.90 He emphasized to the new president that the Soviets were profoundly distrustful of the West, and were alert to signs of capitalist encirclement. FDR had tried to assuage this through sympathetic actions and his own personal rapport with Stalin. Davies urged Truman to meet the Russian as soon as possible, and to seek out opportunities for private exchange. The president did not immediately follow this advice. But once he decided to come to Potsdam, he requested Davies to open the needed channels. It was to fulfill this mission that the ambassador came early to Berlin. He was quickly followed by the Moscow contingent - Averell Harriman and the Pauley group - along with William Clayton and James Dunn from the State Department. On Saturday evening, July 14, the Americans dined together in Babelsburg and reviewed the upcoming negotiations.91 Conversation gravitated toward the German problem and the emerging conflict over reparations. Until then, Davies had focused mainly on the East European situation, and had little exposure to the German debate. Since he was aware of the Yalta clauses, he was amazed by the attitude of the reparations team. As recorded in his diary, these people seemed "more intent on getting the best of a horse-trade, and on winning a fight rather than composing difference." Davies was more favorably impressed by Clayton and Dunn, who appeared less crude and cynical. Asked for his opinion, he responded frankly that from what he was hearing, there was "an ugly situation in the making."92 He urged the others to try to consider the Soviet point of view, and to approach the problem from the perspective of seeking an
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Yergin, Shattered Peace, 32-35; Weil, Pretty Good Club, 134-38; 171-80; Sherwood, Roosevelt and Hopkins, 306-8; 733-34. Davies Diary Entry, May 13, 1945. Davies, Journal and Diary Entries, July 14, 1945. Davies Diary Entry, July 15, 1945.
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accommodation "rather then permit an atmosphere of partisan bitterness to develop." Unless they did so, the entire conference would be in jeopardy and the Allies would fail to resolve other more momentous issues than reparations. By Sunday night, the entire delegation was in place. The president and Secretary of State James Byrnes had driven in with a motorcade that included Admiral Leahy, Missouri cronies from the White House staff, and the core of State Department officials who had sailed with them on the Augusta.93 McCloy and Stimson had traveled separately with their top aides from the War Department, and had been joined in Berlin by General Clay, William Draper, and other specialists from the U.S. Military Government. The group as a whole was an unwieldy, disorganized, and disgruntled collection of people. After years in which President Roosevelt had held the reins of American foreign policy, there was a vacuum of authority and established relationships. Few had confidence in their leader,94 and many wondered about their own standing in the party. One aggravating factor was that Truman had been slow to decide who he was bringing to Potsdam. Averill Harriman had been asking since early June whether he was wanted, and had finally been summoned with only a week's notice. Also offended were Stimson and McCloy, who had been compelled to solicit their own invitation. Remarkably the president had failed to include them despite a conference agenda featuring such key military topics as Soviet entry into the Pacific War.95 For the U.S. delegation the most unsettling circumstance was that neither the president nor his new Secretary of State had any background in international affairs. Roosevelt had kept Truman in the dark about U.S. diplomacy, and although Byrnes had been present at Yalta, he had been exclusively involved in the domestic work of the administration.96 To
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According to Admiral Leahy, the main working group on the Augusta consisted of himself, the President, Secretary Byrnes, speech writer Samuel Rosenman, State Department representatives, Ben Cohen, Freeman Matthews, Chip Bohlen, and Missouri friends, Harry Vaughan and Captain Vardaman. Leahy Diary, July 1945. As noted by McCloy, "The President seems to see most of Byrnes and Admiral Leahy. It is not a particularly intellectually minded group the President has about him, though Byrnes is astute and experienced. There will be some Missouri and old Leahy in our policies from now on - I do not know how enlightened it will be." Diary Entry, 1945 July 16 in John J. McCloy Papers, Series 2: Diaries (Box DYi, Folder 18), Amherst College Archives. See discussion in Isaacson and Evans, Wise Men, 298-300. Ibid., 298; McCloy to Hopkins, June 29, 1945, Hopkins MSS, Box 330, FDR. Byrnes' biographer Robert Messer emphasizes that while Byrnes was considered by Truman to be an expert on Yalta, the South Carolinian had not been privy to many of the most important discussions including those on German reparations. Messer, The End of an Alliance: James F. Byrnes, Roosevelt, Truman and the Origins of the Cold War, 48-49.
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compensate for their lack of knowledge, the two had spent considerable time on board the Augusta poring over the usually neglected State Department Briefing Books, and reviewing the difficult points with Chip Bohlen, Freeman Matthews, and the new counsellor to the Department, Ben Cohen.97 Having assimilated mountains of material, Truman and Byrnes were hoping to stay on top of the proceedings, but their insecurity was manifest in the pugnacity and competitiveness that they brought to the task. By the time the presidential party was installed in Babelsburg, Davies had seen Vyshinski and gained Stalin's consent to a preconference session with Truman.98 Vyshinski had also proposed that since there were so many controversial items on the Potsdam schedule, that the leaders of the Big Three first seek agreements in principle on the most important questions, leaving contentious secondary problems for last. Davies brought this encouraging news to Byrnes, but found the secretary preoccupied with reports of Russian looting.99 In Berlin, the evidence of the Red Army's removals of German industrial property seemed to many U.S. observers a major scandal. Davies suggested that some accounts were exaggerated, although even if true they should not be permitted to destroy the atmosphere of the meeting. Byrnes seemed to concur. He had come to Potsdam to fulfill Roosevelt's vision of a peaceful, cooperative world.100 Now that the war in Europe was over and the United States was about to test its first atomic bomb, he was hoping to renegotiate the terms of the Grand Alliance so that the United States got more of what it wanted, especially in Europe.101 However, in his premier appearance on the international stage, he wanted the three-power conference to succeed. Byrnes assured Davies that he and Truman intended to keep Stalin's friendship.102 The ambassador thought this would not be easy, because "there were powerful forces at work, hostile to Russia." These forces were in evidence, right there in Berlin. Byrnes acknowledged that he and the president "were being constantly hammered" by people who wanted to treat the Soviets coercively, but this was not their purpose. Still dubious,
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Log of the President's Trip to the Conference, July 8, 1945, FRUS, Potsdam II:5; Bohlen, Witness to History, 226. Davies Journal: Report to the President, July 15, 1945. Davies Journal: Report to the Secretary of State, July 15, 1945. According to Davies, Byrnes said that the United States "had to reach agreement" with the Soviets "or we would start down the road to another war." This was what Roosevelt and Hull had done, and he and Truman "would have to preserve that relationship, with safety guaranteed to each, if we were to win this new struggle to maintain peace." Davies Diary, July 15, 1945. See Messer, End of Alliance, 8081; Yergin, Shattered Peace, 113-14. Byrnes' attitude toward the atomic bomb is discussed in Messer, End of Alliance, 71-92 and Alperovitz, Atomic Diplomacy, 42-45. Davies, Notes July 15, 1945.
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Davies reflected that he had come to Potsdam to be helpful, but he might be swimming against the tide. If he saw that "the thing is going to hell in a hand-basket," rather then intrude he would go home. One day later, on July 16, the ambassador's "hand-basket" materialized in the shape of a mushroom cloud, rising over the sands of Los Alamos. Stimson had been waiting anxiously for news of the atomic explosion. The first cryptic cable from New Mexico confirmed the achievement: Operated on this morning. Diagnosis not yet complete but results seem satisfactory and already exceed expectations.103 Following the secretary's report to the president, word spread quickly among a small circle of U.S. officials. Despite the absence of detail, there was immense excitement. An unprecedented 2 billion dollar scientific experiment had been vindicated, and prospects had dramatically improved for a quick ending of the war in Japan. But there in Berlin, with a great international conclave only hours away and a tangle of unresolved controversies still to confront, this extraordinary enhancement of national power was a profound relief.104 Some had reservations. His momentary exuberance notwithstanding, Stimson had been worrying for many months that American acquisition of an atomic bomb might worsen American-Soviet relations by intensifying Stalin's suspicions.105 Even Jack McCloy, normally so business-like, was plunged into philosophical anxiety: Today or rather the day the thing went off is a big day in history. I hope it does not augur the commencement of the destruction of modern civilization. In this atmosphere of destruction and the callousness of men and their leaders, the whole thing seems ominous.106 Having passed several days in Berlin, McCloy was overwhelmed by the "crazy character of man" - as evidenced by the slaughter of millions and the gratuitous obliteration of so much material achievement. Observing his colleagues get ready for the postwar world, he was not consoled by the calibre of American leadership. To Ambassador Davies, the Los Alamos test was a clear threat to EastWest harmony. Learning that the president was postponing his private chat with Stalin, Davies wondered if his own mission was still pertinent. 107 He asked Truman directly whether he was seeking openings to the Soviets,
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Cited in Alperovitz, Atomic Diplomacy, 195; Bird, The Chairman, 251. See important discussion of this issue in Alperovitz, Atomic Diplomacy, 174-235; Davies Diary: Atomic Postscript, July 16, 1945; Murphy, Diplomat 275. Bundy and Stimson, On Active Service, 612-55; Sherwin, A World Destroyed, 160-64; Herken, The Winning Weapon, 16-20. Diary Entry, 1945 July 16 in John J. McCloy Papers, Series 2: Diaries (Box DYi, Folder 18), Amherst College Archives. Davies Journal, July 16, 1945.
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or had this objective been superseded by recent events? Truman replied emotionally: "Joe, I want you to understand that I am trying my best to save peace and follow out Roosevelt's plans." This reassured Davies, who felt that they had gotten "right down to bed rock" and that the president "is big in his courage and mental integrity." In placating the ambassador, Truman was expressing a genuine aspiration. Like Byrnes, he remained loyal to FDR's legacy and, in coming to Potsdam, he was hoping to improve relations with the Russians.108 But he also shared the secretary's assumptions that American plans for the postwar world should prevail, and that these were compatible with legitimate Soviet interests. If there was conflict, it would be the consequence of a Soviet imperialism that should be checked from the outset. For the president successful diplomacy was less the reconciliation of diverse interests than the friendly assertion of American will. He wished to assure Stalin that U.S. intentions were benign, while still gaining his acceptance of American requirements. This would entail not only deft negotiation, but the possession of strong bargaining counters. One of these was the Russian need for American material assistance. With the explosion of the atomic bomb in New Mexico, there was another.109 In Truman's thinking, America's nuclear supremacy did not obviate the need for cooperation, but finally facilitated it. This attitude predominated the next morning, when Truman held his first private meeting with the Soviet leader.110 He informed the Russian right off that he was not a diplomat, that he usually "said yes or no to questions after hearing all the arguments." The two touched amicably on the subjects that would be covered in the meeting. Stalin fulfilled the president's expectation by announcing that the Soviet Union would be entering the Pacific War on August 16. Against the background of TRINITY, this commitment was a mixed blessing. U.S. possession of the atomic bomb reduced the urgency of Soviet involvement and offered the possibility of ending the conflict before the Red Army came in. But there was no guarantee that the weapon would work a second time or that it would have the desired impact on the Japanese. Under these circumstances, Stalin's promise was still good news. Delighted, Truman wrote to his wife:
108
109
110
For Truman's attitude toward the negotiations, especially illuminating are Ferrell, Dear Bess, 516-23 and Ferrell, Off the Record, 47-59. See also Truman, Memoirs: 194S, 367-453; Mee, Meeting at Potsdam, 1-18. In reflecting on the bomb, Truman observed, "It is certainly a good thing for the world that Hitler's crowd or Stalin's did not discover this atomic bomb. It seems to be the most terrible thing ever discovered, but it can be made the most useful." Ferrell, Off the Record, 56. Ibid., 53; Bohlen, Witness to History, 231.
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. . . I've gotten what I came for - Stalin goes to war August 15 with no strings on i t . . . I'll say that we'll end the war a year sooner now, and think of the kids who won't be killed! That is the important thing.111
Overall, the president was pleased by this first encounter. In his diary, he commented on the solidity and forthrightness of the Soviet leader, opining that "I can deal with Stalin. He is honest - but smart as hell."112 There might be "dynamite" in the Soviet agenda, but he also had "some dynamite .. . which I'm not exploding now." The informal tete-a-tete was less agreeable to Averell Harriman, who felt outmaneuvered by Joe Davies. As the current ambassador to the Soviet Union, he considered the arrangements to fall within his own jurisdiction.113 Confronting Davies, he demanded to know under what authority he had taken this initiative. And why had he come to Potsdam? The latter explained that he was there at the president's request to try to halt the deterioration in Soviet-Western relations, which if unchecked "would threaten the peace of the world for generations to come." Less belligerently, Harriman insisted his own aim was to protect the president. There were "hard issues ahead and these 'barbarians' should not be permitted to impair his position." Davies wondered whether as an old friend and senior colleague, he might speak frankly. Having previously recommended Harriman to FDR for the ambassadorship, he was disturbed by the frequent reports that Harriman "had become pro-British and antiSoviet to a degree which threatened to destroy Soviet confidence in him." There were even rumors that Harriman was advocating preventative war with the Soviet Union. The ambassador disavowed this intention, but insisted that there were serious problems and U.S.-Soviet relations should not be "a one way street." Davies observed that "we were both on the same street, and unless we could get along, there would not be order and law on that street, but riot and bloodshed which would destroy the whole community."114 Harriman could not see how this was responsive to the situation in Eastern Europe, where the United States had an obligation to maintain "self-respect" and to uphold democratic principles. While the two ambassadors traded philosophies, the three-power conference was under way in the hardwood paneled ballroom of the old Hohenzollern Palace. Stalin proposed that since Truman was the newcomer to the proceedings that he become the chairman. In this capacity,
111 IIZ 113 114
Harry Truman to Bess Truman, July 18, 1945, Ferrell, Dear Bess, 519; Davies Diary: Stalin's Commitment on Japan, July 18, 1945. Ferrell, Off the Record, 53. Davies Journal, Memorandum of Conversation with Averill Harriman, July 17, 1945, Davies MSS, Box 17, LC. Ibid.
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the president placed on the table a series of proposals on a wide range of topics. Among these was a detailed policy paper, "A Proposed Agreement on the Political and Economic Principles to Govern the Treatment of Germany."115 The American draft was a distillation of the work of the Clayton committee. Much of its substance centered on the tasks of the Allied Control Council whose authority would be "paramount" on matters "affecting Germany as a whole."" 6 In the political field, the ACC would substitute for the national government, while it carried on the work of denazification and democratization at the local and provincial levels. In the economics field, it would maintain the integration of the four zones through uniform policies, and exercise controls mainly for the purpose of disarmament and reparations. As in JCS 1067, the Allied body would take those measures necessary to avert "disease and unrest" among the German populace. By using the Clayton documents as the basis for negotiating with the Allies, the Americans extended the ambiguity of their own internal decision making into the international arena. Read literally, their recommendations were a brief for punishment and reform. They would drastically curtail German self-determination, impose a political purge, put a lien on its national wealth, abolish its military capacity, eliminate its cartels and excessive concentrations of economic power, institute land reform, and mandate trade unions. However, these provisions had been drafted by people whose unstated priority was to reconstruct the German economy and whose willingness to either punish or reform would be limited by that task. In this way, the planners' early habit of dissimulation, bred of conflict with domestic adversaries, was applied to the Russians. Instead of openly proclaiming an intention to rebuild, the State Department drafters tried to preserve the possibility with omissions and loopholes. Not surprisingly, the Soviet representatives reacted with the wariness previously displayed by Roosevelt, Hopkins, and Morgenthau. But since they had already observed American and British actions in the zones, and experienced the disappointments of the Reparations Commission, they were more vigilant. At Byrnes' suggestion, a special subcommittee of economic experts was created to iron out differences on the German issues.117 The U.S. formulation of political principles had been quickly approved by the heads
115
116
117
Thompson Minutes, First Plenary, June 17, 1945, FRUS, Potsdam IL52; U.S. Delegation, Proposed Agreement on the Political and Economic Principles to Govern the Treatment of Germany in the Initial Control Period, July 17, 1945, Ibid., 77578. But it also specified that the decisions of the council would be implemented by the zone commanders, and on questions "exclusively affecting his own zone each national commander would exercise supreme authority." Ibid. Thompson Minutes, First Meeting of the Foreign Ministers. July 18, 1945, Ibid.,
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of state118 and most of its economic principles, other than "first charge," sailed through the subcommittee. To the Soviets, what was problematic about the U.S. proposals was not what they said, but what they left out. Their own policy papers imposed more explicit curbs on the German economy,"9 and seemed to the U.S. representatives on the committee Edwin Pauley, Robert Murphy, and William Clayton - a recipe for disaster. As articulated by Maisky, the chief mission of the Allied Control Council ought to be the elimination of the German war potential. It must, therefore, prevent the recovery of "those parts of the economy which are the basis of the heavy industry" while allowing the free development of light industry and agriculture. A 20 billion dollar reparations program would facilitate this essential objective, and should not be compromised by the need for imports. Once the Germans realized that import payment took precedence "they will try to prove that without very considerable imports they can't live and can't export."120 This was what they had done after World War I "and there is no reason to believe they won't repeat the same joke again." Maisky's presentation was not much different from his approach at Yalta. However, at Potsdam his American colleagues were less sympathetic. Assistant Secretary of State Will Clayton retorted that the United States would not finance Germany a second time.121 The country was low in natural resources and could not survive without significant imports. The Russian maintained that by carefully regulating the German economy, it would be possible to generate both reparations and the necessary exports. Yet clearly, much would depend on how the Allies defined a proper living standard. Prewar Germany had lived on a high scale when compared to other European countries, but now Maisky argued, "We must visualize quite another Germany whose level will be that of middle Europe which is very much lower." The Russian position on the Ruhr also generated alarm. This British controlled area contained the foundation of Germany's industrial strength. Here were located the rich coal mines, the huge steel mills, and the vast chemical plants that had made Germany the leading economic nation on the European Continent. And here as well were many of the factories that had churned out the planes, tanks, guns, and ammunition that supported
118 119 1ZO 1X1
Thompson, Minutes, Third Plenary Meeting, July 19, 1945, FRUS, Potsdam II: 117. Proposals by the Soviet Delegation, Nos 904, 905, 920, 921, 939, 953 in Ibid., 846-47, 863-65, 888, 913-14. Robert Murphy, Memorandum by the Political Advisor, on Subcommittee of Experts on Economics, July 20, 1945, Ibid., 141-42. Representing the U.S. on the Economics Subcommittee were Robert Murphy, Edwin Pauley, and William Clayton. Of these, Robert Murphy was perhaps the most sympathetic to German unification. Despite his long-standing antipathy to the Soviet Union, Murphy had imbibed some of the enthusiasm in Eisenhower's headquarters for making the quadripartite experiment work.
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Nazi aggression. From the Soviet standpoint, this region was too dangerous to be left to the British and the routine processes of the Allied Control Council. In a very imprecise proposal, Maisky called for the "internationalization" of the Ruhr under direct four-power control.122 While stipulating that the indigenous population could remain there, he thought the main economic resources should "probably not" be owned by German nationals. The American approach to the Ruhr had not yet crystallized. Inside both State and War there was anxiety about leaving so much economic power in the exclusive possession of the Germans, as well as a sensitivity to West European, and especially French, desire for severance of the territory. Although most of the U.S. officials at Potsdam did not wish to impair German political unity, there was some interest in a French/Belgian/Dutch protectorate for the area, and even greater support for international ownership and control of its industries.123 Beneath these differences was a shared intention to salvage as much productive capacity as possible, which made an expanded Soviet role quite undesirable. Inside the Economics subcommittee, the Allied representatives were coming face to face with their fundamental differences. The Anglo-American concern for Germany's economic viability and the Russian fear of it inhibited accommodation on specific points. Edwin Pauley had already experienced this dynamic in Moscow, and had come to Berlin after weeks of being educated by Harriman on Soviet transgressions in Eastern Europe. He was, therefore, in an uncompromising frame of mind and had little difficulty mobilizing Murphy and Clayton. After several days, the Americans reached the radical conclusion that there should be no German-wide reparations program.124 Instead, the Soviets should satisfy their own and Polish claims from the eastern zone, while West European claimants could fulfill their requirements from the western zones. The implications of this shift were dramatic. Not only was it an open break with Yalta, but it was directly at odds with the proposals on economic unity that had already been reached. If there were two entirely separate reparations schemes for eastern and western Germany, the prospects for a common trade policy, or for the free flow of goods and services within the country were much diminished.125
122 123
124
125
U.S. Delegation, Meeting of the Economic Subcommittee, July 2, 1945, evening, FRUS, Potsdam II: 183-84. On this matter the president went much further than his advisors in suggesting that the Germans should not control the Ruhr. Davies Diary, July 18, 1948; U.S. Delegation Working Paper, "Separation of the Ruhr and Rhineland from Germany," FRUS, Potsdam 11:989; McCloy to Harrison and Douglas, July 10, 1945, RG 107 ASW 370.8, Germany, MMNA. Bohlen Minutes, Byrnes-Molotov Meeting, July 23, 1945, FRUS, Potsdam IL27475See Kuklick's formidable argument that the zonal reparations approach was the source of the division of Germany. Kuklick, Division of Germany, 226-35.
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John McCloy expressed the changing American perspective in his diary entry of July 23. The assistant secretary had been unofficially attending the subcommittee discussions, and he readily perceived that America's zonal reparations plan would mean "the establishment of some form of threeparty economic rule in western Germany." However, this was preferable to the "constant distrust and difficulty we would have with the Russians over their being in our zones, knowing what goes on and we not being in theirs." As he assessed the options, partition suddenly seemed the lesser of the evils: It is better to have a clear line of distinction and negotiate across that line. It has tremendous significance for Europe, but the other arrangement has more sinister and not entirely favorable considerations when one considers the atmosphere in which negotiations are conducted in Berlin today.... There are such diversities and lack of understanding that I cannot see how it can work out any other way.126 In communing with his diary, the assistant secretary was articulating a certainty that he did not entirely feel. As revealed in subsequent entries, he was still reluctant to abandon the hope of economic unity. 127 Yet the drift of his thinking showed the impact of these first encounters with Russian aspirations. In the desolate environment of Berlin, their overwhelming preoccupation with industrial dismantling and economic restrictions was deeply offensive. Moreover, with reports just coming in on the magnitude of the Los Alamos explosion he, like many of his colleagues, was less inclined to compromise. 128 The disputes inside the Economics subcommittee were aggravated by the external controversy over Stalin's unilateral transfer of East German territories to Polish administration. At Yalta, the three powers had adjusted the contested Soviet-Polish frontier westward to the Curzon line and accepted the principle of territorial compensation from eastern Germany. Because they had disagreed over the extent of the cession - with Stalin pressing for the Western Neisse and Churchill objecting - the final decision was left to a future peace conference. However, during the intervening
McCloy Diary Entry, 1945, July 23 & 24 in John J. McCloy Papers, Series 2: Diaries (Box DYi, Folder 18), Amherst College Archives. Thus as late as July 30, McCloy was writing in his diary, "I attended the earlier meetings, but they left me undecided. I hate to give up the idea of treating Germany as a single economic unit I do feel that we shall get somewhere in trying to work out with the Russians the things they should take out of their zones." McCloy Diary Entry, 1945 July 30 in John J. McCloy Papers, Series 2: Diaries (Box DYi, Folder 18), Amherst College Archives. McCloy also recorded that, "Throughout it all the 'big bomb' is playing its part - it has stiffened both the Prime Minister and the President. After getting Groves' report they went to the next meeting like little boys with a big red apple secreted on their persons." McCloy, Diary entry 1945, July 23 & 24, in John J. McCloy Papers, Series 2: Diaries (Box DYi, Folder 18), AC; Stimson Diary, July 22, 1945.
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months, the Soviets had taken matters into their own hands by putting East Prussia and Silesia under Polish jurisdiction.129 This action challenged four-power rule by violating the spirit of collective decision, and by removing from German control one-quarter of its arable land and the valuable coal mines of Silesia. In going into the Potsdam Conference, the Americans had little hope of budging Stalin on the issue.130 But as another impediment to German recovery, the loss of the OderNeisse territories weighed heavily in their thinking. Between the heads of state, this territorial issue became the initial focus of the German debate. President Truman charged the Soviets with independently creating a "fifth zone of occupation," which would seriously disrupt Germany's internal economy.131 Stalin maintained the border shifts were the unintended result of wartime conditions, when German civilians and military personnel fled the area. He could not comprehend, in any case, the solicitude for the Germans, who were "mainly responsible" for the existing hardships and who "should suffer rather than their victims." Reflecting the State Department, the president insisted that the reparations problem could not be settled unless some of the valuable eastern territory was returned. Yet he was not terribly disturbed by this particular impasse. With the Soviets entering the Pacific War, he had already gained what he came for. Moreover, he felt that in this first appearance on the international stage, he was making a good impression. He had tried to convey a combination of toughness and good will, with the result that both "Joe and Winnie" were being "exceedingly careful with me."132 Despite Truman's complacency, a failure to reach accord on Germany was a matter of grave significance. By the second week, the problem was before the Council of Foreign Ministers, where Secretary of State Byrnes and Foreign Minister Molotov were crossing swords. The Russian demanded 20 billion dollars' worth of reparations - of which fifty percent would come from capital equipment extracted over a two-year period and another fifty percent from current production delivered over the course of
Mee, Meeting at Potsdam, 134-36; Byrnes, Speaking Frankly, 79-81; Bohlen, Witness to History, 234; Kennan, Memoirs 1:276-80. State Department Minutes, Fifth Plenary, July 21, 1945, FRUS, Potsdam II: 211; Joint Strategic Survey Committee, Dismemberment of Germany (Undated), Naval Aide File, Box 2, HST; Leahy Diary, July 21, 1945. U.S. Department of State, Minutes of Fifth Plenary, July 21, 1945, FRUS, Potsdam 11:208-14. The President wrote Mrs. Truman that he had spoken confidentially with Stalin and he expected "things will be all right in most instances." There were some items "we won't and can't agree on - but I have already what I came for." Harry Truman to Bess Truman, July 22, 1945, Ferrell, Dear Bess, 520-521; Davies Diary, July 21, 1945.
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ten years.133 Byrnes objected that the Soviets had already removed substantial material from their zones and that their total figure was unrealistic. Molotov reminded his colleagues that the Soviet Union had suffered "direct losses" of many billions of dollars.134 However, if the Westerners were distressed by the previous allocations, he would shave 1 billion dollars from the bill. When Molotov invoked the Yalta commitment, Byrnes claimed that battlefield destruction had changed the situation. The United States now faced a tremendous problem feeding all the people in its zone, and would be importing at least 1.5 billion dollars' worth of food during the next year. Before paying reparations, Germany's first obligation should be to those who were supplying them. The American argued that by implementing a zonal reparations program, everyone could get what they needed.135 Molotov did not see how this could be true. If the Soviet Union was excluded from the Ruhr, most of Germany's heavy industry would be unavailable to them. It would be better to reduce the total to eight billion dollars than to forego the factories from this area. Byrnes thought differently. Under any German-wide plan, "quarrels would develop" since the Soviets would be constantly questioning the need for imports. Molotov reminded him that if the Allies set a fixed albeit lower sum for reparations, this would obviate any argument over imports. Alternatively, they could agree to treat reparations and payment for imports as equivalent values with German products allocated equally.136 The latter notion was objectionable to Byrnes, who proclaimed that "not a dollar will be paid on reparations until imports are paid for." When again faulted by Molotov for ignoring Yalta, Byrnes claimed that during Pauley's thirty-five-day stay in Moscow, he had taken the 20 billion dollars as the "basis for discussion." The commissioner had made "an investigation" and determined that the sum was "impractical." Thus the United States had already fulfilled its Crimea obligation. Despite the obvious falsity of this claim, Byrnes was becoming increasingly disgusted with the Russian foreign minister.137 To his mind, Molotov's persistent arguments and efforts to come up with different formulas - whether a lowered reparations bill or an altered method of allocation - seemed evidence of stubbornness. But Byrnes was also getting nervous about the thicket into which he had
133 134 135 136 137
Soviet Delegation, Plan for Reparations from Germany (Undated), FRUS, Potsdam IL863. Dept of State, Minutes of Informal Meeting of the Foreign Ministers, July 23, 1945, Ibid., 296-98. Ibid. See discussion in Byrnes, Speaking Frankly, 83-84. Dept of State, Sixth Meeting of the Foreign Ministers, July 23, 1945, FRUS, Potsdam 11:279-80. Davies Diary, July 29, 1945.
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unexpectedly stumbled. Having followed the lead of his subordinates on the Economics subcommittee, he was entangled in a complicated, tedious altercation from which there was no easy escape. It had become apparent to him that in the absence of a reparations agreement, the Soviets would refuse to implement any other provisions for economic or political unity.138 The secretary was unwilling to take the risk. Most State Department economists thought western Germany could not stand alone,139 that a partition would deny access to food and other essential goods, while disrupting the market for many industrial products. Moreover, the immediate breakdown of the Allied Control Council would likely shatter the Grand Alliance. Newly appointed to his job, Byrnes was reluctant to face the public outcry that would almost certainly ensue. Even as a personal preference, he did not want a rupture. Like Truman, he had come to Potsdam hoping to earn his spurs as a formidable negotiator who could achieve a favorable bargain. As relations spiraled downward, the secretary admitted to Joe Davies that he was surprised by the Soviets' firmness.140 He had thought that word of the atomic bomb would "induce them to yield and agree to our position." The ambassador responded that the existence of the bomb "would work exactly opposite." If the United States excluded the Soviets from participation in the new weapon, this would incite further suspicion and animosity. Davies contended that the reparations issue was being mishandled. There was too much emphasis on the financial considerations, which to his mind were "de minimus." The totals that were being discussed did not constitute "even a small faction of a thousandth part of i percent of the cost of a preventative war with Russia." The virtues of peace far outweighed, in any case, the material preoccupations of the U.S. delegation. Moreover, his colleagues were simply not grasping what reparations meant to the Soviets. For them this was the test of American sincerity at Yalta.141 The Soviet Union urgently needed the German deliveries to mitigate some of their own suffering. But even more important, the controversy "touched the core of their fear and suspicion that the West would use Germany to attack them." U.S. interests would be only marginally affected by decisions on reparations. But for the Soviets, it was a key to their national security. Davies urged Byrnes to start moving on a settlement by offering "some trade-offs" on the most contested questions - reparations, the Oder-Neisse
138 139 140 141
Department of State, Minutes of Ninth Meeting of the Foreign Ministers, July 27, 1945, FRUS, Potsdam 11:428-30. U.S. State Department, Policy Toward Germany (Undated), FRUS Potsdam 1:441. Davies Journal, July 28, 1945, Davies MSS, Box 18, LC. Ibid.
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territory, and recognition of the former satellite states.142 Though unwilling to commit himself, the secretary encouraged Davies to start sounding out the Russians. BY THE END OF July, Byrnes was in an exposed and trying position. Within the U.S. delegation members still expected German economic unity, despite digging in their heels on reparations. In coping with this crosspressure, the secretary had no help from Truman, who was preoccupied with the Pacific War and eager to get home.143 Though he lacked knowledge of the German issues, Byrnes was shrewd enough to see that there must be a resolution. As an old South Carolina politician, his most distinctive skill was wheeling-and-dealing, which he had so far put to little use. Following a pause in which the British returned home for national elections, the secretary took charge of the German negotiations.
III. POTSDAM RESOLVED

Byrnes' labors yielded an incoherent reparations deal, which combined zonal removals with new provisions for economic integration. Both the British and Soviets regarded the bargain as irrational, but lacked the power to move the Americans. The very illogic of the arrangements allowed them to accept, since it was impossible to discern their practical meaning. For the Soviets, a further incentive to agreement was that the other German clauses in the protocol still sounded like JCS 1067.
A F T E R HIS
conversation with Byrnes on July 27, Joseph Davies met informally with Vyshinski and Molotov to probe the prospects for an accord. Vyshinski was irritable and uncooperative, complaining again of the violation of Yalta.144 The American noted there were grievances on both sides, and that his own colleagues were disturbed by the reports of Russian "looting." Whatever the merits of each position, it was time to stop recriminating. In a more cordial vein, Molotov chatted with Davies about the surprising British elections in which the Labor Party had unseated Prime Minister Winston Churchill. The two also commiserated over the disturbing atmosphere at Potsdam.145 Molotov emphasized that the Soviet leadership "had trusted President Roosevelt and believed in him," but found it less easy to understand the new president. Davies noted that his own presence at the meeting was testament to Truman's eagerness to preserve the alliance.
14i 143 144 145
Davies Diary, July 27 6c July 28, 1945. Harry Truman to Bess Truman, July 25, 1945 m Ferrell, Dear Bess, 521. Davies Diary, July 28, 1945, Conversations with Vyshinski and Molotov. Ibid.
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Obviously, differences had emerged but the conference could yet be retrieved if the three powers worked on a package of disputed issues. The foreign minister expressed skepticism. At Yalta, there had been clear agreements of principle, but then the Americans had changed their minds. Molotov reminded Davies of the damage the Germans had done, how "over a front of 1,600 miles, and an entire region west of that f r o n t . . . Russia had been overrun and fought over, and its farms, its cities and its factories destroyed by the Germans." More than eight million lives had been "sacrificed to armies, either through death and slavery or worse." At Yalta these facts had been recognized and appreciated. Now they were forgotten. Davies maintained that Truman and Byrnes were still fundamentally committed to Yalta, although they were now uncertain of Germany's capacity to pay the high reparations bill. Molotov did not see why there was so much difficulty. At the very least, the Americans could honor their promise to give the Soviet Union one-half of all reparations (something which their insistence on zonal deliveries would preclude). 146 He also thought Germany had ample resources for payment - gold, numerous war installations, factories of every description, rich supplies of coal, and important agricultural products. With uncharacteristic fervor, Molotov invoked the "tender and bitter" feelings of the Russian people on this subject: Hitler's armies had overrun their land. They had despoiled everything of value. They had enslaved women and children in barbaric death chambers. They had tortured and killed thousands upon thousands. They had destroyed whole cities and razed an empire.147 The foreign minister thought it incredible that the Americans were refusing to negotiate on any figure. Even apart from the Yalta obligation, it seemed obvious that "if anyone had to suffer and be punished" that it ought to be the criminal and "not the ally who had already suffered more to defeat him than any of the allies." Acknowledging the force of this argument, Davies asserted that concessions must be made on all sides. He was looking for a deal that would encompass reparations, the Polish border question, and the recognition of Romania and Italy. This would permit a successful conclusion to the conference and "create confidence in the capacity of the Allies to work together for peace." Alongside Davies' overture, Secretary Byrnes suggested directly to Stalin that the American and Soviet heads of state begin private conversations on the outstanding issues. When the Soviet leader seemed amenable, Byrnes
146
147
According to both Soviet and American calculations, the eastern zone contained no more than forty percent of the desired industrial equipment. U.S. Delegation Working Paper, July 26, 1945, FRUS, Potsdam II:8 84-8 5. Davies Diary, Conversations with Vyshinski and Molotov, July 28, 1945.
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turned to State Department subordinates for assistance with the preparations. During this phase, he relied especially on Assistant Secretary for Economics William Clayton.148 Throughout the Potsdam deliberations, Clayton had swung back and forth on the German problem. An arch-defender of the "first charge" principle, he bore considerable responsibility for the existing stalemate. Yet he was torn between Harriman's bellicosity and the warnings of his own economists. With a nudge from Byrnes, Clayton came down on the side of German unity and helped the secretary put together a deal. Byrnes had been toying with the idea of offering de facto recognition of Poland's western frontier pending a final peace conference, in exchange for Soviet acceptance of a zonal reparations plan. At Clayton's behest,149 this was modified to include a pledge to the Russians that they would also be guaranteed a certain percentage of deliveries from the Ruhr. Such allocation would come from plants not needed for a minimum subsistence economy. President Truman thought the approach ingenuous, and expected a quick resolution with Stalin. In a letter to his wife, he again stressed his liking for the generalissimo. The Russian was "straight-forward, knows what he wants and will compromise when he can't get it."I5 Explaining that he and Byrnes were working out the details on the Polish border and reparations questions, he hoped "we can wind this brawl up by Tuesday and . . . head for home immediately." The United States had already gotten "all we came for" and he thought there would be "a good report to the country." Just prior to the heads of state meeting, Stalin claimed illness and dispatched Molotov to hear the American recommendations.151 As expected, Byrnes offered a trade-off on the Oder-Neisse territories and the procedures for reparations. While each of the Allies would take deliveries from its own zone, the Russians could also receive twenty-five percent of the surplus equipment from the Ruhr, if they paid for it with goods from the east. Molotov seemed moderately interested, but reminded Byrnes that the key was still how much his country could receive from the Ruhr. Soviet requirements were approximately 2 billion dollars (orfiveto six million tons) of Western equipment. The secretary replied that according to his experts it was not possible to put a specific dollar or tonnage value on the equipment that would be available, though he could guarantee the percentage. Indeed Byrnes had asked Reparations Commissioner Edwin Pauley whether the Russians could be given a precise answer. Pauley wrote that while it was feasible to do so, it was imprudent. Echoing Harriman, he
148 149 150 151
Davies Diary July 29, 1945; McCloy Diary, July 30, 1945. Clayton to Secretary of State, July 29, 1945, FRUS, Potsdam 11:900-901. Harry Truman to Bess Truman, July 29, 1945, Ferrell Dear Bess, 522. Truman-Molotov Meeting, July 29, 1945, FRUS, Potsdam 11:471-76.
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contended that "in view of the tremendous shortages of food and fuel, not only in the Western zone of Germany, but in Western Europe, it appears unwise to remove anything except direct war potential...." (italics added). The total value of this "direct war potential" in the three western zones was approximately 1.7 billion dollars, from which the Soviets would probably receive 214 million dollars.152 This differed "so widely from the figure that the Russians have in mind, t h a t . . . the mere mention of this figure at this time will preclude any agreement being made at all." Molotov was no fool, and he readily perceived that Byrnes' evasion was significant. Obviously "25 percent of an undetermined figure meant very little" and there was need for a fixed yardstick.153 Unabashed Byrnes used the American departure from Yalta as a justification for future ambiguity. At the Crimean conference, the three Allies had tried to specify figures "prematurely" with resulting bad will. If six months down the road the Potsdam numbers proved incorrect, "the Soviet government will charge we are going back on the agreement." Molotov also pointed out that less than forty-two percent of the national wealth of Germany lay in the eastern zone. Unless the Ruhr allocations came free, the result of the American proposal would be to deprive the Soviet Union of the fifty percent of reparations to which it was entitled. Secretary Byrnes challenged Molotov's numbers, claiming that half of Germany's wealth was inside the Russian zone. This protestation notwithstanding, Byrnes was holding a State Department study that seemed to sustain Molotov's position.154 According to the document, only forty percent of German industrial production was in the eastern zone, much of it in small factories without substantial fixed capital. In contrast to the western zones, these eastern plants were producing a disproportionate share of peacetime goods such as textiles, appliances, paper, pottery, ceramics, and glass. As regards "once and for all war potential" some thirty percent of installations were in the Russian zone as opposed to forty-eight percent in the Ruhr. Despite this information, Byrnes was riled by Molotov's assertiveness, proclaiming inaccurately that the percentage figures fixed at Yalta "were no more agreed to except as a basis of discussion than had been the actual amounts of reparations."155 Truman tried to cool down tempers. He explained that the United States wanted a "workable plan" and that he hoped the Soviet Union could receive fifty percent of the total. Following the president's lead, Byrnes
IS1
In doing this calculation, Pauley was working in a somewhat different framework
153 154 155
from the one Byrnes was presenting. Instead of 25 percent deliveries from the Ruhr, he was estimating 12.5 percent deliveries from the West as a whole. Pauley to Secretary of State, July 28, 1945, FRUS, Potsdam 11:892. Bohlen, Minutes Truman-Molotov Meeting, July 29, 1949. U.S. Delegation Working Paper, July 26, 1945, FRUS, Potsdam 11:884-85. Bohlen Minutes, Truman-Molotov Meeting, July 29, 1945.
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reiterated that the whole purpose of the U.S. plan was to "do away with . . . certain points of friction." Still Molotov wondered what all of this might mean for German unity. Here in Potsdam, the delegates were setting forth elaborate plans for administering the finance, trade, transport, and industry of Germany. But if reparations were not to be treated as a whole, wouldn't this disrupt these other provisions? Byrnes insisted that "nothing was changed," and that the Allies could carry on with their responsibilities as previously intended. As the session concluded, Molotov restated his understanding of the American proposal: "The Soviet Union would look to its own zone for a fixed amount of reparations and would receive as reparations twenty-five percent of the equipment from the Ruhr available for reparations."156 Correcting him, Byrnes stressed that "the Soviet Union would take what it wished from its zone" (italics added), but must pay for the Ruhr deliveries with products from the east. Overnight, the Americans considered the impasse. In line with his staff's study, Clayton urged Byrnes to supplement the twenty-five percent of compensated Ruhr shipments with another fifteen percent that would come free.157 This sounded better, but from the Soviet perspective forty percent of x was still x. Molotov wondered whether the Western powers would stipulate that the twenty-five percent of deliveries "should not be less than 800 million dollars or two million tons of equipment?"158 Byrnes encouraged him to rely on American "good faith." After all, the Allies were "going to trust each other on matters of much greater importance than this." Moreover, the stellar advantage of this agreement was that "the determination of what was available in the Soviet zone would concern neither the British, French, nor the United States, and they would not therefore be interfering in that determination." In the absence of a fixed figure, Molotov foraged for other safeguards. In rapid succession, he proposed that the Allied Control Council be given responsibility for determining the quantity and type of deliveries from the west, that there be a special four-power regime for the Ruhr, and that central German agencies be created for trade, transport, industry, finance, and communications. The common denominator behind these ideas was that they strengthened the quadripartite machinery, and by so doing guaranteed a Soviet voice in the western zones. As the Americans grappled with these Soviet demands, they faced new difficulties from the British, whose Labor Party representative had rejoined the Allied discussions on July 30. Ernest Bevin, the new foreign secretary, was openly critical of the U.S. reparations approach. In this he was reflecting
156 157 158
Ibid. Clayton to Secretary of State, July 29, 1945, FRUS, Potsdam 11:900. Department of State, Minutes of Tenth Meeting of the Foreign Ministers, July 30, 1945, Ibid., 484-92.
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the outlook of the Foreign Office, which viewed the contemplated "swaps" as a recipe for schism.159 Whitehall had consistently opposed the Soviet desire for a high reparations bill, but thought the U.S. alternative to be economically disruptive and ultimately unworkable. The British were also annoyed that in their absence, the Americans and Russians had focused on the Ruhr as the sole source of Western reparations deliveries. Since this region was exclusively in their zone of occupation, they viewed this as an unequal burden. Despite these lingering difficulties, President Truman thought they were close to a deal. Hopeful of a speedy departure, he wrote Bess that Stalin was trying to stall, but it would do him no good: He doesn't know it but I have an ace in the hole and another one showing - so unless he has threes or two pairs (and I know he has not) we are sitting all right.160 The sticking point was still reparations. The Russians were "naturally looters" and since they had been looted by the Germans "over and over again" one could "hardly blame them for their attitude." But as president, his job was "to keep our skirts clean and make no commitments." In negotiating this issue, Truman felt that he was engaged in a test of wills.161 Unlike some other members of the U.S. delegation, he was not personally outraged by the Soviet dismantling, regarding their actions as within the ordinary bounds of human rapacity. However, he felt obliged to minimize what they received in order to protect the interests of the American and British taxpayers. Truman's shallow definition of the conflict presumed a certain equivalence between the material requirements of the Soviet Union - with its millions of dead and wounded, devastated cities, burned-out farms, and ruined factories - and the expenses accruing to the Western powers as a result of imports. That the United States and Britain were freely deciding to pay for Germany, whereas the Soviet hardships had been externally inflicted carried little weight. To the president, as for the officials in the State and War departments, Germany's economic recovery seemed less a choice than a moral and practical imperative. Although Byrnes' lastest proposal was another means of avoiding specific figures, it gave the Soviets the possibility of extracting significant
159
160 161
As one Whitehall official observed: "The plan is probably a decisive step toward the separation of Germany into a western area and an eastern area under Russia." See discussion in Cairncross, The Price of War, 93-99; Bullock, Ernest Bevin, 27. Harry Truman to Bess Truman, July 31, 1945 in Ferrell, Dear Bess, 522-23. This attitude was also expressed in the president's diary entry of July 7: "Byrnes and I discussed Pauley's plans on reparations. The smart boys in the State Department, as usual, are against the best interests of the U.S. if they can circumvent a hard hitting trader from the home front. But they are stymied this time. Byrnes and I shall expect our interests to come first. Pauley is doing a job for the United States." Ferrell, Off the Record, 49.
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deliveries from the West.162" Once on the table, it fundamentally altered the negotiating situation, for in contrast to the original zonal plan, which merely endorsed what the Red Army was already doing, it provided the Soviet Union with a material incentive to agree. On July 31 Marshal Stalin recuperated from his cold and accepted the substance of the U.S. recommendations. The Russian leader joined the British in proposing that the deliveries come from western Germany and not just the Ruhr, with an accompanying downward revision of the percentages.163 As finally formulated by Byrnes, the Soviets could receive twenty-five percent "of such industrial capital equipment - metallurgical, chemical, machine-manufacturing industries - as would not be required to sustain the peacetime economy of Germany." Of this amount, fifteen percent would be compensated by deliveries of raw materials from the Soviet zone of occupation, while another ten percent would go free.164 During the next six months, the Allied Control Council would develop a Level of Industry plan for Germany as a whole, so that the capital equipment that exceeded the prescribed level might be made quickly available for reparations. In a subsequent session on July 31, the Americans and British enthusiastically supported Molotov's proposal for German central agencies.165 While clearly linked to reparations, these offered a practical mechanism for making economic unification a reality. The Westerners were less responsive to the Soviet demand for four-power supervision of the Ruhr, which seemed to them either redundant of the Allied Control Council or an ominous extension of Russian authority into the area. Stalin had difficulty explaining the purpose, reflecting weakly that he wished to be assured that the Ruhr would remain part of Germany. Ernest Bevin remained unhappy with the U.S. concessions on the GermanPolish border, pressing the case for the eastern Neisse.166 However by this point, Byrnes was confident that he had a favorable bargain and was determined to carry it through. As the newcomer on the scene, the foreign secretary capitulated on this as he had on reparations, but warned that both agreements would handicap future cooperation. In reviewing the final package, Ambassador Davies thought it "a great
l6z
In effect, the Byrnes proposal would postpone a decision on quantity until the formulation of the Level of Industry plan six months later. Depending on how the Allied Control Council defined "a minimum standard of living" there might yet be significant deliveries. Gottlieb, The German Peace Settlement and the Berlin Crisis, U.S. Department of State Minutes, Eleventh Plenary Meeting, July 31, 1945, FRUS, Potsdam 11:511-18. Department of State Minutes, Tenth Meeting of the Foreign Ministers, July 30, 1945, FRUS Potsdam IL4 84-90. Soviet Delegation, Political Principles for Germany, July 30, 1945, Ibid., 824; U.S. Department of State, Minutes of Eleventh Plenary, July 31, 1945. Bullock, Bevin, 27.
163 164 165 166
36-42-
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achievement" that had made the conference "a success when it was seriously threatened with failure." Most of his American colleagues shared that perception for despite a certain bravado, few wished to forfeit the Grand Alliance or lose the chance for German unity.167 The great virtue of the Byrnes formula was that it permitted the Allied Control Council to begin operations while guaranteeing at least a minimum standard of living to the Germans. For those few like Harriman, whose anger over Eastern Europe evoked hostility to any kind of German settlement, the Byrnes initiative was less appealing.168 Top United States policy makers were also cheered by the impending conclusion of the Pacific War. On July 26 they had joined the British and Chinese in issuing a proclamation calling for Japan to surrender unconditionally. On July 28 the Japanese premier had told a press conference that his government would "mokusatu" the Potsdam warning.169 Truman interpreted this to mean that the Japanese planned "to ignore" the Allied statement, although subsequent cable intercepts suggested a more ambiguous intention. The Americans were impatient to use their new atomic weapon, an eagerness reflected in the president's decision to ignore the uncertainties and proceed with the attack. Thus in the waning hours of Potsdam, officials were anticipating that the imminent explosion in Hiroshima would irrevocably change international politics by defeating a hated adversary and displaying unprecedented power to the Russians.170 Even without the bomb, the Soviets had been given much food for thought. On a broad spectrum of issues, they had encountered more U.S. resistance than at any time since Pearl Harbor. On the critical German questions, they were faced with an American approach that was clearly at odds with their own national objectives.171 Of the latter, there had been ample forewarning in the experience of the Moscow Reparations Commission. However, during the European war, clashes with American officials had quite frequently been superseded by more favorable resolutions at a higher level. In coming to Potsdam, Soviet negotiators appeared hopeful that Truman would overrule Edwin Pauley. Yet despite some modifications,
167 168 169
170
Davies Diary, July 31, 1945; Byrnes, Speaking Frankly, 86-87; Yergin, Shattered
Peace, 119.
Indeed, Harriman's position was that no further deliveries should be authorized to the Soviet Union. Harriman, Special Envoy, 488. See discussion in Alperovitz, Atomic Diplomacy, 233-35. While historians continue to differ on whether the Untied States dropped the bomb on Hiroshima and Nagasaki to intimidate the Soviets, there is general agreement that policy makers expected possession of the bomb to reshape great power relations. See Messer, End of Alliance, 71-92; Herken, Winning Weapon, 1-29; Sherwin, World Destroyed, 186-221; Alperovitz, Atomic Diplomacy, 3-8. Information on the Soviet reactions to Potsdam remains sparse. Yet as suggested by the Davies diary and other American accounts, their diplomats were disappointed with the proceedings. For a similar conclusion see Mastny, Russia's Road, 293-303.
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Byrnes' concluding offer was a far cry from what had been said at Yalta, no matter how loosely Roosevelt's promise was construed.I?z Whatever grim thoughts the Soviets may have harbored were suppressed during the last friendly day of the conference. Allied drafters hastened to complete the formal wording of the protocol and the communique, and did not finish their labors until late in the evening on August 1. At that time, the heads of state went into final session, where they clarified some outstanding points and affixed their signatures to the documents. In a courteous gesture, they sent a message to Churchill and Eden expressing appreciation for their contribution.173 Then President Truman, acting as the chair, thanked his colleagues for their cooperation and voiced the wish that "this Conference might be a definite milestone . . . on a difficult road leading to a just and durable peace." He hoped "the good fellowship and good feeling which had been cemented here . . . would continue to grow stronger as the time went on." Marshal Stalin endorsed the president's sentiments and praised him for the fair way in which he had conducted the sessions. By then, it was three o'clock in the morning. A weary Truman urged that the next big three meeting take place in Washington, to which Stalin replied oddly, "God willing." On that note, the three Allied leaders bade farewell. satisfaction over a signed agreement, the German sections of the communique were disjointed, contradictory, and dangerously misleading.174 Even the reparations provisions, which had been pored over for so many weeks, contained serious weaknesses. To avoid a fixed sum the Allies had come up with a formula under which the ACC would have six months to devise a Level of Industry plan that would leave Germany with a minimum peace economy. Yet there were no criteria for defining what this might be. The one source of illumination was the control clause guaranteeing goods and services for an average living standard "not exceeding the standards of living of European
D E S P I T E THE
172
173 174
As pointed out by Economics Deputy Donald Humphry, "Now I think, and this is my interpretation, that when at that level... you agree to take 10 billion dollars as a basis for study, you don't expect to settle for 4 billion dollars or 5 billion dollars you expect maybe . . . you would settle it at 8 1/2 billion dollars or 9 billion. But they certainly I think, can feel as a matter of high level diplomacy, that they were let down when we wouldn't agree to compromise the figure that we agreed to take." Donald Humphry Interview, Conducted by John Backer, September 7, 1977 in John Backer Papers, Rare Book and Manuscript Library, Columbia University, Box 3. Cohen, Notes of Thirteenth Plenary, August 1, 1945, FRUS, Potsdam 11:597-601. The problematic nature of the German clauses has been widely commented upon although there are substantial differences in assessment. See especially Kuklick, Division of Germany, 15 5-66; Backer, Priming the German Economy: American Occupational Policies, 70-72; Backer, Decision to Divide Germany, 88-96; Gimbel, The American Occupation of Germany: Politics and the Military, 9-13.
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countries." Read literally, this meant that the German economy should not be allowed to outstrip that of its neighbors. But was this apparent ceiling also a floor?175 Were the Allies obliged to leave Germany with enough productive capacity to achieve the average European standard? And if not, how far below that standard were they free to go? The resolution of this matter had implications that went beyond the reparations program itself. For under the agreement, the removal of factories was the prime vehicle for eliminating Germany's war potential and limiting its "production of metals, chemicals, machinery and other items that are directly necessary to a war economy." If the Allied Control Council could not settle on a substantial list of dismantlings, then the plan for industrial disarmament would also be imperiled.176 Also obscure was the future of current production reparations. Throughout the negotiations the Soviets had regularly restated their desire to receive half of their allocation in this form.177 Yet in the final intricate arguments over capital equipment the topic was pushed to the sidelines and current production was not specifically mentioned in the agreement. However, the introduction to the reparations section began with an invocation of Yalta ("In accordance with the Crimea decisions...") where recurrent reparations had been included, thus offering a basis for a continued Soviet claim.178 In view of the American aims, the gravest flaw in the reparations scheme was its threat to German unity. During the final stages of the Potsdam Conference both Molotov and Bevin had pointed out the incompatibility of Byrnes' proposal with the plans for economic integration. The Secretary of State had stubbornly insisted that his procedure would facilitate cooperation by removing an unnecessary source of friction.179 However genuinely felt, Byrnes' protestations were illogical. His chief argument to the Soviets was that they could take whatever reparations they wanted from their zone without having to justify themselves to their Allies. At the same time, the Allied Control Council was mandated to pursue "common policies" with regard to such matters as mining, industrial production, trade, transport, and communications. Yet should the Russians decide, for example, to remove most of the steel mills from their zone then this would certainly inhibit the production of mine machinery and constrain the production of coal throughout the country. The same would apply to dismantling in any field of national importance. Actions in the east would obviously affect the economy of Germany as a whole.
175 176 177
178 179
Ratchford and Ross, Berlin Reparations Assignment, 66-6$. Donald Humphry, Unpublished Manuscript on German Reparations, Backer MSS, Box 4, CU. In their reparations proposal, they had requested that fifty percent of the total be from current production. Soviet Delegation, Plan of Reparations from Germany. (Undated). Backer, Priming the German Economy, 73. Truman-Molotov Meeting, July 29, 1945; Kuklick, Division of Germany, 156-58.
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In theory, the two imperatives could be reconciled by deciding that where there was a conflict the Soviet need for reparations would take precedence over the formulation of common policies. Yet clearly this was not a conclusion the Americans were prepared to embrace. Alternatively, it might have been stated that common economic policies would take precedence over Soviet removals. But to make this explicit would be to cancel the Russians' only incentive for abandoning their claim to a fixed sum. Instead, the problem had been ignored and both principles granted equal standing. With regard to the western zones, the contradiction was less apparent. Here removals were predicated on the preservation of a minimum peacetime economy. This offered some basis, albeit ambiguous, for adjusting the disparate demands. Yet significantly, this minimum referred to the entire country. In other words, the Level of Industry plan would involve national targets for different types of production. As a consequence, decisions about western zone removals could not be separated from developments in the east.l8 If the ACC concluded that a certain number of chemical factories must be retained in Germany, then it would be necessary to know how many plants the Soviets had taken out and to reduce the western removals accordingly. Should the Russians stand on Byrnes' promise that what they did in their zone was their own affair then these national arrangements would unravel. All of this would be complicated even further if it was understood that current production reparations were acceptable. Under that condition, the Allied Control Council would be saddled with the responsibility for supervising the German economy as a whole, while one power was allowed to siphon off production for its own use. An important safeguard was the inclusion of the "first charge" principle, which the Soviets had agreed to once capital equipment was exempted.181 But the likely result of such a stipulation was that the Soviets would use their power in the Allied Control Council to drastically curtail imports into the west. Many of these problems became immediately evident in the aftermath of Potsdam when U.S. officials tried to translate the reparations clauses into practical policies. In discussions with the American members of the Allied Control Council, the staff of the Reparations Commission pointed out the discrepancy between the economics and reparations sections. Their initial thought was that where "the two sections are inconsistent, the reparations section will... prove to be governing" and that there was no limit to the
180 181
Humphry, Unpublished Manuscript on German Reparations. "In working out the economic balance of Germany the necessary means must be provided to pay for imports approved by the control council in Germany. The proceeds of exports from current production shall be available in the first place for payment for such imports." This clause "will not apply" to the provisions for capital removals. Communique Potsdam, Report of the Tripartite Conference in Berlin, August 2, 1945, FRUS, Potsdam 11:1501-8.
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capital equipment that the Russians could remove from their zone. They also assumed that the Soviets would be entitled to deliveries from current production.182 These judgments were quickly reversed by Edwin Pauley, who maintained that "although the protocol contemplates that removals for reparations shall be conducted on a zonal basis... it is not intended that this division of reparations shares should prevent the operation of Germany as a single economic unit." As prescribed in the economics section, "reparation and removal of industrial war potential," had been listed as one of the "common economic policies" of the ACC. This obliged the four powers to "make every attempt to arrange for reparations removals throughout Germany on a uniform basis both as to type, kind and extent of such removals" (italics added).183 In subsequent days, the reparations staff took Pauley's conclusion one step farther by insisting that until there was an agreed export-import plan, each zone commander must do his own "and withhold reparations removals until means are provided for the payment of necessary imports."184 Such an interpretation extended the "first-charge" principle to capital equipment, although this had been expressly precluded in the accord. Similar confusion prevailed in the State Department, where Washington desk officers assumed that the reparations settlement had sabotaged German unity. Will Clayton quickly challenged this perception by emphasizing the many areas of common action, including the preparation of a Level of Industry plan and the trading of deliveries across zones.185 Unlike Pauley, he acknowledged that the Russians might "undertake industrialization removals in the eastern zone on a scale not parallel to that which will be determined for the western zone" but he was not prepared to hold the reparations program hostage to all the other economic requirements. If it proved difficult to obtain a joint import-export plan the U.S. commander should cooperate with his Western colleagues to arrange interim financing. But in itself this would not be a reason to suspend the deliveries from the West or to abandon the effort for German integration.
182
183 184
185
The reparations team speculated that the total amount of deliveries might come to 3.5 billion dollars, of which some 1.7 billion dollars would be from the western zones. If this occurred, Germany would be left with a "depression standard plus the ability to deliver some current reparations." (Italics added). Notes on the meeting with U.S. Representatives of the Moscow Reparations Commission, Berlin, August 6, 1945, RG 2.60 Economics Folder: Reparations, Box 1724, FRC. Pauley to Clay, August 11, 1945, RG 260 Economics Folder: Reparations, Box 1724, FRC. U.S. Delegation, Allied Commission on Reparations, Memoranda on the Provisions of the Berlin Protocol Relating to Reparations, August 19, 1945, RG 260 Economics Folder: Reparations, Box 1724, FRC. Clayton and Collado to Thorp, August 16, 1945, RG 59 862.50, DSNA; Kuklick, Division of Germany', 161-62.
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So perplexing was the Potsdam bargain that even the State-War-Navy coordinating committee (SWNCC) could come to no fixed interpretation. Its staff study noted that the Berlin protocol had established three principal objectives: a) "to disarm Germany economically and demilitarize her," b) "to exact from Germany a proper amount and character of reparations within a fixed period of time," and c) to accomplish the initial two goals "in a way which will permit Germany ultimately to sustain a peace economy without outside assistance."186 However, there had been a "failure to establish clearly the measure of each of these objectives, their relation to each other, and their relative priority of attainment."187 In truth the Soviet demand for extensive reparations raised a host of intricate technical issues and it was scarcely surprising that under the pressure to reach a rapid agreement, Allied negotiators did not fully perceive all the practical ramifications. Yet the basic contradiction between a plan for zonal removals, which would involve billions of dollars' worth of goods, and a program of economic unity was manifest from the beginning. That the Soviets and British eventually went along reflected their subordinate position in the deliberations.188 The British were handicapped by the sudden defeat of the conservative government, while the Soviets had no alternative means of gaining possession of any Western factories. The American position had different roots. It was partly the result of Truman and Byrnes' inexperience.189 Both men were new to international negotiations and lacked familiarity with the complexities of the German problem. As the architect of the agreement, Byrnes had been obsessively focused on the two or three elements of the situation that he had mastered, while screening out other practical objections from his fellow ministers. Also contributing to the irrationality was the role of Harriman and his adherent Edwin Pauley. Their antipathy to the Soviets and willingness to sabotage the entire reparations plan preempted a serious consideration of
186 187
188 189
SWNCC, Analysis of Certain Economic Problems Confronting Military Occupation Authorities in Berlin (Undated) RG 107 ASW 370.3 Germany, MMNA. According to SWNCC, this sorting of goals should now await some practical decisions on the American side. Most crucially, policy makers needed a working definition for a balanced peacetime German economy. Did this mean holding Germany to the average European standard, or aiming for some lower level? And what was the range of rehabilitative measures being contemplated? Was the list of "affirmative steps" mentioned in the protocol exhaustive, or were other interventions necessary? Until these things were known, it was difficult to gauge the compatibility of the Potsdam objectives. Ibid. Bullock, Bevin, 23-29; Mastny, Russia's Road, 297-303. Truman and Byrnes' inexperience in foreign affairs has been widely invoked as an explanation for many of their earliest decisions. See, for example, Larson, Origins of Containment: A Psychological Explanation; Messer, End of Alliance, 71-114; Yergin, Shattered Peace, 69-73; IO9~I3> Patterson, On Every Front, 92-112.
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an intermediate, but specific figure for deliveries. 190 Such a procedure might have obviated the necessity for the disruptive zonal design. Yet it was significant that most of the foreign policy veterans on the U.S. delegation applauded the secretary's formula. These men were beginning to appreciate the real difficulty of harmonizing German reconstruction with the Soviet desire for security and compensation. This put them in a mood to delay specific decisions until there were more guarantees of Germany's economic viability. From that standpoint, Byrnes and Clayton had saved the day with their inventive package. The fundamental difference over goals was also applicable to the many clauses in the agreement that had not been debated during the meeting. Indeed it was one of the peculiarities of the Potsdam negotiations that the large philosophic divergences among the Allies had been pinned almost exclusively to the reparations provisions. This was primarily because the Americans had gone into the conference with position papers derived from JCS 1067, which made it possible to reach many quick understandings with the Soviets. Unfortunately, the tone and emphasis of these papers no longer reflected the real priorities of the U.S. delegation. 191 Hence the paradox that after weeks of haggling over the retention of German factories, the U.S. representatives had signed on to an accord that highlighted punishment, control, and far-reaching reforms. Even the introduction to the German section was suffused with Treasury Department rhetoric: The Allied Armies are in occupation of the whole of Germany and the German people have begun to atone for the terrible crimes committed under the leadership of those whom, in the hour of their success they openly approved and blindly obeyed.192 In order to extirpate Nazism and militarism, Germany was to be completely deprived of its weapons and armed forces, while its political and economic structures would be radically transformed. 193
190
191
192 193
Arguably Harriman's greatest impact on Potsdam was exerted indirectly through his influence on Edwin Pauley in Moscow. While he personally felt excluded from the important deliberations, he strongly affected the other principals by his unrelenting criticism of the Soviets. Harriman, Special Envoy, 488-90; Stimson Diary, July 20, 1945; Forrestal Diary, July 29, 1945; Millis, The Forrestal Diaries, 79-80. In the chain of documents, the crucial link between JCS 1067 and the Potsdam position papers was memorandum regarding American policy for the Treatment of Germany, March 23, 1945, FRUS 1945 111:471-73. Communique, Report of the Tripartite Conference in Berlin, August 2, 1945. Echoing JCS 1067, the German people must be convinced "that they have suffered a total military defeat and that they cannot escape responsibility for what they have brought upon themselves, since their own ruthless warfare and the fanatical Nazi resistance have destroyed German economy and made chaos and suffering inevitable." Ibid.
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All Nazi legislation would be expunged, war criminals and those who had participated in atrocities would be brought to trial, and top Nazi leaders as well as influential supporters put in jail. Most drastic in its implications was the provision for massive firings: All members of the Nazi party who have been more than nominal participants in its activities and all other persons hostile to Allied purposes shall be removed from public and semipublic office, and from positions of responsibility in important private undertakings. The national government was abolished, and sovereignty vested in the Allied Control Council, which would utilize German central agencies to carry out essential economic tasks. At the local and provincial levels, political power would be slowly restored and new democratic parties authorized. The judiciary was to be reconstructed "in accordance with the principles of democracy, of justice under the law, and of equal rights for all citizens." And the educational system would be controlled so as "to eliminate Nazi and militarist doctrine." Subject to the requirements of military security, there would be freedom of speech, press, and religion, and workers would regain the right to organize trade unions. Germany's economic war potential would be eliminated through a ban on the production of weapons, ships, and planes, and the strict limitation of other items such as metals, chemicals, and machinery. Whatever capacity was not needed for Germany's approved postwar peacetime needs would be either removed for reparations or destroyed. At the earliest possible date, the German economy would be decentralized "for the purpose of eliminating the present excessive concentration of economic power as exemplified in particular by cartels, syndicates, trusts and other monopolistic arrangements." Moreover, in reorganizing this economy the "primary emphasis" would be on agricultural production and the development of peaceful domestic industries. Some of the severity of these provisions was mitigated by the promise that the German people would be "given the opportunity to prepare for the eventual reconstruction of their life on a democratic and peaceful basis." From this standpoint, all of the provisions on economic unity implied a willingness to make Germany a functioning nation.194 More direct was the commitment to "assure the production and maintenance of goods and services . . . essential to maintain in Germany average living standards not exceeding the average of the standards of living of European countries." And there were further provisions for the prompt restoration of transport, the enlargement of coal production, the maximization of agricultural output, and the emergency repair of housing. Yet taken as a whole, the overwhelming thrust of Potsdam was in the
194
Gimbel, American Occupation, 9-13.
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direction of a strict occupation. In proffering this approach, the Americans were expressing many sincere wishes. With varying levels of commitment, everyone wanted to obliterate Germany's military capacity, to punish the Nazi criminals, to erase the authoritarian political structure, to reduce heavy industry, and to reform the monopolistic economic formations. However, these objectives were less galvanizing than the exigencies of reconstruction, and to the extent that aims conflicted, most opted for the latter.195 In concealing this preference U.S. officials were being as disingenuous with the Soviets as they had been with their own public. liabilities of the Potsdam settlement its stellar advantage was that it kept the quadripartite experiment alive. Most of the troublesome issues had been put on hold, allowing time for the Allied Control Council to gather momentum. On the American side, the ultimate viability of the operation seemed to hinge on a quantitative question: whether Soviet material requirements could be satisfied without imperiling Germany's rehabilitation. If this was possible, then other procedural difficulties could be eventually adjusted. Yet the abbreviated exchanges at the conference had demonstrated that the Russians also regarded the promises to overhaul Germany's internal institutions as essential to their national security.196 Now that the reparations program had been diluted, that obligation loomed even larger as a guarantee against future aggression. Though submerged in Washington's preoccupation with industrial removals, there was good reason to wonder whether the four powers would have the ability to carry through such an ambitious transformation. In the background were the vast differences in historical experience, political ideology, and contemporary need that could easily intercept the project. As much as reparations, this posed a grave challenge to the prospects for German unity.
D E S P I T E THE NUMEROUS
195
196
This complex attitude was reflected in McCloy's diary entry on the eve of Potsdam: "There is just one policy which we must adopt, as I see it - a) strike down Germany's war making machinery to a peacetime economy basis by removals and destruction; b) Punish the Nazi war criminals promptly and vigorously; c) Do our utmost to enable the German to build himself up again morally and politically and economically to a position of stability." McCloy Diary Entry, 1945, July 17 in John J. McCloy Papers, Series 2: Diaries (Box DYi, Folder 18), Amherst College Archives. For discussion of this aspect of Soviet thinking see Gottlieb, German Peace Settlement, 43-54-
The Limits of Reform: The U.S. Zone
At every level of Military Government and from one end of the Zone to the other, we encountered the arguments of expediency and convenience, the necessity of "keeping things running," the dangers of "angering" the Germans and creating a dissatisfied "bloc" which would be ripe for communism, the resentment of lower headquarters against interference from higher headquarters, the fantastic comparison of Nazi politics with Democratic-Republican rivalry in the USA. (Russell Nixon, Acting Director of the Division of Cartels and External Assets to the Kilgore Committee).1 Hitler did restore their self-respect when all men's faces were turned from them. He did stop unemployment. He did give the young people something to live for and something they thought it worthwhile to sacrifice themselves for. And we should not forget that he played on the fear of Bolshevism which loomed a few miles away across Poland. Our views may have been modified in the last few years, but it is fair to ask how many of us can throw stones at people who feared Communism. (Laird Bell, Deputy Director, Economics Division, Speech to the Chicago Council of Foreign Relations).2
U N D E R THE Potsdam Accord, the Americans committed themselves to
substantial structural change and redistribution of power within German society. Yet during their own planning process, they had been unable to agree on the character of postwar Germany. Since the Allied victory in May 1945, their longstanding philosophical differences had become focused on several practical issues of occupation;
1
Russell A. Nixon, Testimony Submitted to the Subcommittee on War Mobilization, Senate Military Affairs Committee, February 2.5,1946, Transcript contained in Dodge MSS, Detroit Public Library (DL). Laird Bell, "Policy Over Berlin," Speech at the Chicago Council on Foreign Relations, December 10, 1945, John Foster Dulles MSS, Box 26, PU.
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i) what steps should U.S. Military Government take to eradicate Nazism as a significant force in its own zone? 2) what approach should it adopt in treating the large German cartels and combines? 3) what should be the response to German workers who were attempting to rebuild new labor organizations? Instead of ameliorating these internal controversies, the Potsdam protocol aggravated them. Though each dispute had its own peculiarities, they were loosely connected by the same "liberal-conservative" dichotomy that characterized the planning battles. Transported from Washington to the German theater, the factions reenacted divisions in the United States over the fate of the New Deal. Critics of big business, who had tried to extend the egalitarian efforts of the Roosevelt administration, resurfaced in postwar Germany as leading proponents of sweeping change. Not coincidentally they were opposed by the same group of bankers and industrialists who had entered the government's executive agencies during the war and braked the liberal agenda. The contest had been unequal even under Roosevelt. With Truman in the White House, the reformers in Military Government had no high-level protection. After months of struggle in which they sustained defeats on denazification, decartelization, and trade union policy, many became convinced that further activity was futile. By early 1946 some had returned to Washington to tell their story of how Potsdam, and to their perception the idealistic hopes of the Second World War, were being betrayed. 1. P U R G I N G NAZIS Throughout 1945 t r i e dominant political issue for the American occupiers was how to cope with the Nazis and their sympathizers. There was no single aspect of the German problem that seemed on its surface to elicit so much agreement. All of the American principals concurred in the judgment that the Nazis were bestial people who had transgressed against the most fundamental principles of human behavior. This had been the official outlook throughout the war, and in the aftermath of defeat the shocking spectacle of the death camps had lent force to that conviction. It was therefore accepted that the continuing influence of this strata on German political life would be poisonous to democracy. While the concept of denazification was never in question, there had always been arguments over its application. Representatives from the State and War departments had been apprehensive lest the policy be made too tough, victimizing so many people that the resumption of normal economic life would be seriously delayed. By contrast, spokesmen for the Treasury were fearful that too many important Nazis and their collaborators would find ways of evading retribution. With the issuance of JCS 1067, the latter view seemed to prevail. Under the directive, U.S. Military Government was ordered to stamp out all
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vestiges of National Socialist organization, to remove "all members of the Nazi party who have been more than nominal participants in its activities" from public office and from positions of importance in the private sector, and to arrest and hold anyone suspected of committing war crimes along with "persons who, if permitted to remain at large, would endanger the accomplishment" of the occupation objectives.3 To guide the army the directive contained strict criteria for deciding which individuals should be fired or incarcerated. From the beginning of the occupation, it was the removal program that proved most controversial.4 This entailed the dual obligation to purge Germany's political apparatus and its private organizations of compromised people. Despite an abstract willingness to carry out the political mission, implementation was obstructed by the Americans' difficulty in finding replacements for the Nazi leaders and functionaries. When the Second World War ended, the one agency working on the problem was the Office of Strategic Services (OSS), which had compiled extensive White, Gray, and Black lists of German nationals. OSS had also accumulated a variety of German contacts as an offshoot of its covert operations. Yet by contrast to the Russians, who had Free Germany Committees already in place and a cadre of communist exiles ready to return, the United States was ill prepared.5 This situation bothered Allen Dulles, the OSS chief in Switzerland, who had wanted a nucleus of friendly Germans to accompany SHAEF in its establishment of control. However, Dulles had been stymied by the State Department, which preferred to enter Germany free of commitments. This partly reflected the influence of political advisor Robert Murphy, whose reputation had been tarnished by his cooperation with Vichyites in the occupation of North Africa. Murphy and his colleagues feared that German centristfiguresmight be more tainted by Nazism than was immediately apparent. This had already been the department's experience when it combed lists of individuals proposed for specific advisory positions. Embarrassment seemed even more likely, if whole groups were recruited.6
Informal Policy Committee on Germany, Revised Directive to the Commander in Chief of U.S. Forces of Occupation Regarding the Military Government of Germany, May 11, 1945, RG 59 740.00119, DSNA. For U.S. policy on denazification during the first phase of the occupation, Bower, The Pledge Betrayed, 134-43; Zink, The United States in Germany 1944-55, 15075; Tent, Mission on the Rhine, 40-74; Fitzgibbon, Denazification (London: 1969) 87-97; Gimbel, American Occupation 101-108. The most comprehensive study of U.S. denazification policy is the still untranslated Niethammer, Entnazifizierung in Bayem. Murphy to Riddleberger, February 16, 1945, RG 59 740.00119, DSNA. Murphy to Riddleberger, November 11, 1945, RG 84 US POLAD 800, FRC; Murphy to Stettinius, February 2, 1945, RG 59 740.00119, DSNA; Murphy to Matthews, February 11, 1945, Ibid.
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The other inhibiting factor was the State Department's distrust of German leftists, who were the main bearers of antifascist sentiment. Department experts recognized that despite the July 20 plot against Hitler, which had drawn from elite elements, German conservatives had generally made their peace with the regime. Existing opposition was largely to be found in the remnants of the working-class parties, among those surviving socialists and communists for whom Nazism had become the ultimate enemy.7 In view of its intention to restore German capitalism, State was reluctant to empower people who would undermine free enterprise. Clearly, workingclass leaders must eventually play a role in a denazified Germany, but this was something that would have to be handled with great care and delicacy over a long period of time. State lacked confidence in the judgment of OSS. Allen Dulles might be a reassuring figure with impeccable establishment credentials, but the same could not be said for some of his left-wing subordinates, who had been recruited because of the war.8 Superimposed on these apprehensions was a continuing concern about the future role of the Free Germany Committee. The prevailing assessment at State was that this Soviet-sponsored formation would have neither the will nor the capability to take over the country. But since the possibility could not be totally ruled out, Murphy's staff thought the United States would be in a stronger position to discourage the movement if it adopted a principled stand against any political organization.9 Yet by attempting to bar all political activity, the Americans put themselves at odds with the antifascist forces inside Germany. A grotesque indication of the State Department's approach emerged during April 1945 when the U.S. Army liberated Buchenwald. The camp was located in Saxony, in an area assigned to the Soviet zone of occupation. However, American troops arrived there first. As the stunned soldiers marched through Buchenwald they found a spectacle of human degradation that defied their comprehension. Stacks of rotting corpses lying everywhere, thousands of emaciated, half dead survivors - comprising a vast expanse of suffering and misery. This sight so sickened General Patton, that he was unable to remain in the camp. For General Eisenhower the experience gave new meaning to the American war effort and impressed on him the urgency of a lasting peace.10 Yet for all the horror, Buchenwald remained an intensely political place. Here were incarcerated many of the revolutionaries of Europe - German, Polish, Dutch, and Spanish leftists - the remnants of the "subversive scum" that Adolf Hitler had pledged to eradicate. Though thousands had gone to their deaths, many had survived, some by finding a place in the
7 8 9 10
Almond and Kaus, "The Social Composition of the Germany Resistance," in Almond, The Struggle for Democracy in Germany, 64-110. Mosley, Dulles, 147-48. See discussion of the American political ban in Kolko, Politics of War, 507-11. Ambrose, Eisenhower: Soldier, General, 399-401; Murphy, Diplomat, 286.
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administrative apparatus of the camp. Of these a handful seemed to have retained their ties to the outside world. They knew of the Free Germany Committee and its activities, and they had advance notice that the Americans were coming. Radical activists - many of them Communists - were already organized, and as the Nazis retreated, they sprang into action. Banners were hung from the windows, posters were plastered along the walls, a mimeo machine was quickly procured, and leaflets were circulating throughout the camp. Meantime a loudspeaker blared out external and internal news, and bade welcome to incoming visitors. Although the war was still in progress, U.S. military personnel assigned to the camp adopted a tolerant stance toward these activities, and seemed inclined to utilize whatever assistance the German inmates could offer. This situation infuriated Murphy's staff. His representative on the scene was Brewster Morris, a career Foreign Service officer whose new assignment was to keep Murphy posted on left-wing political developments. On April 29 Morris reported that Buchenwald "is now a hotbed of communist propaganda and political activity."11 He lamented the loud speaker, the presence of the Free Germany posters, and the intensely political atmosphere: "Every room we looked into was filled with men at work, talking and writing on typewriters, working on propaganda etc." Morris was especially distressed by the army's willingness to make "quite a spectacle out of Buchenwald." Each day Allied dignitaries and journalists were brought into the camp and local Germans were being compelled to view the corpses. In his judgment, this Buchenwald tour was imposing an improper hardship on the local population and giving an undesirable impression of U.S. policy. German visitors might "react with the feeling that perhaps Goebbals was right and the Americans are indeed turning Germany over to the Communists." Morris thought there was an "opportunity for an excellent political and intelligence job" finding out the names of the different Communists and committees. However, he recommended that all political agitation be prohibited, and the flow of compulsory German visitors halted. Murphy pursued the matter with General McSherry, who was not very cooperative.12 Proclaiming ignorance of the politicization of the camp, he offered to investigate. Meanwhile, he agreed to put an OSS agent inside Buchenwald to spy on the Communists.13 By early summer, Murphy had become convinced that with the Russians
11 Ti
13
Brewster Morris to Murphy, "Present Conditions at Buchenwald Concentration Camp and Weimar," April 29, 1945, RG 59 Central Europe, Box 3, DSNA. Murphy to General Frank McSherry, 5 May 1945, Enclosure No 1 to Memorandum 21, April 9, 1945, Ibid., DSNA; Morris, "Communist Exploitation of the Buchenwald Concentration Camp," May 5, 1945, Ibid; Morris, "Further Notes Regarding the Buchenwald Situation," May 9, 1945, Ibid. McSherry to Murphy, May 2, 1945, Ibid.

coming into Saxony, the situation at Buchenwald was a lost cause. However, he was determined that there must be no repetition at Dachau, writing McSherry that "the location of this camp in the future American zone of occupation makes it desirable for us to suppress unwanted political activity right from the start."14 Unless this was done "such activity might develop rapidly and result in a difficult situation of important proportions." The State Department's animus toward political activists in the camps was the harbinger of bitter conflicts to come. Here in the Nazi torture sites were circumstances so excruciating that compassion for the victims, regardless of their political persuasion, would seem inescapable. Here were wrecks of people, many of them without living relatives, earthly possessions, or personal hope for the future, bestirring themselves within days of the Nazi withdrawal to reassert earlier principles and ideals. Yet to Murphy's staff what counted was not the poignancy of these efforts, but the dangers they might pose. Indeed the political problem in the concentration camps was an acute version of the overall challenge that confronted the American authorities once the war was over. The prevailing pattern throughout Germany was one of political apathy, demoralization, and inertia. To the extent that there was discernible anti-Nazi activity, it was coming from an array of locally based antifascist organizations (Antifa), many of which had a leftwing coloration.15 Although American intelligence scrutinized these groups for links to the Free Germany Committee, they could find them in only three cases: Leipzig, Halle, and Nordhausen.16 Yet even in these places, it was unclear whether the organizing initiative had come from the Moscow-based committee or from the local people. More typically, the antifascist formations were independent entities, containing a diverse membership, with a sprinkling of experienced leaders who had been associated with working-class parties or trade unions in the pre-Nazi period. Those Antifa that were associated with Free Germany elicited particular hostility. Free Germany remained an ambiguous organization, bent on farreaching political and social change, appealing to German nationalism and apparently subservient to the dictates of Soviet foreign policy. To Brewster Morris and his colleagues in the Political Division, these characteristics suggested a variety of threats, including the possibility that Free Germany
14 15
16
Murphy to McSherry, May 14, 1945, RG 59 Central Europe, Box 3, DSNA. Wiesner to Murphy, May 12, 1945, RG 84 800, FRC; Heath to Secretary of State, May 29, 1945, Local Action Groups in Post-Collapse Germany, RG 59 862.00, DSNA; Kolko, The Politics of War, 507-512; Krieger, "The Interregnum in Germany," 507-532. Morris to Murphy, May 11, 1945, RG 59 740.00119, DSNA; Donald Heath to Sec of State, May 29, 1945, RE: Local Action Groups in Post-Collapse Germany, RG 59 862.00, DSNA.
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and its front groups could facilitate eventual Soviet control of the western zones.17 While this fear of Soviet expansionism prefigured the later Cold War orthodoxy, in the spring of 1945 lt had a more limited significance. Even on Murphy's staff, only a minority of people were focused on Russian intentions. Antipathy to the Free Germany Antifa reflected a generalized dislike of left-wing movements. Any manifestation of working-class insurgency was deemed a danger, especially when linked to a foreign power. As a consequence, the Americans were antagonistic to all of the German Antifa. U.S. military detachments ordered them to cease their political work, 18 threatening disbandment and arrest if their members did not comply. In some locations, the army did try to use individuals from the grassroots committees to carry out specific assignments, but prevented the Antifa from participating in the work of denazification. By turning their back on the organized antifascists, the Americans weakened their own efforts at political removal. One of their serious problems was how to identify the "more than nominal Nazis" whom they were supposed to eliminate. Though much information could be obtained from captured records, there were gaps in the documents, and some deliberate destruction of evidence. Hence a need for reliable witnesses who could describe what had transpired in a particular town or city. Another obstacle was the lack of reputable people to fill the newly emptied positions in the public administration. Because the U.S. authorities had no preexisting formations to bring in and because they were rejecting the advice of indigenous anti-Nazi groups, they could not easily find untainted substitutes. 19 Even before V-E day, the potential embarrassment of the personnel issue had been demonstrated in Aachen.iO There the American commander, for lack of a better idea, had turned to the Catholic bishop for advice on recruitment. The bishop recommended his chief aide for the position of lord-mayor. And the lord-mayor in turn selected a team of conservative businessmen and technical experts for the top administration. Several months later when the members of U.S. Counter-intelligence and the Special Branches poked around, they found that at least a third of the people who
17 18
19 io
Niethammer, Entnazifizierung in Bayern, 117-23. Headquarters Ninth United States Army PW Detachment (Unsigned) to Commanding Officer, PW Detachment, Ninth US Army, "The Political Situation in Aachen," February 3, 1945, Frank McSherry MSS, Folder: Aachen Report, Box 30, U.S. Army Military History Institute (MHI); Rebecca Boehling, "German Municipal SelfGo vernment and the Personnel Policies of Local U.S. Military Government in Three Major Cities of the Zone of Occupation: Frankfurt, Munich and Stuttgart," 33738.
Morris to Murphy, May 11, 1945, RG 84 US POLAD, Murphy Correspondence File, FRC. Louis A. Wiesner, "Organized Labor in PostWar Germany," 1950, Unpublished Manuscript, Wiesner MSS (Private Collection).
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had been appointed were Nazis! Indignant, the investigators leaked the information to the American press, creating considerable discomfiture for the military. To prevent other such embroglios, General McSherry asked the Political Affairs Division to draft a policy paper on appointments/ 1 In line with his own more liberal outlook, he wanted the guidelines to affirm the importance of using a wide range of Germans including those from the trade unions. He also desired a specific warning against relying too exclusively on the Catholic Church. When the policy paper appeared in late May, it met several of McSherry's concerns. Acknowledging that the record of the Catholic Church "was spotty," it advised Military Government officers "to use discretion" in accepting its advice lest they be "open to the charge of encouraging rightist and reactionary political movements and policies at the expense of more liberal policies."22 Officers were also cautioned about employing German industrialists, big businessmen, and large landowners, many of whom had strongly supported the Nazi regime. Before choosing individuals from these groups, the evidence of their pro-democratic beliefs "should be as well established as possible." A safer assumption was that "former trade unionists, Social Democrats, members of the Center Party are reasonably prodemocratic and anti-Nazi." Appointments ought to be made from a spectrum of anti-Nazi groups, while carefully avoiding "the extreme right and the extreme left." The disappointing feature of the Political Division's paper was that it offered no procedure for picking the right people. As before, the Military Government officer would have to "rely on his own judgement." Hence the ambiguity remained: If political formations were prohibited and if individual officers could not take the advice of organized groups of antiFascists, then what would be the basis for making intelligent judgments? After Potsdam, the situation was eased when the Allies authorized the establishment of political parties and trade unions throughout Germany.23 The elimination of the ban created officially sanctioned local groups, whom the Americans were free to consult. However, their initial inhibitions persisted. Army detachments were wary of the trade unions and distrustful of the SPD. They had a more friendly attitude toward successor organizations
21 22 23
McSherry to Murphy, March 31, 1945, McSherry MSS, Folder: Civil Affairs Germany 1944-45," Box 30, MHI. Murphy to McSherry, May 4, 1945, RG 59 740.00119, DSNA. The American attitude changed in June after Marshal Zhukov had authorized political parties and trade unions in the Soviet zone. Robert Murphy became convinced of the need to compete politically, observing that Zhukov's order "has the result of placing political control in the Russian zone completely in the hands of the Free German movement," which meant that the "Communists may profit from a considerable head-start." Murphy to Matthews, June 28, 1945, RG 59 740.00119, DSNA.
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to the Center Party - the newly formed Christian Democrats (CDU) and the Christian Socialist Union (CSU) in Bavaria. But some officers remained concerned that these more conservative parties might be giving sanctuary to former Nazis. During the summer of 1945, t n e American authorities continued to dismiss people from the public administration, replacing them in an ad hoc fashion. Despite the admonitions of the Political Affairs Division, in this heavily Catholic zone there was still a tendency to turn to the church for political direction. 24 Such disposition was most striking in Bavaria, but it was also apparent elsewhere. Another approach was to call upon politicians from the Center Party, who had spent the Nazi period in semiretirement. The people who were distinctly not chosen for positions of responsibility were members of the Antifa, former activists in the SPD and the KPD, survivors of the concentration camps, and political refugees. On paper the figures sounded impressive. As of August 30 sixty thousand people had been stripped of their positions in the U.S. zone. 25 Yet though these numbers signaled the seriousness of the American commitment to denazification, they obscured certain contradictory trends. Many of the individuals who had been removed were quickly reinstated. Others were bumped down to subordinate positions from which they continued to exercise their previous authority. Then there were numerous instances where "more than nominal" Nazis were simply replaced by different "more than nominal" Nazis. 26 And finally there were the thousands of culpable people who were never removed at all. Overall, there was great variation in how the public purge was carried out. Officials responsible for specifically economic tasks, including industry, communications, and transport, tended to be treated more leniently than others. And there were particular regions in the U.S. zone where implementation was notoriously lax.
Z4
2-5 26
In her valuable study of U.S. political policy in Munich, Frankfurt, and Stuttgart, Boehling emphasizes that "the initial occupation period in all three cities was characterized both by a disproportionately large representation of conservative middle and upper class special interest groups in upper level municipal posts and by strong clerical influence, either upon the appointeesfillingthe posts or upon MG in selecting the appointees. In none of the three cities, during this initial occupation period, when MG rule was most direct and MG influence strongest, were active anti-Nazis appointed to key posts, nor did they play any major role in recommending individuals to MG. Not only were they not encouraged to do so, but they were frequently discouraged when they tried to do so." Boehling, "German Municipal Self-Government," 361-62. Murphy to Matthews, June 28, 1945, RG 59 740.00119, DSNA. Though it is difficult to obtain precisefigures,many individuals removed from office were quickly restored. As explained by Robert Murphy, "Not all persons in automatic removal categories were active Nazis. In fact under current directives removed persons may be reappointed to office after appeal by Military Government if they are found to be only nominal Nazis." Murphy to Secretary of State, RG 59 740.00119, DSNA.
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The most serious deviations occurred in Bavaria, where General Patton was openly contemptuous of denazification policy/7 The general had leaned on two right-wing nationalists - the new minister-president Fritz Schaffer and Cardinal Faulhaber - for advice on personnel. While neither man had supported the Nazis, both retained connections to compromised people. In his capacity as minister-president Schaffer excluded all but the most reactionary elements from administrative posts and sheltered a substantial number of Nazis who were in the "mandatory removal" category. Though Patton had received several warnings from his superiors about the violations in Bavaria, as of September 1945 he was still ignoring them. In contrast to the public sphere where higher authority was abstractly committed to JCS 1067, there was no such determination when it came to the private realm. According to the directive, the U.S. Army was obligated to remove "more than nominal Nazis" from positions of importance in private enterprise. However, within the Economics Branch of Military Government there was a pervasive conviction that German businessmen were more victims than agents of the Nazi regime, and that their acquiescence to Hitler was to be seen as a by-product of the profit motive rather than an expression of enthusiasm for fascism. Furthermore, those Americans who hoped to rebuild the German economy were convinced that the only people capable of directing this effort were those who had done it in the past. As a consequence, many were prepared to ignore or even sabotage the removal program for private enterprise. Illustrative of this lenient attitude toward compromised German businessmen was the report of Will Wright from the American Bureau of the Mines, who had come to Germany to advise on coal production/ 8 Observing that the coal mines were dependent upon the overall functioning of the economy, he argued that to facilitate a general improvement "it is essential to permit the use of Nazi party members with the necessary technical training in engineering and management and make them directly responsible" for the reestablishment of transportation systems, the power and light plants, and the production and distribution of fuels, fertilizers, and food. As for coal, Wright recommended that the Production Control Authority contact those Germans who had previously been in charge, and "select the competent men... even though they were Nazi." This was essential since "there are practically no competent engineers or industrial managers in Germany today who were not members of the Nazi party." The Wright outlook was adopted in virtually every field of economic endeavor. The striking exception was finance, the one sector of Military Government that was staffed by personnel from the Treasury Department.
z? 28
Bower, Fledge Betrayed, 135-38. Will Wright to Jim Boyd, Director of Industry Division, July 20, 1945, RG 84 U.S. POLAD 863.6, FRC.
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With the resignation of Lewis Douglas, power in the division had reverted to Deputy Director Bernard Bernstein, a Morgenthau disciple who was ferociously loyal to the letter of JCS 1067.29 To the economists and lawyers from Finance, what mattered were the affirmative clauses of the directive, not its loopholes. Lacking compunctions about disrupting Germany's business organization, they set cheerfully to work purging German banks and hauling the directors into custody. Moreover, the Finance team was not inclined to stay on its own turf. Because it also held formal responsibility for conducting investigations into the German cartels and external assets, it had a quasi-official excuse for looking into the denazification of German industry. By mid-September, Bernstein had concluded that the army's regulations were not being applied to German private enterprise.30 He complained to Clay that while dismissals had been completed in the financial field, "in virtually every city where we have worked on denazification, a main obstacle has been the fact that denazification was not proceeding in the other sections of the city's economy." Individuals purged from financial institutions could easily move into industry, transport, and communications and obtain important jobs. Bernstein deplored the "widespread feeling that the Denazification Directive can be violated with impunity, with no danger of any disciplinary action." These charges were supported by more detailed studies of specific localities. Assistant Deputy Karmarck emphasized that "Finance officers in every city . . . feel 'out on a limb' because denazification has been applied vigorously in finance but not in industry and other fields." He noted that the pervasiveness of the violations was confirmed by conversations with MG officers "in practically every detachment visited."31 Although the Finance Division was a minority force within the U.S. Military Government, it enjoyed one major asset. On the whole the American press corps in Germany was distinctly sympathetic to their concerns. Reporters from mainstream publications, notably Ray Daniell of the New York Times, Carl Levin of the Herald Tribune, and Ed Johnson of the Chicago Daily News were personally desirous of a thoroughgoing purge. Journalists who had covered the war or observed the death camps shared a profound emotional antipathy to Nazism. As it became apparent that many of the key participants in the Third Reich were escaping Military Government's net, they were shocked and upset. Since the Aachen exposure in early 1945, there had been a steady drumbeat of press criticism about the failures of denazification. Yet it was not
19 30 31
U.S. Senate, Morgenthau Diaries 11:1559-65. Clay Papers, 1:60-61; Bernstein to Clay, Some Comments on the Current Status of Denazification, September 12, 1945, Fox MSS, Box 8, HST. Kamarck to General Lucius Clay, September 26, 1945, Ibid.
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until fall that the lapses became major national news. The timing reflected a growing desperation among the men from Finance and other Military Government liberals, who organized a series of leaks to friendly journalists. However, the results might have been less spectacular were it not for the arrogance of General Patton. The situation in Bavaria was a public relations calamity waiting to happen. General Eisenhower had worried for months about Patton's laxity in removing the Nazis in his jurisdiction. In late summer, he warned his subordinate that outsiders would be "quick to seize upon" violations of denazification policy.32 Moreover, the United States had "entered this war as a foe of nazism," and "victory is not complete until we have eliminated from positions of responsibility, and in appropriate cases properly punished, every active adherent to the Nazi party." Individual field commanders might not like this policy, but the "question has long been decided, we will not compromise with nazism in any way." Despite Ike's pressure, Patton had still not cleaned out his bailiwick at the point when the American press was taking aim at the dismissal program. On September 21 the New York Times ran a big feature by Ray Daniell entitled "Denazification Hit by U.S. Officers."33 Based on talks with Military Government officers in several cities, Daniell reported "a general opposition to the denazification program and a lackadaisical attitude towards its enforcement." As one example he offered a quote from Patton to his staff: "Frageboten? (sic).... What the hell's a Frageboten? Listen, if you need these men, keep them and don't you worry about anything else." Daniell's purpose was to dramatize an attitude he saw as fairly typical. Yet it was Patton who garnered the headlines. At his first official news conference the general provoked a torrent of criticism when he insisted that too much fuss was being made over denazification, that numerous Germans had been dragooned into joining the party against their will, and that the smartest thing the United States could do was to show the Germans "what grand fellows we are."34 This was trouble enough. Patton then made things incomparably worse in answering questions about the Bavarian administration. When asked whether he thought the government was too heavily weighted with priests and others who had prospered under Hitler, Patton replied that he was not trying to be "King of Bavaria" and that if the Germans followed his
32
33 34
General Dwight D. Eisenhower to General George Patton, August 23, 1945, Papers ofDwight David Eisenhower, VL307-8; Eisenhower to Patton, September 11, 1945, Ibid. 351-52. Raymond Daniell, "Patton Belittles Denazification; Holds Rebuilding More Important," New York Times, September 22, 1945. Public Relations Division U.S. FET, Transcript of General Patton's Press Conference at Third Army H.Q. Bad Tolz, Germany, September 25, 1945, Eisenhower MSS, Military Government File, DDE Box 162, Box 84, DDE.
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orders, they could make the political decisions they wished. A reporter observed that Bavarian liberals were complaining that reactionary Nationalists and Nazis were dominating politics. "Reactionaries," howled Patton, "do you want a lot of Communists? I don't know anything about parties. I'm here to see that they do what they're told." The general reiterated that ninety-eight percent of the Nazis were just camp followers who had come in because they were coerced. When challenged on this estimate, Patton retorted that, "this Nazi thing is just like a Democratic and Republican election fight. The thing was that these damned Nazis got other people by the scruff of the neck and other Germans just didn't have the guts to go back." These reflections provided the press with the ammunition it needed. Here at last was something to jolt the American public. For months, reporters had been turning out stories about obscure military authorities who were utilizing Nazis to run railroads, telephones, and the like. It was difficult to enliven these tales. But Patton was a big, colorful figure who was willing to shoot his mouth off. And when he got to the point of comparing the Nazis with American political parties, the writers had a field day. During the ensuing days, there was an avalanche of editorial criticism.35 In a blast at Military Government, William Shirer pointed out that "thousands of Nazis are being left in important political and business posts." There was no mystery about why this was happening. Citing Patton's ill considered analogy, Shirer opined that, "If a top American general understands so little of what this war was about... how can you expect lesser officers under him to carry out a policy which is supposed to rid Germany of Nazism?" In a similar vein, the Philadelphia Inquirer reflected that "Anybody who can't see the difference between the 1944 Presidential campaign in this country and what the Nazis did to Europe and to the world doesn't belong in a top job of demilitarizing Germany." General Patton might be "a great man for smashing Nazis when they were riding around in tanks," but unfortunately "he misses when they come riding around in frock coats." Under pressure Patton temporized, conceding that "When I made the comparison of so vile a thing as Nazism with political parties, I was unfortunate in the selection of analogies."36 He was merely acknowledging "that in Germany practically all, or at least a very large percentage of tradespeople, small businessmen, and even professional men such as doctors
35
36
CBS Radio News, September 23, 1945; Philadelphia Inquirer, September 25, 1945; New York Herald Tribune, September 25, 1945; ABC Radio News, September 24, 1945Eisenhower to Patton, September 29, 1945, Papers of Dwight David Eisenhower, VL394-95; Eisenhower to Marshall, September 29, 1945, ibid., 393; Clay to Assistant Secretary of War McCloy, October 5, 1945, Clay Papers, L94.
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or lawyers, were beholden to the party in power for patronage." Though such people must eventually be removed, "we must put up with them" until there was "sufficient organization" in Bavaria to protect against starvation. This clarification did not quell the public storm. One casualty was the hitherto unblemished reputation of General Eisenhower, who was held responsible for his subordinate's activities. There was a certain irony here since Eisenhower was personally more committed to denazification than his own superiors. The pressure coming from Stimson and McCloy to quickly restore economic life had fostered a climate of evasion in which it had been difficult to single out Patton for special penalties. However, the commotion in the press necessitated dramatic action. After an angry interview at headquarters, on September 29 Eisenhower relieved Patton of his position as chief of the Third Army and set him to work studying the military lessons of the Second World War.37 He also took a broom to the government of Bavaria. Even before Patton's ill-starred press conference, Robert Murphy had become concerned that the conservative minister-president Fritz Schaffer was protecting too many Nazis and antagonizing middle-of-the-road Germans. Now, following a recommendation from Allen Dulles, Eisenhower turned to the exiled Social Democrat Dr. Wilhelm Hogner to replace Schaffer and clean out the Bavarian administration.38 Most crucially, the Patton scandal strengthened the hand of the people in Finance who were embattled with the Economics and Political divisions over the denazification regulations for the private sector. To their delight, on September 26 General Eisenhower unexpectedly proclaimed Military Government Law 8 making it illegal for a business enterprise to employ any member of the Nazi Party or its affiliated organizations in a capacity other than ordinary labor.39 By specifying that all Nazis, not just "more than nominal" ones were subject to removal, the law reduced the area of army discretion and opened the possibility of drastic action against Germany's industrial elite. All of Eisenhower's initiatives - his removal of Patton, his dismissal of the Schaffer government, and his promulgation of Law 8 - drew wide acclaim in the press. In this laudatory vein, the New York Times editorialized: "The American people will trust Eisenhower's intentions in this matter. We should see an end of the scandal of an easy life for Nazis and a tough one for those who fought and suffered in the war against nazism."40 However, among the working reporters who were familiar with
37 38 39 40
Ambrose, Eisenhower: Soldier, General, 422-24; Eisenhower to Marshall, September 29, 1945, Papers of Dwight David Eisenhower, VL391-92. Murphy to Secretary of State, October 3, 1945 & October 13, 1945, FRUS III:97i-73, 982-85. New York Times, September 26, 1945. New York Times, October 3, 1945.
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U.S. Military Government, there was skepticism about the results. According to Times correspondent Raymond Daniell, the apparently "dramatic and revolutionary" change in Bavaria was "only a superficial attack on a fundamental problem." 41 The main difficulty continued to be "the reluctance of Eisenhower's subordinates to put denazification of Germany above considerations of immediate convenience and expediency." During the late fall, that reluctance was manifest in the mounting opposition to the arrest program. Since the beginning of the occupation, the army had taken between 85,000 and 90,000 individuals into custody. 42 Most of these were political and military people suspected of committing crimes, whereas business leaders had been generally untouched. The outstanding exceptions were the directors of the "Big Six" German banks and of the sprawling IG Farben complex. Yet even these jailings, which were carried out by the Finance team, were the objects of continuing challenge, ranging from a sudden shortage of prisons to questionable appeals for individual exemptions. 43 Though many compromised individuals were still at large, the Political Division desired a quick disposition of cases and a rapid cessation of arrests. Murphy insisted that the unsettled situation was "angering the Germans," who can now "see no difference between our methods and Nazi methods." 44 In mid-November, General Adcock proclaimed that ninetyeight percent of the arrests required under the SHAEF Arrest Categories handbook were complete and that the program would be winding down. More striking was the immediate resistance to Law 8. From the moment of its promulgation, the measure was opposed by the leadership of the Political and Economics divisions. 45 This engendered a lax attitude toward
41
New York Times, October 1, 1945. When asked by the new Secretary of War Robert Patterson for an assessment of DanielPs reportage, Civil Affairs Chief John Hilldring emphasized that "Mr. Daniell's record and reputation are such as to make us feel that his charges are largely justified" and that "it would be inadvisable for the War Department to deny the charges categorically, for there is doubtless substantial truth in Mr. Daniell's allegations." Hilldring, Memorandum, October 8,
42 43
44 45
1945, RG 165 WDSCA 014 Germany, Box 175, MMNA. Murphy to Matthews, November 16, 1945, RG 59, Office of European Affairs, Box 13, DSNA. "21 Bankers Held for Aggressive Hitler Support," November 1, 1945, New York Herald Tribune; "15 Major Bankers Seized in Germany," New York Times, November 1, 1945; Testimony of Russell A. Nixon, February 25, 1946. Murphy to Matthews, November 16, 1945. Murphy to Secretary of State, October 29, 1945, FRUS, 1945, 111:993-94. The prevailing attitude was expressed by Col. James Boyd, director of the Industry Branch, in his interview with historian John Backer: "Well you know how many people got into the Nazi party, they were forced into it. The only people we had to run these industrial operations were the people that sometimes had been connected with the Nazi Party." Interview with John Backer, September 28, 1979, John Backer Papers, Rare Book and Manuscript Library, Columbia University, Box 4.
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German managers, who were retaining informal influence through friends and relatives or from their positions as "ordinary labor" in their old companies. There were also direct efforts to soften the legislation. Within weeks Military Government had announced that its appeal boards could use discretion in reinstating "nominal" Nazis. Subsequently, General Clay reported "an estimated eighty percent of the denazification work in all industrial plants in the U.S. zone had been completed." On this basis, he called for the establishment of an all-German Appeal Board to rule on specific cases, subject to the jurisdiction of an American Denazification Policy Board.46 As Military Government cut back its efforts at implementation, new field investigations revealed that in many places, Law 8 had never been enforced. During December a combined team of officials from the Public Safety and Finance divisions traveled through Munich, Nuremburg, Stuttgart, and Wiesbaden to see if German business had been denazified.47 They found that little had been done in any of the four cities, and that the new German authorities were unqualified to follow through. These findings were kept classified, contributing to the American public's impression that the purge of German business was going forward. BYTHEENDofi945, the protagonists in the denazification disputes were more inclined to go public. Until then, the Military Government liberals had been constrained by bureaucratic procedures, and had relied heavily on press leaks to get their story out. The conservatives had preferred to keep mum, while they quietly softened the execution of policy. However, by year's end there was a sense of urgency on all sides, a conviction that the preliminaries were over and that the decisions that were being made would have lasting effects. An additional factor was the growing number of people of disparate opinions, who were completing their tours of duty and were eager to lobby for their ideas back in the States. Among the "soft-liners" a key spokesman was Laird Bell, William Draper's deputy in the Economics Division. A corporate attorney from Chicago, Bell resigned from the army in December and returned to the United States in order to do some "missionary work" on behalf of Military Government. In a major speech to the Chicago Council on Foreign Relations,48 Bell launched a broad attack on what he regarded as the pernicious legacy of Henry Morgenthau and JCS 1067. He complained that "the policy that was evolved is one of retribution. It tears down, it punishes, it calls for years of suppression if not oppression. It was conceived in hate and born
46 47 48
Military Governor, Monthly Report, November 20, 1945. B. Waybur (Treasury) to William Salant(State) February 26, 1945, Enclosure "Failure of Law 8 in Bavaria," RG 59 740.00119, DSNA. Bell, "Policy Over Berlin," December 10, 1945.
The Limits of Reform: The US. Zone
137
in war hysteria." In his opinion, the American purpose "should be to prevent her [Germany] from plunging the world into war again, and only that." He did not think that "we are appointed to administer punishment." As for denazification, Bell stressed that three out of every ten German males belonged to the Party, creating a situation of exceptional difficulty. However, the Nazi public officials were "pretty well cleared out." This had not satisfied "the witch hunters," for although "there was no business, the witch hunters insisted that business too should be vetted." Hence the promulgation of Law 8, a certain recipe for disaster. This meant that the administrative jobs in government and business "must be taken over by the inexperienced, by old men who had not been active in the past fifteen years, by those whose vigor had been sapped by the concentration camps and the like." This vastly complicated the task of restoring Germany to normal life. Quite apart from the effects on German economic revival, Bell was troubled by the unfair impact on those who were being punished. "Observe next," admonished Bell, "what this policy does to the literally millions of men not only removed from their jobs but also excluded from similar jobs for all time." He lamented that the list of removals included not only high officials in government and business, but doctors, lawyers, judges, and "a distressingly high percentage of university professors and eighty percent of the school teachers," and that these had "been set literally to digging ditches and cleaning sewers and told there is no hope of anything better." Some might think that what was "distressingly high" were the large number of Germans, whether they be doctors, lawyers, businessmen, or college professors, who had cooperated with the regime. But this was a line of thought that Bell firmly rejected. "It is easy to say," he opined, "that the Germans have asked for this treatment and that they should have stood up against the Nazis. Some did, and all honor to them." But he proposed that "before we take too superior an attitude towards those who went along, let us ask ourselves how many of us stand up against the dominant beliefs of our friends and neighbors - not to mention the dangers of the concentration camp." Bell had many influential friends in the United States, including former OSS chief Allan Dulles, who had returned to his position as partner in the international law firm of Sullivan & Cromwell. After reading Bell's Chicago speech, Dulles extended his congratulations: "Your statement about the German situation is in almost complete agreement with my own views." 49 Allan had passed a copy of the address over to his brother Foster, but proposed to circulate the paper even more widely. More important, he
49
Allan Dulles to Bell, December 28, 1945, JFD Dulles MSS, Allan Dulles Folder, Box 26, PU; Allan Dulles to John Foster Dulles, December 28, 1945, Ibid.
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was prepared to cooperate with Bell in the effort to change U.S. policy. Noting that "I have done such missionary work as was possible in Washington but so far have not broken into print on the subject," he recognized that both he and Bell were "somewhat suspect as allegedly representing 'predatory' interests." However, if they could get "some people who reflected the views of labor and possibly the churches to join with us we might be in a better position to get our views over." While Dulles and Bell were still trying to shake off the "Morgenthau influence" on denazification, the liberals in Military Government already felt defeated. That perception was reflected in the testimony of Russell Nixon, the deputy director of the Division of Cartels and External Assets (DICEA), in front of the sympathetic Kilgore Committee. Before taking this post, Nixon had directed the denazification section of the Finance Division. Though politically to the left of his Treasury colleagues, the Harvard-trained economist shared their disillusionment over the breakdown of the program.50 Nixon described to the senators how field investigators from the Finance Division had "traveled continuously' in the U.S. zone from May through December. During these trips "we constantly saw hostility on the part of MG officers in the field to anyone who came down from higher headquarters to enforce General Eisenhower's denazification directives." He remarked that "More than one MG official inquired whether our men were 'of the Jewish faith' since they could understand no other reason for an interest in denazification." The whole atmosphere of Military Government was, in his assessment, permeated by sympathy for the Germans and antipathy to reform. The disparate assessments of Laird Bell and Russell Nixon reflected their divergent priorities. Since Bell's main concern was the reconstruction of the German economy, the whole apparatus of denazification - including most particularly Law 8 - seemed a large encumbrance. By contrast, Nixon was committed to purging Nazis regardless of the disruption, and thus his criterion for judgment was the number of compromised people still at their posts. The mere existence of the Bell-Nixon polarity indicated that America's denazification policy was still being contested. However, it was noteworthy that when Laird Bell came home, he knew there were many likeminded people going over to Germany who could take his place. This was not true for Russell Nixon, who was one of a dwindling band of reformers whose numbers were not being replenished. With the erosion of the liberal base in Washington, and the changing pattern of recruitment for the occupation, the future of denazification, at least in its economic aspects, was quickly dimming.
50
Testimony of Russell A. Nixon, February 25, 1945.
The Limits of Reform: The U.S. Zone II. BREAKING THE CARTELS
139
The Potsdam protocol had also committed the U.S. government to the elimination of German cartels.51 Its requirement that the German economy be "decentralized for the purpose of eliminating the present excessive concentrations of economic power" echoed JCS 1067, which called for the "dispersion of the ownership and control of German industry."52 Though the mandate was clear, American attitudes were complex. As a remedy for German militarism, decartelization was never as appealing as denazification. Most U.S. officials were inclined to blame nefarious individuals rather than social organizations for the country's misdeeds. However, they also recognized that Germany's large industrialfirmshad provided invaluable assistance in Hitler's rise to power and his aggression against other nations. During the 1930s Germany's highly concentrated industrial apparatus became even more centralized under the patronage of the Nazi regime. The main mechanism of consolidation was the "cartel agreement" under which companies, involved in the production of similar or related goods, were joined together to control output, markets, and prices. These arrangements were frequently cemented by "patent pools" and other devices for sharing scientific information and access to new technology. Such procedures had not, in fact, originated under the Third Reich. German industry had been heavily cartelized since the end of the nineteenth century, and in the aftermath of the First World War, the process had been greatly accelerated by large infusions of foreign capital.53 During the 1920s several new cartels were established, most notably in the steel industry where American and British financiers had helped launch the massive Vereinigte Stahlwerke. This was also a period in which certain established firms such as IG Farben significantly expanded their field of operations. At the end of the decade, Farben represented not only the old dye trust, but a combination of chemical, oil, metallurgical, and pharmaceutical companies, and was also moving into the machine tool, electrical equipment, and steel industries.54 Though buffeted by the Depression, these
51
52
Report on the Tripartite Conference of Berlin, The Political and Economic Principles to Govern the Treatment of Germany in the Initial Control Period, FRUS, Potsdam 11:1478-98. Informal Policy Committee on Germany, Revised Directive to Commander in Chief of U.S. Forces of Occupation Regarding the Military Government of Germany, May
11,
53 54
1945.
See especially, Martin, AH Honorable Men, 27-117. Early studies of Farben emphasized the firm's willful complicity in the crimes of the Third Reich. These include: DuBois, The Devil's Chemists; Sasuly, IG Farben; Borkin, The Crime and Punishment of IG Farben. More recent studies have demonstrated significant tensions between Farben and the regime. See especially Hayes, Industry and Ideology and Stokes, Divide and Prosper.
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vast concentrated enterprises were in the best condition to navigate the storm. When the Nazis seized political power, they took advantage of the centralization of private resources to assert their control over the economy. Throughout the 1930s there was a growing interpenetration of the state apparatus with the largest companies, a coalescence that yielded rich benefits to both parties. By the end of the Second World War the German cartels had lost most of their autonomy, but had increased their wealth, size, and relative strength within their respective industries.55 To American onlookers, the subordination of the German cartels to the purposes of the Nazis had been especially damaging in view of their prominence in international trade. These cartels had never been exclusively domestic structures, but had been set up to control both national and international markets. During the interwar period, they had considerable success in incorporating foreign rivals into their system of production and sales. Thus when hostilities broke out, the German government had an invaluable mechanism for penetrating the economies of unfriendly nations - most disturbingly in Latin America and the United States itself. Among U.S. officials it was the liberal New Dealers who were most preoccupied with the problem. Inside the Economic Warfare Section of the Justice Department, teams of researchers had spent years sifting through files and interrogating witnesses, trying to piece together a clear picture of the cartels' international operations. Some of their zealotry could be explained by the imperatives of war. However, many were veterans of Thurman Arnold's antitrust campaign, which had begun during Roosevelt's second term. With his recovery program stalled, the president had revived the idea of antitrust prosecutions as a means of combatting economic stagnation.56 As a prelude to this mission, Arnold had organized a group of lawyers and academics to study monopoly and economic concentration in the United States. Convinced that the restrictive practices of a relatively small number of American firms was constraining production and employment, they pushed for remedial action to restore free competition. Any possibility that their program could be realized disappeared with the war, when the influx of big businessmen into Washington accelerated the trend toward corporate consolidation. Frustrated in their domestic purposes, this same group had been put to
55
56
Department of Commerce, Bureau of Foreign and Domestic Commerce, Summary of Report on Economic Concentration in Germany, September 3, 1945, Interdepartmental Special Committee on Private Monopolies and Cartels, RG 59 Notter, DSNA. For important discussion of the role of German big business in the war, see Gillingham, Coal, Steel and the Rebirth of Europe, 1945-55, 45~^5An illuminating discussion of American antitrust is contained in Hawley, The New Deal and the Problem of Monopoly, 283-382. Raymond Stokes traces the extension of this policy into the German arena, Stokes, Divide and Prosper, 42-44.
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work studying the German cartels, where they found even greater vindication for their views. Attorney General Francis Biddle articulated their main conclusions in testimony before the U.S. Senate.57 During hearings by the Kilgore Subcommittee on War Mobilization, Biddle explained how the German cartels had "operated as departments of the German government" in undermining the war preparations of both Europe and America. While disguising their operations as normal commercial activities, their objective was "to cripple American production, to gain from us technical know how, to conduct espionage upon us, and to establish centers of propaganda throughout the world." Biddle cited numerous examples of how German firms had used patent arrangements with American corporations to block the manufacture and export of military equipment.58 Of these, the most spectacular were the deals cut by IG Farben with such companies as DuPont, the Aluminum Company of America, and Standard Oil of New Jersey. Under their provisions, Farben had gained substantial influence over the American chemical industry, thus delaying production of synthetic rubber and magnesium in the United States. These also inhibited the sale of munitions to Great Britain and restricted the amount of American plastics that could be produced as cast sheet for bomber noses. Meanwhile Farben used its access to American technology to strengthen the military capabilities of Germany. Biddle maintained that in their collusion, U.S. corporations had been motivated exclusively by profit. Unwilling to face German competition in their domestic market, they had acceded to German terms: restricting production, setting high prices, and in certain instances withdrawing from the world market altogether. The narrow preoccupations of U.S. businessmen had thus blinded them to the aggressive intentions of others, and caused them to weaken their country's defenses. These experiences had convinced the Justice Department that once victorious, the Allies must "break the power of the German monopolistic firms" so that they "will no longer constitute a menace to the civilized world." The Kilgore Committee concurred, proposing in December 1944 a sweeping reform of the structure and control of German industry.59 This would entail the dissolution of all German monopolies and cartels, and the
57
58
59
Statement of Honorable Francis Biddle, Attorney General of the United States to the Senate Subcommittee on War Mobilization, Committee on Military Affairs, August 29, 1944, RG 84 US POLAD 850.3, FRC. Volker R. Berghahn notes the "irony" that many of these agreements dated back to the 1920s, when Germany had not yet opted out of the world economy and involved firms, like IG Farben or Zeiss, which were at that time strongly in favor of a liberal-capitalist world trading system and of multilateral exchange. Berghahn, The Americanization of West German Industry, 85. U.S. Senate Subcommittee on War Mobilization, Part I Findings and Recommendations, Washington, D.C., November 1944.
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punishment of some ten thousand of "the leading imperialist-minded industrialists." It would also require the confiscation of German property abroad and the elimination of foreign patent rights. These ideas had obvious appeal to the Treasury.60 Though Secretary Morgenthau was personally more interested in eliminating German heavy industry, this was not the goal of his subordinates. For the latter, the essential task was to constrain German economic power without impoverishing the whole society. To the staff, decartelization seemed the logical solution as it was for the secretary, once he realized that his full agenda was unlikely to be realized. At the very least the gross offenders like Farben and Krupp would be put out of action. Hence the decision to embody the Justice Department recommendations in JCS 1067. It was not surprising that the Potsdam provision on "excessive concentrations" had an essentially liberal lineage. As implied by Attorney General Biddle's testimony, the behavior of the German cartels could not be neatly dissociated from the questionable activities of certain American corporations. The effectiveness of entities like Farben was partly based on the willingness of U.S. firms to accede to their plans - a reality that American reformers were eager to point out. Moreover, for those New Dealers who believed that industrial concentration at home had generated social inequity and economic hardship, it was easy to condemn the even more centralized formations in Germany.61 Here under the Nazis was a dramatic demonstration of how lethal such enterprises could be, especially when bolstered by the power of the state. In addition to sabotaging useful economic activity and widening social divisions, they had contributed to internal violence and abetted international aggression. If New Dealers were the most energetic proponents of decartelization, they were not its exclusive supporters. An additional impetus for the program had come from the multilateralists inside the State Department, for whom the problem of cartels was integrally linked to the issue of German autarky.62 Through unfair marketing practices in the interwar period, the German giants had blocked the arteries of international trade, thus intensifying the worldwide depression, fomenting instability, and accelerating the trend toward war. Before a new international trading order was put in place, measures had to be taken to prevent such future excesses.
60 61
61
Stokes, Divide and Prosper, 43-44. Partly because of their domestic experience, American liberals tended to blur the distinction between a program of deconcentration and decartelisation. Berghahn, The Americanization of German Industry, 89-90. Charles S. Reid to Col. Raymond, May 22, 1945, RG 84 US POLAD 850.34, FRC; E. C. Anderson to C. Wilcox, August 29, 1945, RG 59 862.602, DSNA; Willard Thorp to McCloy, August 29, 1945, RG 218 (Records of the Joint Chiefs of Staff), CCAC 014 Germany (11-15-43) Section 10, MMNA.
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Though State's position overlapped the reformers',63 the emphasis was different. For the latter, there was no reason to distinguish between formal cartels and large industrial complexes, which in the German setting were closely intertwined. However, the department experts believed that concentration was a concomitant of industrial efficiency and expected technologically advanced firms to dominate domestic markets. They wished to draw the line at behaviors that prevented competition, most crucially in international commerce. This involved a certain amount of theoretical hair splitting, which had long roots in earlier American quarrels over the nature of antitrust. The ambiguities of State's position were exemplified by two policy papers written by economist Edward Mason, which set tough restrictions on international cartels and less stringent ones on domestic organizations.64 Given the divergences in Washington, much depended on decisions in the field. However, within Military Government there were the same conflicts of values that were complicating the denazification effort. At the center of battle was the pugnacious Finance chief, Bernard Bernstein, for whom decartelization was another fundamental obligation of the occupation.65 After perusing Mason's recommendations, he was sure that they would prove inadequate. To insure that the mission would be carried out, Bernstein was determined to keep authority over decartelization in his own division. Yet Finance faced formidable opposition from many quarters, particularly from the Political and Economics divisions. The sentiment in Murphy's organization was that, if anything, Mason's ideas had gone too far by creating a need for another occupation bureaucracy.66 Some felt that precisely because of its "high degree of development" the domestic cartel system could "prove a useful instrument" for administering the scattered
Despres to Stettinius, Report of Kilgore Subcommittee Study, Effect of Cartel and Monopoly Practices on War Mobilization, 11 November, 1944, RG 59 862.602, DSNA; Secretary of State Stettinius, Memorandum for the President, Comparison of the Recommendations of the Kilgore Subcommittee with those of the Department on the Economic Treatment of Germany, December 39, 1944, Ibid. Executive Committee on Economic Foreign Policy, Committee on Private Monopolies and Cartels, U.S. Policy Toward German Participation in International Cartels and Combines (ECEFP D-61) April 6, 1945, RG 59 Notter Files, Special Committee on Private Monopolies and Cartels, DSNA; Executive Committee on Economic Foreign Policy, Committee on Private Monopolies and Cartels, U.S. Policy Toward German Domestic Cartels and Cartel-like Organizations, July 25, 1945, RG 260 (Economics Division), Box 2408, FRC. Tuthill to Heath, March 1, 1945 RG 84 US POLAD 850.3, FRC. Sydney Redecker to Heath, April 17, 1945, Ibid., Jack Tuthill to Heath, March 1, 1945, RG 59 740.00119, DSNA; Heath to Riddleberger, March 8, 1945, RG 84 US POLAD 850.3, FRC; Tuthill to Murphy, April 10, 1945, Ibid.
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enterprises in the U.S. zone. This attitude reflected the intense anxiety on Murphy's staff about the prospects of reviving German production. For similar reasons, the most serious resistance to decartelization came from William Draper, the chief of the Economics Division, and his subordinates in the Industry Branch.67 These men held direct responsibility for running the German economy, and had little appetite for disruptive innovations. Moreover, many had been recruited by the War Department because of their personal experience dealing with German business, or because their home companies had been involved there before the war. This included such people as Rufus Wysor from Republic Steel, Peter Hoaglund of General Motors, and Fred Devereux of AT&T. The director William Draper was still on leave from Dillon, Read & Company - a large financial house that had made major German investments during the 1920s. Among its projects, the firm had floated the bonds for Vereinigte Stahlwerke, Germany's biggest steel combine, thus contributing to the formation of the international steel cartel. This career background had overlapping effects. Since so many officials in Economics were from American companies that were themselves highly concentrated, there was a spontaneous antipathy to the antitrust impulse. Moreover, where people had some personal connection to the large German firms, they were inclined to view their size as the product of efficiency rather than unfair trade practices and to minimize the management's willful complicity with Nazi transgressions. A more disturbing, though less pervasive phenomenon was the interest of certain members of the Economics Division in enriching themselves and their home firms. By rapidly restoring certain German enterprises to their predefeat status and mode of functioning some American companies could be greatly benefited. A particularly glaring example of this involved operatives of IT&T, who were employed by Military Government. These men used their position under the occupation to protect IT&T equipment, to reopen the factories of IT&T subsidiaries, and to try to preserve the concentrated character of the German communications industry.68 Given these factors, the decartelization program was in difficulty from the conclusion of the war. The Finance Division had tried to hold the initiative by immediately commencing research on the structure of German industry. With the retreat of the German army, their "T-team" of investigators from the Justice and Treasury departments came swooping into the headquarters of major German concerns, ferreting out efforts to secrete assets
Martin, All Honorable Men 41-42, 176-78; Simpson, "Notes on International Corporate Elites and the Reconstruction of German Capitalism, 1945-48," (unpublished paper). Sampson, The Sovereign State of ITT, 40-47.
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abroad and seeking the keys to their internal organization.69 This activity was consistent with JCS 1067, which had called for "a survey of combines, pools, mergers, holding companies and interlocking directorates" as a prelude to their dispersion. Despite the proliferating data, a new Military Government Interdivisional Committee stalled the recommendations on the dissolution of cartels.70 The one deviation from this pattern of inactivity concerned the largest and most powerful of these entities, the IG Farben corporation. During the war, Justice Department investigators had generated substantial publicity about the firm's interference with American military production.71 If any one enterprise was seen as a threat to U.S. national security, Farben was surely it. Yet apart from its direct interventions in American economic life, Farben was manifestly one of the chief pillars of the Third Reich. Through its domination of the chemical industry (notably the production of synthetic oil and rubber) and its penetration of many other realms of economic endeavor, Farben had made itself indispensable to the Nazis. As a consequence, the company was implicated in the most nefarious activities of the regime, including the production of poison gas for crematoria, the use of slave labor at Auschwitz, and the theft of non-Aryan and foreign properties in the occupied nations.72 For the American public, IG Farben was synonymous with Nazi criminality. At the beginning U.S. Military Government proceeded vigorously. Farben headquarters were located in a sprawling building on the outskirts of Frankfurt. There on April 15, the SHAEF armies came smashing in, bringing with them the investigators from the T-force.73 The Finance men hurriedly sealed off the building, and demanded of the recalcitrant Farben employees that they turn over the company files. On a tip from one of the watchmen, a half dozen directors were also located and brought in for questioning. And then the T-force fanned out to the hills of the city, where they marched into the mansion of Baron Georg von Schnitzler, the head of the firm. There they were greeted by the affable German, who reflected that at long last he would be able to resume his acquaintance with his
Brigadier General Bryan L. Millburn to Col. Raymond, April 27, 1945, RG 84 US POLAD 850.3, FRC. Raymond to Chief of Staff, U.S. Group Control, Report for June of Committee on Cartels, June 30, 1945, Ibid. Borkin, Crime and Punishment, 76-94. Ibid., 53-75; Stokes, Divide and Prosper, 11-30. Peter Hayes has argued that Farben's responsibility for Nazi war making, the theft of foreign properties, and the use of slave labor was less extensive and voluntary than was perceived by Americans at the time. However, he acknowledges that in the service of profit making the company cooperated in all these activities. Hayes, Industry and Ideology, ziz-j6. Robert Pell, Memo to Murphy April 25, 1945, RG 59 740.00119, DSNA.
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many good friends in England and the United States. The baron immediately explained that Far ben was "one of the largest businesses in the world," that he had personal contacts "all over the place," and that it had been "a most unhappy situation to be locked up, as it were, and be cut off from all my pleasant friendships around the world." The encounter with the Finance investigators was less convivial than von Schnitzler had anticipated. The Farben director and his colleagues were placed under arrest, the company's private papers were confiscated, and the main Farben buildings were requisitioned for use as the headquarters of U.S. Military Government. During the succeeding weeks, the T-team devoted most of its attention to the Farben operations, using the new records to form a complete picture of the company's connections and activities. By early summer, it was ready with recommendations for disposing of the plants in the American zone.74 The Finance Division had greater luck on the Farben issue than on the broader aspects of decartelization policy. Responding to domestic criticism, General Clay notified Bernstein and Draper that he wanted immediate action. The result was the issuance of Military Government general order 2 on July 5, 1945, mandating the seizure of the possession, direction, and control of IG Farben.75 The individual plants that were involved in war production were to be blown up or dismantled for reparations. Those facilities that had strictly peacetime application could be retained, though their ownership must be dispersed. Until this dissolution occurred, all production and rebuilding in IG Farben plants was prohibited. These arrangements were to be executed by a Farben control officer to be appointed by the military governor. Thus at the time of Potsdam, Military Government possessed a definite plan for dealing with Farben, but was otherwise bogged down in its decartelization policy. The reformers in the Finance Division were consequently encouraged by the directness of the Berlin protocol, hoping that the imperatives of Allied cooperation would lend momentum to their frustrated mission. These expectations were shattered in early September, when General Clay decided to remove Bernard Bernstein as acting director of Finance, and to replace him with Detroit banker, Joseph P. Dodge.76 Bernstein's
74 75 76
Knapp and Bogdan to Murphy, Re: Action with Respect to Cartels Especially IG Farben, June 22, 1945, RG 84 US POLAD 850.3, FRC. U.S. Military Government, General Order No 2, July 5, 1945, RG l 6 5 CSCAD, MMNA. In July 1945, Treasury Secretary Morgenthau attempted to persuade Assistant Secretary of War John McCloy to appoint Bernstein as permanent head of Finance. McCloy demurred, telling Morgenthau that Bernie "is doing a hell of a good job and he's keen, but everybody that I talked to about it, and I've checked with Clay directly, he said he didn't think he had quite the bridge for the job. That he is busy
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replacement was a long-anticipated, but nonetheless momentous change. For months, he had used his berth to lobby passionately for denazification, industrial disarmament, and economic decentralization. Though wanting a more orthodox man for Finance chief, Clay wished to retain Bernstein in the theater. At a time when domestic opinion was critical of a "soft" occupation policy, the abrupt departure of the colonel would be more grist for the mill. Clay's solution was to make him the head of the new Division of Cartels and External Assets (DICEA), which was taken out of Finance and placed under the jurisdiction of the Legal Division. 77 To the liberals in Military Government, these moves seemed a deliberate effort to undermine the decartelization program. 78 It was not simply that Bernstein was losing power to a conservative banker. Since the end of the war, the decartelizers in the Finance Division had been nurtured by their continuing relationship to the Treasury, even after Morgenthau's departure. By taking DICEA out of Finance, Clay was cutting the reformers' tie to Washington and insuring their isolation within Military Government. Bernstein himself wanted no part of this arrangement. By the end of the month, he had taken himself back to the United States in order to protest Clay's decision. It was this departure that had put his deputy Russell Nixon in charge of DICEA. From the outset, Nixon was beset by problems. Paradoxically the Potsdam protocol quickly become an excuse for inaction. Because of the accord, Military Government now had responsibility for negotiating a quadripartite decartelization law. Had the negotiations been expeditious, this would not have presented any problem. But British representatives, quietly egged on by American sympathizers in the Economics Division, blocked agreement.79 When the discussions stalled, higher Military authorities prevented DICEA from taking effective action pending an Allied accord. In the interim, the decartelizers were kept busy conducting new studies, while men from the Industry Branch proceeded to reopen German enterprises throughout the zone. In October, Nixon was finally given something useful to do. Under instructions from Clay, the DICEA deputy was told to look into the Farben situation. The breakup of Farben had been the priority project for army but so far there were few signs of accomplishment. When Nixon as a bird dog and most useful and most helpful but they don't think he can handle the big affair." Morgenthau MSS, Morgenthau Diaries, 1610, FDR. See also, Clay to Hilldring May 7, 1945, Clay Papers, 1:12; Clay to War Department, September 8, 1945, ibid., 70-71.
Clay to McCloy, September 16, 1945, Ibid., 1:79. Testimony of Russell A. Nixon, February 25, 1946. Testimony of Creighton Coleman, February 25, 1949, RG 200 Gift Collections, Johnston Avery MSS, Coleman File, MMNA. See discussion in Eisenberg, "The German Restoration," 24-38.
77 78 79
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sought enlightenment from Colonel Edward Pillsbury, the Farben control officer, he received no information or help of any kind.80 Nixon subsequently turned for assistance to the new Finance director Joseph Dodge, who was sitting on the interdivisional advisory board for Farben. Dodge was unexpectedly sympathetic,81 agreeing that nothing had been done to curb the company's war potential. In this regard, he was most annoyed by the handling of Farben's Montaxn plants. These fourteen installations had been built by the German government during the war, and had been leased to Farben for its operation. Of all the company's plants these were the most obviously geared to meeting the requirements of the German war machine, yet Pillsbury had remained immobile. Dodge mentioned that he had been personally involved in trying to close the Aorganda plant at Gersdorf, a facility that manufactured poison gas, but had been so far unsuccessful. By month's end, the continuing complaints from Dodge and Nixon prompted Pillsbury to recommend that the Industry Branch destroy some of the Farben war plants.82 While this proposal was generally accepted, the prevailing cynicism was expressed by one Murphy staffer who noted the program "is a little less violent than it sounds" since the targeted facilities were either underground plants or highly specialized war production plants, whose general purpose machinery would already have been removed "before we enjoy ourselves blowing up the remainder."83 The critics of decartelization hoped that by exploding a few worthless plants, that domestic pressure would be defused.84 At the level of the Allied Control Council, the American commitment to Farben's elimination was reinforced. In November the ACC passed Law 9 "to ensure that Germany will never again threaten her neighbors or the peace of the world . . . taking into consideration that IG Farben industries knowingly and prominently engaged in building up and maintaining the German war potential."85 To this end, legal title to the Farben assets was vested in the quadripartite body. Zonal control officers were given the task
80 81 82 83 84
85
Testimony of Russell Nixon, February 25, 1946. Ibid. Pillsbury to Dodge, November 5,1945, RG 260 (Economics Division), Decartelization File, Box 2732, FRC. Tuthill to Murphy, October 18, 1945, RG 84 US POLAD 860 IG Farben, FRC. Mindful of this mentality, the mood in DICEA remained gloomy. Abijah Fox, the Assistant Chief of the Finance Division, reported to Washington that Cartels and Assets was "continuing to struggle for jurisdictional position" but their "morale is very bad because they are not accomplishing anything, they do not know where they are going, they do not know what their status i s . . . . " Fox was personally pessimistic about the Farben situation. While his boss, Joseph Dodge, had persuaded Farben Control to designate the Montaxn plants for destruction, he anticipated "that nothing much will come out of it except some exaggerated publicity." Telephone conversation, Orvis Schmidt and Abijah Fox, October 25, 1945, Fox MSS, HST. Cited in Borkin, Crime and Punishment, 158.
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of removing plants with war potential while dispersing the ownership of the rest. With Eisenhower's original order thus reaffirmed, Dodge reminded Pillsbury that "the established public concept of IG as a war criminal is a continuing reason for establishing a record of definitive action."86 He wondered what steps the control officer had taken to terminate the company. Invoking Law 9, Pillsbury now contended that since the Allied Control Council was taking over IG Farben on a quadripartite basis, it was premature to handle dispersion on a zonal basis. With regard to the munitions factories, his office had proposed that all fourteen of the Montaxn plants be blown up, but the Industry Branch had only agreed to three and had not yet carried this out. Faced with this stonewalling, the leaders of DICEA felt increasingly powerless. Back in Washington, Bernard Bernstein formally resigned. When Clay offered his position to Russell Nixon, the latter turned it down. After mulling the situation over with his staff, Nixon had concluded that nothing positive would be done and that his continued involvement would only mask the direction of U.S. policy. The upheavals in DICEA were chronicled by Times reporter Ray Daniell, who explained that "Experts who came here to smash German cartels and such excessive concentrations of economic power as IG Farben . . . have been relegated by the War and State Departments to an investigative and advisory role."87 More was at stake here than a quarrel over turf, for "there are partisans of the Treasury's case who see in recent developments yet another indication that those in Germany anxious to ameliorate the economic consequences of defeat to the Reich have won another round." Despite the coverage in the New York Times, the resignation of Bernstein and Nixon was not major news. These were relatively obscure people caught in an esoteric bureaucratic struggle, whose concerns were hard to project. During the late fall, Military Government was still enjoying a certain respite from press attack following the dismissal of Patton, and the issuance of Law 8. In the cartel field, the existence of Order 2 mandating the seizure of IG Farben in the U.S. zone, and now the passage of a similar measure in the Allied Control Council conveyed a public impression of achievement. To dispel the confusion, Russ Nixon ordered one last DICEA study on Farben, prior to his departure from Germany. A similar review was carried out in Finance. The two reports, submitted in mid-December, found little progress.88 Of a total of fifty-five Farben plants in the U.S. zone, two of the Montaxn facilities had been completely destroyed and another three
86 87 88
Cited in Pillsbury to Dodge, November 5, 1945. New York Times, November 15, 1945. Nixon to Clay, December 17, 1945, RG 260 (Economics Division) Decartelization File, Box 2732, FRC.
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stripped of their usable equipment and blown up. Meanwhile, the rest of the Farben plants were in operation, occasionally receiving priority in the allocation of essential supplies, and sometimes cooperating in a subterranean fashion. As a remedy for these abuses the Finance Division proposed that all the wartime additions to IG Farben, including the Montaxn factories, be rapidly destroyed or declared available for reparations, and that plans be immediately formulated in the U.S. zone for the dispersal of Farben's ownership. These ideas were warmly endorsed by DICEA, and seemed acceptable to General Clay who reminded his division chiefs that order number two was still the official policy. Yet while calling for more vigorous enforcement, Clay also made an administrative decision that further undermined DICEA. For a period of weeks, the future of the group had hung in the balance. The September reorganization had satisfied nobody. Charles Fahy, the chief of the Legal Division, had failed to establish his authority over the staff, which continued to consort with former colleagues in Finance. Still, their inability to implement decisions had produced unceasing friction. From a public relations standpoint, DICEA was a clear liability to the army, a nucleus of disappointed, self-righteous people with a penchant for running to the press. Clay's solution was to again divide the group.89 A quarter of the staff was told to continue working on Germany's external assets, and sent back to Finance. The other three-quarters was granted the responsibility for all cartel questions, including Farben, and put under the direct authority of the Economics Division. Since decartelization was obviously an economic issue, there was a certain logic to these arrangements. However, Economics Director William Draper was a known foe of the program, and was likely to use his new line of authority to strangle the reform. Clay's purpose was probably more complicated. During the first eight months of the occupation, he had repeatedly expressed a more than perfunctory interest in breaking up some of the large German firms. However, the general wished to be sure that such interventions would not hamper essential production, and he was more willing to trust a pro-business person like Draper to make sensible decisions than the liberal ideologues from the Treasury.
BY THE BEGINNING of 1946, the prospects for decartelization remained in doubt. Negotiations on a quadripartite law were still stalled in committee, and in the absence of concrete legislation, the American authorities
89
Corrected Transcript of TWX Conference with State Department Re: DICEA Reorganization, December 20, 1945, RG 84 US POLAD 860 Farben, FRC.
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were unwilling to act unilaterally.90 In response to Clay, Draper had instructed his subordinates that dispersion of Farben "should be completed at the earliest possible moment." On Capital Hill, however, Russell Nixon was warning the Kilgore Committee to take such promises with a grain of salt.91 So far, the experience with IG Farben was "the failure to do the obvious even when it is expressly ordered." Nixon reiterated that most officers were reluctant to interfere with German industry, and that their foot dragging in this notorious case augured poorly for the wider program.
III. BUILDING TRADE UNIONS

Another key reform decided at Potsdam was the rehabilitation of German working-class organization. The Allied protocol had provided that "subject... to the maintenance of military security, the formation of trade unions shall be permitted." This clause was consistent with the text of JCS 1067, which had called for the establishment of independent labor unions.92 Among American planners there had been no dispute about the need to rebuild the German labor movement. There was at least a nominal consensus that the lack of independent working-class organization was one of the keys to Nazi hegemony and a component of the nation's militarism. If postwar Germany was to become a more democratic nation, it would have to become a more pluralistic society. By the Second World War, it had been more or less accepted in the United States that trade unions had a certain legitimacy as one of the competing interest groups in the country. And by extension, it was assumed that Germany would also benefit from the resurrection of working-class institutions. Still, the brief policy pronouncements left many questions unanswered. Allied support for trade unions could mean many things, from simple legalization of these organizations to outright assistance. And even if this were settled, there would have to be further decisions about the kind of structure the unions would have, the types of procedure they would be required to follow, and the sort of activities in which they might engage. At the outset of the occupation, the Americans had no shared conception
90
91
92
Allied Control Council, Minutes of the 23 rd Meeting of the Allied Control Council, November 23, 1945, RG 59 740.00119 Control (Germany), DSNA; Creighton Coleman to Loyd V. Steere, British Position on Deconcentration, December 30, 1945 RG 84 US POLAD 850.3, FRC. Draper to Col James Boyd and Judge J. W. Madden, December 20, 1945, RG 260 (Economics Division) Draper File, Box 2407, FRC; Testimony of Russell A. Nixon, February 25, 1946. R e p o r t of the Tripartite Conference of Berlin, The Political and Economic Principles to Govern the Treatment of Germany in the Initial Control Period; Informal Policy Committee on Germany, Revised Directive to the Commander in Chief, May 11, 1945.
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of what the postwar German labor movement should be. One solution to these problems would be to permit German workers to reshape their own institutions. Most U.S. officials, however, doubted that self-determination was warranted. In contrast to the arguments over denazification and decartelization, which had developed along parallel lines, the internal quarrel over labor policy had a distinctive character. It did not, at first, elicit strong emotions from the American principals. For most of the leading liberals, workingclass organization was a back-burner subject, clearly subordinate to the more pressing tasks of rooting out Nazis and smashing the large industrial firms. This attitude expressed a certain negativism on the liberal side. The reformers were generally clearer about the things they wished to cut out of German society than the institutions they hoped to build. And in terms of their priorities, they saw the destruction of fascism as their first responsibility. As for the conservative businessmen who were so influential in Military Government, their clear preference was to steer away from labor policy. These men had no wish to encourage the construction of German labor unions, and under the existing conditions they were relatively complacent about working-class developments. In comparison to the rest of Europe, at war's end the German working class seemed dormant. In other countries the experience of the resistance had fanned a worker insurgency and brought to the fore a militant communist labor leadership. But under the Third Reich workers had failed to mount a significant challenge to the regime. In the wake of defeat, U.S. observers were impressed by the demoralization, confusion, disunity, and apathy of German laborers.93 To American conservatives, who were inclined to ignore labor issues, there was little incentive to become involved. These early abdications meant that relatively subordinate people in the Labor Relations Branch of Military Government were given substantial authority in supervising German unions. Since fundamental policy questions had not been resolved, Branch officers had wide latitude in setting up guidelines. The political situation inside Labor Relations was anomalous from the start. Although officially an army bureaucracy, the Branch was composed of individuals recruited from diverse segments of the American labor movement and from specialized New Deal agencies. Conservative trade unionists from the American Federation of Labor (AFL) constituted the majority.94 Nevertheless, at the beginning of the occupation, radical operatives from the Congress of Industrial Organizations (CIO) and their New
93 94
Wiesner, "The Politics of Socialism in Germany," January 1, 1945, RG 84 US POLAD 850.4, FRC. McCloy to Clay, May 31, 1945, RG 107 ASW.8 Germany, MMNA.
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Deal allies occupied certain strategic positions.95 As a result there was bitter factional feuding, and the earliest activities of the Branch were frequently out of step with the rest of Military Government. Like the other army agencies, the Labor Relations Branch had a dual mission. One job was to cooperate with the comparable Allied organizations in preparing quadripartite legislation, which would set the framework for zonal operations. The second was to oversee the creation of working-class organizations in the American area of occupation. As prescribed by Yalta, zonal authorities would be free to set their own policies in the absence of an Allied accord. While American, British, and Soviet representatives had quickly agreed on the text of a national trade union law, French Military Government had chosen to veto it.96 Thus, for all of 1945 the energies of Labor Relations were almost exclusively focused on the construction of labor organizations in the American zone. Yet branch operatives were deeply polarized in their approach to this task. The first Labor Relations director, Mortimer Wolf, was a central figure in the argument. A former National Labor Relations Board (NLRB) attorney with a reputation for moderate views,97 once in Germany he immediately gravitated to the most radical faction in the Branch. Programmatically, this CIO group was emphasizing the importance of rank-and-file control of the labor movement. Convinced that the trade unions under Weimar had proved ineffective because of their insulation from membership opinion, they hoped to avert this development in the future by vesting responsibility for union organizing at the grass roots.98 This "bottom-up" approach focused on the plant as the essential unit of organization.99 The basic idea was to authorize shop steward elections in each individual workplace. The shop stewards (i.e., the members of the works councils) would be entitled to represent the workers on whatever
95
96
97
98
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These included Mortimer Wolf, Director of the Labor Relations Branch (National Labor Relations Board); Joseph Gould (CIO Office Workers); Edward Fruchtman (Wage and Hours Administration); George Wheeler (National Labor Relations Board, formerly United Federal Workers, CIO); Clarence Bolds (United Auto Workers, CIO); and Franz Loreiaux (Oil Workers International, CIO). Allied Control Council, Minutes of the n t h Meeting, November 11, 1945, RG 59 740.00119, DSNA. See Gimbel's discussion of French obstructionism in the Allied Control Council, Marshall Plan, 35-53. Although there was a left-wing faction on the board, he had not been associated with it. Indeed his middle-of-the road credentials helped gain Wolf a subsequent appointment as a labor operative for OSS. Telephone Interview with Morris Glushin, May 1981; Telephone Interview with Irene Arnold, May 1981. Mortimer Wolf t o Director of M a n p o w e r Division, M a y 25, 1945, R G 84, Frankfurt T X 850.4, FRC; M u r p h y t o Secretary of State, Re: Conversation with Major David Morse, Acting Director of M a n p o w e r Division, U.S. Group C C , January 17, 1945, ibid. Wolf t o Director of M a n p o w e r Division, M a y 2 5 , 1945.
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matters the employees designated. Meanwhile, these councils could also serve as nuclei for larger unions. The stop stewards from particular plants would be free to amalgamate with similarly organized groups elsewhere so long as the entire process was undergirded by a system of elections. As explained by Wolf, the entire process "hinged upon the use of the elective rather than the appointive process in trade union organizations."100 The informing principle was that "the German people, including workers, required elementary exercise in the use of the democratic process at the lowest and simplest levels." Wolf maintained that by insisting on elections, the United States could exercise a "vitalizing influence" on the trade union movement and on German society as a whole. While seemingly inoffensive, this grassroots approach provoked angry opposition from some of the more conservative forces both inside and outside of the Branch.101 The context for their opposition was the reawakening of German workers, who by the summer of 1945 w e r e beginning to organize both works councils (Betriebsrate) and trade unions across the zone. Chastened by the experience of fascism and war, labor activists seemed determined to create a unified movement and to end the bitter political rivalries that had disrupted class solidarity under Weimar. Within these nascent formations, the issue of economic democracy had become salient. The complicity of Germany's industrial and financial magnates in the rise of Nazism and in the manifold crimes of the regime had generated a mandate for their removal. Despite variations of emphasis, there was widespread support for socialization and worker participation in management.102 These developments fanned fears about "bottom-up" organizing among the AFL faction in the Labor Relations Branch. This group of American trade unionists were zealous anti-Communists, who had been battling for control of the labor movement inside the United States. Since 1936 these
100 IOI
Wolf to General John Hilldring, February 1, 1946, RG 165 CSCAD 014, MMNA. These included most prominently Henry Rutz (International Typographical Workers Union, AFL); Newman Jeffrey (United Auto Workers, CIO); Andrew Joseph Dunn (Brotherhood of Railroad Clerks, AFL); Paul Porter (International Brotherhood of Teamsters, AFL and American Newspaper Guild, CIO); Harold Francis Mullaney (International Brotherhood of Electrical Workers, AFL); and Murray Gross (International Ladies Garment Workers Union, AFL). Wiesner, "The Politics of Socialism in Germany," January 1, 1947, RG 84 US POLAD 850.4, FRC. As explained by historian Michael Fichter, "All political currents within the labor movement regarded a thorough but class-based removal of the National Socialist leadership and their supporters from positions of responsibility as a basic prerequisite of democratization. And they demanded that the implementation of this plan be in the hands of the labor movement. In contrast to the U.S. concept of democratization the German labor movement called for the realization of traditional demands for democratic participation of the workers in all aspects of society." Fichter, "American Trade Union Policy in Germany, 194447" (Ph.D. diss., Freie Universitat Berlin, 1978), 9.
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efforts intersected the AFL's rivalry with the CIO, and was readily extended into the international field when, at war's end, the CIO helped to established the World Federation of Trade Unions.103 A top priority for this faction was to insure that the German labor organizations remained staunchly anticommunist and that they would refuse to affiliate with the new labor international. An overlapping goal was the desire to model the German organizations on the American pattern. This meant building a "bread-and-butter" kind of movement that emphasized collective bargaining and wage demands, rather than politicized groupings that focused on economic democracy. It remained true, nevertheless, that the conservative laborites wanted to build strong unions in postwar Germany that could guarantee their members a decent standard of living. Some number of this group even defined themselves as Socialists, although they did not believe that unions should be the instruments of political change. By the summer of 1945 the AFL group in Labor Relations was receiving substantial assistance from the Political Division.104 The driving force was Louis Wiesner, the Labor attache on Robert Murphy's staff. With graduate training from Harvard in modern European history, Wiesner had a sophisticated grasp of the competing trends in German labor history. Harboring an intense hatred for communism and anything that smacked of revolutionary change, he harbored a certain fondness for old-fashioned German Social Democracy. A person of activist proclivities, Wiesner traveled widely throughout the zone, writing long memoranda to Murphy, building alliances with like-minded German unionists, and counseling the AFL nucleus in Military Government.105 While Murphy's Political Division had a different agenda from that of the AFL operatives, they were united in their mutual suspicion of the grassroots approach. The two groups were broadly agreed that this method of organizing would subvert the purposes of the occupation by destroying traditional trade unionism as it was understood in the United States and by stimulating a revolutionary labor movement that would be dominated by the Communists. The reasons leading to these conclusions were complex. A major concern was the fate of the surviving Social Democratic Party (SPD) trade
103
104 105
For discussion of the issue of the AFL and the WFTU see Radosh, American Labor and United States Foreign Policy, 304-47; Windmuller, American Labor and the International Labor Movement 1940 to 1953, 52.-79; Peter Weiler, British Labour and the Cold War, 89-128; 165-88. A pathbreaking German study is Lademacher, Gewerkschaften im Ost-West-Konflikt: Die Politik der American Federation of Labor im Europa der Nachkriegszeit. Interview With Louis Wiesner, Washington, D.C., September 13, 1983; Wiesner, "Organized Labor in Post-War Germany," 3-8. Interview with George Fischer, New York City, October, 1981.
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union leadership. During the 1930s some socialist laborites had escaped Hitler's clutches byfleeingto England, Scandinavia, and the United States. While in exile they established ties with like-minded trade unionists in the West, including anticommunist leaders in the AFL and the CIO. At war's end many American labor leaders hoped to utilize the emigres as the basis for a revived German working-class movement. State Department labor experts supported the idea, anticipating that the old-line Social Democrats would prove a bulwark against German Communist Party (KPD) influence.106 Wolf's plan imperiled this project. By insisting on a "bottom-up" mode of organization and by stipulating that elected shop stewards be employed in the factories they represented, it removed from consideration those Social Democrats who had spent the duration of the war in exile or in German concentration camps.107 One of the first people to recognize this implication was Newman Jeffrey, an anticommunist Reutherite from the United Auto Workers (CIO), who was now a key figure in the branch. As he attempted to mobilize trade union assistance back in the United States, Jeffrey found the national leadership of the CIO to be unsympathetic. Even so moderate a figure as Sidney Hillman was deeply critical of the Weimar labor movement, believing that the old German organizations had helped open the door to the Nazis and that their leaders deserved retirement. The CIO chief's convictions were so strong on this issue that he had personally urged the American Military authorities to employ "bottom-up" procedures as a way of introducing new blood.108 In seeking allies in the United States, Jeffrey turned instead to the leadership of the AFL. Writing to President George Meany, he explained that under the "shop steward" procedure "the most experienced trade unionists are cut out from even this limited form of union organization."109 He
106 107
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Murphy to Secretary of State, Re: Conversation with Major David Morse, January 17, 1945. Indeed, Wolf made no secret of his antipathy to the socialist emigre unionists. He emphasized that their "doctrines" were at variance with occupation objectives in that they "implicitly deny any responsibility of the German nation to make restitution . . . elevate immediate social and economic reform in Germany above reparations, and demand treatment of the Germans as a liberated rather than occupied people." Wolf to Director of Manpower Division, May 25, 1945. Manpower Director Frank McSherry had originally served as Hillman's deputy in the Labor Division of the War Production Board. According to Louis Wiesner, "Hillman read McSherry a long lesson about the weakness and chauvinism of the pre-1933 Social Democratic trade union leaders, who had sold out the Weimar Republic by failing to resist Hitler, and advised McSherry this time to build trade unions from the grass roots, i.e., starting with plant groups." Wiesner, "Organized Labor in Post-War Germany," 173. Newman Jeffrey to George Meany, December 21, 1945 AFL Papers, ser. 1 (Germany file), Wisconsin Historical Society (WSHS). Document kindly provided by Henry Berger.
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warned that the effect was "to give advantage to the Communists in gaining control of local plant organizations." While Jeffrey's assessment was not shared by most of the other CIO members in the Branch, it was warmly supported by the AFL people on the scene, who conveyed similar sentiments back to their Washington office. A second anxiety centered on the important role assigned to the shop stewards. Branch conservatives were appalled by this attempt to make the works councils the building blocks of the new trade unions. They contended that by so doing Military Government would be lending support to one of the most radical working-class institutions in pre-Nazi Germany. The result could only be the subordination of the trade unions to the works councils. Should this occur, the political issue of workers' control would become the chief focus of the new German labor movement. State Department representative Louis Wiesner shared their alarm. Appalled by his government's naivete, he reminded his superiors that "works councils in Germany (as in Russia) were after the last war organs of attempted revolutionary change."110 Observing that "they were again being used for this purpose in the Soviet zone of Germany," he argued that "for (the) American Military government to foster this formation in preference to and as a basis for trade unions seems to be a gratuitous invitation to German workers to recall their revolutionary traditions." Finally, opponents worried about the slow pace of union organization implied by the "bottom-up" approach.111 Seconding the opinion of the Branch dissidents, Wiesner pointed out "that the only elements who will obey an order prohibiting organizations are necessarily the moderates whom it is desired to encourage. The Communists and other extremists . . . are already organizing underground . . . and will gain advantage from enforced inactivity of the law abiding moderates." A related consideration was that trade unionists in the American zone would be placed at a disadvantage vis-a-vis the more centralized and developed organizations in the east if and when national reunification of the labor movement occurred. According to Newman Jeffrey, "the significance of the go-slow policy in the British and U.S. zones when trade union organization is vigorously promoted in the Russian zone and in Berlin under conditions that indicate probable Communist control, is that when national organizations are established the Russian group will have substantial advantage."11* The opponents to the "bottom-up" approach were not inclined to interpret the disagreements as simply intellectual. In launching their attack they claimed that Wolf's group was motivated by subversive intentions, and
110 111 112
Wiesner to Lloyd Steere, December 11, 1945, RG 84 US POLAD 850.4, FRC. Wiesner to Secretary of State Re: Policy of the Occupation Authorities Toward the Trade Unions in Germany, July 12, 1945, Ibid. Jeffrey to Meany, December 21, 1945; Wiesner to Otis Mulliken, December 6, 1945, Ibid.
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that they were purposefully assisting the German Communist Party. Jeffrey insisted that "the American group of Communists and Fellow Travellers are working with . . . the KPD with the deliberate purpose of creating utter chaos and confusion on the American side so that the German Communists shall be able to take over at the appropriate time." 113 The alternative method urged by the American dissidents was much closer to German traditions in that it emphasized a "top-down" approach to trade union formation. In the U.S. zone of occupation, returning socialist union leaders had constituted themselves as regional organizing committees. Wolf's opponents proposed that Military Government afford them official recognition and authorize them to build unions at the grass roots. These groups would receive the property of the defunct Nazi Labor Front (DAF) and could use these resources to facilitate an organizing campaign in the factories. Some time after the new bodies were organized, union leaders would be required to submit to an election by the rank-and-file. The crucial difference here from the procedure pressed by Wolf was that the elections would follow rather than precede the establishment of unions. This alternative procedure was designed to offset all the alleged disadvantages of the Wolf plan. In recognizing previously established Social Democratic trade union leaders as nuclei of the regional organizing committees, the Military Government would help ensure that the unions would remain in reliable, noncommunist hands, friendly to the United States and dependent on the Military Government for their existence. Although theoretically the membership would have the power to vote out the selfimposed leaders, in reality they were less likely to do so once the leaders were in place. Second, this method of organization would retain a clear line of demarcation between the works councils and the unions, enabling the latter to curtail the activities of the councils. Finally, such a method would accelerate the organization of zonal unions, enabling trade union leaders from the American zone to deal more effectively with the leadership in the east when reunification occurred. In the initial months of the occupation, Wolf's group enjoyed a marginal advantage. Since Wolf was head of the Labor Relations Branch and had strong support from the Manpower Director General Frank McSherry, he embodied the "bottom-up" approach in a series of Military Government directives.114 However, discontent in the Branch was widespread and opponents to Wolf had few inhibitions about pursuing their own program. In areas of the zone where "top-down" advocates were in charge, they simply ignored regulations and lent support to committees of congenial Social Democratic trade unionists.
113
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12, 1945, AFL papers, ser. 1, WSHS; Porter to Frey, 18 August 1946, AFL papers, Frey File, Box 13, WSHS. Documents kindly provided by Henry Berger. Wiesner, Policy of the Occupation Authorities Toward the Trade Unions in Germany, July 12, 1945.
Abraham Bluestone to Matthew Woll Re: U.S. Labor Policy in Germany, December
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During the early summer, Wolfs adversaries were strengthened by the arrival of Joseph P. Keenan, the new labor advisor to the U.S. military governor."5 An influential AFL functionary from the Illinois International Building and Electrical Workers Union (IBEW), between 1943 a n d 1945 he had served as vice chairman for labor production on the War Production Board (WPB). In this latter capacity, he had shown himself to be a pliable labor representative, whose commitment to maintaining productivity involved him in repeated efforts to prevent walkouts and to stop strikes once they had begun. Not surprisingly Keenan had established warm relations with the industrialists appointed to the board and had become a special friend of Lucius Clay, the army's top official on the WPB. As Clay's choice for Labor advisor, Keenan had no knowledge of German trade unions. However, before going abroad he sought assistance from Georgetown's right-wing, strongly anticommunist prelate, Father Joseph Walsh."6 Walsh arranged for Keenan to be briefed by former German Chancellor Heinrich Bruening and by Political Science Professor Edmund Stinnes, a disaffected member of the Stinnes family, owners of a major share of the German coal and steel industry. These encounters did not prepare Keenan for the political feud inside the Labor Relations Branch. Unaware of the quarrel and instinctively distrustful of the socialist-minded, "top-down" advocates, his first interventions were confused and inept."7 However, after some persuasion by Wiesner, Keenan swung behind this faction, invoking Clay's authority to replace Mortimer Wolf with Newman Jeffrey. At the time of Potsdam, Jeffrey had just taken over as head of Labor Relations where he was attempting to undo the work of his predecessor."8 With the issuance of the protocol, he invoked the provision calling for free trade unions to urge his subordinates to proceed speedily. New instructions to the field eliminated the detailed electoral procedures that the Wolf group had prescribed. Meantime Henry Rutz, an AFL printer from Wisconsin, used his position
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117
118
In an interview with historian John Backer, Keenan remembered that on the War Production Board Clay would "take actions that precipitated strikes and then he'd have to turn to me to see if I could get them to go back to work and things like that. So we got to be good friends." June 26, 1980 in Backer Papers, Box 4, CU; Interview Biographical Note, Joseph Daniel Keenan, Joseph Keenan MSS, Box 1, Catholic University Library (CU). As recalled by Keenan, "I knew nothing of Germany when I went there. Nothing at all. But with Father Walsh and Miss Thorpe of the AFL, I had a chance to meet with Stennis (sic) who was there. I had a chance to talk to Bruening... through these people I got a breakdown on how the trade unions were operating over there." Interview with Joseph P. Keenan, Oral History Collection, HST. Donald Heath to Murphy, June 19, 1945, RG 84 US POLAD 850.4, FRC; Richard Eldridge, Memorandum of Conversation, June 21, 1945, ibid.; Wiesner to Sam Berger, July 6, 1945, Ibid. Wiesner to Murphy, Policy Toward Trade Unions in the U.S. zone, December 11, 1945-
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as executive officer to the chief of field operations of the Labor Branch to install partisans of the "top-down" approach in key positions in the zone.119 Invoking Jeffrey's directives, these officials accorded recognition to the regional committees of Social Democrats whom they had been supporting from the beginning of the occupation. By September, it had become clear that the "bottom-up" approach was unraveling. General McSherry was personally dissatisfied with Jeffrey and the policy revision that he had instituted. The Manpower director had been persuaded by Sidney Hillman months before that it was a terrible idea to restore the old German labor leaders. Believing that this was now transpiring, General McSherry took the opportunity afforded by Keenan's return to the United States to bring Wolf back, and to try to preserve the grassroots mode of organizing. This organizational oscillation was a sign of the continuing indifference at Military Government headquarters to labor issues. The inattention of the higher authorities posed a sharp contrast to their approach to decartelization. At every step of the way Bernard Bernstein and the people from DICEA were tripping over the businessmen from the Economics Division and other top officers. Yet without Joe Keenan to pull on Clay's sleeve, there was very little interest in what was happening with the unions. When an operational Far ben plant was scheduled for closing, this struck at the heart of Military Government's mission in Germany. But so far the working-class organizations were having no adverse effect on production, which rendered them irrelevant. Moreover Clay and his associates in Economics had no desire to encourage trade unions of any kind.120 Since the fight in Labor Relations was about what type of labor movement to foster, neither faction seemed particularly appealing. And to the extent that the "bottom-up" advocates in Labor Relations were actually slowing the formation of unions, their procedures held a certain short-term advantage. With the top brass looking away, Mortimer Wolf returned to his post. However, the Branch director was no better situated than he had been previously to be an effective leader. Jeffrey's brief tenure had given the "top-down" advocates a new lease on life. Regardless of official policy, the staff in the field continued to implement the particular procedures that they individually preferred. In places like Bavaria, where the Wolf group was strongly represented, organization was slow and from the "bottom-up." In other places, most notably Wuerttemburg-Baden, plants were organized by regional committees, supported by the Labor Relations Detachments from Military Government.
119
IZO
Wiesner to Mullikan, December 5, 1945; Wiesner, "Organized Labor in Postwar

Germany," 179-80. Interview with Louis Wiesner, September 13, 1983; Wiesner, "Politics of Socialism in Germany"; Tom Stauffer to Holland, February 2, 1948, RG 59, 862.5043, DSNA.
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In an effort to counteract the latter trend, Wolf commissioned Captain Joseph Gould, formerly from the CIO and the OSS, to investigate labor developments in the Wuerttemberg-Baden area. Gould found that Labor Relations personnel had enabled the Wuerttemberg Trade Union League to organize itself in an undemocratic fashion, maintaining in his report that the league had dominated the shop steward elections in a "shocking manner."121 He charged that the league in many instances simply installed the shop stewards it wanted, and in other cases had so manipulated the election proceedings that no effective choice was available to the workers in the plant. Despite Gould's findings Wolf was unable to discipline the officers involved, nor could he displace the regional committee from its dominant position. While trying to cope with specific regional problems, Wolf sought once again to clarify overall policy. In a staff meeting in November, the Labor Relations director tried to use the guidelines that had been prepared in the four-power Manpower directorate. Because of the French veto, these were still not Control Council law, but Wolf hoped to make them the basis of American action. The directorate had recommended that the shop stewards be the building blocks for the unions, and had proposed that where other types of unions were already in existence, that these would be required to submit themselves for approval to regional bodies of shop stewards.122 This was unacceptable to many members of the staff, who argued that since the guidelines had no legal standing, they were not obliged to follow them. By December 1945 Wolf was knee deep in difficulties. Despite the support of a loyal cadre of men in the Branch, most of his subordinates were openly flaunting his instructions. Nursing a case of hepatitis, Newman Jeffrey had returned to Washington. There he took the occasion afforded by his convalescence to rally support from American labor leaders against the Labor Relations chief.123 In addition, the State Department, which was increasingly troubled by the reports of Louis Wiesner about the implications of "bottom-up" organizing, was now manifestly hostile.124 The clamor from across the water finally reached Clay, who instructed McSherry to restore order in the Branch and to end the shop steward experiment. With his dismissal imminent, Mortimer Wolf sent a blistering letter to the Civil Affairs Division of the army in which he claimed that
121
Murphy to Secretary of State, December 27, 1945, RG 59 862.5043, DSNA; Wolf to General Hilldring, February 26, 1945; Fichter, "American Trade Union Policy,"
216.
122 123
124
Murphy to Secretary of State, November 13, 1945, RG 84 US POLAD 850.4, FRC; Murphy to Secretary of State, December 29, 1945, Ibid. Abraham Bluestoe to Woll, December 12, 1945; Wiesner to Mulliken, December 6, 1945Wiesner to Mullikan, December 5, 1945, Wiesner, Policy Toward Trade Unions in the U.S. Zone, December 11, 1945; Murphy to Secretary of State, December 27, 1945, RG 59 862.5043, DSNA; Fichter, "American Trade Union Policy," 213-32.
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his opponents were actively subverting the purposes of the occupation.125 He charged his adversaries with seeking "the rapid restoration of the pre1933 trade unions on a basis which will exclude all leadership except that of the right-wing." They were attempting to restore old-line labor leaders "activated by a violent anti-Soviet bias" who favored a "split among the Allies." This was "the principal tenet of their political creed, and they aimed at the creation of a political labor movement to embrace and accomplish it." In his letter, Wolf vehemently denied that the shop steward approach was "a plot to assure Communist domination of the German labor movement." Noting that his opponents were "well aware that in the shop steward elections only a handful of Communists were being selected," Wolf stressed that "in [his] practical estimation there was and is no likelihood that the labor movement in the U.S. zone can be dominated by the Communists against whom effective propaganda has been directed for twelve years and which constitute only a decimated remnant of their pre193 3 strength." In this connection, he pointed out that the elected shop stewards were "mostly of the nonpolitical left Social Democratic wing with a smattering of Christian Democrats and Communists." Despite the widespread worker participation in shop steward elections, insubordinate Labor Relations staff had been permitted to ignore grassroots sentiment and to organize unions on a regional basis. Wolf had therefore concluded that there was no longer any possibility of building German trade unions according to the democratic methods that had been prescribed. As he explained it, "the essential hypocrisy of a position" in which he was negotiating policies with the Allies without being sure that they "would be enforced by subordinate officers in the U.S. zone unless it happened to accord with their social, political, and other views" had prompted him to resign.126 Clay shrugged off the charges, assuring his superiors that the letter was "an exaggerated account of honest differences of opinion."127 Observing that there are basic disagreements between the AFL and the CIO, he stressed that OMGUS was not concerned with these nor did it wish "to force a specified pattern on Germany." The general insisted that Military Government was "trying to build from the bottom up and to let the German trade unionists under democratic processes determine their own pattern." These disclaimers notwithstanding, Clay knew that the "bottom-up" policy was on its way out. Appended to his reply was a report from the Manpower Division responding to Wolf's charges.128 This report did not
1X5 116 117 Iz8
Wolf to Hilldring, February 1, 1946, RG 165 CSCAD 014, MMNA. Ibid. General F. Shulgen to Clay, March 13, 1946, RG 165 CSCAD 014 Germany, MMNA; Clay to General Echols, April 3, 1946, Ibid. Manpower Division, Office of Military Government, Memorandum in Reply to Mr. Wolf's Statement (undated), RG 59 740.00119, DSNA.
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deny the veracity of his claims. Instead it justified the reliance on regional organizing committees, explaining that this would speed up the formation of trade unions in the zone. Noting that in certain instances the division had been confronted by a fait accompli, the report argued that "it was not desirable to scrap the process and start again." The Manpower Division's rebuttal discounted Wolf's anxieties about elections. Emphasizing that the new leadership would eventually have to submit itself to membership approval, it found no significant violation of democratic procedures in having the election follow rather than precede plant-wide appointments. The terms of the report made it clear that with Wolf gone, the "topdown" advocates had taken charge. Indeed, Wolf's departure at the beginning of 1946 provided the occasion for a major shakeup both in the Labor Relations Branch and in the Manpower Division as a whole. Major Harold Mullaney, an official from Joe Keenan's old union, the International Brotherhood of Electrical Workers, replaced Wolf as head of Labor Relations.129 Shortly thereafter, General McSherry, still fundamentally a sympathizer with Wolf and his supporters, resigned his position. McSherry was succeeded by Leo Werts, a University of Chicago-trained labor relations specialist, who had worked for the federal government as a labor official on the War Production Board (WPB). In this capacity, Werts had developed a substantial network of ties to American trade unionists. Like Mullaney, Werts held conservative views about how to organize workers, and had been specifically chosen by Joe Keenan to help end the shop steward enthusiasm. The two men had little difficulty carrying out their mandate. Regional committees were already flourishing in Wuerttemberg-Baden and Hesse. In the places where Wolf's people had exercised jurisdiction such formations were waiting in the wings. The new officers now commanded that all obstruction cease. Appropriate regional committees were permitted to organize wherever they wished. In contrast to Wolf, Mullaney and Werts possessed the clout to make their orders stick.130 Behind them stood the Military Government hierarchy and the much relieved representatives of the Department of State. Within very short order the two succeeded in eliminating once and for all the traces of the "bottom-up" approach. The rout of the Wolf group allowed Military Government to support those German labor leaders whose ideas were most congenial.131 Since
1X9 130
131
Biographical Statement, Harold Francis Mullaney, RG 260 (Manpower Division), Director's Records Pertaining to Trade Unions and Labor, Personnel Folder, FRC. By April General Clay was reporting that "a shop steward or works council election is not a prerequisite to the formation of trade unions." Clay to Echols, April 3> 1946. While officials in the U.S. Military Government believed that regional organizing committees would prove far more amenable to American purposes than the shop committees, it should nevertheless be emphasized that the regional committees were spontaneous German creations. Indeed, Fichter has argued that the "topdown" advocates were successful because their approach to organizing was more
164
Labor Relations field officers could now legitimately authorize regional organizing committees, they backed socialist veterans, including Markus Schleicher from Wuerttemberg-Baden, Willi Richter from Hesse, and Gustav Schiefer from Bavaria. Although these men were by no means immune to the larger currents of German working-class opinion - the desire for unity, the interest in political action, the wish for socialism and codetermination - their commitments were judged by the Americans to be less "extreme" than the activists who were emerging in the plants. By empowering these leaders in advance of elections, the U.S. government strengthened their ability to control events. As summarized in a State Department Intelligence Report: The old SPD unionists feared that the election of officers from below would radicalize the movement and endanger the centralization of leadership in their hands. In contrast, the demand for elective officers was widespread among the younger and more militant trade unionists. The issue was settled by a policy of gradualism which gave the old leadership time to consolidate their influence.132 Another effect of the "top-down" policy was that the Americans were laying the institutional groundwork for moving against the works councils. During the 1920s the socialist unions had functioned in precisely this way, using their power to restrict the initiatives of the councils. By relying on regional organizing committees rather than the shop stewards as the basic unit of organization, the U.S. officials hoped to repeat that earlier history. Of all the reforms prefigured at Potsdam, the United States was most faithful in carrying out its promise to rebuild the labor movement. However, Military Government was also encouraging a top-down, bureaucratic mode of organization, which it hoped would thwart working-class militancy and prevent the spread of communism. IN T H E F I R S T eight months of the occupation, the American reform record was genuinely mixed. Much had been done to eliminate the grip of the Nazis on German public life, to break the link between German private industry and the state, and to provide independent organizations for workers. Yet in carrying out the injunctions of Potsdam, certain powerful inhibitors had become quickly apparent. Of these, the most overriding was the affinity of American businessmen for Germany's old economic elite, and their unshakable conviction that only the experienced private owners and
consistent with German traditions and worker expectations. Fichter, "American Trade Union policy," 231-33. Department of State, Office of Intelligence, "Status and Prospects of German Trade Unions," May 21, 1946, OSS, State Department Intelligence Report, Part V, Reel V, DSNA.
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managers of capital were capable of restoring the country's productive apparatus. The other was a virulent anticommunism that flowed through many of the veins of Military Government. The German Communists had suffered more cruelly under Hitler than any other political grouping, and as leading opponents of fascism had established a claim to representation. Though obedient to Moscow, in the context of a U.S.-Soviet alliance that connection was theoretically benign. Officially speaking, the German KPD was a legitimate political formation that was supposed to form part of a new coalition of democratic forces. Yet in reality few leaders of American Military Government were reconciled to this role. These American attitudes imposed definite limits on the program for denazification, decartelization, and autonomous working-class organization in the U.S. zone. What remained to be seen was how seriously they would affect the plans for collaborating with the Russians in the administration of a unified Germany.
A Fragile Friendship
Mr. Riddleberger raised a question whether it was appropriate to proceed with reparations removals to the USSR until it was clear that the USSR was willing to carry out the political and economic principles of the Potsdam Protocol.... General Clay took sharp issue with the point of view that it was the USSR which was failing to carry out the Berlin Protocol. The Russians favored the creation of central administrative machinery which the French continued to veto.... Furthermore, General Clay believed that the USSR had gone farther than the French in the introduction of democratic procedures in their zone.... The entire record of the Control Council showed that the USSR was willing to cooperate with the other powers in operating Germany as a single political and economic unit. (Resume of Meeting at State Department, November 3, 1945 Y
of Potsdam, U.S. policy makers wished to keep Germany united and to find ways of making the quadripartite machinery work. These intentions were quickly frustrated when the French decided to veto all legislation unifying the country, pending the severance of the Ruhr and Rhineland. Inside U.S. Military Government, there was harsh condemnation of France and a perception of the Soviets as fellow victims of its obstructionism. The gravity of the French challenge overshadowed other issues: the American retreat from reform, disagreements over reparations, tightening Soviet control in the eastern zone. So long as the French were paralyzing the Allied Control Council, it was difficult to gauge the seriousness of these differences. Based on its experiences in Berlin, the army remained
IN THE AFTERMATH
1
Resume of Meeting at State Department, November 3, 1945, Clay Papers, Iaii-17. 166
167
confident that if the French would back down, the quadripartite experiment could succeed.
I. THE FRENCH SPIKE

The latter months of 1945 were an unsettled period in East-West relationships. The Soviets were expanding their authority over Eastern Europe and advancing claims in other places: for a base in the Dardanelles, a trusteeship in Libya, and a special role in northern Iran. To U.S. policy makers these activities seemed qualitatively different from their own efforts to control Italy and Japan, or to shape internal developments in China and elsewhere. Despite their indignation, by December the American leaders had reached no consensus on whether the Soviet Union had become an enemy or only a dangerous friend. That ambivalence was reflected in Secretary Byrnes' decision to make the Moscow Conference of Foreign Ministers an occasion for compromise. Meanwhile Germany remained the key to peace. If the four powers could settle disputes there, other international issues would fall into place, but if they failed, the postwar world would fracture. IN T H E T O P ranks of U.S. Military Government, there was a strong desire to cooperate with the Soviets. That attitude was reinforced during August when General Eisenhower accepted a long-standing invitation from Stalin and went to Moscow for a celebration of the Allied victory, taking with him Lucius Clay. During the Second World War Eisenhower had earned the respect and friendship of the Soviet leadership by his sustained efforts to make the military partnership a reality. Their gratitude was reflected in the extraordinarily warm welcome with which he was greeted in the Soviet Union, including an unprecedented request to join Stalin on Lenin's tomb for a parade review. During the many hours that the two men stood together, they spoke at length about the prospects for peace. Also unusual was the openness and flexibility of the arrangements. Both Eisenhower and Clay were encouraged to go wherever they wished and to converse freely with their Soviet counterparts. They enjoyed long sessions of drinks and poker with Marshal Zhukov and other Soviet military personnel in which socializing was mixed with serious talk about the requirements of the occupation.1 Given their conservative political outlook, both Eisenhower and Clay had a distaste for the Soviet system. However, the emotional reception in Moscow bolstered their preexisting wish for friendship. To General Eisenhower, for whom wartime suffering had been a continuing and excruciating
2
Eisenhower, Crusade in Europe, 489-91; Jean Smith Interview with Lucius D. Clay,
13, February 11, 1971, Backer Papers, Box 4, CU.
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reality, U.S.-Soviet amity was an essential guarantee of a more harmonious international order. He also believed that the Soviet Union had earned America's trust. 3 Of all nations they had endured the greatest hardships during the conflict, they had made the largest sacrifice, and it was they who had inflicted the most devastating blows against the Wehrmacht. Lucius Clay had been much farther from the field of battle and was a more taciturn and unsentimental person. Yet he was also infected by the spirit of wartime comradery with the Soviet military and was touched by the country's hardships. From this early visit to the Soviet Union, he took the measure of Russian backwardness and desperation. In later years that perception would shape his tactics for waging the Cold War, and make him more reckless than most. However, in 1945 i* molded his conviction that the United States and the Soviet Union could work together in occupied Germany. Upon his return to Berlin, he felt charged with two extraordinary missions. Competitive and driven, he aspired to be the man who would rebuild Germany and cement a Great Alliance. 4 Yet to achieve these things the Allied Control Council (ACC) would have to institute common policies for Germany as a whole. The ACC was a complex organism, with many layers of decision making. Issues were referred in the first instance to an appropriate four-power directorate. There matters were discussed in detail and concrete proposals thrashed out. Once resolved, the subject was passed up the line to an Allied Coordinating Committee, composed of the four deputy military governors. These included General Clay for the Americans, General Robertson for the British, General Koeltz for the French, and Marshal Sokolovsky for the Soviets. The most significant negotiations took place at this level, as the four deputies attempted to compose outstanding differences, while insuring that directorate proposals were consistent with their own national policies. 5 Final disposition rested with the military governors - Eisenhower, Zhukov, Montgomery, and Koenig, who often had to refer home for instructions.
3
813-16; Murphy, Diplomat, 322-23. Clay's attitude clearly emerged in a speech to Military Government officers in late August: "I think you can take great pride that while you are here you are participating in one of the great experiments of all time. That experiment consists not merely in our mastering our ability to fix responsibility on a people who waged aggressive war . . . it also gauges our ability to work with other nations. You occupy the testing ground of international cooperation. Every act that you do and every decision you make influences the international undertaking to govern Germany. If we are to have understanding and accord throughout the world in the years to come, the experiment in Germany cannot be permitted to fail." Office of Military Government, Weekly Information Bulletin, August 27-29, RG 165 CSCAD 014 Germany, MMNA. For operations of the Allied Control Council see Clay, Decision in Germany, 104119.
For discussion of Eisenhower's attitude toward relations with the Soviet Union see Dwight Eisenhower, Crusade in Europe, 485-506; David Eisenhower, Eisenhower,
169
From the beginning, the prevailing practice was for the military governors to meet three times a month and for the Coordinating Committee to meet twice in advance of each session. In addition, it was not uncommon for the deputies to sit in for the military governors at the official Allied Control Council meetings. During these sessions, and in the informal dinners that regularly followed, Clay developed a close personal bond with his Russian colleague, Vassily Sokolovsky.6 The latter was a former school teacher, born of peasant stock, who had risen through the ranks of the Red Army to emerge as the hero of Smolensk. Clay had great respect for the man, and extended their professional connection into a private social relationship. Apart from Sokolovsky, Clay was increasingly impressed by the sincerity and cooperativeness of the Soviet authorities. The previous spring he had worried about the slow manner in which they were approaching the operations of the Allied Control Council. Now they seemed diligent and eager to get things moving. This assessment was reflected in the September military governor's report, which acknowledged "divergences" but emphasized that "the harmonious development of the necessary machinery for their solution and the cordial personal relations which have developed give ground for real hope that even the most controversial problems can be dealt with objectively and the necessary solutions can be found."7 In the same vein, Clay wrote confidentially to McCloy that "I am much encouraged by the general attitude of cooperation and the apparent desire especially on the part of the Russians to work with us in solving various problems." He thought "we are making real headway in breaking down their feelings of suspicion and distrust" and hoped that "by the time conflicting views develop on the major issues, we will understand and trust one another sufficiently to deal with the problems objectively and to work out sensible compromises of our views."8 Then quite suddenly, the optimism in U.S. Military Government was punctured by the recalcitrance of the French. This development had been quietly building since early August, when France was excluded from Potsdam.9
6
8 9
the Sokolovskys: "I liked Sokolovsky. I really did. He could quote the Bible more frequently and more accurately than anybody I'd known. He was very intelligent. Very interesting. Loved to read English novels, especially Jane Austen." Cited in Smith, Lucius D. Clay, 262. Report of U.S. Military Government U.S. Zone, September 1945, RG 59 740.00119, DSNA. The cordial relations between the Americans and Soviets on the Control Council emerge clearly in the diary entries of James Pollock, who was serving as Clay's advisor on Civil Affairs. Pollock Diaries, July-September 1945, Pollock MSS, Box 58, Bentley Historical Library, University of Michigan (UMI). Clay to McCloy, September 3, 1945 Clay Papers, 1:62-68. The most comprehensive discussion of French policy in postwar Germany is in Willis, The French in Germany, also useful is Wall, The United States and the Making of Postwar France, 77-95.
In his interview with Jean Smith, Clay recalled that he and his wife socialized with
170
Unlike the other Allies, its leaders felt exempt from the provisions of the agreement. They also disagreed fundamentally with the emphasis on German unification. Their own solution was to radically decentralize Germany's political institutions and to drastically reduce its territory by internationalizing the Ruhr and Rhineland, and integrating the Saar's economy with their own. These views had been expressed by Foreign Minister Bidault and French President Charles DeGaulle on their summer visit to Washington. Secretary Byrnes' response was to offer as an alternative a twenty-fiveyear security treaty to guard against German aggression.10 There matters had rested until late September, when the French decided to exert pressure by blocking Allied plans for central German administrations. Apart from reparations, the most crucial decision at Potsdam was the agreement to establish German central agencies for finance, industry, communications, transport, and trade. These entities would exercise authority over all of Germany. While operating under the jurisdiction of the Allied Control Council, they would have a German state secretary and an all-German staff. If economic unity was to become a reality, these bodies were indispensable. In their absence, there were no available institutions that could reintegrate the economic activities of the zones. U.S. Military Government attached particular importance to the German central agencies as a remedy for the breakdown in trade. For Clay and his associates in the Economic Division, the difficulty of procuring raw materials from the other zones was paralyzing their efforts to restore production. Apart from the obvious long-term considerations, the central agencies were urgently needed to reopen the channels of exchange. It was, therefore, a rude shock when General Koeltz announced at the September 13 meeting of the Allied Control Council that the French government was vetoing a bill establishing a German transport agency.11 Clay reacted sharply, pointing out that if the Control Council could not establish these central bodies, it could not govern Germany. Noting that the Potsdam protocol was already two months old, he warned that if agreement could not be reached in the ACC that the individual powers would make their own agreements with one another. On October 1 General Koenig made it clear that the original veto was no aberration.12 Observing that his government had not been a party to Potsdam, the Frenchman insisted that the creation of German central agencies would prejudice the question of Germany's western frontiers. The same would be true if other national institutions were formed. Thus France
10
Memorandum of Bidault, Byrnes conversation, August 23, 1945, FRUS, 1945, IV: 711-21; Memorandum of Truman-De-Gaulle Conversation, August 22, 1945, Ibid.,
709-10.
11 IZ
Murphy to Secretary of State, September 13, 1945, RG 59 740.00119, DSNA; Clay to WARCAD, September 24, 1945, Ibid. Murphy to Secretary of State, October 1, 1945, Ibid.; Murphy to Secretary of State, October 3, 1945, Ibid.
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would continue to veto not only the central agencies, but bills establishing national political parties and trade unions, until the other powers accepted its territorial demands. Clay angrily reported to Washington that "unless there is a definite improvement in our ability to obtain results in the next two or three meetings . . . it will be manifest to the press and to the public that Military Government has failed."13 Yet oddly, he and Eisenhower were considering as options that if the ACC collapsed, the U.S. would "go it alone or join in a tripartite government of Western Germany" (italics added). Earlier in June, before the Control Council started up, the two generals had talked of a Western administration.14 Yet at that juncture, it was the Soviets who appeared to be slowing things down, whereas in the existing context the French were the obvious culprits. Clay's speculations reflected his government's preoccupation with the industrial revival of Western Europe. Should the quadripartite experiment not work, it would be even more urgent to integrate the resources of the western zones with those of Western Europe. However, at this stage the desire to collaborate with the Russians was still a restraining factor. These competing currents were reflected in the American deliberations over the coal problem. By early fall it had become apparent that the western zones were failing to meet West European requirements for German coal. To improve production and allocation, Assistant Secretary McCloy had proposed that there be a committee of western coal experts, under the authority of the zone commanders, who would have the right to go anywhere in the three western zones and to use whatever facilities were necessary.15 Here, McCloy met resistance from U.S. Military Government, which did not want to offend the Russians by going outside the Allied Control Council. During the fall, the army's clear preference was to find a way of salvaging the quadripartite project. This meant pressuring France. Clay therefore urged the State Department to use economic and other diplomatic means to gain its cooperation. If there was no movement, he requested permission to establish central agencies with the Soviets and British. On October 20 the State Department granted its approval, with the caveat that the tripartite arrangement would be "for administrative purposes only and is not intended to prejudge final disposition to be made of territories within these areas."16 This was a significant qualification, for although the American government had never stated that the western
13 14 15
16
Clay to War Department, October 4, 1945, Clay Papers, 1:90-91. Clay to Joint Chiefs-of-Staff, June 6, 1945. Hilldring to Me Cloy, October 3, 1945, RG 165 ABC Germany Sec 29, MMNA; Me Cloy to Hilldring October 5, 1945, Ibid.; Ernest Gross, Items for Inclusion in Mr. McCloy's Letter to General Clay, November 1, 1945, RG 107 ASW 370.9 Germany, MMNA. Hilldring to Clay, October 20, 1945, FRUS, 1945 111:885-86.
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boundary of Germany was final, that had been the presumption of the negotiations at Potsdam. For the Russians, access to the Ruhr was a prime incentive for their acceptance of the reparations clauses and their support of central economic agencies. Should it pass outside the jurisdiction of the Allied Control Council, their strategic position would be drastically altered. Clay forged ahead, inviting the British and the Russians to create a tripartite central agency for transport. 17 Neither power was responsive. From the earliest moment of stalemate, General Robertson had said that his government would not circumvent France. The Soviets were more evasive. Sokolovsky expressed bitter feelings about French behavior and proposed a public denunciation of their obstructionism, but would not agree to a tripartite agency. The Allied Control slowly ground to a halt. In his monthly report, the U.S. military governor lugubriously observed that "The percentage of problems which received final disposition has been rather small, in some cases disappointingly so because of the necessity of obtaining unanimous agreement."18 Pointing a finger, he cited "the unwillingness of the French authorities to agree to the establishment of central German administrative machinery provided for by the Potsdam agreement." The full measure of the army's wrath emerged in November, when Clay and Murphy returned to Washington for discussions at the State Department.19 There, Clay expounded at length on his problem, stressing that the French had crippled the Control Council. He also noted the Russian belief "that the French obstinacy was receiving tacit support from the British and the United States." Disavowing this conclusion, Clay wondered if the State Department was doing anything to alter French behavior. Doc Matthews, from the office of European Affairs, conceded that the department had taken no action. The general also prodded the State Department to reach a quick decision on the Ruhr and Rhineland, emphasizing that the matter was vital to the Russians. On this question as on central agencies, State's political officers were not very forthcoming. Their immediate priority was the internal stability of France, where in the most recent national elections the Communists had emerged as the single largest political party. 20 With the Gaullist government facing a significant parliamentary challenge, they thought it wise to delay. Matthews replied that French leaders would be coming to Washington in November and should be allowed to make their case. More ominously, James Riddleberger questioned the pro-Soviet character of Clay's presentation. Citing the "inhumane and unplanned transfers
17 18 19 zo
Matthews to Cohen, October 12, 1945, RG 59 740.00119, DSNA. Report of the Military Governor, October 1945, Ibid. Resume of Meeting at State Department, November 3, 1945. See discussion in Leffler, Preponderance of Power, 68-71; Wall, Making of Postwar France, 44-47; Gimbel, Marshall Plan, 36-38.
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of population, the barriers to interzonal movement, the failure to develop interzonal trade, the control of the press in the Russian zone, and unilateral action taken . . . on land reform and nationalization of industry," he wondered if the Soviets were really prepared to implement Potsdam/ 1 General Clay denied that the Soviets were undermining the occupation. He maintained that they were strongly committed to German central agencies, had only blocked one or two papers in the ACC, and had gone much further than the French in introducing democratic procedures in their zone. Though they had made some unilateral decisions, in the absence of quadripartite authority this was also the practice of the U.S. commander. In a dramatic summation, Clay pleaded for the preservation of the wartime alliance, reminding his audience that cooperation in Germany was "of decisive importance for the foreign policy of the United States." Unless relations succeeded in "that laboratory," the broader prospects for friendship would be jeopardized. William Clayton, the Assistant Secretary of State for Economics, expressed "full concurrence," while the political officers remained silent. The most tangible result of Clay's visit to the United States was to shore up the War Department's understanding of the French problem. In outlining the failures of economic restoration, Clay convinced his superiors that the solution lay in the establishment of central economic agencies. These opinions were amplified by Jack McCloy in a major policy address to the American Political Science Association.22 By mid-November, McCloy was preparing to leave government service and he used the occasion afforded by the APA invitation to give a public account of his position on Germany. Some of his statement reiterated old themes. Middle Europe was in desperate straits and without German production would become a wasteland. In its fixation with German war potential and the need for reform, the United States had neglected the economic emergency. Despite these troubles, the one thing that was going right was the U.S.-Soviet relationship. Clay and Eisenhower had done a heroic job and "in spite of the many trials and tribulations, real cooperation was achieved in the first meetings of the Council." Contrary to the prevailing conception, the more recent difficulties did "not emanate from the Soviets but from France." If not for their interference "there would have been a very substantial measure of agreement in the council." One measure of Clay's success in converting the War Department was a change in the arrangements for coal. McCloy's idea for a western coal committee had been partly a concession to France. During his Washington
" " Resume of Meeting at State Department, November 3, 1945. Speech Delivered by the Honorable John J. McCloy the Assistant Secretary of War Before the Academy of Political Science, New York City, November 8, 1945, RG 59 740.00119, DSNA; for McCloy's hopes for U.S.-Soviet cooperation in Germany, McCloy Diary, October 6, 1945 with Enclosure Letter to General McNarney.
174
^ Fragile Friendship
talks, Clay persuaded McCloy that such a committee would be counterproductive and that the work of the "coal experts" should be a quadripartite function/3 The State Department had its best opportunity to pressure France during the visit of Foreign Minister Couve de Murville.24 The French leader reiterated his country's conviction that "the security of Europe and of the world demands that Germany should lose the free use of the war potential represented by the industry and the resources of the Rhine-Westphalia area." He demanded that the Left Bank of the Rhine be placed under direct military occupation, that the Ruhr be internationalized, and that his own country be permitted to annex the Saar. These areas would then cease to be under German sovereignty and the jurisdiction of the Allied Control Council. The foreign minister also made it clear that whatever was done on the boundary issue, France was opposed to the plan for central economic agencies. While these German bodies were theoretically subordinate to the ACC, they would become increasingly powerful over time. Eventually Germany would reemerge as a strong, centralized nation with all the associated dangers of militarism and renewed aggression against its neighbors. State Department representatives listened patiently through three days of meetings without offering significant objection. Their chief response came in the form of skeptical questions about the French plan for the Ruhr. At the conclusion of the talks, each of the department principals - Jimmy Dunn, Ben Cohen, Doc Matthews, and James Riddleberger25 - informed Couve de Murville that it was necessary to go forward with the Potsdam decision on central agencies. Certain economic questions had to be handled immediately, and these German-wide bodies were essential to the task. Their immediate establishment would not preclude a territorial adjustment in the west. While State Department officials were putting themselves on record in support of the army, their presentation was perfunctory. Despite the breakdown in quadripartite operations, they offered no direct criticism of French behavior in the Allied Control Council, nor did they even hint of a penalty for French recalcitrance. The same timidity was apparent in Secretary
i3
24 25
This decision was strongly protested by General Walter Bedell Smith, Eisenhower's deputy in command for USFET, who wrote Hilldring: "While I have every consideration and regard for Lucius Clay's position in Berlin, I am still not particularly hopeful for really constructive work there on a four-power basis." With regard to coal, he could not see how "the addition of a few experts subordinate to Clay, Robertson, Koenig and Sokolovsky will do anything constructive." Walter Bedell Smith to Hilldring, November 16, 1945, WBS MSS, Box 10, DDE. Report on the Franco-American Conference Held in Washington, D.C., November 13-20, 1945, FRUS 1945, 111:896-906. Franco-American Discussions on Rhineland-Ruhr Question, Notes on Third Meeting, November 19, 1945, RG 59 740.00119, DSNA.
175
Byrnes' session with Couve de Murville. After hearing the French proposals, Byrnes stated blandly that the United States was prepared to go ahead with central plans for currency, transportation, and other matters and would be communicating with the British and Russian governments to express its willingness to "install the plan in the other three zones if they wish to." Aware that the British had already dismissed this idea, the Frenchman was unmoved.26 The State Department's caution reflected its continuing anxiety over the French domestic situation. Contrary to Soviet claims, it did not express a subterranean desire for German partition nor any special enthusiasm for the French approach. In the aftermath of Murville's visit, Central European chief James Riddleberger drafted an internal memorandum rejecting most of their proposals.27 Although State had not complied with Military Government's request for pressure, McCloy was assured that Secretary Byrnes had taken "a very strong stand." In conveying this information to Clay, McCloy urged him to keep the War Department posted. If the French continued "their obdurate stand," the new Secretary of War Robert Patterson "would be willing to prod the State Department."28 Back in Berlin, the French remained immobile. Fortunately for Clay, there was additional support from an independent presidential commission. Earlier in the fall, the barrage of press criticism had prompted Truman to designate Byron Price and a team of observers to go to Germany to examine the occupation. The overall thrust of the Price report was favorable to the army, ratifying the retreat from reform and other Military Government decisions. One key conclusion was that France was ruining the Allied government and must be compelled to change:
The necessity for breaking the present deadlock in the Control Council at Berlin is so important that use of the full force and prestige of American diplomatic power to that end is fully warranted.29 Repeated attempts have been made to set up common policies so that the German railways, the German postal service and other essential facilities could be operated as integrated national systems. All of these attempts have failed, due
almost entirely to the rigid opposition of the French (italics added).
26
27 28
29
Gimbel, Marshall Plan, 43-44; Memorandum of Conversation of Couve de Murville and Secretary of State Byrnes, November 20, 1945, FRUS 1945 111:907-908; See also exchange of Byrnes and Patterson in Minutes of SWNCC, Forrestal Diary, November 6, 1945, PU. Discussion of the French Proposal Regarding the Rhineland and the Ruhr, November 8, 1945, RG 59 Office of European Affairs, Box 14A, DSNA. Ibid.; Matthews to Secretary of State, Re: International Corporation for Control of Ruhr Industry, November 13, 1945, Ibid.; McCloy to Clay, November 23, 1945, RG 107 ASW 370.8 Germany, MMNA. Truman to Secretary of War, November 20, 1945, President's Office File (OF), Box 687, HST.
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Price suggested that the U.S. government publicize the French position and not permit it to hide behind a surface adherence to Potsdam. This last recommendation was immediately achieved when someone leaked the Price report to the press. Provoked, the State Department promptly attacked the document. In a letter to Truman, Byrnes contended that the blame Price was placing "on the French for the failure to establish central administrations... is not entirely accurate."30 Though the secretary knew from Clay that this was precisely where responsibility did lie, he chose not to confide in the president, who had remained outside the entire controversy. Without presidential involvement, the two departments were stalemated. By mid-December, the State Department had still done nothing, and a frustrated Secretary of War was demanding that "the full force and prestige of American diplomatic power" be used to get the French in line. Under-Secretary of State Acheson deflected the request with the unhelpful reminder that U.S. Military Government had the right to institute the central agencies with the British and Soviets. Since this option was already foreclosed, Patterson warned that the French refusal "might result in a breakdown of the provisions of the Berlin Protocol."31
H E R E THE MATTER seemed frozen. Six months into the quadripartite experiment, and from the army's perspective, the State Department was throwing away a vital opportunity. Inside Germany, Russian cooperation seemed a continuing probability, with all the rich implications for the unity of Europe and the peace of the world. Yet despite their dependency on the United States, the French were being allowed to destroy the project.
II. WHOSE FACTORIES?

The French veto was not the only source of Allied conflict. During the period, when the army was complaining so bitterly about French obstruction, they were also quarrelling with the Russians over reparations. This dispute seemed to them less grave. Unlike the absence of central agencies that damaged their own plans for reconstruction, the lack of reparations deliveries primarily hurt the Soviets. The leadership of U.S. Military Government believed, in any case, that the impasse was temporary and that the Soviet Union's requirements could be reconciled with their economic agenda.
T H E P O T S D A M AGREEMENT
30 31
had left the four powers with the contradictory task of establishing economic unity while implementing a zonal
Byrnes to Truman, November 24, 1945, RG 59 740.00119, DSNA. Patterson to Byrnes November 21, 1945, FRUS 1945,111:908-9; Acheson to Patterson, December 12, 1945, Ibid., 919-20; Patterson to Byrnes December 13, 1945, Ibid.,
922-23.
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reparations program.3Z The flaw in this arrangement emerged when the Russians submitted a list of forty factories that they wanted as advance deliveries from the western zones. Invoking the principle of economic unity, Clay insisted that the western allocations could only be made after the establishment of a minimum livable German economy. Furthermore to establish that minimum, the Allies would need to know what resources would be available in the eastern zone. He proposed that a "mixed commission" be sent there to report on what had been taken.33 Clay's response surprised Sokolovsky, who pointed out that nothing of the kind had been envisioned at Potsdam. Uncertain himself, Clay turned to the State Department for guidance. On September 6 William Clayton cabled that Soviet participation "in determining the character and amount of reparations from the western zones of Germany... waits for Soviet cooperation in treatment of Germany as a single economic unit for purposes of industrial war potential and reparations."34 Hence Soviet industrial removals from the eastern zone "must be based on a plan arrived at among the four powers, which will treat every zone as part of a unified Germany with respect to future standards of living." This interpretation was consistent with the economic unity provisions of the protocol, but directly contravened Byrnes' promise to Molotov that the "USSR could take what it wanted from its zone."35 The Soviet request for advance deliveries was based on a Potsdam clause, authorizing deliveries during the six-month preparation period for the Level of Industry plan.36 However, in addition to setting the mixed commission as a condition for fulfillment, State added a whole new caveat. Before the Soviets could receive any advance deliveries, West European countries must be given the chance to present their claims. These would be offered through an organization that the Americans and British were just then forming for purposes of determining distribution - the Inter-Allied Reparations Administration (IARA). Not surprisingly, the Russians objected to the creation of a West European body that would function outside the Allied Control Council. And they could see no reason why their deliveries should be delayed until it was operational. Despite their unhappiness, the Soviets were eager to avoid a breach. In
32 33 34
35
36
Donald Humphry, Unpublished Manuscript on German Reparations; Byrnes, Speaking Frankly, 79-87. Murphy to Secretary of State, August 22, 1945, RG 59 740.00119, DSNA. Clayton for Draper, Harriman, September 6, 1945, Folder: Pauley Reparations Mission, John Backer Papers, Rare Book and Manuscript Library, Columbia University, Box 2. Indeed based on Byrnes' presentation Under-Secretary Joseph Grew thought "a removal program from the three western zones must be based on the hypothesis that a virtually self-contained economic area will be constituted by these zones."" Grew to Despres, August 12, 1956, RG 59 740.00119, DSNA. Murphy to Dodge, September 11, 1945, Ibid.
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mid-September their Foreign Ministry dispatched a conciliatory letter to the State Department.37 For weeks they had been skirmishing with the Western powers over whether the Allied Reparations Commission should remain in Moscow or be moved to Berlin.38 In an attempt at harmony, they finally abandoned their efforts to keep the commission in their own capital. They also promised to supply data to the Allied Control Council on their removals and to let a mixed commission carry out inspections. Yet significantly, they continued to challenge the American interpretation of Potsdam, maintaining that "there is no necessity of drawing up a single plan of reparations." The Berlin Conference had clearly "established one procedure of reparations collection in the Eastern Zone and another in the Western zones." With regard to the latter, they urged that Allied negotiations on a German Level of Industry plan proceed immediately so that by the end of December there could be a final list of plants for allocation.39 The Level of Industry plan remained the crux of the issue. From the standpoint of all the participants, the most important question was how much industrial plant would be removed from the western zones. At Potsdam, the Americans had been internally divided on this matter and they remained split during the ensuing weeks. For administration liberals the reduction of Germany's overblown industrial capacity remained the prime strategy for reducing its war-making potential. Outside the Treasury, this outlook had underpinned the work of the Foreign Economics Administration which, since early 1945, na< i been studying the German economy in order to propose changes in its productive capability. As the only government agency working on this problem, its recommendations formed the logical basis for the Level of Industry plan. However, in mid-August, when its director, William Fowler, arrived in Berlin with his team of experts and stack of thick reports, he was coolly received.40 These studies were based on the assumption that decisions about removals should be conditioned by the requirements of demilitarization. This contrasted with the prevailing view in Military Government, where the
37 38
39 40
Soviet Foreign Office to State Department, September 18, 1945, RG 59 740.00119, DSNA. Heath to Col. Jefferson, Roles of the Control Council and the Reparations Commission on Reparations Removals, September 12, 1945, Ibid.; Press Statement of Edwin Pauley August 29, 1945, Ibid.; Kindleberger, Luthringer, Knapp to Clayton, August 27, 1945, RG 59, Office of European Affairs, DSNA; Backer, Winds of History, 65. Soviet Foreign Office to State Department, September 18, 1945. For a discussion of the premises of FEA report, Leo Crowley to Secretary of State, November 10, 1945, "Background of Study Project for German Economic and Industrial Disarmament," Byrnes MSS, Box 613, Clemson University, Robert N. Cooper Library. According to Ratchford, a Deputy on the Level of Industry Board, "everyone" who studied the FEA plan agreed it would not work. Ratchford and Ross, Berlin Reparations Assignment; Round One of the German Peace Settlement, 65.
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first concern was to identify the plants that Germany must retain in order to be economically viable. During his first meeting with Fowler, William Draper, the chief of MG's Economics Division, complained that the FEA recommendations did not allow for sufficient exports to pay the imports that Military Government deemed necessary to a balanced economy. He also criticized their procedure of evaluating each industry separately in terms of its war-making potential.41 The result, in his opinion, was that individual industries were screwed down "too tight" as was the economy as a whole. By early September, Draper had elicited Washington's backing for a circumvention of the proposals. In a joint memorandum, the Secretaries of War and Navy endorsed their general direction, but stipulated that "decisions regarding the complete elimination of particular civilian industries . .. should either be left to the determination of the U.S. Military Government authorities in Germany, or be referred to them for their advice and recommendations" before becoming official policy.4Z Armed with this document, General Clay abruptly decided that the Foreign Economics Administration studies should be removed from circulation within Military Government.43 Once the liberals from FEA had been vanquished, American planning went forward in two settings. A Level of Industry Board, directed by Duke University economist Calvin B. Hoover, was asked to recommend a general standard of living and to specify the type of items needed, the imports that would be required, the sources of exports to pay for them, and the volume of production that should be permitted. This exclusively American organization formed a part of a quadripartite Level of Industry Committee, which was expected to report to the Allied Control Council. In addition, U.S. Military Government authorized specific Industry committees under the four-power Economics Directorate to consider appropriate levels for particular sectors.44 Under Hoover's tutelage, the new Level of Industry Board came to a questionable conclusion. According to the Potsdam protocol, Germany was to be left with a peacetime economy "not exceeding the average" of Europe as a whole, excluding the Soviet Union and the United Kingdom. The American group stood this formulation on its head by construing the ceiling as a floor, and deciding that Germany must retain enough factories to achieve the average European standard.
41
4Z 43 44
To Administrator FEA from Secretary of War Re: Ad Hoc Interdepartmental Committee Report on FEA Projects, RG 165 CSCAD 014 Germany, MMNA. Clay to McCloy, September 3, 1945, Clay Papers, 1:62-68. See discussion of the Level of Industry negotiations in Ratchford and Ross, Berlin Reparations Assignment, 33-36.
Kamarck, Meeting With FEA Representatives, August 23, 1945, Abijah U. Fox MSS, Box 7, HST.
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Although this commitment would obviously offend the Russians, whose own standard of living was far below the European average, Clay and Draper accepted it. Other aspects of Hoover's work troubled them considerably. His preliminary report, issued in late September, frontally attacked the Potsdam clauses by claiming that during the next three to five years there was no possibility of reconciling the goals of industrial disarmament, a tolerable peacetime living standard in Germany, and payments for the costs of occupation.45 If the Allies were true to the latter aims, there would be nothing left over for plant removals. Inside the State Department, reactions to the Hoover report were also hostile.46 While throwing down the gauntlet to the Russians, it also jeopardized the ability of the West European nations to receive desperately needed equipment and goods. Department economists challenged the technical validity of the study, insisting that there could be large removals in Germany's war-inflated steel, machine tools, and chemicals industries without damage to the overall economy. For the time being, "the supply of available industrial equipment will n o t . . . be the limiting factor on German economic recovery" which would depend primarily on "the availability of coal, transport, raw materials, and food." General Clay quickly disassociated himself, cabling the War Department that while he respected Hoover "very much" and thought he had made "a valuable contribution to our work," the study had not yet "been coordinated" with the work of the Industry committees.47 Clay wanted his superiors to be aware of this, in case it became necessary to apprise others that Hoover's conclusions "reflect his personal studies but do not necessarily represent our official views over here." The general had reason to be worried. With Hoover back in the United States, privately lobbying for his report, news of his efforts broke into the American press. Here again, it was Raymond Daniell of the New York Times who scooped the story. Charging that the United States was backtracking on its promise to eliminate Germany's war potential,48 he charged Draper with the decision to guarantee Germany a standard of living equal to the European average. More broadly, he claimed that the Hoover report had prevented agreement with the Russians. Sensitive to the possibility of another scandal on the heels of the Patton
45
46 47 48
Brief of Draft Preliminary Report of the Working Staff of the German Standard of Industry Board, RG 165 CSCAD 014 Germany, Box 175, MMNA; See also Calvin Hoover, Reparations Under the Potsdam Agreement, Speech to Council on Foreign Relations, November 9, 1945, CFR. Murphy to Secretary of State, September 30, 1945, FRUS 1945 111:1320-21; Clayton to Murphy, October 12, 1945, Ibid.:i34i-43. Clay to Hilldring, September 23, 1945, RG 260 (Economics Division), Box 2409, FRC; Clay to McCloy, October 3, 1945, Clay Papers, L89-90. New York Times, October 8, 1945.
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affair, the War Department sought clarification. Clay acknowledged that the Hoover report had been placed in the quadripartite committee but "as a basis of discussion only, with full understanding that it did not represent a finalization of U.S. views."49 He denied that this was producing conflict with the Russians, who were so far concentrating on advance deliveries. Contrary to Daniell's assertion, there had been "no guarantee" to Germany of a certain living standard.50 The New York Times salvo signaled a new barrage of criticism in the press.51 Ray Swing of ABC News claimed that the Hoover report will "startle Americans as it must have startled the Russians" by its support for a high volume of German trade. John Vandercook of NBC reflected that since the Anglo-American policy "of allowing the rebuilding of a strong Germany . . . led directly to World War II," the new recommendations have "given rise to many forebodings in Europe." And Bill Costello of CBS opined that to the Russians the Hoover report looked "like a deliberate attempt to keep Germany strong as a bulwark in Central Europe against Communism." The clamor in the U.S. press reflected the unpopularity of the industrial reconstruction of Germany.52 Though Morgenthau's "pastoralisation" scheme had been widely denounced, and most Americans believed that Germans should not be allowed to starve, economic rehabilitation had never been a publicly accepted goal. Because the conservative American planners had been so reticent about their intentions, the Hoover report was something of a revelation. Although Hoover's precise views on reparations did not accurately represent those of his superiors, the reporters had correctly assessed that his determination to let Germany exceed the minimum subsistence level reflected the prevailing outlook. It was also true that discussions with the Soviets on a German Level of Industry were at a standstill, a condition aggravated by the absence of a definite U.S. negotiating position. Allied attention thus reverted back to the Russians' original request for forty factories on advance deliveries. By November, the U.S. Economics Division had identified certain factories of a military nature that could be readily spared from Germany.53 But the State Department was refusing to
49 50
51 52
53
Clay to Hilldring, October 10, 1945, Clay Papers, 1:99-100. With regard to the latter, Clay was shaving a point. Hoover had been told to leave the Germans with enough plant to allow them to come up to the European average, though technically speaking the United States was not promising they would achieve this level. AGWAR to Eisenhower, October 10, 1945, RG 165 CSCAD 014 Germany, MMNA. According to a Gallup poll published on November 14, 1945, "About one-half of the voters in this country do not think that the United States is meting out tough enough treatment to Germans living in the American Zone of Occupation," AGWAR to Clay, November 14, 1945, Ibid. Clay to War Department, September 28, 1945, Clay Papers, 1:86-87.
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grant approval on the grounds that the Soviet Union was asking for seventyfive percent of the initial list, whereas it was only entitled to twenty-five percent. The Soviets responded that since they were the only country making a specific request, there was no reason why they should not receive the first batch with adjustments of percentage occurring later. However, to soothe the Americans they cut their initial request to twenty factories.54 At this difficult juncture, General Eisenhower jumped into the fray. Personally aggravated by the tightfisted policies of the State Department, he met unofficially with his friend Marshal Zhukov and his deputy Sokolovsky.55 On the agenda were a number of disputed items, including American complaints about press access to east Germany and the Soviet restrictions on air traffic out of Berlin. Zhukov was forthcoming on both subjects, but emphasized that from his government's standpoint the chief question was reparations. As Eisenhower subsequently described, Zhukov and Sokolovsky "spoke rather earnestly, almost plaintively, about their conviction that while we were concerning ourselves with the economy and living standards of France, Belgium, Holland, and even in Germany, no one had spoken up to talk about living standards in Russia."56 He had explained that while the United States knew a good deal about conditions in Western Europe, it was relatively unfamiliar with the state of affairs inside the Soviet Union. Zhukov replied that while Russia "would never place itself in the position of begging," that he could tell Eisenhower with the "utmost frankness that the standard of living in Russia today was deplorably low and that it was his conviction that even the present standard in Germany was at least as high as it was in Russia." He reflected further that "the great problem facing the Russian government and nation today is to make speedy and effective progress in raising their standards before the situation became really desperate." Eisenhower communicated an understanding of Zhukov's feelings, and promised that the United States would be helpful. In a more official vein, the Soviet marshal requested Eisenhower to convey to his superiors that "Marshal Stalin and the whole Russian government wants nothing so much as peace and understanding between the United States and Russia; that no economic and military move in the Soviet Union should be or could be interpreted as inspired by any unfriendliness towards
54
55 56
Under the Potsdam accord, twenty-five percent of equipment surplus to the German Level of Industry was to go to the Soviet Union and Poland, the remaining seventyfive percent to Western Europe. Murphy to Secretary of State, Re: nineteenth meeting of the Coordinating Committee of the ACC, November 7, 1945, RG 59 740.00119, DSNA. Eisenhower to Clay, November 8, 1945, Papers of Dwight David Eisenhower, VI:5 22-25. Eisenhower's position is discussed in Smith, Lucius D. Clay, 280-81. Eisenhower to Clay, November 8, 1945.
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the United States."57 Indeed it was "the great desire of the Russian government and people to be treated as intelligent human beings on the basis of equality in every respect." The Soviets were strongly hoping that the United States would truly carry through on the agreement it had made at Potsdam. Zhukov assured the American that, "When reparations really start flowing from your zone into the Russian, you will find that a lot of difficulties that you are experiencing will probably disappear." Eisenhower was greatly affected by this presentation, writing Clay that the whole purpose of the talk "was to renew and strengthen the spirit of understanding," which Zhukov had previously demonstrated, and to obtain "certain concrete concessions that I thought would do much to prove the sincerity of both sides." Ike encouraged Clay to continue the dialogue with Sokolovsky, and to be prepared to meet the Russians "always at least half way." With so much pressure from the War Department, State finally yielded on the advance deliveries. On November 16 Clay was able to announce in the Coordinating Committee that the U.S. government was accepting the Russian proposal for fifty percent of the first list.58 General Robertson also struck a conciliatory note, indicating that his government was prepared to view the Russian position with "extreme sympathy." Unfortunately implementation was delayed for another month, when the French insisted that they would not approve any allocations until the Allies had set a policy on the restitution of looted goods.59 However, by December after literally months of discussion and a strong intervention by Eisenhower, the Soviets were promised fifteen factories. By this time, the State Department had released to the public an important position paper, "Reparations Settlement and the Peacetime Economy of Germany."60 The inspiration for the document was the policy vacuum left by the Hoover debacle. That experience had convinced the army that it should have an official statement from Washington on certain questions such as the level of the balanced peace economy desired by the United States, the criteria to be used for determining this level, and the
57 58
59
60
Ibid.; see also Eisenhower to Clay, December 11, 1845, DDE Box 22, Germany Folder, DDE. Minutes of twenty-first Meeting of Coordinating Committee of Allied Control Council, November 16, 1945, RG 59 740.00119, DSNA; Clay to Eisenhower, December 2, 1945, DDE Box 22, Germany Folder DDE. The Soviets ended the quarrel by allowing the French to remove whatever allotted property they could identify from the first deliveries. Though this left a question of principle for later determination, the Soviet initiative enabled the advance deliveries to start moving. Murphy to Secretary of State, December 11,1945, RG 59 740.00119, DSNA. U.S. Department of State, "The Reparation Settlement and the Peacetime Economy of Germany," December 16, 1945, State Department Bulletin, XIII, 960-63.
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appropriateness of using the average European peacetime economy as the standard of measurement. The army also wanted to be officially instructed whether it was permitted to take any affirmative action to rebuild the German economy apart from the items mentioned at Potsdam: the repair of housing and transport and the restoration of coal and agricultural production.61 The State Department paper was a direct response to these interrogatories. A dry, technical, and at points dense piece of work, the document attracted little attention outside of government circles. Nevertheless, it set forth more candidly than any previous public statement its own attitude toward the German occupation. On the question of how to determine a proper level of industry, the department accepted the principle that Germany should be permitted to achieve the European average by 1948. By that time, it calculated that the European standard of living "would approximate the average standard of living over the period 1930-3 8."62 While this would be the basis for deciding what plants would remain in Germany, State wanted the figures to be adjusted to permit sufficient exports to pay for "essential imports." Although a less extreme statement than the Hoover report, the State Department paper was a stunning assault on Potsdam.63 Following the army, the department had transformed what had been offered as a ceiling on German production into a floor, saying in effect that "minimum" subsistence for Germany meant living at the European average. Furthermore by applying this definition to the "export-import" program, it was endowing the first-charge principle with a new significance.64 If "essential imports" now included everything that Germany had to purchase in order to come up to the European average by 1948, then "first-charge" surely meant that there would be nothing available for current production reparations. Most extraordinary was the inversion of the Potsdam goals - already prefigured by the rejection of the FEA studies. In the protocol, the reparations program was not only an end in itself but the primary means of preventing Germany from reattaining a "war-potential. " 6s In this most
61
62 63 64
65
State-War-Navy Coordinating Committee, Analysis of Certain Economic Problems Confronting Military Occupation Authorities in Germany, October 19, 1945, RG 218, Records of the Joint Chiefs of Staff, CCS 383.21 Germany, Sec. 9, MMNA. U.S. Department of State, "The Reparation Settlement and the Peacetime Economy of Germany." Donald Humphry, "December Interpretation of the August Agreement," unpublished manuscript in Backer MSS, Box 4, CU. This refers to the provision of the Potsdam protocol, under which all proceeds from exports must be used in the first instance to pay for "essential imports." As of July 1946, U.S. negotiators adopted the position that this principle effectively nullified the concept of recurring reparations. But in December 1945, the State Department did not state the point directly. Donald Humphry, "December Interpretation of the August Agreement."
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recent policy statement, the State Department interpreted the reduction of heavy industry as the result rather than the reason for carrying out reparations. Once removals had been made for purposes of compensating Germany's victims, then some of that industrial capacity in steel, chemicals, and machine tools might be rebuilt. Despite the changes, the State Department economists did not view their approach as antagonistic to the Russians. Unlike the staffers on the Hoover board, they thought their guidelines compatible with substantial allocations from the western zones. However, they continued to leave the hard arithmetic to U.S. Military Government, which retained the task of forging an Allied consensus on the German Level of Industry plan. Beneath this maneuvering over reparations policy was the core American dilemma: how to satisfy West European and Soviet claimants for German supplies, while preserving the country's ability to revive as a major industrial nation. Since there was continuing uncertainty about the nature of Germany's wartime damage and the appropriate remedies, the U.S. position was an unsteady one. Inside the Allied Control Council, the Americans and Soviets were stuck on a point of principle. To promote agreement, the Soviets had agreed to use the year 1938 as the basis for the new German Level of Industry and to set the figures for individual industries according to the European per capita average at that time.66 However, the Americans from the Economics Division contended that these ceilings would have to go higher in order to permit production for export. The Russian response was to skip most of the fall meetings of the Industry committees.67 During December, General Clay took over the negotiations and began pushing for a deal. Instead of arguing abstractions, he proposed to the Allied Coordinating Committee that they work with specific numbers.68 If the four powers could come up with an acceptable formula for steel then other matters might fall into place. The Allies were initially far apart in their steel figures. Citing calculations of the European per capita average in 1938, the Soviets recommended a capacity of 4.6 million tons. The French said 7 million tons, the British offered 9 million tons. Functioning as the group pragmatist, Clay encouraged everyone to move toward the middle.69 After further struggle in which the Soviets said they would go no
The Soviets insisted on calculating the level of each individual industry at the same level as it had been in 1938. This approach also put them at loggerheads with the American negotiators, who wished to have greater flexibility in determining the average. Hoyt Price to Murphy, October 30, 1945, RG 59 740.00119, DSNA. Minutes of Coordinating Committee of the Allied Control Council, December 21, 1945, Ibid.; Murphy to Secretary of State, December 22, 1945, Ibid. Ratchford, Berlin Reparations, 119-21.
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higher than 5.6 million tons, Clay suggested that two figures be used - 7.2 million tons for capacity and 6.0 million tons for production. This would leave Germany with a steel capacity that was quite close to a 7.8 million ton estimate, originally proffered by the Hoover team.70 Since he lacked new instructions, Marshal Sokolovsky went on record against the American compromise. However, on the last day of December, he privately assured Clay and Murphy that the 6.0 million ton production figure would prove acceptable to his government. Delighted by the shift Clay reported to the War Department that the "way was prepared for unanimous agreement on German steel level" early in the new year. This was a "signal triumph for quadripartite machinery and should lead to early agreement on levels to be permitted other phases of German industry."71
BY THE BEGINNING of 1946, it appeared as though the nettlesome question of German reparations was on the verge of resolution. Advance deliveries to the Soviet Union had finally begun and a path had been cleared for a Level of Industry plan, which would permit significant removals from the western zones of Germany. On the surface, Clay's success in the steel discussions appeared to vindicate the State Department's approach by demonstrating that the United States could maintain the sinews of Germany's industrial economy while accommodating the Russians. Yet the full import of these negotiations was still unclear. Submerged in the trading of numbers was the fact that the Soviets had retreated much farther than their Western colleagues. Because they disapproved the idea of giving the Germans a more than "minimum subsistence economy," even their first steel figure had been a concession. But as had been true at Potsdam, the Soviets were in the weaker bargaining position. The Western allies controlled the facilities that they needed, and without a deal they would get nothing. The fact of agreement was no indication that the Russians were satisfied, or that they would even acquiesce in the final arrangements. This could not be known until the actual quantity of reparations deliveries had been specified. But even then, the true measure of the Soviet attitude would be found not in their willingness to accept the Western offerings, but in how prepared they were to open up the eastern zone to the influence of their Allies.
III. THE EASTERN ZONE

From the instant the Red Army entered Berlin, the Americans had kept a close eye on the political and social developments in the eastern zone. U.S.
Pollock Diary Entry, January 20, 1946; Clay, Decision in Germany, 108-9. Murphy to State, December 31, 1945, RG 59 740.00119, DSNA: Clay to Secretary of War, December 31, 1945, RG 165 CSCAD, 014 Germany, MMNA.
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plans for a quadripartite occupation rested on the premise that the Soviet Union would eschew a revolutionary course in Germany. This expectation was partly derived from the wartime view of Stalin as a shrewd, pragmatic, cautious man, whose allegiance to the Russian homeland far exceeded his ideological commitments. It was thought that in the German setting, the Soviets would have a special incentive for moderation. There would be three Western armies patrolling the area, and the rich industrial resources of the Ruhr were in British hands. If there was conflict, the Soviet Union would be quickly shut out of the most valuable portion of the country. Moreover, the punitive attitude toward Germany, which the Soviets had consistently displayed, seemed at odds with a Marxist agenda. This said, American policy makers were acutely aware that the Soviet Union was a communist country that had played host to thousands of German KPD members during the war.72 Thus there was always the possibility that the Soviets would yield to temptation and try to Bolshevize the country. Should they do so, the prospects for German unification would disappear. U.S. OFFICIALS WERE resigned to the return of the communist exiles. After twelve years of Nazi propaganda and a bitter war on the Eastern Front, the Soviets would be facing a hostile populace. The Communists were the only reliable Germans they knew, and they were certain to use them.73 This expectation was fulfilled on April 30, 1945, the very day that Adolf Hitler committed suicide, when three planeloads of German Communists landed in Berlin. Organized into three "initiative groups," their first assignment was to assist the Red Army in establishing local German administrations in Berlin and the provinces by identifying "politically acceptable" residents.74 The most influential of these groups remained in Berlin, where under the direction of KPD boss Walter Ulbricht,75 they tried to create a city Magistrat
72
73
74
75
U.S. observers were apparently unaware of the Soviet murder and incarceration of thousands of German Communists who had sought refuge in the Soviet Union. Steele, Inside East Germany, 28-30; Leonhard, Child of the Revolution, 131-162. There was some uncertainty among the Americans about whether the Soviet Union would work directly through the KPD or use the Free Germany Committee. Until June 1945 much of the reporting from the Political Division assumed the latter. Especially enlightening because of its extensive use of the East German and Soviet archives is Naimark, The Russians in Germany: The History of the Soviet Zone of Occupation, 1945-47 (forthcoming), Chapter 5. Other valuable English-language sources on Soviet political policy in the eastern zone are Leonhard, Child of Revolution-, Krisch, German Politics under Soviet Occupation-, Nettl, The Eastern Zone and Soviet Policy in Germany; Sandford, From Hitler to Ulbricht, 1945-46: The Communist Reconstruction of East Germany, 1945-46. For the role of Walter Ulbricht during this early period, see Carola Stern, Ulbricht,
101-9.
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for the ruined capital. Though free to select the people, they were constrained by Soviet-issued guidelines. Certain key positions such as deputy mayor, director of internal affairs, and police chief, were granted to Communists. However, the job of mayor and the majority of other posts were given to individuals from other parties.76 The pattern in Berlin was repeated throughout the eastern zone provinces.77 Political appointments were made at the advice of the communist "initiative groups." And while non-KPD people predominated, the Party kept its hands on certain vital jobs. This put the Communists in a powerful, though by no means controlling position. The exiles immediately declared their intention to create a parliamentary republic.78 While asserting that working-class organizations should occupy a far more important role than in Weimar, they also emphasized that Germany was not ready for socialism and middle-class groups must continue to be represented in the state. The KPD's position was consistent with the Popular Front tactics of the 1930s, in which interclass cooperation and the defense of political democracy had been stressed. Yet this moderate line was jarring to many German leftists, who had survived in Germany during the years of Nazi oppression.79 Among these indigenous activists, there were hopes for a more thoroughgoing social transformation in the wake of the fascist collapse. Such sentiment was especially marked in certain of the local antifascist committees (Antifa) that had spontaneously surfaced at the end of the war. Significantly, the Moscow Communists viewed the Antifa with the same suspicion and disdain that the Americans did. Early in May, Walter Ulbricht set the precedent for the rest of the eastern zone by banning these committees in Berlin and its environs. By so doing, he was striking a blow not only at the independent left, but at those Communist Party members who questioned the virtues of bourgeois democracy.80
76 77 78
79
80
Leonhard, Child of Revolution, 302-3. Nettl, The Eastern Zone, 81-82; Sandford, From Hitler to Ulbricht, 68-70. According to Leonhard, a member of Ulbricht's Initiative Group, "our political task was not to consist of establishing socialism in Germany or encouraging a socialist development. On the contrary, this must be condemned and resisted as a dangerous tendency." Leonhard, Child of Revolution, 81-82. For the Soviet attitude, see "Beratung am 4.6 1945 um 6 Uhr bei Stalin, Molotow, Shdanow," and "Bericht Walter Ulbrichts uber eine Beratung bei Stalin am 6.2. 1946 um 9 Uhr abends," in Badstiibner and Loth, Wilhelm Pieck-Aufzeichnungen zur Deutschland politik, 194553, 5O-53; 68-70. Naimark explains that "By setting up the SPD and the nonsocialist parties so quickly and then joining them in an antifascist bloc, SVAG preempted those Communists who advocated the establishment of Soviet power and the crushing of the bourgeoisie." Naimark, Russians in Germany, Chapter 5. Morris, The Attitude of German Communists, Report No. 4, March 29, 1945, RG 59 Central Europe, Box 3, DSNA. Leonhard, Child of Revolution, 318-26.
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The KPD's swing to the Right became even more apparent in June, when Marshal Zhukov permitted the formation of political parties.81 Once legally established, the KPD's first act was to call upon the other "anti fascist" parties to create a united front and to join them in a ten-point program of political and social reform. Its manifesto acknowledged that "the prerequisites do not exist for the realization of a Soviet Germany." While calling for political democracy, it specifically endorsed "private enterprise and initiative on the basis of private property." Labor's rights would be protected through the establishment of trade unions and works councils. As for land reform, the estates of "counts and princes" would be liquidated, though large farmers would be exempt. Expropriated property would be redistributed in the form of private plots. Here was a program designed to reassure the Western powers and to provide a basis for intraparty collaboration.82 Zhukov's order had led to the rapid reestablishment of the Social Democrats (SPD) and two bourgeoise groupings - the Christian Democratic Party (CDU) and the Liberal Democrats (LDP). Each had the right to build their organizations and to publish the party newspapers, subject to the military censor. With Soviet pressure in the background, all agreed to coordinate their policies with the KPD, under the rubric of a Progressive Bloc.83 From the Communist standpoint, the most complicated relationship involved the SPD. While the eastern Social Democrats had a friendly attitude toward the Russians, their program was to the left of the KPD. By early summer, the SPD was calling for the nationalization of banks, insurance companies, mineral resources, mines, and the energy industry.84 It was also demanding the confiscation of large landholdings and of "viable" large-scale industry. Party spokesmen had originally asked for an immediate merger with the Communists on the basis of a Marxist platform. When Walter Ulbricht spurned this offer, they more reluctantly affiliated with the Progressive Bloc. Beginning in September, there began to be indications of a reappraisal of the KPD's political strategy.85 By this time the unpopularity of the Communist Party in the east had become a definite problem. Although it had played a constructive role in restoring order and restarting the economy, this could not offset the association with the Russians. The many instances
81 82
83
84 85
Clay to War, August 8, 1945, RG 165 WSCAD 014 Germany, MMNA. Weitz, "The Burdens of the Past: German Communists and the Prospects for a 'German Road to Socialism', 1945-49," (Unpublished Paper), 1994; Sandford, From Hitler to Ulbricht, 51-53; Leonhard, Child of Revolution, 326-38. Naimark advances the important argument that "for large numbers of German antifascists, the beginning of the political parties and operation of the 'antifascist democratic bloc' meant the end of active politics." Krisch, German Politics, 46. Murphy to Secretary of State, Communist Campaign for a 'United Front' of German Democratic Parties," November 4, 1945, RG 59 740.00119, DSNA.
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of rape and pillage as the Red Army moved across Germany,86 the severance of the Oder-Neisse territories, the sudden influx of tens of thousands of refugees into the east, and the massive removal of factories had all reaped a new harvest of bitterness. By contrast, the SPD had emerged as the largest and most dynamic party in the zone.87 This was consistent with pre-Hitler trends in which the German Social Democrats had been the largest party in the country, substantially outstripping the Communists in both members and votes.88 In the aftermath of war, the socialist leadership was not as organized as the Communists and were receiving significantly less material aid from the Soviets. Despite these handicaps, in both Berlin and the provinces workers were spontaneously flocking to their banners. If on the communist side this balance of forces was generating a new interest in fusion, there was greater hesitancy among the eastern Social Democrats.89 An important factor was the attitude of their western colleagues, who under the leadership of Kurt Schumacher were developing a more conservative and anticommunist posture. The divergence between the two groups over a range of issues from nationalization to relations with the KPD emerged during their October national conference at Hannover. After encountering Schumacher, eastern leader Otto Grotewohl had no doubt that fusion with the Communists would result in isolation from his own party in the west.90 Yet Grotewohl and his colleagues had their own independent complaints about the program and tactics of the KPD, and a reviving fear of its manipulativeness. Thus despite substantial rank-and-file sentiment for party unity, Grotewohl adopted a more challenging stance, proclaiming in November that there would be no fusion until the SPD was organized on a national basis.91 As the eastern Socialists retreated, the Communists became more assertive about the virtues of amalgamation. At the beginning of December, the Soviet military authorities came out of the shadows, pressuring the SPD to
Weitz, "Burdens of the Past," 6. At the end of August 1945, t n e eastern KPD had 150,000 members as compared to 375,000 members of the eastern SPD. Naimark, Russians in Germany, Chapter 5; Lt. Thompson to Col. Hohenthal, The Present Political Picture in Germany and Particularly in Berlin, September 13, 1945, RG 84 US POLAD 801.1, FRC. In the last free election prior to the Nazi take-over, the SPD received 7.1 million votes in comparison to 4.8 million for the KPD. Edinger, Kurt Schumacher, 36. For detailed exploration of SPD attitude towards merger, see Krisch, German Politics, 101-19; Office of Military Government, Bi-Weekly Political Summary, November 16, 1945, RG 165 CSCAD 014 Germany, MMNA; Morris, Notes on KPD/SPD Relations, December 6, 1945, RG 59 Central Europe, Box 3, DSNA. Krisch, German Politics, 105-7.
Ibid., 109-12.
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participate in a unity conference scheduled for the end of the month.92 To this point, the Soviet Union's position had been uncertain. Though the German Communists had been talking up merger for months, the Soviets had stood behind the four-party Progressive Bloc. The unity conference was a predictably rancorous affair.93 The KPD delegates arrived with a set of pro-merger resolutions, including a call for joint electoral lists and a common program at the provincial level. The SPD delegates came with a list of grievances and demands that before merger could proceed their party must be treated more equitably and the intimidation it had been experiencing must cease. After considerable quarreling, a compromise was struck in which the Social Democrats agreed that unity should become a practical goal, and that a joint commission would work out details of structure and program. However, they managed to keep things vague by wriggling out of the KPD request for joint lists and blocking the adoption of a specific schedule for unification. The purposes of the new organization were also kept obscure. To appease the SPD the Communists resurrected the term "socialism" though still restricting its application. The final resolution of the December conference declared that the new unity party should make decisions on the basis of workers' needs and "the special conditions existing in Germany." Under the new regime (described as "the ruthless smashing of the old power structure"), the country would experience a "democratic renewal" that could create "new and special forms of the transition to . . . socialism."94 While thus incorporating the view that Germany was unready for a social revolution, the conference had at least genuflected toward Marxist goals. If the KPD's language was more tortured than usual, this reflected the dilemmas of Soviet policy. Throughout 1945 the Russians, followed by their communist adherents, sought the fine line between overturning existing hierarchies of wealth and power and preserving the foundations of private property. The pattern was initially observable in agriculture, when the Soviets undertook an ambitious land reform program. This was in line with the Potsdam protocol, which called for the breakup of the Junker estates. As the first of the Allies to address that goal, the Russians were acting not only on their ideological proclivities but in response to special circumstances in the zone.95 The east contained proportionately more large estates
92
93 94 95
According to Naimark, "the main impetus toward unity was the Soviet desire (and Ulbricht's as well) to crush the SPD as an active force in the politics of the eastern zone. By the end of 1945, the SPD represented the most serious domestic threat to Soviet control of the zone," Russians in Germany; Wiesner, "Organized Labor in Post-War Germany," 197. Krisch, German Politics, 118-44. Ibid., 143. Gottlieb, German Peace Settlement, 54-58.
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than the western zones, and many owners had fled the area as the Red Army moved in. Consequently, during the summer of 1945 much of this land went unutilized despite the population's urgent need for food. The Soviet zone was also experiencing a great migration of Oder-Neisse refugees who needed a place to live and work, making it a logical solution to settle them on the abandoned lands. The Russians made their opening move in Saxony, when the provincial administration announced on September 3 that it was expropriating all German government land, the estates of all leading Nazis, war criminals, and absentee owners, and all other estates that were larger than one hundred hectares. Their decree made no provision for compensation.96 Expropriated land would be used to provide private farms for landless settlers and other land-poor farmers, and the recipients would be given ten to twenty years to repay a sum of money equal to the first year's harvest. Actual distribution would be carried out by the local peasants, organized in Peasant Mutual Aid Committees. These would rule on eligibility, and would also bear the responsibility for arranging access to heavy equipment, fertilizer, and other necessary resources. The Saxony law became the model for land reform in the other provinces. Though publicly applauded by the four parties in the Progressive Bloc, the local newspapers, the labor unions, and other organized centers of German activity, there was some subterranean dissent. The SPD was disturbed that the expropriated land had not been nationalized, while others from the CDU and LDP complained about the lack of compensation, the small size of the resultant plots, and the speed with which the measure had been enacted.97 Such criticisms notwithstanding, Russian actions were consistent with the KPD promise to permit large farms and to maintain private cultivation. More problematic were Soviet dealings with East German labor. As was true in the west, working-class organization sprang up independently in the factories, where employees formed shop councils to deal with immediate problems.98 Given the flight of so many managers and owners from the Russian zone, these groups frequently seized responsibility for production. From the Soviet perspective these formations were a mixed blessing. For the short term, they had a useful role to play in bringing order out of chaos and offering an alternative to the compromised capitalists. But they were frequently autonomous, militant, and politically heterodox entities.
96
97
98
Land Reform, Report of the Economics Division, November 1947, RG 260 Economics Division, Folder: Land Reform, Box 2413, FRC; see also discussion in Nettl, The Eastern Zone, 85-87. Murphy to Secretary of State, September 14, 1945, RG 59 740.00119, DSNA; Murphy to Secretary of State, September 21, 1945, Ibid.; Sandford, From Hitler to Ulbricht, 117. McShane, International Labor and the Origins of the Cold War, 206-7.
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The response of the KPD was to try to outflank the councils by stimulating a strong, centralized trade union movement." Their top-down approach resembled the one being pushed by the AFL and the State Department in the U.S. zone, and for reasons that were not dissimilar. Among other things, it provided a substantial advantage to that faction which could command the support of the occupying authority. Marshal Zhukov had legalized trade unions in early June. Shortly thereafter, the KPD laid the groundwork for a new, unified trade union in Berlin - the FDGB (Freier Deutscher Gewerkschaftsbund).100 Led by a multiparty coalition of veteran laborites, the FDGB's executive board claimed control of all the union's finances and assumed responsibility for appointing lower-level organizers. This virtually ensured that every segment of the city's labor movement would conform to the pattern set by those at the top. The FDGB was also centralized in the sense that each of its eighteen-member industrial unions had little independent power vis-avis the union's executive. With considerable support from the Russians, the Berlin organization quickly garnered a membership of one hundred thousand.101 This approach was duplicated in the eastern provinces, where teams of organizers from the FDGB rapidly recreated regional versions of the Berlin formation. Though officially separate from the Berlin body,102 these entities conceived of themselves as part of the same movement, and were organized in such a way that they could be readily assimilated. As it grew in size, the FDGB kept expanding its sphere of operations. Along with the Western powers, the Soviet authorities had forbidden strikes and were making administrative decisions about wages and prices. However, the Russians encouraged the union to participate in a wide range of decisions, from denazification to the technical details of worker insurance.103 In numerous plants throughout the zone, the FDGB exercised the right of codecision, sharing responsibility with management for hiring, firing, working conditions, procurement of supplies, and the elaboration of production plans. In those factories that had been abandoned by their owners, the Soviets made the FDGB the trustee for the enterprise, granting it authority over the daily operations of the plant. As the union moved into the realm of economic decision making, its functions began to overlap those of the works councils. This development
99 100 101 102 103
Sandford, From Hitler to Ulbricht, 134-240. Wiesner, Memorandum of Conversation, August 6, 1945, RG 84 US POLAD 850.4, FRC; Murphy to Secretary of State, August 13, 1945, RG 59 862.5043, DSNA. Nettl, The Eastern Zone, 84. Wiesner, Policies of the Occupation Authorities Towards Trade Unions in Germany, RG 84 US POLAD 850.4, FRC. Wiesner, "The Politics of Socialism in Germany," January 9, 1945, RG 84 US POLAD 800, FRC.
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-A Fragile Friendship
was not accidental since communist leaders of the FDGB viewed the councils as dangerous competitors.104 In July, its executive had proposed the abolition of the works councils, but had retreated after fierce protest. In subsequent months it continued the quest for ascendancy, a murky situation that continued until mid-October when, at Soviet behest, the provincial government of Thuringia passed a works council law designed to codify relations in the plant.105 Under its provisions shop councils were required in every factory, and codetermination was made mandatory on many subjects. At the same time, the law increased the control of the FDGB over the works councils by giving the union responsibility for plant elections and by requiring councils to carry out their activities within the framework set by the union. Though the Russians were enlarging the prerogatives of workers vis-avis management, in insisting on a hierarchical, centralized mode of organization they were also keeping the reins in their own hands. By relying on the communist operatives, who dominated the FDGB executive board, the Soviets retained the ability to either shore up the factory owners or to displace them altogether. On the fundamental question of private ownership, the Soviets brought heavy ideological baggage. Their domestic preference was reinforced by a view of fascism as the final and perverse outgrowth of "monopoly capitalism." Indeed their wartime propaganda had continuously emphasized the nefarious role of the big banks and large cartels in bringing Hitler to power and sustaining his aggression against other nations. The obvious conclusion was that these structures should be socialized. Yet the Soviets were simply unwilling to take this step. They were boldest on the banks. In early summer, they closed down the largest ones and cancelled the outstanding obligations.106 In subsequent weeks, they created decentralized municipal banks to carry out some essential functions, and kept the private bank assets in blocked accounts. When it came to private industry, they tread warily. Provincial administrations were permitted to operate on an ad hoc basis and to seize those firms that were owned by war criminals and Nazi leaders.107 In late October, the Russians codified their approach through the issuance of SMA Order 124, which sequestered all "ownerless property" as well as the property of the German government, the Nazi organizations, and the officers, "leading
104 105 106 107
Sandford, From Hitler to Ulbricht, 160. Murphy to Secretary of State, Re: Transmission of Thuringian Works Council Law, December 1, 1945, R G 84 US POLAD 850.4, FRC. Sandford, From Hitler to Ulbricht, 38. Sandford speculates that the "promulgation of SMA Order 124 might thus be seen, in part at least, as an attempt by Communist authorities to regain control of the expropriation movement and reduce it to a unified coherent program under the aegis of the Soviet Military administration," Ibid., 197.
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members and influential followers" of the Nazi Party. The order established commissions in every city and district to review cases and to return facilities where sufficient evidence was lacking.108 What SMA 124 would amount to in practice would largely depend on how the commissions interpreted the phrase "leading members and influential followers." If defined broadly, it could drastically alter class relations within the zone. A more literal usage would keep capitalism intact. For the present, the Soviets had carefully linked the sequestration of property to denazification. More crucially, they refrained from transferring title to the state, leaving the possibility that even the sequestered firms might be broken up and resold to other private owners.109 While down playing socialization, the Soviets emerged as enthusiastic proponents of deconcentration. In the four-power committee charged with writing a decartelization law, they introduced a tough mandatory bill dispersing the ownership of companies employing more than three thousand persons, having an annual turnover of more than 25 million Reichsmarks, or which granted particular individuals unfair trade advantages.110 Under their draft, the Allied Economics Directorate would determine whether the broken up firms would be eliminated through reparations or resold to other private owners. In embracing American antitrust doctrine, the Russians were traveling far from their ideological roots. In Marxist theory, economic concentration was an inevitable concomitant of modernization and the development of society's productive forces. Within this intellectual framework, "monopoly capitalism" was problematic not because enterprises were large, but because private ownership prevented society from realizing the benefits. In the Stalinist era, the Russians had freely discarded many Marxist precepts, but their preference for huge, centralized industrial structures revealed a continuing faith. The Soviets' anomalous advocacy of decartelization111 in the German setting was consistent with their overall effort to find a meeting ground with the West. In conjunction with their liberal land reform, their careful expansion of trade union power, and the narrow sequestration program, this fragmentation of large firms would substantially weaken the German elite while still protecting the right of ownership.
Wiesner, "The Politics of Socialism in Germany," June 1947. For Gottlieb, German Peace Settlement, 61-64. Murphy to Secretary of State, September 25, 1945, RG 59 862.50, DSNA. Indeed Soviet support for decartelization was at odds with their efforts to use certain German firms to produce current production reparations. These enterprises represented a substantial degree of industrial concentration, notably the optical plants at Jena and the synthetic oil plants at Leuna. Tuthill to Steere, December 3, 1945, RG 84 US POLAD 850.3, FRC.
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U.S. MILITARY GOVERNMENT reacted to the evolution of Soviet policy complacently. For those of its members who were preoccupied with the mundane business of clearing roads, reopening factories, organizing supplies, and shipping coal, Russian behavior in the eastern zone, excluding their destruction of factories, was not considered threatening.112 Whatever the Soviet Union's ultimate objective, the immediate reality was that their occupation zone had diverse political parties, a relatively free press, an agricultural system based on private plots, and a still capitalist industrial structure. More noteworthy was that the Russian officers with whom these Americans transacted business appeared to be practical, efficient people, who were often more cooperative than their counterparts in French and British Military Governments. There was greater anxiety among Robert Murphy's staff in the Political Division. Several of his subordinates were old-line Foreign Service officers, whose hostile attitude toward the Soviet Union had been unchanged by the war. Such people viewed the KPD's Popular Front approach with skepticism, regarding it as a temporary maneuver to gain influence. As presented by Brewster Morris, the party's line "with its emphasis on 'democracy' and 'nationalism' enables it to win much political support from genuinely democratic and freedom-loving elements."113 However, the "real objectives may be quite different, and presumably include above all, the establishment of a totalitarian political system, subservient to Moscow." Brewster Morris represented the extreme end of anti-Sovietism, even within Murphy's team. Yet he brought to his reportage an ideological tone that characterized some of the cable traffic going back to the State Department.114 In these documents there was a propensity to see any modification of class relations as tantamount to Bolshevism and an assumption that the KPD was both less legitimate and more diabolically effective than other political groups. Offsetting these habits was the fact that Murphy and his subordinates had an immense range of contact both inside and outside the Russian zone. Theirs was no ordinary diplomatic mission. The staff traveled extensively and talked regularly with a diverse group of Germans - Left, Right, and Center.115 By contrast to Moscow, where members of the embassy
112 113 114
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Interview with Louis Wiesner, Washington, D.C., September 13, 1983. Morris, The Free Germany Movement and American Military Government, May 23, 1945, RG 59 Central Europe, Box 3, DSNA. Many historical works have relied heavily on the set of cables pertaining to the Soviet zone, contained in FRUS 1945 111:1033-84. Read in isolation these convey the impression that U.S. Military Government viewed the eastern zone as irretrievably lost. Yet not only are these cables distinctly unrepresentative of OMGUS as a whole; read in isolation they produce an inaccurate impression of Robert Murphy's attitude. The important exception to this pattern was the difficulty Murphy's staff had in establishing contact with the leadership of the KPD. Murphy to Secretary of State, November 30, 1945, FRUS 1945 111:1075.
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were virtually trapped behind its walls, in Berlin Murphy and his subordinates worked with the Soviets on the ACC and socialized with them in the after-hours. This allowed them to relate developments in rich detail, often providing data that was at odds with their most negative speculations. Moreover, unlike some members of his staff, Murphy had personally absorbed the atmosphere in Clay's headquarters, where it was conventional wisdom that undesirable trends in the eastern zone would be ameliorated by unification. Though he faithfully transmitted the field reports including some especially virulent and pessimistic ones from Morris - he retained the belief that through the quadripartite machinery the eastern zone could be brought to normal existence. Hence, even in this most critical wing of U.S. Military Government there was surprising hopefulness. While deploring communist manipulation of the Progressive Bloc and its allocation of administrative appointments, members were acutely aware of the opposition's strength. Robert Murphy was confident that if there were free nationwide elections, the eastern zone KPD would be resoundingly defeated.116 From that standpoint, the political advisor was most distressed by the movement toward political merger, which would inflate the popularity of the Communists by the addition of the Social Democrats.117 However, if the country was unified quickly, the western SPD would still be able to prevent that development. The prerequisite for these political improvements was quadripartite supervision of national political parties. During the fall, the four-power Political Directorate had drafted a law that satisfied American requirements. However, this was yet another piece of legislation that the French were blocking in their effort to force territorial changes. Inside the Political Division, the greatest worry was that with the Allied Control Council paralyzed, there would be irrevocable social and economic changes in the eastern zone. This fear lent an urgent, at times almost frantic edge to the descriptions of Soviet land reform and expansion of workers' rights. On the eve of Murphy's Washington trip, where he and Clay would be lobbying for central agencies, the political advisor cabled with regard to the Thuringia law, "the KPD and the FDGB in Sovzone of Germany have thrown into high gear a drive for social revolution in the industrial and commercial fields." Unless the process was halted, he wrote ominously, "within a few months the Soviet zone of Germany will be virtually a socialized state."118 As in the political field, Murphy and Clay's preferred method was to use quadripartite legislation to constrain unwanted social developments. A key
116 117
118
Murphy to Secretary of State, August 13, 1945. Murphy to Secretary of State, August 22, 1945; Murphy to Secretary of State, December 29, 1945, FRUS 1945 III: 1079-81. Morris, Report 102, Central Europe, Box 3, DSNA. Murphy to Secretary of State, October 28, 1945, FRUS 1946 111:1065-67.
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aim was the management of the FDGB through the prescription of rules guaranteeing the autonomy of the industrial unions. By fragmenting this centralized body, the organization could be steered away from initiatives on codecision and socialization, and directed toward more traditional trade union functions. That aspiration also fell afoul of the French refusal to authorize national labor organizations.119 Against this background, an otherwise minor set of negotiations assumed unexpected significance. The only place where France was facilitating Allied action was in Berlin. During September, the Berlin FDGB had conducted district elections across the city, and petitioned the Kommandatura for the right to hold a constitutional convention.12"0 Together the Americans and British delayed authorization for the gathering, while they pressured the FDGB121 and their Soviet sponsors for new balloting under altered rules. By late December, the Russians had yielded to their demands, causing Murphy to reflect that this "longest and most difficult conflict" in the "young life of the Kommandatura . . . has taught both Allies and Germans a good deal about bureaucracy and international understanding."122 Praising Soviet representative Panin, who "had showed an especially conciliatory spirit," the political advisor hoped the agreement would "set a precedent for closer Allied supervision of the Berlin unions and will tend to modify the sometimes arbitrary way in which especially the Communist trade union leaders have ruled their flock." For U.S. Military Government the Berlin labor agreement seemed to illuminate what could be accomplished if the French obstruction ceased. Once the Allied Control Council was permitted to function, the Soviet need for access to the western zones would become a powerful lever for eliciting their compliance with American patterns of political and social organization.
SUCH EXPECTATIONS of the Russians were far removed from the original assessment of Roosevelt and the liberal faction, grouped around the Treasury. They had all assumed that the opening of the eastern zone would require large concessions to Soviet interests: not only generous reparations but a reform program in the west that would destroy any remnants of the Nazi order, including its industrial and financial pillars. However, this
119
120
121 122
Murphy to Secretary of State, Minutes of Ninth Meeting of Allied Control Council, October 29 1945, RG 59 740.00119, DSNA; Murphy to Secretary of State, Minutes of eleventh Meeting of the Allied Control Council, November 23, 1945, Ibid. Murphy to Secretary of State, October 21, 1945 RG 59 862.5043, DSNA; Murphy to Secretary of State, November 4, 1945, Ibid.; Heath to Secretary of State, November 4, 1945, Ibid. Murphy to Secretary of State, Conversation of Charles Zimmerman With Berlin Trade Union Leaders, December 10, 1945, Ibid. Murphy to Secretary of State, December 19, 1945, RG 84 US POLAD 850.4, FRC.
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group had lost most of its influence and the ideas it had inscribed in JCS 1067 were being weakly implemented. Their last stronghold was in the Division of Cartels and External Assets (DICEA), where members had endorsed the Russian decartelization law as a useful compromise.113 By breaking up the large German firms - IG Farben, Krupp, Mannesmann, Siemens, Flick, and the Vereinigte Stahlwerke - the Allies would be offering a guarantee against a revival of German militarism without necessitating government ownership of the means of production. As for the conservative leadership of U.S. Military Government, they remained sanguine about achieving unification while rebuilding German capitalism their own way. These high hopes were conveyed by Economics Deputy Laird Bell in the same Chicago speech in which he had excoriated the reform agenda. Suggesting that the Russians "have given up their idea of world revolution," he proclaimed that
We are the two great powers in the world today with no genuine conflict of interest anywhere on the globe. We have in the Allied Control Council the opportunity of working together with the Soviets on a common problem, and though I doubt whether we will ever reach full agreement... we are making a little progress. It will be a real contribution to world peace if we can maintain and develop the beginnings of working together with the Soviets in an atmosphere of tolerance and mutual understanding.124 It was in Bell's spirit that Lucius Clay was beseeching the State Department to start reparations and pressure the French 125 so that, through the medium of the central agencies, all of Germany could be reclaimed for the West.
123
124 125
However, the complexity of the situation was reported by Raymond Daniell of the New York Times, "Although the United States policy toward cartels as laid down in Washington and in the Potsdam agreement is almost identical with the Russian view, the attitude of the Economics Division of American Military government appears to be closer to that of the British, who are cool toward the whole idea." New York Times, November 17, 1945. The proposed Soviet decartelization law is described in Murphy to Secretary of State, September 25, 1945, RG 59 862.50, DSNA. Bell, "Policy Over Berlin," December 10, 1945. Resume of Meeting at State Department, November 3, 1945.
The Russian Challenge
The operation of German central agencies would have militated against zonal boundaries and served to break down exclusive Soviet control of one of the largest and most important German areas. Within it the Soviet Military Government has thrown its vigorous support to the German Communist Party. (Robert Murphy, February 24, 1946)1 I think we should guard against undue optimism about central agencies serving to break down exclusive Soviet control in Soviet zone. (George Kennan, March 6, 1946)2
1946 the Soviets became less cooperative. After completing a Level of Industry plan with the Allies, they backed away from an agreement to institute an export-import program for Germany as a whole. More dramatically, they tightened political control of the eastern zone by forcing the merger of the Socialists and Communists into a new Socialist Unity Party (SED). Together with the eastern labor movement (FDGB), the party asserted the special interests of the German proletariat and agitated for a more ambitious policy of industrial expropriation. Although disappointed, leaders of U.S. Military Government viewed these developments as of a piece with the impediments that the French regularly, and the British sporadically, had offered to the Allied project. Whereas previously, they had rated the Russians as the most forthcoming of the occupying powers, by the spring they had become quite critical. Yet within Military Government, there was also a feeling that the Soviet Union's interests had been needlessly thwarted, especially with regard to the uncertain status of the Ruhr-Rhineland. And there was a continuing confidence that with unification, the worst Soviet behaviors would be mitigated. Inside the State Department, Russian actions were construed more ominously. Inspired by George Kennan, the political officers maintained that
D U R I N G EARLY
1 z
Murphy to the Secretary of State, February 24, 1946, FRUS 1946 1505-7. Kennan to the Secretary of State, March 6, 1945, Ibid.:516-20.
2OO
201
the Soviet Union was trying to make all of Germany communist, or failing that to keep absolute control of the eastern zone. Invoking this analysis, some began to argue that the United States should complete the division of Germany by integrating the western zones into a new West European structure.
I. ECONOMIC UNITY
The most serious Soviet offense occurred at the end of a long and surprisingly amicable experience negotiating reparations. During that process U.S. Military Government grew closer to the Russians while becoming even more antagonistic toward Western colleagues and the State Department. This odd alignment reflected a shared reluctance to subordinate German policy to West European needs. But the bond was fragile and could not withstand sudden Soviet deviations.
FACED WITH a lack of progress on central agencies and Germany's western frontiers, General Clay was counting on a reparations agreement to regain momentum. At the beginning of the new year, the four powers seemed close to a settlement of the German Level of Industry. Clay's own proposal that the Allies use a double figure for steel - 5.8 million tons of annual production and 7.5 million tons in retained capacity - had interrupted the debate over abstractions and offered a practical solution. Under the U.S. plan, German steel production would be cut to one-third of its wartime peak, and other war-potential industries pegged to that figure. This gave the Soviets the possibility of receiving substantial allocations from the western zones. Although the State Department had publicly proclaimed that once reparations were paid Germany might be permitted to rebuild its facilities,3 Clay had sidestepped the topic. Moved by the prospect of immediate gain, the Russians seemed ready for a quick deal. Even the French were amenable to the American approach since it would allow them to strengthen their domestic industry without making any concessions on German unity. Only the British stood in the way. Although General Robertson had accepted the steel figures, in January he announced that the rest of Germany's Level of Industry must be tied to the higher figure for capacity rather than the lower one for production* Worried that the British stand
3 4
U.S. Department of State, "The Reparation Settlement and the Peacetime Economy of Germany" December 16, 1945. Murphy to Secretary of State, January 13, 1946, FRUS 1946 V:484~85; Murphy to Secretary of State, January 18, 1946, Ibid.1486-87. For the British attitude toward reparations, see Cairncross, Price of War, 100-129; Kramer, "British Dismantling Politics, 1945-49," in Turner, Reconstruction in Post-War Germany British Occupation Policy and the Western Zones 1945-55, 125-34.
202
would unravel his whole compromise, Clay cabled Washington for help. He urged the State Department to handle the negotiations, but asked that they not surrender the point since that would violate the U.S. commitment to the other governments and undermine the Potsdam accord.5 Despite these representations, Secretary Byrnes did not provide firm diplomatic support. After telling the British ambassador that he agreed with Bevin, he finally settled on an ambiguous formula under which the Allies would continue to plan on the basis of the steel production figure6 with the understanding that some reserves could be left for the maintenance and repair of the war-potential industries. The waffling irritated Clay, who pointed out that "quadripartite government must be a government by compromise." The Russians had already come up from their original singlefigureof 4.6 million tons to the acceptance of a steel capacity of 7.5 million - an important concession that the British were jeopardizing.7 Byrnes' indecisiveness was partly the result of his unfamiliarity with the technical issues. But it also reflected the harsh criticism to which he was currently subject. At the December Council of Foreign Ministers, he had successfully negotiated agreements on the Rumanian and Bulgarian peace treaties, and had begun preliminary work on the control of atomic energy. To his dismay, when he returned to Washington he had found an angry president, a disgruntled State Department, and a querulous Congress. The unanticipated censure had induced in him a new wariness about any type of understanding with the Soviet Union.8 Moreover, there was quite specific pressure growing in the capital for a slowdown on reparations. A House Subcommittee on Postwar Recovery was challenging the removal program on the grounds that it imperiled the economic recovery of the European Continent.9 Lobbyists from individual American corporations that stood to lose their German investments under the Potsdam reparations provisions were leaning heavily on the State Department for relief.10 And the business press was beginning to complain
5
6 7 8
10
viewpoint." In compromising with the Soviets, the United States had moved farther apart from the British. Clay to Hilldring, January 29, 1946, Clay Papers, 1:153. Byrnes to Clay, January 28,1946, FRUS 1946 V:492; Memorandum of Conversation Lord Halifax and Secretary of State Byrnes, January 28, 1946, ibid., 493-94. Clay to War Department, January 31, 1946, Clay Papers 1:154-55. See discussion in Yergin, Shattered Peace, 151-53; Messer, End of Alliance, 12755House Special Committee on Postwar Economic Policy and Planning, Economic Reconstruction in Europe, Enclosure Murphy to Farris, January 19, 1946, RG 84 US POLAD 850, FRC. A particular source of irritation for U.S. corporations was the removal of their factories in the Soviet zone. Though it was clear that the Western Allies would not remove foreign owned property as reparations, Soviet behavior engendered an unfavorable attitude toward the program as a whole. See, for example, "Business Abroad," Fortune, September 1945, 214; Fortune, October 1945, 242.
Clay noted that the U.S. position was about "midway between British and Russian
203
about the very concept of using German industry to compensate the victims of Nazi aggression. One manifestation of the pressure was the campaign undertaken by Allan Dulles, Laird Bell, and Foreign Service veteran DeWitt Poole to influence the State Department. Dulles and Bell had come home from occupied Germany convinced that the American reform effort was ruining the industrial recovery. While much of their animus centered on the denazification and decartelization policies, they were also opposed to the Potsdam reparations clauses. Neither man had been privy to the most recent round of negotiations, but without knowing the details, they regarded any deliveries of capital equipment as contributing to Germany's stagnation. On February 8 Poole wrote Dulles that he had conducted the talks "we contemplated."11 He had discovered that the Political side of the department has "held to its position pretty well," but there was "serious difficulty" on the Economics side. Charles Kindleberger, the head of the German and Austrian section, was "all right as far as he goes" but did not appear "to control the raft of young Jew boys under him." In order to fulfill Potsdam, these men "put ahead of everything else the dismantling of German plants and shipment of machinery to Russia." To Kindleberger's staff "good relations with Russia are the imperative need: Russia must be satisfied." According to Poole, James Riddleberger had complained about the situation to Under-Secretary Acheson but without result. For the moment Riddleberger was "letting things simmer," while "chipping away" at the details.12 By operating quietly, he had gained the release of twenty thousand Nazi arrestees. It seemed evident that "a change must be engineered at the highest levels because . . . as soon as anything starts to filter down, a deliberate leak to the leftist press occurs." The Treasury Was still a major source of infection, for despite Morgenthau's ouster "the Harry White boys continue to shoot without waiting to see the whites of anybody's eyes." In his own canvass of the State Department, Laird Bell encountered the same configuration.13 Among the economists there was clear support for reparations. Kindleberger's staff was convinced "there is much excess capacity of some sort and that a quick, surgical operation is for the benefit of Europe as a whole." Moreover, people throughout the department "seem to be quite allergic to what they believe to be public opinion based upon the polls." This was true even of the political officers, who were "unwilling to move very openly because of the residual power of the Morgenthau group." To counteract these trends, it would be "necessary to shape up a
11 11 13
DeWitt Poole to Allan Dulles, February 8, 1947, Dulles MSS, Box 21, PU. Ibid. Bell to Allan Dulles, February 2, 1946, Dulles MSS, Box 23, PU.
204
more discriminating interest through the usual channels - a depressing prospect." Bell's complaints notwithstanding, the State Department was negatively disposed toward Clay's efforts, whether out of antipathy to the Soviets or because of concern for West European interests. In mid-February the department's Central Europeanists openly attacked the Level of Industry plan, claiming that it would impose so much hardship that "constructive political elements" would be unable to build for the future. 14 While these admonitions did not halt the Allied negotiations, the department's potential for sabotaging the four-power agreement was being demonstrated in the related field of external assets. Under the Third Reich, Germans had stolen billions of dollars' worth of foreign assets, and the quantities had significantly increased at war's end as businessmen raced to get their private resources out of the country. By offering an economic base for a Nazi comeback, these holdings seemed to pose a security threat to the occupying powers. To deal with this danger, the Allies had agreed at Potsdam that external assets should be used for reparations purposes. Under instructions from President Truman, American representatives in the Allied Control Council had pressed for the establishment of a fourpower German External Property Commission (GEPC) that could marshal and vest the external assets. The resulting Law 5, which had passed in October, gave the new GEPC the power "to do all acts which it deemed necessary to obtain possession or control over all property vested in the Commission." 15 Despite the clarity of the commitment, the State Department had early reservations. For the Soviets to be involved in the acquisition process, especially in Western Europe, would invite political embarrassment. Inevitably, the quest for German assets would expose awkward connections between high-placed foreign nationals and important Nazis, which the Russians would have few compunctions about publicizing. In November, State had proposed that the GEPC be divided into two panels, one comprised of the American, British, and French representatives, and the other composed exclusively of the Soviet member. 16 The justification for this procedure was that under Potsdam the assets from Eastern Europe would be going to the Soviet Union and Poland, while the remainder would be distributed to the West European reparations recipients. This two-panel approach was at odds with the presumption of Law 5 that
14 15
16
Official Gazette, November 1945, 37War Department Memorandum as Basis for Discussion with Mr Acheson, February 9, 1946, Central European File, Box 2, DSNA; "2 Agencies Struggle for Nazi Assets, Washington Post, February 23, 1946.
Department of State, Germany and Austria Review of Political Developments, February 15, 1946, RG 59 Central European File, Box 3, DSNA. Control Council law No 5, Vesting and Marshalling of German External Assets, CC
205
all four powers had a collective interest in insuring the acquisition of the assets, regardless of their ultimate distribution. While the army was protesting this scheme the State Department announced that under their agreement with the Latin American republics, nations in the western hemisphere would be allowed to vest and marshal the German assets in their own territories without regard to the GEPC. 17 In addition, West European allies would be permitted to handle the external assets on their own. In his testimony before the Kilgore Committee, Russell Nixon, the acting director of the Division of Cartels and External Assets (DICEA), had publicized these violations. As the U.S. representative to the German External Property Commission, he deplored the State Department's interference with the exercise of his legal function and perceived an "utter failure to disarm the Nazis of their foreign economic bases." 18 General Hilldring confirmed his description of events for the War Department, commenting that on external assets, "Nixon is as right as the Lord's Prayer." Together with Bernard Bernstein, he had correctly forecast the State Department behavior in advance of his superiors. Now he had knowledge of "chapter and verse concerning the mess" that the United States had made of Law 5. 19 Despite the Kilgore hearings, State continued to ignore the Allied Control Council. At the end of January, it had asked the British and French to join them in diplomatic negotiations with the formerly neutral countries. Since several of the neutrals were evidencing signs of resistance, this slighting of the GEPC was especially significant/ 0 Once discussions had been placed at the diplomatic level, the British could more easily evade Law 5's requirement to impose economic sanctions. All of this was awkward for Clay, who had negotiated the law but was unable to stop his own government from breaching it. After an angry exchange with Acheson, he cabled that while he now thoroughly understood the views of the State Department, their approach was "at variance with the responsibilities placed in GEPC by Control Council Law Number 5." If these were not going to be carried out, then the organization ought to be abolished. Also annoyed, Robert Murphy wrote that "having t a k e n . . . the firm position which he did in the Coordinating Committee and in the Control Council leading up to the enactment... of Control
17
18
19 zo
5, 1946, RG 165 CSCAD 014, MMNA. The State Department immediately issued a detailed rebuttal, claiming that "The statement issued by Mr Nixon is full of mischievous inaccuracies and misleading innuendoes." "Capital Denies Charges Laid to Russell Nixon," Herald Tribune, January 8, 1946. Hilldring to Assistant Secretary of War, February 16, 1946, RG 165 CSCAD 014 Germany, MMNA. "Soft Policy Set Up on Reich's Wealth" New York Times, November 14, 1946; Teleconference Bernstein and Fox, November 23, 1945, Fox MSS, BOX 8, HST.
Hilldring to Secretary of War, Clarification German External Assets Policy February
206
Council Law No. 5, action now on another than a quadripartite basis would prove a source of possible embarrassment here."ZI Clay and Murphy were protesting into the wind. Regardless of the legalities, the State Department was determined to lock the Russians out. As a courtesy to the War Department, it invited the army to send a representative to the negotiations with the neutrals, and it offered the curious suggestion that the new U.S. member to the GEPC could also sit in so long as it was clear that he was not representing the quadripartite body. Meanwhile the West European and Latin American countries were allowed to proceed with their own policies.zz While the discussions on external assets were theoretically separable from the negotiations on the LIA, they carried an implication of U.S. bad faith that intruded on the wider proceedings. Moreover, in its attitude toward Law 5, the State Department was expressing the same West European priority that was interfering in other ways. From the army's standpoint, the French obstruction of central agencies and the State Department's lethargic response were casting a dark shadow over all their work. Though pinning great hopes on the reparations talks, Clay recognized that without movement on the wider issues, the quadripartite project would founder. During the early months of 1946, State had resisted the War Department's pleas to pressure the French. In mid-January, Acheson answered Secretary Patterson's third formal request with the uncharitable reminder that it was the War Department that had previously insisted on the veto.23 Claiming that the State Department had already expressed its views to the French, he urged the army to make their case inside the Allied Control Council. Knowing that such representations were futile, U.S. military officials wanted concrete actions. At the very minimum, the American government could follow the recommendations in the Price report by publicizing the French role. Alternatively, it could delay approval of an impending French loan, withhold food shipments into the French zone, or block French measures to integrate the Saar's economy with its own/ 4 As a personal friend of Byrnes, Clay tried to convince him that the situation in the Allied Control Council was very grave. But while the
ZI
"
13 Z4
Clay to Hilldring, February 9, 1946 Clay Papers, I:i58-60; Clay to Hilldring, February 8, Ibid., 160-61; Murphy to Matthews, February 9, 1946, RG 59 740.00119, DSNA. Hilldring for Secretary of War, Clarification of German External Assets Policies, February 5, 1946, RG 165 CSC AD 014 Germany, MMNA; Patterson to Paul, March 19, 1946, Ibid.; WARCAD to OMGUS April 6, 1946, RG 218 CCAC 386 Germany, MMNA. Patterson to Secretary of State, December 28, 1946, RG 59 740.00119, DSNA; Acheson to Patterson, January 12, 1946, Ibid. Patterson to Acheson, February 2, 1946, Ibid.; Clay to AGWAR, January 28 1946,
Clay Papers 1:151-5 2.
207
secretary was overtly sympathetic, the most he could offer was a weak letter to Bidault.25 In this Byrnes assured the foreign minister that he could "readily understand the desire of the French government to effect territorial changes which... will form the basis of security against Germany" and hence the reasons "which have prompted the French government... to prevent the establishment of central German administrative departments." However, he did not believe that the creation of these agencies would prejudice the decision on the frontiers. The secretary "earnestly" hoped that the French government would reconsider, noting that actions to this effect would "help to create a more favourable atmosphere for the important economic and financial talks which they are about to initiate." Contrary to Byrnes' reflections, the question of Germany's western frontier was integrally connected to the establishment of central agencies. Whether the Ruhr-Rhineland region would remain part of Germany would profoundly affect the character of the remaining country. If it was excluded, the French might have no further fears of unification, but the Russians would lose their main incentive to integrate the east. Yet on this most crucial question, the State Department was still unwilling to make a clear decision. Understanding that the severance of the western territories would freeze the division of Germany and create two rival European blocs, they were naturally hesitant to make the move.z6 But in the face of increasingly gloomy news about the economies of Western Europe, the possibility of somehow removing the Ruhr industries from the ACC's jurisdiction and using them as the pump for immediate neighbors was a tempting prospect. While wrestling with this larger problem, the State Department promised a territorial adjustment in the Saar if France would be more helpful on central agencies. In March the new socialist premier Leon Blum made a conciliatory gesture by agreeing to have German administrative "departments" rather than "central agencies." The difference was not purely semantic. By administrative "departments" Blum meant German bodies composed of state secretaries from each of the zones, which would implement the policy decisions of the ACC. This nullified the purpose of the original proposal, which was to break down the independence of the individual zones.27 While Blum's concession was meager, the American ambassador to Paris,
Clay to Eisenhower, January 25, 1946 DDE 162, Box 22, Folder: Eisenhower MSS, DDE; Secretary of State to Bidault, February 1, 1946 FRUS 1946 1496-98. Central European Division, Russian Interest in the Status of the Ruhr and Effect on U.S. Policy, January 21, 1946, RG 59 Central European File, Box 2, DSNA. Memorandum of Conversation, Bonnet and Matthews, February 18, 1946, RG 59 Office of European Affairs, Box 10, DSNA; Matthews to Byrnes, February 28, 1946, Ibid.; Secretary of State to Bonnet, March 22, 1946, FRUS 1946 1528-29.
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Jefferson Cafferey, counseled forbearance. After eight months of agitation by the Gaullists, the French public was convinced that a change of Germany's western borders was indispensable to their national security.28 In order to make their modest proposal the French Socialists had leaned very hard on Foreign Minister Bidault (MRP), who was now threatening to resign. Any further breach in the socialist-MRP alignment would destabilize the governing coalition and abet the Communists. Back in Washington, State Department officials had no difficulty swallowing the idea of German "departments" as the price of the French political equilibrium.29 From Clay's standpoint, the situation was less tolerable. Frustrated by the economic paralysis that seemed to be gripping western Germany, he was desperate to get the country unified. His most immediate problem was a shortage of food. The American and British authorities had promised the Germans that they would maintain a daily intake of 1,500 calories, but these levels had proved elusive. Ironically, it was only in the more agricultural eastern zone that the food supply was reliable. To meet the crisis Clay had asked for large-scale grain imports from the United States, but the hard-pressed Department of Agriculture was unable to guarantee that the shipments would be forthcoming.30 These imports would, in any case, have to be paid for by German industrial exports that did not exist. Despite tireless efforts by the Economics Division, German industry was still a shambles. One major bottleneck was coal. The mines were in the British zone where, in Military Government's perception, the authorities were doing a miserable job of managing production. So far tonnage was less than one-third of the wartime levels. With much of this supply being shipped to Western Europe under the coal directive, the German factories lacked fuel. The Americans had opened some fifty percent of the plants in their zone, but output hovered near the twelve percent mark.31 In interpreting these trends some U.S. conservatives - like Calvin Hoover and the Dulles/Bell group - blamed the reform and reparations programs. However, Clay and his associates believed the most harmful circumstance was the separation of the zones. This limited their influence
z8 29 30
31
Caffrey to Byrnes, February 28, 1946, RG 59 740.00119, DSNA; Caffrey to Byrnes, March 1, 1946, FRUS 1946 1509-11. Secretary of State to Caffrey, March 2, 1946, Ibid.; Echols to Clay, April 27, 1946, RG 84 US POLAD 801,1, FRC. Central European Division, German and Austria Review of Political Developments, March 15, 1945, RG 59 Central European File, Box 3, DSNA; Echols/Clay Teleconference, March 20, 1946, RG 107 ASW Germany, MMNA; Clay to Eisenhower, March 21, 1946, in DDE 162, Box 22, Clay Folder, DDE; Clay/Petersen Teleconference, March 27, 1947, RG 107 ASW Germany, MMNA. U.S. Military Governor, Summary of December Report, January 20, 1946, RG 218 CCS 383.21 Germany, MMNA.
209
over the Ruhr, where they were prevented from correcting British failings. It also blocked the flow of industrial raw material and equipment, upon which the U.S. zone factories were dependent. As explained in the March military governor's report, the expansion of industrial activity could not occur unless the interzonal trade barriers were removed and there was an expansion of imports from outside the country. 32 With the situation frozen, Clay was indulging the dubious hope that a reparations agreement might itself provide the stimulus for a freer circulation of goods. This expectation was sustained by his positive experiences negotiating with the Soviets on the LIA. Apart from their flexibility on the actual levels of particular industries, they had made two key concessions that greatly improved the prospects for trade. As regards German light industry, which the Americans viewed as an important source of exports, William Draper had introduced a resolution stating that there should be no removal of capital equipment from this sector. Though interpreting the proposal as an unwarranted interference with their zonal reparations program, the Russians had agreed to it.33 The more surprising shift occurred in the export-import field. Since Potsdam the Soviets had argued that in calculating a level for German industry it was unnecessary to factor in the country's need for exports to pay for imports. This was consistent with their general position that while their own economy was so weak, the import of food to Germany was a luxury that should wait. However, mid-way through the talks they had agreed that for purposes of the plan the Allies might assume that Germany could export 3 billion Reichsmarks' worth of goods, and apply half of this sum to pay for food imports - an alteration that seemed to Robert Murphy to be "a significant Russian compromise." 34 Transcending the specific items under discussion, there was a spirit of collaboration between the Americans and the Soviets. James Pollock, the U.S. Civil Affairs director, was struck by the mood when he sat in on the Coordinating Committee: General Sokolovsky turned to General Clay whenever he got into a hole.... It is an interesting sight to see the the four power representatives in action, each with their interpreters conducting a discussion in three languages. Actually the Control Council is a great school of international government.... In most instances the United States, Russia and Britain are together; the French constitute the chief barrier to a rapid agreement.35
32 33 34 35
Summary of January Report of the Military Governor, U.S. Zone, Germany, February 20, 1946, RG 218 Records of the JCS CCS 383.21 Germany, 11, MMNA. Price to Steere, January 18,1946, RG 84 US POLAD 860, FRC; Murphy to Secretary of State, January 21, 1946, FRUS 1946 V:49O. Murphy to Secretary of State, February 19, 1946, Ibid. Pollock Diary, March 8, 1946.
no
According to Clay, the representatives were at the stage where "we can get mad and argue about one point, reach a compromise and not have it affect our personal relations or any subsequent points we might take up." Although most of difficult issues had been settled back in January, it took until late March to complete the Level of Industry plan. To get to that point, Clay and Draper had quashed the grumbling of their own staffs, beaten back the objections in the State Department, and stopped a variety of crippling French amendments. Over the weeks, they had become increasingly confident that British General Robertson was in accord with the program. They were thus disappointed when, at the last minute, Whitehall demanded a clause calling for "mandatory revision" of the plan should any of its operating assumptions prove false.36 Such a provision virtually guaranteed some future reduction of reparations deliveries. With help from Sokolovsky, Clay managed to effect a final compromise on plan revision, enabling all four powers to approve the agreement.37 The completed version of the LIA left Germany with approximately fifty-five percent of its 1938 industrial capacity.38 This meant a reduction in the prewar standard of living of an estimated thirty percent. Certain war-related industries such as synthetic oil, synthetic rubber, aluminum, and magnesium were banned altogether. Apart from these, the heaviest restrictions occurred in the war-potential industries singled out at Potsdam - steel, machine-tools, and chemicals. In these crucial fields about thirtyfive percent of capacity was retained. At his press conference in Berlin, an effusive Draper told the assembled reporters that the Level of Industry plan was a "historic document which we consider a complete fulfillment of the Potsdam Declaration."39 In a similar vein, Clay wrote Eisenhower that "Your evident desire for friendship, has paid real dividends, which proves conclusively... that cooperation and understanding are still possible between our country and the Soviets, if we are willing to have patience and . . . a little more understanding of the tremendous problems which the Soviets face internally."40 To achieve an accord that seemed to satisfy both the Soviet Union's demand for factories and Washington's solicitude for German industry, Clay and Draper had expended immense personal capital. Yet no sooner had they finished the task, then they encountered an unexpected Soviet
36 37
38 39 40
Murphy to Secretary of State, March 7, 1946, FRUS 1946 1533-34; Murphy to Clay, March 22, 1946, Ibid. 15 29-31. As proposed by the Soviets, "Plan is subject to review as may be agreed by the Control Council in the event that the fundamental assumptions of the plan are bound to be changed." Murphy to Secretary of State, March 27, 1946, Ibid.; 533 34Office of Military Government, Public Relations Service, Level of Industry, Press Conference, March 29, 1946, RG 84 US POLAD, FRC. Ibid. Clay to Eisenhower, March 21 1946, Eisenhower MSS, Correspondence File, DDE.
The Russian
Challenge
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challenge on, what was for them, the absolutely vital question of Germany's trade. Earlier the Soviets had indicated that when the complete LIA was in place they would work out the details of an export-import program. 41 However, on April 10 the Russian representative to the Economics Directorate announced that this was a zonal issue that could not be addressed by the Allied Control Council until Germany had achieved a favorable trade balance and the reparations program had been carried out. 42 Since both of these events were several years off, this meant in practice that a nationwide trade policy would be postponed indefinitely. There was no lack of reasons for the Soviet stand. Without central agencies they would be making available resources from their zone without a corresponding increase in their national authority. And since both agricultural and industrial productivity were presently higher in their zone, a common export-import plan would yield less benefits and constitute a drain on their area. Nevertheless by changing gears they were violating Clay's understanding of what they had promised and undermining one of the foundations of the Level of Industry agreement. This Soviet behavior made Clay's position untenable. Yet significantly, his first impulse was to blame the French, who had undermined the Allied project all along and who were creating the occasion for this new Soviet obstruction. 43 Indeed, Clay's personal opinion was that without central agencies and a decision on the Ruhr, it was not very practical to institute a common export-import program. Within a day of the Soviet announcement, he cabled a request to the State Department to cut off the flow of wheat to the French zone, and then to France itself, if it did not change position in the ACC. Despite his insistence that such intervention was of "paramount importance," 44 he received the usual noncommittal reply. By the first week of May, it was clear that the Soviets were digging in. During discussions in the Coordinating Committee, they tied their refusal to the absence of quadripartite structures. Clay's reply was that "he could
41
As explained by Clay, "the Soviet representatives in particular have expressed a ready willingness to work out this problem after a Level of Industry has been established for Germany as a whole. It is their view that an overall export-import
4Z 43
44
program cannot be determined and administered until there is an agreed level of industry which established the export program. There is much merit in the Soviet viewpoint." Clay to War Department, March 1, 1946, RG 218 JCS CCAC 900.3 Germany, MMNA; Heath to Secretary of State, February 28, 1946, RG 59 740.00119, DSNA. Murphy to Secretary of State, April 10, 1946, FRUS 1946 V:538; Murphy to Secretary of State, May 2, 1946, Ibid.:545-47. As late as April 26, Clay's civil affairs advisor James Pollock was writing in his diary that "If only government could bring enough pressure on the French to force them to recede from their negative position many problems would be solved." Pollock Diary Entry, April 26, 1946. Clay to War Department, April 11, 1946, RG 59 862.5018, DSNA.
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not do as his French colleague and accept favorable parts of (the) Protocol, while rejecting less favorable ones."45 In his judgment all three elements the reparations plan, the trade program, and the central agencies - were intertwined. In the absence of the latter, the other items must be "suspended." He was therefore instructing American technicians to halt their dismantling. Paper allocations might continue but "until we know what area is to compose Germany and whether or not the area will be treated as an economic unit there would be no further work." In issuing his "stop order" General Clay was acting on his own initiative, though he was fully confident of being upheld by his superiors. His phrasing of the suspension made it clear that France was the main object of his wrath.46 The Soviets might be the immediate perpetrators, but theirs was the last act in a sequence that had originated in Paris and Washington. However, Clay was also aware that his suspension would fall most heavily upon the Soviets. Other European nations were hoping to receive reparations - France among them - but none had sustained the damage inflicted on the Soviet Union and none were so exclusively reliant on dismantling as the only form of Western aid. From the beginning, Clay had seen reparations as his chief lever with the Soviets, and now that they were posing a problem he was willing to use them punitively. Apart from its coercive effects, the "stop order" was most fundamentally an expression of acute anxiety. With the western zones of Germany running out of food, critics in Washington attacking the Level of Industry, and no prospect for improvement anywhere on the horizon, the army was not in a position to start taking out factories.
II. THE EAST ZONE MOVES LEFT

During this difficult period, Soviet Military Government imposed more radical political and social policies in the east. By the spring of 1946, their treatment of the German proletarian groupings had become increasingly authoritarian, while they accelerated an assault on the propertied classes.
T H E MAIN POLITICAL
drama was the battle over fusion. In December 1945 Ae Social Democrats had been pressured by the Soviets to participate in unity conference with the Communists. Although they had there endorsed the concept of a unity, they had cleverly postponed any decisions on practical arrangements. During January, prospects for fusion seemed to dim when reports of the proceedings unleashed a storm of protest from the
45
46
Clay to War Department, May 2, 1946, Clay Papers, 1:203-4; Draper to Peter V. Martin, May 6, 1945, RG 260 Economics Division, General Draper's File, Box 2407, FRC. The anti-French motivation for Clay's "stop order" has been extensively discussed. See especially Gimbel, Marshall Plan, 98-99; Smith, Lucius D. Clay, 350-55.
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western SPD. In the British zone, Party leader Kurt Schumacher angrily denounced the merger drive as "a brutal attempt at conquest of the Social Democratic Party by the Communists."47 Gathering in a conclave at Frankfurt, socialist leaders from the U.S., French, and British zones dissociated themselves from the Berlin executive, claiming that the eastern formation had ceased to function as an independent organization. This harsh reaction shocked the Soviet zone Social Democrats, whose goal had been to stall a merger while they enlisted help from the west. If the outside criticism was gratuitous, the effect was to make them even more defensive and cautious in their dealings with the Communists. On January 15 their spokesman Otto Grotewohl reiterated his previous promise that there would be no fusion of the two workers' parties until the SPD had been reconstituted on a national basis.48 Faced with this new obstinacy, the Soviets seemed to hesitate. But then came the dismaying results of the first Kreise elections in the U.S. zone.49 These had been rapidly organized by General Clay in order to accelerate the turnover of political responsibility to the Germans. Since the balloting was confined to places with a population of under twenty thousand, it was anticipated that the rural, conservative bias would yield a triumph for the bourgeoise parties. This outcome was further insured by a U.S. decision to grant a wide franchise, thus permitting thousands of "nominal" Nazis to register. Regardless of the special circumstances the final tally was a fiasco for the Communists. With more than eighty-four percent of the eligible voters going to the polls, the KPD averaged a mere three percent of the overall total.50 These elections were doubly ominous for the Soviets. By enabling the Germans to vote so soon after the defeat, the Americans made it difficult for the Soviet Union to delay elections in their own zone. And though it was certain that the KPD would not perform as poorly in the east as in the western Kreise, the poll was an unpleasant reminder of the unpopularity of the German Communists. The Russians immediately tightened the rope, summoning the Social Democratic leaders to Karlshorst, where they were told that fusion must occur no later than May 1.51 This instruction was sweetened by promises
47 48 49
Cited in Clay to AGWAR, February 15, 1946, RG 218 Records of JCS CCS 383 Germany 3, MMNA. Krisch, German Politics, 162-64. Wiesner notes that, "as late as January 15, Wilhelm Pieck had privately told a high SED official it would take as long as a year to amalgamate, but immediately after the U.S. zone elections the SPD leaders were called to Karlshorst, and the Soviets gave them the deadline of May 1 for amalgamation." Wiesner, "Organized Labor,"
213.
50 51
Clay t o A G W A R , February 1 5 , 1946. Murphy to Secretary of State, January 9, 1946, RG 59 862.00 DSNA; Wiesner, "Organized Labor," 209; Steele, Inside 'East Germany, 46.
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of troop withdrawals and the cessation of dismantling, along with more general assurances that the enhancement of working-class solidarity would diminish the rigors of the occupation. These palliatives notwithstanding, the Soviets were departing markedly from their earlier efforts to deal with the authorized noncommunist parties in a less coercive fashion. Pressed by SMA's demands at the top, the Social Democratic leaders were also encountering an internal revolt in the provinces.51 From Thuringia and Saxony, there were upheavals in the Party organizations and an outpouring of sentiment for a rapid amalgamation. Some of this "spontaneous" agitation had been engineered by the Soviet authorities in the region. Yet there was sufficient desire for unity at the grass roots to lend plausibility to the campaign.53 Pushed from above and below, and demoralized by the failure of the Allied Control Council to break the isolation of the zones, the SPD executive capitulated.54 During a tumultuous two-day conference in midFebruary, the eastern leaders agreed to present the unity issue to a Party congress "for decision as soon as possible." With the fusionists in clear control of the provincial apparatus, the results of the congress were a foregone conclusion. The executive committee's decision triggered a new revolt, this time by opponents of fusion, who suddenly had no outlet within their own organization. So ominous was the atmosphere that some individuals, most prominently Gustav Dahrendorf from Berlin, took sanctuary in the western zones.55 Dahrendorfs flight had particular significance, for among the Social Democrats he had been one of the earliest and most enthusiastic advocates of merger. Inside Berlin, the struggle intensified as SPD delegates to a local conference furiously repudiated the executive committee.56 In a bitter scene, the participants shouted down Otto Grotewohl when he tried to explain the executive's action, and demanded a zone-wide referendum on the issue.
52
53 54
55 56
Naimark, Russians in Germany, Chapter 5; McCauley, Marxism-Leninism in the German-Democratic Republic, 13; Gottlieb, German Peace Settlement, 52; Childs, The GDR: Moscow's German Ally, 15-16. Weitz, "Burdens of the Past," 16. In discussion with British authorities, Grotewohl emphasized the Soviet pressure and explained that if his Central Committee continued resistance "they would be merely dismissed and replaced by provincial committees." Moreover, there was nothing to hope for from the West because with the French blocking German unification "no support from other zones could help them." U.K. Political Advisor to FONOFF, February 7, 1946, FO 371/55586/PRO; Krisch, German Politics, 17073; McCauley, Marxism-Leninism, 14-16. U.K. Political Advisor to FONOFF, February 7, 1946; Murphy to Secretary of State, February 15, 1946, FRUS 1946 V:jo^. "Socialists Veto Merger With Reds in Berlin," New York Herald Tribune, March 1, 1946; Murphy to Secretary of State, March 4, 1946, RG 59 862.00, DSNA.
215
While the Social Democratic leadership grappled with this defiance, the U.S. Military Government entered the dispute. In late March, General Clay declared that the Americans would refuse to recognize any new political party that had not been established by the vote of its members.57 Though this injunction would have no immediate impact on the eastern zone, it would mean that in Berlin the new party would be banned from the western sectors. Another clear implication was that the fused group would have no standing in the U.S. zone. Less officially, Louis Wiesner from the Political Division and George Silver from Manpower kept in regular contact with the Berlin opposition, offering them moral support and some limited amount of material assistance.58 These intrigues had little appeal to Clay, who disdained socialists of all varieties and preferred to transact his business directly with the Russians. Despite American objections, the Soviets were determined to force the merger.59 On March 29, following consultations with the SMA, the SPD executive granted permission for a referendum in Berlin. But it simultaneously proclaimed that the results of the poll would not be binding upon the Party congress and urged those of its members who supported merger to boycott the election. To assist the boycott, the Soviets insisted that technical difficulty would preclude any balloting in the eastern sector. These impediments did not prevent an estimated 23,755 members of the Berlin party from voting on March 30.60 The ballot contained two questions: "Are you for the immediate merger of both workers' parties?" and "Are you for an alliance of both parties that would guarantee cooperative effort and exclude fratricidal conflict?" On the second and more abstract issue 14,763 socialists said "yes" and 5,559 said, "no." But on the first and more practical question of whether fusion should occur immediately, the results were reversed. A mere 2,940 voters responded affirmatively, while 19,529 were opposed. These unbalanced returns were more ambiguous than they appeared. Official SPD membership stood at approximately 60,000. Thus in addition to the 27,000 party members in the eastern sector who had no opportunity to vote, another 10,000 Socialists in the western sectors had stayed at home. Whether the antifusionists constituted a majority of the Berlin party was still uncertain, but at the very least there was a sizable segment of Social Democrats who were in disagreement. Buoyed by the referendum,
57 58
59 60
Murphy to Secretary of State, March 25, 1946, RG 59 740.00119, DSNA; Byrnes to U.S. POLAD, April 9, 1946, RG 59 862.00, DSNA. Paul Hagen to James Doyle, March 20, 1946, Goldbloom MSS (private collection); George Silver to George Fischer, June 28, 1946, Ibid. Author Interview with George Fischer, 1981. Murphy to Secretary of State, March 20, 1946, FRUS 1946 V:7ii-i2. Krisch, German Politics, 184-85.
2i6
the dissident leaders called a meeting in the U.S. sector and established a new citywide committee to fight amalgamation.61 Despite the protest, the arrangements for merger proceeded apace. A joint conference committee of Social Democrats and Communists drew up a table of organization, which provided for equality of representation at all levels of the Party, including a Co-Chairmanship of Wilhelm Pieck (KPD) and Otto Grotewohl (SPD). The platform followed closely the line set forth by KPD theorist Anton Ackermann in his December 1945 article, "Is There a German Road to Socialism?" His answer was "yes" but the proposed route was, by contrast to the Soviet experience, a circuitous one requiring the completion of the democratic revolution begun in 1848. In launching the new party, the leaders were still careful to assert that its first task would be to bolster a parliamentary regime, through which workers might peacefully effect a long-range transition to socialism.62 On April 20 the German KPD met in their final convention and voted overwhelmingly to endorse the merger. Although many communist veterans harbored reservations, their doubts were muffled by the Party leadership.63 At the SPD conference the following day, there was the same coerced unanimity. After a period of vacillation, the Grotewohl group had expelled the dissidents from the organization and barred their participation in the meeting. Having thus obliterated free discussion, the two groups came together in an emotional ceremony in which they buried their ancient hatchet and reconstituted themselves as the Socialist Unity Party (SED).64 Though relentless in the pursuit, the Russians had paid a heavy price for their new political instrument. At the outset they had clearly hoped that the genuine desire for unity among rank-and-file workers would smooth the process. But by forcing the pace and shaping the terms of amalgamation they forfeited much of the initial good will. Within the West German zones, where Social Democrats and Communists were still negotiating the terms of their relationship, this spectacle of intimidation had a chilling effect. But there were also adverse consequences in the east. Once dissident Socialists had been pushed outside their own party, their continued resistance - certainly in the four-power city of Berlin - was a virtual certainty. Ironically, the Soviets' heavy-handed effort to consolidate the German working class had generated new and poisonous divisions.65
61
6z 63 64 65
Berlin (Unsigned) to Secretary of State, March 4, 1946, RG 59 862.00, DSNA; State Department, Germany and Austria Review of Political Developments, April 15, 1946, RG 59 Central European File, Box 3, DSNA. Naimark, Russians in Germany, Chapter 5; McCauley, Marxism-Leninism, 16-24; Sandford, From Hitler to Ulbricht, 220-23. Leonhard, Child of Revolution, 348. Morris, Establishment of the SEPD, April 9, 1946, RG 59 Central European File, Box 3, DSNA. Heath to Murphy, March 26, 1946, RG 84 US POLAD 800. FRC; Childs, The GDR, 15-16; Leonhard, Child of Revolution, 354; McCauley, Marxism-Leninism, 13. Krisch, The German Democratic Republic, 7; Steele, Inside East Germany, 49-50; Wiesner, "Organized Labour," 220-21.
217
These political maneuvers were accompanied by further attempts at recasting class relations in the zone. SMA's immediate priority was to build the membership of the Free German Trade Union Federation (FDGB) and to expend its role in the economy.66 For these purposes, the Soviet authorities were giving the union substantial material aid in the form of offices, supplies, automobiles, and food. Using their press and other less formal means of persuasion, they communicated an expectation that workers would affiliate. With the ranks swelling by the tens of thousands, they stretched the Allied Control Council procedures and permitted the Berlin organization to closely coordinate with the labor union in the zone. Although the Americans had hoped that changes in the FDGB's electoral rules would modify its character, the first results were disappointing.67 In the borough and district conventions noncommunist candidates had gained a narrow majority, but when these individuals chose the delegates to the February citywide convention, the KPD had an overwhelming advantage. So lopsided was the representation that when the organization's leadership put together a slate for the executive board, they deliberately changed the proportions, giving the Communists less than half of the positions.68 The numbers were becoming irrelevant, in any case, for the imminent merger of the two working-class parties was altering the significance of affiliation. Under Soviet tutelage, the labor union became an instrument of the merger effort. Candidates for the FDGB executive were required to endorse fusion, thereby eliminating the opposition Social Democrats from any role in decisions. Indeed the convention with its prominent contingent of pro-merger Berliners became another rallying place for Party unity and a source of pressure on the SPD.69 The completion of fusion in the spring yielded signs that the Soviets might be changing their position on socialization. To this point, they had been operating in the framework of SMA 124. This meant that the sequestrations of Nazi property were continuing apace, but there had been no decision on final disposal.70 One straw in the wind was an April speech by communist leader Walter Ulbricht to the FDGB executive, in which he demanded the immediate expropriation of large-and medium-sized firms in the Soviet zone prior to the creation of central administrative agencies.71 Underlining the seriousness of this presentation were developments in
66 67
68
69 70 71
Nettl, The Eastern Zone, 84; Sandford, From Hitler to Ulbricht, 155-83. Murphy to Riddleberger, April 1, 1946, RG 84 US POLAD Correspondence, FRC; Wiesner to Murphy, May 15, 1946, RG 84 US POLAD 850.4, FRC; Wiesner to Mr. Muccio et. al., May 24, 1946, Ibid. Murphy to Secretary of State, February 7, 1946, RG 59 862.5043, DSNA; Murphy to Secretary of State, February 16, 1945, Ibid.; Clay to AGWAR, February 22, 1946, RG 84 850.4, FRC. Goldbloom, Special Report: Important Political Developments in Berlin, February 16, 1946, Goldbloom MSS (private collection). Gottlieb, German Peace Settlement, 6z-6$; Wiesner, "Organized Labour," 220. Sandford, From Hitler to Ulbricht, 203-8.
2i8
Land Saxony, where the administration was drafting a new bill on the sequestered properties.72 According to its provisions, the government would be permitted to socialize without indemnity all properties belonging to war criminals, active Nazis, early contributors to the NSDAP, and absentee owners. By May, this legislation had not been formally introduced, but the SED and the FDGB were aggressively campaigning for a landwide referendum on the question.
F O R MUCH OF U.S. Military Government, the developments in the east remained an annoying sideshow - a working out of old rivalries between proletarian factions. At Clay's headquarters there was growing sensitivity to Soviet chicanery, but it was mainly in the Political Division that apprehensions were focused. With varying levels of distress, the prevailing attitude was that the lack of unity had caused the problem and that an effective Allied Control Council might yet ameliorate it. Frustration was most intense with regard to the SED. Political advisor Robert Murphy maintained that because of the delay in creating central German agencies, the United States had been forced to criticize "from across the line without being able to bring broad democratic influence to bear" on eastern political events.73 While noting that some members of his staff now thought "the pattern has so crystallized that the differences of form existing between the Soviet zone and the Western zones will be almost impossible to rectify," he demurred. If the Allied Control Council could extend its authority, Murphy was "confident that during the coming year Western ideas will more successfully penetrate the Soviet zone than has been the case during the past."74 The political advisor's outlook partly reflected private conversations with his Russian opposite Semenov.75 The Soviet representative had assured him that the Soviet Union did not want to create a one-party system, even if some German Communists were trying to give this impression. According to Semonov, his government sought to consolidate the liberal and democratic elements in Germany, and to perpetrate the kind of two-party arrangement that existed in the United States. The Russian directly disclaimed a policy of using terror or economic pressures to force Germans to join the SED, and promised Murphy that if specific cases of such behavior were brought to his attention, he would remedy them. Murphy was also receiving information from eastern zone leaders of the
7Z 73 74
75
Morris, Memorandum No. 127, April 19, 1946, RG 59 Central European File, Box 3, DSNA. Murphy to Matthews, May 17, 1946, RG 59 740.00119, DSNA. Morris, German Communism vs. the American Occupation, March 16, 1945, RG 59 Central European File, Box 3, DSNA; Morris, Notes on Certain KPD and Soviet Propaganda and Tactical Lines, April 20, 1946, Ibid. Murphy to Matthews, May 17, 1946.
219
CDU, Jacob Kaiser and Ernest Lemmer, which seemed to confirm the Semonov presentation.76 Following the fusion decision, the two had been cordially received by Colonel Tulpanow, the Russian official in charge of supervising political parties. Tulpanow had sought to assure them of his country's friendly intentions toward Germany and of the Soviet desire to put postwar relations on a new footing. Kaiser and Lemmer left the session, believing that their party would be able to participate in east zone elections and to assume office, if it gained a majority. As an example of the kind of Allied intervention that seemed meaningful, the Americans had obtained an agreement in the Berlin Kommandatura that both the new SED and the socialist opposition could operate freely in the city, and together with the bourgeois parties compete in municipal elections.77 The latter were scheduled for October, as was the balloting for provincial office in the east. If the regulatory authority that would apply to the Berlin contest could be extended to the zones, an SED victory might still be prevented. Despite the setbacks in the labor field, the Americans also remained hopeful of winning control of a national labor movement. With the advocates of "bottom-up" organizing finally vanquished, the Manpower Division was promoting the rapid formation of large industrial unions, headed by reliable anticommunist leadership. In preparing a challenge for the FDGB, the army invited the American Federation of Labor (AFL) to establish a headquarters in the theater. AFL people were already operating inside the Labor Relations Branch, but the organization's presence as a private entity allowed more freedom to maneuver. Back in the United States, the union agreed to raise thousands of dollars to support "democratic-minded" German labor leaders.78 Meanwhile the Political Division was continuing to use the Allied Control Council to change the FDGB's structure. It thus expanded previous efforts to strengthen the autonomy of the functional unions within the federation, and demanded that candidates for trade union office identify their party affiliation.79 One lesson of the previous election was that the prohibition against party listing had worked to the detriment of the nonMurphy to Secretary of State, May 21, 1946, RG 59 862.00, DSNA. David Saposs, Notes on Union Organization in U.S. Zone, February 27, 1946, Keenan MSS, Catholic University; Riddleberger to Murphy, April 25, 1946, RG 84 US POLAD 850.4, FRC; Wiesner, Political Aspects of Trade Unionism in the U.S. Zone of Germany, June-July 1946, Ibid.; Murphy to Riddleberger, May 22, 1946, Ibid. The decision of the AFL to ship food packages to Germany followed General Clay's decision on April 11, 1946 to allow such packages to go to private individuals. Clay to War Department, April 11, 1946, Clay Papers, L189; Woll to Jacob Beam, May 26, 1946, RG 84 US POLAD 850.4, FRC; Woll to Truman, May 28, 1946, Ibid. Wiesner to Murphy et. al., May 20, 1946, Ibid.
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Communists. Though the KPD adhered to the letter of the regulation, its more sophisticated networks enabled it to insure the selection of members against their more anonymous opponents.80 If the opposition Social Democrats were to gain a future voice in the organization, they must make themselves known. In the spring of 1946, the most significant U.S. initiative was its use of the Allied Control Council to bolster the prerogatives of management. Since early in the occupation the Soviets had allowed works councils to exercise substantial control over production, while subjecting them to the increased authority of the FDGB. The achievement of codecision in the east was a constant incitement in the west, where workers aspired to the same goal. Despite a negative attitude by U.S. Military Government, individual works councils in their zone had obtained agreements from employers giving them a greater say in policy.81 To reverse these trends, the U.S. Labor Relations Branch submitted a draft works council bill to the ACC. As explained by Labor attache Louis Wiesner, its purpose "was not only to tame the shop stewards in Western Germany" but also to "tame the works councils in the Soviet Zone in the interest of trying to preserve a modicum of economic unity in Germany."82 Under Article 5, specifying the functions of the works councils, these bodies were permitted to negotiate with employers on "the application of collective agreements" and to engage in a range of tasks, from the establishment of health and safety regulations to the prevention of war production. Omitted from the list were certain key rights being exercised in the Soviet zone, namely, participation in personnel, budget, production, and distribution decisions.83 To the amazement of the Americans, the Soviet representatives accepted their draft of Law 22 without any quarrel. One factor, which they did not then appreciate, was the Soviets' own animus toward the works councils.84 By early 1946, U.S. observers tended to assume that the councils were already under the thumb of the FDGB. However, there was continuing conflict on the factory floor, where workers frequently elected noncommunist shop committees. In defiance of both the Soviets and the trade union, these groups were apt to resist pressure for high productivity, speed-up, labor discipline, and reparations deliveries.
80
81
82 83 84
For discussion of the KPD's behind-the-scenes electioneering see MacShane, International Labour, 210-12. Clay to AGWAR, February 15, 1946; Department of State, Germany and Austria Review of Political Developments, March 1, 1946. Wiesner to Murphy, Re: Draft Directive on Works Councils, March 29, 1945, RG 59 US POLAD 850.4, FRC; Wiesner, "Political Aspects of Trade Unions in U.S. Zone of Germany." Wiesner, "Organized Labour," 231. Fichter, "American Trade Union Policy," 259. MacShane, International Labor, 207; Sandford, From Hitler to Ulbricht, 164-65.
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As drawn up by the Americans, Law 22 increased the authority of the unions vis-a-vis the works councils. The latter were required to hold elections under union tutelage and to "carry out their functions in cooperation with the recognized trade unions." These clauses were crafted with an eye to conditions in the west, where the councils tended to be far more radical than the unions. Yet in disciplining their own grassroots activists, the Americans were inadvertently abetting the FDGB in its drive for control. Soviet support for a moderate works council bill was also consistent with their earliest approach to the Allied Control Council, which was to make it a vehicle for limited reforms (denazification, decartelization) and to advance nonideological interests (reparations, retention of the Ruhr, German central agencies). They had generally refrained from measures that challenged either parliamentary democracy or the institutions of capitalism. Despite their new militancy, marked by the turn to fusion and gross manipulation of the FDGB, the Soviet representatives had not altered the pattern. This led Robert Murphy to think that socialization could also be forestalled. When Ulbricht called for extensive expropriations, the political advisor speculated that "the thinking of some German Communists may well be in advance of their Russian associates." Plans for socialization had gone quite far, but "final decisions on these matters have apparently not been made by the Soviet Military Government officials" (italics added).85 The American recommended legislation, under which the Allies would agree that the property of war criminals and of Nazis who were in the arrest category would be confiscated without indemnity. Zonal authorities might dispose of these as they chose, but there could be no other transfers of title until democratically elected provincial governments decided the question.
T H U S , DESPITE ITS
militant anticommunism, inside the United States Political Division was a desire to revivify the Allied Control Council. If the body could function in the way that had been intended, much might be done to improve conditions in the east. But would the Soviets open up the zone? The spring's events had demonstrated that the reparations program was not itself a sufficient incentive. This fed speculation on the American side that perhaps the Soviet Union might really prefer quadripartite paralysis to any diminution of their exclusive hold.
III. THE WASHINGTON PRISM

As the reports from Germany arrived in the capital, they were refracted through a prism of global anxiety. State Department officials evaluated the
85
Murphy to Riddleberger, April 24, 1946, RG 84 US POLAD Correspondence File, Box 459, FRC.
222
information from the German theater against an international backdrop of mounting crisis. Following the Moscow Council of Foreign Ministers in December, U.S.-Soviet relations had plummeted as disagreements over Eastern Europe and a bitter confrontation in Iran engendered an atmosphere of suspicion and mutual recrimination. Meanwhile, political instability and weak economic performance in Western Europe contributed to a generalized sense of emergency.86 In this tense and polarized atmosphere, the communications from Germany were at times ignored or given meanings that their authors had not intended.
T H E BREACH IN
understanding was most obvious in the exchange of cables between Robert Murphy and the State Department. From an institutional standpoint, Murphy's situation had been awkward from the start. As political advisor to General Clay and head of the Political Division, he was formally a subordinate in a military hierarchy. Yet within occupied Germany, Murphy was also the highest-level State Department officer, representing a bureaucracy that was setting policy for the army.87 The political advisor was not ordinarily one to challenge prevailing doctrine. A man of charm and flexibility, Murphy had risen through the Foreign Service by conforming to its conservative outlook and behavioral norms.88 However, as an officer of the occupation, he was immersed in the environment of the Allied Control Council, which supplied him with experiences that diverged substantially from those of his State Department colleagues. During February 1946, as the conditions in the eastern zone seemed to deteriorate, Murphy had dispatched one of his routine messages, lamenting the lack of cooperation from the French and endorsing Clay's urgent pleas for diplomatic support.89 In pressing the case, he underscored that by blocking central agencies the French "had played directly into the hands of the Soviet Union which has taken full advantage of French obstructionism to consolidate the Soviet position in eastern Germany." That result was avoidable since the operation of the central agencies "would have militated against zonal boundaries and served to break down exclusive Soviet control of one of the largest and most important German areas."
86
Murphy to Clay, May 2, 1946, RG 84 US POLAD 801.46, FRC. For a discussion of the deterioration in U.S.-Soviet relations during the early months of 1946, see especially Leffler, Preponderance of Power, 100-140; Harbutt, The Iron Curtain: Churchill, America and the Origins of the Cold War; Thomas, Armed Truce, 48155O.
87
88 89
Murphy was part of the Military Government hierarchy in the respect that his division was expected to conform to the decisions of Clay's headquarters. Yet, the political advisor was not in uniform and was thus outside the military chain of command. Murphy, Diplomat, 324-26. Murphy's role in the Department of State is described by Weil, Pretty Good Club,
119-25, 138-39.
Murphy to Secretary of State, February 24, 1946, FRUS 1946 1505-7.
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Though scarcely different from others, the political advisor's communication aroused the ire of George Kennan in Moscow, who was just coming out of obscurity as an isolated nay-sayer on U.S.-Soviet policy. At the end of the Second World War, Kennan had seemed a cranky eccentric, whose nostalgia for tsarist Russia and disdain for the Bolsheviks fitted poorly with Rooseveltian aims. But with the United States and Soviet Union presently involved in skirmishes across the Eurasian land-mass, his gloomy formulations had more appeal.90 Murphy's cable came across Kennan's desk shortly after his dispatch of the Long Telegram, which had amplified his pessimistic analysis in rich, authoritative prose.91 Kennan's essential notion was that the Soviet Union, by virtue of its history, culture, and ideology, was irrevocably expansionist. Efforts at conciliation were doomed to failure and the overriding task of U.S. diplomacy was to prevent the Russians from making further advances. These views caught the attention of Secretary of the Navy James Forrestal, who enthusiastically circulated the Long Telegram throughout the government. To many people, especially those in the State Department, Kennan's presentation seemed prescient. In regard to German matters, Kennan's early ideas had been especially unpopular. As far back as January 1945 he had called for the partition of the country and the abandonment of Allied cooperation.92 Since this directly challenged his own department's quest for centralized authority, the memoranda were filed away. Now in the altered international setting, with his own reputation on the rise, he recycled these rejected opinions. Opposing Robert Murphy, Kennan insisted that the Russians were in no hurry to establish central agencies, that they were "happy to have several months in which to exercise a completely free hand in their zone; to take stock of the situation; to overcome the effects of their own initial entry, to quell fears of certain sectors of the population, and to establish firm foundations for Communist political control."93 This was admittedly a temporary expedient, for the Soviets ultimately intended to use the central agencies as an "indispensable device" for penetrating the western zones, Their tactic would be to form an "'anti-Fascist Republic' as a road-paver for Soviet Socialist State which is to follow." To Kennan the German agencies were "a double-edged sword, which could cut in either direction." He thought Military Government unduly optimistic in its expectation that these would terminate Soviet possession of the east. More likely, the Russians would delay their formation until they were confident they could control their own zone and assert their
90
91 92 93
For an analysis of Kennan's role and the reception accorded his ideas see Backer, Decision to Divide Germany, 152-55; Isaacson and Thomas, The Wise Men, 35256; Larsen, Origins of Containment, 255-57. Kennan, Memoirs, 1:583-98. Kennan to Bohlen, January 26, 1945, Kennan MSS, Box 28, PU. Kennan to the Secretary of State, March 6, 1946.
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influence over the west. Unfortunately, the severance of the Oder-Neisse territory had left "rump" Germany highly vulnerable to Soviet machinations. The loss of these food-producing lands had so unbalanced the economy that it was dependent on Soviet supplies and ripe for communist agitation. As for U.S. policy, Kennan saw only two choices: to unify Germany with the high probability that it would pass into the Soviet sphere, or to divide the country and integrate the western zones with Western Europe. Though not explicitly advocating the partition, the diplomat left no doubt that this was his preferred course.94 As an exercise in logic, the Kennan memo was persuasive. There was some artifice in his reference to the Oder-Neisse settlement, which he presented as the main reason why unification was dangerous to the West. In reality, Kennan had considered German unification to be undesirable long before this topic was considered at Potsdam. But if it was true that western Germany was seriously susceptible to communist blandishments, and if it was also true that the Soviets were determined to make the country communist, then there was a compelling case for division. In outlining his position, Kennan had disregarded the contradictory information coming out of Berlin. Virtually all of the reports had emphasized the Communists' weakness in the western zones and the precariousness of their eastern position. U.S. Military Government had also presented a more complex picture of Soviet actions and attitudes in which radical initiatives were regularly offset by examples of restraint. Despite the solipsism of Kennan's presentation, within the State Department his views on Germany had the same sort of appeal as his global analysis. They provided an explanation, at once plausible and selfjustifying, for what was at the very least a conflict of interest. Regardless of their ultimate intentions, the Soviets' current interference with interzonal trade and their machinations in the east were inhibiting the recovery of German capitalism. The subtleties of the "German road to socialism" notwithstanding, the flow of Marxist rhetoric from Soviet and SED organs supported the convenient assumption that the Soviet Union was attempting to take over the country. While this required some intellectual footwork - such as crediting Kennan's theorizing over the more nuanced reports from eyewitnesses in Germany - the rush to worst-case thinking reflected the department's iron determination to use German resources to pump up the free economies of Western Europe. Because this latter commitment was nonnegotiable, there was no willingness to analyze how it might be affecting Soviet behavior or to explore positions that might offer a basis for compromise. The real deviants were the U.S. officials in Berlin, who despite their own preference for capitalist reconstruction, continued to see Soviet policy as
94
Ibid.
225
reactive, fluid, and potentially reversible in its more damaging manifestations.95 This reflected daily experiences of Soviet cordiality and a more intimate knowledge of their outlook. Clay's circle had been educated to Russian fears of German militarism - the anxiety over the war potential in the Ruhr and the apprehension that industrial disarmament would never be carried out. They had also received constant reassurance that Soviet unilateralism in the east was a by-product of German disunity, and that political pluralism and private property would be preserved. Most important of all, the Americans in Germany regularly encountered people from the eastern zone. This alerted them to the many Soviet encroachments but also to the political and social space that still remained. Should Allied cooperation not materialize, the East Germans had much to lose. Because of these perceptions, the leadership of Military Government was disgusted by George Kennan's meddling. Robert Murphy cabled back to Washington that Clay was "pretty violent" against the diplomat's preachment, which he saw as a capitulation to the British line.96 The political advisor maintained that the Russians "had been meticulous in their observance" of Potsdam, and had gone out of their way to be friendly. Indeed, "Zhukov, Sokolovsky and Sobelev have told me at different times and in different ways that they sincerely want the friendship of Americans, that there will never be a war between the two countries, that they are grateful for what the United States has done for the Soviet Union." Whatever people were saying in Washington, Murphy wished "to make it quite clear that in our local innocence, we have never and still do not believe for a minute in imminent Soviet aggression." This was cheerful news that Murphy's boss, Doc Matthews, had no desire to hear. Acknowledging that "your account of the Soviets in Berlin is entirely accurate," he insisted that "you get an entirely distorted picture if you attempt to draw general conclusions from it."97 Matthews admitted "that no one here thinks for a moment that the Soviets want war with us at this time." But this was hardly the point. Unfortunately it was "basic doctrine in the Kremlin that the Soviet and non-Soviet systems cannot exist in the world side by side." Therefore its leadership "want no peace or rehabilitation in Europe . . . for under such conditions their infiltration and communisation methods do not prosper." While Murphy's superiors embraced Kennan's analysis, they were less convinced about the desirability of partition. To analyze the option the Central European Division called upon David Harris, who had authored many of the postwar planning documents, to prepare a memorandum.98 Like Kennan, Harris assumed that the Soviet Union was "intent on a
95 96 97 98
See especially, Smith, Lucius D. Clay, 277-96; Backer, Winds of History, 86-151. Murphy to Matthews, April 3, 1946, RG 59 Office of European Affairs, Box 147, DSNA. Matthews to Murphy, April 18, 1946, Ibid. David Harris, The Future of Germany, March 26, 1946, RG 59 740.00119, DSNA.
226
Communist Germany," but he questioned whether the country was susceptible to their manipulations. Drawing up a balance sheet of political groupings, he pointed out that the anti-Communists "constitute an overwhelming majority of the German population," and would have on their side "an ancient popular prejudice against the Slavs which was fanned into fanaticism by the Nazis." He therefore expected the anti-Communists to successfully "hold the line" unless material conditions became so devastating that the whole society shifted loyalties. While Harris wanted the United States to revitalize the German economy, he did not think partition would be helpful. For an exclusively western Germany to prosper, the Western nations would have to provide adequate markets for its goods and rapidly offer substantial infusions of capital and materials. He doubted that the western zones could be integrated into Western Europe with sufficient speed and scale to avert an economic debacle. Furthermore, if Germany was divided, the anger of the populace would necessitate a permanent military occupation. Harris predicted that the restoration of German unity would become the major preoccupation of the German people on both sides of a partition line and that, consequently, the Occupying Powers and the world at large would have no respite until the objective was obtained." Even worse, the splitting of the country could be the very thing that turned the Germans to communism, providing the Russians and their KPD allies with the chance to emerge as the defenders of German unity. For both political and economic reasons, Harris thought the United States should take an "emphatic stand in favor of German unity," and push for the rapid establishment of the central German agencies. However, he wanted this to be accompanied by a positive program for German revival, which meant abandoning the "vindictiveness" of previous policy and rewriting JCS 1067. Harris' wing of the State Department had never liked that document in the first place, but he now provided an anti-Soviet reason for its revision. In this Central European document, there was a certain contradiction in the discussion of the Russian problem. If the Soviet Union was determined to make Germany communist, as Harris assumed, then what would deter it from using the German central agencies to subvert the western zones? Grasping that difficulty, James Riddelberger appended a statement emphasizing that "Russia will only permit the functioning of such agencies in the Soviet zone and cooperate in their operation throughout Germany to the extent which it believes these agencies can be used for Soviet purposes." 100 U.S. representatives in Berlin must be alert to their designs and "so construct
99 100
Ibid. Riddleberger to Matthews, March 28, 1945, RG 59 Central European File, Box 2, DSNA.
227
these central agencies that they can eventually be utilized in the Western Zones if it becomes apparent that four-power cooperation in the Allied Control Council has broken down." By offering this caveat Riddleberger demonstrated how close he already was to the position of the partitioners. As of spring, the State Department was still divided on the question of German unity. One convert to the Kennan line was the new ambassador to the Soviet Union, Walter Bedell Smith.101 Smith recommended a phased process in which each of the three western zones would form their own central governmental agency with a permanent secretariat. This could then be followed by the creation of a "temporary" West German government, which might eventually be combined with a Soviet-sponsored government in the east. The ambassador's "personal belief" was that the final step "may never be taken." The main opponents of partition were based in the economics side of the department in the office of German-Austrian Affairs (GA).IO2< The Kindleberger group shared David Harris' doubts about the economic viability of the western zones, but also worried about the larger implications for Europe. If Germany was divided, the Continent would be split into rival blocs. Historically, the areas had been interdependent, with the eastern nations selling their raw materials to the west in exchange for finished industrial products. Even assuming a much closer integration with the United States, it was difficult to see where Western Europe was going to find either its markets or its supplies.103 The disposition in GA was to seek a diplomatic solution that could hold Germany together within the framework of a united Europe. Sparking the enterprise was the young economist Walt Rostow, who had spent considerable time in Germany imbibing the outlook of Military Government. Rostow was favorably impressed by the operations of the Allied Control Council, viewing it as a model for international cooperation. While troubled by the existing stalemate, he thought it might be alleviated by a decision on the Ruhr-Rhineland and an overall improvement in intraEuropean relations.104 Rostow's concept was to create a new European organization, under UN auspices, to be comprised of technical commissions for coal and power, inland transport, telecommunications, trade, food, and economic development.105
IOI IOi
103
104 105
Smith to Secretary of State April 2, 1946, FRUS 1946 V:535~36. An important discussion of the role of the State Department economists is contained in Rostow, The Division of Europe After World War II, 38-50. For Kindleberger's continuing interest in maintaining the unity of Europe and of Germany, see Kindleberger to Ben Cohen, April 5, 1946, Kindleberger MSS (private collection); Kindleberger to Col. Bonesteel, May 3, 1948, RG 59 Central Europe, Box 4, DSNA. Kindleberger, Marshall Plan Days, 156. Three versions of the Proposal for an all-European Settlement, contained in Rostow, Division of Europe, 94-119.
228
Membership would be restricted to continental Europe, meaning that of the occupying powers only France would be a participant. GA viewed this structure as a possible matrix for solving the Ruhr-Rhineland issue. While the territory would remain under German sovereignty its industries would come under the supervision of the European body. Once this was resolved then the United States could demand the implementation of central agencies, reparations, and an import-export plan.
T H E DISAGREEMENTS
between and within the government bureaucracies complicated Secretary Byrnes' preparations for the Paris Council of Foreign Ministers meeting. Byrnes was slowly regaining the credibility he had lost when he compromised with the Soviets at the Moscow CFM.106 Since then, he had partially redeemed himself by giving anti-Soviet speeches and taking a firm stand in the Iranian crisis. From these experiences he had learned that successful diplomacy with the Soviets would earn its practitioner Washington's opprobrium, whereas bellicosity would be respected. This put the secretary in an awkward position as he began the Paris meetings. His discomfort was evident in his talk with Bidault as he reflected that "some months ago American opinion had been eager to give the Soviet Union the most complete cooperation."107 However, now Russian popularity in the United States "had been completely dissipated by the Soviet Government's policies" and he personally "had gone to the extreme where he had been criticized for appeasing Russia and yielding too much." As far as American opinion was concerned, there was no further willingness "to make concessions on important issues." Already half immobilized, Byrnes could not make a clear decision on the German question. Without approval from the president and a rough consensus in his own department, it was premature to embrace partition. On the other hand, to break the Berlin impasse, he would probably have to accommodate the Soviets on the Ruhr-Rhineland issue and coerce the French on central agencies - two highly controversial initiatives for which he also lacked substantial backing. Ultimately Byrnes' strategy for the Paris meeting was to proclaim an American commitment to German unity, while sidestepping the sticky subsidiary questions. His personal contribution was to try to address Soviet and French apprehensions about German militarism by proposing a twenty-five-year disarmament treaty.108 That idea had already been broached back in December with Stalin, who had seemed moderately interested. Since then the State Department had circulated a draft to all of the Allies
106 107 108
See discussion of this issue in Messer, End of an Alliance, 156-80. Memorandum of Discussion, May 1, 1946, RG 59 Central European File, Box 2, DSNA. Text of Draft Treaty on the Disarmament and Demilitarization of Germany, April 30, 1946, FRUS 1946 IIH90-93.
229
but had received no responses. Byrnes latched on to the concept because it seemed to test the sincerity of Soviet intentions. If Russian behavior in Germany was really motivated by fears of aggression, then the disarmament treaty should suffice. If it did not, that would be a sign that the real Soviet motive was not safety but dominion.109 According to the treaty preamble, the Allies had assumed the obligation to effect the disarmament and demobilization of Germany. "In substantial measure" this responsibility "had already been fulfilled" but it was necessary "to insure that the total disarmament and demilitarization of Germany will be enforced as long as the peace and security of the world may require." To this end the Allies would prevent Germany from reconstituting its armed forces, from manufacturing or importing military equipment, from building military installations of any kind, and from establishing factories, plants, shops, research institutions, laboratories, and testing stations designed for the production of weapons. This American proposal elicited slight enthusiasm from the Russians. At a dinner for Molotov, Byrnes expressed sorrow at the Soviet Union's apparent indifference, reiterating his hope that the treaty would serve "as a reinsurance against any Soviet fears of a renewed attack by Germany" and thus eliminate doubts about U.S. determination to safeguard the peace.110 The secretary pointed out to Molotov "that there were many people in the United States who were unable to understand the exact aim of the Soviet Union - whether it was a search for security or expansionism." It seemed to him that a disarmament treaty for Germany and perhaps for Japan should "effectively take care of the question of security." Molotov objected that the draft treaty "appeared to postpone the question of German disarmament until after the occupation was over." There was an immediate need for a four-power commission to go into the zones, and investigate how well existing disarmament agreements were being carried out. At some future date, long-term arrangements such as the twenty-five-year treaty could be settled. This reasoning seemed dishonest to Byrnes, who could not understand why the treaty should interfere with immediate progress on demilitarization.111 The lapse in communication reflected larger divergences in the American
109
110 111
As early as January 1945 Senator Arthur Vandenburg had introduced the idea of a four-power treaty to keep Germany permanently demilitarized. The concept was picked up by the State Department, and included in the Briefing Books for Potsdam. At that time, an important rationale was that the treaty "would greatly reduce Soviet fears that Germany will one day be permitted to regain its strength and be used by the Western powers in an anti-Soviet combination." Samuel Reber, Treaty of Demilitarization of Germany with commitment to use U.S. forces, June 25, 1946, RG 59 Central Europe, Box 4, DSNA. Memorandum of Conversation, April 28, 1946, FRUS 1946 II: 146. Yergin, Shattered Peace, 224-26; U.S. Delegation Record, Council of Foreign Ministers, Second Session, Fourth Meeting, April 29, 1946, FRUS 1946 11:166-73.
230
and Soviet approach. The Russians had always argued that demilitarization was not exclusively or even primarily a matter of eliminating weapons. The only reliable mechanism was the eradication or control of Germany's war-potential industries. Since December, the State Department was publicly on record as opposing the permanent limitation of these industries. Moreover, because of the impasse in the ACC, even that temporary curtailment had not yet begun. From the Soviet perspective, the Allied obligation to disarm Germany remained unfulfilled. As the CFM discussion spluttered and stalled, the economics side of the State Department grew restless. The Kindleberger group wanted Byrnes to engage the main issue - namely, the Ruhr-Rhineland/central agency/reparations tangle. On May 9 Acting Secretary Dean Acheson cabled their package of recommendations to Paris.112 As proposed by GA, the Council of Foreign Ministers would make a specific commitment to negotiate the western boundary issue at its next session. In the interim, reparations deliveries would be resumed, provided the Soviets agreed to a common export-import plan and that all the Allies accepted German "bureaus" pending the establishment of central agencies. Should it emerge after ninety days that there had been no progress in treating Germany as a whole, then reparations would again be suspended. The authors acknowledged that Soviet aims in Germany were still ambiguous. The Soviet Union might already have decided to keep the eastern zone isolated, or to hold on to it until such time as unification offered the prospect of controlling the whole country. If either of these motives was operative, then the situation was irretrievably lost. However, the Soviets might be genuinely fearful that common economic policies would interfere with their zonal reparations program and impose on their "most selfsufficient zone, burden of meeting part of deficits of other less selfsufficient zones." If these pragmatic concerns were behind Russian behavior, then there was opportunity for a bargain. On the more benign view, the U.S. government might eventually assume greater financial responsibility for the costs of occupation and perhaps even for imports, thereby reducing the pressure on the Soviet Union. It might even prove useful to take some "effective action" against German combines and trusts, to implement land reform, and to nationalize the properties of convicted war criminals. By enacting these reforms the United States could "avoid the charge that we were seeking to impose 'a capitalist orientation' on Germany" and could lay the "basis for economic as well as political democracy.""3
112 113
Acheson, Hilldring to Secretary of State, May 9, 1946, FRUS 1946 V:549; Acheson to Secretary of State, Background of Proposals, May 9, 1946, Ibid.:5 50-5 5. Significantly, these more innovative suggestions (i.e., the reduction of Soviet responsibility for the German deficit, and the resurrection of the reform program) were not part of the formal package, but were merely offered as ideas that the secretary might wish to explore.
The Russian
Challenge
231
The GA program represented the soft-line position in the State Department and was, in its open-mindedness about Soviet objectives, a purposeful challenge to the Kennan orthodoxy. Still, the formal package was less forthcoming than appeared on the surface. It did not include the concessions that U.S. Military Government favored - namely, a promise that the Ruhr-Rhineland would remain part of Germany and a decision to go ahead with central German agencies instead of "bureaus." 114 Without these stipulations, the Soviets would have no assurance that reparations levels would be maintained or that they would have a voice in the industrialized west. Yet Byrnes did not want even GA's level of specificity. Once his disarmament treaty had proved unappealing, his one practical goal was to appoint special deputies to discuss a list of major questions and report back to the next CFM.115 This approach aggravated all the other participants, who thought the exercise pointless. Daunted by the volley of complaints, the Secretary of State gave up. In mid-May the Paris Council of Foreign Ministers adjourned, more frustrated and angry than the Allied Control Council in Berlin.
I N T H E I R B I W E E K L Y summary of events, State Department officials blamed the Soviets for the failure of the Paris meeting. 116 According to their analysis, the Russian leadership "apparently prefer to postpone consideration of German questions until there has been further consolidation of SovietCommunist strength in the Soviet Zone and in Eastern Europe." This was producing a situation in which the quadripartite enterprise might collapse completely, although the Western powers would make "every effort... to avert what all feel would be a catastrophic development." This description omitted many complexities. As department officials knew, the French had no wish to unify Germany and were preoccupied with their own territorial demands. The British were determined to keep the Soviets out of the Ruhr, and were backing away from a previous commitment to economic integration. 117 Byrnes himself had gone to Paris, clearly ambivalent about German unity and with few ideas other than the disarmament treaty for breaking the existing stalemate. It was also true that Molotov had nothing constructive to suggest. His mechanical invocations of Potsdam and refusal to engage the practical
114
115 116 117
Clay, Memorandum, Internationalization of the Ruhr, April 1946 Clay Papers,

1:191-201.
U.S. Delegation Record, Council of Foreign Ministers, Second Session, Eighth Informal Meeting, May 16, 1946 FRUS 1946 11:426-32. State Department, Germany and Austria Review of Political Developments, May 15, 1946, RG 59 Central European File, Box 3, DSNA. During this period, the British government was coming close to a decision in favor of partitioning Germany. For discussion of this issue, see Deighton, The Impossible Peace, 54-89; Turner, Reconstruction in Postwar Germany, 7-8; Foschepoth, "British Interests in the Division of Germany after the Second World War," 391-411.
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questions that were dividing the Allies made it obvious that his government was "postponing" a decision. Whether this signified an abandonment of German unification, an attempt to consolidate control of East Germany, a demonstration to the Western powers of the costs of abandoning Potsdam, or simply a period of Kremlin rethinking was obscure. These were perplexing questions, but the disposition in Washington to find honest answers was rapidly diminishing.
Bizonal Beginnings
We have much at stake in gaining the opportunity to fight for democratic ideals in Eastern Germany and in Eastern Europe. This opportunity would result from the true unification of Germany under quadripartite control. (Lucius Clay to Byrnes, November 1946).* But if agreement with the Russians involves any sacrifices in the economic field which would have the effect of delaying or impeding the rapid improvement of living standards and restoration of confidence in our zone of occupation, then such an agreement in my opinion, will prove to be a hollow one, and we will find that we have purchased unreality with reality. (George Kennan to Byrnes, November 19, 1946).2
IN JULY
1946 the Soviets adopted a definite policy. When the Paris Conference of Foreign Ministers reconvened, Molotov astonished his colleagues by calling for the formation of a centralized German government and the upward revision of the German Level of Industry, to be accompanied by the payment of reparations from current production. Rather than stimulating a new round of Allied negotiations on German unification, the Soviet shift accelerated the movement toward a merger of the American and British zones. On the American side, there were diverse motives for establishing the bizone. There was universal dislike of British economic policy and a desire for a more direct voice in the Ruhr. Within U.S. Military Government this was joined to the expectation that, carefully handled, economic fusion could establish a framework for four-power amalgamation. Among many State Department officials, it was viewed in opposite fashion: as the first step in a deliberate strategy of dividing the country.
1 1
Clay to Byrnes, November 1, 1946, Clay Papers, L284. Kennan to Byrnes, Policy Towards Germany, November 19, 1946 RG 59 740.00119, DSNA.
233
234
Bizonal Beginnings
Progress toward merger was accompanied by intense arguments among U.S. policy makers over the implications of splitting Germany. To the Washington proponents, such a course seemed increasingly vital for the economic and political salvation of Western Europe. But to those in Germany who were directing the occupation, it seemed tragically evident that the abandonment of the quadripartite project would entail the gratuitous sacrifice of freedom in the east. Whatever the original intent, the practical effect of the bizone was to widen the division of the country. The coalescence of the two zones propelled western Germany in a more conservative direction, and brought the Americans into closer relations with the British, who had even less willingness to compromise with the Russians than they did.
I. BYRNES' OFFER
During the month-long adjournment of the Paris CFM, economic conditions in western Germany continued to decline. The most distressing condition was the dwindling food supply. There were still no agricultural shipments from the eastern zone, and following an April shortfall of American deliveries, Military Government had been forced to slash the 1,275 calorie ration and to cut the provision of bread by one-third. Even prior to these reductions, an OMGUS Nutrition Committee had warned that the population of the larger towns was "facing nutritional disaster."3 Rickets had become prevalent in children under age six, while retarded or arrested growth was evident in those from ages six to eighteen. There were widespread signs of malnutrition and frequent instances of anemia. Famine edema, which had disappeared at the end of January, was reemerging in the cities. The coal situation was also grave. Output in May hovered at approximately one-third of prewar levels, creating new conflicts over allocations.4 France and other West European recipients were clamoring for a larger share, while the British were insisting that unless more was retained inside Germany, productivity could not be restored. Since the British controlled the Ruhr, coal was officially their problem. But the resulting shortages were crippling industrial recovery in the U.S. zone and in western Europe as a whole.
3 4
Clay to Echols, May 18 & May 24, 1945, Clay Papers, 1:207-8; 212; Murphy to Riddleberger, June 8, 1946 RG 84 US POLAD, Correspondence File, Box 459, FRC. In May, coal production stood at 3,927,000 (or thirty-seven percent of 1938 levels). This compared unfavorably to the figures for January, when production stood at 4,394,000 tons (or forty-one point four percent of 1938 production). Cited in Mark Roseman, "The Uncontrolled Economy: Ruhr Coal Production, 1945-48," in Turner, Reconstruction in Postwar Germany, 95; Draper to Clay, May 24, 1946, RG 260 General Drapers' File, Box 2407, FRC.
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235
To prod the British the State Department dispatched economists Walt Rostow and John Kenneth Galbraith on an investigative mission. The two returned with a list of short-term recommendations, including increased miner rations and expanding the importation of mine supplies.5 At a deeper level, they had absorbed the army's skepticism that the British were "likely or capable of carrying out the requisite action." Unfortunately, the United Kingdom had established an unwieldy administrative structure, the North German Coal Control, which seemed designed to thwart German efficiency. The troubles in coal, food, and overall industrial production increased General Clay's impatience with the zonal isolation. In late May, he dispatched a long memo to the War Department complaining that these were "airtight territories with almost no free exchange of commodities persons and ideas."6 He reiterated the compelling need for free exchange between the zones, a nationwide foreign trade program, and common policies for finance, transportation, communication, agriculture, and industry. Beside his familiar point that the pieces of Potsdam (reparations, central agencies, and the preservation of boundaries) must be implemented simultaneously, he added several new proposals. Most important was the call for a German provisional government. Since the fall of 1945, OMGUS had been building up the political structures in the Lander (provinces), patterning them on the individual states in the United States. In November it had created the Landerrat, a coordinating committee of the provincial ministerpresidents, which was assuming increased responsibility for economic affairs. Clay wished to extend this body to include the minister-presidents from all four zones.7 The resulting council or provisional government would then supervise the German central agencies, thereby diminishing the role and the conflicts of the Allied powers. To effect a settlement of the Ruhr-Rhineland question, the general recommended that the territory remain under German sovereignty, with its industries subjected to some limited type of international ownership and control.8 The purpose of this, as of his other proposals, was to create momentum for a wider amalgamation so as to avoid a second "unbearable" winter. Clay argued that the United States must join forces with whatever power
5
6 7 8
Galbraith and Rostow to Clay, May 31, 1946, RG 59 Office of European Affair File, Box 14A, DSNA; Rostow to Kindleberger, June 10, 1946, RG 59 Central European File, Box 7, DSNA. Clay to Eisenhower, May 26, 1945, Clay Papers, 1:212-17. Ibid. See important discussion of the development of the Landerrat in Gimbel, American Occupation, 35-51. Under his plan a Ruhr authority could take possession of the properties and issue two classes of stock: a Class A dividend-bearing set to "those former owners cleared from Nazi association'* and a Class B of nondividend paying shares to those individual countries which comprised the authority. Clay did not specify which nations might be permitted to join, leaving open the possibility of Soviet membership.
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Bizonal Beginnings
was willing to cooperate. If the French continued to resist or if the Soviets made further difficulties, then it would be necessary to merge exclusively with the British zone. The political consequences of such unilateral action might be serious, "but not as serious as the continuation of the present airtight zones." Clay expected, in any case, that a bizonal merger would force the Soviets' pace and encourage them to participate. This "cautious optimism" impressed Walt Rostow when he visited Berlin in late May.9 The leadership of U.S. Military Government still believed "that hard bargaining straightforward Americans who know their objectives, and who have reasonable objectives, can do business with the Russians." What was required was "clarity, simplicity, and directness in all relations." At the State Department, the army's pressure for quick action was assimilated into the movement for partition. The State Department's briefing papers for the forthcoming Paris CFM opined that if the conference did not make progress, there would be "no practical choice other than giving up, at least temporarily, any serious hope of restoring the unity of Germany."10 Consequently, "the least bad program" would be to organize the three western zones "into some kind of economic and later some kind of political entity." Meanwhile the United States would continue to submit all policy decisions to the Allied Control Council "and then after a reasonable interval take note of failure of agreement and make the necessary arrangements for bipartite or tripartite cooperation." In repackaging Clay's advice, State Department officials substantially altered its purpose and nature. While the former was somewhat resigned to a bizonal interlude, after which the Russians and perhaps the French would come in,11 the latter was envisioning a prolonged stalemate along East-West lines. Moreover, General Clay had carefully limited his proposal to economic fusion, whereas State was already conceiving of a political consolidation that would eliminate the Soviet Union. When the Paris CFM reconvened, Secretary Byrnes was prepared for its failure. While holding in his briefcase the offer of merger, he had no new proposals for quadripartite agreement. During the intervening weeks, he had become more wedded to his disarmament treaty, believing this to be
Rostow to Kindleberger, June 10, 1946. Riddleberger, Draft Memorandum to the Secretary, June 7, 1946, RG 59 Central European File, Council of Foreign Ministers Folder, Box 2, DSNA. In an interview with Jean Smith, Clay later recalled his "feeling that if we combined the British and American zones, and in so doing evidenced a quick and rapid recovery, that this might be helpful in getting the four-power government effective." Interview With Jean Smith, February 25, 1971 in John Backer Papers, Box 4 Rare Book and Manuscript Library, Columbia University. For discussion of Clay's views during this period, see Krieger, "Was General Clay a Revisionist? Strategic Aspects of the U.S. Occupation of Germany," 168-74.
Bizonal Beginnings
237
a fair test of Soviet objectives. The U.S. delegation expected these to be more clearly revealed during this second session, for the Soviet Union was understood to be reevaluating its German policy.12 The agenda was crammed with items concerning the satellite peace treaties, so the topic of Germany was not discussed until July 9. Molotov led off with a harsh indictment of the Byrnes treaty, which he claimed was not only inadequate to safeguard the peace but might well encourage the resurgence of German aggression.13 The foreign minister pointed out that at war's end, all of the Allies had recognized that the disarmament of Germany meant a good deal more than the disbanding of its armed forces and the prohibition of weapons. The "elimination of Germany's war and economic potential and the establishment of proper Allied control over German industries" had been understood as vital to international security. Yet one year into the occupation, there was still no plan for accomplishing this. Molotov also argued that certain political and social objectives were inextricably linked to German demilitarization. Here the crucial task was "to remove the effects of the domination of Hitlerism in all spheres of public life in Germany," and to reconstruct the German state along "democratic lines." Unfortunately little had been done in the west to expedite agrarian reform and decartelization. The draft treaty did not say "a single word" about these responsibilities, although it apparently envisioned the termination of the Allied occupation. For its part, the Soviet Union did not favor the removal of troops from Germany until it was industrially disarmed, internally democratized, and in fulfillment of its reparations obligations. With regard to the latter, the Soviets returned to the 10 billion dollar figure promised at Yalta, which could be achieved through a combination of capital removals and commodities from current production. The full import of Molotov's remarks did not become evident until the next day, when he revealed a stunning change in Soviet thinking.14 Speaking as a defender of German interests, he advocated the economic rebuilding of the country. The foreign minister reflected that the Soviet Union had always eschewed a "spirit of revenge," and was eager to make Germany an independent, industrial society that could participate fully in the world economy. Stressing the need of foreign people for German coal, metal, and manufactured products, he not only affirmed the country's right to export and import, but intimated a willingness to reopen the whole Level of
Murphy to Secretary of State, May 29, 1946, FRUS 1946 V:561-62. U.S. Delegation Minutes of thirty-eighth Meeting of Council of Foreign Ministers, July 9, 1946, FRUS 1946 11:843-47. U.S. Delegation thirty-eighth Meeting of the Council of Foreign Ministers, July 10, 1946, FRUS 1946 V:869-73.
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Industry plan. This would also allow the Soviet Union to extract a significant proportion of its reparations as finished goods rather than factories and equipment. Molotov came out as well for a unitary German state. Lumping together the French demands for the revision of Germany's western frontiers with the American and British support for federalism, he complained of efforts to destroy the German nation. If through a plebescite, the German people expressed their support for any of these approaches, this would be their decision. But the Allied powers should not interfere with the Germans' ability to shape their own government along peaceful and democratic lines. Since these approaches portended the creation of a powerful and potentially aggressive country, Molotov reaffirmed the need for safeguards. Chief among them was the requirement for four-power control of the Ruhr, an imperative that he repeated on three separate occasions during his speech, and the completion of the 10 billion dollar reparations program. Once these were in place, central agencies could begin to function, while details were hammered out for the creation of a nationwide provisional government. The Soviet proposals offered new avenues for an Allied agreement. Especially noteworthy was their acceptance of German reconstruction, and of the country's participation in European and international trade. Should a four-power understanding not materialize, this also had the advantage to the Soviet Union of aligning it with the aspirations of the German people. Until this point, their identification with punitive policies had damaged their reputation within the country and severely handicapped the Communist Party. If the Soviets were hoping to move toward unification, the results were sorely disappointing. Secretary Byrnes could neither fathom nor credit their objections to his disarmament treaty.15 Obviously the document did not contain all of the features that Molotov was discussing, but these had already been specified in the Yalta and Potsdam agreements. The 10 billion dollar reparations figure was something else entirely, since that had already been discarded. Along with the rest of the U.S. delegation, Byrnes was simply furious that the Russians were coming back to it. As for fourpower control of the Ruhr, he had never seen the rationale. The Russians already had a voice there through the Allied Control Council, and if they were asking for more, that must express a desire to obstruct. Ignoring the conciliatory aspects of Molotov's July 10 speech, Byrnes described it to President Truman as "a long harangue," which had been "critical of everything" and showed "no willingness to agree upon or talk up any proposals other than his own."16
15 16
U.S. Delegate Record, Council of Foreign Ministers, thirty-eighth meeting, July 10, 1946; Yergin, Shattered Peace, 229-30. Byrnes to Truman, July n , 1946, PSF, Box 179, HST.
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The British were even more hostile.17 Bevin and his colleagues had come to Paris in a stubborn frame of mind, without much hope or enthusiasm for quadripartite integration. They were deeply troubled by the stagnation in the Ruhr and the financial burden this was imposing on their own taxpayers. The annual cost of the occupation was estimated at 324 million pounds, of which approximately 74 million pounds were being spent on imports into Germany. The British already regarded the Allied Control Council as an impediment to recovery, and here was Molotov asking for a larger role in the Ruhr and a bigger reparations bill.18 Furthermore, the British had always entertained strong suspicions of Soviet political motives. For months the Foreign Office had been fretting over the prospect that the Soviet Union would use German central agencies to penetrate the western zones. While the cabinet was still undecided about partition, the strategy of the delegation was to set the price of amalgamation so high that these entities would never materialize. That same toughness was manifest in the British paper on economic unity.19 While omitting any reference to central administrations and the completion of industrial dismantling, it called for the free circulation of indigenous products and the use of German exports to defray the existing zonal deficits. Such requirements hadfiguredprominently in American policy papers, but by insisting on the distribution of German commodities ahead of the other aspects of Potsdam, the British were being more provocative. Increasing the tension, Bevin demanded "immediate action" on his proposal. Unless this was forthcoming, he warned his colleagues that his government would "be compelled to organize the British Zone of Occupation in Germany in such a way that no further liability shall fall on the British taxpayer. " zo By asserting unilateral control of the Ruhr, Britain could retain more coal for internal use and manufacture higher priced items for export. Bevin's stand galvanized the Americans.21 U.S. officials were already
17
18
19 10 21
There are some outstanding treatments of the British attitude. See especially, Greenwood, "Bevin, the Ruhr and the Division of Germany, August 1945-December 1946," 203-12; Deighton, The Impossible Peace, 81-134; Deighton, "Cold War Diplomacy: British Policy Toward Germany's Role in Europe, 1945-49"; Turner, Reconstruction in Postwar Germany, 15-36; Foschepoth, "British Interest in the Division of Germany after the Second World War," 391-411; Weiler, "British Labour and the Cold War: The Foreign Policy of the Labor Governments 194551," 54-82. U.S. Delegation Record, Council of Foreign Ministers, Second Session, Thirty-Ninth Meeting, July 20,1946; Foschepoth, "British Interest in Division of Germany," 399; Bernard Burrows to Pat Dean, July 8, 1945, FO 371/55843/PRO. Contained in U.S. Delegation Record, Council of Foreign Ministers, July 10, 1946, FRUS 1946 IL860-69. Ibid. Gimbel, "Cold War Historians and the Occupation of Germany," in Schmitt, 17.5. Occupation in Europe After World War II, 91-92.
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critical of how the British were managing the Ruhr industries. Any implication of a more exclusive authority was painful to contemplate. The U.S. zone could not, in any case, survive economically without ready access to the products and proceeds of Germany's industrial northwest. In coming to Paris, Byrnes had already intended to propose a much closer coordination between the zones. The secretary quickly countered Bevin's remarks with an invitation for economic fusion/2 He hoped the council as a whole could reach agreement, but if there was no progress then as a "last resort" the United States "will join with any other occupying government or governments in Germany for the treatment of our respective zones as an economic unit." Such an arrangement need not interfere with the work of the Allied Control Council since those governments that did not participate in the merger could join at any time. His intention was not to divide Germany but "to expedite its treatment as an economic unit." Byrnes' exposition had a certain validity. Taken literally, the fusion offer was consistent with Allied Control Council procedure in the respect that each of the occupiers had the right to chart their own course when fourpower agreement had not materialized. Moreover, the U.S. government had not yet made a choice about partition. Still the American initiative represented a distinct departure from Yalta and Potsdam, and posed an obvious threat to the Allied mission. Once two or more of the zones were operating together under independent rules, this would erode the already shaky standing of the ACC and create new obstacles to compromise. The fusion offer was not, by any construction, the "last resort" that Byrnes was claiming. It was tendered at a moment when the Soviet Union was moving toward certain key Anglo-American positions. Yet neither the United States nor the British delegations would acknowledge that alteration. By the summer of 1946 the Council of Foreign Ministers talks had become exercises of the deaf in which certain ritual demands produced so much static that they drowned out other sounds. With the Russians asking for a larger role in the Ruhr and 10 billion dollars in reparations, the Americans and British could hear trouble and deception, and little else/ 3 The only ministerial accomplishment was to schedule a special session on Germany later in the year. But with the Americans and British ready to strike out on their own, the immobility on substantive matters had immediate repercussions. No sooner did the conference adjourn then U.S. Military Government was instructed to repeat the Byrnes merger offer in
11 z3
U.S. Delegation Record, Council of Foreign Ministers, July 11, 1946, FRUS 1946 11:897-98. Extract from Cabinet Conclusions of July, 15, 1946, FO 371/55855/PRO; Central European Division, Round-Up of the Council on Foreign Ministers at Paris, July 18, 1946, RG 84 US POLAD Correspondence File, Box 459, FRC.
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the Allied Control Council.24 In its updated version, this would entail the establishment of German central "bureaus" by whatever powers joined the project. The rapid American initiative put the British in something of a dilemma. From a strictly economic standpoint, it was unclear whether they would save more money by organizing the Ruhr for export or by combining operations with the U.S. zone.25 Bevin's best guess was that they would do better with the Americans. While they would have less ability to use coal profitably, they would gain in increased access to American foodstuffs and capital. The British also had second thoughts about antagonizing the Soviets. After months of edging the Americans toward a more confrontational approach, Bevin wondered whether "there might be some disadvantage . . . in an Anglo-Saxon bloc."26 From Berlin, General Robertson reminded him that no political decisions were being made and that the Russians "could join in at any moment." On July 30 the British cabinet stopped hesitating and accepted the merger. At the Allied Control Council, Robertson announced their intention to begin staff talks with the Americans and urged the Soviets and French to participate.27 This elicited the first definite indication from the Soviet Union that it was rejecting the offer. Sokolovsky argued that economic unity "would not be furthered by the division of Germany into two or more parts based on pronounced autarchy." Sounding Molotov's most recent theme, he also complained that there was no provision for political integration. Despite these objections, Sokolovsky was at some pains to show that his government still wanted the Allied Control Council to work.28 After reciting its many efforts to integrate the zones, he called for a new four-power organization to step up interzonal trade. In reporting to Washington that the Russian response to McNarney was "considerably short of acceptance," Robert Murphy viewed Sokolovsky's proposal as a possible "advance." The Soviets also made new concessions in the Berlin Kommmandatura, where they reached an agreement with the Western powers on a new constitution for the city. During August, the Russian representatives continued their overtures, suggesting that Molotov's change of line had been intended to facilitate an
24 25 26 27 28
CAD to Clay and McNarney, July 18, 1946, RG 165 CSCAD 014 Germany, MMNA. Cabinet Conclusions, July 25, 1946, FO 371/55844/PRO; Dean, Brief for the Secretary of State for Cabinet Discussion on Cabinet Paper 292 on July 25th, Ibid. Note of a Meeting Between the Secretary of State and Mr Hynd on July 23 rd, FO 371/55589/PRO; Extract from Cabinet Conclusions, July, 25, 1946. Murphy to the Secretary of State, July 30, 1946, FRUS 1946 1585-86. Allied Control Authority, Coordinating Committee, Measures to Improve Interzonal Cooperation, July 31, 1946, FO 371/55590/PRO; Murphy to the Secretary of State, July 30, 1946.
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Allied accord. At a social dinner, their Economics Deputy Kolpakov proposed to his American counterpart Donald Humphry the framework for a trade that would involve the raising of the Level of Industry in exchange for current production reparations.29 If this principle was accepted, he implied that the controversial 10 billion dollar figure could then be modified. General Sokolovsky subsequently offered Clay more specific ideas about a possible deal.30 He recommended that the span of the Level of Industry plan be extended from two to seven years, during which time the plants that did not have to be dismantled could be used for the production of current reparations. Raw materials for the plants might be provided either from the excess available in Germany or from the country that planned to receive the manufactured goods. Outside these specially designated factories, the proceeds of all other German exports would be used to pay for necessary imports. This would keep the level of trade close to what had been contemplated in the original LIA. The Russian movement was gratifying to Clay, and seemed to confirm his expectation that bizonal fusion would precipitate German unification. The optimism in Military Government was reported by Newsweek, which found a "consensus . . . that the next six months will prove decisive." Although the Russians would probably stall, "the odds shift in favor of Moscow coming back into the fold.31 The alternative to compromise would be complete exclusion from three-fourths of Germany, an outcome that was too stupid and dangerous for the Soviet Union to permit. With the Soviets edging toward a deal, Clay experienced Washington pressure to pull away. A threatening development was the more critical attitude of the State Department economists. Officials in the Division of German and Austrian Economic Affairs (GA) were becoming concerned that Military Government's preoccupation with the Soviets was imperilling West European recovery. One irritant was the army's failure to deliver needed equipment to Western Europe pursuant to Clay's "stop order." With the formation of the bizone, GA Chief Charles Kindleberger wanted the United States and Britain to write an interim Level of Industry Plan that could serve as the basis for making western deliveries until France and the Soviet Union had mended their ways. This was just the sort of polarizing gesture that Clay and Draper were anxious to avoid. Draper argued that the new Level of Industry would surely become known and would be regarded as "the scrapping of a previous agreement and closing the door to unification."32 As a general policy, Kindleberger thought it unwise to
29 30 31 3Z
Chase to Heath, August 7, 1946, RG 84 US POLAD 800, FRC; Kindleberger to Chase, August 3, 1946, Kindleberger MSS, MIT. Robertson to Jenkins, August 20, 1946, FO 371/55590/PRO. "Zones Together," Newsweek, August 12, 1946. Kindleberger to Draper, August 11, 1946, RG 250 (Economics Division), Box 2413, FRC; Draper, Memorandum for Files, August 12, 1946, Ibid.; Kindleberger,
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handicap the operations of the bizone in order to facilitate Soviet adherence. Unlike Kennan, he had no objection to including the Russians if they were prepared to accept Western terms. But where there was a conflict between Soviet interests and West European needs, he regarded the latter as overriding. Kindleberger was especially alarmed by Military Government's drift toward current production reparations, believing it imprudent to allow any diversion of unpaid manufactured goods to the east.33 In his efforts to probe the Soviet overtures, Clay faced resistance not only from the State Department but from the British. Despite its ambivalence about how far it wished to go in actually partitioning Germany, the Foreign Office saw obvious merit in delaying unification. According to Permanent Under-Secretary for Foreign Affairs Orme Sargent, the western part of Germany must be made "more attractive both politically and economically than the rest."34 If this was done, "we can hope that sooner or later eastern Germany may be brought more under western influence or at least that Soviet influence there may be to some extent counterbalanced." The British perceived some advantages to the Sokolovsky plan, including the circulation of Germany's indigenous products and the probable escape from the rigors of the March LIA.35 But Germany would have to provide current production reparations before it had an export-import balance, and would consume coal and other scarce raw materials in running the designated factories. Moreover, once the western installations were producing for eastern use, Soviet influence in the area would inevitably grow. The British thought the very fact that Sokolovsky had floated the scheme showed how upset the Soviets were about bizonal developments. So there were plenty of reasons to wait. If this first Russian offer was not accepted, "they will return later with a better one." That might not occur right away, which was fortunate since by building up economically they would be "in a stronger position than we are today to get what we want politically." Because of the objections from Washington and London, Military Government was unable to move the Russian negotiations to higher channels. Draper was allowed to continue his informal talks, but without authority to suggest concessions on the American side. This constraint aggravated U.S. officials in Germany, who sensed that an East-West accord might finally be obtainable.36
Memorandum, August 11, 1946, Kindleberger MSS MIT; Kindleberger to Chase et al., August 13, 1945, Ibid. Ibid.; Kindleberger to Galbraith and Mason, August 13, 1946, Ibid. Cabinet Minutes, FO 371/55591/PRO; FONOFF to U.K. Delegation to Paris Peace Conference, August 26, 1946. Cabinet Minutes, Soviet Proposal for Revision of Reparations Plan, August 20, 1946, FO 371/55590/PRO. General Robertson to Jenkins, August 27, 1946, FO 371/55591/PRO.
33 34 35 36
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A L T H O U G H UNSUCCESSFUL
in gaining Washington's support for its Soviet initiatives, U.S. Military Government had more influence on policy toward the Germans. Molotov's unabashed appeal to German nationalism fortified those officials in both the army and the State Department, who disliked the negative-sounding prescriptions left over from JCS 1067.37 That rhetoric and remnants of the programs were still in place, partly because the American public still believed in them. However, by bidding for German support, the Russians altered the context of U.S. decision making. They unwittingly sparked a public relations contest, in which the American rebuilders could finally be open. Following Molotov's speeches in Paris, Clay drew up a position paper that he intended to publicize to the Germans.38 While this echoed previous themes, including the endorsement of reunification, it was mainly a summons to national revival. It promised "early establishment of a provisional governmental structure" based on the Lander, and retention of Germany's major boundaries including those in the west. The United States would consider "any rational plan" for internationalizing the coal and steel industries of the Ruhr and Rhineland so long as the areas were under German political authority and "fully integrated with the German economy." To counteract the threat of aggression, there would be controls over heavy industry, but they would be temporary. Once political responsibility had been turned over to the Germans, the Allied armies could cease to be mass formations and become instead small security groups. Troop reduction was vital, for "no country can regain its self-respect nor progress to maturity in democratic processes in the presence of large occupying forces." To Clay's annoyance, the State Department was at first unwilling to issue his document, preferring to dispatch another committee on "objectives" over to Berlin.39 Aside from the ordinary turf wars, this reflected their discomfort with Clay's statements on the western boundary and the German provisional government. The department did not differ in substance, but was still squeamish about antagonizing the French on such delicate issues. When Clay learned of their dissatisfaction, he angrily cabled the War
37
38
39
David Harris to Riddleberger, July 17, 1946, RG 59 74.00119, DSNA; Harris to Riddleberger, May 1, 1946; OCL Report, "The Position of Great Britain, France and USSR Toward Germany," August 12, 1946, RG 59 R 6c A Reports (Lot), DSNA; Department of State, Round-up of Council of Foreign Ministers at Paris, July 18, 1946, RG 59 General Europe, Box 4, DSNA. Clay to Echols, July, 19, 1946, Clay Papers, L2.36-46. According to Jean Smith, the Clay paper was the outgrowth of a talk between the general and Secretary Byrnes on the evening after the Molotov speech. At that time, Clay told Byrnes that U.S. policy could no longer be based on the punitive strictures of JCS 1067, and he received permission to draft a new policy paper. Smith, Lucius D. Clay, 379. Murphy to Riddleberger, August 3, 1946, RG 84 US POLAD Correspondence, FRC.
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Department that there was nothing in his paper, except perhaps the stand on the Ruhr and Rhineland, which had not been previously published.40 It was not his purpose to alter the American position but merely to articulate the assumptions under which Military Government was already operating. His headquarters was "really in a mess if we are unable without days of delay to give a summarized statement of policy to our own people." Clay saw no point in meeting with the State Department committee. If its members wanted his views, they could find them in writing.41 Meanwhile he was planning to come back to Washington where he hoped "to find out whether our government wishes me to continue here in Germany under conditions which make it possible for our objectives to be accomplished." His own inclination was to resign. This was not an ultimatum, but the job "has no glamour and becomes meaningless" unless he enjoyed the confidence that would permit him to make on-the-spot decisions. Some of the general's irascibility reflected his problems over Russian policy, where his opinions were being ignored. Despite a variety of provocations, his threat of resignation was an empty one. After further thought, he phoned Secretary of State Byrnes in Paris and arranged for an immediate consultation.42 The secretary accepted Clay's contention that there must be some positive rejoinder to Molotov. For this purpose, Byrnes agreed to come to Germany for a major policy address in September. In the interim, he instructed economist John Kenneth Galbraith to draft the speech, using Clay's paper as background for the task. The results were presented at a historic gathering of German and American officials at the Stuttgart Opera House on September 6. This was the first occasion since the end of the Second World War when Americans and Germans participated in a joint public meeting. The gravity of the event was marked by the presence on the stage of not only the Secretary of State and political advisor Robert Murphy but the prominent Senators Thomas Connally and Arthur Vandenberg. The orchestrator of the conclave, Lucius Clay, took a seat at the rear of the hall, wishing to observe the responses of the German audience.43 The form of the gathering symbolized the content of the Byrnes address. The novel element in the secretary's speech was the clear communication to Germans that their nation would be permitted to recover - economically, politically, and culturally. The country had committed great sins against the world, and there were still penalties to be paid. But the suffering would end, the stigma would be lifted, ordinary life would resume, and Germany would rejoin the family of nations. Over and above the specific
40 41 42 43
Clay to Schulgen, August 7, 1946, Clay Papers, L247-48. Clay to War Department, August 16, 1946, Ibid.:254. Pollock to Clay, September 24, 1946, Pollock MSS, Box 21, UMI; Smith, Lucius D. Clay, 385; Author's Interview with John Kenneth Galbraith, August 1990. Clay, Decision in Germany, 80.
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commitments that Byrnes was prepared to offer, an attitude of reconciliation predominated. Many of the secretary's ideas and much of the language echoed Clay's. In the political field, it was "the view of the American government that the German people .. . under proper safeguards should now be given the ordinary responsibility for the running of their own affairs."44 Economically, the country would be encouraged to produce and trade. "Germany," said Byrnes, "is a part of Europe, and European recovery, particularly in Belgium, the Netherlands, and other adjoining states will be slow indeed if Germany with her great resources of iron and coal is turned into a poorhouse." The obligation to provide reparations remained in force, but if Germany was not treated as an economic whole, the Allied Control Council plan would be revised upward. With respect to boundaries, the United States would support a Western revision to accommodate France on the Saar. But so far as the American government was aware, "the people of the Ruhr and the Rhineland desire to remain united with the rest of Germany." The United States was "not going to oppose these desires." Moreover, the United States was not necessarily wedded to the Oder-Neisse frontier as the border between Poland and eastern Germany. While it had agreed at Potsdam that Poland could administer certain territories prior to a peace conference, it was not committed to their final cession.45 Perhaps most important, the number of occupation troops would be reduced. Americans did not believe that "large armies of alien soldiers or alien bureaucrats, however well motivated or disciplined, are in the long run the most reliable guardians of another country's democracy."46 This did not mean that the United States would be pulling out of Germany in a hurry. So long as other nations maintained troops, its "security forces" would remain. With a rhetorical flourish, the secretary proclaimed: I want no misunderstanding. We will not shirk our duty. We are not withdrawing. We are staying here. As long as there is an army of occupation in Germany, American armed forces will be part of that occupation army. This emotional promise had been added on to the speech at the last minute, with a view to assuring both French and Germans that the country would not be abandoned to the Russians.47
Byrnes, "Restatement of U.S. Policy on Germany." Cited in State Department Bulletin, September 15, 1946, 497-501. Here Byrnes was departing from Clay, who had assumed the finality of the eastern border. In reopening the question, the secretary was seeking a new means of mollifying French opinion. Murphy, Diplomats, 337-38; Clay to Pollock, October 3, 1946, Pollock MSS, Box 21, UMI. Ibid. Clay, Decision in Germany, 79.
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With all these pledges of restoration, the Byrnes speech was equally noteworthy for what it did not tell the Germans. Gone from the text was the reform rhetoric of JCS 1067 a n d the Potsdam protocol. With the possible exception of denazification, the clear implication of his remarks was that Germany had completed the internal social changes necessary for self-determination. This confirmed certain Soviet criticisms. Molotov had argued for months that the disarmament treaty was being offered as a substitute for other programs, and would become an excuse for eliminating important controls. Now Byrnes was promising "to return the government of Germany to the German people" without clear guarantees of any societal improvement.48 In setting forth his prospectus for German rehabilitation, the Secretary of State was not trying to offend or injure the Soviet Union.49 Indeed he was continuing to appeal for German unity, asserting that
It is not in the interest of the German people or in the interest of world peace that Germany should become a pawn or a partner in a military struggle for power between East and the West.
The American preference was for Germany to "be administered as an economic unit" and that for this purpose zonal barriers "be completely obliterated." However, as he stood in the Stuttgart Opera House, Byrnes was no more ready than he had been at Paris to satisfy key Russian demands. The U.S. acceptance of Germany's western frontiers was potentially very helpful, but in the secretary's rendering was instantly offset by the implicit challenge to the Oder-Neisse arrangements. Meanwhile, he had nothing to add on reparations, four-power control of the Ruhr, or the composition of the German central agencies. The secretary's tight approach to the Soviets formed a stark contrast to his generous stance toward the Germans.50 In a stirring conclusion he gave his assurance that "the American people want to help the German people to win their way back to an honorable place among the free and peace loving nations of the world." Emotions inside the hall ran high as Americans
48
49 50
This aspect of the situation was recognized by analysts in the State Department. OCL State Department, "Controversial Issues in German Policy Raised by Byrnes Speech," September 24, 1946, RG 59 R 6c A (Lot), DSNA. Gimbel, "Cold War Historians," 93-94. As Messer points out, "The Byrnes speech may have been intended to produce an indirect effect on French policy. But Byrnes knew before he delivered it that it immediately would be interpreted in the United States as a courageous response to the Soviet Union. Given the circumstances of the time, a public proclamation of a continued American military presence there could hardly have been interpreted in any other way." Messer, End of an Alliance, 205. See as well, Smith, "The View from USFET: General Clay's and Washington's Interpretation of Soviet Intentions in Germany, 1945-48," 64-78.
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and Germans rose to their feet in a standing ovation.51 Many, including General Clay, shed tears of relief. Outside the Opera House, western zone newspapers were already on the streets with a full text of Byrnes' remarks. Within minutes the secretary's voice went out over the airwaves, with a German translator bringing his message to millions of citizens.
T H E STUTTGART ADDRESS
made explicit the priorities that had animated U.S. policy for over a year: the desire to restore Germany quickly, and to use its economic resources as a means of promoting West European trade. If Soviet requirements could be simultaneously satisfied so much the better, but these were not a reason to modify or delay actions. With the launching of the bizone, the industrial core of Germany would pass under American jurisdiction, creating the possibility that even without German unification, important U.S. goals might be fulfilled.
II. CLAY'S CRUSADE

Meanwhile far from the public eye, the American-Soviet discussions had been proceeding in Berlin. At the time of Stuttgart Economics Director William Draper was back in Washington, trying to persuade State Department policy makers that he was close to success.52 Though inclined to credit Draper's claim that economic desperation might lead the Russians to make major changes, they were still loathe to grant them current production reparations. Western Europe was already clamoring for scarce German products, which would inevitably be reduced by allocations to the Soviet Union. From the Moscow embassy came warnings that current production reparations would become a kind of Trojan Horse in the Ruhr.53 Under Sokolovsky's proposal the Soviet Union would receive a greater quantity of goods than it would gain from dismantling, and at the end of ten years would still have title to the plants. The result of this operation "would be to give a considerable portion of German industry in the western zones, an eastern orientation." Factories that were producing goods for delivery to the Soviet Union would be subject to a measure "of Russian intelligence and control," an involvement that would help them achieve their political and economic aims in Germany. Despite their reservations, the upper echelons at State were hesitant to stop Draper's probes. German unity was still the official policy of the United States, and with reliable Military Government conservatives insisting that the goal was within reach, it was embarrassing to interfere. Eschewing any
51 52 53
Clay, Decision in Germany, 81-82; "German Reaction to Byrnes' Speech," Byrnes MSS, Box 592, Clemson. Hugh Ripman to E. R. Warner, September 6, 1946, FO 371/55592/PRO. Durbrow to the Secretary of State, September 6, 1946, FRUS 1946 V:6o2~3.
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commitments, Acheson and Clayton instructed Draper to continue talking with the Soviets and to determine the actual quantity of reparations they had in mind.54 The intimations of additional Soviet concessions engendered a cheerful mood in Clay's headquarters, which surprised the stream of American visitors. Public officials, businessmen, and journalists arriving in occupied Germany were treated to the OMGUS heresy. According to that doctrine, the French were the prime villains, the Soviets were pathetically weak and subject to bizonal pressure, the United States could probably obtain most of what it wanted in negotiation with the Soviet Union, and the peace of the world hinged on these developments. The guests heard the news with varying degrees of enthusiasm.55 Randolph Burgess of National City Bank was greatly impressed, writing in his Germany report that, "despite the differences in their philosophies and aims, the powers have been able to compromise on many problems." He regarded Germany as "the crucible where the capacity of the great powers to work together is being tried out." By contrast, freelance journalist Louis Fischer reacted skeptically to the Military Government line. When told by Clay and associates that the Russians had become "more conciliatory," Fischer insisted that this was merely a "tactical retreat." There have been such retreats before, "a withdrawal before an attack, but they return because they are pursuing goals that are important to them." Among the press regulars, the Newsweek reporters continued to echo Military Government views. On September 23 the magazine ran a feature, "THE PEACE: Russia, Reparations and the Reich," amplifying the prospects for an Allied deal.56 The article called attention to "a little noticed portion" of the Stuttgart speech that raised a question "of fundamental significance: Whether Potsdam should be revised to give the Soviet Union reparations from current production?" While such reparations might be dangerous, they could ameliorate one of the main sources of Soviet hostility - the terrible condition of their economy. According to "the best informed American authorities" the Soviet need for reparations was "the dominant factor" in their policy toward Germany. Army officials believed "an arrangement could be worked out," but were being opposed by a majority of diplomats. By mid-October, the Russian negotiating position had come very close to the Americans'. Kolpakov submitted a written proposal recommending that the amount of current production going to the Soviet Union (as well as to Poland and the Western nations) should take account of the value of
54 55
56
WDSCA to OMGUS, October 10, 1946, RG 165 CSCAD 014 Germany, MMNA. Burgess to Robert Murphy, September 5, 1945. Enclosure: National City Bank, Report on Germany, RG 84 US POLAD Correspondence, FRC; Louis Fischer to George Fischer, September 29, 1946, Fischer MSS (private collection). Newsweek, September 23, 1946.
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the capital removal that had already gone to each.57 The raw materials would be provided by the recipient nation until such time as there was a favorable balance of trade. Once the Allied Control Council had set the levels of current production reparations, there would be an upward revision of the March Level of Industry. A balanced export-import program would go into effect, and Clay's "stop order" would be rescinded. Central German agencies could be established immediately, and except for purposes of industrial dismantling, "economic zonal boundaries would be entirely removed." The Kolpakov proposal was appealing to OMGUS because it portended the rapid circulation of goods and personnel throughout the four zones. It was also curiously consistent with the army's own plans for pumping up the German economy. As of October the Industry Branch was clamoring to raise the production ceilings for steel, machine tools, electricity, and other goods - an endeavor that the new Soviet scheme would certainly advance.58 Moreover, in an effort to stimulate German exports, Military Government had arranged a revolving credit from the Reconstruction Finance Corporation (RFC) to subsidize the importation of U.S. raw materials into Germany for processing into finished products.59 While the receipts from sales would be used in the first instance to repay the RFC, the project was domestically controversial because it demonstrated that the United States was directly financing German revival. Current production reparations would not obviate this objection, but it would alter the context by assimilating the American import program into a project conducted by the Allies. Ironically, what the Soviets had put on the table was the very agenda that the State Department had floated years before when it was wooing Franklin Roosevelt. Officials then had advocated current production as a means of satisfying the Russian need for German goods while stoking up the engines of the country's economy. It was just this linkage, which had seemed so menacing to Henry Morgenthau and the Treasury, which had been clearly rejected by the great powers at Yalta. Apart from its economic merits, the Kolpakov plan had positive political import. During September, the first local elections had taken place in the Soviet zone. The Americans had assumed that arrangements were sufficiently rigged that the Socialist Unity Party (SED) would win an overwhelming victory.60 Yet as returns came in from the eastern zone districts,
57 58 59
60
Murphy to Matthews, October 14, 1946, FRUS 1946 Industry Division (OMGUS), Draft Study of Industrial Dismantling, October 6, 1946, RG 165, CSCAD 014 Germany, MMNA. Bennett to Clay, October 10, 1946, RG 260 Economics Division File, Proposal Revolving Dollar Loan, Box 1480; Press Conference, Statement of George E. Allen, October 15, 1946, Ibid.; AGWAR to OMGUS October 15, 1946, RG 107 ASW European Trip File, MMNA; Stone, PM, October 10, 1946. Morris, Memorandum 165. Communist and Soviet Tactics for Coming Berlin and Soviet Zone Elections, August 8, 1946, RG 59 Central Europe, Box 3, DSNA.
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there were signs of a more serious contest. In Saxony, the SED garnered forty-eight percent of the vote cast, enough to give it a majority over the other parties.61 Nevertheless, the Liberal Democratic Party (LDP) and the Christian Democratic Union (CDU) made a strong showing, polling more than 1.3 million of the 3.3 million total. There were as well hundreds of thousand of dissident SPD members who followed the instructions of the Berlin Independent Socialists by spoiling their ballots. In key urban areas (including Dresden, Leipzig, and Zwickau), the SED was in the minority. Subsequent elections in Thuringia, Mecklenburg, and Province Saxony demonstrated the same pattern, with the Socialist Unity Party struggling for bare majorities.62 Military Government officials were naturally critical of Soviet irregularities. The very existence of the SED was itself a manifestation of coercion. During the weeks preceding the elections, the SMA had demonstrated its favoritism toward the organization by allocating greater quantities of food, transport, press, and other facilities. In many rural districts, there were widespread complaints that the CDU and LDP had not been permitted to organize or to list their candidates.63 Yet the actual balloting appeared to be free and fair.64 The very fact that elections had been held and that millions of east Germans had voted against the Socialist Unity Party was an indication of the continuing political space in the zone. Members of Robert Murphy's staff began to wonder whether the negotiations on current production reparations could widen that space even farther. Louis Wiesner recommended that in exchange for reparations deliveries, the United States should demand certain political guarantees: immediate permission for the Social Democratic Party to organize freely and operate on equal terms in the east, the end of discrimination against the LDP and the CDU, abolition of all press restrictions, and new Soviet zone elections.65 Over the next weeks, the relevance of this approach seemed confirmed
61
62 63
64 65
Times, September 1, 1946; Strang to Foreign Office, September 4, 1946, FONOFF 371/55582/PRO; Wiesner to Murphy, Soviet Zone Elections, September 5, 1946, RG 84 US POLAD, Correspondence File, Box 459, FRC. Strang to FONOFF, September 11, 1946, FONOFF 371/55371/PRO. Morris, Memorandum No. 173, Elections in Northeastern Germany, September 21, 1946, RG 59 Central Europe, Box 3, DSNA; Wiesner to Clay, Shortcomings of Implementing American Policy in Germany, October 8, 1946, RG 84 US POLAD 801.1, FRC. Strang to FONOFF, September 4 & September 11, 1946; Manchester Guardian, September 5, 1946. Wiesner to Murphy, October 12, 1946, RG 84 US POLAD 801.1, FRC. This approach was picked up by Murphy, who wrote Washington that "The Russian need for commodities out of German production is so urgent and apparent that we would be well advised to use the opportunity to obtain very definite commitments from them on . . . the introduction into the Soviet zone of occupation of our form of democratic methods." Murphy to Matthews, October 14, 1946, Ibid.
"German Election in Russian Zone Gives Moderates Surprising Vote," New York
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by dramatic events in Berlin. Since April, the American representatives on the Kommandatura had been working with their colleagues on election procedures for the city. Once the Soviets had agreed to recognize the Independent Socialists, a genuine contest was certain. However, it had taken until the fall for the four powers to settle on equitable voting arrangements. During the campaign, Soviet partisanship was as apparent in Berlin as it had been in the zone. The SED was accorded a disproportionate share of funds and facilities, and there were subtle and not so subtle suggestions that SMA's treatment of the city would depend on favorable electoral results. By contrast U.S. Military Government was divided over how actively it should back the anticommunist parties. The British were offering quiet assistance to the Independent Socialists. And there were people in the Political Division, like Louis Wiesner, who thought the United States "should discretely use its influence" on behalf of the opposition candidates.66 As on trade union matters, Clay's disdain for German socialists dampened his enthusiasm for Wiesner's brand of interventionism. But the general was also mindful that a majority of Berliners resided in the western sectors of the city, so that if the Soviets could be held to the prescribed regulations the "democratic forces" would do quite well on their own.67 Despite its partiality, the SMA appeared to be respecting these rules by allowing the noncommunist parties to campaign vigorously in the eastern sector. This tolerance extended beyond the city into the zone, where a new round of Lander elections was scheduled to coincide with the Berlin balloting. After the local elections, the bourgeois parties had protested the restrictions on their operations, especially in the rural areas, where in onequarter of the districts they had been prevented from offering electoral lists. In discussions with Jacob Kaiser and other CDU leaders, Russian General Georgieff agreed to stop this form of harassment and permit contests everywhere.68 The fruits of this negotiation were evident on October 20, when the east Germans went to the polls for the second time. The SED suffered major losses, with its overall total dipping below the fifty percent mark.69 In
66
67 68 69
Wiesner to Clay, October 8, 1946; Cabinet Minutes, Special Rations for SED Officials, September 4, 1946, FONOFF 371/55370/PRO; R. T. Mapine (British Political Division) to R. C. Wilberforce (Control Office for Germany and Austria), September 30, 1946, 371/55371/PRO; Cabinet Minutes, Extra Rations for SPD Leaders, September 28, 1946, Ibid. Clay to War Department, August 20, 1946, Clay Papers, 1:25 6-5 8. Murphy to Riddleberger, October 14, 1946, RG 84 US POLAD Correspondence File, FRC. Murphy to Secretary of State, October 24, 1946, RG 165 CSCAD 014 Germany, MMNA; Murphy to Secretary of State, October 25, 1946, FRUS 1946 1734-36; Under-Secretary of State for Dominion Affairs to the Dominion Offices, October 25, 1946, FONOFF 371/55374/PRO.
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combination, the CDU and the LDP gathered more than 4.7 million votes, while the SED took approximately 4.6 million. In each of the four provinces, the SED maintained a thin margin of control, but its power now depended on the fragmentation of the opposition. In many locations, the Party held only a plurality of votes. Given the SEDs special advantages and the enormous material and moral investment that the Soviets had made in its success, the results were a bitter blow.70 The truly stunning political news came in Berlin, where the Socialist Unity Party sustained a crushing political defeat. Most American observers had expected the organization to lose the election, but few had predicted the magnitude of the Party's humiliation, when Berliners finally got the chance to express their preferences. With over 89 percent of the eligible voters participating, the SPD received 48.7 percent of the vote, the CDU took 22.1 percent, the SED 19.8 percent, and the LDP 9.4 percent. Even in the Soviet sector of the City, the SED had trailed far behind the Social Democrats with a percentage of 39.8 percent to the SPD's 43.7 percent. One mortifying measure of the SED's weakness was that it gathered substantially fewer votes than the Berlin KPD had received during the 192832 period. These results left Soviet political strategy in tatters. For months they had been building up the Socialist Unity Party as their chief source of internal influence, but now had little to show for their efforts.71 The leaders of U.S. Military Government felt immense vindication. While Washington officials had declaimed endlessly about Soviet perfidy, their Berlin staff had done the serious work of organizing an election with their Russian counterparts. This had yielded a rich harvest as the Communists forfeited control of the most important German city. What Eisenhower's armies had never attempted, Clay's minions had bloodlessly achieved. With great pride the general reported that "The election was carried out in a free and democratic manner and was technically correct."72 Because of the "elaborate and effective precautionary measures taken by the Allied Kommandatura, the free expression of the political will of the population was assured." These events seemed to confirm the point that Allied cooperation could be translated into political liberation for the east. Left to their own devices, the Soviets would have foisted compliant communist politicians upon the populace. But since an accommodation with the West continued to be
70
71
"
Leonhard, Child of the Revolution, 357-360; McCauley, Marxism-Leninism, 2932; Steele, Inside East Germany, 58-59. Murphy to Secretary of State, October 23, 1945; Strang to Robertson, October 21, 1946, FO 371/163068/PRO; Childs, The GDR: Moscow's German Ally, 19-20. Clay to War, October 29, 1946, RG 165 CSCAD 014 Germany, Box 237, MMNA. In a personal letter to Pollock, Clay wrote, "Of course the SPD victory in Berlin with CDU in second place is a great satisfaction to us and a vindication (although no one else seems to feel it) of our political policy in Germany." Clay to Pollock, October 25, 1946, Pollock MSS, Box 27, UMI.
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important to them, they had made the procedural concessions that enabled the German people to choose. Against this backdrop, the Draper negotiations had become even more consequential and yet outside of U.S. Military Government, American policy makers were either indifferent or hostile to their success. The Moscow embassy insisted that the Soviet Union would not trade political concessions for economic ones. According to charge d'affairs Charles Durbrow, there was "nothing in Leninist-Stalinist book to justify a hope" that the Kremlin would approach political affairs "with other than its well established and proven revolutionary techniques."73 Exasperated by this, Robert Murphy pointed out to the State Department that the Berlin elections had been "a heavy blow to Soviet aims and prestige."74 But these elections "did not just happen to occur in free and orderly fashion"; they had been the product of months of arduous negotiations "during which western powers put up all effective proposals and forced reluctant Russian authorities to agree to them." If the United States accepted current production reparations, it would not be throwing away its leverage. Should the Soviets renege on their side of the bargain, there was always the option of cutting off Western deliveries. But so long as there was a possibility of opening up the east, the United States should not willingly confine its objectives to the western zones. While Murphy scrapped in the back alleys of his department, General Clay took his fight for German unification to Secretary Byrnes. As of November, the Anglo-American negotiations on fusion were scheduled to be completed in New York at approximately the time when the new Council of Foreign Ministers meeting was winding up. This was a charged linkage. One possible outcome was that the emerging American and British partnership would reduce the four-power enterprise to a hollow shell. Alternatively, the momentum for German unity would overtake the bizonal arrangement. In a last-ditch effort to promote the latter development, Clay brought the Secretary of State an elaborate memorandum, setting forth a strategy for German integration.75 In analyzing the stalemate in the Allied Control Council, the general maintained that French opposition was deep-seated and unlikely to be modified in the near future. However, Soviet resistance now seemed "to rest primarily on its need and desire for current production as reparations." Citing new OMGUS studies, Clay argued that the cost of satisfying the Russians might not be that high. A fifteen percent increase in the Level of Industry, accompanied by the importation of 2.5 billion dollars in raw material would yield approximately 7.5 billion dollars' worth of
73 74 75
Durbrow to the Secretary of State, October 23, 1946, FRUS 1946 V:628-29. Murphy to Secretary of State, October 25, 1946, Ibid.:63i33. Smith, Lucius D. Clay, 394; Clay to Byrnes, November 1946, Clay Papers, L27784.
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reparations over a ten-year period. The 5 billion dollar net gain could be used to supply both the Soviet Union and Western Europe. Meanwhile, the Germans could be assured that they would permanently retain the plants "as an incentive for meeting the program." Such an approach offered manifold advantages. It would assist the Europeans by increasing German productivity, it would mollify German public opinion, it would avert the necessity for partition, and it would entail "the full political unification of Germany, thus extending Western liberalism to the borders of countries now under Communist influence." Obviously there were risks and liabilities. The real consequences could not be know until there was an overall plan for the Germany economy in which the cost of reparations from current production could be tallied up and compared to the requirements of Germany's internal economy and agreed import-export program. The immediate question was whether the U.S. government would allow the Allied Control Council to undertake this sort of investigation. The stakes here were truly enormous: If in fact, German unification is impossible unless this issue is resolved, a failure to investigate it fully means the partition of Germany, with ultimate political and economic competition between western Germany under allied controls and eastern Germany under Soviet controls. Obviously this establishes the frontier of Western democracy along the Elbe.76 However, if the reparations deal could be struck, "the gain for Western democracy is the right to contest for its philosophy throughout Germany and to extend its frontier to the borders of Poland and Czechoslovakia." Though presented tentatively, the bargain Clay was envisioning would constitute a windfall for the United States. He believed the Soviet domestic circumstances were so dire, their need for German productivity so great, that they would abandon major economic and political objectives. In addition to sharing the economic resources of their zone (something they had promised all along), he thought they might now forfeit the political authority of their zone commander, give up the special advantages of the SED, and in other ways unseal the east without the internal changes in the west, which Molotov had demanded. Germany might then become a united, democratic, capitalist country; Western Europe could revive economically; and Eastern Europe would become ripe for political change. These were grand prospects that could get anyone's adrenalin flowing. And back in Germany, the spirits in U.S. Military Government were soaring. This was partly the effect of the Berlin elections, but also of Stuttgart. After more than a year of nonaccomplishment and frustration all good things seemed to be happening at once. The blight of the Morgenthau plan had been lifted, funds were becoming available to stimulate exports, with
76
Ibid.
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the establishment of the bizone the United States would be gaining access to the Ruhr coal mines, and the Russians seemed to be losing their nerve. To banker William Draper, the American government seemed about to close its biggest deal. As he explained to his friend Fred Devereaux, "For the first time since VE day a number of factors make possible a broad drive to accomplish what we came to Germany for."77 The new connection with the British provided "the most tangible evidence" but there were "many indications... which make me think the time is not far distant when successful negotiations may join the Russian zone as well." Should this be accomplished "the French will come in as a matter of course." Many grave economic problems remained, "but the psychological time has come to strike, and to strike hard for a solution here in Germany which may mean a solution of bigger problems that threaten to divide the world." As on so many previous occasions, Secretary Byrnes was unwilling to strike at all. Despite the elaborateness of his plan, Clay had asked Byrnes for one modest step: to get the Council of Foreign Ministers to authorize the Allied Control Council to consider current production reparations. This would put the Draper negotiations into normal governmental channels and improve the prospects for closure. Yet to make this move would imply a serious commitment to working with the Russians, which by November 1946 was an unpopular course. Only recently, the Kennan orthodoxy had been codified into an ominous comprehensive report by presidential counsel Clark Clifford and his aide George Elsey/8 The Clifford-Elsey document invoked the Marxist belief in "irreconcilable" conflict with capitalist nations, provided a long list of Russian treaty violations, and concluded that the United States "should be prepared to join with the British and other Western countries in an attempt to build up a world of our own." Experience had shown the Soviet orbit to be "a distinct entity... with which we cannot pursue common aims." For George Kennan personally, this "world of our own" had to encompass the western zones of Germany. In preparation for the New York Council of Foreign Ministers, he emphasized to Byrnes that German economic conditions were "deplorable" and American efforts to alleviate them were being "partially cancelled out."79 Kennan attributed the failure to an array of factors, including the persistence of reform policies and "the desire to avoid prejudicing another agreement with the Russians." This was causing "perplexity, loss of confidence and desperation" among the
77 78 79
Draper to Fred Deveraux, November 7,1946, RG 260 (Economics Division), Draper File, MMNA; Goldsmith to Dodge, October 29, 1946, Dodge MSS, Box 1, DPL. An especially penetrating analysis of Clifford-Elsey is contained in Leffler, Preponderance of Power, 130-38; see as well Clifford, Counsel to the President, 124-129. Kennan to Byrnes, November 19, 1946.
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German populace. There was an urgent need to rearrange American priorities so that the creation of "creditable economic conditions" in the bizonal area would take precedence over other goals. Kennan had even less specific knowledge of the German situation than the previous spring. His advice took no account of the political changes Clay was reporting or the concrete plans that were under discussion. Yet his views continued to have more resonance in Washington than those of Military Government. His bleak interpretation of Soviet purposes provided a self-serving explanation for a sharpening conflict and, even more important, a rationale for unilateral actions. In the case of Germany, it supported the State Department's growing determination to extract resources exclusively for western Europe.80 Although the War and State departments both viewed German recovery as integral to Europe, there had always been a difference of perspective. The army was understandably preoccupied with the task of getting Germany on its feet, whereas for the State Department the needs of Europe had greater urgency. By late 1946 that initial difference had widened as State's attention became focused on the production and trade problems in Western Europe. Disappointments there were creating a more rigid attitude, even among the integration-minded economists in the Division of German and Austrian Affairs. At Clay's headquarters, it seemed elementary that the German economy would come back much more quickly if the eastern and western zones were united. This would be true even if the Soviet Union was permitted to siphon off a significant quantity of industrial products in the form of current production. Moreover, officials in the U.S. Military Government still regarded eastern Germany as part of their watch, and could not so easily write it off, when its retention seemed so attainable. Into this quarrel entered the British, whose influence was on the rise as bizonia became imminent. The British were also divided among themselves, with their own Military Government chief Brian Robertson in alignment with Clay. Like the American, Robertson wanted an honest exploration of the Soviet offer but was overwhelmed by objections from London.81 There, too, expansive fears of Soviet malevolence intersected with anxieties about costs to yield a stubborn resistance to compromise. In the case of the British, their exclusive possession of the Ruhr made them
80
81
In a similar vein Riddleberger told the British that "We had gained nothing by trying to reach agreement with the Russians during the past eighteen months .. . and having decided to take some steps ourselves to redress the balance, we should not allow ourselves to be deterred too much by pursuing courses which might hinder the speediest possible recovery in the western zones." Sir Oliver Harvey, Memorandum of Conversation, November 15, 1946, FO 371/55594/PRO. Working Party on German Directive, Record of Meeting at the Foreign Office, October 8, 1946, FO 371/55593/PRO.
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especially desirous of keeping the Russians out, while their hopes of receiving American economic aid enhanced the attraction of partition. Bevin's immediate goal was to complete the bizonal agreement before any consideration of German unification.82 This meant avoiding substantive negotiations at the New York Council of Foreign Ministers. Such delay was congenial to Byrnes, who was being pulled in opposite directions by his State Department advisors and by the army. Furthermore, the energies of both American bureaucracies were being diverted by the complex discussions with the British. The main business of the November council was, in any case, the completion of the Italian and satellite treaties. Western observers noted that Foreign Minister Molotov was in an unusually affable mood, accepting a series of unwelcome recommendations from the Paris Peace Conference.83 This did not encourage Byrnes to test the waters on Germany. Instead he opted for postponement, suggesting procedures for a full-scale consideration in March. By not pursuing Clay's recommendations, the secretary was losing more than time. When the Allies next engaged the question, they would be doing so against a backdrop of bizonal institutions and practices that would have to be incorporated.
FINAL TALKS ON the bizone were occurring in Washington, overlapping the session of the CFM. Most of the elements of fusion had already been resolved. Setting 1949 as the target for economic self-sufficiency, it called for a common standard of living, an immediate calory level of 1,550, the pooling of indigenous resources on the basis of need, and the development of a joint export-import plan.84 To conduct this work, bizonal agencies would be set up for economics, finance, agriculture, transportation, and communications. These would be staffed and directed by Germans under the supervision of a bipartite board. The outstanding questions involved the allocation of costs - both responsibility for previous deficits and for the procurement of essential imports. The financial debate was unexpectedly bitter.85 The British cabinet had been hoping the Americans would cover three-quarters of the expenses but found U.S. negotiators adamant against anything more than a fiftyfifty split. It also wanted certain protections, including a ceiling on dollar
82 83 84 85
Speech of Ernest Bevin, British House of Commons, Foreign Affairs, October 22, 1946, 1516-26. Feis, From Trust to Terror, 168-70. Kindleberger to Acheson, The U.S.-U.K. Negotiations on Germany, November 5, 1946, RG 59 Saltzman MSS (Lot) DSNA. Hilldring to Secretary of State, November 14, 1946, Ibid.; Riddleberger, Financial Aspects of Fusion of U.K.-U.S. Zone in Germany, November 29,1946, Ibid.; Murphy, Memorandum for the Secretary of State, November 29, 1946, Ibid.; Foschepoth, "British Interest in Division of Germany," 402; Deighton, The Impossible Peace,
110-15.
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expenditures and a one-year limit on the duration of the agreement. These, too, were unacceptable in Washington. So strained were their exchanges that Foreign Minister Bevin finally threatened to pull out of western Germany altogether. When Secretary Byrnes seemed unimpressed with his bluff, the British government yielded to most of the American conditions, allowing the completion of the bizonal agreement on December 2, 1946. 86 Once this was achieved, the British immediately tried to torpedo the OMGUS talks with the Russians. For months, they had tracked these efforts, fearful that Clay would achieve a compromise. Now that there was a bizone, they had grounds for intervention. Before returning to Germany, General Robertson, Lord Strang, General Clay, and Robert Murphy worked out a list of the requirements that the Soviets must meet before they could affiliate.87 Though duplicating many of the items in Clay's November memorandum, the British had added stiffer provisions. Among them was the stipulation that the Great Powers be equally responsible for all German deficits (past and present), and that there be no commitment at this stage to current production reparations. The British were pleasantly surprised when Clay and Murphy seemed to concur. Assuming the latter held firm, this gave excellent prospects that bizonal Germany could develop without intrusion from the east. However, they were also mindful that the tactical meeting had taken place in Washington, where Cold War winds were blowing strong. Once returned to the collegiality of the Allied Control Council, the British feared there might be "backsliding" by the Americans. 88 That disposition became evident as soon as Draper resumed contact with his Soviet counterpart General Koval. During consultations on the report for the forthcoming Council of Foreign Ministers, the Russian stressed the continuing possibility of a deal: On the problem of economic unity, Mr. Koval mentioned that any time that the powers would be willing to consider reparations from current production, the Soviet Union will be willing to join in its implementation. . . .89 As on previous occasions, Koval maintained that there would be "no difficulty in achieving this unity" once the new reparations plan was in place.
86
Memorandum of Agreement Between the United States and the United Kingdom on Economic Fusion of their Respective Zones of Occupation in Germany, Signed in Washington, December 2, 1946. U.S. Senate, Committee on Foreign Relations,
87
Documents on Germany 1944-70, 77-81.
88 89
Memorandum Prepared Jointly by U.S. and U.K. Deputy Military Governors and Advisors, Soviet Proposals for Economic Unity, December 5, 1946, FO 371/54508/ PRO. Dean, Minutes, December 20, 1946, FO 371/64508/PRO. Notes on Conversation held by General Draper and Mr. Koval, December 19, 1946, RG 260 OMGUS, Economics Division, Box 2412, FRC.
z6o
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Draper was still intrigued. One discordant note was Koval's observation that political unification might still be dangerous because the Allies had failed to complete the reform mission of Potsdam. The "liquidation of economic and war potential in the western zone has not even begun" and nothing had been done about cartels. Even denazification was unfulfilled. Perhaps it was unwise to turn power back to the Germans? Draper challenged Koval's gloomy description, and contended that all the pieces should be implemented simultaneously: the social reforms, reparations, a balanced trade program, and new political structures. As the talks trailed into January, Koval asked for a written U.S. proposal that he could take back to Moscow. Believing that Koval was speaking for the top Soviet leadership, Clay thought it useful to comply. However, without permission from Washington he could make no advance.90 As the weeks went by, the atmosphere in the Allied Control Council grew meaner. Representatives engaged in tedious quarrels over how to word their disagreements for the foreign ministers. Finally, out of some unidentified combination of irritability and hope, Clay threw on the table the strict conditions that he and Murphy had worked out with the British.91 It was the measure of the Foreign Office recalcitrance that they felt betrayed by this action. Believing the disclosure premature, they ordered Robertson to get the document withdrawn. The general pointed out that the cat was already out of the bag, and the most he could do was to avoid further conversations.92 British anxiety was unwarranted. Rather than open a door to bargaining, Clay's presentation elicited a hostile Soviet response. On February 25 Marshal Sokolovsky delivered a blistering attack on the bizone, directly faulting the Americans and British for trying to split Germany.93 He insisted that their fusion agreement was a direct repudiation of Potsdam. It contained no provision for liquidating war potential, for expediting reparations, or for eliminating "the economic basis of fascism in Western Germany represented in the form of monopolies and large Junker estates." What it had done was to unleash a campaign by "all manner of Fascist scum and other suspect elements in Western Germany" to overturn the Allied understandings. Moreover, by promising western self-sufficiency within three years, the Americans and British were eliminating the basis for a wider integration.
90 91 92 93
Clay to War Department, February 1, 1947, RG 165 WDSCA 014 Germany SEC XIX, MMNA. U.S. Proposal, February 5, 1947, FO 371/64508/PRO. Dean to Steele, February 8, 1946, Ibid.; Steele to Dean, February 11, 1946, Ibid.; Dean to Steele, February 13, 1946, Ibid. Statement of Marshal Sokolovsky Concerning Anglo-American Agreement Regarding the Economic Unification of British and U.S. Zones of Occupation in Germany, Appendix A to CONL/M(47>5, RG 84 US POLAD 801.46, FRC.
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The bizone contained three-fourths of the coal and metal industry of Germany, along with the largest engineering, chemical, metal-working, and engine-building enterprises. If all that industry was "guided towards external markets" and if the principles of the Potsdam Conference with regard to the even distribution of industrial products was rejected, this would inevitably disrupt "all economic relations within Germany." This biting indictment notwithstanding, Sokolosky closed the statement on a conciliatory note. "All of us are agreed," he opined, "that we came to Germany to fully demilitarize Germany, to deprive it of the possibility of rising again as an aggressive power, and to democratize it through and through after having driven from Germany the remnants of fascism and bestial racial ideology."94 The Allies had also committed themselves to a program of reparations, and to the eventual restoration of the country to a prosperous, independent status. The marshal was convinced that "all of the difficulties which have arisen" between them could be "fully overcome" if there was a return to a common policy in the spirit of Yalta and Potsdam.
T H E RUSSIAN'S SPEECH
exemplified the ambiguity in the Soviet Union's negotiating stance. For months, it had been apparent that the Soviets were seeking a means of holding a quadripartite enterprise together. However, the messages from Kolpakov, Koval, and Sokolovsky had varied in their content. At times they seemed to be saying that if the Western powers would meet their reparations demands, this would provide sufficient incentive to open the eastern zone. On other occasions, they appeared to set a higher price, requiring structural changes in the west as a condition of unification. It had already been demonstrated that the Soviets' minimum agenda was unattractive to Washington. If they were determined, as well, to resurrect the reform mission of Yalta and Potsdam, there was no hope for resolution. These latter agreements had been eulogized at Stuttgart and were being rapidly buried in the new bizone.
III. BIZONAL GERMANY: THE LIMITS OF REFORM

To American listeners, Russian complaints about the resurgence of "fascist scum" and "German monopolists" was empty propaganda. Even the vocabulary of denunciation sounded more like a brief for communism than a genuine expression of fear. Yet in reality, the formation of the bizone was accompanied by a general relaxation of political and economic prohibitions. This trend had been observable in the two zones before Byrnes made his offer of fusion, and was accelerated by their coalescence.
94
Ibid.
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Whether led by Conservative Winston Churchill or Labourite Clement Atlee, the British government had never embraced the liberal imperatives of JCS 1067. From the beginning of the occupation, its dominant objectives were to revitalize the heavy industries of the Ruhr while limiting the costs of running the zone. Security against future German aggression would be mainly derived from relations with the other Allies, most crucially the United States. This outlook engendered a skepticism toward denazification and other punitive programs.95 Once the Nazi government had been abolished, the British considered the important cleansing to have been accomplished. Beyond that, they wished to prevent overtly hostile people from resuming positions of authority and to punish those who were guilty of the most egregious crimes.96 Unlike American reformers, they had no desire to comb the whole society in quest of Nazi activists. Their leniency was most apparent in the economics field, where they denied that the holding of high position was intrinsically compromising. Instead, they used as the criterion for decision the person's role in the Nazi Party and specific behaviors during the war. Since even these standards were weakly applied, the British zone quickly became the sanctuary for German businessmen who faced penalties in the American and Soviet zones. This was not simply a matter of minimizing punishment. The more startling development was the willingness of the British to employ important German industrialists and financiers as advisors to Military Government. As in the American case, the British Economics Division was directed and staffed by business people who had close ties to German industry during the interwar period. Significantly, their Division chief, Sir Percy Mills, had last visited Germany in 1939, when he represented the Federation of British Industries in cartel discussions with the Reichsgruppe Industrie. Drawing upon these previous connections, the British recruited men such as Wilhelm Zangen, head of the Reichsgruppe Industrie, Hermann Abs, a leading director of the Deutsche Bank, and Heinrich Dinkelbach from the Vereinigte Stahlwerke to assist in economic reconstruction.97 Their
95
96
97
Ian Turner, "Denazification in the British Zone," in Turner, Reconstruction in PostWar Germany, 239-67; Marshall, The Origins of Post-War German Politics, 4757; Memorandum by Tom Stauffer Contained in Neumann to Riddleberger, May 14, 1947, RG 59 740.00119, DSNA. Division of Research for Europe, OIR Report No. 4626, The Present Status of Denazification in Western Germany and Berlin, April 15, 1946, RG 59 R & A, DSNA; Bower, Pledge Betrayed, 144-78. Murphy to Secretary of State, April 15, 1948 attachment: Abs and Schniewind, Kilgore MSS, Box 34, FDR; Memorandum, German industrialists: Dinkelbach, Henle, Kost, Roeslen, Reusch, Zangen, January 1949, RG 84 US POLAD Correspondence, FRC; Harris-Burland, Notes Upon Herr Dinkelbach, FO 1036/112/PRO. See important discussion of the role of Nazi industrialists in Berghahn, Americanization of German Industry, 40-70.
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official justification was that these individuals had never belonged to the Nazi Party, or had been only nominal members. Yet all had played a vital role in sustaining the Hitler regime, and all had participated actively in the German war effort. Even in the coal industry, which the British had sequestered in December 1945, the old managers were kept in place. Not until a miners' protest in the spring of 1946 did the personnel practices change. In other less crucial branches of heavy industry, the workers' hostility to ex-Nazi managers was more readily ignored.98 At the time of the merger talks, this weak denazification effort was being carried out by British regional directors with the assistance of German advisory panels. By contrast, the ambitious program in the U.S. zone had been ceded to the German Lander under the provisions of the Law for Liberation from National Socialism and Militarism." Passed in March 1946 at Military Government's behest, it required all Germans over the age of eighteen to fill out questionnaires (Fragebogen) in which they indicated the nature of their involvement with the Nazi regime. Local German tribunals (Spruchkammer) then had the responsibility for classifying those who were in the presumptive guilt categories and imposing final sanctions. This authority included the right to review and overturn decisions previously rendered by Military Government. By the fall, it had become evident that the German Spruchkammer were functioning poorly. Across the zone, the tribunals were operating in a hostile, intimidating climate. There was great reluctance to serve on the boards and when local people assumed positions, they were readily subject to community pressure. Not surprisingly, the tendency of the tribunals was to exonerate people or to find excuses for putting them into the category of minor offenders. In reports compiled during August and September, Army Intelligence found massive evidence of evasion and "whitewash" in the German proceedings.100 With the decision to merge, the Americans and British began discussions on the coordination of their denazification policies. Given the disparities in their approach, there was no ready agreement. However, there was a shared understanding that somehow denazification must be implemented swiftly and terminated. If the possibility of punishment loomed indefinitely over the populace, prospects for recovery would be blighted.
98
99 100
Bower, Pledge Betrayed, 298-301; Department of State, Office of Intelligence and Research, "The Political Situation in Germany A Year after Defeat," June 25, 1946, 23-24, RG 59, OSS Files, DSNA; Wiesner, The Politics of Socialism in Germany. Legislation discussed in Gimbel, American Occupation, 101-10; Summary of the Report of the Military Governor, U.S. Zone Germany, July 20, 1946. Murphy to Dorn, June 24, 1946, RG 84 Correspondence, FRC; Chase to Heath, September 10, 1946; William Connor to Assistant Chief of Staff, October 7, 1946, Martin M. Philipson Papers, Box 1, WW II Western Europe Folder, MHI; OIR Report, "The Present Status of Denazification in Western Germany and Berlin," 5-8.
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While joint discussions of denazification were something new, the two sides had been talking about decartelization for almost a year. During the fall of 1945, t n e Soviets had introduced a bill setting mandatory standards for deconcentration into the Allied Control Council. In revised form, it was accepted by the Americans and French, but blocked by the British. After several vetoes, the State Department had undertaken diplomatic efforts to bring Whitehall's policy into line. The underlying situation was more complicated. In Berlin, the Decartelization Branch had welcomed the Soviet legislation, whereas their immediate superiors in the Economics Division had covertly fostered British resistance. The State Department had entered the fray at the urging of the decartelizers, but its own economists were ambivalent about the measure. The impulse at State had always been to seek the line between those German practices that were an unnatural "restraint of trade" and those that derived from efficiencies of scale. The prevailing assessment was that some sort of "mandatory standard" would be necessary for any change to occur, but there was latent sympathy for British concerns. Indeed, during spring negotiations the department had been slowly moving toward their position.101 By August, James Stewart Martin, the newest chief of the Decartelization Branch, became worried that the creation of the bizone would destroy the reform effort. Formerly the head of the Economic Warfare section of the Department of Justice, Martin had spent years studying the operations of the German cartels and their role in Nazi aggression. While strongly committed to their breakup, Martin had hoped to avoid the bitter personal controversy that had engulfed his predecessors, Bernard Bernstein and Russell Nixon. Yet from the beginning of his tenure in Germany, he was at loggerheads With Draper and colleagues in the Industry Branch.10* Since the bulk of Germany's heavy industry was in the British zone, Martin feared that amalgamation could lead to the predominance of the British pattern.103 As minimum protection, he recommended to Clay that the United States unilaterally promulgate the text of the Allied Control Council Decartelization Law in its own zone. When the general gave his approval, Draper summoned a staff conference in which he chastised Martin for going over his head.104
101
IOZ 103 104
Heath, Memorandum of Berlin-Washington TWX Conference, February 16, 1946, RG 84 US POLAD 850.3, FRC; Halifax to Foreign Office, March 9,1946, FONOFF 371/55702/PRO; Murphy to Terrill, March 7, 1946, RG 59 862.50, DSNA; Turner to FONOFF, April 25, 1946, FO 371/55702/PRO; Foreign Office Minute, May 2, 1946, Ibid. Testimony of James S. Martin, January 27, 1949, RG 335 Ferguson Commission, Box 1 MMNA. Martin to Clay, August 2, 1946, Ibid., MMNA. Martin to Clay, August 5, 1946, RG 260 Economics Division, Box 7408, FRC; Chase to Kindleberger, August 5, 1946; Memo for the Record, August 13, 1946,
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Draper was also conducting private conversations with Sir Percy Mills on a more lenient law for the bizone.105 Alert to this activity, Martin anticipated that the Economics chief would use his September trip to Washington to get backing from the State Department. Martin himself was not without resources. The negative wartime publicity about the actions of Farben, Krupp, and other large German firms had left a residual public hostility to their resurgence. Prominent liberals, including Eleanor Roosevelt and Henry Wallace, had raised recent questions about the government's failure to institute controls, while the ever sympathetic Kilgore Committee was continuing to monitor policy.106 Writing to Senator Kilgore, Martin warned that bizonal unification held "frightening" implications.107 With the new emphasis on recovery, Draper would try to enlist Assistant Secretary of State Clayton in opposition to decartelization. Martin urged the senator to keep abreast of these talks, and to arrange his own return to Washington so that he could tell the committee about the new obstacles he was facing. Martin's apprehensions were well founded. Whereas the State Department had coolly received Draper's initiatives with Koval, it looked favorably on his chats with Mills. Phoning Martin from Templehof airport as soon as he returned, Draper announced that there had been a "shift of position" on the subject of a mandatory law.108 The State Department did not want Military Government to issue a unilateral law, but instead to renegotiate the quadripartite bill so that it would be more congenial to the British. In a rare occasion of discord Clay overrode Draper, instructing Martin that in the absence of any written orders from State, he should continue working on the zonal draft. Tensions came to a head in early October, when a group of American newspaper editors interviewed Colonel Lawrence Wilkinson, director of the Industry Branch.109 Wilkinson charged that by trying to purge the Nazi management and impose controls on the combines and cartels, the United States was "pulling a man up by the hand while we kept one foot on his neck." He considered it an absurd waste of resources, which only a wealthy country like America would contemplate. Prodded by Martin, General Clay questioned the propriety of Wilkinson's remarks. Not only did they
RG 260 Economics Division, Box 2327, FRC; British Control Commission for Germany (Berlin) to Control Office for Germany and Austria (London), August 20, 1946, F O 371/55703 PRO. W. Ritchie to Dean, August 26, 1946, Ibid. Truman to Secretary of State, May 22, 1946, PSF, Box 126, HST. Martin to Senator Kilgore. August 27, 1946, RG 335 Ferguson Commission, Martin File, MMNA. Rudlin to Gross, September 4, 1946, RG 59 740.00119 Control, DSNA; Martin, All Honorable Men, 197-99; Draper to Martin, September 23, 1946, RG 260 Economic Division, Box 2932, FRC. Martin, All Honorable Men, 200.
105 106 107 108
109
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breach U.S. policy, they were also inaccurate. In reality the decartelization program "had not progressed sufficiently . . . to have any real effect on the German economy."110 During a follow-up gripe session, Draper openly rejected Martin's approach.111 An Allied law that prohibited cartel arrangements for marketing, distribution, and pricing might be desirable, but an attack on size was not. If Germany was going to participate in world markets, it must have the opportunity "to have efficient industrial organization and where that requires sizeable industry or plants that should be permitted." Clay reminded Draper that the purpose of U.S. occupation policy was to promote free enterprise in Germany. Given their history of past offenses, this could not be achieved "without striking at large corporations." Unless small business was protected, the unfortunate alternative would be some form of public ownership. Morevoer, decartelization was still official policy. So long as this was true, the staff had an obligation to carry it out. In his own behavior, Clay had not always been quite so literal in implementing instructions - certainly not in regard to JCS 1067. However, one element in his thinking was the imminent arrival of a Senatorial Investigating Committee. For over a year, the Kilgore Committee had been gathering testimony on the conduct of the occupation. During the summer, they had heard some particularly damaging statements from a Colonel Francis P. Miller, who worked in the office of the Director of Military Intelligence.112 Miller offered a mixed bag of complaints, which ranged from the high living and black marketeering of various officers to the "conflict of interest" inside the Economics Division. The committee was motivated to pursue Miller's charges for disparate reasons. Liberals like Kilgore had an ideological commitment to the completion of reform, while for Republican members there was a partisan harvest to be reaped if they could demonstrate that the Truman administration was botching the occupation through corruption or incompetence. Unlike the previous year, when Patton's indiscretions had unleashed an avalanche of press criticism, U.S. Military Government had been enjoying relative freedom from scrutiny. This was partly the result of an elaborate War Department campaign to improve coverage of the occupation. Using Eisenhower as its spokesperson, it had arranged a series of lunches and German tours for the publishers and editors of major U.S. media."3 By
110 111 111 113
Clay to Draper, October 10, 1946, RG 335 Ferguson Commission, MMNA; Draper Testimony, Ferguson Commission, Box 2, Ibid. Excerpts from Minutes of General Clay's Staff Meeting of Saturday, October 12, 1946, RG 260 Economics Division, Box 2398, FRC. Special Committee to Investigate the National Defense Program, Testimony of Colonel Francis P. Miller, August 14, 1946. These included Henry Luce from Time, Malcolm Muir from Newsweek, Frank Gannett fo Gannett News, Julian Ochs Adler of the New York Times as well as
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establishing a line to their bosses, the intention was to curb the muckraking of the working reporters. From the army's perspective, one salutary result was a decision by the New York Times management to pull the ever inquisitive Raymond Daniell out of Germany. According to Robert Murphy, "Si" Sulzberger had taken "a helpful interest" demonstrating his desire "to make a fair presentation of Military Government's case."114 If some of the messengers had disappeared, the messages were potentially harmful. Not only was decartelization obviously stalled, but the internal reports on denazification were damning. The most recent staff study of the Bavarian Spruchkammer showed that of 575 ardent Nazis, the tribunals had determined "almost 400 to be followers and only twenty-five to be major offenders."115 In this context, the Kilgore Committee could easily find embarrassing material that might endanger congressional appropriations for the new bizone. Under heavy pressure from Truman and Byrnes, the senators had promised to avoid the diplomatic side of things, but were insisting on making the trip.116 Anxiety about the committee's probe underpinned Clay's support for Martin. It also spurred him to reprimand the German Landerrat on the implementation of the Law for Liberation from National Socialism and Militarism. In an unusually harsh speech on November 5, the general asked how the Germans could expect to "demonstrate their ability for selfgovernment and their will for democracy if they shirk or evade the first unpleasant and difficult task they have undertaken."117 Emphasizing that the United States had a continuing commitment to denazify, he threatened that if there was no significant improvement in the next sixty days, Military Government would take over the task. Despite the alarm bells, the committee's proceedings were not as adversarial as anticipated. November elections had brought in a Republican majority and a new general counsel, George Meader, who was both friend and former student of Clay's civil affairs advisor James
114
115 116
117
the editors of the Christian Science Monitor, Saturday Evening Post, the Cleveland Plain Dealer, the Readers Digest and others. Civil Affairs Division, Memorandum: Informal Lunch With , RG 165 WSCAD 014 Germany, MMNA. From Murphy's letter, it appears that the actual decision to recall Daniell was made by the publisher Julis Ochs Adler after making inquiries with Military Government officials. Murphy to Riddleberger, April 28, 1946, RG 84 US POLAD, Murphy Correspondence File, FRC. Cited by Gimbel, American Occupation, 106-10. Special Committee to Investigate the National Defense Program, Testimony of Under-Secretary of War Kenneth Royall, September 26, 1946; Confidential Memo to Truman, The Investigation of Military Government in Europe, September 30, 1946; Russell to Murphy, October 15, 1946, Byrnes MSS, Box 611, Clemson. Pollock to Clay, December 12, 1946, Pollock MSS, Box 21, UMI; Gimbel, American Occupation, 106-8.
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Pollock.118 Though there was leakage of damaging preliminary reports, the final version was equivocal. The study acknowledged that neither denazification nor decartelization had been effectively implemented, and mentioned "some evidence of rather intimate business and social relationships" between American and German corporate leaders, but found no indication of impropriety.119 The Senate committee did wish to continue its investigations. However, it faced overwhelming opposition. The panel had offended liberal opinion by including in its report material from Colonel Miller that was insulting toward Negroes and Jews.120 Of greater weight, members of the administration (notably Byrnes, Patterson, and General Clay) were insisting that further hearings would undermine U.S. Military Government and abet communist propaganda. Once the fusion agreement was signed on December 2, momentum was building throughout official Washington for the economic recovery of western Germany. Further revelations about the failures of reform seemed needlessly negative. But reform was failing, and the shut down of the senatorial investigation, like the wooing of the nation's editors, contributed to public obliviousness. Even George Meader, the friendly committee counsel, was dismayed by the management of information. Writing Pollock, his old political science professor, Meader argued that "the iron curtain which the State Department and the War Department have sought to draw between the American people and the goldfish bowl" would not be helpful in generating a "sense of responsibility and interest."121 In addition, the assertion of executive influence over the Congress had set a precedent "which will be an historic stepping-stone away from democracy." As James Martin had predicted, the completion of merger doomed the quadripartite decartelization law. During November, Draper had resumed his talks with the British on the text of a bill, which could be jointly promulgated.122 On December 6 he obtained Clayton's official endorsement for this bizonal approach and an agreement that the legislation need
Indeed Pollock was in contact with both Meader and Senator Homer Ferguson about how the committee ought to proceed. Pollock to Clay, September 24, 1946, Pollock MSS, Box 21, UMI. Meader, Confidential report to the Special Senate Subcommittee Investigating the National Defense Program, November 23, 1946. "Occupation Study Balked by Kilgore," New York Times, November 25, 1946; "Probe of AMG Beaten Six to Four on Party Lines," Herald Tribune, November 26, 1946. Meader to Pollock, December 5, 1946, Pollock MSS, Box 25, UMI; Pollock to Meader, Devember 16, 1946, Ibid. Weir (Berlin) to Steel (Washington), November 13, 1946, FO 371/55703, PRO; Heath to Murphy, November 23, 1946, FRUS 1946 1642-43; Foreign Office to New York, December 7, 1946, FO 371/55703/PRO.
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not be mandatory.123 The State Department's capitulation permitted the passage of uniform bizonal laws in early January 1947. In their final versions U.S. zone law 56 and British zone ordinance 78 prohibited cartels (i.e., arrangements between firms that had the effect of inhibiting free competition) and barred enterprises that were excessively concentrated. However, they contained only one yardstick for determining when an individual firm was too concentrated - the ten thousand employee figure - and this merely set a standard for investigation. Unlike the quadripartite measure, this legislation did not provide a definite list of firms that would be subject to immediate action. By following this path, the Americans and British widened the chasm between themselves and the Soviets. Even more than denazification, the Russians had seen the destruction of the large German companies as integral to "democratization." They had initially supported the Americanstyle reform, while downplaying their own preference for socialization. Inside the Allied Coordinating Committee, the Soviet representative made a last bid for the original draft. As described in a British Minute, "this was an awkward moment for us."124 General Robertson recommended that the subject be dropped for the next six months. This triggered an argument between Generals Kurochkin and Clay about the merits of acting on a quadripartite basis. Fortunately "no-one . . . appeared anxious to press us and the whole question was successfully shelved." While interpersonal embarrassment was minimized, the Americans and British had eliminated one of the few Allied agreements on German industrial policy. This aspect of the situation was invisible in the American press, where the bizonal laws were receiving favorable attention. They appeared to exemplify a sensible type of reform and to mark the emergence of a new partnership between the United States and Britain. However, for James Stewart Martin and the members of his staff, the Soviet angle was profoundly serious. Reviewing the history of the ACC negotiations, Decartelization Deputy Johnston Avery reflected that "the Americans are now in the preposterous position of having made concessions to the British on a bizonal basis which they led other allies in resisting on a quadripartite basis."125 That this was "a betrayal of the French and Russians is dangerously evident."
WHILE THE British were anxious to escape the Rooseveltian reform legacy, they also wished to eradicate the bases of fascism. To accomplish
123 124 125
Clayton to Clay, Elimination of Excessive Concentration of Economic Power in Germany, December 6, 1946, RG 59 Central Europe, Box 4, DSNA. Berlin to Foreign Office, Coordinating Committee ninety-seventh Meeting, January 9, 1946, FO 1049/745/PRO. Johnston Avery Memo, February 17, 1947, RG 200, Avery MSS, Exhibit 4-A Royall Investigating Commission, MMNA.
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this, their preferred strategy was the socialization of German heavy industry.^6 They also desired strong trade unions, central economic planning, worker participation in management, and the political ascendancy of the Social Democratic Party (SPD). Such an agenda was, in key respects, more in tune with indigenous German sentiment, though less consistent with the requirements of Potsdam. British policy was complicated by divisions within their own ranks comparable to the factionalism on the U.S. side. Its Economics Division included many conservative individuals, who were sympathetic to the German economic elite. Their presence reflected the traditional outlook of the military, as well as the influence of the Churchill government on the earliest appointments. When the Labor Party took over in August 1945, lts ideological disposition was to promote socialism. However, it was slow to change personnel or to formulate specific programs. Over time, the Attlee government's theoretical position was strengthened by the desperate condition of the coal and steel industries.127 Among the obstacles to revitalization - the wartime destruction, the uncertainty surrounding reparations, the breakdown of transportation, the lack of food, the shortage of skilled manpower - was their existing structure. With six conglomerates controlling ninety-eight percent of steel production and a handful of syndicates owning the mines, a collapsing financial apparatus was a permanent threat to production. Under the Nazi war economy, the size of these companies, their concentrated character, and their interpenetration with the big banks and other key industrial sectors were sources of efficiency. But with Germany split in four, much of the economy at a standstill, and large portions of the steel industry slated for dismantling, such arrangements could not be sustained. A related problem was that the chief German owners of coal and steel were tarred by their Nazi connections.128 Some had fled the country, others were interned, most had their property blocked, and all were legally disbarred from participating in economic decision making. Though British Military Government was regularly bending the rules to obtain the services of culpable individuals, they had more inhibitions about restoring their ownership rights. But if the old Ruhr magnates forfeited their assets, who
126
127 128
Friedman, The Allied Military Government of Germany, 3 3-35; Marshall, Postwar German Politics, 11-14. British policy on socialization has been extensively researched by German historians. Some valuable works are Rudzio, "Die ausgebliebene Sozialisierung an Rhein und Ruhr, Zur Sozialisierungspolitik von Labour Regierung und SPD 1945-48," 1-39; Lademacher, "Die britische Sozialisierungspolitik im Rhein-Ruhr-Raum 1945-48," in Claus Scharf and Hans-Jiirgen Schroder Die Deutschlandpolitik Grossbritanniens und die britische Zone, 1945-49, 51-92. (Kindly translated by Chris Offerman). Turner, "British Policy Toward Germany Industry, 1945-49," in Turner, Reconstruction in Postwar Germany, 67-80. Bower, Pledge Betrayed, 287-303; Wiesner, "The Politics of Socialism in Germany."
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would have the capital to acquire them? In a period when the reichsmark was losing most of its value, this was an overwhelming difficulty. By the summer of 1946 the British were preparing to move ahead with public ownership. Early in the occupation their Military Government had taken custody of the coal mines. The cabinet now decided to do the same for steel plants and to declare that these could "under no circumstances be returned to their former owners."1*9 To facilitate socialization, they planned to establish a new province of North Rhineland-Westphalia - a unit that would encompass the territory of the Ruhr and could potentially assume ownership of the coal and steel industries. Having made these decisions, the British kept them under wraps during the July session of the Council of Foreign Ministers, not wishing to aggravate the Americans. 130 It was only in late August, with bizonal fusion already in progress, that they publicized some of their aims. Addressing the Allied Control Council, General Robertson announced that his government was taking custody of the iron and steel industries and would be forming a North German Steel Iron and Steel Control (NGISC) to reorganize the firms.131 A German administration would be given the responsibility for production, although it would operate under the supervision of an Anglo-American staff. Less candidly, he promised that "great care will be taken" not to prejudice future decisions "regarding the ownership of such industries or . . . measures of international control." 132 Robertson's news was greeted sourly by General McNarney, who feared this "might lead to separate philosophies of Government throughout Germany." To members of the U.S. Industry Branch, the displacement of private interests seemed directly at odds with new efforts to stimulate production. For William Draper, it was lamentable that just when the two zones were coalescing, the British had acted unilaterally on a matter of great interest to the United States. 133 The agitation in American Military Government was matched by the unhappiness of the German Social Democrats. 134 From the perspective of
129 130
131 131
133 134
Cabinet Reconstruction Committee, June 11, 1946, FO 371/55405/PRO. Bevin decided that the delegation would say nothing but if asked "would mention incidentally that industries were to be vested in the commander-in-chief pending a final settlement." Recommendations of Delegates Meeting Held July, 1, 1946, FO 371/55843/PRO. BMG Minutes of the Allied Control Council, August 22, 1946, FO 371/55407/ PRO. When he explained the new policy to the British Regional Commissioner, Robertson indicated a "longer term objective" of preparing the steel industry for "reorganization on the basis of public ownership." General Robertson to the Regional Commissioners, August 15, 1946, FO 1036/112/PRO. Draper to Clay, August 8, 1946, RG 260 Economics Division, Draper File, FRC. Strang to Dean, September 20, 1946 FO 371/55371/PRO; Wiesner, The Politics of Socialism in Germany.
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the SPD, British Military Government had been a huge disappointment. Not only had it failed to relieve the economic misery in the zone; it had been excruciatingly slow in promoting social equity. Now just as the Labour Party appeared to be mobilizing, the creation of the bizone threatened further progress. The more conservative Americans would gain influence in the Ruhr with the probable enhancement of Christian Democratic strength. Spurred by party leader Kurt Schumacher, the Executive Committee of the German Social Democratic Party brought these grievances into the open. Meeting in Cologne on September 25, they issued a dramatic resolution that proclaimed that "Germany threatens to sink in the most terrible catastrophe."135 In the political, economic, and military spheres of life, "the same forces prevail which led us to the present conditions." Unification of the American and British zones was putting "capitalist-minded representatives" in control. The SPD would refuse to participate in these arrangements unless the two Military Governments gave certain concrete assurances - including nationalization of basic industry, a radical agrarian reform, and a more just distribution of taxes and other financial burdens. In advance of Cologne, the British had tried to dissuade the German Social Democrats from issuing ultimatums,136 despite their awareness that many of the charges had validity. Among the younger Labor MPs there was a clamor for an administrative shakeup and an acceleration of the socialization program. And even within Whitehall, many also felt that a swifter implementation of public ownership would ameliorate the economic crisis, boost the morale of the SPD and the trade unions, and spike the guns of the German Communists. However, the government was constrained by fear of the Americans, whose antipathy had come to the surface. From the German Control Office Mark Turner cautioned that there must be no further action until fusion was settled, lest the U.S. Congress resist funding for the project.137 Decision rested with Bevin, for whom the SPD revolt loomed very large. Speaking to the House of Commons on October 20, the foreign secretary stressed that German basic industry had been "in the hands of magnates who were closely allied to the German military machine, who financed Hitler and who in two wars, were part and parcel of Germany's aggressive policy."138 Because his government had "no desire to see these gentlemen or their like return to a position which they have abused with such tragic results," it had seized the coal and steel industries and vested them in the
135
136 137 138
Enclosure, Resolution Passed by the Joint Meeting of the Executive Committee and the Working Committee of the Social Democratic Party of Germany, held in Cologne on September, 25, 1946, FO 371/55373/PRO. Robertson to Schumacher, September 17, 1946 FO 371/55371, PRO; Strang to Dean, September 20, 1946, Ibid. Pat Dean, Cabinet Minute, October 9, 1946, FO 371/55372, PRO; Mark Turner to Mr. Ritchie, October 21, 1946, FO 371/65342/PRO. Foreign Affairs, House of Commons, 1515-26 in FO 371/55593/PRO.
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hands of the British commander. Soon it would be taking similar action for the chemical and mechanical engineering industry, with the intention of placing all of these industries in some type of public ownership. The case for socialism had never been so strong. Britain wished to support those Germans who did not want to again become tools of the magnates' disastrous machinations. U.S. observers understood that British industrial policy had taken a definite turn. From Berlin, Murphy cabled that following Bevin's speech British representatives had "stated quite frankly that it will henceforth be official policy . . . to encourage and effect wide measures of socialization."139 This carried the clear implication that the SPD "will be utilized as the instrument of British Labor Party policy in Germany." Officially American reaction was limited to admonitions that the initiative for public ownership should come from the Germans themselves and should not have the effect of centralizing the economy.140 Despite this reserve, the British anticipated an effort by Clay to block their plans. To prevent such a contingency, their representatives to the fusion talks tried to obtain a commitment that the United States would not interfere with socialization.141 Such a promise was unattainable. Informally the Americans indicated that they would not raise any objections if the initiative came from the Germans. Although Bevin and others in the cabinet considered this response inadequate, their financial weakness induced them "to take the best terms we can get." Since the Americans would not insert any guarantees in the fusion accord, the British chose to restate their understanding that nothing in the agreement would enable one of the two governments to "intervene in the internal administration of the other's zone." Secretary of State Byrnes declined to confirm this. However, he was willing to say that the socialization issue had not been raised in the negotiations, thereby allowing the British to reaffirm their policy.142 Behind these tortured formulations, U.S. officials were attempting to
139
140
141
142
Murphy to the Secretary of State, November 1, 1946, RG 59 740.00119, DSNA; Gallman to Secretary of State, November 4, 1946, RG 165 CSC AD 014 Germany, MMNA. During the New York Council of Foreign Ministers meeting in mid-November, James Riddleberger surprised the Foreign Office with some unofficial praise of Bevin's October announcement. According to a delegation report, the American agreed that public ownership "was the only possible policy and the only one that would lead to equality of sacrifice." But, he warned that the new Congress could be "sticky" and that the question must be "tactfully handled." It was, therefore, important that the initiative come from the Germans themselves. Sir Oliver Harvey, Memorandum, November 15, 1946, FO 371/55594/PRO. Financial Aspects of Bizonal Unity in Germany, November 26, 1946, RG 59 Saltzman File, DSNA; Foreign Affairs, House of Commons, 1515-26 in FO 371/55593/PRO; Cabinet Minutes, November 1946, FO 943/197/PRO. New York (Permanent U.K. Representative to the United Nations) to Foreign Office, December 2, 1946, FO 371/55409/PRO.
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defuse a potential confrontation. By late 1946 it was clear that the problem went far beyond the ideological predilections of the British. In a variety of new legislative settings, the Germans were registering an independent preference for public ownership. In Hesse, the population had overwhelmingly approved a referendum on Article 41 of its constitution, providing for public ownership of coal, iron, steel, potash, and transport. Pursuant to this the Hessian Landtag had already passed a law taking over certain locally owned industries, including the already sequestered Farben plants. 143 In Berlin, the recently elected city assembly was preparing to enact an ambitious socialization measure that placed in trusteeship all major industrial firms pending the formation of a central German govenment. 144 In responding to these developments, American policy makers were internally divided. For U.S. Military Government, it was clearly desirable to block socialization in whatever guise it appeared. When Hessians adopted a constitution containing Article 4 1 , Clay had insisted on a separate referendum. When that also passed, he decided to withhold approval of the Landtag's implementing legislation. Similarly in Berlin, where the British, French, and Soviets had already said they would approve socialization U.S. Military Government was set for a veto. 145 Within the State Department, such authoritarianism was deemed unwise. Certainly with regard to Berlin, the department was unwilling to defy not only the aspirations of the Germans but the views of two Western Allies. Clay was therefore instructed to accept a city assembly bill, so long as it made adequate provision for compensation. More broadly, the department distinguished between nationalization and "area socialization" at the level of the land, kreise, or municipality. 146 While fully alive to the dangers of the former, it thought some amount of the latter could be accepted. The quarrel over the Berlin legislation led Under-Secretary of War Howard Peterson to ask for a review of U.S. policy on socialization. To him this was a matter of basic American philosophy: Such. . . consideration must it seems to me take into account the background of practice and experience in the United States. In this country, political and economic ideology has encouraged private ownership.... Removal of incentives, lowered efficiency and the rights of the individual have been considerations persuading the
143 144
145 146
Riddleberger to Hilldring, August 8, 1946; Wiesner, The Politics of Socialism in Germany; Gimbel, American Occupation, 117-18. Heath to Secretary of State, November 16, 1946; Draper to Chief of Staff, Socialization of Berlin Major Enterprises, December 5, 1946, RG 260 Economics Division, Socialization File, MMNA. AGWAR to OMGUS, November 23,1946, RG 165 CSCAD 014 Germany, MMNA; Keating to War Department, December 7, 1946, Ibid. Acheson to Heath, December 5, 1946, RG 59 862.00, DSNA; Draft Cable for CAD to Clay, December 27, 1946, RG 165 CSCAD 014 Germany, MMNA.
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American public that public ownership of industries which are normally competitive is not to be desired.147 While still resisting the War Department's views, State acknowledged the usefulness of a broad policy statement. This put the American position in suspension at the time the bizonal agreement went into effect. As on decartelization, the army's unequivocal opposition to socialism reflected the prominence of U.S. corporation executives inside the Economics Division, and their ready identification with the needs of German businessmen. It also derived from their exclusively German preoccupation and determination to create a viable capitalist society in the area for which they were directly responsible. This contrasted with the outlook in the State Department, where Germany was increasingly regarded as a giant export-import pump for Western Europe. From this vantage point, how Germany was organized internally had less importance than whether she could fulfill her allotted role in European trade. In accomplishing this goal, it was obviously desirable to cooperate with German capital and to encourage commercial deals with American businesses. But these were relative, not absolute objectives, which allowed the State Department to respond more flexibly to certain political problems. Among them were pressures from the British, the demands of German workers, and the potential of the Soviets to exploit indigenous dissatisfaction. Although the Americans were in disarray, the British expected that General Clay's views would prevail.148 To forestall his intervention, General Robertson concluded that the only feasible route to socialization was by achieving a legislative mandate in the Lander. This was at odds with his personal belief that nationalization rather than provincial expropriation was a more rational way of treating the industries. It also entailed some political risk since in the key province of North Rhineland-Westphalia the Christian Democrats were ascendant. Seeing no alternative, Robertson opted "to work quietly with German political leaders, particularly the left-wing CDU leaders in North Rhineland/ Westphalia."149 Acknowledging that it might be slower to go through the provincial governments, he thought this would "obviate much embarrassment in the future." In London, the jittery Control Office asked for "maximum assurance" that if the issue was turned over to the Lander "there is
147 148
149
Petersen to Hilldring, January 16, 1947, RG 59 862.60, DSNA. During the bizonal talks, the Foreign Office had been impressed by his strong influence in Washington. Their experience confirmed General Robertson's previous assessment that "in all German questions what really mattered was to reach agreement with General Clay since the latter was all-powerful." R. Sargent, Memorandum, December 13, 1946, FO 371/55591/PRO. From BERCOMB to CONFOLK, December 20, 1946, FO 1036/115/PRO. Sir William Strang, Memo: Socialization of the Ruhr Industries, FO 1049/745/PRO.
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no risk of an adverse vote." Robertson could give them no guarantees, but argued that a general resolution by the parliament of North RhinelandWestphalia would yield a "sufficient mandate" for Military Government legislation.150 Backed by the Foreign Office, British officials in Dusseldorf secretly encouraged a core of left-wing CDU leaders to cooperate with the SPD in presenting a joint resolution.151 By mid-January 1947 they believed they had achieved the necessary consensus. Then quite suddenly their tactic unraveled when Konrad Adenauer, the leader of the British zone CDU, persuaded his party to adopt a unified position. At their Ahlen Conference, the Christian Democrats adopted a Reconstruction Program that attempted to synthesize socialist and capitalist ideas. This opened a breach with the SPD, and produced a floor fight in the Landtag of North RhinelandWestphalia. In a straight party vote, the body voted down the Social Democratic resolution calling for the socialization of coal, iron, and steel.152 These legislative developments dealt a serious blow to British industrial policy. By the spring of 1947 Bevin's promises seemed no closer to realization than when he first offered them. The Ruhr's major industries were still in Military Government hands, German custodians had yet to be appointed, and no provisions had been made for the transfer of title.
IN COALESCING,
the Americans and British stymied each other's most radical impulses. British Laborites had helped American conservatives dilute the Potsdam restrictions, confident that they had a more enlightened strategy for reshaping the country. However, during the first three months of bizonal development, the American presence had already constrained their plans for socialization. It was clear in both capitals that a larger struggle over public ownership was still ahead. But in March 1947, as they prepared to meet the Soviets in Moscow, there was no common agenda for "democratizing" postwar Germany.
150 151 152
Control Office to British Command, January 7, 1946 FO 3 71/643 62/PRO. Robertson to Jenkins, January 6, 1947, Ibid. Bercomb to Rhinwest, January 8, 1947 1030/344/PRO; Berlin to Foreign Office, January 8, 1947, FO 371/64362/PRO. Steele to Atlee, Germany: Motions Debated in North Rhine-Westphalia Landtag, April 14, 1946, FO 371/64366/PRO.
7 The Doctors Deliberate
Differences had occurred before on other questions, and as a rule after people had exhausted themselves in the dispute they then recognized the necessity of compromise. It is possible that no great success would be achieved at this session, but that should not cause anyone to be desperate.... It was necessary to have patience and not become depressed. (Josef Stalin, Conversation with Marshall) 1 . . . we cannot ignore the factor of the time involved. Disintegrating forces are becoming evident. The patient is sinking while the doctors deliberate. So I believe that action cannot await compromise through exhaustion. (Secretary of State George C. Marshall, April 28, 1947) 2 W I T H THE ESTABLISHMENT
of the bizone, a feeling of uncertainty hung over occupied Germany. While the country was palpably splitting in two, there had been no clear policy decision by any of the Allies that this was desirable. On the American and British sides, the forthcoming Moscow Conference of Foreign Ministers was viewed as climactic. Either the Allies would find a way to harmonize differences and reintegrate the zones, or Germany would be divided. The rapid emergence of bizonal institutions was precipitating a choice. Over the next months, the bizone could become the foundation for a unified Germany, or a more separate and ultimately sovereign entity. Inside the British cabinet, the matter was virtually settled. The new partnership with the United States was providing the necessary confidence to attempt to exclude the Soviets from western Germany. Among American policy makers, whose responsibility for the final outcome was so much greater, there was more disquiet. The continuing pressure from Military Government
1 2
Memorandum of Conversation, April 15, 1947, FRUS 1947 11:337-44. George C. Marshall, Radio Address, April 28, 1946, cited in Forrest C. Pogue, George C. Marshall Statesman, 200.
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to strive for German unification and to salvage eastern Germany, disrupted consensus. As they approached the Moscow meeting, the overriding factor for U.S. officials was the deteriorating economic situation in Western Europe. In this harshest of winters, with coal and fuel in short supply, industrial production plummeting downward, and exchange between nations dwindling, the future of democratic capitalism appeared in jeopardy. From this standpoint, the revival and integration of Germany's industrial base, always a State Department objective, appeared an urgent necessity. Without quite determining that partition was their purpose, the American delegation went off to Moscow unwilling to compromise or to wait.
I. PREPARATIONS
For more than a year, the formation of U.S.-German policy had been marked by the disproportionate influence of the Kennan theorists as compared to those like Clay and Murphy, who were operating in thefield.In the planning for Moscow, the outlook of the "containment" group finally prevailed. Although based on speculation about Soviet aims, their analysis was more compatible with broad U.S. purposes than the firsthand observations of the people who were there. During early 1947 U.S. Military Government kept Washington posted on the Russians' diplomatic initiatives. Unlike Clay's November effort, these reports were communicated neutrally with little attempt at advocacy. Yet it was clear from their content that the Russians were interested in a deal, that they were trying to put one together before the opening of the Moscow CFM, and that their stated terms were moderate. From the Moscow embassy, Ambassador Walter Bedell Smith signaled his skepticism. Peering behind Sokolovsky, Koval, and Kolpakov, he detected Lenin. The old Bolshevik leader had always regarded Germany as the country "best suited for development of Communism."3 Despite the experience of Nazism, Stalin had maintained the belief that the German proletariat was the key to revolution in Europe. If anything, this ideological predilection had been reinforced by the war. The obvious danger of an unfriendly Germany had increased the Soviet appetite for domination. Given this aim, the Soviet Union would inevitably tighten control of the eastern zone while looking for opportunities to destabilize the west. By accepting central agencies, it could "restrain rehabilitation... and preclude development of federalism." In the forthcoming negotiations, the Russians would undoubtedly stress reparations and four-power control of the Ruhr - demands that were partly driven by economic need. Yet having "once gotten their teeth into Germany" the Kremlin would "give precedence to power - political and ideological considerations."
3
Smith to the Secretary of State, January 7, 1947, FRUS 1947 11:138-42.
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According to Smith, the stakes in the game were truly monumental, nothing less than the control of continental Europe. Along with the other denizens of the Moscow embassy, the ambassador favored the partition of Germany: It seems inevitable to me that we must be prepared if necessary to accept further separation of eastern and western zones of Germany. . . . For us there can be but one policy; we must promote and support in word and deed all true democratic and progressive forces in our zone and at the same time we must defend them from infiltration and subversion by totalitarian machinations from the east. The Moscow conference would produce no positive results, though the Soviets might try to prolong discussions. The U.S. delegation should be prepared to sit them out, and if necessary put in a deputy to rescue the Secretary of State. Smith's portrayal of an omnipotent Kremlin shrewdly orchestrating the communization of Germany was at odds with the electoral results of the previous four months. In local balloting throughout the British and French zones, the KPD had made a poor showing, which paralleled its dismal performance in the U.S. zone the previous spring. 4 These returns formed a significant counterpoint to the elections in the Russian zone, where the Socialist Unity Party had barely broken even. Also significant was the electoral fiasco in Berlin, where under quadripartite supervision the SED had polled a paltry twenty percent of the votes. By the beginning of the new year, the overwhelming likelihood was that anticommunist forces would dominate the political life of a united Germany. The Russian negotiating position reflected this. Rather then leaping at the opportunity to subvert the west, the Soviets seemed to be backing away from Molotov's previous call for political integration. In their talks with Clay and Draper, they were clearly reluctant to establish a German provisional government and had emphasized instead their own material requirements. 5 The real impetus for amalgamation was coming from the U.S. Office of Military Government (OMGUS), which had put forward stringent conditions for Soviet cooperation. Yet interestingly, Smith evinced no interest in whether these would be accepted. The ambassador's assumption of malevolent intent, his exaggeration of Russian capabilities, and his disregard of the conditions inside Germany gave his message the theological flavor
Morris, Notes on Communism in British and French Zones, January 15, 1947, RG 59 Central Europe, Box 3, DSNA. In the French Zone the KPD polled 180,000 votes out of a total of 2,860,000 cast. Strang to FONOFF, September 17, 1946, FO 371/ 55371/PRO. In the British Zone, of approximately 29 million votes cast the KPD polled 2.4 million. Strang to FONOFF, October 20, 1946, FO 371/55373/PRO. Morris, Memorandum, December 26, 1946, RG 84 800 US POLAD, FRC; Murphy to Secretary of State, January 9, 1947, RG 59 740.00119, DSNA.
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of previous embassy cables. Given the stifling political environment of Moscow, and his staff's lack of movement and open exchange with Soviet officials or citizens, such rigid pronouncements were to be expected. However, in Washington, where officials still had access to diverse sources and an abundance of information (much of it at variance with the Embassy's interpretation), the theology was hardening into orthodoxy. With regard to Germany, many of the policy makers who were previously undecided on unification - partly out of deference to Military Government's reports - were rapidly embracing the Kennan line. Among the converts were the men charged with preparing the new position papers for Moscow: Ben Cohen, the State Department counsellor, and General John Hilldring, who had moved over from the War Department to become head of the State Department's Division for Occupied Areas. In mid-January, the two sat down with Freeman Matthews and Chip Bohlen to draw up general guidelines for the forthcoming meeting.6 Since the team no longer perceived German unification as desirable, they ignored the Soviet overtures in Berlin and set forth propositions that were likely to be unacceptable: a revision of the Oder-Neisse frontier, a drastic curtailment in the size of the occupation forces, a reduction of the zone commander's prerogatives, a decentralized provisional government based on the Lander, an upward revision of the German Level of Industry, the exclusion of the Soviets from operational authority in the Ruhr, and little or no reparations from current production. Not surprisingly, the group anticipated that the Foreign Ministers Conference would fail. Cohen thought the session would last for five or six weeks "and would not make any great accomplishment other than to clarify and reduce the issues."7 On the surface, the inflexibility of the Cohen-Hilldring team was based on their fear that the Soviets would be able to dominate a unified Germany.8 However, their enthusiasm for this questionable proposition was being fed by a quite independent rejection of Potsdam. From the outset, its punitive clauses had generated apprehension at State that German industrial recovery would be dangerously retarded, possibly imperiling the economic recovery of western Europe. Now eighteen months past the event, the gloomiest prognostications seemed on the verge of fulfillment. In the lead-up to Moscow, Western Europe was reeling from the effects of one of the fiercest blizzards in modern memory.9 As the snows settled upon
6 7 8 9
Preparation of Documents for Council of Foreign Ministers, January 24, 1947, RG 59 Saltzman O I O . I / I I O I , DSNA. John Foster Dulles, Memorandum, February 26, 1947, Re: Council of Foreign Ministers Meeting in Moscow, JF Dulles MSS, Box 294, PU. For the impact of Kennan's thinking on U.S. German policy, see Backer, Decision to Divide Germany, 150-64 and Stephanson, Kennan, 117-29. Acheson, Present at the Creation, 284-85; Feis, From Trust to Terror, 227-36; Pollard, Economic Security, 59-81; Leffler, Preponderance of Power, 159-60. An especially valuable book that challenges U.S. policy makers' perception of the economic crisis is Milward's, The Reconstruction of Western Europe, 1-56.
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the Continent, factories shut their doors, workers were laid off, and ration levels were slashed. The ravages of weather came atop long-standing shortages of coal, steel, and food, which had depressed industrial production. During 1946 some of the most damaging effects had been mitigated by imports from America, which were financed by loans from the U.S. government. However, as this capital ran out Western Europe was finding no alternative sources of dollars or supplies. In the first quarter of 1947 levels of production dropped from eighty-three percent of 1938 figures to seventy-eight percent. In Germany, the economic conditions were especially severe. 10 Coal production was still at forty percent, while other vital enterprises such as steel, chemicals, and machine tools were at less than one-third. Despite the bizonal arrangements, food shortages had actually intensified, with calorie levels in the Ruhr beneath the 1,500 minimum. A typical report from the U.S. Consul noted that The spirit of the population is reported to be very low in the cities affected. There is no coal, a general lack of sufficient warm clothing, no electric current, very insufficient transportation, no work, no wages, insufficient food and the prospect looms of another scarcity of bread on account of the bakeries not having enough current for supplying the bread required.11 In light of these conditions, the very concept of Potsdam was anathema, for nothing seemed more senseless to State Department policy makers than constraints on productivity or limits on distribution to the west. 12 Since a settlement with the Soviets seemed certain to involve both, there was little receptiveness to an accord. Outside of official circles, the gravity of the economic situation combined with the imminence of Moscow to stimulate a number of important private and quasi-private studies of U.S.-German policy. Of these the most interesting and influential was the work of the German study group in the Council of Relations (CFR). During the Second World War, the Council had authored elaborate plans for the treatment of Germany. These had been adopted by the State Department when the CFR's War/Peace project became part of the postwar planning structure. Since then the Council had made no further recommendations, but its original ideas and even phrasings had been recycled through the State Department Briefing Books every time there was an Allied conference. In late 1946 the CFR had established a new study group to examine
10
11 12
House Special Committee on Postwar Economic Policy and Planning, "Economic Reconstruction in Europe," December 1946; U.S. Military Governor, Industry (Including Coal), March i-April 30, 1947, 22; Gottlieb, German Peace Settlement; Pollard, Economic Security, 103-6. Altaffer to Secretary of State, January 20, 1946, RG 84, US POLAD 801.46, FRC. Porter to Robert Murphy, January 14, 1947, RG 84 820 Military Government General, Box 778, FRC; Haraldson to Heath, European Dependence on German Economy, December 3, 1946, Ibid.
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German economy and culture. 13 The group was chaired by Allen Dulles, who had returned to private life as law partner at Sullivan & Cromwell. This high-power body included former government officials who had been closely involved with the German issue (John McCloy, John Kenneth Galbraith, De Witt Poole); representatives from the private sector, whose companies had conducted substantial German business (William R. Herod from International General Electric Company, Milton C. Lightner from Singer Sewing Machine, Shephard Morgan from Chase Manhattan Bank); and a contingent of journalists and academics with special expertise {Foreign Affairs editor Hamilton Fish Armstrong, Harvard economist Edward Mason, New York Times writer Shephard Stone). As was the custom at the council, the rapporteurs for the body were two young men: Hoyt Price, formerly a member of Robert Murphy's staff in Berlin, and Wesleyan historian Carl Schorske, previously the chief of the Central European section in OSS. By January 1947 the group's work was geared to the Moscow Council of Foreign Ministers. At Allen Dulles' urging, it decided to prepare proposals that could be given to Secretary Marshall prior to his departure. 14 Because the members' assumptions generally paralleled those of the Washington incumbents, their conclusions were not very different. But their internal process entailed long discussions, leading them to be more explicit about their concerns. Having inadvertently recruited some mavericks most notably Schorske - they also confronted some fundamental questions that the Washington bureaucracies had managed to avoid. On January 10 Allen Dulles set the framework for the group's deliberations with a lengthy address on the German question. 15 Dulles' major theme was the need for rapid action. For too long the victorious powers had "temporized" with the German problem, afraid that anything that was done "would disturb the uneasy balance in the relations between Russia and the West." But the situation in Germany had gone beyond "the danger point," and it was essential that the Moscow meeting yield new initiatives to reconstruct the country. Germany must be restored to a high level of industrial production so that the rest of Europe could recover. To Dulles this meant scrapping the LIA, rebuilding the Ruhr as the powerhouse for the Continent (although its resources might be "held as a common trust"), and shaking off the whole apparatus of Potsdam which was, in any case, "hastily drafted... ill-considered.. . and unsatisfactory in its practical application." All the clauses that pertained to reparations and to Germany's economic and
13 14 15
Council of Foreign Relations Study Group on the Problem of Germany, Proposed List of Members, October 24, 1946, Records of Groups, Vol. XVI, CFR. Price and Schorske, The Problem of Germany, III. Allen W. Dulles, "United States Policy With Respect to Germany," January 10, 1947, Germany Study Group, CFR.
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political structure should be reevaluated in the light of present European requirements. Dulles understood that much of this would be unpalatable to the Soviets. And it was certainly not his intention to provoke or exclude them. But neither did he consider it wise to delay practical accomplishments in order to ameliorate their anxiety. More sensible was to introduce the necessary rehabilitative measures into the American, British, and perhaps the French zone, recognizing that "the division of Germany at the Elbe may not wholly disappear for some time." Within the CFR study group, it was the job of the rapporteurs to sit in on meetings, to gather the speeches and memoranda from individual members, and to piece together a final report. After weeks of deliberation, Price and Schorske submitted a draft that resembled Dulles' initial presentation.16 However, Schorske had injected some deviant ideas into the document. Unlike his colleagues, the historian still considered Germany's undemocratic and militarist predilections to be a serious problem. He also favored German unity, and thought the Soviet connection worth preserving. These concerns led him to criticize the weak Byrnes disarmament treaty,17 to warn against excessive federalism, to advocate some limited socialization, and to endorse reparations from current production. Schorske's contributions upset the other participants,18 several of whom sent angry letters to Dulles. A typical reaction was that of William Herod from General Electric, who thought the U.S. aim in Germany "should be the highest degree of prosperity while paying the least for peace." Others argued that Germany was already divided, and compunctions about disunity should not inhibit rehabilitation. Hamilton Fish Armstrong administered the ultimate rebuke, emphasizing that "this memorandum, as it stands will not enhance the council's reputation in the State Department." Responding to these criticisms, Allen Dulles revised the text so that it would conform to the members' views and the State Department's tastes. In this final version, Dulles acknowledged the conflict between "integrating the industry of western Germany chiefly into Western Europe" and satisfying Soviet security needs.19 But the economic task must now be paramount. As guidance for the Moscow conference, the chairman's most important conclusion was that the United States "should not approach the
16 17
18
19
"U.S. Policy Regarding Germany," January 20, 1947, Germany Study Group, CFR. Schorske maintained that the Byrnes disarmament treaty was unsatisfactory because under its provisions if any two supervising states colluded in the rearmament of Germany, there would be no possibility of enforcement. Schorske, "The Political Problem," January 10, 1947, Germany Study Group, CFR. Germany Study Group, Minutes of the Fourth Meeting, January 25, 1947; Poole to Percy Bidwell, January 22, 1947; Armstrong to Dulles, January 21, 1947, Ibid.; Armstrong to Bidwell, January 21, 1947, Ibid. Germany Study Group, "The Problem of Germany," February 24, 1947, Ibid.
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German problem merely as a factor in our relations with Russia, or conclude that any settlement which may satisfy Russia and ourselves and lessen tension between us is necessarily a good solution" (italics added). Parallel to the Council of Foreign Relations, the American Association of the International Chamber of Commerce had also established a study group on U.S.-German policy. Headed by Marian B. Folsom, the chairman of Eastman Kodak, its membership was exclusively corporate/ 0 This group was also oriented to the forthcoming CFM, and offered proposals that were tantamount to schism. Not surprisingly, the chamber found that the nub of the German problem was economic:
The economic recovery of Germany will determine more than any other single factor the economic health and vigor of the rest of Europe. Next to the continued prosperity of the United States and the healthy recovery of Britain as a factor in world trade, nothing more than German recovery can influence the soundness of the whole trading system.21
It was essential that America's main energies be directed to reversing the economic stagnation there. The Soviets could be included in an all-German settlement if they accepted free elections, gave up the idea of current production reparations, and permitted the eastern zone to participate unconditionally in the restoration of a free market system. Since it was highly unlikely that the Russians would agree, the real need was to build up the western zones "as part of the economic system of Western Europe." Impediments to trade and private investment, such as excessive decartelization and overzealous denazification, should be rapidly eliminated. For the time being the Ruhr could be operated by the United States and Britain, with the eventual goal of incorporating it into a West European customs union. Into this swelling chorus came the voice of former President Herbert Hoover, who had been summoned to Germany by President Truman to study the food situation.22 As his condition for acceptance, the former president insisted on an expanded mandate that would allow him to review overall economic policy. After traveling to Berlin and several western cities in the company of the conservative German economist Gustav Stolper,
20
21 22
Other members were Eugene S. Gregg, vice-president of Westrex Corporation, James S. Knowlson, president of Stewart-Warner Corporation, N. Peter Rathvon, chairman of the board Radio-Keith Orpheum Corporation, and Morris S. Rosenthal, executive vice-president of Stein Hall and Company. United States Associates International Chamber of Commerce, "Germany and the Recovery of Europe," March 18, 1947, RG 59 862.00, DSNA. This request had been orchestrated by General Clay, who wanted Hoover's assistance in getting the army's German budget through the Republican-controlled Congress. Backer, Winds of History, 155-59; Former President Herbert Hoover to President Truman, January 19, 1947, OF, Box 687, HST.
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he returned with the ominous reflection that the world was "involved in the most dangerous economic crisis in all history." Despite the expenditure of millions of dollars by American and British taxpayers, Germany was still not producing. This was the result of the ruinous policies set down by Morgenthau at Quebec, inscribed in JCS 1067, and carried on through Potsdam. Apart from the standard injunctions to shake off such encumbrances, Hoover went one step farther than other American critics by challenging the official emphasis on German light industry/ 3 He noted that even during peacetime, between sixty and seventy percent of German exports had been from heavy industry. If the Allies tried to change this, they would find insufficient markets for the new lines of production, and they would damage other European countries that exported similar goods. The only practical course was for the United States and Britain to commit themselves to the resurrection of German heavy industry - steel, chemicals, and machine tools - though possibly exempting such militarily significant items as synthetic oil, ammonia, and rubber. The hardnosed Hoover report was even more inimical to Soviet interests than the other studies, and clearly implied at least a temporary German partition.24 As in the deliberations of the Council on Foreign Relations and the American Chamber of Commerce, the chief impetus toward the division of Germany was the wish for a free hand in combatting its economic stagnation. This represented a sea-change from the prevailing attitude at the end of the Second World War, when it was accepted that cooperation with the Soviet Union must involve limitations on Germany's revival as a major capitalist power. After two years of paralysis and an emerging crisis in Western Europe, the important new conviction was that no interference with Germany's growth and integration into the economies of Western Europe should be tolerated. Given this outlook, it was inevitable that the Soviets would appear to be acting in bad faith. Since each of the Soviet Union's demands - whether it be for German factories, manufactured products, changes in industrial leadership, or controls on the size of individual enterprises - seemed to threaten the recovery of a capitalist Europe, it was a tiny step to the conclusion that they were deliberately spreading chaos. For most U.S. leaders it was becoming a truism that the Russians were trying to dominate Western Europe and that they could succeed. These pessimistic views helped rationalize the American bargaining position, but they were not its main source.
23
Z4
Hoover, "The Necessary Steps for Promotion of German Exports so as to Relieve American Taxpayers of the Burdens of Relief and for Economic Recovery of Europe," March 18, 1947; "48 U.S. Leaders Thank Hoover for His Report, N. Y. Herald Tribune, March 30, 1948. While Hoover thought this would be acceptable for the short run, he did not see the division of Germany as a viable long-term arrangement.
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The preoccupation with West European integration was especially marked in the newest participant in government planning - Allen Dulles' brother Foster.25 As of February 1947 the Republican attorney was serving as the top foreign policy advisor to presidential aspirant Thomas E. Dewey, and was widely expected to become the next Secretary of State should his candidate become president. John Foster Dulles had strong views on the German question, and was plainly desirous of going to Moscow. Since the Truman administration was actively seeking bipartisan support for its European policies, he had little trouble getting appointed to the U.S. delegation.26 More than any public figure, John Foster Dulles' whole career had been closely intertwined with German issues. The nephew of Robert Lansing, Woodrow Wilson's Secretary of State, Dulles had served on the Reparations Commission at Versailles. As counsel to U.S. representative Bernard Baruch, he had been a fierce opponent of the extravagant Allied demands, and later became an outspoken critic of the conference decisions. During the interwar period, Dulles rose to the top of the international law firm of Sullivan and Cromwell. The firm maintained an office in Berlin and did a brisk German business, representing several provinces and private corporations, as well as American banks and corporations with extensive holdings in the country.27 In 1933, when Hjalamar Schacht announced Germany's plan to suspend payment on its foreign debt, Dulles participated in the talks as the representative of the Wall Street firms that had marketed the 1.2 billion dollars' worth of bonds and securities in the United States. As the Nazis consolidated their power during the 1930s, Dulles viewed them as a distasteful but transient phenomenon. A staff revolt forced him to close the Berlin office in 1935, an angry encounter that according to his brother Allen left Foster "in tears."28 When many Wall Street associates began to advocate resistance to Hitler, Dulles counseled moderation. As late as 1941 the attorney was still urging American aloofness from the war. Once hostilities were under way, Dulles worked under church auspices for a peace plan that would leave German industry intact.29 Because of this history, John Foster Dulles was a favored target of American liberals, who viewed him as the embodiment of the amoral American businessman whose avidity for profit had nourished a dangerous
25
z6 27 28 29
Foster Dulles, 331-54 and Hoopes, The Devil and John Foster Dulles, 67-70. Dulles to Marshall, February 9, 1947, RG 59 862.00, DSNA. Among these was the J. Henry Schroder Banking Corporation, which along with Dillon, Read, handled the bulk of private loans to Germany. Episode described by Hoopes, Devil and John Foster Dulles, 47. J. F. Dulles, Memorandum Regarding Germany, February 8, 1944, Dulles MSS, Box z4, PU.
For discussion of Dulles' approach to the German question, see Pruessen, John
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pro-Germanism. 30 Yet after 1945 Foster was not so much a pro-German as a West European integrationist, and his concern for profit was linked to a broad vision of a new international order. Dulles presented his views in a widely publicized speech to the American Publishers Association. In this January address, he espoused many of the principles that his brother Allen was articulating privately in the Council of Foreign Relations. Foster maintained that "whoever deals with Germany deals with the central problem of Europe." 31 As previously organized that Continent had proved to be "the world's worst fire hazard." To prevent future conflagrations, the war victors should think in new ways about its political and economic arrangements. The preeminent necessity was to break down national barriers and to promote the economic unity of Europe: A Europe divided into small economic compartments cannot be a healthy Europe. All of Europe's economic potentialities need to be used at maximum efficiency and European markets should be big enough to justify modern methods of cheap production for mass consumption. That, no doubt, is why Mr. Attlee declared some time ago that "Europe must federate or perish". Though Dulles did not explicitly exclude Eastern Europe from the project, it was clear from his remarks that he had mainly in mind the West European segment, most particularly the Ruhr. As for Germany, he wished to escape "the Potsdam dictum that Germany shall be a single economic unit." With its coal and efficient manpower, the Rhine basin "constitutes the natural economic heart of western Europe." From this location "ought to flow vitality not merely for Germans but for Germany's western neighbors." It would be a particular misfortune if the German peace treaty simply restored Germany as an individual entity "subject to only German political control." Instead, Dulles favored the internationalization of the Ruhr, which would allow the interested West European countries some control of its industrial resources. Political innovation in this critical region was desirable in itself and might establish a foundation for a wider federation. In joining the Moscow delegation, Dulles' primary objective was to
Foster's brother Allen was also a target of liberal criticism because of his service as partner and director of the J. Henry Schroder Bank of London. During the 1930s there were frequent allegations that the J. Henry Schroder Bank was secretly colluding with the Kurt Schroder Bank in Berlin, a notorious Nazi outfit. Though tainted by this associations, Allen was less vulnerable than Foster. He had been an early advocate of U.S. intervention in the war, and had served with distinction as OSS chief in Switzerland. John Foster Dulles, "A New Year Resolve", National Publishers Association, January 17, 1947, Allen Dulles MSS, Box 30, PU.
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promote greater cooperation between the Western powers. He was therefore opposed to making compromises with the Soviets. Pressure for an accord was still coming from Clay and his cohorts in U.S. Military Government. Despite deteriorating relations in the Allied Control Council, the general was convinced that the Soviets' hunger for German material goods would lead them to make many important political and economic concessions.32 Differences between the American principals first erupted in Berlin when a rump group from the U.S. delegation (Ben Cohen, Doc Matthews, Chip Bohlen, and John Foster Dulles) arrived for preliminary talks at the army's Wansee guest house. General Clay explained to his visitors that based on his conversations with Sokolovsky, he thought he could get a settlement of the German problem. 33 In exchange for current production reparations, the Soviets might permit the extension of Western style democracy to eastern Germany. This report fell like a lead balloon on the other participants. A pugnacious Dulles reminded Clay that the Soviet Union was now America's mortal enemy. If Germany was united, it would not be able to resist the pressures of Soviet communism. Moreover, German unification would produce a political backlash in France, causing that polarized nation to turn to the East. By couching his objections in the Kennan idiom, Dulles was invoking the group's most primitive fears.34 The general responded in similar vein, maintaining that western Germany could go communist if, as a result of partition, a viable society was prevented from forming. Both men were downplaying their more controversial concerns. For Dulles, there was a basic apprehension that a rebuilt and reunited Germany would overwhelm the rest of Europe and that it could not be trusted with possession of the Ruhr. As for Clay, he implicitly recognized that certain of his priorities no longer had much currency among his Washington colleagues. The claim that a divided Germany would be peculiarly ripe for communism was a
3Z
According to OMGUS, the Soviets would come to the Moscow session with a long list of complaints, but these would be "a smoke-screen behind which the Russian representatives will press for the acceptance of their views with respect to central government and to a production program designed to make vast quantities available
33 34
for reparations." Office of Military Government for Germany, A Summarized Analysis of the German Problem, March 5, 1947, FRUS, 1947 IL223-34. Described by Smith, Lucius D. Clay, 414-17. These observations were in line with Foster's new identity as another fire-eating opponent of U.S.-Soviet cooperation. Yet as his biographer Ron Pruessen has aptly pointed out, there was a certain amount of theatrics in Dulles' articulation of the Russian issue. Always the canny lawyer, the Republican was keenly attuned to the mood of the audience, and as he well recognized, Marshall and his associates were becoming increasingly edgy about Soviet intentions. Pruessen, John Foster Dulles, 287-97.
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spur-of-the-moment invention. The general's more abiding reasons for keeping Germany united included his residual allegiance to the Soviet alliance, a sense of responsibility for east Germany, and a wish to keep lines open to the rest of Eastern Europe. Each of these commitments had become not merely unfashionable, but also inexpressible. In the debate at Wannsee House, General Clay was the clear loser. Recognizing his irrelevance to the Moscow proceedings, he asked to skip the conference and to remain at his headquarters in Germany.35
II. DELIBERATIONS
While months of planning had proceeded the meeting in the Soviet capital, the American delegates arrived there in a gloomy, impatient mood. The weather in Moscow was harsh, the food was unappealing, the accommodations were crowded, the social life was restricted, and the prospects for a four-power deal seemed slight. From the outset, the members were asking each other how soon they would be able to wrap things up and go home. The Allies were gathering to discuss the most crucial geopolitical issue of the postwar era: the future of Germany. Since Potsdam, this topic had been continually reemerging at CFM sessions, yet it had always appeared in partial form and it had always been postponed. Now at last the victors were ready for a full-scale reappraisal, but in a context of many new European problems and a widening gap between the eastern and western zones.
I N D E E D AS THE conference opened, a high drama was occurring back in Washington, where American officials were coping with the British decision to withdraw their military and economic support from Greece and Turkey.36 In responding affirmatively to the British plea for help, the administration placed the issue in the framework of a worldwide struggle between American freedom and Soviet tyranny. During a private session with congressional leaders, Under-Secretary of State Dean Acheson described how Russian pressure "had brought the Balkans to the point where a highly possible Soviet breakthrough might open three continents to Soviet penetration." Citing the dangers of a corrupted Greece, he contended that the Soviet Union "was playing one of the greatest gambles in history at minimum cost" and only the United States "could break up the play."37
35 36
37
Backer, Winds of History', 173. There are many fine discussions of the Truman Doctrine. See especially Freeland, The Truman Doctrine and the Origins of McCarthyism; Wittner, American Intervention in Greece 1943-49, 70-102; Paterson, Soviet-American Confrontation, 174206; Gabriel and Joyce Kolko, The Limits of Power: The World and United States Foreign Policy, 1945-54, 2-18-4 5. Acheson, Present at the Creation, 292-93.
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Following Acheson, the president had accompanied his request for a 400 million dollar Greek and Turkish Assistance Bill with a public enunciation of the Truman Doctrine. Though not mentioning the Soviet Union directly, the president spoke of a choice between "alternative ways of life" - one that was "based upon the will of the majority and . . . distinguished by free institutions" and the other that was "based upon the will of a minority forcibly imposed upon the majority."38 He proclaimed that it must be "the policy of the United States to support free peoples who are resisting attempted suppression of personal freedoms." By portraying this ominous international polarization, the Truman Doctrine created a domestic shock. Yet curiously, at the Moscow conference there were few direct reverberations either from the Greek and Turkish conflicts or the president's speech. Before their departure, the members of the delegation had been briefed on developments in the Balkans, and once in Moscow were kept informed through daily cables. However, the members remained riveted on the issues at hand. This reflected not simply their official responsibility, but a shared assumption that Germany was the decisive international question. How the Allies settled its future would determine the pattern of European politics, and ultimately the shape of the new global order. Even the Soviets kept their silence on Truman's provocative statements.39 Perhaps more than the Americans, they regarded the German question as the crucial one. If the Truman Doctrine had no immediate impact on the Moscow negotiations, it nonetheless crystallized certain broad attitudes that were operative on the American side. Chief among these was the perception that postwar Europe was disintegrating. The pressure for action in Greece and Turkey had arisen in response to British weakness, and was in the case of the Greek civil war a result of economic distress and social instability. Considered in its entirety, the episode was another demonstration of the urgent need for a European recovery program. Yet in putting forward their assistance program, U.S. officials had chosen to highlight Soviet culpability.40 Apart from its public relations value, this reflected their genuine fear that victorious Greek insurgents would affiliate with a Soviet bloc. That the Soviet Union had generally discouraged an insurrectionary movement and was itself withholding assistance41 was thus obscured by the anxiety
38 39 40 41
Truman, "The Truman Doctrine," March 12, 1947, contained in Public Papers of the Presidents: Harry S. Truman, 1947, 176-80. Bullock, Bevin, 379. See important discussion of this issue in Leffler, A Preponderance of Power, 14246; Yergin, Shattered Peace, 283; Freeland, Origins of McCarthy ism, 88-114. Since the Greek revolutionaries were receiving support from Yugoslavia and Bulgaria, the Americans viewed this as an extension of Soviet policy. For discussion of Soviet role in Greece, see Barnet, Intervention and Revolution, 121; Gabriel and Joyce Kolko, The Limits of Power, 329-46; Stavrakis, American Intervention in Greece, 84-88; Wittner, Moscow and Greek Communism, 1944-49, 48-126.
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over outcome. Such imprecision in assessing Russian behavior, and possibly motive, constrained opportunities for diplomacy. Certainly in Moscow, there was little disposition in the U.S. delegation to look closely at Russian actions or to give credence to their stated positions. If the Americans were in an uncompromising mode, they remained keenly aware of the momentousness of the occasion. As at Potsdam, that sensibility aggravated the personal rivalries and disagreements within the negotiating team. In both settings there was a new Secretary of State who lacked familiarity with the topics on the agenda. Byrnes' response had been to lead with his chin, to ignore the department professionals, and to almost perversely move out in front on matters where he had no knowledge. By contrast, Secretary Marshall's tendency was to rely heavily on the expertise of others. Before leaving Washington, the secretary had been carefully briefed by Cohen, Matthews, and Bohlen,42 and when he arrived in Russia he turned to the most experienced German-hand of all - John Foster Dulles. Dulles' influence with the secretary quickly became a sore point, even among the representatives from the State Department.43 To these professionals Dulles was fundamentally an outsider. His ideas about the Ruhr his firm commitment to internationalization and impatience with issues of national sovereignty - were far from orthodox. That he was also a humorless, domineering person, who threatened partisan retaliation when his views were not accepted, added to the irritation. The Dulles presence was even more aggravating to OMGUS.44 At the start of the conference, U.S. Military Government was represented by William Draper, his assistant Donald Humphry, and Civil Affairs Director Edward Litchfield. They were soon joined by General Clay, who despite his ardent desire to remain in Germany, was summoned to Moscow by Secretary Marshall. Already provoked by Dulles on his stopover in Berlin, the general was enraged by his continued spiking of bargaining with the Soviets, as well as his preference for Ruhr severance. Clay's battle with Dulles intersected the long-standing feud between the army and State Department over German questions. That quarrel had always contained a dual aspect: a divergence over how to treat the Russians, and a disagreement over the relative priority to be assigned German as opposed to West European recovery. The disputes were linked, since the State Department's determination to utilize German resources for the benefit of Western Europe generated a more rigid stance toward the Soviets.
4i
43 44
See especially Kindleberger, Marshall Plan Days, 185-87; Yergin, Shattered Peace, 297-98; Pruessen, John Foster Dulles, 344-46. Interview With Donald Humphry, September 9, 1978, by John Backer, Backer MSS, Box 4, CU; Gimbel, Marshall Plan, 192; Backer, Winds of History, 172-77.
Secretary of State George Marshall, Testimony Before the Senate Foreign Relations Committee, February 15, 1947.
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At Moscow, these philosophical disagreements became suddenly personal. The economists from Charles Kindleberger's Office of German and Austrian Economic Affairs (GA) were in conflict with William Draper and his associates from the Economics Division. Meanwhile, General Clay felt thwarted by his old rival Walter Bedell Smith, the ambassador to Russia, who joined Dulles in whipping up anti-Soviet sentiment in the delegation. Smith had always coveted Clay's job, and now that his friend George Marshall was Secretary of State, both he and Clay anticipated he would get it.45 For all their cantankerousness, the Americans shared many specific objectives. They all believed it vitally important to end the compartmentalization of the German zones, to shift political power to an indigenous German leadership, and to more vigorously activate German heavy industry. Whatever agreement came out of the conference would have to advance these aims. The Americans also wished to be literal about things. They were unwilling to leave Moscow with a set of paper formulas of the sort arrived at in Potsdam. Those generalizations had proved unenforceable in practice, and, as they now saw it, had contributed to the economic and political paralysis of Germany. So if a quadripartite agreement was to be struck, it had to be unambiguous, precise, and completely consistent with the aim of quick recovery. Otherwise, it would be preferable to develop the bizonal arrangements, which was what most of the U.S. principals were expecting. In his initial presentation, Secretary Marshall concentrated on certain key points. He called for the immediate implementation of the central economic agencies specified in Potsdam, but now he added the requirement that there be a provisional German government, which would exercise "legislative power" over these administrative agencies.46 This provisional government would consist of "those heads of government of the Lander who are democratically responsible to their state assemblies." This meant that the provisional government would not be established by direct election but would be chosen by the provincial legislatures. As outlined by Marshall, the new German structures would continue to be subject to the authority of the Allied Control Council. In dealing with the economic agencies, however, the ACC would be expected to "refrain from direct operation or detailed supervision of their operations." If the council wished to overrule the Germans it could do so by majority vote. There would no longer be a veto on economic matters.47 As for the zone
Interview With Lucius D. Clay, no. 17, February 9, 1971, by Jean Smith, Backer MSS, Box 4, CU. Statement by U.S. Delegate, "The Scope and Form of the Provisional Government," March 21, 1947, RG 43 Moscow CFM, Box 154, DSNA. "The powers and functions now given to the German central agencies shall be subject to such action as may be taken, or such direction as given by the Allied
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commander, his autonomy would be drastically curtailed. He would "have authority over the departments only through or as directed by the Allied Control Council." While the chief responsibility of the German provisional government would be to supervise the economic agencies, it would also be expected to write a new constitution. The Americans had already decided that the German government ought to be federal in nature, and that the provinces would be the building blocks. Since members of the provisional government would be representing the Lander, this outcome was probable. However, just to be sure, the secretary called for Allied guidelines that would detail the composition of national institutions and insure a proper distribution of powers between the levels of government.48 In any case, economic unification need not await the completion of the constitution. The central agencies would be set up right away, as would the provisional government. Once this machinery was in place, the economic life of the nation could resume. To the Americans, it was crucial that "indigenous products and imports should be used on a common basis throughout Germany without regard to zonal boundaries." It was also necessary to start an export-import program so that Germany could pay for approved imports "at the earliest possible date."49 As the bizonal authorities had already projected, these would be a deficit for several years, until Germany's international sales caught up with its purchases. Responsibility for this, as well as the deficits already accumulated by the United States and Britain, must be assumed by the four powers.50 Within this framework Germany was to become self-supporting at the average European standard of living, and it was to be permitted to meet "the practical requirements of European countries for German products and trade revival." By introducing European needs, Marshall was substantially altering Potsdam, for that agreement had contemplated leaving Germany only enough heavy industry to meet its own subsistence needs. Since European requirements were now entering the calculation, this clearly entailed a substantial upward revision of the Level of Industry plan.51
Control Council by a majority of its members." U.S. Position Paper, Questions Concerning Germany, March 17, 1947, Ibid. Statement of U.S. delegate, "Scope and Form of Provisional German Government," March 21, 1947; Coordinating Committee to the Council on Foreign Ministers, Preparation of the Proposals in Regard to the Report of the Allied Control Council, March 28, 1947, FRUS 1947 11:409-12. U.S. Position Paper, Questions Concerning Germany. March 17, 1947. State Department, Treatment of Germany as a Single Economic Unit, February 1947, FRUS, 1947 II:2i6. While the Americans were not ready to specify figures, Marshall asked for a fullscale review in the Allied Control Council that would be based on the new assumptions. Statement by U.S. delegate on Reparations, March 17, 1947, RG 43, Moscow CFM, Box 154, DSNA; Marshall to Acheson March 31, 1947, RG 59 Control Council 740.00119, DSNA.
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As of March 1947 approximately two thousand plants were scheduled for dismantlement from the western zones. Under a revised LIA, many of these would be retained in Germany.52 This left the question of how the recipient nations (the Soviet Union and the other European countries) would be compensated for the damage that the Germans had inflicted. Marshall had little to offer. Sticking closely to the State Department Briefing Books, the secretary stated there could be no reparations from current production until the German economy was in balance. This meant, in practice, that the claimants would be giving up their right to factories and equipment, without any material redress. The final element in Marshall's package was the forty-year disarmament treaty originally suggested by Byrnes. This treaty had already been rejected by the Russians several times. However, in the context of the other U.S. proposals to restore Germany quickly, it assumed added significance. By barring Germany from reestablishing its armed forces, rebuilding armaments plants, and reconverting civilian industries to military production, the treaty offered some basic guarantees against the revival of German militarism. Considered as a whole, the deal that Marshall was offering in Moscow was scarcely novel. As with the disarmament treaty, most of the pieces had been presented on earlier occasions. The change was in the comprehensive nature of the American plan, and in the unambiguous commitment to German reconstruction. Of special importance was the decision to link a vigorous program of economic rehabilitation with the establishment of a German provisional government and the curtailment of the Allies' prerogatives. Among Marshall's colleagues, Bevin's response was the most positive. During the weeks preceding Moscow, American and British officials had consulted on strategy so that their negotiating position was now quite close. Despite disagreements on some particulars, such as the Level of Industry and the procedures for forming a German provisional government,53 the British goal at Moscow was like that of the U.S. State Department: to set prohibitive conditions for Soviet cooperation, and, when these were rejected, to proceed vigorously with the development of the
A study prepared by OMGUS anticipated the retention of approximately one thousand of the two thousand plants scheduled for dismantling. Kindleberger to John DeWilde, March 12, 1947, Kindleberger MSS, MIT; U.S. Political Advisor, Memorandum, Possible Attitude of IARA countries at the London Conference on Germany, January 3, 1947, RG 260 Economics, Memos from POLAD, Box 2411, FRC. The British wished to set a twelve million ton steel minimum for a revised Level of Industry, whereas the Americans were reserving judgment on the specific figures. The British hoped to create a German Advisory Council that would precede the formation of a provisional government, while the Americans wanted to establish that government immediately. Marshall to Truman, March 19, 1947, PSF, Box 162, HST.
The Doctors
Deliberate
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bizone. As outlined by Patrick Dean of the Foreign Office, the delegation should avoid "detailed discussions" that would lead the public to expect compromise: We want to be in the position of pointing out with ever increasing clarity why we can't agree at this conference and that Russian intransigence on these matters is the cause .. . unless the Russians come the whole way to meet us, and that they won't do.54 Given these purposes, Marshall's presentation seemed to hit the mark. Yet Bevin and his colleagues were continually on edge, lest Clay gain a hearing with the secretary and interest his own government in an accord. 55 By contrast, French Foreign Minister Bidault continued to oppose many key features of the U.S. position. 56 This reflected less his personal views than the pressures emanating from both the Left and Right of the French political spectrum. During the previous year, the French had withdrawn their demand for the physical separation of the Ruhr, but they were still insisting on the international ownership and control of major industries, border revisions in the Rhineland, and economic annexation of the Saar. They were somewhat more amenable to modified central agencies, but certainly not to a German provisional government. The newest feature of their negotiating stance was a coal ultimatum: Until they received five hundred thousand tons monthly, they would block all moves toward German unification. Over and above these specific claims the French government was bent on weakening Germany economically and politically, leading them to oppose any upward revision of the LIA or curtailment of Allied Control Council sovereignty.57 Curiously enough, the Soviets were in key respects closer to the American and British views than were the French. 58 Even before the conference they had made it clear that they would support the establishment of a German provisional government, and that they would approve a substantial
54 55
Cited in Deighton, Impossible Peace, 138. Bevin, "Part III Tactics for Moscow," FO 371/64598/PRO; Bevin to FONOFF, April 8, 1947, Ibid. In her penetrating study of British policy, Anne Deighton documents these British apprehensions and sees them as evidence that the U.S. delegation as a whole was being coaxed by the British. Deighton, Impossible Peace, Memorandum of conversation between Secretary of State Marshall and President Auriol on Thursday, March 6, RG 59 740.00119, DSNA.; Acheson to Caffrey, March 6, 1947, FRUS 1947 II: 182; Caffrey to Secretary of State, French Parliamentary Debate on Foreign Policy, March 14, 1947, RG 84 US POLAD 800, FRC. See discussion in Wall, The Making of Postwar France, 49-77. Marshall to Truman, March 18, 1947, PSF, Box 162; Marshall to Truman, March 20, 1947, Ibid.; Marshall to Truman, March 23, 1947, Ibid.; Memorandum of Conversation Between Monsieur Georges Bidault and General Marshall on March 13, 1947, RG 59 740.00119, DSNA. Pruessen, John Foster Dulles, 341.
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upward revision of the Level of Industry plan. While accepting the concept of German rehabilitation, the Soviets continued to complain that the specific American and British plans threatened their security interests, and would nullify the effects of the fascist defeat. An important source of discontent was the projected provisional government. In pushing decentralization and touting the virtues of the Lander, the Americans had donned the mantle of impartial political scientists. But all the participants at Moscow realized that how the German government was structured would affect who held power. If the provisional government was based on the Lander, one practical consequence would be that the German Communists would be a weak political force. There were more western than eastern provinces and all were dominated by parties hostile to the KPD. If these were aggregated, the communist representatives would be always outnumbered and would have less clout than in a direct nationwide contest.59 This would limit Soviet influence over the new regime, a circumstance that would be especially troubling if the zone commander's veto was also eliminated. Early in the session, Foreign Minister Molotov took strong exception to the "federalization" scheme on the grounds that it would violate German sensibilities and allow the militarists to become the spokesmen for German unity.60 He urged his colleagues to take the Weimar constitution as a point of departure. The document was obviously imperfect, but reflected democratic German sentiment and could be amended to reduce the concentration of power in the executive. Beneath his rhetoric about things that were "dear to the German people," the hardheaded Molotov was seeking procedures that would maximize communist strength and his own government's influence. Such concerns animated his suggestion that in drafting a German constitution, spokesmen from the trade unions and the popular "democratic" organizations be included with the representatives of provincial governments in the German advisory committee. Moreover, Molotov wished to stipulate in advance that a German provisional government should be chosen by direct national elections, under a system of proportional representation. And he was flatly insistent that the zone commander's veto must be continued.61
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Molotov also argued that the electoral arrangements in the western Lander left the KPD underrepresented: "Thus the system of elections adopted in the British zone yielded the following results at the elections of local self-government organizations in September, 1946; the German Social Democratic Party received 11,178,000 votes and 2,549 seats; the Christian Democratic Union, with 11 million votes, won 8,583 seats; the Communist Party with 2 million votes, received only 139 seats." Molotov, "Denazification and Democratization," March 13, 1947, Speeches and Statements, 15. Molotov, "Provisional Political Organization of Germany," March 22, 1947, Ibid.: Ibid.; Molotov, "The Composition of the German Advisory Council," April 5, 1947, Ibid. 167-69. Further amplification of Soviet perspective on federalism is
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The Soviets also expressed fear that American and British plans would cost them money. In contrast to their colleagues, they had not been pouring economic resources into Germany. In the aftermath of an invasion that had left 20 million dead and devastated their own industrial and agricultural life, and in the face of massive domestic privation, such largess was scarcely imaginable. Since the very beginning of the occupation, they had challenged the propriety of the Anglo-American appropriations, which were now expected to increase under the bizonal accord. Despite the large-scale removals from the Soviet zone, material conditions appeared more favorable there than in the west.62 This was partly because of the greater availability of food in the east. It was also because the Russians had combined military coercion with enough social reform to stimulate economic revival. While forcing people to go back to work, the Soviets made extensive use of the German works councils and trade unions to get the plants back in operation. Against this backdrop, economic unity on the Anglo-American model could entail a net drain of resources from east to west, imperil the Soviet system of production, and force the Russians to pay for mounting deficits generated by others. Despite these apprehensions, Molotov accepted the principle of pooling resources and of establishing a unified export-import program. He drew the line on deficits, insisting that "only the future relationship between exports and imports can be considered and not the repayment of past and present deficits." As for the future, the Russians were not very forthcoming: "The German economy should be established on the principle of a net balance, i.e., not showing any deficit."63 If the Allies wanted to import materials into Germany, these would have to be paid for with the resources on hand. On a different front, the Russian minister was sharply critical of what he viewed as the conservative restoration in the American and British zones. A particular sore point was the failure of denazification in the Ruhr.64 Throughout the conference, he returned to this theme, complaining bitterly that people who had helped Hitler come to power and facilitated German aggression "remain to this day in many important economic and administrative positions in big industrial centers of Germany." Among
presented in Trainin, "On Basis of Departure for State Structure Postwar Germany," Izvestia, April 1, 1947 and Leontiev, "On Questions of State Organization in Postwar Germany," Pravda, March 31, 1947, cited in Moscow Embassy to Marshall, RG 59 862.00, DSNA. Gottlieb, German Peace Settlement, 54-66; Steele, Inside East Germany, 63-64; Nettl, The Eastern Zone, 145-98. Coordinating Committee to the Council on Foreign Ministers, Preparation of Proposals, March 28, 1947. Molotov, "De-Nazification and Democracy," March 13, 1947, Speeches and Statements, 11-17; Molotov, "De-Nazification and Democracy," March 14, 1946,
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them were such notorious individuals as Heinrich Dinkelbach, Ernst Poensgen, and Wilhelm Zangen, who had been recruited by the British for service in the occupation. Molotov was disdainful as well of the American-engendered plan to screen the entire German population. Since this was an impossible mission, the real effect was to allow leading Nazis to get lost in the crowd. Not only were many resuming their old jobs; they were also escaping criminal prosecution. He therefore favored new legislation to ensure that former active Fascists were removed from public and semipublic office, and that war criminals and leading representatives of the Nazi regime would be rapidly prosecuted. From the Soviet standpoint, the problem went deeper than blameworthy individuals. They had always maintained that fascism was "monopoly capitalism" in the final stage of decay and that to prevent future Nazi aggression there must be structural change of German society.65 In their interpretation Potsdam had promised this, and its obligations - for land reform,66 deconcentration of industry,67 and establishment of a national labor movement68 - should still be carried out. Without such measures, the American disarmament treaty would have little use. Protection from the Germans was not just a matter of banning weapons and armies.69 At the center of the Soviet negotiating position was still the desire for reparations. The Level of Industry agreement was almost a year old, and
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Gottlieb, German Peace Settlements Steele, Inside East Germanyp, 33-48. Land reform was the least controversial item, since the Allied Control Council had already passed a directive requiring its implementation. The Americans were in the process of pushing a very limited measure through the Lander while the British effort was stalled. U.S. State Department, Division of European Research, Land Reform in the U.S. Zone of Germany, November 1, 1946. RG 59 Research and Analysis, DSNA. While Molotov's demand for a compulsory law reflected a long-standing Soviet position, he now added the even more troublesome demand that the decartelized units be turned over to the German state. Allied Control Council, Coordinating Committee Report to the CFM, Section IV Part 5a Decartelization, February 17, 1947 FO 371/64394/PRO. The Russians were proposing that the trade unions be permitted to unify on a national basis and to determine their own mode of internal organization. At this time the Western powers were resisting the amalgamation of the zonal unions until their constitutions provided a decentralized structure in which constituent industrial unions enjoyed considerable autonomy. See Eisenberg, "Working Class Politics and the Cold War," 290-95. "It was clear to all of us only recently that this cannot be ensured merely by the disarmament of Germany; in addition it is necessary to carry out the reconstruction of Germany on a democratic basis. .. . The draft treaty which was presented to us proceeds from a different principle, which creates the illusion that in order to secure the world against new German aggression, it is sufficient merely to disarm Germany, without worrying about her denazification and democratization." Molotov, Draft Four-Power Treaty for Disarmament and Demilitarization of Germany, April 14, 1947, Speeches and Statements, 89-97.
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they had so far received only a handful of deliveries from the western zones.70 Over the intervening months, a quadripartite working party had prepared lists of dismantling, in anticipation of economic unification. But now the Americans and British were saying that even with amalgamation, many of the assigned plants would not be delivered. The Soviets had already signaled their willingness to upwardly revise the LIA, and they were publicly abandoning a policy of capital removals from their zone. However, they regarded many of the remaining western plants to be under the category of "war potential," which they wanted blown up or removed. Of greater concern was the Anglo-American refusal to countenance reparations from current production. The Russians maintained that current reparations was the only way for them to attain the 10 billion dollar figure established at Yalta. Though this drove the American and British representatives wild with impatience, Molotov ploddingly explained the Soviet right to that quantity. In remarks that were almost unchanged from the time of Potsdam, he showed why reparations were so vital to his country:
All of you know the contribution made by the Soviet Union to the common Allied cause in the last World War. For four years the armies of the Soviet Union opposed more than 200 divisions of Germans and their satellites, and at times the number of these divisions rose to 240. For three years the Soviet troops fought the armies of Hitler and his satellites single-handed.... The services rendered by the Soviet Army in the salvation of European civilization are universally known. . . . Our country lost millions of people and suffered enormous material damage. The Soviet government and the entire Soviet people cannot permit this to be forgotten.71
For reasons of security, national pride, and harsh material necessity, the promise of Yalta must be honored. In the first round of talks, Molotov's overall presentation was ambiguous. While he had ticked off a long litany of grievances and demands, he kept reiterating that "there was general agreement on most of the points discussed" and that a comprehensive bargain could be struck. More informally, Soviet diplomats assured the Americans that they were desirous of a settlement, and that they might give way on certain key issues - the organization of the German government, the revival of German exports,
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According to Molotov, "during the entire period up to January 1, 1947, the Soviet Union received reparations deliveries from the Western zones amounting to only five million dollars, that is reparations deliveries without paying for them. In addition, the Soviet Union received from the western zones reparations deliveries amounting to 7.5 million which according to the Berlin agreement were to be paid for with other commodities." Molotov, "German Economy and the Reparations Problem," March 19, 1947, Speeches and Statements, 35. See discussion in Backer, Decision to Divide Germany, 89-101. Molotov, "German Economy and the Reparations Problem," March 19, 1947.
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the forty-year disarmament treaty - if they could get reparations from current production. While failing to clarify the precise nature of the tradeoff, they were clear that the "acceptance of reparations from current production is an absolute condition of the principle of the economic unity of Germany."72 As they listened to the speeches of the Allies, tensions mounted within the American delegation. Although there were few surprises, the interaction with the other powers sharpened the differences within the group. As expected, the British posed the fewest problems since they mainly upheld Marshall's stand. More problematic were the French and Russians, whose minimum demands - in the former case for coal and in the latter case for current production - rang in some ears like extortion.73 In both instances, it was unclear how much else would have to be conceded in order to achieve cooperation, nor was it evident what that cooperation would amount to in practice. These uncertainties generated new arguments over which party, if any, should be conciliated. Despite internal disagreements, the predominant tendency was to accommodate France. From early in the session, the U.S. government had participated in tripartite talks with the British and French on increasing the export of coal. Having followed French wishes and excluded the Russians, the Western powers had agreed that once Ruhr-Aachen production had reached three hundred thousand tons a day, that at least twenty-five percent of the supply could be sold to Europe.74 Predictably, the most explosive issue for the U.S. delegation was whether to meet the Soviet request for current production reparations. Many members thought that this could be the basis for a deal.75 This included Draper's assistant Donald Humphry, who later recalled, "One thing I'm perfectly clear about. Throughout this period I was working intensely to get an agreement and I was never in any doubt about the fact that we could get an agreement with the Soviets, a compromise. And I always went around with details in my pocket." This was also the perception of Kindleberger's assistant George Jacobs, who wrote back to Washington that the Russians "have made it very clear that they are prepared to agree to economic unity in something much like our terms," if they were satisfied on reparations. Even Dulles conceded the centrality of this issue in his report to Senator
7Z 73 74
75
Marshall to Truman, March 18, 1947; Molotov, German Economy and the Reparations Problem, March 19, 1947. Mason to Thorp, March 20, 1947, Kindleberger MSS, MIT. Kindleberger to DeWilde and Covey, March 17, 1947, Ibid.; Edward Mason, Memorandum of Conversation, March 21, 1947, Ibid.; Draper, Summary of Conversation Discussions With British and French concerning Coal (Undated), Ibid.; Kindleberger to DeWilde and Covey, March 24, 1947, Ibid. Interview with Donald Humphry, conducted by John Backer, September 8, 1981, John Backer Papers, Rare Book and Manuscript Library, Columbia University, Box 4; George Jacobs to DeWilde and Covey, March 29, 1947, Kindleberger MSS, MIT; J. F. Dulles to Vandenberg, March 29, 1947.
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Vandenberg: "The insistence of the Soviet Union on reparations from current production out of the western zones continues to be the outstanding feature." Despite the widespread expectation of large Soviet concessions, there was no consensus on what to do. After the initial presentations by the foreign ministers, the remaining disputes were remanded to an Allied Coordinating Committee, where General Clay was representing the United States. During the last week of March, Clay resumed his campaign to trade current production reparations for the opening of the east.76 Though encouraged by the Soviets, he could get little backing from his State Department colleagues. Some, such as Bedell Smith and Freeman Matthews, had already decided that an agreement with the Soviet Union was intrinsically objectionable. Others, such as Kindleberger and Cohen, were more narrowly opposed to granting the Soviets free finished products. Since the hawkish Dulles had Marshall's ear, Clay was unable to circumvent this second tier of State Department officials. To assuage the general, Kindleberger and Cohen worked up a complex formula under which the Soviets might receive current production reparations, if the German Level of Industry exceeded the average European standard.77 However, they hedged this modification with so many other conditions that there was little likelihood that the Soviets could receive more than a bare minimum of goods. As explained by one staffer, Ben Cohen "doesn't think that the Russians will accept this, but feels it is useful in order to be able to say that we have gone as far as we can in making the Russians an offer." By March 29 Secretary Marshall seemed ready to adopt the CohenKindleberger proposal for the next round of discussion. This development infuriated Clay, who insisted that the State Department people didn't know what they wanted, that they were confused and disorganized, and that they were "ultimately going to throw away Germany."78 In an amazing display of pique, he indicated to General Sokolovsky that he did not support his own government's tactics and that he had no part in the decisions that had been reached. Certain now that the Moscow conference would fail in its official purpose, Clay asked Secretary Marshall for permission to return to his duties back in Berlin.
III. A SUCCESSFUL FAILURE . . .

Once the Americans had decided not to compromise on current reparations, there was no further prospect of a four-power deal. Inside the delegation, it had been an open question whether concessions in this field would
76 77 78
Kindleberger to Covey, March 24, 1947. See discussion in Backer, Winds of History, 174-77; Smith, Lucius D. Clay, 418-20. Kindleberger to Covey, March 24, 1946. Ibid.
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provide sufficient incentive for the Soviets to abandon their other economic and political demands. Yet it was universally recognized that this was the Soviet Union's minimum requirement, which must be satisfied if Germany was to be united. By deciding to make their own maximum program nonnegotiable, the Americans were opting for the partition of Germany. Though at odds with their public rhetoric, most found the idea relieving.79 Absent the Soviets and the confining apparatus of Potsdam, they could finally rebuild western Germany according to their lights.
IF SERIOUS D I P L O M A C Y
ended on March 29, there were weeks of fruitless speeches and arguments to be endured. The second round of discussions was more hostile than the first. Secretary Marshall denounced the Soviets for making current production an "absolute condition" for economic unity and accused them of "trying to sell the same horse twice." Molotov angrily rejected the metaphor. Obviously reparations had a different meaning for Americans, "who do not feel what Soviet citizens feel after going through a terrible period of excruciating atrocities, destruction and plunder." But Russian representatives were not approaching the issue "as merchants, or in a mercantile spirit," nor would they allow other "traders to appear who would sell our horse to anyone cheap, and without our consent." To Marshall, the Soviet Union was offering a recipe for chaos. Germany could not simultaneously supply coal to western Europe, pay out current production in the east, and avoid internal misery and starvation. Molotov insisted that more could be accomplished if the Western powers would make reforms. The largest problem was the shortage of food, but this was because the Western lands were still in the hands of the Junkers, "who . . . obstruct a rise in agriculture." By contrast, the German peasants "knew how to work" and if given property would grow more food.80 Although negotiations were already stalemated, there was apprehension in Washington that the U.S. delegation might give away too much. With Truman's approval, Under-Secretary Acheson dispatched guidelines designed to limit current production reparations.81 To the standard strictures about not costing more money, or interfering with German exports and coal shipments, Marshall was asked to refuse the Russians any deliveries until the IARA nations had received amounts equivalent to removals from the eastern zone. This recommendation was in such direct contradiction to
79
80
81
"The Moscow Conference of Foreign Ministers, which opened on March 12, 1947, is remembered for its failures rather then its accomplishments. I think of it as a very successful failure." Smith, My Three Years in Moscow, 211. Secretary of State Marshall, Economic Principles, March 31, 1947, RG 59 Central Europe, Box 4, DSNA; Molotov, "Germany and Economic Unity," March 31, 1947, Speeches and Statements, 50-56. President Truman to Secretary of State Marshall, April 1, 1947, FRUS 1947 11:3023; Marshall to Acheson, April 2, 1947 PSF, Box 162, HST.
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previous understandings that Marshall did not wish to introduce it, nor, given Ben Cohen's formula, was it necessary to do so. Beneath the technicalities, the Acheson memorandum was another sign to the U.S. delegation of the uncompromising mood in the capital. The Allies had some further clashes on political matters. By calling for a decentralized structure and a Lander-appointed provisional government, Marshall had allowed Molotov the high ground of German self-determination. While the Americans wished to create a totally new political framework, Molotov stressed the legitimacy of the Weimar constitution.82 Here was a document that had commanded some allegiance from the German populace, and with amendments could provide the basis for immediate elections. By contrast, Marshall's approach meant delaying a popular vote for months if not years. As all three Western powers were resisting a return to Weimar, Molotov proposed a plebescite. Why not allow the Germans a voice in how powers should be distributed between the central government and the Lander? Marshall demurred, claiming that "we cannot assume at the present time or in the immediate future that the German people are prepared to act intelligently on this question." Molotov alluded to an American policy paper, which spoke of political authority "as emanating from the people and subject to its control." He wondered if the "thesis" was still valid. Clearly the experience of Hitler had demonstrated the dangers of plebiscites. Did this then mean that "we can no longer use a plebescite to find people's opinion on any question?"83 Molotov's line of argument sat poorly with the Americans, who regarded this as a cynical invocation of democratic values. In their irritation, they gave no attention to the conservative implications of the Soviet position. The Weimar constitution had not been especially advantageous to the KPD. Under conditions of a four-power occupation, it was likely to prove even less so. Whatever its liabilities, it provided for a substantial degree of decentralization: prescribing provincial Landtags and a national legislative house that was derived from these bodies. Had they been in a less partisan mood, American delegates might have perceived the Russian endorsement of Weimar as another sign of weakness. By promising to support this political structure, the Soviets were suggesting a willingness to jeopardize SED control in the east despite
82
83
Molotov, "The State Organization of Germany," April 2, 1947, Speeches and Statements-, "The Composition of the German Advisory Council," April 5, 1947, ibid.; "The Form and Scope of the Provisional Political Organization of Germany," April 8, 1947, ibid.; "The Division of Powers Between the Provisional Central German Government and the Governments of the Lands," April 8, 1947, ibid, Marshall to Truman, April 7, 1947, RG 43 Moscow CFM, Box 154, DSNA; Molotov, "The Form and Scope of the Provisional Political Organization of Germany," April 7, 1947.
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circumscribed opportunities in the west.84 As they sat in Moscow, the Americans were in a position to observe firsthand some of the deplorable material conditions that were constraining Stalin's German policy. Moreover, the reports from Berlin were continuing to highlight the SMA's desperation. According to the Political Division, Soviet officials had informed the leaders of the SED that German unity was now urgent. Without raw materials from western Germany there would soon be "serious interruptions of production, plants will be forced to close, bankruptcy will follow."85 Yet none of this information seemed to matter. In its own gathering momentum toward partition, the U.S. delegation found Soviet intractability on every issue. Determined to emphasize points of difference, the Americans chose to reopen the question of Germany's eastern border. This decision, under consideration since Stuttgart, had been strongly contested by the U.S. ambassador to Poland, Bliss Lane, who feared it would weaken the anticommunist forces in that country.86 He contended that once the United States had accepted the deportation of the Germans from the Oder-Neisse territories, they had signaled their acceptance of the permanence of the boundary. The Poles could not understand "why Germany, which ravaged Poland and deliberately destroyed Warsaw house by house, should be the gainer at Poland's expense." Bedell Smith had rebutted Lane with the same sort of arguments he had used against Clay.87 Germany was more vital than Poland, and there was now a vigorous struggle going on in western Germany to stop the extension of communism. By contrast, Poland was "already under Soviet domination and likely to remain so for a long time to come." Thus "whether or not the Polish people remain or turn still further to the east matters little provided the German people remain faced in the Western directions." Lane had continued his dissent, insisting that the Polish people were not turned east, and that regardless of the recent rigged elections there was still
84
85
86 87
An indication of the Soviet attitude is suggested by January 1947 meetings with the German leaders of the SED. At that time, the Soviets raised the prospect of legalizing the SPD in the eastern zone in exchange for the recognition of the SED in the western portion of the country. As observed by Naimark, "The January-February 1947 discussions in Moscow indicated that Stalin and his lieuenants seriously considered an 'all-German' formula for both solving their problems in Central Europe and the SED's problems in the zone," The Russians in Germany, Chapter 5; See as well, "Reise nach Moskau vom 30.1.-7.2.1947," in Badstiibner and Loth, Wilhelm Pieck-Aufzeichnungen zur Deutschlandpolitik 1945-1953, 110-26. In a personal letter to Joseph Dodge, Clay wrote, "Progress here in Moscow is slow and uncertain. However, patience is required. The problems are many and complex and one has only to visit Russia to realize how much its policy is affected by dire need." Clay to Dodge, March 24, 1947, Dodge MSS, Box 1, DPL; Heath to Marshall, April 4, 1947, RG 59 862.00, DSNA. Lane to Secretary of State, January 13, 1947, FRUS 1947 11:142-43. Smith to Secretary of State, February 3, 1947, Ibid.1151.
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an important contest going on. Just as Smith had written off eastern Germany in advance of the Americans on the scene, he was also dismissing the complexities in Poland. In their focus on Western Europe, both he and his colleagues on the U.S. delegation were developing an intellectual stake in perceiving Eastern Europe as lost.88 Playing to a west German audience, Secretary Marshall directly challenged the Oder-Neisse frontier. Claiming that there had been no final agreement on Germany's border, he called for an international commission to evaluate the territorial claims. Molotov scornfully cited chapter and verse of Potsdam in order to demonstrate that the German-Polish border had been irrevocably settled. Observing that 5,678,936 Germans had been moved out of the area with the consent of the Allied Control Council, and that thousands of Poles had moved in, no one could suppose that this "had been undertaken only as a fleeting experiment."89 By mid-April, the ministers were moving through the agenda without any sign of resolution. Whatever the issue - the Oder-Neisse frontier, control of the Ruhr,90 the American disarmament treaty - positions seemed far apart. Hoping to bring the meeting to a conclusion, Secretary Marshall decided to visit Generalissimo Stalin. The Russian leader had extended invitations to each of the foreign ministers early in the conference. Bevin and Bidault had already paid their call, but the American secretary had preferred to wait until the conference had taken a more decisive turn. Now there was no reason for delay. Flanked by Ambassador Smith and Chip Bohlen, the secretary entered the Kremlin for a late night meeting with the Russian leader. After the usual pleasantries, Marshall told Stalin that he was "very concerned and somewhat depressed at the extent and depth of misunderstandings and differences," which had appeared during the conference.91 This seemed part of a general deterioration in U.S.-Soviet relations that had occurred since the war. At the time of victory, "no country had enjoyed such public esteem and admiration in the United States as the Soviet Union, because of what it had done in the war." Unfortunately, American public opinion had lost its regard for the Soviets "largely if not entirely due . . . to the numerous acts on the part of the Soviet Union." In this Moscow meeting, the atmosphere of distrust and suspicion had made an agreement "virtually impossible." Marshall discounted Soviet charges that the United States was trying to
88 89
90 91
Acheson to Secretary of State, January 25, 1947, RG 59 862.014, DSNA; Lane to Secretary of State, February 10, 1947, FRUS 1947 11:155. Molotov, "The Basic Directives for the Preparation of the Peace Treaty with Germany, including the Question of the Polish-German Frontier, "April 9,1947, Speeches and Statements, 78-87. Secretary of State to Truman, April 10, 1947, PSF, Box 162, HST. Memorandum of Conversation, April 15, 1947, FRUS 1947 11:337-44,
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dismember Germany. He assured Stalin that the United States "deeply desired economic unity." It did not want "a centralized . . . dominant German government which would control industry, education, finance, and other matters" because this would endanger the peace of the world. The purpose of the bizone was not to sabotage Potsdam, but to save money for British and American taxpayers, who were bearing the cost of zonal disunity. In concluding his presentation, the secretary stressed his government's sincerity in seeking not only economic integration, but a German disarmament treaty. The United States and the Soviet Union might have two very different forms of government, but Americans were not trying "to convert the Soviet people" to their form. What the United States was trying to do was to help countries that were suffering from "economic deterioration" get on their feet. There was "no intention of dominating or trying to dominate any country in the world." Stalin replied that a solution to the German problem should remain in the framework of prior agreements. If modifications were needed, this should be done on a four-power basis. As regards a future German government, the Russians were also opposed to a strong central state and "more than anyone, did not want to see Germany rise again as an aggressive power."92 However, if a national German government possessed less authority than the individual Lander, this would not be a real government. The Allies would be forfeiting control "of the instrument of German unity and handing it over to the militarists and the chauvinists" with many attendant perils. The Russian leader was most voluble on the question of reparations. U.S. proposals would deprive his country of any deliveries beyond that already received. By his accounting this amounted to approximately 2 billion dollars' worth of goods, including capital equipment, German assets in eastern Europe, and finished products. At Yalta, when the Soviets had asked for io billion dollars, all the Americans had agreed the amount was "very small." Now unfortunately, "a different point of view" was operative and the Soviet Union's removals were to be severely limited. In view of their wartime sufferings, the Soviet people could not accept this. Such complaints notwithstanding, Stalin denied that "the situation was so tragic." Claiming to be more "optimistic" than Secretary Marshall, he thought these were "the first skirmishes and brushes of reconnaissance forces" on the Germany problem. In the past, there had been disagreements on many subjects but usually after arguments, the necessity for accommodation had been accepted. Even if this particular conference should fail to achieve a settlement, that "should not cause anyone to become desperate." With patience, an accommodation would be reached. Meanwhile
92
Ibid.
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his government would be frank in its dealings, and would not try to compete for the loyalty of the Germans.93 In the aftermath of the meeting, Marshall was optimistic that the Soviets would accept the U.S. drafted disarmament treaty without the crippling amendments previously offered by Molotov. Though recognizing their dislike of the pact, he cabled Truman that they might be ready for compromise. He speculated that "we are now seeing some results of my interview with Stalin." Since the situation was fluid, he hoped the White House would be careful not to leak the minutes of that encounter, lest the account of "my frank comments" arouse Stalin's resentment.94 Whatever Marshall's reasons for expecting a shift, they proved inaccurate. By April 23 it had become clear that Molotov was standing by his amendments. This was a genuine blow to the secretary, who proclaimed that the ministers' acceptance of the treaty "would have been an indication to the world that despite the character and extent of our disagreements on other aspects of the German problem," the four powers were "at least united in their determination to prevent a revival of Germany's capacity to make war." The advantages of this were "so obvious" that the United States "finds it difficult to understand the reasons for the Soviet Government declining to agree."95 For Marshall, as for Byrnes, the Russian posture was truly incomprehensible. As both men saw it, the treaty was a benign idea that ought to satisfy
93
In subsequent years, American participants at Moscow described the MarshallStalin encounter as a moment of truth for the U.S. Secretary, the instant when he
94 95
finally gauged the full depth of Soviet cynicism. W h a t Marshall ostensibly learned was h o w uninterested the Soviet leader w a s in reaching a n agreement. The Russian's apparent goal w a s t o paralyze Germany, ruin West European recovery, a n d create conditions for a revolutionary takeover. As presented by the Bohlen memoirs, "Stalin took a relaxed attitude towards the failure of the conference t o achieve any results," a n d repeatedly asserted that, " ' W e m a y agree the next time, or if n o t then, the time after t h a t . 5 " Bohlen claimed that Stalin's "main thesis" was that there " w a s no urgency about settling the German question." This so upset Marshall, that he talked all the w a y back t o Washington "of the importance of finding some initiative to prevent the complete b r e a k d o w n of Western Europe." Bohlen, Witness to History, Z6Z-64. These conclusions are n o t sustained by Bohlen's o w n minutes of the meeting, which he described as a "full account." N o w h e r e does Stalin say, " W e can agree the next time, or if n o t then, the time after that." T h e Russian's statement that there was n o reason " t o become desperate" over the failure of the conference could be construed as a m a r k of indifference. But in the context of Stalin's followup comment that all the main questions "could be compromised," it might be more plausibly read as a bid for a n e w negotiation. If the Secretary w a s seriously disappointed in M o s c o w , it seems unlikely that this w a s the product of his talk with Stalin. Secretary of State t o Acheson a n d T r u m a n , April 17, 1947, FRUS 1947 11:351. Molotov, " M r . Marshall's Statement o n the Draft Four-Power Treaty o n the Demilitarization of Germany," April 2 3 , 1 9 4 7 , Contained in Molotov, Speeches and Statements, 1 0 7 .
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at least the minimum claims of all the Allies, assuming they were operating in good faith. However, the Soviets were not wrong in seeing that for the Americans the minimum had become a maximum, and that the treaty was being offered as a replacement for many of the security commitments that had been made at Potsdam. From their point of view, a guarantee of American protection was less confidence-inspiring than actual changes in Germany's economic and political institutions. Moreover, the American attitude toward the treaty had undergone a gradual transformation. Though originally written to gain Soviet and French support for German unification, now it was an interim measure to maintain four-power cooperation while the bizone was built up.
O N C E THE disarmament treaty was foreclosed, there was no longer any quadripartite business to conduct. Yet throughout the conference, the Western powers were also following an unofficial agenda in clarifying their own relationships to one another in occupied Germany. As the Soviet negotiation waned, these efforts assumed greater centrality so that by late April they had become the real work of the meeting. U.S. representatives were more alarmed by the French political situation than at any previous gathering. During November elections, the Communists had polled an unanticipated 28.6 percent of the vote, making it the single largest party in the French Assembly.96 This electoral strength had not been translated into ministerial portfolios, but the residual power of the Communists fed American reluctance to upset the new Ramadier government. In Moscow, U.S. strategy was to eschew coercion and to offer Bidault positive incentives for collaborating with the bizone. Although the French had modified their German policies in advance of the CFM, once there they were immovable.97 This resistance encompassed every major item on the Anglo-American agenda, including even the disarmament treaty. The Americans and British deplored the obstructionism, but finished off the coal agreement and endorsed the French claims on the Saar. Recognizing the concessions, Bidault explained to Marshall that he was still unable to affiliate with the bizone. Until the political conditions in his country improved, he hoped the United States would be patient. The secretary indicated great sympathy for Bidault's situation, and promised to help France procure a new loan with the World Bank.98
96 97
98
Joyce and Gabriel Kolko, Limits of World Power, 158-59. They resisted a German provisional government, pressed for reparations from current production, demanded the internationalization of the Ruhr, refused to authorize an increase in the Level of Industry unless the Ruhr was severed, and objected to the Byrnes treaty in terms that echoed Molotov, Memorandum of Conversation Between Mr. Georges Bidault and General Marshall. March 13, 1947. Memorandum of Conversation by the Secretary of State, Bidault, Alphand and Matthews, April 20, 1947, FRUS 1947 11:367; Willis, French in Germany, 45.
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At Moscow, the most intense dealings were between the Americans and British. By virtue of their participation in the bizone, the two countries were now openly aligned against the Russians. Yet they were also preoccupied with the serious internal problems that had cropped up since the launching of their project three months earlier. Although the German committees had been put in place, and the appropriation of goods and capital were starting to flow, there was no intimation of economic recovery. This was partly the result of the miserable weather, partly the inherent complexity of the task. More disturbing was that the Germans on the bizonal committees were locked in partisan controversy, the Lander were not complying with committee instructions," and the Americans and British representatives on the Bipartite Board (BICO) were unable to agree on industrial policy. During the weeks before Moscow, the British had steadily attempted to expand bizonal authority, but had been blocked by Clay who was holding things open for the Russians. The lack of progress was especially frustrating to the British, whose desperate financial condition left little margin for mistake. Moreover, it was in the Ruhr that the organized discontent was at its highest pitch, as exemplified by a series of work stoppages during the first week of April.100 At this juncture, British Military Government was keenly attuned to the SPD leadership, which was complaining bitterly about the absence of German control. In approaching the Moscow conference, Bevin's affirmative goal was to strengthen the bizone by new agreements with the Americans.101 Until the Soviet negotiation was a definite failure, this could not be developed. During the first weeks of the meeting, the U.K. delegation was still not confident of American firmness. To prevent any backsliding they had dug in their own heels by proclaiming that they would not accept current production reparations unless Germany's export-import accounts were in balance. Bevin's stubbornness contributed to the diffuse American conviction that there were more important uses for German goods than providing relief for the Russians. Yet little persuasion had been needed. After all their fretting, the British found their U.S. counterparts to be as receptive as they were to a quadripartite breakdown.102
99
Thus in Bavaria, for example, the Minister for Agriculture Dr. Josef Baumgartner
100
101 102
refused to comply with an order that Bavaria supply other Lander with food. Delbert Clark, "Bavarian Resists Allies Food Plan," New York Times, April 2, 1946. Altaffer to Secretary of State, April 1, 1947, RG 59 862.5043, DSNA; Heath to Secretary of State, April 3, 1947, RG 59 862.5018, DSNA; Strang to Robertson, April 4, 1947, FO 371/65020/PRO. Bullock, Bevin, 388-92; Steininger, "Ruhrfrage und Sozialisierung in der AngloAmerikanischen Deutschlandpolitik 1947/48," 167-240. Memorandum of Conversation with Ernest Bevin by the Secretary of State, March 22, 1947, FRUS 1947 11:273; Unsigned U.K. Memo, Economic Principles, April 4, 1947, FO 371/65052/PRO.
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Once the stalemate had materialized, the British felt more optimistic about the bizone. Writing to the Foreign Office, delegate Hall-Patch reflected that "whether Clay likes it or not he will be forced into a more fruitful collaboration with us to make the two zones an efficient paying concern."103 Absent quadripartite economic unity, "we shall both have our hands much freer to take common action to make the fusion agreement a success." If U.S. Military Government tried to impose impediments, there would be "the strongest possible grounds" for objection. The British had in mind certain immediate steps. Bevin called for the revision of the Level of Industry plan on a bizonal basis, pegged to a steel figure of 10 million tons. Once this was instituted, he favored the delivery of surplus factories to Western Europe and the Soviet Union. He also recommended various improvements in the bizonal machinery, including the physical concentration of the committees at Minden, the integration of the American and British staffs, and an expansion of the policy "lee-way" for the German organizations.104 Back in his headquarters, Clay was in high dudgeon when he learned that Marshall and Bevin were discussing bizonal matters. He considered that all the British proposals were technical in nature and should be handled by the Military Governments in Germany.105 By going directly to the Secretary of State, the British were obviously reckoning on his inexperience to gain fast victories on disputed points. For many weeks, OMGUS had been resisting British ideas for bizonal reorganization. Though ostensibly innocuous, these derived from the larger goal of creating a more centrally planned, quasi-socialist economy in the western zones. This conflicted with the American preference for a free market regime. If there was any advantage in severing the Soviet connection, it was in liberating the engines of German capitalism. To sacrifice east Germany and then allow the British to create new fetters seemed absurd.106
103 104
105 106
Sir Hall Patch to Roger Makins, April 5, 1947, FO 371/65052/PRO. Bevin's plan was to introduce this proposal into the CFM, and when the Russians failed to accept, to institute it on a bizonal basis. Memorandum of Conversation by the Secretary of State, April 5, 1947, FRUS 1947 11:309-11; Memorandum of Conversation by the Secretary of State, April 8, 1947, Ibid.:315-16; Makins to Patch, April 9, 1947, FO 371/65052/PRO. Clay to Draper. April 13, 1947, Clay Papers, 1:335. Clay acknowledged the need to make the bizonal agencies more efficient, but maintained that their present failure stemmed from "fundamental" differences in the American and British viewpoints. The Germans were inclined to "an almost complete regimentation" of their economy, and they had "considerable British sympathy for this purpose." As a consequence, the agencies were attempting to control a range of functions that far outstripped the capacities of their personnel. In the general's opinion the remedy for bizonal woes was more, rather then less decentralization of responsibility. Clay to Draper, April 11, 1947, Clay Papers, 1:333-34-
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Clay's frustration reached a boiling point after a talk with Sir Cecil Weir, the head of the British Economics Division. On April 12 Weir returned from Minden, where he had gotten an earful of complaint from Victor Agartz, the SPD chairman of the Bizonal Executive Committee. The latter was feeling thwarted by the lack of central authority and the insubordination of the individual Lander. Sympathetic to the Agartz agenda, the British Labourite pressed the case with Clay. The general replied furiously that it was "totally foreign to his ideas that there should be any central planning or production." The U.S. objective was to stimulate exports, not to intensify industrial regimentation. Since there was such a difference in social philosophies, perhaps the zones should be "administratively separate." Without undoing the fusion accord, the two powers could divide up the money and proceed autonomously.107 Though probably a bluff,108 Clay's eruption created the only excitement in Moscow, where the delegations were still plodding through the dreary agenda. Among the British, he was already known as the "tyrant of Frankfurt" who had to be managed with the utmost care. With this reputation newly sustained, Bevin sprang into action. Since Clay would not be returning to the CFM, the foreign minister urged Secretary Marshall to join him in writing a new program for the bizone that would be delivered personally to OMGUS headquarters.109 On April 18 Marshall, Bevin, Robertson, and Draper forged a compromise. The four agreed to draw up a new Level of Industry plan for the bizone. While postponing a decision on specific figures, Marshall expressed a formal wish that the final figure for steel would come in "close to" 10 million tons. In six weeks, when the plan was ready, it would provide the basis for listing installations to be allocated to IARA and the Soviet Union. Bizonal administration would be improved by concentrating the German committees in Minden. Without specifying what the allocation of powers should be between these central bodies and the Lander, it was stipulated that these arrangements should conform to future plans for a provisional government.110 The American-British accord was designed to give momentum to the
107 108
109
110
Brownjohn to Roberstson, April 12, 1947, FO 3 71/6505 2/PRO; Brownjohn to Robertson, April 13, 1947, Ibid, This was certainly Draper's judgment, who told Kindleberger that Clay's statement was nothing more than "tactic to bring the British into line." Kindleberger to deWilde and Covery, April 15, 1947. The Foreign Office advised Bevin "that the position taken by General Clay raises a fundamental issue on which we cannot afford to compromise. We hope it may be possible to secure a decision in Moscow. It seems of overriding importance, in the light of the failure to secure economic unity, to make sure that fusion at least is a success." Foreign Office to U.K. Delegation at Moscow, April 16, 1947, FO 371/65052/PRO; Bevin to Marshall, April 14, 1947, FRUS 1947 11:475. Kindleberger to DeWilde and Covey, April 18, 1947, Kindleberger MSS, MIT.
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bizone while temporarily ignoring the underlying philosophical differences. In following this procedure, Marshall was doing with the British what he had refused to do with the Russians - namely, to paper over serious disagreements in order to maintain the rudiments of cooperation. For all the ambiguities, the two powers had resolved something important: Barring unforeseen developments, in six weeks' time they were going to raise the lid on West German industry without their colleagues' consent. This would be the most overt breach of Potsdam since its signing. 111 On a onehour stopover at Berlin's Templehof Airport, Marshall explained the new situation to General Clay. The Secretary of State did not expect a settlement with the Russians for many years. He therefore urged Clay to take as his primary mission the task of collaborating with General Robertson so that the bizone could become an economic success. 112 the Moscow Conference of Foreign Ministers constituted a turning point in international relations, Marshall thought it necessary to make a public accounting. In a national radio broadcast on April 28, he described his disillusionment at the meeting. 113 He had gone to Moscow with hopes that there could be significant progress in unifying Germany. At the very least, he had thought the Allies could sign a disarmament treaty and write some guidelines for the future work of the deputies. None of these expectations had been met. Russian attitudes had made it impossible to reach an accord. Throughout the occupation "the Soviet occupied zone has operated practically without regard to the other zones." There had been "little or no disposition to proceed on the basis of reciprocity," nor even to provide the other Allies with essential information. Indeed the "unwillingness of the Soviet authorities to cooperate in establishing a balanced economy for Germany" had been the "most serious check" in the development of a self-supporting country that could supply its neighbors with coal and other needed goods. This same obstructionism had been operative at Moscow, where the Soviet Union had insisted upon reparations from current production as a precondition for German unity. The U.S. goverment did not believe that such reparations had been contemplated at Potsdam. However, it had agreed to study the question, so long as it was understood that these removals could not increase the financial burden of the Allies, or postpone the repayment "of the advances they had made to keep the German economy
R E C O G N I Z I N G THAT
111
111 113
The six-week delay was partly the work of Draper, who had teamed up with Edward Mason to slow things down. They stressed, in opposition to Bevin, that an earlier proclamation would be "too indicative of a breakdown in relations" and that "Russia and France should be given some opportunity of reconsidering their position." Kindleberger to DeWilde and Covery, April 8, 1947.
Clay, Decision in Germany, 174; Smith, Lucius D. Clay, 426. George C. Marshall, Radio Address, April 28, 1947.
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from collapsing." Unfortunately, the Soviet Union had made no response to this offer. Apart from economics, there were other provocations. The Soviets had scuttled the four-power disarmament treaty by adding numerous amendments designed to alter its character. They had resisted Western proposals to create a federal type of German government. And they had demanded the establishment of a centralized political structure, which could endanger democratic norms. The secretary concluded that "agreement was made impossible in Moscow because . . . the Soviet Union insisted upon proposals which would have established in Germany a centralized government, adopted to the seizure of absolute control of a country, which would be doomed economically." With inadequate land, excess population, and an obligation to turn over "a large part of its production... principally to the Soviet Union," Germany would be ripe for disaster. Marshall alluded to Stalin's call for patience, and expressed his own continuing wish that cooperation might develop. But he made it clear that the United States was no longer willing to wait: we cannot ignore the factor of time involved here. The recovery of Europe has been far slower than had been expected. The patient is sinking while the doctors deliberate. So I believe that action cannot await compromise through exhaustion. New problems arise daily. Whatever action is possible to meet these pressing problems must be taken without delay. While eschewing specifics, the secretary indicated that the United States would now gear its German policy to the economic revival of Europe. Marshall's talk accurately identified many of the points in dispute between the Americans and the Russians, and appropriately signaled the alteration of U.S. policy - away from East-West collaboration and the implementation of German unity. However, as a means of enlightening the American public about the nature and reasons for the impasse in Moscow, it was seriously misleading. Members of the U.S. delegation had not been disillusioned by the proceedings.114 Many were bored, irritated, and at times infuriated by Russian
114
Yet the theme of American disillusionment at Moscow has entered the iconography of the Cold War. This partly reflects the testimony of the participants. Thus John
Foster Dulles, who had gone to Moscow determined to block an agreement, proclaimed on national radio that the failure of the meeting was "a grave disappointment" to the United States. See discussion of Dulles' views in Pruessen, John Foster Dulles, 346-49. In his memoirs, Robert Murphy wrote that "the Soviet government... finally put its cards on the table at the Moscow conference, leaving no doubt that Russia's goals were a direct threat to Anglo-American objectives in Germany. The Russians finally revealed their confidence that they could thwart Western plans for Germany's economic recovery and thereby could jeopardize rehabilitation of non-Communist Europe." Murphy, Diplomat, 341. According to
314
behavior, but most had corne to Moscow expecting a stalemate. Among Marshall's State Department advisors, no one thought that German guidelines would be written or that the disarmament treaty would be accepted. Ben Cohen had expressed a group consensus when he predicted that the conference would "not make any great accomplishment other then to clarify and reduce the issues." The U.S. representatives from Military Government had greater aspirations, but this was because they hoped their own delegation would be more forthcoming on reparations. If there was disillusionment on the American side, it was that of the army with the State Department. There was also little basis for suggesting that the Soviet Union was deliberately stalling German unification. During the summer of 1946 this may have been the Soviet tactic. However, at the Moscow meeting, the overriding perception of both the American and British negotiators was that the Russians were frightened by the prospect of partition, and were eager for a deal. If there was a preference for delay, this was an AngloAmerican attitude, signified by Marshall's comment early in the conference that he would "rather build solidly than build fast."115 What was disturbing to the Americans and British was that the Soviets were proposing terms of unification that they disliked. To the extent that the secretary discussed the Russian terms, he gave the public little indication of their character, rationale, or complexity. Thus in reviewing the political issues Marshall alluded darkly to "a government, adopted to the seizure of absolute control of a country." He failed to mention that the Soviets had proposed a modified version of the Weimar constitution, in which executive authority had been reduced. Nor did he explain that it was the Soviet Union that was asking for a nationwide election to decide government structure, whereas the United States and Britain preferred to set a structure in advance of elections. Had the secretary pointed these things out, practical solutions might have remained elusive, but the American people would have received a less ominous impression of the Russian stance. Marshall's remarks on reparations were even less informative. The most astute listener could scarcely have imagined the tense disputes taking place within the American delegation over what political, social, and economic concessions the Soviets would make in exchange for current production. Marshall had stressed the Russian refusal to permit economic unity if such reparations were not forthcoming. What he did not acknowledge was the Truman's memoirs, Marshall "had gone to Moscow with the hope that he would persuade the Russians that the United States was working for peace. The Russians,
however, were interested only in their own plans and were coldly determined to exploit the hopeless condition of Europe to further Communism rather than cooperate with the rest of the world." Truman, Memoirs, I I : n z . Secretary of State Marshall, Economic Principles, March 31, 1947.
115
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Soviet indications of compromise, once their material requirements were met. The clear implication of Marshall's presentation was that the Soviet Union had confronted the Western powers with a new and extravagant request for goods, designed to produce economic collapse in Germany. In reality, the Soviets had been repeating the 10 billion dollar figure for more than two years, with the original support of the United States. What had changed was the Russian emphasis on current production as opposed to capital equipment. However, Molotov was correct in asserting that current production reparations had been envisioned at Yalta, and at the very least, was not repudiated by Potsdam. Since all parties, except France, were now determined to raise the Level of Industry and reduce the allocations of capital equipment, the Russians were not asking for a larger amount of compensation, but rather a different type. In his speech, Marshall had emphasized that the United States was prepared to consider some substitution so long as this did not increase the cost to Allied taxpayers or prevent the repayment of past deficits. What he did not explain was that the Allies were now committed to pouring enough resources into Germany to enable it to become not merely self-supporting, but able to sustain the economic recovery of Western Europe. This being the case, the use of the first-charge principle meant in practice that it would be years before the Soviet Union could receive any more current production reparations from its own zone or western Germany. Since much of this was abstruse and technical, it was natural for Marshall to try to simplify the issues for a wide audience. However, Marshall's particular simplifications conveyed a discrete message: that the Russian doctor was trying to kill the patient. This lethal imagery effectively foreclosed an informed debate over policy alternatives.116 Yet even among U.S. policy makers, whose knowledge of the issues was more complex, the exploration of options had been closely circumscribed. Faced with a Soviet negotiating position, which whatever its shortcomings was neither revolutionary nor fixed, and which seemed obviously geared to the attainment of German unification, the Americans were unwilling to engage in substantive diplomacy. Like the British, their approach to the Moscow discussions was to state their preferences and when these were rejected to take unilateral action in the west. While the leadership of OMGUS appeared to depart from this pattern, they did so only by degree. Clay and Draper had developed an honest compassion for Soviet suffering, and they were earnestly committed to German unification. Yet although they were flexible on the issue of current
116
Given the flow of information, it was not unpredicted that press support for Marshall's approach would be "highly favorable." State Department, "US Opinion
Concerning Germany," May 2, 1947, RG 107 ASW 072, MMNA.
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production reparations, they were not prepared to accept any of the Russian ideas about the social, political, and economic organization of the country. Their aim was to buy Russian agreement without yielding on any of these items. What so aggravated Clay and Draper about the State Department was its reluctance to probe a potentially favorable deal that might yield up eastern Germany and perhaps ultimately Eastern Europe.117 Such rigidity obviously precluded any other kind of bargain. Many on the delegation felt that OMGUS was naive in arguing that reparations alone would do the trick. However desperate the Soviets might be, it was foolish to think that Stalin would abandon the other aspects of his German program. During the Moscow session, as in the months preceding it, the Soviets had sent out contradictory messages, suggesting on some occasions that reparations was their main concern, and on others that Germany must be drastically reformed. If embattled over current production, the U.S. delegation was solidly aligned against further internal changes of the sort espoused by the Soviet Union. Without acknowledging it even to themselves, the Americans had chosen to separate western Germany at a time when the country's unification still seemed attainable. Among its delegates there was no desire to learn what, if anything, the Soviets might really settle for: whether it be increased reparations, the Weimar constitution, a more vigorous denazification and decartelization program, nationwide elections with proportional representation, or the retention of a limited veto for the zone commander. Far short of the centralized, socialized state that Marshall had evoked, there were moderate possibilities still on the negotiating table. In choosing to draw the line, the Americans were partly acting out their fears of communist subversion: their conviction that no matter what the safeguards, the KPD would find ways of dominating a unified country. Nevertheless, there were constant reminders from people on the scene that communism was a weak force in Germany, which was being artificially bolstered by the segregation of the Soviet zone. Underpinning their willed paranoia was a more realistic concern that even the Soviets' minimum agenda would be disruptive to West European recovery. If Germany shipped free industrial products to the east, if Ruhr coal was utilized for this purpose, if there were renewed attacks on compromised business leaders, if there was a ceiling on large enterprises, if labor unions had more power, if the Soviet Union had a voice in Ruhr decision making - such
117
Leffler, A Preponderance of Power, 153; Krieger, "Was General Clay a Revisionist?" 169-71. In recent years, the "dovishness" of Clay has received substantial scholarly attention. Two major biographies, Backer, The Winds of History, and Smith, Lucius D. Clay, offer substantial documentation for this point. While both works are exceptionally useful, they downplay the extent to which Clay's early friendliness to the Russians rested on the belief that they would do most of what the United States wanted in occupied Germany.
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things would complicate Germany's economic integration into Western Europe. It was easier to shut off dialogue while faulting the adversary for intransigence. While U.S. officials often spoke as if there was only one path to European recovery, their approach had a narrower character. Not only did they assume that reconstruction must be carried out by private enterprise; they also regarded free trade within western Europe as an indispensable ingredient. This had its origins in a long-standing conception of American economic interests as requiring the reduction of international barriers to exports and capital.118 In removing the Soviet impediments to their imperiled vision of recovery, the Americans were incurring certain costs. As emphasized by Clay and his colleagues, the most tangible of these was the reduction of access to east Germany - both its resources and polity. If the country remained divided and if, as was now contemplated, that division was deepened, the Soviet Union would weld its zone to their own bloc. More broadly, the collapse of the four-power experiment in occupied Germany meant the effective end of the Grand Alliance, posing new if ambiguous challenges to the safety of Europe.
118
For discussion of this issue, see McCormick, America's Half-Century, 43-78; Gabriel
and Joyce Kolko, The Limits of Power, 11-175; Kuklick, Division of Germany,
3-19; 226-41.
8 Marshall's Medicine
The difficulty under which we labor is that in spite of our announced position, we really do not want nor intend to accept German unification in any terms that the Russians might agree to, even though they seemed to meet most of our requirements, since as they have declared war on European recovery, we know . . . that they would . . . prevent the resources of Germany from contributing. (Walter Bedell Smith to Eisnhower, December 10, 1947).J It is now known that there is an intention to make Germany, or at least western Germany, the object of a definite American plan in Europe.... Germany's affairs are judged and decided by American Senators and American businessmen of every description who boss it in the Western zones and help the American monopolists to penetrate ever deeper into the industries and banks of Western Germany. (V. M. Molotov, Statement to Soviet Press, December 31, 1947).z WiTHTHECOLLAPSEofthe Moscow conference, U.S. officials felt they
could finally deal with the problem of European recovery. Even before the meeting, they had begun to envision a new economic assistance program that would include Germany. They could now incorporate the western zones, without either the constraints of Potsdam or Soviet interference. Such advantages seemed to overshadow the forfeit of the eastern zone. By summer, the Americans were discovering that the movement toward partition did not immediately ease the task in western Germany. In elaborating their economic agenda, they were challenged by the French, who still wished to block German industrial revival. They also faced serious opposition from the British, who in association with the German SPD and
1 z
Smith to Eisenhower, December 8, 1947, Smith MSS, DDE 162, Box 101, DDE. V. M. Molotov, The Results of the London Meeting of the Foreign Ministers, December 31, 1947, in Molotov, Problems of Foreign Policy, 551.
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the trade unions, were pressing for socialization and expanded worker rights. Conflicts with Western partners fortified the American determination to lock the Soviets out of west Germany. That determination was growing in any case because in the wake of the Marshall Plan, the Soviets' behavior was increasingly provocative. Their new militancy allowed U.S. policy makers to assert that Soviet aggressiveness was forcing the insulation of all Western Europe. However, the Americans had developed a quite independent preference for a German partition. Already evident at the Moscow meeting, this emerged even more clearly during the lead-up to the November 1947 Council of Foreign Ministers when it appeared that the Russians might accept most of their demands. Significantly, U.S. officials still opted for schism, preferring to keep the Red Army in Central Europe rather than forfeit control over the European Recovery Plan.
I. THE PRESCRIPTION
In setting the framework for an assistance plan, the Americans were intent on narrowing the economic gap between the western zones of Germany and its neighbors. Among themselves, there were serious disputes over the precise meaning of that commitment. However abrasive, their bureaucratic differences were dwarfed by controversy with the French, whose conception of security was directly violated. This yielded fierce battles over the German Level of Industry, the quantity of coal exports, and the future of the Ruhr. As THE U.S. delegation sat in Moscow, the State-War-Navy Coordinating Committee (SWNCC) was just finishing its preliminary study of new foreign aid programs.3 Responding to a request from Under-Secretary of State Acheson, it called for a planned economic package that would allow the United States to take "positive, forehanded, and preventative action." Since the need for American help far outstripped its ability to provide, it was essential to give "the highest priority to the nations or areas which are vital to our national security and national interests."4 The SWNCC report offered little insight into what those "national interests" might be, or the type of economic program that should be developed.5
3
4 5
Moscow conference. For a diverging perspective, see important essay by Forrest Pogue, "George C. Marshall and the Marshall Plan: A Memoir of Policy Developments in Germany (1945-47): in Maier, The Marshall Flan and Germany, 46-70. Report of the special "Ad hoc" committee of the State-War-Navy Coordinating Committee, April 21, 1947, FRUS 1947 111:204-19. The hodge-podge reasoning of this and subsequent governmental studies underpins the conclusion of many historians that U.S. policy makers were driven by a mixture
This chronology is significant because it contravenes the suggestion that Marshall's desire for a European recovery plan was a response to his disillusionment at the
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Its main effect was to ratify the growing realization within the government that something comprehensive must be done for Europe and that the United States would have to pay. Already America had extended an excess of 9 billion dollars to the Continent through a series of specialized programs, which were largely geared to relief. Clearly such efforts were too small and too fragmented. After six weeks in the company of John Foster Dulles and the State Department's European specialists, Secretary Marshall had an enhanced appreciation of the economic emergency on the Continent. Upon his return, he immediately sent for George Kennan who had just been appointed director of the department's new policy planning unit. Although the diplomat was still completing his stint at the War College, the anxious secretary asked him to start right away, assemble a staff, and be prepared to present recommendations for a European recovery plan within a short period.6 He offered no specific guidelines, but urged him to "avoid trivia." There was little likelihood that Kennan would indulge in banalities. To him, Europe was the focal point of world civilization, and for years he had been pondering its fate with a mounting sense of tragedy. In the aftermath of the Moscow conference, Kennan saw the Soviets as ready to take it over: . . . They feel, in other words, that Europe is in reality theirs, although Europe may not know it: that they have already woven an invisible network of economic dependency around those proud nations of the continent which still fancy themselves to be free; and that they have only to await patiently the day when American failure to relieve the intolerable economic conditions of those areas will allow them to begin to draw tighter the cords of that invisible network and bring the west of Europe into the shadows which have already enveloped the east.7 As he explained in his valedictory to the War College, Kennan regarded the American failure in Germany as a major source of Europe's economic plight. He deplored the fact that for two years "we let the economic situation slide," while giving precedence to "a political program designed to accomplish the denazification and democratization of German public life." In attempting to pacify the Russians, the United States had "made no serious effort to restore the German economy to a point where it could play any appreciable role in solving the general economic problem of Western Europe." Fortunately, priorities seemed to be changing and public officials seemed more aware that "tens of millions of people are waiting almost as a matter of life and death" for German revival. But there must
of humanitarian, economic, and strategic (i.e., anti-Soviet) motives that they did not care to weigh. See, for example, Hogan, Marshall Plan, 26; Daniel Yergin, Shattered Peace, 309; Jackson, "Prologue to the Marshall Plan: the Origins of the American Commitment for a European Recovery Program," 1067-68. Kennan, Memoirs, 1:3 42. Ibid., 347-52-
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be no wavering. Unless the restoration of West Germany's productive capacity became "the primary object of our policy" the Soviets would win their gamble. While Kennan tended to situate the European recovery problem in the framework of the Soviet threat, the earliest position paper from his policy planning staff revealed a different emphasis.8 The document downplayed the Russian communist factor as the cause of Europe's economic woes, attributing them instead to the disruptive effects of the war. Tensions with the Soviet Union were making the situation worse, but were by no means primary. In its effort to assist Europe, American actions "should be directed not to the combating of communism as such but to the restoration of the economic health and vigor of European society." During May, as the policy planning staff hammered out specific recommendations, its analysis was reinforced by Assistant Secretary of State William Clayton, who returned from Europe in a state of great agitation. He emphasized to Acheson that "we grossly underestimated the destruction of the European economy by the war."9 Though appreciating the physical damage Americans had underrated the lethal effects of nationalization, land reform, the disappearance of private firms, and the disruption of preexisting market relationships. Among the effects, Europe was now suffering from a lack of self-sufficiency in coal and food. With millions facing starvation, the social and political fabric could disintegrate with "awful implications . . . for the future peace and security of the world." The impact on the American economy would also be "disastrous." Clayton foresaw "markets for our surplus production gone, unemployment, depression, a heavily unbalanced budget on the background of a mountainous war debt." To avert these perils the United States would have to spend between 6 and 7 billion dollars a year for the next three years, mainly in the form of surplus commodities such as coal, food, cotton, and tobacco. The president and the Secretary of State must make "a strong spiritual appeal to the American people to sacrifice a little themselves . . . in order to save Europe from starvation and chaos {not from the Russians) and, at the same time, to preserve for ourselves and our children the glorious heritage of a free America." By June, Marshall had received sufficient advice from the policy planning staff10 and from Clayton to warrant a public presentation. Speaking
8
9
10
1947 111:220-23; Kennan to Acheson, May 23, 1947, Ibid. William Clayton, The European Crisis, May 27, 1947, Ibid. 1230-3 2; See also Summary of Discussion on Problems of Relief, Rehabilitation and Reconstruction of Europe, May 29, 1947, Ibid. 1234-36. Policy Planning Staff, Policy with Respect to American Aid to Western Europe, RG 59 Policy Planning Papers (PPS), Box 1 DSNA.
Memorandum by the Director of the Policy Planning Staff, May 16, 1947, FRUS
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at the Harvard commencement, the secretary described the breakdown of the European economies and explained that the Second World War had caused greater damage than had been recognized. The lack of an agreed peace settlement for Germany and Austria had also "seriously retarded" the recovery. But even if the political problem was quickly resolved, it would take a substantial effort to put Europe on its feet.11 Europe's need to acquire American goods far exceeded its capacity to pay for them. Without substantial help it would "face economic, social, and political deterioration of a very grave character." This would adversely affect the political stability and peace of the world, while the impact on the American domestic economy was "apparent to all." The United States must now accept responsibility for "restoring economic health in the world." Such an enterprise would be directed "not against a country or doctrine, but against hunger, poverty, desperation, and chaos." Marshall called upon the European countries to seize the initiative by formulating a collective program for their own rehabilitation. The United States would provide "friendly aid" in the drafting and would later extend whatever level of support seemed practical. The secretary's address contained some disingenuous features, notably a not-so-open invitation for all European governments to participate. According to his remarks, "Any government that is willing to assist in the task of recovery will find full cooperation, I am sure, on the part of the United States government." While theoretically extending to the East European countries and the Soviet Union, Kennan's staff had assumed that the conditions of aid would so greatly impinge on sovereignty as to effectively preclude Soviet participation.12 Yet by contrast with the Truman Doctrine speech, delivered two months earlier, the Harvard talk provided a more accurate reflection of the administration's outlook. While invoking moral values, the secretary had forthrightly acknowledged that America's political and economic self-interest required the reconstruction of Europe. Also noteworthy was Marshall's effort to carefully place the U.S.-Soviet conflict within its wider context. Following another Kennan recommendation, he tried to avoid the impression that the establishment of "healthy economic conditions" was "a defensive reaction to communist pressure" rather than "something we would be interested in doing if there was no communist menace." In reality, the Truman administration's concern about European recovery predated the Soviet-communist threat,13 and would have existed anyway.
11 12 13
Press Release Issued by the Department of State, June 4, 1947, FRUS 111:237-39. Bohlen, Witness to History, 263-65. For studies that see the Marshall plan as continuous with long-standing U.S. desire for an integrated European economy, see Gabriel and Joyce Kolko, Limits of World Power, 359-83; Freeland, Origins of McCarthyism, 151-87; Hogan, Marshall Plan, 26-40; McCormick, America's Half-Century, 72-81.
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Even during wartime, the State Department planning committees had emphasized reconstruction and the establishment of a multilateral trading order on the Continent. Problems with the Russians did lend urgency to the situation. From the American standpoint, the Soviet Union's imposition of state ownership and planning across much of Eastern Europe and its constraint on German industrial development had exerted a downward pull on Europe as a whole. Moreover, the recent surge of communist strength in Western Europe imposed an obvious time pressure. Unless the economic deterioration was quickly arrested, such parties might gain control of governments and institute irrevocable changes. Among U.S. officials, these circumstances generated a momentum for action and a willingness to spend money that might otherwise have seemed excessive. In the short term, a European recovery program would likely increase the Soviet danger. To this point, the granting of political legitimacy to the West European Communists and the acceptance of the Soviet Union as a formal partner in the German occupation had encouraged peaceful and legal behaviors. However if, as the Americans were anticipating, a plan of economic assistance entailed larger subsidies to Germany, a cut-off in reparations to the Soviet Union, and the exclusion of communist parties from West European governments, retaliation might be fierce. By accepting that risk, officials were acting on their conception of national security, which required free market economies in the advanced industrial nations. In the immediate aftermath of the secretary's speech, some of the most menacing implications were muted. On its face, the offer of aid extended to the eastern nations. Moreover, because of the delicate political equilibrium in France, Foreign Minister Bidault insisted that Molotov be invited to join the European conference that would be considering the American proposal.14 When the delegates gathered in Paris during late June, the Soviet foreign minister brought along one hundred economic experts. This signaled an intention to stay. However, the Russians were faced with an obvious dilemma. As they were frank in saying, their own economy had been devastated by the war and they, along with the East Europeans, desperately needed outside assistance. Furthermore, if they did not participate, the result would be an exclusively West European program that included the western zones of Germany. This would confront them with a powerful, hostile, and potentially aggressive bloc of states. At the same time, the American conditions for participation mitigated against the Russians' involvement.15 Not only must they integrate their
14 15
LaFeber, America, Russia and the Cold War, 60; Mee, The Marshall Plan: the Launching of the Pax Americana, 114-27. See Pravda editorial, cited in Smith to Secretary of State, June 16, 1947, FRUS 1947 111:295-95; Molotov, Problems of Foreign Policy, 469.
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economy with the rest of Europe, accepting the policies of some transnational entity, they must also accommodate the Anglo-America agenda for Germany. That would mean giving up large-scale reparations while facilitating a high level of industrial production. Some of the Russian reservations were shared by Bevin and Bidault, but they had no wish to commiserate. Given the American desire to exclude the Russians, their tactical problem was how to induce Molotov to withdraw on his own. Ultimately Stalin resolved the matter for everyone by ordering his foreign minister home.16 As they departed from Paris, the Soviets insisted that the East European nations also decline Marshall's offer of assistance. In the case of Poland, Hungary, and most tragically Czechoslovakia, this was done with obvious unhappiness.17 The elimination of the eastern countries precluded the use of the existing Economic Commission for Europe (ECE) machinery, but in other respects simplified the arrangements for collaboration. On July 12 the representatives of sixteen capitalist-oriented nations (Austria, Belgium, Denmark, France, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Sweden, Switzerland, Turkey, and the United Kingdom) formed a new Committee for European Economic Cooperation (CEEC) to develop a formal proposal for the Americans. During the summer and early fall, as the CEEC subcommittees conducted their studies, the crucial German question remained outside their jurisdiction. It was universally assumed that the resources of the Ruhr would be vital to the enterprise, but the form that contribution would take and the nature of German participation were unresolved. With neither the Germans nor the Americans represented in the CEEC, these latter issues could not be directly addressed.18 Since Washington was footing the bill, its attitude would be decisive. Among U.S. policy makers certain broad views had taken hold. Their predominant desire was to use the German economy to create a free trading system in western Europe. This bred an impatience with competing approaches, whether nationalistic economic plans or security-driven opposition to German revival. By the same token, they were also opposed to programs that would benefit Germany at the expense of its neighbors. While their position was clear in the abstract, when it came to specifics the Americans had difficulty balancing immediate German requirements
16 17
18
See Caffrey cables to the Secretary of State, FRUS 1947 11:296-307; Molotov, Problems of Foreign Policy, 459-70; Mee, The Marshall Plan, 135. Steinhardt to the Secretary of State, July 10, 1947, FRUS 1947 111:318-19; Steinhardt to the Secretary of State, July 10, 1947, ibid.:319-20; Griffis to the Secretary of State, July 10, 1947, ibid. 13 20-21; Griffis to the Secretary of State, July 10, 1947, ibid.:322. Draper for Clay, July 7, 1947, RG 260 Economics Division 311.55 Classified Papers, Box 2361, FRC.
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with those of Western Europe. The task was complicated by the desperate condition of so many of the principals, as exemplified by the conflict over coal. Urgent West European need justified the demand that Germany increase its exports, even though domestic industries were inadequately supplied. Yet as Clay never tired of pointing out, if too much coal was taken out initially, Germany's long-term productivity would be jeopardized by a too weak industrial infrastructure. The CEEC deliberations created new pressure for Washington to make choices. Still, consensus was elusive. On one extreme was the influential Hoover report, which had completely renounced the Level of Industry concept, criticized all plant removals, and emphasized the rebuilding of German heavy industry.19 Although welcomed by some U.S. business groups, in its single-minded advocacy of German interests, the study went farther than most policy makers - including the War Department - were prepared to go.20 Most critical were the economists in the German and Austrian Division (GA). As explained by Kindleberger, "the suggestion that the German war economy is an appropriate economy for a peacetime Germany," even excluding those factories producing final armament products, was hardly acceptable.21 Nor did he buy Hoover's notion that somehow a 7.5 million ton ceiling on steel was causing production to drop below 3 million tons. Instead, Kindleberger's cohort continued to favor a modified Level of Industry plan and the delivery of dismantled factories to Western Europe. The GA economists wanted Germany to concentrate its productive effort on food and coal, to limit imports to food and those items necessary to stimulate exports, and to maximize the flow of goods out of the country. Within these parameters, they hoped to resurrect previous trading relationships with Europe even if this cost Military Government hard currency. Though giving precedence to the needs of Germany's neighbors, they thought it might be time "to allow German industrial activity to catch up more rapidly." Not surprisingly, Clay's headquarters was approaching the recovery issue
19
President's Economic Mission to Germany and Austria, "The Necessary Steps for
zo
11
Promotion of German Exports so as to Relieve the American Taxpayer of the Burden of Relief and Economic Recovery of Europe," March 18, 1947. For diverse reactions to Hoover report see Council of Foreign Relations Dinner Meeting, April 7, 1947, Records of meetings, Vol. XII CFR; Report of Lewis R. Brown, Chairman of the Johns-Manville Corporation, August 15, 1947 Snyder MSS, Box 18, HST; Pauley to Truman, April 15, 1947, Ibid.; John Steelman, Memorandum for the President, Hoover and Pauley Recommendations on Germany," Ibid. Excerpts from the Cleveland-Moore-Kindleberger memorandum of June, 12, 1947, on a European recovery program, contained in Kindleberger, Marshall Plan Days, 1-25. Although the document was officially dated June 12, Kindleberger explains that it was prepared for the policy planning staff during May.
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from a different angle. Since the Moscow conference, the production in the Ruhr had taken an unexpected nose-dive.22 By summer, coal had plummeted to 210,000 tons a day, closing down factories and disrupting the manufacture of steel, railroad cars, and other key items. Meanwhile, the supply of food was also spiraling downward, a condition many observers were blaming on weak administration and inadequate collections from German farmers.23 The army blamed Washington for inadequate assistance to the Germans. Although conceding the failures of internal distribution, Clay thought the more serious lapse was that promised shipments of American grain had never materialized. With the pressures of the Cold War, the State Department had found new reasons to neglect German interests. In his frustration, the general wrote privately to his mentor James Byrnes that "I miss you everyday."24 The Stuttgart speech was to him like a Bible, but that "living document of hope" had little operational significance. Denying that he was "pro-German," Clay fervently hoped "that in our political warfare with the Soviet Union we do not forget that here in Germany we have 70,000,000 human beings to remember." Extrapolating from contemporary experience, Clay feared that a European assistance program could divert the supply of goods from Germany and further drain its hard currency. In response to a State Department canvass on the Marshall Plan,25 he highlighted the need for more food, coal, and other raw materials. If these were reliably provided then Germany would be able to export textiles, dyestuffs, pharmaceuticals, spare parts, machines, and chemicals to the rest of Europe. Furthermore, something must be done to improve the foreign exchange situation. Otherwise, Germany would have to keep selling to the dollar areas and limit its purchases of luxury items from Western Europe. As for the "appropriate level of German industry relative to that of surrounding countries," Clay noted that the feeding level in Germany was about one-third below that of neighboring countries, while the level of industry stood at about half.26 U.S. Military Government had always agreed
22
23
24 25 26
Kindleberger to Thorp, May 9, 1947, RG 59 Central European File, Box 4 DSNA; A. S. Barrows to M. S. Szymczak. May 9, 1947, RG 165 CSCAD 014 Germany, MMNA; Groth to Secretary of State, May 20, 1947, RG 84 US POLAD, Correspondence File, FRC. OIR Report 4427, Economic Situation and Prospects in the American and British zones of Germany, June 3, 1947, RG 59 R Sc A, DSNA; Secretary of War to the Secretary of State, June 13, 1947, FRUS 1947 II: 1151-524 War Department, NBC broadcast, "Situation in Germany," June 21, 1947, RG 165 CSCAD 014 Germany, MMNA. Clay to Byrnes, May 11, 1947, Clay Papers, 1:3 51; Washington-Berlin Teleconference, May 13, 1946, Ibid.:354-65. Clay for Secretaries of State, War, and Navy, June 28, 1947, Clay Papers, 1:377-81. Ibid.
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that Germany's recovery should follow that of the liberated countries. But he thought that over the next two years, this spread should be reduced to approximately fifteen to twenty percent. Despite their differences, all the American actors wished to upgrade Germany's position vis-a-vis the rest of Europe, and to strengthen the economic ties. The simplest remedy was to ameliorate the dollar shortage. Although unhappy with Clay, the State Department shared his concern that the satisfaction of certain European desires, such as using the port of Rotterdam or purchasing Italian tomatoes, would deplete Germany's hard currency. If the U.S. Congress approved a new aid package, then Washington could make up the difference. In July, Secretaries Marshall, Patterson, and Forrestal formalized that recommendation: In cases where the restoration of normal international commercial relations between Germany and the rest of Europe would involve an increase in United States dollar expenditures for the account of Germany, or a delay in the attainment of a self-supporting German economy at an appropriate standard of living, funds for German expenditures shall be increased, or the German economy compensated, through provisions by the United States of sufficient relief moneys to the country or countries so benefited to enable them to pay Germany.27 By a strategic application of American funds, trade patterns would be established that could then outlast the initial infusion of money. The other large task was to readjust Germany's Level of Industry in order to maximize the sale of goods among the countries of West Europe. Responsibility for this work resided with an Anglo-American working party that had been deliberating since Moscow. By July 12 it was ready with a plan. Whereas the original LIA had set Germany's overall industrial capacity at approximately seventy to seventy-five percent of 1936, a year in which there was neither depression nor boom, the new proposal brought the overall figure up to one hundred percent. There were substantial revisions in heavy industry, in fields such as metals, machine tools, and chemicals, where the Potsdam agreement had mandated the harshest cuts. 28 These levels were going back to where they had been in 1936, at just the moment when Germany commenced its surge for rearmament. In steel, the production rate would be raised from 7.2 to 10.7 million tons with no ceiling on exports. Although the new figures still left room for reparations in capital goods, the attempt at industrial disarmament was plainly dead.
I N C O N T R A S T T O the Americans, West Europeans remained fearful of the Germans. However severe their economic problems, they had less
i7 28
AGWAR to OMGUS, July 11, 1947, RG 84 US POLAD 850, FRC. Office of German and Austrian Affairs, Memorandum, The Bizonal Level of Industry Agreement, August 8, 1947, RG 59 862.50, DSNA; Clay to AGWAR, July 12, 1947, RG 165 WDSCA 014 XXIV, MMNA.
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confidence that closer trade relations would obviate the danger of military aggression. The greatest skeptics were the French, whose apprehensions had translated into continuous obstructionism in the Allied Control Council. The prospect of increased economic aid from the United States could scarcely reconcile them to more help for the Germans.29 When word arrived in Paris of the revised Level of Industry plan, the new CEEC was just settling in to business. Foreign Minister Bidault reacted with a sense of personal betrayal. He reminded Marshall of the political capital he had expended getting rid of Molotov.30 Having "burned its bridges," France now found herself in a terrible situation. He felt "surprise... and concern at the sudden revelation of a course of action which has such painful consequences for us." With an instinct for selfdramatization, the foreign minister explained how
I went straight ahead in all tranquility. I committed my country. I regret nothing that I have done. But I fear, if the plans of which I was given a glimpse, materialize at this time, not only will my efforts have been in vain, but they will be turned against the cause I served.
If the Americans and British followed through on their plans, his government would be in an "untenable" position. The French were also distressed to learn that during August, the Americans and British would be holding their own Coal Conference to consider methods of increasing output. At the center of the conference agenda was a bizonal proposal for turning the mines back to German management, thereby acknowledging, albeit indirectly, German sovereignty over the Ruhr's resources.31 The conjunction of these disturbing events was not accidental since American willingness to pay for West European recovery presumed a large German role. The offended French diplomats quickly put out the word that the Anglo-American initiatives were jeopardizing the whole project. On July 21 Ambassador Henri Bonnet complained to Marshall of the threat to French security and economy. The proposed measures would create a too powerful Germany, as well as undermine the new Monnet Plan under which France was intending to replace much of Germany's steel production with its own.32 Marshall denied that Germany could be a danger in its own right. The
19
30 31
32
U.S. Embassy (Paris) to Secretary of State, July 17, 1947, RG 84 US POLAD 850, FRC; Memorandum Prepared by the Policy Planning Staff, July 21, 1947, FRUS 1947 111:335-37. Caffrey to the Secretary of State, July 11, 1947, Ibid.:984. Bidault to Marshall. July 17, 1947, Ibid.:99i-92. For a helpful discussion of U.S.-French relations during this period, see Raymond Poidevin, "Ambiguous Partnership: France, the Marshall Plan and Germany," in Maier, Marshall Plan and Germany-, 331-61. Communication by the French Foreign Minister Bidault, July 17, 1947, FRUS 1947 111:992-93; Caffrey to the Secretary of State, July 18, 1947, Ibid.:993~96; Caffrey to the Secretary of State, July 20, 1947, Ibid.1997-99.
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real menace "would be a Germany controlled by the Soviet Union with German military potential utilized in alliance with the Soviets."33 It could hardly be in France's interest "to have the Soviets dominate Germany." The secretary's rejoinder exemplified Washington's recently acquired habit of justifying all controversial measures by bringing up the Soviet threat. In truth, policy makers' preference for a revised LIA and for German coal managers had little to do with an enhanced communist presence in Germany. However, such ritual allusions were taking their intellectual toll, dulling the self-perceptions of the practitioners and closing their minds to diverging ideas. If Marshall was unsympathetic, over the next few days he became increasingly aware of the serious political problem in France. From Paris Ambassador Caffrey warned that the hostility of the French populace could lead to Bidault's resignation, which in turn would open the door to the more extremist parties of Left and Right.34 Troubled by this prospect, the British suddenly wished to delay. Bowing to the pressure, Marshall cabled Bidault that the U.S. Government would suspend an announcement of the LIA "until the French Government has had a reasonable opportunity to discuss these questions with the U.S. and U.K. Governments." When Clay learned of this decision, he was livid. He complained to Assistant Secretary for the Army Howard Peterson that this "complete reversal" of policy would preclude economic rehabilitation.35 Since the State Department had different ideas, it should run the occupation. He was personally unwilling to direct a failure, and wished to be brought home. Peterson replied that the general's resignation was "unthinkable." There was "a major issue to settle - namely precedence of German recovery plan," and this battle was far from lost. So far, there had only been a delay. Clay considered the real issue to be the coddling of the French. From that standpoint, the deferral of the LIA was the "most momentous" decision since Potsdam. The general was misjudging the State Department attitude. Despite anxiety over Bidault's political embarrassment, there was no disposition to undo the Level of Industry agreement. The prevailing view was articulated by George Kennan, who had been one of the first to urge tripartite talks.36 Though alert to the public relations aspect, he thought the French must be told privately of "their choice between a rise in German production or no European recovery financed by the U.S." If this was presented squarely, he anticipated "a meeting of the minds."
33 34 35 36
Memorandum of Conversation of M. Bonnet and the U.S. Secretary of State, July 21, 1947, RG 59 Central European, Box 4 DSNA. Caffrey to Secretary of State, July 18, 1947. Petersen to Clay, July 22, 1947, RG 107 ASW 091 Germany, MMNA. Memorandum Prepared by the director of the Policy Planning staff, July 18, 1947, FRUS 1947 111:332.
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To calm down the War Department, State concurred in a memo specifying that "no other country" would be permitted to vote, veto, or make decisions about the new plan, which would be announced by September i.37 This inspired Secretary of the Army Kenneth Royall to announce at a Berlin press conference that he was aware "of no agreement... to consult with France before promulgation" of the Level of Industry.38 His tactless commentary generated renewed protest in Paris and seriously embarrassed Bidault. In Washington, Ambassador Bonnet informed Robert Lovett, the Undersecretary of State, that the Communists were seizing on Royall's statements as "proof... that this government was not sincere in its agreement to give French views full consideration." More important, the French government itself believed that the talks were "merely a device." After they had uttered their objections, the Anglo-American commanders "would go right ahead and do what they had always intended to do." Under the circumstances, the French delegates to the CEEC had been instructed to withhold their participation.39 The administration's row with France gave a new opening to congressional liberals.40 As part of an anti-Soviet package, the rebuilding of Germany was unassailable. But if it alienated important West European countries such as France, there was reason to reconsider. Accused by congressmen of favoring the rehabilitation of Germany over that of Western Europe, the State Department worried that the public's animus toward Germany could be rearoused. Pushing the War Department into the back seat, Lovett took command.41 If the French government needed consultations, it would have them. Furthermore, these sensitive exchanges would be entrusted to Lewis Douglas, the experienced ambassador to London, who was on amicable terms with the French. Clay could join the negotiations, but would not direct them. Though flexing its bureaucratic muscle, State still intended to go through with the LI A unless there was "a genuine threat to the success of the
37
38 39
40
41
For a contrasting analysis, consult Gimbel, Marshall Plan, 238. War Department Draft, German Level of Industry, July 26, 1947; Royall to Clay, July 2, 1947, RG 218 Records of the Joint Chiefs of Staff CCAC 004.04 Germany, MMNA; Petersen for Clay, July 28, 1947 RG 107 ASW 091 Germany, MMNA. Cited in Lovett to Marshall, August 3, 1947, FRUS 1947 IL1014-16. Ibid.; Lovett for the Secretary of State, August 5, 1947, Ibid.: 1017-19. The British also took this French threat very seriously. Memorandum of Conversation, Herbert Penson and C. Tyler Wood, August 6, 1947, RG 335 Draper/Voorhees File, Level of Industry, MNNA. Proceedings and Debates of the 80th Congress, Congressional Record, Hon. John A. Blatnik, "German Coal Sabotage and European Recovery," July 24, 1947; Hon. George G. Sadowski, "What About Germany? Can We Afford to Follow Herbert Hoover's Advice Again?" July 25, 1947, Ibid. Lovett to Marshall, August 3, 1947.
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European Economic Plan... or in the face of a threatened collapse of democracy in France." Clay contended that sooner or later the United States would have to call the French bluff. Otherwise their internal communist threat would be repeatedly hauled out as a reason for sabotaging German recovery. Still seething over his contradictory instructions, he was eager to quit.42 Clay informed Royall that there was no way he was going to London to serve under Lew Douglas. It was "rather humiliating" to be made an advisor on a subject for which he had been chiefly responsible for two and a half years. There was a certain ironic appropriateness in the choice of Douglas. Early in the occupation this McCloy brother-in-law had been the first top official to resign from Military Government because of the apparent restrictiveness of JCS 1067. Now the offending clauses had been rewritten43 and it had become his task to sell the results to the French. In doing so, he was under tight instruction from the State Department to "support vigorously the level of industry agreement" and to prevent it from being modified.44 The ambassador brought some new ideas to the conference table. At the moment of his assignment, he was in Paris with Assistant Secretary Clayton and Ambassador Caffrey, monitoring the West European discussions on the Marshall Plan. Through their unofficial contacts, the three had learned that the French might be willing to accept the revised LIA if given certain assurances on the Ruhr such as an International Allocation Board, that would distribute its products equitably between Germany and other European nations. To the Americans, this was an option that seemed well worth exploring.45 From their experience with the CEEC, the trio was attuned to the reluctance of the West European participants to subordinate national goals to an integrated proposal that would be less inexpensive and quickly achievable. Especially troublesome from this point of view was the Monnet Plan, which emphasized the expansion of the French steel plant. One possible side benefit of a Ruhr Allocation Board was that by improving access to German steel, it would dampen French ardor for their own steel facilities.
42
43
44 45
Teleconference of Clay and Peterson, July 24, 1947 Clay Papers, 1:385-88. While the general had cried wolf on many previous occasions, Robert Murphy thought that this time, "he really seems to have lost interest." Murphy to Marshall, August 9, 1947, FRUS 1947 IIH026-27. Joint Chiefs of Staff to Clay, July 11, 1947, U.S. Dept. of State, Germany, 194749, 33-4iMarshall to Douglas, August 12, 1947, RG 165 WDSCA 014 Germany, XXV, MMNA. Clayton to Marshall, July 1947, FRUS 1947 11:1022-24; Murphy to Caffrey, August 8, 1947, RG 84 Correspondence File, Box 460, FRC; Caffrey, Douglas and Clayton to Lovett, August 13, 1947, RG 59 862.60, DSNA.
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On Clayton's authority, Douglas delayed his departure for London so that he could continue informal talks with Bidault and Jean Monnet.46 After days of vigorous discussion, they reached a tentative bargain under which France would accept the Level of Industry plan, recognize bizonal authority over the Ruhr for the duration of the occupation, and begin the process of trizonal merger. In return, the United States and Britain would promise that in the final peace settlement the Ruhr's resources would pass under the jurisdiction of an International Allocation Board. Considering the deal to be immensely favorable, Douglas, Clayton, and Caffrey urged Washington to back it. The State Department was more cautious.47 While mindful of the Ruhr's military potential and the fears it elicited among the West Europeans, it hesitated to disturb market relationships. Even reparations, as disruptive as they might be, seemed less permanently harmful than an experiment with international control. Moreover, the State Department was just then feuding with the British over the socialization of the Ruhr industries. To salvage his plan, Bevin had suddenly latched on to the French agenda, attempting to tie international control to some type of public ownership by the Germans.48 Wanting to quash this development, the department preferred to stick with the narrow subject of the LI A. On August 16 Lovett again pulled the reins,49 instructing Douglas to start up the tripartite talks so that the September i deadline could be met. The Ruhr question was naturally important, but should be dealt with when there was a German peace settlement. If absolutely essential, Douglas might tell the French that the United States would resume discussion of the allocation board "at an appropriate time" and would then give it "sympathetic consideration." Disappointed, Douglas and Clayton pressed Lovett for more latitude.50 At the very least, Douglas should be allowed to tell the French that "the appropriate time" for talking about the allocation board would be soon. The disposition of the Ruhr was critical to the development of the Marshall Plan. Even if the LIA matter was resolved, the French were not going to
Douglas, Caffery and Clayton to Lovett, August 14, 1947, RG 59 862.60, DSNA; Caffery, Clayton and Douglas to Lovett, August 14, 1947, Ibid.; Clayton to Lovett, August 15, 1947, RG 335 Draper/Voorhees File, Level of Industry, MMNA. Secretary of State to American Embassy (Paris), August 12, 1947. Lovett to American Embassy (London), August 15, 1947, RG 59 862.60, DSNA; Memorandum of Conversation, British proposal for international control of Ruhr Industries, August 18, 1947, Ibid.; Douglas to Lovett, August 19, 1947, RG 335 Draper/Vooerhees, Level of Industry Plan, MMNA; Orme Sargent, Proposed International Control of the Ruhr, August 19, 1947, FO 371/64372/PRO; Foreign Office to Washington Embassy, August 19, 1947, Ibid. Lovett to Douglas, August 16, 1947, RG 59 862.60, DSNA. Caffrey, Clayton and Douglas to Secretary of State, August 19, 1947, Ibid.
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reduce the projections for their own steel production unless assured of access to the German supply. That in itself would damage the overall plan, "distort it violently, and make it unrealistic." When the London conference formally opened on August 21, Douglas was still hamstrung by his instructions. He also had General Clay, who had been ordered to the meeting, peering over his shoulder. French Ambassador Massigli was in a compromising mood. The latter agreed to the new bizonal Level of Industry provided that reparations deliveries were quickly resumed, that Germany would export sufficient coal to facilitate the Monnet Plan, and that it be decided that interim policies for the Ruhr would not prejudice its future international status.51 Douglas could not meet any of these requirements.52 His assignment at the conference was to obtain French acquiescence in exchange for generalities soothing to its public. Massigli remained amiable. However as the meeting reached its conclusion, the French suddenly threatened to repudiate the LI A if there was no increase of German coal exports. Ambassador Douglas retorted that the United States was paying the bills for Germany and was about to pay the bills for Western Europe. If France took an "intransigent position" in London, this would "influence Congress to a disapproval of any additional aid." Privately Douglas disliked this coercive tactic. For him, the magic word was "immediately." If he could tell the French that "immediately" following the publication of the new German Level of Industry they could come back and talk about the Ruhr, there would be a more satisfactory communique. Heeding the advice of William Draper, Lovett continued to demur. Douglas could only offer the vague promise of "sympathetic consideration" at some "later date."53 The conference communique was indeed equivocal. The three delegations agreed that the new LI A "should not result in priority being given to the rehabilitation of Germany over that of the democratic countries of Europe."54 While this could be construed as a back-hand endorsement, the French reiterated their reservations about certain of the figures, which they would not withdraw until their needs for coal and coke had been met. However, French acceptance had never been a prerequisite for action. From a public relations standpoint, the fact that they had not made a scene
51 52
53 54
Douglas to Lovett, August 22, 1947, RG 335 Draper/Voorhees File, Level of Industry, MMNA. State and War to Ambassadors Douglas and Clay, August 23, 1947 RG 59 862.60, DSNA; Douglas to Secretary of State, August 25, 1947, RG 335 Draper/Voorhees, Level of Industry, MMNA. Douglas to Lovett, August 24, 1947, Ibid.; Lovett to Douglas, August 27, 1947, RG 59 862.60, DSNA. American Embassy (London) to State Department, August 27,1947, RG 165 CSCAD 014 Germany, MMNA.
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or walked out of the deliberations was tantamount to victory. Whatever Douglas' personal assessment, the feeling at State was that he had fulfilled his mission.55 Even General Clay was impressed that there had been no embarrassing pyrotechnics and that the Level of Industry plan was still on course.56
IN S I G N I F I C A N T respects, the tripartite session was a weak imitation of the Moscow Foreign Ministers Conference. In London, it was the French who were pressing hard for security guarantees and economic compensation from Germany. And, like the Soviets before them, they encountered an uncompromising American posture. In this instance, the prospect of Marshall Plan aid had so far sufficed to prevent a serious breach. Yet the nasty skirmish over the Level of Industry plan intensified American worries about the future of their German program.
II. NO SECOND OPINIONS

Inside the bizone, the existing situation was grim. Since Moscow, the American, and British authorities had been trying to stoke up the engines of the western economy with negligible results. Industrial production hovered at approximately thirty-eight percent of the 1936 levels with the stagnant coal mines dragging down the other sectors. To the Americans, the remedy was more outside capital and greater leeway for the German business class. Holding a different opinion, the British and their German associates favored economic planning, socialization, and greater industrial democracy.57
PHILOSOPHICAL TENSIONS
with the British had become acute when Clay and Robertson began discussing bizonal reorganization in mid-April.58
55 56
57
58
Lovett to Douglas, August 29, 1947, RG 335 Draper/Voorhees, Level of Industry, MMNA. Clay reported to Roy all that the "Discussions in London were interesting. Douglas handled the matter well. However, he was helped materially by firm State Department instructions for which we are grateful." Clay to Royall, August 31, 1947, Clay Papers, 1:415. In English, the most valuable discussion of the Anglo-American conflict over socialization remains Gimbel, The American Origins of the Marshall Plan, 207-19. For this phase of the controversy, useful German sources are Lademacher, "Die britische Sozialisierungspolitik im Rhein-Ruhr-Raum 1945-48," in Scharf and Schroder, Die Deutschlandpolitik Grossbritanniens und die britische Zone, 51-92; Rolf Steininger, "Die Sozialisierung fand nicht statt," in Foschepoth and Steininger, Die Britische Deutshland-und Besatzungspolitik 1945-49, 135-50; Steininger, "Ruhrfrage und Sozialisierung in der anglo-amerikanischen Deutschlandpolitik 194748," 167-240. Draper, Memorandum for the Record: Conference of Clay, Robertson, Draper, Weir, April 26, 1947, RG 84 US POLAD Correspondence File, FRC; Murphy to Secretary of State, April 27, 1947, RG 59 740.00119, DSNA.
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Both men were agreed that the German agencies should have expanded powers. But unlike Clay, Robertson favored a centralized Economics Council that could engage in comprehensive planning, concentrate production in the most efficient factories, and compel the Lander to accept its wideranging policies. Although Marshall and Bevin had instructed their subordinates to effect a settlement, they were unable to do so. Clay explained to Washington that the British program was still geared to "a detailed regimentation of the German economy," which would pave the way to "the complete socialization of the bizonal area."59 If he accepted their terms, he would offend the American businessmen and bankers, whom he was counting on to finance the export program. At Bevin's behest, Robertson accepted a more modest allocation of function for the German agencies. However, he and Clay were still at odds over the procedure for selecting the Economics Council. Behind their competing schemes were divergent attitudes toward the SPD. Clay opposed equal state representation, assuming this would facilitate the Party's control.60 In that event, there would be "a vigorous German effort... to obtain a high degree of centralization which will be directed to the development of a socialistic bizonal area." American Military Government would then have to accept these measures or be "in constant opposition to the German majority supported by British." In Washington, both the State and War departments were sympathetic to Clay's concerns. Guiding him through the discussions with Robertson, they suggested a complex electoral formula designed to thwart an SPD majority.61 They also encouraged him to define the powers of the Economics Council "so as to preclude, at least for the time being, socialization at bizonal. .. level." When the accord was finally signed in late May, it fulfilled most of their wishes. While the German organizations could assume more responsibility for rehabilitation, they lacked the authority to redefine class relationships. The British were not surprised by the American position. They had known, for at least a year, that Clay would try to block public ownership by any German central organ. They were more optimistic about legislation in the provinces, where the American had said he would honor the "freely expressed" views of the Germans.62 Following Moscow, the prospects for a socialization bill in North Rhine-Westphalia had brightened considerably when new Landtag elections reduced the strength of the Christian
59 60 61
61
Clay to Noce, April 28, 1947, Clay Papers, 1:342-44. Clay to Noce, April 29, 1947, Ibid. 1344-46. Teleconference Clay and Petersen, May 13, 1947, Ibid.:359-60; Clay to Noce, May 24, 1947, Ibid.1365-67; Murphy to Secretary of State, May 29, 1947, RG 59 962.50, DSNA. Discussion With General Clay about Strengthening the Bizonal Agencies, May 1947, FO 371/64367/PRO; Robertson to Jenkins, June 1, 1947, FO 371/64368/PRO.
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Democrats. There seemed to be enough seats on the Left to gain a majority for public ownership of the Ruhr coal and steel industries. Similar trends were apparent in the other British zone Lander, where the SPD was leading the drive for socialism.63 These political changes coincided with the sudden decline in German coal production and a growing feeling in Washington that the British had botched the job.64 In the opinion of U.S. Military Government, the most serious failing was in the pattern of management. At the top levels, the British had retained too much authority for themselves through the North German Coal Control (NGCC). This was demoralizing to the middle- and lower-level functionaries, who were often inadequate in any case. Many were inexperienced, having obtained their positions as a result of denazification, while those who were veterans were often vulnerable to political charges by the workers in the factories.65 These difficulties were compounded by the specter of imminent socialization, which was sapping the initiative of everyone. In late May, General Clay suddenly demanded a halt to social experiments.66 To end the uncertainty over the status of the coal mines, he proposed that they be immediately placed under a German trusteeship that would continue until there was a central German government. Operational responsibility would be given to an all-German management, which would have the authority to negotiate directly with the works councils, thereby curtailing "the overbalance of power" presently enjoyed by the mine workers. These recommendations reversed Clay's commitment to accept Landerinitiated socialization. He now intended to delay a decision until the German people could "freely determine under stable conditions the future of the coal mines." That would not occur for years. Among Germans it had become a truism that the postponement of nationalization after World War I had effectively killed the program. Aware of this history, the military governor was counting on the trusteeship to brake the popular momentum until more prosperous conditions changed the political climate.
63
64
65
66
See reports from Altaffer to Secretary of State, March 17, April 26 6c 29, 1947, RG 59 862.00, DSNA; Harris-Burland to Brigadier Oxbarrow, Socialization of Basic Industries, May 27, 1947, FO 371/1036/46/PRO. By June coal production had dropped to the daily rate of 215, 000 tons. Patterson to the Secretary of State, June 13, 1947, FRUS 1947 11:1152; Policy Planning Staff Memorandum: German Coal Production, May 1947, RG 59 PPS, Box 1 DSNA; Policy Planning Staff, Eleventh Meeting, May 29, 1947, RG 59 PPS, Box 32, DSNA. Particularly influential in this context was the report of Robert Koenig, former chief of the solid fuels of SHAEF. Koenig to ambassador, June 9, 1947, Presidents Committee on Foreign Aid, Box 7, HST; Murphy to the Secretary of State, June 30, 1947, FRUS 1947 11:977-92. Clay to Patterson, June 16, 1947, Clay Papers, 1:3 71-7 3.
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The State Department reacted ambivalently to Clay's proposals.67 Their own studies had focused on the British failure to supply the mines adequately. Some questioned whether the prospect of nationalization was really damaging productivity. A more obvious impediment was labor undiscipline. Yet by directly thwarting the aspirations of the trade unions, that problem might well be aggravated. Furthermore, to block legislation in North Rhineland-Westphalia would create a battle with the British and the German SPD, just when the conflict with the Soviets was most severe. On the other side was the department's own antipathy to public ownership, its fear of establishing a precedent, and its apprehensions about congressional reaction. In the cabinet-level Committee of Three (State, War, and Navy), Secretary Marshall seemed to waver.68 To his colleagues, he wondered aloud how Clay's trustee plan would remedy "uncertainty of ownership." Wouldn't it merely prolong the ambiguity, while directly violating democratic decision making? Marshall was finally persuaded by Secretaries Patterson and Forrestal that the socialization of the coal mines must be halted. William Clayton, who was on his way to London, was given new marching orders. His job was to inform Bevin that British management of the coal industry was "pathetic."69 The United States was not going "to participate in any big new commitments" unless there was assurance that this problem "will be licked and quickly." In other words, the Americans would not "sit by while the British tried out any ideas which they had of experimenting with socialization." While policy makers highlighted their pragmatic concern with productivity, their position was mired in ideology. OMGUS had offered no evidence that the ownership situation was adversely affecting the mining of coal. Given the erratic food supply, the shortages of equipment, the absence of consumer goods, and the lack of a stable currency, there seemed a host of more direct reasons why recovery was slow. It was a plausible speculation that uncertainty of ownership was undermining management, and that this might become more disruptive over time. Yet as even Marshall had recognized, this could as easily be ameliorated by an early decision for public ownership as by delay.
67
6S 69
18, 1947, RG 59 Central European, Box 4, DSNA; Murphy to the Secretary of State, June 17, 1947, RG 84 Frankfurt TS, Folder: Berlin, FRC; U.S. State Department, Problem Paper II: Proposed Coal Conference With the British, June 1947, RG 59 Saltzman File, DSNA. Minutes of a meeting of the secretaries of State, War, and Navy, June 19, 1947, FRUS 1947 11:927-29; Gimbel, Marshall Plan, 209. Memorandum of Conversation, Secretaries Marshall and William Clayton, June 20, 1947, FRUS 1947 IL929.
Central European Division, Policy Regarding Public Ownership in Germany, June
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In barring socialism, the Americans were acting on the assumption that only private incentives worked - this despite the experience in the eastern zone, where coal production was back at ninety-eight percent of prewar levels in the state-owned coal mines. Among the British, there was no less concern about productivity than the Americans. However, the Attlee government regarded the German trade unions, and worker morale in general, as the key to efficiency. The latter's expectation that working-class initiative could overcome stagnation was outside the realm of American thinking, emerging only in the State Department's anxiety about antagonizing the German Miners Union. For the businessmen in OMGUS, the important actors were owners and managers. Working-class compliance, which was all that was needed, could be achieved through the usual combination of hierarchical coercion and the increased provision of material goods. In emphasizing this approach, the Americans were registering their own domestic preferences, as well as their desire to make western Germany the pump for a capitalist Western Europe. Over in Germany, the British reacted to the news of Clay's trusteeship plan with a feeling of personal betrayal.70 Both Generals Robertson and Weir had privately believed that Lander socialization was irrational - that given the importance of the coal and steel industries, expropriation ought to occur on a national, or at the very least, a bizonal level. In order to get a program that could pass muster with the Americans, they had pressured the skeptical SPD into support for provincial legislation. Hence Clay's reversal was doubly humiliating. The American stoutly insisted that he had never made the promises that were being attributed to him.71 He claimed to have told Robertson "repeatedly that I believed it would be a great mistake for British Military government to undertake such nationalization within Germany." He had said that the United States would approve some state socialization if it was "the freely expressed desire of the German people." But he had never thought there could be such "a free expression" until Germany's political structure was settled and a central government was operating. Otherwise one province, North Rhine-Westphalia, would have control of the major resources of Germany and thus a dominant position within a larger government. If the British entertained hopes that the military governor was speaking only for himself, these were dissipated when William Clayton administered his scolding to Bevin.72 His message was immediately reinforced by the
70 71 7Z
Murphy to Secretary of State, June 24, 1947, RG 84 US POLAD, Frankfurt TS, FRC; Steele to Robertson, June 21, 1947, FO 1049/748/PRO. Clay to Petersen, June 24, 1947, Clay Papers 1:375-76. Summary of First Meeting of Under-Secretary Clayton and ambassador with British Cabinet Members, June 24, 1947, FRUS 111:268-73; G. Jenkins to the Secretary of State, June 30, 1947, FO 371/64371/PRO.
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State Department's John Hickerson, who warned the Foreign Office that Congress would never accept the socialization of the coal mines. If Whitehall insisted on going ahead, the funding for the entire Marshall Plan could be placed in jeopardy. Hickerson pressured the British to participate in a joint Coal Conference in which socialization and other items related to productivity cold be thrashed out.73 The British were in a poor position to resist the Americans. On the eve of convertability, they were experiencing a rapid decline in their dollar supply that was jeopardizing their ability to carry out the December fusion agreement. Attlee reminded Bevin that because of their financial embarrassment they would have to seek additional support from the United States.74 Clearly "the Americans would take it very much amiss" if the British committed themselves to socialization of the coal industry. Yet having promised the House of Commons and the British trade unions that he would implement public ownership in the Ruhr, the foreign secretary was in a stubborn mood. He told the Americans he would join a Coal Conference about improving financing and productivity, but he would not place socialization on the agenda.75 By mid-July, U.S. officials were faced with a double-barreled challenge from their allies. The British opposition to a Ruhr trusteeship was coinciding with the French rejection of the Level of Industry plan. During the very same week, both Bidault and Bevin had offered to fly to Washington to defend their national priorities. It suddenly appeared that the two controversies might spill into each other as the French claimed a say on the ownership and management of the Ruhr coal mines with some sympathetic nods from the British.76 After skirmishing with the Americans over the scope of the Coal Conference, Bevin was threatening to withhold cooperation.77 However, if the British desired economic assistance this was not one of his options. The U.S. Government had already announced the meeting, and attached great importance to its success. The omnipresent Douglas was sent to Bevin for "an unusually frank conversation" in which he promised that the United States would not demand a formal renunciation of socialization in
73 74 75
76 77
Hoyt-Millar Memorandum, July 3, 1947, FO 3 71/643 69/PRO: Hickerson to Matthews, June 25, 1947. Prime Minister to the Secretary of State for Foreign Affairs, June 30, 1947, FO 371/ 643 69/PRO. See discussion in Bullock, Ernest Bevin, 438-46. Secretary of State to Robertson, July 7, 1947, FO 371/64369/PRO; Record of a meeting held in the Secretary of State's Room in the Foreign Office on Wednesday, July 9, 1947, FO 371/64510/PRO; Foreign Office to Washington, July 12, 1947, FO 371/64370/PRO; Bevin Memorandum, July 11, 1947, Ibid. Communication by French Foreign Minister (Bidault), July 17, 1947, FRUS 1947 11:992-93. Memorandum of Conversation Between Lovett and Balfour, July 15, 1947, RG 59 Saltzman, DSNA; Balfour to Foreign Office, July 16, 1947, FO 371/64370; Foreign Office to Washington, July 17, 1947, Ibid.
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Washington, but would want to explore how "uncertainty of ownership" was affecting production.Though finally accepting the American invitation, Bevin maintained that coal output would fall unless nationalization was carried out. If they interfered, the two Western powers would "face the hostility of every Social Democrat in Germany" and would "play straight into the hands of the Communists."78 After the rocky preliminaries, the first encounters at the Coal Conference were surprisingly cordial. The Americans assured the British that their financial anxieties would soon be relieved. The two parties readily approved a plan for turning the mine management back to the Germans, and reached quick understandings on the price of coal and the procurement of steel for the coal industry.79 Trouble arose during the second week, when the British were asked about their plans for ownership.80 Lord Strang offered a spirited defense of his government's position and suggested that the Americans had generated an "uncertainty" that was damaging to production. Managers were hesitant because they didn't know their future bosses, while working-class cooperation had been endangered. German coal miners were "more politicallyminded perhaps, than those in other countries," as were their works councils and trade unions. If the occupying powers reneged on the promise of socialization, there would be negative repercussions. There was also a security dimension, because under the Nazis the German coal cartels had been "a potent instrument" for aggression. This could happen again. Representing the War Department, William Draper suggested that the December fusion agreement implied a British promise not to institute public ownership without consulting the United States. Strang maintained to the contrary that Secretary Byrnes had promised the Foreign Office "liberty of action." As he concluded his appeal, the Englishman reflected that the demand for public ownership had been raised in Germany since 1895 a n d had been repeated through many decades. State Department economist Willard Thorp observed dryly that the Germans must be "used to the idea's being postponed." As the discussions unfolded, the British learned that Clay was about to veto socialization legislation in Hesse.81 Also disturbing were reports that
78
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Secretary of State to the Embassy in the United Kingdom, July 17, 1947, FRUS 1947 IL944-45; Clark to the Secretary of State, July 26, 1947, RG 165 WDSCA 014 Germany Section xxiv, MMNA; Conversation with the United States ambassador, July 25, 1947, FO 371/64371/PRO. Mark Turner to Hoyar-Millar, August 16, 1947, FO 371/64513/PRO; Frank A. Southard to Secretary Snyder, Summary of Anglo-American Talks on Ruhr Coal Production, August 23, 1947, John W. Snyder MSS, Box 18, HST. Anglo-American conversations on German coal production, United Kingdom record of discussion on ownership of Ruhr coal mines on August 14,1947, FO 3 71/643 72/PRO. General Lucius D. Clay's statements on socialization made at Press Conference on 14th August 1947, FO 371/64372/PRO.
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U.S. Manpower advisor Joseph Keenan was lobbying Ruhr trade unionists on behalf of Clay's trusteeship plan. Keenan had allegedly promised the Germans that if public ownership was delayed, the U.S. government would guarantee rations of 1,800 calories. Furious about the intervention in their zone, the Foreign Office warned that if such activities continued, they would be brought to public attention.82 By the end of August, the British delegation in Washington latched on to a reality that had somehow eluded them in London. The Coal Management agreement, which they had endorsed, abolished their own North German Control (NGCC) and created a Bipartite Liason Committee in which each power held a veto over important decisions. Even if the Coal Conference said nothing about socialization, it was "quite out of the question for the British Commander-in-Chief to take any steps towards the transfer of the ownership of the coal mines . . . without the consent of his U.S. colleagues."83 Changing tactics, Lord Strang now tried to obtain an American commitment to let socialization occur. Convinced that they were sincerely upset about low productivity, the diplomat proposed that Clay's trusteeship scheme be supported with the understanding that after coal production had remained at 350,000 tons a day for six months that the Germans could vote on public ownership.84 This would "give the Germans an incentive to increase production" while preserving their ultimate right to determine ownership. Although there was sympathy in the State Department for Strang's approach, it ultimately followed Clay's advice and turned the idea down.85 Responding to the American rigidity, the British retaliated by withdrawing support from the entire mine management plan. They advocated instead a phased approach in which the Germans would gradually assume responsibility, subject to the authority of the North German Control (NGCC). The formation of a bipartite body would await the completion of the financial talks. Suddenly the Coal Conference was stalemated. With a certain wry satisfaction, Clay remarked to Draper that he "thought everyone but me always got along internationally."86 Unwilling to countenance such defiance, the State Department informed Bevin that this interim arrangement
82 83 84 85
86
Burrows, Minute, August 19, 1947, FO 371/64372/PRO; U.K. Military Governor to Foreign Office, August 16, 1947, Ibid. Strang to Jerkins, August 24, 1947, Ibid. Stillwell to DeWilde, August 22, 1947; Strang to Jenkins, August 23, 1947, FO 371/ 64372/PRO. Clay for Royall, Noce, and Draper, August 25, 1947, Clay Papers, L411-13; Lovett to American Embassy (London), August 24, 1947, RG 335 Draper/Voorhees, Level of Industry, MMNA. Teleconference Draper and Clay, September 8, 1947, Clay Papers, L422-24.
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was out of the question. If the Coal Conference adjourned without an agreed report, "the public reaction will adversely effect the possibility of increasing the U.S. financial burden in Germany" (italics added).87 The British quickly caved, signing the Coal Management Plan that placed a new German organization under the jurisdiction of a U.S.-U.K. control group. For the first time since the beginning of the occupation, the United States would have an equal share in the direction of the Ruhr coal mines.88 Douglas' promise to Bevin had been literally kept. The session concluded without any direct statement on the deferral of socialization. However, the Foreign Office understood that with the formation of the bipartite body, the Americans had achieved their purpose:
We should be quite clear that it amounts to the temporary postponement of our policy of socialization. The policy is a cabinet decision, has been announced to the country and to the Germans and is the subject of keenest interest, both among the Labour Party and the Social Democrats in Germany. It will not be easy to explain to Parliament our reasons for not pressing ahead with it... ,89
The deciding element had been money. Put delicately, there were "several cogent reasons, which do not require recapitulating, why we cannot go ahead without American agreement, and we have been left in no doubt whatsoever that Washington is not prepared to consent to socialization." As THEY SALVAGED the rights of German business, the Americans faced their most direct challenge from Britain. However, Bevin and his associates had consistently invoked the aspirations of the German trade unions90 and those citizens who were affiliated with the SPD and the left wing of the Christian Democratic Party. Because of the occupation these voices were not being heard in their full strength, but they were sufficiently audible to worry U.S. officials. In the aftermath of the Coal Conference, there was sharp dissent from the miners.91 Both their union and works councils contained a sizable communist presence - estimated between thirty and forty percent. Yet even among the SPD majority, there had been overwhelming support for public ownership and worker participation in decisions. Indeed the original plan for German management, which had been drafted by Victor Agartz, the
Memo of Conversation, Douglas and Stilwell, Management Plan and the U.S.-U.K. Control Group, September 8, 1947, RG 59 Saltzman, DSNA. Memorandum by Kenyon C. Bolton of the Division of International Conferences, report Anglo-American conversations regarding German coal production, Washington D.C., August 12-September 10, 1947, FRUS 11:962-66. Dean, Socialization of Coal Mining in the Ruhr, September 20, 1947, FO 371/PRO. See especially, Weiler, British Labor, 165-85. August Schmidt to Herr Direktor Roelen, July 11, 1947, RG 260 Manpower Division Records Pertaining to Trade Unions and Works Councils Folder: Coal, FRC.
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director of the Bizonal Economics Council, had granted certain powers to the labor movement.92 This feature had been scrapped by the Americans weeks earlier.93 By inhibiting socialization and imposing a hierarchical scheme of management, the Coal Conference inflicted a twin defeat on workers. Meeting in convention, the Miners Union issued a clear warning:
The miners expect that the promises given will be kept and the German people will be allowed to carry through the nationalization of their mines. Without the transferring of the mines into the possession of the Land North Rhine and Westphalia as trustees for the coming United Germany, without the full privilege of taking part in decisions of the miners . . . in German democratic mining administration organs, a sufficient increase of the coal output is out of the question (italics added). All intentions to again subject the Ruhr mining industry to the power of German or the international monopoly capitalists will meet the decisive resistance of the whole of the Ruhr mine workers and the mining clerical workers. 94
These sentiments reverberated in the U.S. zone, leading to a similar denunciation by the Interzonal Coal Miners organization.95 Nor was the disappointment confined to miners. Across the Ruhr, the actions of the Coal Conference were sharply criticized.96 This reflected an awareness that precedents were being set for other industrial sectors and regions. In Hesse, General Clay had been engaged in a year-long battle to
92
93
94 95
96
The general manager would be appointed by the Economics Council, which was presently in Social Democratic hands. The Miners Union would have the right to approve important personnel appointments. And if, as anticipated, the legislature of Land North Rhine-Westphalia passed its socialization bill, the involvement of traditional business elements would be discouraged. Steele to Robertson, June 21, 1947, FO 371/64368/PRO. According to the American proposal, "The Trustee, the members of the Executive Committee and the heads of the district organizations will, taken together, be the key to the success or failure of German management. They, therefore, should be selected with the greatest care from the industry itself, based on their experience and business qualifications." Proposed German Coal Organization, (Undated). Ibid.; Draper to Clay, June 12, 1947, RG 260 Economics Division, Coal Folder: 1946-47, Box 2406, FRC. Robertson to Strang, August 16, 1947, FO 371/64372/PRO. Altaffer t o Secretary of State, Meeting of the British Z o n e Trade Union Representatives Reaches Agreement o n Principles Advocated for Reconstruction of Basic Industries, September 1 1 , 1947, R G 84 US P O L A D 850.4, F R C . According t o o n e M u r p h y staffer, there w a s " a distrust of political promises a n d especially of political moralizing o n the part of the United States." After so much talk a b o u t " G e r m a n initiative a n d G e r m a n responsibility," the United States h a d simply ignored G e r m a n preferences. Stauffer t o L. V. Steere, G e r m a n Reaction t o the Postponement of Socialization, October 17, 1947, R G 84 US P O L A D 800. F R C ; August Schmidt t o H e r r Direktor Roelen, July 1 1 , 1947; Dennis A. Courtney t o Director, M a n p o w e r Division, October 1 5 , 1947, R G 2 6 0 M a n p o w e r Division Ruhr Coal Mines, FRC.
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prevent public ownership. Faced with legislation expropriating its coal industries, he now declared to the U.S. zone Landerrat that any enterprise that had national importance would not be an appropriate target for socialization.97 The Americans were also moving across a broad front to block labor's participation in management.98 At the factory level, U.S. Manpower tried to stop the works councils from negotiating codecision agreements with owners. But by the summer of 1947 the main battle for industrial democracy was occurring in the provincial legislatures. In Bremen, WuerttembergBaden, and Hesse the new constitutions all contained articles permitting codetermination. Because Bremen had acted first, General Clay outlined his views in a letter to the Buergerschaft president.99 The military governor warned that he would scrutinize future bills to insure that they conformed to Allied Control Council Law 22. Echoing his approach to socialization, he insisted that any land legislation for codetermination "must conform to the general pattern of industrial management established for Germany as a whole." Any "substantial change" would have to "represent the considered opinion" of the entire German people. Since that could not occur until Germany possessed a national government and economic conditions had stabilized, Bremen would have to wait. In asserting this position, Clay saw himself as defending German selfdetermination. As with public ownership, provincial decisions on industrial management had national implications and there were obvious reasons for preferring a national mandate. What the general could less easily recognize was that in the absence of either national or provincial action, he was himself setting the pattern of industrial development. For Clay and his associates in the Economics Division, the restoration of owners and the reinforcement of plant hierarchy was so ordinary that they could not perceive these as interventions. As the Americans obstructed labor's two most important objectives, they encountered the problem repeatedly posed by Bevin: how to prevent workers from turning to the Communists, when all their programmatic
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Lawrence N. Sisson to Lawrence Wilkinson, Chronological History in Regard to Socialization Program in Hesse, December 13, 1948, RG 260 Economics Division PH-121 Socialization, Box 2403, MMNA. Eisenberg, "The Limits of Democracy: U.S. Labor Policy in Postwar Germany," in Ermarth, The Shaping of Postwar Germany, 74-79; Hubsch, "DGB Economic Policy With Particular Reference to the British Zone, 1945-49," in Turner, Reconstruction in Postwar Germany, 295-97; Berghahn, Americanization of West German Industry, 203-20. Edward Litchfield to the Chief of Staff, Bremen Works Council Law (Implementation Law to Article 47 of Bremen Constitution), Tab C, October 6, 1947, RG 260 Manpower Division, Records Pertaining to Trade Unions and Works Councils, October 6, 1947, FRC.
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goals were being thwarted.100 In August this issue became suddenly acute as trade unions from the four zones seemed to approach unification. Because of an early French veto of national legislation, the trade unions had been organized zonally. In significant measure, each reflected the predilections of the occupying power. In the case of the U.S. zone, the unions were often led by moderate Socialists and were greatly limited in their sphere of operation. On the opposite end was the Soviet zone FDGB, a large and powerful entity that was under the control of the Socialist Unity Party (SED).101 Such differences notwithstanding, representatives of all four movements had begun meeting in the summer of 1946 to discuss prospects for amalgamation. These interzonal conferences, which convened every three months, were sponsored by the World Federation of Trade Unions (WFTU) - an international formation that embraced both communist and noncommunist labor organizations.102 From the beginning, U.S. Military Government had viewed the project ambivalently. Because of its original assumption that Germany would be a unified country, the integration of the labor movement seemed a foregone conclusion. Moreover, unless there was unity the United States would have little influence over working-class developments in the eastern zone. But there was also a deep antipathy to the WFTU, especially on the part of the AFL people, because of its large communist membership and because the United States was represented there by the rival Congress of Industrial Organizations (CIO).103 Of greatest concern to the Americans was the radicalizing potential of a single labor movement. In sheer numbers, the membership of the Berlin FDGB and that of the eastern zone could overwhelm those from the West. Even worse, on many issues of substance, there would probably be a meeting of minds. For over a year, U.S. Military Government had allowed the interzonal conferences to take place, while pressuring the unionists from their own zone to avoid policy decisions and eschew formal organization.104 Given
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101 103 104
This danger was acknowledged in a State Department problem paper: "In the three Western zones, the Social Democrats are still dominant, as they were before the war. But they are righting insistent Communist competition in unions and works councils. Their task will be all the more difficult when our policy of insistence of deferment of socialization in the Ruhr is publicized." Hilldring to Allen, Summary of Important Activities for General Marshall, Problem 6: Should We Aid in the Development of a Free Trade Union Movement? RG 59 Saltzman, DSNA. Wiesner, "Policies of the Occupation Authorities Toward Trade Unions in Germany," July 12, 1945; Wiesner, "Politics of Socialism in Germany," January 1, 1947; Wiesner, "The Present Status of German Trade Unions," April 17, 1947, RG 84 US POLAD 850.4, FRC; MacShane, International Labor, 187-213. Weiler, British Labor, 172-80. Radosh, American Labor and U.S. Foreign Policy, 30-37; MacShane, International
Labor, 68-76.
Murphy to Secretary of State, July 17, 1946, RG 84 US POLAD 850.4, FRC.
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the anticommunism of many of these representatives, such advice was frequently congenial. While the interzonal effort stood still, private operatives from the AFL tightened connections to German labor leaders by arranging for hundreds of them to receive regular CARE packages from the United States.105 Though originally focused on the U.S. zone, this distribution was being extended into the British and French areas as well. Then unexpectedly the movement toward labor's amalgamation gathered steam. The immediate stimulus was an invitation by the World Federation of Trade Unions (WFTU) for German trade unionists to attend its Prague convention.106 For the Germans this was a welcome opportunity to reopen international connections and escape the pariah status to which they had been relegated since the war. At the June 1947 session, the WFTU voted to permit the individual zone delegates to participate regularly in its affairs but stipulated that affiliation would only become final when the Germans created a national trade union center. Having observed the enthusiastic response of the German representatives, U.S. Labor attache Louis Wiesner tried to slow the progress of a trade union center. For this purpose, he enlisted Elmer Cope, the European representative for the CIO, who was reputed to be a strong anti-Communist.107 The latter thought he could persuade the western unionists to resist the overtures of the FDGB. Citing the action of his own union (the United Steelworkers) in throwing out the Reds, he averred that "American unionists can beat out the Communists in the world labor movement" in much the same way. As Wiesner had feared, the German trade unions were in no mood to halt. Buoyed by the experience in Prague, representatives to the August Interzonal Conference passed resolutions welcoming the WFTU invitation and creating a preparatory commission to formulate recommendations for a national trade union conference in the spring. Especially disappointing was the behavior of the U.S. zone representatives who, despite intense pressure, had failed to set prohibitive conditions for future progress.108 Prodded by the Labor attache and the members of the Manpower Division, General Clay moved to preserve the split. In September he informed U.S. zone labor leaders that he would not approve an interzonal labor
105
106 107 108
Silver to Keenan, July 17, 1946, Keenan Papers, Catholic University (CU); AFL, Minutes of the Meeting on International Relations, July 19, 1946, AFL Papers, Committee on International Relations File, WSHA; Silver to Keenan, August 13 6c August 23, 1946, Keenan MSS, CU; Dunn to Keenan, August 31, 1946, Ibid. Wiesner, "World Federation of Trade Unions and the German Labor Movement," July 3, 1947. Ibid. DeMayer to the Secretary of State, Re: The fifth German Interzonal Trade union Convention, September 12, 1947, RG 84 US POLAD 850.4, FRC; Wheeler, Who Split Germany? 77.
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federation until the economic unity of Germany had been achieved.109 Even then, individual functional unions would have to unify first, before he would accept a central federation. This latter decision was based on the longstanding view in Military Government that by strengthening functional unions, the German labor movement would have a less political orientation. against amalgamation, the Americans had their work cut out for them. As observed by James Meskiman, the chief of the Labor Relations Branch, "the one issue on which there is complete agreement in the trade union movement is that of German-wide trade union unity."110 Yet by the fall of 1947 the desirability of splitting the German labor movement was becoming as axiomatic to American officials as the division of the country, and for some similar reasons. Because the United States was thwarting the substantive demands of western labor notably for public ownership and codetermination - the eastern connection had become more dangerous. Policy makers feared that disgruntled unionists from the west could not safely mingle with disciplined Communists from the FDGB.111 In like fashion, conflicts with Britain and France over the character of West German reconstruction was fueling the American determination to keep the Russians out.
H A V I N G SET THEMSELVES
III. NO VISITORS
Though U.S. officials were expending most of their energies in battles with the western Europeans, their public rhetoric targeted the Soviets. With the launching of the Marshall Plan, the Cold War had become the central motif in U.S. foreign policy. Complex situations were described in the language of containment and major U.S. policies outfitted with an anticommunist rationale. The German stalemate was assimilated to this wider pattern, so that the decision to rebuild the western zones was portrayed inaccurately, as a belated response to the Russians.
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Murphy to Secretary of State, September 14, 1947, RG 59 862.5043, DSNA; Wiesner to Murphy, Re: Developments in interzonal trade union relations, January 9, 1948, RG 84 US POLAD 850.4, FRC. Meskiman to Werts (Undated), RG 260 Manpower Division, Director's Records Pertaining to Trade Unions and Works Councils, FRC. This aspect of the situation was noted by the CIO's European representative, Elmer Cope: "Too little is done too late, so that in order to keep the Russians from controlling the labor movement in Germany, the military authorities must make arbitrary decisions prohibiting the development of a free democratic trade union organization in Germany." Elmer Cope to Clinton Golden, October 29, 1947, Cope MSS, Box 17, Folder 5, WSHS. Document kindly provided by Henry Berger.
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SOVIET BEHAVIOR HAD certainly become more provocative. Within Europe a watershed event was the formation of the Cominform in September 1947, linking the communist parties of the Continent.IIZ During the Second World War, Stalin's decision to dissolve the Comintern had assumed immense symbolic significance as a demonstration of the Soviet renunciation of proletarian revolution and desire to rejoin the family of nations. Now the choice to formally reknit the European communist parties seemed to betoken an all-out offensive against democratic capitalism. In the first conclave in Poland, Soviet spokesmen Andrei Zhdanov and Georgi Malenkov set a bitter tone, proclaiming the division of the world into "two camps," one "imperialist and antidemocratic," the other "democratic and anti-imperialist." In their analysis, the United States was seeking control of Europe as a prelude to worldwide military and economic expansion. This entailed an assault on the eastern bloc, and a possible attack on the Soviet Union itself.113 Such perils underpinned their harsh critique of the French and Italian communist parties for their "opportunistic reformism" and their foolish participation in bourgeois coalitions. At present the untapped strength of the proletarian masses must be utilized in a direct campaign to defeat the Marshall Plan, to beat back the "forces of reaction," and to preserve the sovereignty of western European governments. As for Eastern Europe, there were to be no more "national" roads to socialism. As exemplified by the Polish experience, the deviant route had previously involved some limited acceptance of private property and tolerance of independent political parties. At this moment of mobilization, the Russians demanded conformity with their own model: collectivization of agriculture, the final expropriation of private industry, and the establishment of single-party regimes.114 In eastern Germany these trends were clearly observable, though still qualified. Since the provincial referenda the proceeding summer, there had been steady movement toward the socialization of industry.115 In conjunction with the Russian-owned AGs, publicly owned enterprises constituted approximately two-thirds of the value of all the industrial property, and in some heavy industries - steel, coal, machine tools, and chemicals - these proportions went even higher. However, in the small commercial
111 113 114 115
DePorte, Europe Between the Superpowers, 136-37; Yergin, Shattered Peace, 32526; Ulam, Expansion and Coexistence, 459-61. Mee, The Marshall Plan, 207; Taubman, Stalin's American Policy, 1.76-79. Deutscher, Stalin, 585-87. "Economic Structure of the East Zone," DER TAGESSPEIGEL, August 2, 1947, Enclosure to Robert Murphy, Transmittal of articles on the economic structure of the east zone, RG $9 862.50, DSNA. Carmel Offee, Notes on Socialization of Industry in the Soviet Zone and on Soviet Expropriation of Industry, November 3, 1947, RG 84 Frankfurt TS, Folder 360 German Government, FRC; Nettl, The Eastern Zone, 167; Gottlieb, German Peace Settlement, 59.
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establishments and moderate-sized light industries, the Soviets had left ownership in private hands. And while they subjected the peasants to increased state regulation, they allowed them to retain possession of the private farms, which they had acquired under the land reform.116 Considered in aggregate, the zonal pattern of ownership remained a hybrid one. In the political field, the bourgeois parties were maintaining a real but precarious existence. Both Christian Democrats (CDU) and Free Democrats (FDP) had the right to organize and to run candidates for most elected positions. Though subject to sporadic harassment and denied equal resources, they maintained their own press, carried on public meetings, and offered an alternative program to that of the Socialist Unity Party. In the most recent Lander elections, they had constituted a sufficient presence to hold the SED to roughly fifty percent of the vote.117 Because of the unreliability of the Landtags, the Soviets promoted new "Unity Fronts" for each of the provinces.118 As instituted in Thuringia and Saxony, these were composed of representatives from each of the political parties and from the mass organizations (including those for peasants, labor, women, and youth). The "fronts" claimed the right to recommend solutions for problems that would go before the legislatures. Though the Russians had not officially endorsed this procedure, it remained an obvious threat should the public officials stray too far. Most troublesome for the Soviets was the eastern CDU, which under the strong leadership of Jacob Kaiser had become a rallying point for the opposition. As on previous occasions, the SMA leaned on the vulnerable local committees to repudiate the Marshall Plan and to put pressure on Kaiser.119 In August, the agitation had grown so intense that the CDU chief was anticipating a rapid dismissal. To the surprise of Western observers, the Soviets skipped the confrontation. On the eve of the Christian Democratic convention, the Russian political director Tulpanow assured Kaiser that there would be no interference, although he pressed the party chief not to create embarrassment.120 In the western zones as well, communist agitators were treading warily. The KPD had been unable to capitalize on the recent economic downturn,
116
Peasants had to meet steep delivery quotas that were publicized in advance and
117 118 119 IZO
strictly enforced. But they were permitted to sell their excess production in special markets at higher prices. Ibid., 56. For discussion of eastern zone elections, see McCauley, The German Democratic Republic Since 194s; Steele, Inside East Germany, 58-60. Murphy to Secretary of State, July 13, 1947, RG 59 862.00, DSNA; EUCOM to AGWAR, July 29, 1947, RG 84 800 MG Reports, FRC. Huebner to AGWAR, June 10, 1947, RG 84 US POLAD 800, FRC; Murphy to Riddleberger, August 31, 1947, Ibid. Murphy to Riddleberger, August 31, 1947, Ibid.; Murphy to the Secretary of State, September 10, 1947, RG 59 862.00, DSNA.
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registering less than ten percent in the British zone elections121 and approximately 7.8 percent in the French.122 For the west German Communists, it was survival rather than a seizure of power that was the overwhelming task. Fearing a ban, the Party had begun preparations to go underground. In the meanwhile, it was pursuing an electoral strategy and carefully avoiding illegal acts.123 The KPD was most active in the labor field, where it was gaining strength in the works councils. However, its operatives were achieving power by downplaying their party affiliation and identifying themselves as vigorous defenders of working-class rights. Even then, they tried to avoid strikes and to maintain a low profile when work stoppages occurred.124 Since 1945 these west German Communists had traveled a great ideological distance. They were no longer the "popular front"-minded, prodemocratic, social reformers sent back from Moscow. Harshly critical of the Western powers and bitterly hostile to the "reactionary" classes, they had obviously resumed their anticapitalist mission.125 Yet under Soviet tutelage, they were still careful to respect bourgeois forms and to adhere to Allied Control Council procedures. The Russians were being most troublesome in Berlin. Having cooperated in free elections the previous October, they were locked in conflict with the Social Democratic administration. Their main vehicle for obstruction was Article 36 of the Berlin constitution, which required the positive sanction of the Kommandatura for all city laws and major appointments.126 Invoking this clause, the SMA was able to hold up legislation and to inhibit personnel changes.127 By summer, the ongoing skirmishes became a full111 IXX 113 114
125
116 127
Morris, German Communism Following the Moscow Conference. Ernest de Mayer to Secretary of State, Reported Rift in the KPD in the French Zone, May 31, 1947, RG 84 US POLAD 800B, FRC. Huebner to AGWAR, September 10, 1947, RG 84 US POLAD 800, FRC. Frederick Mann to Secretary of State, Work Stoppages in Mannheim, August 8, 1947, RG 59 862.00; Offie to Secretary of State, A Review of KPD policy and Activity in the United States Zone of Germany, September 10, 1947, RG 84 US POLAD Frankfurt TS, FRC. A. Dana Hodgdon to Secretary of State, Attempted Merger of the Communist Party of U.S. Zone with Socialist Unity Party, May 26, 1947, RG 59 862.00, DSNA; E. Tomlin Bailey to the Secretary of State, Political Report, Communist Activity in Bavaria, June 13, 1947, Ibid.; Morris, Soviet Policy in Germany on the Eve of London CFM, September 15, 1947, RG 84 US POLAD 800 Germany, FRC. Wiesner to Murphy, May 22, 1947, RG 84 US POLAD 820 Berlin, FRC. It also exercised indirect leverage through the FDGB, which had earlier signed contracts with the Berlin Magistrat regulating personnel practices. These agreements made it doubly difficult for the Social Democratic government to replace Communist loyalists. Minutes, 102nd Meeting Coordinating Committee, February 5, 1947, RG 59 740.00119, DSNA; Allied Control Council, 119th Meeting of the Coordinating Committee, April 23,1947, Ibid.; Allied Control Council, 60th Meeting
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scale row, when the SPD settled on Ernst Reuter as its nominee for lordmayor. A repentant former Communist who had once been associated with Lenin, Trotsky, and Radek, Reuter was despised by the Russians, who would not approve his selection.128 U.S. officials were aware that the wording of Article 36 lent itself to Soviet intervention. However, they insisted that Kommandatura "sanction" meant that the four powers could only disapprove decisions after they were taken. The timing was crucial, for if Allied action followed German decisions then it would take a unanimous vote to overturn, whereas approval in advance meant that a single power could veto. As the tedious procedural fight polarized the Kommandatura, the Berlin government sank deeper into paralysis. Not only was the city without a permanent mayor, but municipal officials were demoralized and frightened by Soviet charges against individuals.129 Since the Moscow Conference of Foreign Ministers, Soviet spokesmen in all the quadripartite forums had become more strident in their attack.130 In September, Colonel Tulpanow responded to the triple provocation of the Marshall Plan, the revised LIA, and the Anglo-American Coal Conference with a vitriolic address to the SED's convention. The Russian proclaimed that we "are the only military administration which openly, loudly declares . . . its democratic duty to support forces and organizations fighting for unity of working class and united democratic Germany."131 At present there were two Germanies, one a country "of all progressive forces of workers, farmers and intelligentsia" that desired peace in Europe, the other a "country of people who with support of foreign, particularly American capital, want to plunge German people once again into bloody slaughter of imperialistic war which monopolo-capitalism (is) preparing." Fortunately, there was "no one in the world" that could stop "the legitimate course of history." Despite "tremendous difficulties," the future belonged to a united socialist nation.
of the Allied Control Council, April 30, 1947, Ibid; Office of Military Government, "What is Going on In Berlin?" June 25, 1947, Ibid. Wiesner, Memorandum of Conversation, June 6, 1947, RG 84 US POLAD 820 Berlin, FRC; Civil Administration and Political Affairs Branch (OMGUS), Analysis of Current Political Situation in Berlin, June 25, 1947, Ibid.; Allied Control Council, 128th Meeting of the Coordinating Committee, July 9, 1947, RG 59 740.00119, DSNA. Murphy to Secretary of State, June 29, 1947, RG 59 862.00, DSNA. Office of Military Government, Political Division, Soviet Propaganda Practices in Germany, October 1947, RG 84 US POLAD Correspondence File, FRC; Smith to the Secretary of State, August 19, 1947, RG 84 US POLAD 850, FRC. Enclosure to Dispatch 1667 from Moscow Embassy, Interpretive Report of Soviet Foreign Policy Based on the Press for August 1947, RG 84 US POLAD 800, FRC. Speech cited in Murphy to the Secretary of State, September 27, 1947, RG 59 862.00, DSNA.
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129 130
131
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For those Americans who were seeking confirmation of Russian malevolence, the evidence was ample. The tightening of controls in eastern Germany, the KPD's anticapitalist agitation in the west, the repeated challenges in Berlin, and soliloquies such as Tulpanow's confirmed the most pessimistic assessment of the Soviet Union's purposes.132 Had they been so disposed, U.S. officials might have given weight to the conflicting trends: the maintenance of bourgeois parties and some private enterprise in the eastern zone, the adherence of the western KPD to parliamentary norms, and the allowance of diverse political formations in the Soviet sector of Berlin. While Russian speech makers were unquestionably abusive, the Americans were aware that some of their major charges were true - notably the claim that the United States and Britain were dividing Germany and scrapping Potsdam. This alone might have generated curiosity as to how much of Soviet behavior was angry reaction and whether it would improve if there was a genuine attempt at settlement. From their informal contacts in Berlin, U.S. Military Government was hearing of the confusion and disappointment in Soviet ranks. At a reception in the Polish embassy, SMA's political advisor Semonov buttonholed a Murphy staffer wanting to know if the United States had truly abandoned the idea of a united Germany. When assured that this was not the case, the Russian reaffirmed his desire to find a basis for cooperation.133 In another social gathering, V. S. Ivanov, a policy plenipotentiary from Moscow, told his American hosts that "for the first time the Russian people are beginning to hate the U.S."134 Citing the cutoff of reparations and the Soviet Union's exclusion from western Germany, he claimed to be "terribly worried about current developments." Despite reports that Marshal Sokolovsky was still looking for a compromise, the Americans had no desire to probe. This reluctance was rooted in the same priority that had operated at Moscow: the desire to use west German industry to salvage a free market system in Western Europe. In the intervening months, that priority had assumed obsessional proportions as a stream of governmental and private studies focused on Central Europe's stagnation as the source of existing woes.135 From this standpoint, it ultimately made little difference whether the Soviet Union desired partition, or
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derance of Power, 179-92; Yergin, Shattered Peace, 320-35. W. M. Chase to Murphy, July 23, 1947, RG 84 US POLAD 820, Box 778, FRC. Murphy to the Secretary of State, August 19, 1947, FRUS 1947 11:884-86. Lewis H. Brown Report on Germany, August 15, 1947, President's Committee on Foreign Aid MSS, Box 6, HST; International Chamber of Commerce, The Economic Condition of Germany Today and its International Repercussions, November 1947, FO 371/65834/PRO; Statement by the Honorable John Foster Dulles Before the Senate Foreign Relations Committee, November 14, 1947, JF Dulles MSS, Box 294, PU; President's Committee on Foreign Aid, Economic Considerations, October 1947, President's Committee on Foreign Aid MSS, Box 6, HST.
For discussion of policy makers perceptions during this period, See Leffler, Prepon-
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whether its motivation was world revolution, security against Nazi aggression, or generous compensation for damage inflicted. Concessions to the Soviet Union would inevitably impose unwelcome impediments to the restoration of German capitalism and the release of its industrial power. American stubbornness was also fed by their difficulties in gaining the Europeans' cooperation on the overall shape of the Marshall Plan.136 During the late summer, the discussions in the CEEC had revealed not only objections to German revival, but a widespread refusal to subordinate national requirements to an integrated West European program. Such differences had yielded months of bitter dispute with France and Britain over economic policy in the western zones. This made the isolation of the Soviet Union seem more necessary than before. Any continental rapprochement that gave the Soviets a voice in West European affairs could easily fan the resistance of Western partners, most dangerously in the German arena. Not really wanting to know if the Soviet Union would improve its behavior, the Americans commenced their planning for the November CFM. With rumors afloat of possible Soviet concessions, the British asked whether there were any terms under which the United States would accept Germany's economic unification. The State Department's John Hickerson replied negatively. If the Russians came into the Ruhr, under some type of "bogus unity," they would either try "to prevent the resources of western Germany being properly employed within the framework of the Marshall Plan . . . or to ensure that the increased productivity benefited the eastern zone and not merely western Germany and Western Europe generally."137 The British needed no persuasion. Superimposed on their long-standing fears of the Soviet Union were their new hopes of receiving American aid. The Foreign Office was anticipating gains on two fronts: in the revision of the bizonal financial accord and the eventual allocation of Marshall funds. German unification would bring a Soviet supplicant to the table and indirectly imperil both prospects. Yet the British were troubled by the possibility that the Soviets would advance proposals "which the US and UK might find it embarrassing to reject."138 Of special concern were the intimations that the Soviet Union would recommend the removal of all foreign forces from German soil. In the months since Moscow, the size of the occupation armies had become a
136
137 138
For an outstanding discussion see Milward, Reconstruction of Western Europe, 80-89; also, Hogan, Marshall Plan, 60-87; Mee, The Marshall Plan, 180-204. Kennan, Situation with Respect to European Recovery Program, September 4, 1947, FRUS 1947 111:397-405. Foreign Office to Lord Strang, October 22, 1947, FO 371/64207/PRO. Memorandum of Conversation by the Chief of the Division of Central European affairs, October 17, 1947, FRUS 1947 11:687-88; Strang to Foreign Office, October 18, 1947, FO 371/64209/PRO.
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major topic in the Allied Control Council.139 Strangely, this was the liveliest item in otherwise stalled proceedings. The Soviets seemed interested in reducing their occupation armies, leading Clay and Murphy to believe that they would cut their troops in direct proportion to the shrinkage in the west. While this would have left the Soviets at a three to two disadvantage, the British hoped to widen that margin by insisting on exact equality among themselves, the United States, and the Soviet Union. In their mutual planning, both the Americans and British were agreed that the complete removal of troops was undesirable.140 However, should the Soviets make the offer, it would be politically awkward to reject it outright. In that event, their strategy would be to attach such onerous conditions to the troop withdrawal that the Soviets would be compelled to renege. Another shared anxiety was that the Russians might press for the immediate establishment of an all-German government, even if there was no accord on economic principles. Although this might result in a loss of power for the SED, it would still endanger the Marshall Plan by giving the Soviets a say in western Germany.141 To avoid these perils, the Americans and British wanted a short CFM. When the foreign ministers convened, there could be a quick review to see if the Russian position had changed in any significant respect. If it had not, then they would press for a rapid adjournment. If there were modifications on particular questions such as troop withdrawal, an all-German government, or even reparations, then the Western powers would link them to other more controversial points. They hoped the meeting would break up over political rights, where the Soviets were most vulnerable.142 At the deputies meeting in early November, the Russian representative Smirnov had nothing new to suggest.143 The Americans, however, were still nervously expecting the Soviets to propose an early end to the occupation.
139 140 141
141
143
Murphy to the Secretary of State, June 1, 1947, FRUS 1947 11:871-72. Strang to Foreign Office, October 18, 1947. Foreign Office to Lord Strang, October 22, 1947, FO 371/64207/PRO; Memorandum of Conversation by the Chief of the Division of Central European Affairs, October 30, 1947, FRUS 1947 11:692-93. Memorandum of Conversation by the Chief of the Division of Central European Affairs, November 4, 1946, Ibid.:697-98; Central European Division, Considerations in Planning for the CFM, October 28, 1947, RG 59 Office of European Affairs, Box 147, DSNA. United States Daily Journal of Meetings, Deputies for Germany, London, November 6-22, 1947, FRUS 1947 11:703-12. Interestingly, the U.S. representative Robert Murphy was also unhappy with his instructions, complaining that "So often we talk about the way our Soviet colleagues are placed within a rigid framework . . . and given no latitude of any sort. "Apparently the U.S. government was "also adept at this practice" for it was evident that the department "does not desire to use the present meeting as a means of making progress." Murphy to Beam, November 7, 1947, RG 84 US POLAD Correspondence File, Box 460, FRC.
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The Joint Chiefs of Staff and other governmental bodies conducted lastminute reviews of the option. What if all the troops left? Clearly that would diminish the Soviets' coercive power in the eastern zone. But it would also leave the United States without a military presence on the European Continent, whereas the Red Army would remain inside Soviet territory. This situation "would almost certainly destroy any continued and firm opposition the Western European countries could otherwise be expected to exert against communist (Soviet) penetration."144 Given the importance of the issue, the U.S. analysis was remarkably imprecise. There was little effort to distinguish between European acceptance of specific Soviet demands and a complete capitulation to communism. Nor did anyone find it necessary to explain why Soviet military superiority would automatically translate into a Western European collapse. The bottom line, as far as the Americans were concerned, was that the Soviet Union was an adversary that would try to destabilize Western Europe. Without knowing exactly how they might succeed, it seemed selfevident that a military presence was an essential protection. All of this was premised on the expectation that Germany would be divided and the three western zones incorporated into the Marshall Plan. Under these conditions, prudent leaders must be prepared for trouble.145 Once again, American policy makers were stuck in an intellectual circle that was partly of their own making. A divided Germany would polarize the European Continent in ways that made military power more essential. But they were the ones propelling that division and closing the door to any compromise. Unwilling to reexamine these decisions, they were left with the need for troops. This meant that the Red Army would also stay, with cruel consequences for the inhabitants of the east. The American delegation arrived in London, determined to have a split. The awkwardness of their position was that they were publicly committed to German unification. Together with the British, their operational goal was to conduct the meeting so that the Soviets would appear responsible for the results. Once the Allied negotiations had failed, they intended to proceed with the arrangements for a West German government.146
144
145 146
Report by the Joint Strategic Survey Committee to the Joint Chiefs of Staff on military implications in an early withdrawal of occupation forces from Germany, November 14, 1947, RG 226 Records of the Office of Strategic Services, CCS 383.21 Germany (2-22-44) I 9 J MMNA. For other critical reports, see Clay to Eisenhower, November 5, 1947, Ibid.; Policy Planning Staff, PPS 13, November 6, 1947, RG 59 PPS, Box 1 DSNA. Leffler, Preponderance of Power, 182. Memorandum by the Secretary of State for Foreign Affairs, German Economic Unity, November 22, 1947, FO 371/64515/PRO; Central Europe Division, Considerations in Planning for the CFM, October 28, 1947; Draper to Clay, November 6, 1947, RG 335 OUS 014.1, MMNA.
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As always, French domestic politics was a complicating factor. During the fall, the Communists had lost ground when their militant tactics earned them new enemies. On the Right, the Gaullists had gained dramatically in municipal elections and were emerging as the more serious adversary.147 Foreign Minister Bidault now seemed more willing to join the bizone provided there were satisfactory arrangements for the Ruhr. However, the possibility that the Gaullists could win a national victory made French affiliation less appealing for the Americans. Under a right-wing government, France could pose as much of a problem to German reconstruction as the Soviets. So in addition to severing ties with the east, the Americans wanted to maintain cooperative relations with the French zone, while postponing trizonal fusion.148 There was also German opinion to be considered. U.S. policy makers were well aware that despite a pervasive antipathy to the Soviets, there was no mandate for partition. Their internal reports suggested that among west German politicians, such as Kurt Schumacher (SPD)149 and Konrad Adenauer (CDU)I5, there was a more realistic acceptance of at least a short-term division. Regardless of their personal predilections, if the initiative for a break seemed to come from the west, these politicians would publicly denounce it. Especially problematic was the position of the eastern CDU. Under the outspoken leadership of Jacob Kaiser, it was continuing its struggle for political independence. From Berlin, their chief American advocate Robert Murphy was inundating the State Department with descriptions of the members' courage, vulnerability, and urgent wish for an East-West settlement.151 Plainly, the division of the country would destroy whatever viability the CDU still possessed in the Soviet zone. In the opening days of the London conference, American fears of Soviet flexibility seemed misplaced. Foreign Minister Molotov was instantly belligerent, suggesting that his government preferred angry rhetoric over subtle
147
148 149 150 151
Caffrey to the Secretary of State, October 30, 1947, FRUS 1947 IIL795-97; Caffrey to the Secretary of State, November 3, 1947, Ibid.: 797-98; Central Intelligence Agency, Review of the World Situation as it Relates to the Security of the United States, November 14, 1947, President's Secretary File (PSF), Box 202, HST; Caffrey to the Secretary of State, December 1, 1947, FRUS 1947 111:807-9. Memorandum of Conversation by the Secretary of State, September 18, 1947, FRUS 1947 II:68o-82. Henry Kellerman to William Tyler, October 31, 1947, RG 59 Saltzman, DSNA. Altaffer to the Secretary of State, October 23, 1947, RG 59 740.00119, DSNA. Murphy to Secretary of State, Petition for the Formation of a German Government, August 21, 1947, RG 59 862.00, DSNA; Murphy to Morris, November 6, 1947, RG 84 US POLAD Correspondence File, Box 460, FRC; Murphy to Beam, November 6, 1947, Ibid.; Murphy to the Secretary of State, November 8, 1947, RG 59 862.00, DSNA.
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diplomacy. To the old complaints about Anglo-American violations of Potsdam, Molotov wove Zhdanov's "two-camp" indictment. In this explanatory framework, the failure to adequately reform and demilitarize the western zones reflected a deliberate plot to turn western Germany into a base for capitalist aggression. Whereas the Soviets had emphasized German democracy and economic development, the "imperialists" were trying to use German territory "as a base for development of a war industry" and its "reactionary forces as a support for dominating over the democratic countries of Europe."152 Appealing to German nationalism, Molotov accused the United States and Britain of purposely botching the bizone's recovery.153 He drew upon American statistics to show that industrial production in the bizone was only thirty-five percent of the figure for 1938, which compared unfavorably with the fifty-two percent rate of recovery in the Russian zone. This stagnation was no accident. American and British interests were using their authority to inhibit Germany's industrial competition. Meanwhile, their own "monopoly capitalists" were attempting to penetrate the Ruhr and to acquire valuable properties cheaply. Molotov observed gravely that it is "our duty to enable German civilian industries to develop, recognizing that this is in the interest of the German people and of the other people of Europe." The Russian also chided the Americans for abandoning German unity. Two years previously, they had supported a federal government for all of Germany but this was no longer the case. Whatever Secretary Marshall stated officially, it was clear from internal statements that "the question of the creation of a Government for the Western zones has already been decided by the United States of America."154 Despite Molotov's angry rebukes, the Russian negotiating position had not appreciably altered since Moscow. The Soviet Union was still calling for reparations from current production, democratization in the form of denazification, decartelization, and land reform, the establishment of central German economic agencies that would be subject to the attenuated authority of the zone commanders, and the creation of a provisional government elected directly by the German people. They had added a few items, notably a call for an early peace treaty and a proposal that the new German government participate in its drafting.155 At this juncture, the Soviets were faced with an impossible dilemma. Fearful of the formation of a West German state, they had no way to stop
152 153 154 155
Molotov, "The Peace Treaty with Germany," November 26, 1947, Problems of Foreign Policy, 503-10. Molotov, "Economic Principles for Germany," December 5, 1947, ibid.:515-24. Ibid. The United States Delegation at the Council of Foreign Ministers to President Truman, November 29, 1947, FRUS 1947 11:740-41.
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it without completely surrendering the eastern zone. Even then, it was not certain that the Americans and British would wish to incorporate the area. The disparity between Molotov's harsh language and moderate negotiating position betokened a dual strategy of appealing to German nationalists while keeping lines open for a deal with the West.156 Whatever the precise intent, the foreign minister's accusations increased Secretary Marshall's determination to bolt the door. Assuring his colleagues that the United States favored the establishment of a German provisional government "at the earliest possible moment," he thought they should be honest with themselves.157 A German government that was "called upon to administer a Germany divided as it is today by the policies of the occupying powers would be a sham and a delusion." Employing the approach, which had been developed with the British, the secretary insisted upon linkage. Issues could not be settled piecemeal. Any further move toward unification must entail complete acceptance of certain economic and political principles. These had been embodied in a new British position paper, which stipulated that a unified Germany must be allowed to join the Marshall Plan. Other unpalatable items were a complete ban on current production reparations, the formation of a government based on the Lander, and the detailed regulation of political rights.158 Following days of boring stalemate, the Soviets suddenly came forward with an offer of compromise. On December 8 Molotov submitted a specific, written proposal on economic unity. Much of it was a distillation of previous positions, including the almost quaint demand for German central agencies. In this updated version, the prerogatives of the individual zone commanders were greatly curtailed and the insistence upon a veto had disappeared.159 The Soviets also acknowledged "the necessity of accelerating" the reconstruction of German industry, both for purposes of reparations and for European trade. While still clinging to the 10 billion dollar
156
157
158 159
One aspect of this approach was the Russian effort to promote a German People's Congress on behalf of German unity. This body was convened during the London meeting, and attempted unsuccessfully to gain recognition as the voice of the German public. Chase to the Secretary of State, November 29, 1947, RG 59 862.00, DSNA; Proposed Cable to Department of the Army, December 6, 1947, RG 84 820 Military Government Reports, Box 778, FRC. Council of Foreign Ministers, Questions Relating to Germany Economic Principles, Statement by the Head of the United States Delegation, December 5, 1947, RG 59 Central Europe, Box 4, DSNA. Proposal by the United Kingdom delegation to the Council of Foreign Ministers, November 27, 1947, FRUS 1947 11:779-88. The United States Delegation to the Council of Foreign Ministers to President Truman, the Acting Secretary of State and Others, December 8, 1947, Ibid.; Proposal by the Soviet Delegation to the Council of Foreign Ministers, December 8, 1947, Ibid
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reparations figure, they accepted the recently revised Level of Industry plan and the resulting limitation on the removal of capital equipment. Current production reparations must continue, but these could be stretched over a twenty-year period. As soon as a procedure was in place for the fulfillment of the reparations program, the interzonal barriers would come down. The Soviet offer was hardly the "sensational" proposal that Western policy makers had been nervously anticipating. It contained no grand gestures such as the immediate withdrawal of the occupation armies, and the concessions it did include were ambiguously worded. Yet for the first time since the war's end, the Soviets seemed desperate enough to subordinate their immediate reparations requirements to Anglo-American notions of European recovery. Within the U.S. delegation, the predominant response was one of irritation and worry. In a personal letter to General Eisenhower, Ambassador Walter Bedell Smith described the group's discomfort.160 Observing that Molotov had begun to make concessions, Smith reflected that "The difficulty under which we labor is that in spite of our announced position, we really do not want nor intend to accept German unification in any terms that the Russians might agree to, even though they seemed to meet most of our requirements" (italics added). The real problem was that the Soviets would interfere with the German contribution to the Marshall Plan. However, the United States was in an exposed position, and it would "require careful maneuvering to avoid the appearance of inconsistency if not hypocrisy." Just how careful the Americans would have to be emerged during the next forty-eight hours as Molotov continued to give ground. On December 10 the Russian agreed that Germany must repay the Allied advances for imports161 and accepted the principle that the external occupation costs should be required "as debts due from Germany to the controlling powers." Secretary Marshall quickly upped the ante by asking the CFM to decide that after January 1948 "nothing shall be taken out of Germany" that was not paid for by money or goods. This provision would not apply to the 682 plants scheduled for removal in the bizone, but it would encompass all current production reparations. Thus at the point that Molotov was offering to compromise the timing of the reparations program and to adjust it to Germany's other obligations, the secretary demanded complete renunciation. Unless Molotov had undergone a remarkable metamorphosis, this was
160 161
Smith to Eisenhower, December 10, 1947. He further stipulated that this could be a "a first charge on Germany's foreign exchange resources after its essential needs had been met." The United States Delegation to the Council on Foreign Ministers to President Truman, the Acting Secretary of State and Others, December 10, 1947, FRUS 1947 11:762.-64.
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a requirement that should block a settlement. Yet Marshall was suddenly uncertain about how far the Soviets might go to prevent partition. He also had new anxiety about the resolve of his Western allies. Bidault seemed tempted by the prospect of Soviet support on the Ruhr,162 and even Bevin was becoming nervous about a break. Now that the Russians were shifting on reparations, he was not sure "how firm the British will be maintaining the front we have so far been able to present."163 Marshall explained to Lovett that the situation in the conference was "exceedingly critical."164 The U.S. delegation was involved in "very delicate manuevers against Molotov's evident purpose to secure agreements of a character which would appear well to the public but would permit most serious frustration of what must be done in Germany in connection with ERP." The Soviets were "playing for time" and Molotov was "consistently, almost desperately, endeavoring to reach agreements which really would be an embarrassment to us in the next four to six months." On December 12 the Russian foreign minister ended Marshall's ordeal with a fierce rejection of the American position.165 Reciting the whole litany of betrayal, he complained that after two years of occupation, a mere 3 3 million dollars' worth of capital equipment had been distributed to twenty different countries, including the Soviet Union. "Is this situation admissible?" he asked rhetorically. "Is it not a mockery?" At a time when "allies were needed in the war against the common enemy, they mattered." Then "quite substantial promises were made to them, and obligations were entered into." But when the moment "came for peace making, little of these promises were left." The Soviet Union would not abandon its claim for current production reparation, but they were not nearly so damaging as was claimed.166 In the bizone, current production reparations had been prohibited and industrial production was way down, whereas the deliveries from the Soviet zone had proved compatible with a faster rate of growth. The Western powers
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166
Secretary Marshall told Bidault "that while appreciating to the full the difficulties that he was laboring under.... I nevertheless wished to draw his attention to the vital importance of the debates now proceeding in congress on the European aid program." Memorandum of Conversation, Secretary Marshall and M. Bidault, November 28, 1947, RG 59 740.00119, DSNA; United States Delegation at the Council of Foreign Ministers to the Department of State, December 8, 1947, FRUS 11:793-94. Secretary of State to the Acting Secretary of State, December 11, 1947, Ibid.:764-66. Ibid. United States Delegation at the Council of Foreign Ministers to President Truman, the Acting Secretary of State and Others, December 12, 1947, Ibid.:766-68; Molotov, "Germany and Reparations," December 12, 1947, Problems of Foreign Policy, 531-40. Ibid.
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were the true exploiters of Germany. Rarely mentioned were "the hidden reparations and economic privileges which the British, American and French authorities, and their industrialists and banks" had taken. These included the export of underpriced coal and timber, as well as the purchase of cheap factories from hard-pressed German industrialists. The United States was about to impose a new credit to the amount of over 1 million dollars. The Germans had not been asked whether they wished to undertake this debt, which would vastly increase their dependency on the United States. Once Molotov had resumed his attack, American diplomats breathed a sigh of relief. Soviet malice was easier to deal with when it was on the surface. Moreover, the charges of capitalist profiteering in Germany seemed so manifestly inaccurate and cynical that they revived a flagging sense of legitimacy about the movement toward partition. Secretary Marshall admonished his colleague that such remarks "reflected on the dignity of the government of the Soviet Union." Bevin thought Molotov should thank his fellow ministers "for listening to the end." Having weathered the crisis, Marshall was determined to end the conference.167 He huddled with Bidault and Bevin, and together the ministers agreed that Molotov's insistence on current production provided sufficient grounds for a break. On December 15 Bevin addressed the council, indicating his "great disappointment" in the lack of accord. He was immediately followed by Marshall, who explained that since the Soviets were insisting upon terms "which would enslave the German people and retard European recovery," he was moving for adjournment.168 A surprised Molotov169 denied that his government had caused the stalemate, and argued that the Americans were seeking an end to the discussions so that they could exercise a "free hand" in their zone. Fume as he might, the Russian could not negotiate with empty chairs, and as his colleagues gathered up their papers and departed the room, the Soviet isolation was graphically apparent. As THEY TERMINATED the London CFM, the Americans and British experienced a momentary sense of triumph. Molotov had played his diplomatic cards foolishly, providing them with an excuse not merely to stop negotiations but to proceed with the partition of the German nation. However, beneath their satisfaction was a lurking fear of retaliation. Once the Soviets had assimilated their definitive exclusion from western Germany,
167 168 169
The Secretary of State to the Acting Secretary of State, December 13, 1947, FRUS 1947 IL769-70. The United States Delegation at the Council of Foreign Ministers, December 15, 1947, Ibid.:77i-73. Murphy to Major-General Walsh, December 22, 1947, RG 84 Correspondence File, Box 460, FRC.
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they would almost certainly look for a place to strike. The most tempting target was the exposed city of Berlin,170 which neither power had given much thought to protecting. Yet having embraced the risks of a divided continent, they had incurred an obligation for its defense.
170
Shortly after the London CFM adjourned, American intelligence agencies began predicting a Soviet move against Berlin. Murphy to Secretary of State, December 24, 1947, FRUS 1947 IL905; Smith to Secretary of State, December 30, 1947, Ibid.:9o8; Hillenkoetter to the President, December 22, 1947, RG 226 Records of the Office of Strategic Services, Leahy File 123 "Memos to and From the President," MMNA.
A Separate State
You know of the sincere and patient attempts of the democratic nations to find a secure basis for peace through negotiation.... You know of the obstacles we have encountered. But the record stands as a monument to the good faith and integrity of the democratic nations of the world. (Harry S. Truman, March 17, 1948)l . . . we may be approaching agreement in the ACC on quadripartite currency reform for all of Germany. The question arises whether this is desirable from the U.S. standpoint.... it is recommended that General Clay be instructed that the policy of this government is no longer to reach agreement on currency and financial reform. (Frank G. Wisner, Deputy to the Assistant Secretary of State for Occupied Areas, March 10, 1948)2
BY THE BEGINNING of 1948 the Americans and British were resolved: There would be two Germanies. For the foreseeable future the eastern zone would be left to the Russians, while the western zones would become a separate state. Together the two powers devised concrete plans for making West Germany a reality: procedures for a constituent assembly, guidelines for a governmental structure, arrangements for the Ruhr, and provisions for a diminished occupation. The Anglo-American initiatives generated significant opposition from France and other West European nations, who remained fearful of German militarism. Meanwhile West German politicians, whose cooperation was essential to the project, were loathe to endorse measures that would formally divide their country. From these currents emerged a new and serious dilemma for policy makers: to assuage West European anxieties would
1
1
1948. Wisner to Lovett, March 10, 1948, FRUS 1948 11:879-82.
Text of President Truman's Address to the Congress, New York Times, March 18, 363
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aggravate the already discontented Germans, whereas to conciliate the Germans could further jeopardize West European support. As for the unwanted Russians, they were alternately bellicose and conciliatory in their frantic efforts to stop the creation of a West German government. In June, the futility of their efforts became apparent when the six-power London conference approved plans for a separate constituent assembly. This was rapidly followed by the introduction of a new currency into the western zones of occupation. Responding to these frustrations, the Soviets imposed a blockade on the western sectors of Berlin. Although the confrontation had long been implicit in the German partition, the Americans and British still lacked a strategy for rescuing the city. The sudden vulnerability of the former German capital drove home a lesson that they had dimly perceived for months: to safely create a West German state, in defiance of Soviet wishes, would require overwhelming military power.
I. RELUCTANT ALLIES
In January 1948, Generals Clay and Robertson initiated another reorganization of the bizone, designed to make its structures more like a formal government. The changes of the previous spring had proved disappointing. The German bodies seemed paralyzed by partisan conflict, Lander insubordination, and public indifference. Their contribution to economic recovery was doubtful, and their ineptness in food collection bordered on scandalous.3 The two generals hoped that with greater powers the bizonal organizations would behave more responsibly and enjoy greater legitimacy in the eyes of the public. Their approach was in line with Marshall and Bevin's intention to take incremental steps toward a West German state, without formally acknowledging that this was their purpose.4 The German minister-presidents and the leaders of the Bizonal Economic Council were summoned to Frankfurt, where they were handed a set of Anglo-American recommendations designed to alter the existing structures.5 These included a doubling in size of the Economic Council, the creation of a second chamber composed of representatives from the Lander, the establishment of a new Executive Committee under the direction of a single chair, the formation of a high court, and the development of a
3
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4577, March 12, 1948; Gimbel, American Occupation, 186-98. Memorandum of Conversation by the Political Advisor for Germany (Murphy), December 17, 1947, FRUS 1947 11:811-13. This deceptive approach was discussed by American and British planners, even in advance of London. Strang to Foreign Office, October 18, 1947, FO 371/64207/PRO. Murphy to Secretary of State, January 7, 1948, FRUS 1948 II: 8-10; Clay to Draper, January 10, 1948, RG 84 US POLAD 801.1 Bizonal Affairs, FRC.
Department of State, "Problems of German Bizonal Reorganization," OIR Report
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central bank. Bizonal organs would be charged with new functions, notably over budget and taxation. General Robertson assured the Germans that this was not the equivalent of a new constitution and that the military governors were still committed to German unification. When the French learned of the session, they again felt betrayed. Foreign Minister Bidault had returned from the London CFM bringing assurances to his cabinet that henceforth the three Western powers would be closely coordinating their zonal policies. He was therefore embarrassed by the news that the Americans and British had made new plans to restructure the bizone, and that they had excluded General Koenig from their discussion with the Germans.6 French unhappiness was also substantive. The Anglo-American proposals seemed alarmingly close to an actual West German government that was far too centralized for their comfort.7 Moreover, such rapid movement toward partition was dangerously provocative to the Russians. The latter might retaliate with their own regime in the east or by expelling the western powers from Berlin, precipitating a chain of events that could cause World War III. OMGUS officials had little patience for the French objections.8 Still struggling with horrible economic statistics - another year-end drop in coal production, calory levels in the Ruhr sinking below 1,200 - they were determined to strengthen the bizonal organs. Furthermore if they met French concerns about centralization, they would have even less to offer the German politicians, who were in a fretful, anxious mood. In their meeting with the military governors, the German ministerpresidents had been shocked by how quickly the occupying powers were proceeding toward schism. Although overtly compliant, they privately expressed serious reservations that seemed to intensify during the ensuing weeks.9 According to General Robertson, they were "terrified of being accused of splitting the country by the Russians and even though many of
Department of State, Preview of French Protest on Bizonal Reorganization, January 10, 1948, RG 59 Central Europe File, Box 4, DSNA; Murphy to Secretary of State, January 15, 1948; Wallner to Bonbright, January 16, 1948, FRUS 1948 II:26-28. Draper to Clay, January 12, 1948, RG 84 US POLAD 801.1, FRC; Caffrey to the Secretary of State, January 10, 1948, Ibid.: 20-21; H. B. Livingston to Kit Steel, January 15, 1948, FO 371/70573/PRO. Clay to Draper, January 12, 1948; Clay-Royall Teleconference January 12, 1948, Clay Papers, 11:5345535. Indeed OMGUS was not especially eager for the French to join the Bizone, believing that their participation would generate more problems then it would solve. Murphy to Ernest de Mayer, January 4, 1948, RG 84 Correspondence File, Box 461, FRC. Murphy to Secretary of State, January 8 6c 9, 1948, FRUS 1948 II: 10-16519-20. Most critical were the German Social Democrats, whose oppositional stance was of particular concern to the British. Robertson to Fonoff, January 13, 1948, FO 371/ 70572/PRO; Robertson to Pat Dean, January 27, 1948, FO 371/70579/PRO.
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them subscribe privately to the idea of reconquering the east through the west, they will not do so in public." The Germans also suspected the Americans and British of trying to form "a puppet organization," and were reluctant "to risk their political futures by joining it." To reduce some of the pressure, the two Allies were willing to issue the Frankfurt proposals as a proclamation. However, they still desired formal consent. Though acquiescing, the minister-presidents hedged their acceptance with numerous qualifications.10 The most important was their insistence that the bizonal changes not be conceived as steps to a future German government. Since this was precisely what the Americans and British had in mind, the whole episode underscored the difficulty of maintaining not only French but West German cooperation.11 By February, U.S. policy makers were shifting their attention to the forthcoming six-power conference, scheduled for London. This gathering, which was to include the three Western occupying nations along with representatives from Benelux, was expected to consider a basket of German issues. Among them were western Germany's political structure, its role in the Marshall Plan, a final reparations program, a settlement of the Ruhr, and guarantees of disarmament and demilitarization. American officials hoped that by considering these issues simultaneously, it might be easier to make a breakthrough.1* In planning for London, U.S. officials were aware that their outlook was different from the West Europeans'. Wherever Hitler's armies had held sway, people remembered the Germans with fear and loathing. For much of the Continent, the depredations of the Third Reich continued to overshadow Soviet transgressions so that Germany still appeared the premier security threat. Even in England, where anti-Russian attitudes were dominant, there was a persistent anxiety about German militarism. The Americans regarded these fears as outdated. Unless Germany gravitated into the Soviet orbit, it could not become a menace.13 With the approach of the six-power conference, this abstract disagreement assumed practical significance. U.S. proposals were plainly designed to strengthen West Germany's economic and political position. The least controversial item was German participation in the Marshall Plan. West European countries were already resigned to its inclusion, and except for the French there was wide support for the idea. Indeed the Benelux
10
Riddleberger to Ambassador Murphy, U.S.-U.K. Conference with German Authorities, January 29, 1948, RG 84 US POLAD 801.1, FRC; Civil Affairs to Military
Government, January 30, 1948, ibid. Clay to Draper, January 28, 1948, Clay Papers, II:547-48. Harvey to Fonoff, January 15, 1948, FO 371/70572/PRO; Beam to Claxton, January 19, 1948, RG 59 Central Europe, Box 4, DSNA; Beam to Reber, February 10, 1948, Ibid. Secretary of State to Embassy in France, February 19, 1948, FRUS 1948 11:70-71.
11 12
13
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countries had always depended upon Germany's heavy industry and markets for their own prosperity, and did not expect to alter the pattern.14 What mattered to the Europeans was that there be safeguards so that Germany's industrial revival could be carefully controlled. There were certain to be sharp differences over the nature and severity of these guarantees. Ironically the most difficult issue appeared to be reparations, which had so poisoned relations with the Soviets. Now that the Soviet Union was shunted aside, it seemed likely to contaminate interactions with West European friends. To its proponents, reparations had always carried layers of meaning - symbolic, material, and strategic. Reparations was a way of saying that Germany was guilty of crimes against its neighbors, a means of compensating occupied countries for damage inflicted by the Nazis, and a technique for preventing German rearmament. For all these reasons, they were vitally important to the countries of Western Europe as they had been to the Russians. The dismantling program had already been shrunk by the revised Level of Industry plan. This had left only 682 plants in the bizone for reparations. Yet Congress had demanded an investigation of even this modified scheme.15 Not surprisingly, there was objection to the prospective delivery of one-quarter of the factories to the Soviet Union. There were also complaints about the seventy-five percent allocated to Western Europe at a time when the United States was preparing to pay for ERP. Congressional spokesmen insisted, with little apparent evidence, that by leaving some of these plants in Germany the United States could economize. If Soviet deliveries were still being contemplated, this was at Bevin's insistence. The foreign minister regarded reparations as a solemn obligation, which ought to be fulfilled for moral and practical reasons.16 While both the U.S. State and War departments disagreed, they were reluctant to pressure the British on this matter. As for those plants that were earmarked for Western Europe, the army and State Department regarded congressional objections as nonsensical. Having coauthored the revised Level of Industry plan, OMGUS was convinced that the 682 plants could not be used in Germany unless resources were diverted from other more essential enterprises. In light of this assessment, State saw no reason to disappoint West European associates.17
14 15
Wesley Haraldson to Ambassador, The Relationship of Western Germany to the European Recovery Program, February 3, 1948, RG 84 US POLAD 850, FRC. "House Group Urges Pact with Germans to Ease U.S. Costs" New York Times,
February 5, 1948; Inverchapel to Bevin, February 16, 1948, FO 371/70579/PRO. Gimbel, American Occupation, 181-85. British Cabinet, Policy in Germany, January 5, 1948, FO 371/76780/PRO; CSCAD to Cinceur, January 9, 1948, RG 335 OUS 387.6 Germany, MMNA. Clay to the Department of the Army, January 13,1948, FRUS 1948 11:706-8; Memorandum Proposed by the Department of State, January 20, 1948, Ibid.:7ii-i6;
16 17
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Inside the cabinet, Secretary of Commerce Averell Harriman and Secretary of the Interior Julian Krug continued to raise objections.18 In Harriman's case, hostility to reparations harked back to Potsdam, where he had fiercely resisted the Byrnes-Clayton formula for zonal deliveries. With a battle pending in Congress over the European recovery program, he and Krug had unusual leverage. They obtained another delay in dismantling, pending a cabinet subcommittee's review of the list of 68z plants for possible retention in Germany. This put the United States on a collision course with the West European countries, who were threatened not only by a material loss but by the elimination of a method for industrial disarmament.19 Under the circumstance, the elaboration of alternative security measures became even more urgent. Since early 1946 the U.S. government had pushed the four-power Byrnes treaty with its provisions for long-term supervision and controls. This idea had always appealed to the French, who saw additional reasons for applying a disarmament treaty to the three western zones. However, the State Department was now hesitant to make West Germany the target of an adversarial agreement/0 To maintain peace in Europe, the department was gravitating toward Bevin's plans for a Western Union. The British foreign minister had first floated the notion at the conclusion of the London CFM, when he spoke vaguely of "some western democratic system" that would be "backed by money, power and resolute action."21 In the intervening weeks, this had taken shape as an incipient alliance of France, England, and the Benelux countries for purposes of mutual defense. Although the United States had yet to resolve its own relation to the project, the obvious advantage of the Western Union over a three-power disarmament treaty was that it would subsume safeguards against Germany in an anti-Soviet plan. Prior to London, the French discovered that the Byrnes proposal was "a dead duck."" They emphasized to Washington that without a satisfactory agreement on military security, they would attach greater significance to the internationalization of the Ruhr. Yet among the Americans, there was
"U.S. to Press German Press Dismantling" Herald Tribune, February 9, 1948; Secretary of State to Congressman W. G. Andrews, February 10, 1948, RG 59 862.60, DSNA, 18 Memorandum Prepared by the Department of State, January 20, 1948, FRUS 1948 11:711-17; Memorandum by the Acting Secretary of State, January 23, 1948, Ibid.:7i6; Harriman to Truman, January 23, 1948, Ibid. 1716-17. 19 "House Group Urges Pact With Germans to Ease U.S. Costs", New York Times, February 6, 1948; Resolution by the Inter-Allied Reparations Agency, February 16, 1948, FRUS 1948 11:734-35; FONOFF to Washington, February 23, 1948, FO 371/ 70579/PRO. ao Secretary of State to Truman, February 11, 1948, FRUS 1948 11:61-63. " Memorandum of Conversation by the Ambassador in the United Kingdom, December 17, 1947, FRUS 1947 11:811-13. " Memorandum of Conversation by the Chief of Western Union Affairs (Achilles), February 13, 1948, FRUS 1948 IL63-65,
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declining sympathy for this position as well. The United States had just acquired an equal voice in the control groups for coal and steel, which might be weakened by an international authority. Military Government was also worried that new encroachments on German sovereignty would unleash an indigenous backlash that could damage production.23 The relative indifference of the United States to all the security items reparations, the disarmament treaty, the future of the Ruhr - was even troubling to the British. From the point of view of Whitehall, once partition was under way and the western zones were being incorporated into the Marshall Plan, it was time to think seriously about German aggression. In contrast to the Americans, they were willing to make concessions on all of these topics/ 4 Moreover, they continued to believe that socialization would be a useful deterrent to German rearmament because it would remove vital resources from the control of untrustworthy capitalists. During the fall, the Landtag of North Rhine-Westphalia had kept the option alive by continuing to work on a public ownership bill for the coal mines.25 Though Western countries might disagree about the perils of German militarism, they shared a growing animosity toward the Soviet Union. In Western Europe this feeling had been inflamed by the recent strikes and militant agitation of the local communist parties. The opening of the sixpower conference coincided with the coup in Czechoslovakia, where the Communists were suppressing their coalition partners and destroying the last vestiges of political liberty. Here was a graphic demonstration, lest any be needed, of how hazardous it was to make deals with the Soviet Union or its national servants.26 Against this backdrop, there was diminished resistance to a German partition.
Z3
24
2-5
26
Bizonal Fusion Agreement, December 17, 1948, State Department Bulletin, December 28, 1947, 1262-67; Clay to Draper, February 7, 1948, Clay Papers, IL555-58; Clay-Draper Teleconference, February 10, 1948, Ibid.:558~59; Draper to Clay, February 12, 1948, Re: Ruhr and Benelux Position Papers, RG 165 CSC AD 014 Germany, MMNA. Douglas to the Secretary of State, February 20, 1948, FRUS 1948 11:75-77; Douglas to Secretary of State, February 21, 1948, Ibid. ^8-79; FONOFF to Washington, Three-Power Talks on Germany, February 23, 1948. As of February 1948 it had passed through its second reading. The British were resigned to a veto, but they urged the Americans to leave the road open for socialism once a West German government was established. U.K. Control Commission to FONOFF, February 5, 1948, FO 1034/42/PRO; FONOFF to Berlin Control Commission, February 7, 1948, Ibid.; Robertson to FONOFF, February 11, 1948, Ibid. American officials had been anticipating communist action in Czechoslovakia for some time. Privately, there was less shock and upset than was being projected to the American public. According to the CIA, "The Communist coup in Czechoslovakia does not reflect any sudden increase in Soviet capabilities, or any change in current Soviet policies or tactics The psychological reaction to the Czech coup appears to have been out of all proportion to its actual significance." CIA, Review of the World Situation as it relates to the Security of the United States, March 10, 1948, PSF, Box 202, HST.
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During his introductory remarks on February 24, Ambassador Lewis Douglas placed the proceedings in a Cold War context.27 Contrasting the "destructive influence of Soviet attitude" and the "constructive influence" of ERP, he emphasized the changed nature of the German problem. While his government was still hoping for four-power cooperation, it was unwilling to delay measures that would put Germany on a self-supporting basis. Remedies could be taken without fear of security since Germany was no longer a threat. Stripped of its eastern territories and desperately dependent on foreign trade, it was only a danger as the "instrumentality of some other power." In explaining U.S. policy, the ambassador invoked the exigencies of containment. Yet it had been only three years since he had resigned from Military Government, proclaiming that JCS 1067 would ruin the German economy and prevent the necessary rehabilitation of Europe/ 8 His agenda then, which predated the emergence of the Soviet threat, resembled the position papers he had brought to London: the rebuilding of German coal and heavy industry, the limitation of reparations and reform, the integration of the Ruhr economy with that of its neighbors. By early 1948 Douglas, along with his governmental colleagues, had become genuinely alarmed about the Soviet Union. Among American officials it was an article of faith that the Russians were out to communize western Germany and destroy the Marshall Plan. This conviction created a new rationale for long-desired decisions. It also provided a useful counter to the West Europeans, who otherwise objected to many American ideas. Throughout the two-week session, held in the Old India House, the U.S. delegation had its hands full fending off the Allies' security demands. The State Department had pinned its hopes on the Benelux countries that, unlike France, clearly favored the revival of German industry. However, their representatives were surprisingly stubborn about a range of issues, notably their insistence that an international Ruhr authority be established before a West German state.29 The disposition of the Ruhr became a negotiator's nightmare as the French lobbied for international management of the mines and steelworks, and the British brought back the topic of socialization.30 Anticipating some of the tension, the Americans had arranged the
27
z8 29 30
State Department. Secretary of State to Douglas, February 20, 1948, FRUS 1948 11:71-73; Douglas to the Secretary of State, February 25, 1948, ibid.:8789. Browder and Smith, Independent, 232-35. Douglas to Secretary of State, February 29, 1948, FRUS 1948:104-7; Ivone Kirkpatrick to Bevin, March 16, 1948, FO 371/70582/PRO. Douglas to Secretary of State, February 27, 1948, FRUS 1948 IL97: FONOFF to Berlin, February 28, 1948, FO 371/70581/PRO.
In striking this note, Douglas was reflecting his very precise instructions from the
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conference in two sessions. They intended the first to be short and exploratory, followed by a two-month recess while the U.S. Congress finished its deliberations on the Economic Recovery Act. Once the money had been obtained, the second session would resume and make its final decisions.31 This careful timing had a dual purpose. By keeping matters vague in the first stage, State wished to avoid offending Congress with possibly controversial results. And by stretching the London conference across the ERP debate, they hoped to gain maximum influence when the money became available. The prospect of American aid obviously loomed large for the West Europeans, setting boundaries to their dissent. However, their opposition was sufficiently intense to gain them one concession from Douglas: a promise that an International Ruhr Authority would proceed the formation of a West German government. Furious, General Clay cabled on March 5 that such a commitment could produce "an immediate orientation of German thought toward the east."3* The military governor was overreacting, for Douglas' concession was less substantial than it appeared. Although he had agreed that the Ruhr authority might be created before a West German government, "immediately, possibly one day before," it would not operate until afterwards.33 Moreover, no definite powers had been assigned to the body. The statement of function did not mention international management and made only vague provision for control of allocations, which was so important to the French. When the London conference recessed on March 6, the Ruhr accord formed one of several broad understandings, of which the most momentous was the decision to proceed with a West German government. As anticipated, the conferees also decided to incorporate the western zones into the European recovery plan and to permit their representation on any continuing organization.34 While U.S. officials were heartened by these results, they remained wary. The West Europeans had accepted the idea of a federal West German state,
31
32 33
34
Inverchapel to the FONOFF, February 14, 1948, FO 371/70577/PRO; Bevin to Inverchapel, February 16, 1948, Ibid.; Bevin to Inverchapel, February 21, 1948, FO 371/7058/PRO. Clay to Draper, March 5, 1948, Clay Papers, 11:569-71. Report of the Working Party on the Ruhr of the London Conference on Germany, March 5, 1948, FRUS 1948 11:135-38; Douglas to Secretary of State, March 6, 1948, Ibid.: 140-42; Draper to Clay, March 10, 1948, Clay Papers, IL573-74; D. C. Fahey to General Noce, Re: State Prepared Draft of Cable to General Clay, March 12, 1948, RG 165 CSCAD 014 Germany, MMNA. Communique issued at the Recess for the London Conference on Germany, March 6 1948, FRUS 1948 11:141-43; Douglas to the Secretary of State, March 5, 1948, Ibid.: 131-34. Kirkpatrick to Sir Philip Nichols, March 16, 1948, FO 371/70582/ PRO.
A. Separate State but questions of timing, procedure, and structure had been assigned to a working party in Berlin, which could easily run aground over the specifics. Furthermore, some of the most difficult security issues had been held over to the next session, including a final settlement of reparations35 and the methods for insuring Germany's demilitarization. Unless satisfactorily resolved, these would ultimately halt any progress on German governance. As T H E Y DEPARTED London, the other serious American worry concerned the reliability of the west German politicians. To create a separate state, their energetic cooperation was essential. However, the recent experience of reorganizing the bizone had revealed the latter's timidity about anything resembling a divided government. Soon resemblance would pass to actuality, requiring the political leaders to brave the disapproval of their own constituents. A desire to conciliate the Germans led U.S. policy makers to a final assault on their own reform agenda. For years, they had been diluting the obligations of JCS 1067 without ever quite eliminating them. Somehow the irreducible fact of German aggression had enabled a waning band of American liberals to keep alive certain programs, policies, and staff from the period when antifascism was still a vital force. Always, these had been subordinated to the exigencies of reconstruction and the need to accommodate German business leadership. However, the announcement of the Marshall Plan had created new pressures for their abolition, which the imminence of partition brought to a head. Since the summer, Washington had been demanding the quick termination of denazification.36 This signified a dramatic alteration in moral outlook from the closing of the Second World War. Then the spectacle of Europe's suffering and the revelations of the death camps had produced almost universal revulsion and determination to bring the perpetrators to justice. During the intervening years that consensus had eroded, leaving the cruelties of fascism as the special preoccupation of American Jews and outraged leftists. To mainstream policy makers ruined factories not wretched crematoria symbolized the contemporary calamity. From such a vantage point, it was the denazification program rather than the Nazis that required removal.
With regard to reparations, Douglas had elicited a pledge by the British and French to cooperate with the U.S. Cabinet Committee's investigation of listed plants, but they did so with the private understanding that the process would be short and that no more than fifteen to twenty plants would be affected. Douglas to Secretary of State, March 4, 1948, FRUS 1948 11:128-30; Douglas to Secretary of State, March 6, 1948, Ibid.: 139-40; Kirkpatrick to Nichols, March 16, 1948, FO 371/70582./ PRO. Murphy to Riddleberger, July 14, 1948, RG 84 US POLAD, Correspondence File, Box 460, FRC.
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The attitude of Truman's advisors was expressed by Secretary of Commerce Averell Harriman on his return from a European fact-finding tour: There must be an end to denazification at an early date to release these people, many of them the best brains in the country, to go back to their productive activities. The terror of denouncement hangs heavily now over almost everyone in supervisory positions... ,37 Harriman had thus reversed the wartime perception that because many of "the best brains in the country" had devastated the peoples of Europe, they were especially deserving of punishment. In his mind, they had become the victims facing "the terror of denouncement." By appropriating the language of antifascism to describe their plight, he obliterated the distinction between the torture, execution, and slaughter of family members that resulted from denunciation under the Third Reich and the fines, loss of employment, and short jail sentences associated with denazification. Because of the demands coming from the State Department, in October 1947 U.S. Military Government had asked the German Lander to amend the Law for Liberation from National Socialism and Militarism.38 So far, the German courts had dealt mainly with the less serious infractions. However, under the OMGUS revisions prosecutors were granted new discretion in reclassifying Class II offenders as followers and in expediting the treatment of the latter, through a rapid clerical procedure. These changes had far-reaching consequences.39 In November there were an estimated 787,000 cases still to be completed, of which approximately 640,000 had been described as "highly incriminated persons." By late January, the load had been reduced to 230,000 cases even though few individuals had been found guilty. As described by Military Government, the October amendments "granted substantially every alteration to the law which the German authorities could themselves agree upon," and had "completely quieted all agitation for change." However, the State Department was still dissatisfied.40 In response to its criticism, OMGUS produced new amendments curtailing the program. The most important of these was that German prosecutors were permitted to lower the classification of all Class II offenders, even those who had belonged to "criminal organizations" like the S.S. Once these individuals
37 38 39
40
Harriman to President Truman, August 12, 1947, PSF, Box 179, HST. See the useful early study by John H. Herz, "The Fiasco of De-Nazification," 569-94. Ibid., 574-75; U.S. Military Government to the War Department, November 30, 1947, RG 84 US POLAD 820 Military Government Reports, FRC. MG Intelligence reported that between November and December 1947, there was a tremendous increase in the number of cases processed. In November, they estimated a total of 43,611 cases, while in December the figure leaped to 177,213. EUCOM for CSGID, January 27, 1948, Ibid. Its position aggravated Clay, who felt personally committed to the October procedures. Clay-Draper Teleconference, March 12, 1948, Clay Papers, 11:540.
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were declared followers, they became immediately eligible for the clerical "expediting process." As for those Class II people whom the prosecutor still wished to try, they would be released from civilian internment camps and allowed to resume employment until their case was heard.41 To make these changes, U.S. Military Government required the consent of the German Landerrat. U.S. Public Safety Director Ted Hall first outlined the proposals to the German denazification ministers, who responded indignantly.42 Having staked their personal reputations on the fulfillment of certain obligations, it was humiliating to be suddenly undercut by the occupation power. Especially embarrassing was the decision to curtail the most serious cases, after the minor ones had been processed. The denazification ministers were clearly not the Germans who most concerned the Americans. Ball treated them to the facts of life: There was an 800 million dollar appropriation bill, sitting in Congress, which might not pass if denazification continued to obstruct economic recovery. The Landerrat proved more cooperative, passing the new amendments on March 25. This broke the back of the denazification program. As anticipated, the German prosecutors used the new regulations to rapidly turn offenders into followers. They could scarcely do otherwise since Military Government was also requiring an abbreviated court schedule and a limitation of cases to fit the timetable. Tens of thousands of "seriously incriminated" people were pushed through the process during the spring of 1948, and were either exonerated or subjected to minor fines.43 By May 1 Military Government was able to report that only 28,065 "hard core" cases remained to be tried.44 While disappointing for those U.S. officials who wanted denazification completely finished, the March amendments had pushed the program to the margins of zonal life. This improved the prospect that when west German politicians formed a new government, the rancor of continued prosecutions would not encumber their efforts. Not surprisingly, the gutting of denazification was accompanied by the virtual abandonment of U.S. zone decartelization. This effort, too, had undergone numerous dilutions, of which the most crucial was the previous year's decision to jointly promulgate with the British a nonmandatory law.
41
42 43 44
E. W. Wendt to Murphy, Further Information with Reference to Secretary of the Army Department's Telephone Conversation on Denazification with General Clay, March 17, 1948, RG 84 US POLAD Correspondence File, Box 461, FRC; Wendt to Murphy, New Modifications in Denazification Law, March 18, 1948, Ibid.; Gimbel, American Occupation, 171-77; Hertz, "Fiasco of Denazification," 575-76. Gimbel, American Occupation, ijz-yy, Wendt to Murphy, March 18, 1948. Hertz, "Fiasco of Denazification," 577. Cited in Gimbel, American Occupation, 174.
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That measure had left wide discretion to the military governors and their staffs to decide which German firms constituted excessive concentration. At time of its passage, most of the major firms were in the British zone, where the authorities' clear preference for socialization made it unlikely that much decartelization would be achieved.45 During the intervening months, the law had generated somewhat more activity than anticipated. British officials started Operation Severance, an ambitious program for breaking up the mammoth coal and steel combines of the Ruhr.46 Meanwhile American staffers in the Decartelization Branch had identified several companies that appeared to violate the criteria specified in the bill and were preparing test cases. Yet the tenuous position of the latter was exemplified by the departure of their third chief, James Stewart Martin, another ardent reformer, who had fallen afoul of the business executives in the Economics Branch.47 With the launching of the Marshall Plan, Secretary Harriman had taken the offensive against decartelization as he had on denazification. He explained to the president that the program "reaches the point of impractical pulverization."48 Historically, "the structure of German business... has been entirely different from ours and it would seem that within the framework of a democratic system, the Germans should be permitted to work out their own method of private business organization." He assumed that the United States would "wish to encourage private enterprise." Harriman's reference to business "pulverization" was as exaggerated as his description of denazification. With the possible exception of IG Farben (whose component units had been separated, though not yet resold), not a single combine had been broken up. The secretary was merely echoing the complaints of visiting American businessmen, who spoke as if a draconian master plan had already been implemented.49 Far from a blueprint, Law 56 was full of loopholes.50 The lawyers in decartelization were hoping, however, to build such clearcut cases that
45 46 47
48 49 50
For discussion of British position see U.K. Military Government to FONOFF, January 11, 1948, FO 371/71143/PRO. Isabel Warner, "Allied-German Negotiations on the Deconcentration of the West German Steel Industry," in Turner, Reconstruction in Postwar Germany, 157-61. Decartelization was also having difficulty getting the implementing regulations past the Economics Division and the hierarchy of OMGUS. Martin, All Honorable Men, 231-34; Martin, "Germany's Cartels Are At It Again," October 6, 1947, New Republic, 13-19. Harriman to President Truman, August 12, 1947. Noce to Draper, Comment of business executives who comprised recent observation tour, June 3, 1947, RG 260 (Economics Division), 312.1 Folder 1, Box 2361, FRC. Its key provision was Article I, which called for the elimination of "excessive concentrations" of German economic power. Using a variety of criteria - including number of workers, percentage of production, asset value, volume of business, character and nature of the enterprise, and the extent of previous participation in cartels and restrictive arrangements - the decartelization branch must determine
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their opponents in Military Government would back off. For this purpose, they picked firms that were clearly monopolistic and were heavily tainted by their association with the Nazi war effort. One target was Henschel und Sohn, which had produced "Tiger" tanks, antitank guns, heavy ordinance tanks, planes, locomotives, and trucks for the German government. At war's end, Henschel possessed seventy to eighty percent of Germany's locomotive facilities, between ninety and ninety-five percent of its trolleybus manufacturing capacity, and a "commanding position" in other types of enterprise.51 Since the production of different items had already been organized into distinctive "plant groups," there was a basis for claiming that the dissolution of the firm would not adversely affect output. In addition to Henschel, the branch was recommending action against the Robert Bosch Company that held monopoly-control of fuel injection equipment, the Vereinigte Kugellager Fabriken A.G. (VKF) that monopolized the production of antifriction bearings, and Gutehoffnungshiitte (GHH), a major combine whose activities included the mining of coal, the processing of pig iron, and the manufacture of crude steel and synthetic oil.5* Despite efforts to avoid controversy, the decartelization staff had to overcome a number of challenges from their immediate superiors. The new branch director, Richardson Bronson, was philosophically opposed to their endeavors, as was his boss Philip Hawkins, a Draper son-in-law who had been appointed director of the Property Control Division. The skirmishing continued until the early spring, when General Clay abruptly altered U.S. policy."
when a firm constituted a dangerous concentration of economic power. If it chose to issue a "Determination and Order," the firm would be given the opportunity to file objections and to offer its own plan for reorganization. There was an elaborate review procedure, and a right of intervention by the U.S. Military Governor. Report of the Committee Appointed to Review the Decartelization Program, 56-58. According to the Ferguson Commission, Bosch produced a wide variety of products in the field of fuel injection, accounting for fifty percent or more (ranging up to eighty percent) of the entire German production with respect to thirteen separate classes of commodities. It employed over 30,000 people and in 1942 held assets over RM 11,700,00. There were "indications that it was engaged in industrial espionage before the war in the United States and was an important unit in the economic warfare conducted by Germany prior to and during the war." VKF was a subsidiary of SKF in Sweden. After acquiring all but one of its competitors, VKF was (together with Kugelfischer) the only producer of antifriction bearings in Germany. Under the reparations program, Kugelfischer was dismantled and removed to the Russian zone, leaving SKF in a monopoly position. Dominated by the Haniel Family, GHH was an aggregation of 300 different companies that produced a variety of goods, including locomotive, diesel engines, automobiles, farm machinery, stoves, wire goods, rivets castings, and forgings. Report of the Committee Appointed to Review the Decartelization problem, Ibid., 60-61, 93. Hawkins to Clay, Re: Decartelization Branch, March 9, 1948, Kilgore MSS, Box
51 52
53
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Following the military governor's instructions, on March 11 Bronson gathered the branch professionals around a table and made a series of shocking announcements. 54 From now on, there would be no reorganizations of enterprises in the field of capital goods and heavy industry. The Henschel and VKF cases were off. The Bosch case was suspended. For the future, the decartelization team would focus on monopolistic and unfair trade practices in the fields of consumer goods and merchandising. In working with the British, the staff's main purpose would be to curtail the scope of Operation Severance. These reduced responsibilities would necessitate layoffs of at least one-quarter of their personnel. Stunned by Bronson's remarks, most of the members did not believe he was speaking for Clay. Although frequently branded as "left-wingers," the staff was mainly comprised of politically moderate people who saw themselves as implementing an official U.S. policy. From that vantage point, they had long viewed General Clay as a sympathetic overseer. In an angry quest for clarification, they quickly drafted a statement emphasizing that the changes "would leave the fundamental concentrations of economic power intact while engaging in little more than harassing attacks on the smaller companies." This document was immediately leaked to the New York Times reporter Delbert Clark, whose front-page story appeared the next day. 55 Furious about the publicity, Clay cabled Draper that this was "another outburst of disloyalty from the same old crowd who want their views accepted." 56 Three days later, Bronson reconvened the staff for a lecture on leaking. Acknowledging their right to talk to reporters, he demanded "discretion and accuracy*" Some objected that they were public servants answerable to the American people. Bronson replied that they were all "good soldiers" under oath to obey orders. As described by one participant, this elicited a burst of outrage: we said that the jailers at Buchenwald etc., were under orders (in time of war) to carry out their superiors instructions; nevertheless, they were condemned to hang. Did Bronson want us to carry his "good soldier" analogy that far? We had only Law 56 to guide us. Until that law was repealed by another law, not by some interpretation or policy statement of his or of his chiefs, we could only be guided by the law.57
35, FDR; Bronson, Draft Memorandum, March 8, 1948, and Bronson to General Clay, March 9,1948, RG 200 Royall Investigative Commission, Avery MSS, MMNA; Bronson, Conference with Clay, March 10, 1948, Kilgore MSS, Box 35, FDR. John J. Barron, Memorandum for the Files, March 12, 1948, RG 200 (Barron File), Avery MSS, MMNA.; Johnston Avery et al. to the Military Governor, Decartelization Policy, March 13, 1948, ibid. Cited in Martin, All Honorable Men, 258. "Clay Orders Halt in Decartelizing Germany's Trusts," New York Times, March 12, 1948. Clay to Draper, March 14, 1948, Clay Papers, 11:579. Charles C. Baldwin to Martin, March 18, 1948, Kilgore MSS, Box 35, FDR.
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On the substantive issue, Bronson seemed to retreat. He told the group that while there would be an emphasis on the consumer goods field, there were still appropriate targets in heavy industry.58 The bewildered decartelizers sought an explanation from the military governor himself.59 On March 19 Clay grimly informed them that Bronson's original presentation was correct. None of the four test cases was acceptable. Henschel was too important to the economic recovery of Europe, VKF was owned by a Swedish firm, Bosch needed its central research labs and main plants in the electrical equipment and fuel injection fields, and GHH could not be dealt with until there were broader decisions on steel combines. With regard to the British, he had been appalled to discover that they were considering splitting up the steel combine into perhaps fifty relatively small, competitive companies. This was unacceptable. German companies must be large enough to operate effectively in international markets, and provide their owners with "a reasonable rate of return on investment."60 The staff protested Clay's decisions, arguing that he was contravening Law 56. When one member questioned why Military Government was obliged to guarantee profits for German businesses, the general had heard enough. Retorting that "I did not call this meeting to be lectured on decartelization," he unexpectedly stood up and exited the room. With this angry departure, the army's efforts to prevent excessive concentration in German heavy industry were effectively terminated.61 In the aftermath several of the decartelizers lost their jobs and, with their loyalty under challenge, were denied employment in other branches of Military Government.62
58
59 60
61
62
In the latter instance, the branch must follow a "rule of reason" and consider what good would be accomplished by a contemplated action. When pressed for written guidance, Bronson said there was no need for this since everything was unchanged. Ibid.; Clark, "New Cartel Plan Called War Move," New York Times, March 15, 1948. Johnston Avery et al. to the Military Governor, Decartelization Program and Policy, March 17, 1948, RG 200 Avery MSS, MMNA. Many of the participants in this meeting took careful notes. Alexander Sacks, meeting With General Clay March 22, 1945, Kathryn Beaty, Clay Meeting, March 1948, Richard Rathbun, Notes on General Clay's meeting with Decartelization Staff, March 22, 1948, RG 200 Royall Investigative Commission, Exhibits 38-39, Avery MSS, MMNA. Martin, All Honorable Men, 260-62; "Clay Confirms Curbs on Decartelization: Will Be Sole Judge on Breaking Up Trusts," New York Times, March 25, 1948. Mr. Havlik to Mr. Thorp, Decartelization and Deconcentration Program of Germany, May 13, 1948, RG 59 862.602, DSNA; Avery, Memorandum, November 18, 1948, RG 200 Avery MSS, MMNA. Francis Laurent to Military Governor, March 17, 1948, RG 200 Avery Papers, MMNA; John C. Stedman, Report of unofficial interview with Charles Rothstein, December 11, 1948, Ibid. According to the New York Times, "several of those
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T H E INTERNAL American battles over denazification and decartelization were far removed from the high politics of the London conference. Yet together, they formed a definite pattern. To improve the prospects that a separate West German state could survive and contribute to the Marshall Plan, the United States was sweeping away most of the safeguards provided in Yalta and Potsdam. By so doing, they were increasing the necessity for keeping the country divided. Clearly a unified Germany that was heavily industrialized, dominated by large corporations, still influenced by former Nazis, freed of a reparations obligation, and unrestrained by a demilitarization treaty, could be a threat to other countries, including the United States. Indeed many people within West European policy circles and at the lower ranks of U.S. Military Government viewed these arrangements as dangerous even for a separate West German state. However, under the impact of an accelerating Cold War, the opportunity for dissent was rapidly constricting. The pressure to conform, already intense, was about to become overwhelming once the Soviets fulfilled expectations and retaliated in Berlin.
II. "A NEW TENSENESS"

Since bidding farewell to Molotov, the Americans and British had been apprehensive about Berlin.63 Quadripartite control of the city had always presumed a united country, and was linked to the operations of the Allied Control Council. The formalization of partition would give the Soviets both rationale and incentive to expel the Western powers. Furthermore, there was no easy way to protect Berlin. It was an island inside the eastern zone, whose western garrisons were far outnumbered by the surrounding Red Army. To deter a Soviet challenge, Foreign Secretary Bevin thought it wise to continue with reparations deliveries.64 This preference was rejected by the originally found surplus have found it impossible tofindother jobs . .. even after having been orally accepted. In each case the prospective new chief informed the
63
64
applicant that circumstances had arisen preventing him from employing the individual." "Legal Aide Quits Post in Germany," New York Times, May 13, 1948. R. H. Hillenkoetter to the President, December 22, 1947, RG 226 Records of the Office of Strategic Services, Leahy File 123 "Memoes to and from the President Elect, "MMNA; Murphy to Gallman, December 24, 1947; Smith to Secretary of State, December 30, 1947, FRUS 1947 11:908. Memorandum by the Secretary of State for Foreign Affairs, Policy in Germany, January 5, 1948, FO 371/76780/PRO. General Robertson felt even more strongly, regarding it as "illogical that we should allow the Americans to stampede us . . . to the extent of making us throw away one of our most effective weapons for maintaining our vital position in Berlin." Military Governor to the Foreign Office, January 5, 1947, Ibid.
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Americans. During the London conference Ambassador Douglas warned Bevin that if Britain shipped factories to Russia, the Congress might attach "drastic limitations" to the ERP bill or the bizonal appropriations. The foreign secretary replied that a cutoff could destroy the quadripartite operation in Berlin and incite the Russians "to drive us out." Douglas thought this would be "an openly hostile a c t . . . which the Soviets would be reluctant to take." Under great pressure, Bevin had unhappily agreed to delay the eastern deliveries.65 For all their stubbornness, the Americans were aware of Berlin's vulnerability and the need to ameliorate Soviet hostility. In December, Marshall had informed Bevin that he would prefer to carry out a quadripartite currency reform.66 This would have the intrinsic merit of maintaining a single currency for Germany as a whole, while preserving the rudiments of a quadripartite structure. As a "carrot" for the Soviets, such legislation was less tasty than German factories, but it would reaffirm the four-power mission. A currency bill had been pending in the Allied Control Council since the summer of 1946. Introduced by the Americans, it included a drastic writedown of the existing currency in the ratio of 10 to 1, a progressive capital levy, and a commitment to equalize the burdens within Germany of the economic losses from the war (Lastenausgleich). Inside the U.S. government this proposal had always been controversial, with many high-level officials offering ideological objections to the levy and equalization provisions.67 Invoking the virtues of simplicity, Marshall resolved the internal dispute by insisting on a stripped down bill that would provide for new currency.68 One complication was that the Soviets had already endorsed the main provisions of the original American draft. During the eighteen months of prior negotiations, the main point of contention had been the Russians' desire to have a second printing site in Leipzig, whereas the Western
65 66 67
Douglas to the Secretary of State, March 3, 1948, FRUS 1948 II: 120-21. Memorandum by Frank G. Wisner to the Assistant Secretary of State for Occupied Areas, March 10 1948, Tab A, Ibid.: 881. Indeed this had been a bitter source of controversy within the American government during the May-September 1946 period. The OMGUS proposals were based on the Dodge-Goldsmith-Colm report, which insisted that equalization measures must accompany the issuance of new currency. This position was contested by some highly placed individuals in War and State. Clay stood behind his own advisors, and was ultimately successful in making their recommendations the core of the U.S. negotiating position. Abijah Fox, Considerations in Respect to Approval of Dispatch to General Clay of a Cable Concurring in Submission for Quadripartite discussion of the Financial Plan, May 23, 1946, Fox MSS, Box 7, HST; Clay to Echols, May 23, 1946, Clay Papers, I:2o8-io; Dodge to Burgess, September 16, 1946, Dodge MSS, Box 1, DPL. One of the best discussions of the initial currency bill and subsequent negotiations remains Gottlieb, German Peace Settlement, 9 5 107.
68
Gottlieb, German
Peace Settlement,
186.
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powers preferred a single location in Berlin. The Soviets had recently agreed to quadripartite supervision of the Leipzig facility - a concession that satisfied the French and British. However, not only did the Marshall proposal allow for only one site; it also eliminated those egalitarian features of the currency proposal that the Russians had found most congenial. Clay's superiors were aware that the total package might be unacceptable. They instructed him to make a quick canvass of the Soviet reaction, and if no agreement was forthcoming to proceed with a western currency reform.69 When quadripartite talks resumed on February 1, General Sokolovsky dropped the demand for the Leipzig printing plant70 but, as OMGUS had predicted, he challenged the abandonment of the equalization provisions. The Russian also emphasized the need to accompany currency reform with the creation of a central finance agency and a German central bank. Many on the U.S. side privately agreed with his claim that effective regulation of the money supply required these institutions. However, their growing commitment to partition made them reluctant to form new nationwide structures. Clay informed Sokolovsky that further conversation had become "superfluous" and that the U.S. government would make its own decisions.71 The latter replied irritably that the American "might just as well not have submitted this ultimatum proposal" and done as he pleased in the first place. The Soviet Union had just made a big compromise on Leipzig, and was prepared to be flexible on the finance department and central bank. Sokolovsky pointed out that if there "was a real desire to do so, we could coordinate US and USSR proposals without difficulty." The Russians' willingness to give ground was a source of embarrassment to Clay, who had not wanted the currency negotiations in the first place. Now there was no easy way to terminate them without the Germans "pointing responsibility to us."72 When Sokolovsky acceded to an immediate printing of currency, the U.S. military governor set a sixty-day time limit for a detailed accord in the Finance Directorate. Meanwhile, he planned to continue work on a Western currency that would be ready if the talks failed.73
69
70 71 72 73
General Clay had serious reservations about Marshall's initiative. His Finance Division had always contended that it would be unfair to the Germans to reduce monetary assets by ninety percent, as stipulated in the new law, while leaving all tangible assets untouched. Such a procedure would also ignore the profoundly unequal effects of the war upon the citizenry. Murphy, Suggested draft of letter for Secretary Marshall, January 1948, RG 84 Frankfurt TS, Folder 1949, Box 35, FRC; Murphy to Saltzman, January 5, 1948, Ibid. Secretary of State, February 1, 1948, FRUS 1948 11:870-73; Murphy to Saltzman, January 5, 1948. Clay to Department of the Army. February 5, 1948, Clay Papers, IL5 53-54. Clay-Draper Teleconference, February 10, 1948, Ibid.:5 59. Clay to Draper, February 12, 1948, Ibid.:561.
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Inside the Finance Directorate, U.S. representative Jack Bennett tried to promote that failure. In late February, he explained to General Robertson that he was seeking a report "with disagreement on two or three world convincing points." The amused Britisher wondered "whether he had been able to spot such likely points in the discussions." Bennett admitted that so far he had not, but said he would be "searching as the discussions went 74 on. By early March, the "two or three world convincing points" had not materialized because the Soviets were still making concessions. Clay was impressed by "their surprising willingness to compromise" 75 although he wondered if they might be bluffing. They were certainly providing no opportunity for a rift. Since the British and French also preferred an agreement, decision reverted to the Americans. Back in Washington, the momentum toward German partition and heightened Cold War tensions had dissipated any remaining interest in a quadripartite reform. On March 10 the State Department instructed Clay that "the policy of this government is no longer to reach agreement on currency and financial reform." 76 Acknowledging that an accord was near, it emphasized the negative consequences: The question arises whether this is desirable from the U.S. standpoint, since quadripartite currency reform might enable the Soviets to frustrate further the economic recovery of western Germany.... Furthermore, a quadripartite currency, as compared to a bizonal or trizonal currency, would deprive us of a very important monetary instrument for achieving the effective economic administration of the western zones.... The military governor's new job was to find a credible means of disrupting the Allied negotiations by June 1. As this was already Clay's predilection, he promised to comply.77 Apart from the currency talks, Allied relations in Germany were rapidly deteriorating. Since the collapse of the CFM, even the diplomatic niceties had fallen into disrepair. This was the first winter of the occupation that the Soviet military authorities failed to send their Christmas greetings or to attend the quadripartite ball commemorating the New Year. 78 In
74 75 76
77
78
Robertson for Coates, February 26, 1948, FO 371/70580/PRO. Clay to Draper, March 7, 1948 RG 335 SAOUS 123.7, Germany Draper/Voorhees, MMNA. This policy paper was drafted by Frank Wisner and approved by Under-Secretary Lovett the next day. The army quickly concurred, and sent a cable to Clay notifying him of the change. Wisner to Lovett, March 10, 1948. Clay-Draper Teleconference, March 12, 1948, Clay Papers, 11:574. Reporting to Whitehall, General Robertson noted that Clay "is determined that the discussions shall fail, and is instructing his men that they must look for a good opportunity and a good cause." Robertson to Strang, March 12, 1948, FO 371/79587/PRO. Huebner to Department of the Army, January 10,1948, RG 84 820 US POLAD, FRC.
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conducting daily business, the Americans and British were self-righteous and aloof, while the Russians were bombastic and denunciatory. There was an infectious, ugly spirit radiating from the four headquarters in Berlin, which extended out into the zones. In the eastern zone, the Soviets were finishing off the CDU as an independent entity. Following Molotov's visit in December, General Tulpanow had dismissed Jacob Kaiser and Ernst Lemmer as party leaders. This represented a major shift, since over years of ideological disputes, the SMA had carefully preserved a cordial relationship. Their removal was the prelude to a complete purge of the Christian Democratic executive board. As docile leaders were put in place, there were reports of arrests, interrogations, expulsions, and firings of the remaining dissidents*79 With the destruction of the CDU, the Lander parliaments became rubber stamps for the Socialist Unity Party. Influence had been passing, in any case, to the central administrations for the zone. SMA Order 32, issued in February, reorganized the German Economics Commission to provide greater coordination between the economic ministries and to increase their authority over the provinces. Though this paralleled developments in the bizone, the zonal bodies in the east were even more removed from popular control than those in the west.80 Especially aggravating to the Americans was Soviet promotion of the Peoples Congress Movement (Volkskongress). Based in the east, this organization had assumed the mantle of German nationalism and was regularly berating the Western powers for failing to unify Germany.81 Though hitherto unsuccessful, the group was hitting a sensitive theme, which could become very dangerous once ordinary citizens realized the imminence of partition. Somewhat less assertive were the western zone Communists who, struggling to stay alive, were observing both parliamentary norms and the bounds of trade union legality.82 Nevertheless, inside tLS. Military
79
80 81 81
Chase to Murphy, December 11, 1947, RG 59 862.00, DSNA; Chase to Murphy, December 12, 1947, FRUS 1947 11:903-4; Peter Rodes, Director of Intelligence to office of Deputy Director of Intelligence, December 20, 1947, RG 84 820 MG Reports, Box 778, FRC; Riddleberger to Secretary of State, January 21, 1948, RG 59 862.00, DSNA; Huebner to Department of the Army, February 19, 1948, RG 84 820, FRC. See discussion in Davison, The Berlin Blockade, 53-55. Riddleberger to the Secretary of State, February 16, 1948, FRUS 1948 11:66-68. Morris, Recent Soviet Zonal developments, February 17, 1948, RG 84 801.46, FRC. Altaffer to Secretary of State, January 22, 1948, RG 59 862.00, DSNA; Altaffer to Secretary of State, January 26, 1948, Ibid. Apart from German unity, the western KPD had few cards to play. Membership in all three zones was down, as was the Party's voting strength and representation in governmental bodies. There were reports of bitter factional disputes, with veteran German Communists pitted against younger Moscow-guided newcomers. Martin J. Hillenbrand to Secretary of State, Communist Party Developments in North RhineWestphalia, March 10, 1948, RG 59 862.00B, DSNA; de Mayer to Secretary of State, January 23, 1948, RG 84 US POLAD 801.46, FRC.
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Government, rumors were rife of KPD sabotage and a mysterious Protocal M that contemplated massive disruptions in the spring.83 Responding to these real and imagined perils, the Americans and British sought to muzzle the KPD. Both Military Governments had imposed a longstanding ban on the Socialist Unity Party and more recently the Volkskongress. In March, British Military Government imposed new regulations, directed at the Communists. These curbed offensive speech and publications, and facilitated the prosecution of subversive individuals.84 On the American side, General Clay asked his staff for a proposal that would show "a little bit of iron fist to the KPD party."85 Noting that the Communists had been "pushing us around," he thought it time "we started pushing them around." Pursuant to his request, Louis Wiesner produced a draft "Program to Restrict Communism and Aid Democracy," which would drastically curtail communist activity. When his recommendations proved too repressive for his superiors, Wiesner produced a modified version that recommended reprisals against individual Communists, the elimination of employment with U.S. forces, exclusion from the police, a denial of travel passes to known organizers, and a purge of the bizonal agencies.86 In the ripening conflict with the east, the Americans were particularly assertive in the labor field. Since September, U.S. Military Government had been trying to arrest the drive for an interzonal trade union movement.87 Despite their efforts, by early 1948 an interzonal working party had designed a structure for a national trade union center and drafted a statement of tasks. As described by the U.S. Political Division, the latter "emphasizes socialization, planned economy, codetermination, land reform,
83
84
85
86
87
Huebner to CSUSA, January 27, 1948, RG 84 US POLAD 820, FRC; Murphy to Secretary of State, February 2, 1948, RG 84 US POLAD 800, FRC; Morris, Soviet Zonal Developments, February 17, 1948; Riddleberger to Secretary of State, February 12, 1948, FRUS 1948 11:875-76. Minute by Dean, January 9, 1948, FO 371/70477/PRO; Robertson to FONOFF, January 7, 1948, Ibid.; Peter Garron to Dean, March 9, 1948, FO 371/70478/PRO; Dean, Action Against Communism in Germany, March 15, 1948, Ibid. This instruction is quoted by Louis Wiesner in his draft, Program to Restrict Communism and Aid Democracy, March 1948, RG 84 US POLAD Murphy Correspondence Folder: 1948, FRC. Clay and Murphy were leery about such blanket prohibitions, fearing they would precipitate further repression in the eastern zone. Murphy explained to Wiesner that what "General Clay has in mind . . . is practical measures to be taken against individual SED-KPD members." A useful example was the case of Max Reimann, who had just been expelled from the German Economics Council. This action had "followed on certain suggestions made to the Germans by the Military Governors at our recent Bipartite board meeting." Murphy to Wiesner Re: Program to Restrict Communism and Aid Democracy, March 22, 1948, RG 84 US POLAD Murphy Correspondence, FRC; Wiesner to Murphy, March 27, 1949, Ibid. Wiesner to Murphy, Re: Recent Developments in Interzonal Trade Union Relations, January 7, 1948, RG 84 US POLAD 850.4, FRC; Morris, Memorandum 318, January 27, 1948, RG 59 Central European Files, Box 3, DSNA.
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etc." Suddenly U.S. officials perceived that one of their gravest apprehensions could materialize, that Germany might acquire a unified, centralized, politicized labor movement, committed to a far-reaching program of social change, and amenable to Soviet influence.88 Lest any evidence be needed for the usefulness of partition, the unstable situation in the unions provided further ammunition. To deter progress toward integration, Military Government tightened its regulations, stipulating that "all national affiliations, amalgamation or cooperation in joint meetings" would be contingent upon prior approval, which would only be forthcoming when "the economic relationship between the zones warranted it."89 In a related move, the U.S. Manpower Division promoted a political housecleaning in the U.S. zone labor organizations. The stated purpose was "to eliminate Communist influence in the whole trade union field . . . in order to insure that the social and economic patterns now being set for Germany square with our concept of democracy." It was, therefore, compiling lists of trade union functionaries who would be screened for "political reliability" and publicly exposed.90 The most ferocious struggle for control of German labor was occurring inside the Berlin FDGB. For over a year, the Americans and British had been helping independent Socialists challenge the SED's domination of the trade unions. By early 1948 the dissidents had followed the advice of U.S. Manpower and constituted themselves as the Independent Opposition (UGO).91 Within a matter of weeks, they had captured the leadership of four functional unions and were preparing to defy the complex electoral rules, which had facilitated SED's ascendancy. In turn, the SED-FDGB
Riddleberger to Secretary of State, Recent Developments in Interzonal Trade Union Relations, January 23, 1948, RG 59 862.5043, DSNA; Riddleberger to Secretary of State, February 10, 1948, RG 84 US POLAD 850.4, FRC; U.K. Political Division to German Political Department, February 20, 1948, FO 371/7083 5/PRO. In the wake of Dresden, U.S. zone leader Fritz Tarnow allegedly told U.S. Manpower officials, "Now don't start shooting at the central council. We'll see that its formation is delayed." Riddleberger to Secretary of State, February 10, 1948. Manpower Division, OMGUS, "Communist Infiltration and Extent of Influence in Trade Union Organizations." (Undated) RG 260 Manpower Division, Director's Records Pertaining to Trade Unions and Labor, Communism Folder, FRC. According to McCluskey, chief of U.S. Manpower in Berlin, "in November at the suggestion of U.S. Military Government a party neutral organization of opposition trade unionists was formed to make possible aggressive action at the forthcoming election." McCluskey to Director of OMGUS (Berlin sector) Re: Report on the FDGB Elections, June 9, 1948, Ibid. As subsequently described by Louis Wiesner, McCluskey and Ted Gardiner (a former FBI official, who was then chief of Berlin labor relations) became the U.S. liaisons to the group. Though neither "knew any German or anything about trade unions" they knew that "they wanted the UGO to win the election or split from the FDGB." The two "brought all groups together, told them what they ought to do and gave them every help in doing it." Wiesner, "Organized Labor" 372-77.
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executive board warned that if the UGO violated official procedures, their mandates would not be recognized in the spring balloting. Since both factions were heavily subsidized and monitored by the occupation powers, their rivalry was assuming the same embittered, unyielding character of the overarching competition. 92 Not surprisingly, it was in the quadripartite city of Berlin that conflict between the Soviets and the Americans was most overt. Since January, there had been a pattern of mutual harassment. SMA was periodically interfering with trains as they exited the western sector, 93 while the volatile U.S. Kommanandant General Howley had briefly banned the movement of cars into the Russian sector. As the Soviets increased their pressure on the Berlin SPD, the Americans prohibited all Socialist Unity Party meetings that involved propaganda for the Volkskongress. 94 Not surprisingly, the four-power Kommandatura was barely functioning. A typical winter day found the Allies embroiled in trivial arguments. 95 Thus, when city authorities asked the Kommandatura for approval of certain schoolbooks, the Americans objected because one of them contained selections from Stalin's speeches. Denouncing the insult to his leader, the Soviet representative insisted that he would approve no other textbooks until the United States modified its stand. In reply, the Americans maintained that Stalin's speeches were disparaging to the West and were inappropriate material for young children living in an Allied city. This sort of dialogue yielded minimal achievement. Beneath the pointless speeches was the underlying reality of Soviet obstructionism. Their original acceptance of an SPD city government had presumed the imminence of German unification. As prospects for this waned, so had SMA's flexibility. For more than a year, the Russian Kommandant had been using his veto power to either delay or block the decisions of the municipality. 96 The Americans had also shown that when they disagreed with a measure, they would interfere. This had been evident in the politicking over the Berlin socialization bill, to which the United Stated presented a host of impediments. 97 More typically, it was the Russians'
9Z
William Chase to Secretary of State, March 5, 1948, RG 84 US POLAD 850.4, FRC; Manpower Division to Director of OMGUS (Berlin sector), Re: Report on the FDGB Elections, June 19, 1948, RG 260 Manpower Division, Directors Records
93 94
95 96 97
Pertaining to the Trade Unions and Labor, FRC. Smith, Lucius D. Clay, 464. Peter Garran, the British political advisor in Berlin, warned his government that American policy in the city "is very wild, and we shall have great difficulty in preventing the Americans from saying or even doing a number of very foolish things." Garran to Dean, February 17, 1948, FO 371/70579/PRO. Murphy to Secretary of State, January 19, 1948, RG 84 US POLAD 800, FRC. Davison, Berlin Blockade, 47-49; Howley, Berlin Command, 138-52. Louis Glaser to the Kommandant, January 13, 1948, RG 84 US POLAD 860, FRC; Haraldson to Laukhoff, January 16,1948, Ibid.; Laukhoff to Glaser, January 23,1948, Ibid.; Murphy to Secretary of State, January 22, 1948, RG 84 US POLAD 820, FRC.
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hostility to the Berlin city government that had produced paralysis in the Kommandatur a. As Soviet rhetoric in the Kommandatura became more abusive, some Americans wondered if it portended some dangerous new initiative. One Murphy staffer drafted a cable, warning of "a Soviet intention to breakup the quadripartite administration of Berlin." 98 When General Clay was shown a copy on March 3, he thought it "precipitant" and declared that it would "unduly alarm Washington." 99 Based on his encounters with high-level Soviet decision makers, he had found no reflection of their Berlin Kommandant's "ill-spirits." Yet three days later, Clay startled Washington with a more ominous dispatch of his own. Addressed to General Chamberlin, chief of army intelligence, the military governor observed that For many months, based on logical analysis, I have felt and held that war was unlikely for at least ten years. Within the last few weeks, I have felt a subtle change in Soviet attitude which I cannot define but which now gives me a feeling it may come with dramatic suddenness (italics added). I cannot support this change in my own thinking with any data or outward evidence in relationships other than to describe it as a feeling of new tenseness in every Soviet individual with whom we have official relations. .. .IO Within seventy-two hours, the military governor had moved from skepticism that the Soviets would disrupt the Kommandatura to a serious suspicion of war. His new perception had a dramatic impact back home, where according to General Bradley, "it lifted me right out of my chair." 101 Secretary of Defense Forrestal evinced similar agitation, as he copied the Clay cable, and distributed it throughout the bureaucracy. Some military authorities may have been less distressed than they claimed, since Clay had previously been urged to send a message that would help the army gain congressional passage of Universal Military Training. 102 However, the military governor's pessimism exceeded that mandate, and likely reflected the news from London. On March 5 Clay had learned that, against his advice, Ambassador Douglas had accepted the rapid formation of an International Ruhr Authority. Regarding this as a fundamental
98 99
100 IOI
Murphy to Secretary of State, March 3, 1948, RG 84 US POLAD 820, FRC. The relevant memoranda are carelessly dated June 3 and September 3 raising a possibility that the number 3 is also inexact. Yet from the surrounding Political Division records, it seems likely that Clay was approached on March 3, but if not then most definitely during the week of March 2 through 7. Chase to Riddleberger, RG 84 US POLAD 820, FRC; Chase to Laukoff, Ibid.; Laukhoff to Riddleberger, March 8, 1948, Ibid.; Riddleberger to Murphy, March 9, 1948. Clay to Chamberlin, March 5, 1948, Clay Papers, 1948 II: 5 68-69. Cited in Smith, Lucius Clay, 466-67. According to Walter Millis, the editor of Forrestal's diaries, the Clay cable "fell with the force of a block-buster bomb." Millis, Forrestal Diaries, 387. In his interview with Jean Smith, Clay remembered this as a Congressional problem over the draft. Smith, Lucius D. Clay, 467.
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challenge to West German sovereignty, Clay had immediately conjured the menace of the Russians as a reason to reverse Douglas' diplomacy. This position was set forth in a second March 6 cable to the War Department:
This is a critical period in which decisions of this type should not be made. Germany is not at present a menace except in hands of the USSR.... I feel that we should tackle first things first. Now is the time to think of security against the USSR, taking measures for security against a revived Germany later... .IO3
The exaggeration of the Russian danger to win a domestic argument was a relatively new move for the military governor. Yet it was a temptation that he, like many of his official colleagues, was finding difficult to resist. Much of the information coming into the capital had a threatening character. Whether honestly set forth or willfully distorted, the reports from Europe were filled with Soviet misdeeds: the crackdown in Czechoslovakia, overtures to the Finns for a mutual defense treaty, similar pressures on the Norwegians, plans for a coup in Italy if Communists failed to win the national elections.104 In this anxious atmosphere, American officials were increasingly preoccupied with military strength. By mid-March the Truman administration had decided to share that interest with the American public. In a nationally broadcast speech, Truman identified a grave threat to the freedom and safety of Western Europe.105 This was because "one nation has not only refused to cooperate in the establishment of a just and honorable peace but - even worse - has actively sought to prevent it." By contrast, the West had always wished for conciliation:
You know of the sincere and patient attempts of the democratic nations to find a secure basis for peace through negotiation and agreement. Conference after conference has been held in different parts of the world. We have tried to settle the questions arising out of the war on a basis which would permit the establishment of a just peace.... You know the obstacles we have encountered. But the record stands as a monument to the good faith and integrity of the democratic nations of the world.
At Brussels, the British, French, and Benelux countries had just completed a fifty-year treaty for mutual defense.106 Now that they had drawn together, the United States must provide help.
103 T 4
Clay to Draper, March 6, 1948, Clay Papers, 11:571-73. For useful discussion of the various crises in early 1948, see Leffler, Preponderance of Power, 203-10. 105 Text of President Truman's Address to the Congress, New York Times, March 18, 1948. To6 Treaty of Brussels: Treaty of Economic, Social, and Cultural Collaboration and Collective Self-Defense between the United Kingdom, Belgium, France, Luxembourg, and the Netherlands, March 17, 1948, in Carlyle, Documents in International Affairs, 1947-4%, 2.25-29.
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Although Truman maintained that the first priority should be the enactment of the Economic Assistance Bill, the burden of his message was military. Through harsh experience, the United States had "learned the importance of military strength as a means of preventing war." He therefore urged Congress to pass Universal Military Training (UMT), a temporary Selective Service Law, and to back the new Brussels treaty by "extending to the free nations the support which the situation requires." The president assured his listeners that America would always be searching for a diplomatic solution. It was "ready and anxious to join with all nations . . . in every possible effort to reach an international understanding." More pointedly, he asserted that "the door has never been closed, nor will it ever be closed, to the Soviet Union" if it cooperated in the pursuit of peace. However, the United States had "a tremendous responsibility to act according to the measure of our power for good in the world." As an exercise in poetic license, the president had surpassed the Truman Doctrine speech. Certainly in regard to Germany, where the United States was bolting the door against an agreement, his portrayal of events had little resemblance to reality. Yet not since Potsdam had Truman been significantly involved in German affairs. Over years of intricate maneuvering, officials in the State and War departments had made complex decisions without White House guidance. While the president knew of the efforts to create a West German state, he was probably unaware of the Soviet attempt to preserve a quadripartite currency or to keep alive the possibility of German unification. Even for more knowledgeable subordinates, the fact that it was the United States rather than the Soviets that was abandoning diplomacy seemed a mere technicality. Perceiving a pattern of unbridled Russian malevolence, they were not inclined to analyze the specific situation or to probe the relation between Western behaviors and Soviet actions. At all levels of the Truman administration there was a mounting sense of endangerment.107 Most thought it unlikely that the Soviets would attempt an invasion of Western Europe,108 but the possibility that the Soviet Union would try preemptive action before the West became too strong could not be ruled out. More worrisome was the prospect that the Soviets would create an incident, perhaps in Berlin, which could set off a chain of uncontrolled events leading to war. And even if armed conflict did not occur, West European countries might feel so intimidated that they would
107
For diverging perspectives on the March "war scare," see especially, Freeland, Origins of McCarthy ism, 2.64-87; Yergin, Shattered Peace, 350-58; Millis, Forrestal Diaries, 382-409; and Kofsky, Harry S. Truman and the War Scare of 1948, 8 3 122.
108
JIC of the U.S. Embassy in Moscow, "Soviet Intentions," April 1, 1948, RG 330 Records of the Secretary of Defense, MMNA.
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seek accommodation with internal communist elements or with the Soviets themselves. For these disparate apprehensions, American military might seemed an appropriate antidote. 109 In connection with the president's speech, there had been a decision to increase the size of the U.S. armed forces by 350,000 and to seek a 3 billion dollar supplemental defense appropriation for FY 1949. The administration had also resolved to supplement the Brussels pact with an Atlantic Security Treaty that would involve the United States and Canada with the defense of western Europe. 110 The relevance of this military thinking became quickly apparent, as the Soviets responded angrily to the London proceedings. In Washington, the Soviet ambassador handed Secretary Marshall a thick letter of complaint that reviewed the history of schismatic Western policies and argued that By placing the western part of Germany outside the joint control of the four powers, an attempt is being made to use it for the purpose of setting up a special group of western European states as against the rest of the states of Europe, which leads to the political cleavage of Europe and the formation of two camps of European countries... . rl1 The London conference formed part of this treacherous pattern, allowing a small group of states to make decisions, while those who "had suffered most from German aggression were left outside." As a consequence, the Soviet Union did not regard the agreements of the conference as having "legal force." Though the Russians had closely monitored the developments in London, the results remained officially secret. The final communique had been couched in general terms, omitting any specific reference either to the procedures to be followed or to the goal of a West German government. 112 The real targets of this secrecy were the French and German publics,
109
As described by Melvyn Leffler, "U.S. military initiatives were being taken in light of possible local contingencies and in view of the need to reassure the French and not in anticipation of a Soviet military thrust. National security was defined in terms of the potential control of resources and industrial infrastructure that were threatened in the short run not by Soviet military capabilities, but by indigenous unrest and uncertainty over Germany's alignment." Leffler, Preponderance of Power,
210.
110
111 112
Memorandum by the Secretary of State to the Secretary of Defense, March 23, 1948, FRUS 1948 111:541-42. Report Prepared by the policy planning staff Concerning Western union and Related Problems, March 23, 1948, Ibid.:6i6; Minutes of the Sixth Meeting of the United States-United Kingdom-Canada Security conversations, Held at Washington, April 1, 1948, Ibid. 171-75. A. Panyushkin to the Secretary of State, March 6, 1948, RG 84 US POLAD, Correspondence Beam, Box 461, FRC. Communique on informal discussion of the German problem issued by France, the United Kingdom, the United States, and the Benelux Countries, London, March 6, 1948, in U.S. State Department, Documents on Germany, 91.
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whose reactions were likely to be hostile. On March 20, when trizonal working parties were formed in Berlin to work out the details of the London agreements,113 there was no announcement. Marshal Sokolovsky took the occasion to ask his colleagues on the Allied Control Commission for a formal report on the London decisions. The Americans and British demurred on the grounds that so far the conference had made "recommendations" rather than issuing any "directives."114 Sokolovsky deplored this lack of candor. Clearly the issues in London were "within the competence of the Control Council" and should be determined on a quadripartite basis. By their actions, the Western powers had proven that "the Control Council virtually no longer exists as the supreme body of authority in Germany." As the chairman of the ACC, Sokolovsky dramatized his point by abruptly adjourning the meeting without offering any subsequent date to reconvene. While Clay was sure that the Russian walk-out had been deliberately staged, he did not know what they were intending. In the ensuing days, their behavior was inconsistent. After postponing all meetings of the ACC committees on grounds of illness, they then proposed that some of the agencies, including the Finance Directorate, be immediately continued. On March 26 their chief of staff General Lukianchenko made the ambiguous announcement that his government was willing to resume four-power administration, so long as the Allied Control Council carried out its Potsdam obligations.115 Whatever their purpose, the Soviets had inadvertently rescued Clay from the embarrassing currency negotiations. Having interrupted the main work of the ACC, they had given him a reason to stop the talks. Thus he and
Berlin to FONOFF, March 17, 1948, FO 371/79583/PRO. The task of these working parties was to develop a West German governmental structure, an occupation statute, a military security board, and plans for trizonal fusion. Clay to Draper, March 20, 1948, Clay Papers, 11:587-88. In this connection, it is interesting to compare two cables drafted by Clay on March 20. In the first he reported to Draper that "the British, French and U.S. Military Governors met yesterday in Lancaster House to consider the instructions (italics added) to the military governors of the London conference." Ibid. In the second he relates his presentation in the ACC: "General Robertson and I both stated that the meeting in London had resulted in the issue of a communique which had been printed. That communique had stated that the discussion was exploratory in nature and the proposals agreed upon by the delegates to London would have to be confirmed by the respective governments as a result of these London discussions. I stated therefore I had nothing to give Marshal Sokolovsky." Clay to the Department of the Army, March 20, 1948, RG 165 CSCAD 014 Germany, MMNA. Clay to Draper, March 20, 1948; "Russians Cancel Meetings of Berlin Control Groups," New York Times, March 22, 1948; Murphy to the Secretary of State, April 1, 1948, FRUS 1948 IL885. Cited in Robertson to Foreign Office, March 26, 1947, FO 371/79584/PRO.
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General Robertson quickly rejected the invitation to proceed with the Finance Directorate. Yet there were differences of tactics between the two military governors. Clay wished to finish off the Allied Control Council by reestablishing it on a three-power basis, while to General Robertson this seemed absurdly provocative.116 As they pondered their response, General Dratvin suddenly notified his colleagues that beginning April i all passengers and baggage proceeding from the western zones to the garrisons in Berlin would be subject to new identification and inspection procedures.117 The regulations would be applied to rail and highway traffic for the alleged purpose of averting "terrorism" and to prevent the infiltration of "subversive" elements. The Soviet decision to interfere with the Berlin access routes had been so long awaited that its actual occurrence was a surprise. The British immediately proclaimed that they would not allow the inspections, while Clay sought permission for U.S. guards to shoot Soviet soldiers in the event of confrontation.118 His request generated anxiety in Washington that a war might be imminent. Secretary of the Army Kenneth Royall nervously suggested that the trains be sent through without orders to shoot, while a letter of protest was dispatched to Stalin. Clay thought this unwise: "Any weakness on our part will lose us prestige important now."119 The U.S. military governor was personally convinced that the Soviets would not start a war, and that "a strong stand... will win the issue." This assessment was consistent with Clay's longstanding perception of Soviet vulnerability, which had previously led him to advocate four-power cooperation. Now a Cold War convert, his awareness of their weakness made him more belligerent than his Washington colleagues. Many of Clay's superiors were seriously alarmed. General Bradley wanted assurances that the United States would not be departing from precedent in refusing Russian access to the trains. Should war break out, "we must be sure that the fault is not ours." IiO Clay argued again that the conflict would not go that far, but that it was important to establish "the integrity of the trains," which were "a symbol of our position in Germany and Europe." Still nervous, the Joint Chiefs of Staff were unwilling to increase the guard, and would only grant permission to shoot if the Russians fired first.
116
117
118 119 110
As explained by General Robertson, if the break came later on currency, the Western position would be much less tenable. Robertson to Fonoff, March 23, 1948, FO 371/70584/PRO; Foreign Office to Berlin, March 24, 1948, Ibid.; Military Governor to FONOFF, March 30, 1948, Ibid. See Davison, Berlin Blockade, 62-76; Shlaim, The United States and the Berlin Blockade, 120-46; O'Neal, Foreign Policy Making in Times of Crisis, 232-35; George and Smoke, Deterrence in American Foreign Policy, 120-30. Shlaim, The United States and Berlin, 122. Teleconference, March 31, 1948, Clay Papers, 11:600-604. Berlin Teleconference 2, March 31, 1948, Ibid.:6o4-6.
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Inside Berlin, there was a rapid stalemate. The Soviets halted British and American military trains, but did not try to force an entry.121 Instead they shunted the trains onto the side of the track, where they were held indefinitely. With civilian transport continuing to get through, Clay instituted a small-scale airlift to supply the military garrisons. He further recommended an "armed convoy" as a means of forcing the issue on the highways, but received no backing from his government. This situation was sufficiently worrisome that officials in both Washington and London were beginning to reevaluate the premature death of the ACC. Within the State Department, there was talk of summoning the quadripartite body to deal with the traffic problems.122 In a more decisive move, the British government requested Clay to reconvene the Coordinating Committee. According to General Robertson, the American refused, arguing "that we shall never get a break under more favorable conditions than we have got it now." Were there to be a four-power meeting, the Russians might demand a national referendum on the issue of German unity. Such an initiative would prove extremely awkward and would "put us in the wrong whereas now we are in the right."123 Certainly nobody in either capital was prepared to reopen the fundamental question of German unification. That the country must be partitioned was a foregone conclusion even if it created an imperative for a military buildup and a heightened risk of confrontation. Left for discussion were the tactics of crisis management. Of these, the most difficult item was whether the Western powers should stay in Berlin if Soviet behavior got rougher. Many in the Pentagon wondered if the city should or could be defended. Noting the reluctance to fight a war over Berlin, General Bradley urged Clay to start planning for how the Western powers might "announce withdrawal and minimize loss of prestige rather than being forced out by threat."124 This injunction was maddening to the military governor, who regarded the existing crisis as an empty bluff.
121
"
"American, British Trains Held in Soviet Berlin Zone for Inspection by the Russians," New York Times, April 1, 1948; Clay to Bradley, April 1, 1948, Clay Papers, 11:607-8.
But at this juncture, Department representatives were leery of imposing such a tactic on Clay. Lord Inverchapel to the Foreign Office, April 2, 1948, FO 371/ 70585/PRO. To pacify Robertson, the American agreed to circulate a statement to his colleagues that since nothing had been placed on the agenda, he would not convene the ACC unless specifically requested. For the moment, Robertson thought this was adequate: "It establishes his willingness to have the Control Council meet and it maintains the fiction that the Control Council still exists." Berlin to FONOFF, April 6, 1948, FO 371/70585/PRO. Bradley-Clay Teleconference, April 10, 1948, in Clay Papers, 11:621-25; See discussion in Shlaim, The U.S. and Berlin, 135-42.
"3
124
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Clay did acknowledge that the launching of a West German state and the implementation of a Western currency reform would bring on a truly serious encounter. But even then, the Western powers could not afford to retreat. In one of his greatest flights of rhetoric, he admonished Bradley:
Why are we in Europe? We have lost Czechoslovakia. We have lost Finland. Norway is threatened. We retreat from Berlin.... After Berlin, will come western Germany and our strength there relatively is no greater and our position no more tenable than Berlin. If we mean to hold Europe against communism, we must not budge. We can take humiliation and pressure short of war in Berlin without losing face. If we move, our position in Europe is threatened. If America does not know this, does not believe the issue is cast now, then it never will and communism will run rampant.125
Abashed, the chief of staff assured him that his question was only designed to explore a situation that had generated concern in government circles. Clay's histrionics demonstrated that he had now embraced the competition with the Russians with the same moral zeal that had accompanied earlier efforts to make the quadripartite experiment the basis for international peace. However, in the transition he had lost none of his old shrewdness. Unlike the waverers back home, he was intensely aware of how difficult it would be to create a West German state if the United States abandoned Berlin. Appreciating how unpopular the idea of partition really was, he believed that a failure to protect Berlin citizens would inspire resistance from the West German populace and from many quarters in western Europe. So for him, drawing the line across Germany meant holding the line in its former capital.
BY A P R I L IO the Soviets had unaccountably stopped their interference with military trains. While they continued to bother the Western powers with various types of restrictions, the immediate threat to Berlin suddenly disappeared. This reprieve provided the Truman administration with the opportunity to postpone for a little while longer the question of whether it would go to war with the Russians in order to insure Germany's division.
III. "INSERTING THE NEEDLE..."

Meanwhile, there were Western road blocks to overcome. Clay's alertness to that necessity was partly a reflection of his frustrating experience in the trizonal working parties. These had been formed during the recess of the London conference to work out the technical aspects of German governmental structure, trizonal fusion, and other related matters. Despite their limited mandate, they were immediately overwhelmed by controversy,
115
Ibid.
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producing more distress at OMGUS headquarters than the Soviet diversion of trains. discord had been provoked by zealotry on the U.S. side. For the working party on governmental structure, Clay had permitted political scientist Edward Litchfield to introduce a plan for a West German provisional government.126 This contravened the official purpose of the group, which was to set guidelines for a Constituent Assembly. By changing the order, Litchfield aimed to have a new government in place by summer. The young academician also conceived the notion of announcing the plan on May 15 at Frankfurt, as the Western powers' "contribution to the centennial of the Revolution of 1848." Other than celebrating German holidays, the least priority for the French was to immediately establish a German provisional government. Even the British were dismayed, since Litchfield had not consulted with them. The working party on governmental structure was quickly paralyzed.127 The French insisted that not only would they confine discussions to a Constituent Assembly, but they would never approve a West German government until the Soviets created one in the east. This quarrel over the timing of a new state had a chilling effect on the other working parties. Because of French opposition, the three Western powers could not agree on procedures for trizonal fusion, the drawing of Lander boundaries, the outlines of an occupation statute, or any of the other items with which they were charged. Both Clay and Robertson tried to impress upon General Koenig the need to consolidate the zones in the face of Soviet pressure. However, the Frenchman had drawn the opposite conclusion, contending that the American recommendations "would provide exactly pretext to the Soviet Union for which they had been looking."128 Certainly the formation of a provisional government "would open ourselves to a Russian propaganda attack which would then have substantial foundation because our action would involve a violation of Potsdam and spirit of other agreements." After several weeks, the three military governors reviewed the "progress" of the working parties, and found it to be minuscule.129 Clay concluded
S O M E OF THE Litchfield to Tripartite Working Party on Political Development of Western Germany, March 22, 1948, FO 371/70584/PRO. Steele to Deane, March 27 6c 30, 1948, FO 371/70584/PRO; Lovett to Murphy, March 30, 1948; Murphy to Secretary of State, March 31, 1948, FRUS 1948, II: 154-56; Steele to Deane, March 31, 1948, FO 371/70582/PRO; Kirkpatrick to Ambassador George Rendel (Brussels), April 12, 1948, FO 371/70584/PRO. Murphy to Secretary of State, April 1, 1948. Murphy to Saltzman and Hickerson, April 1, 1948, FRUS 1948 II: 158-60; Clay to Draper, April 1, 1948, Clay Papers, II:6o8-n; Robertson to FONOFF, April 1, 1948, FO 371/70584/PRO.
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that these bodies were hopeless and that differences should be referred back to the London conference. There the French delegation would be represented by Ambassador Massigli, who had shown himself to be less amenable to Gaullist influence than General Koenig. In a bid to quickly reconvene the six-power gathering, Clay warned the State Department that the Soviets might be on the verge of creating a separate East German government. This was one instance where the military governor had overplayed his hand, since the news was most welcome to the State Department. Assistant Secretary Lovett observed that such a development "would clearly shift responsibility to Soviets for splitting Germany."130 The United States could "first exploit this move and then announce that given this regrettable step Western Germany would be forced to set up a provisional constitution of its own." Hoping for a Russian misstep, he was content to leave April 20 as the date for reconvening London. In Berlin, Clay finally saw daylight when Couve de Murville of the French Foreign Office visited his headquarters. To his relief, de Murville seemed willing to concede that the threat posed by the Russians was more severe than Germany's.131 The Frenchman was, therefore, open to a compromise offered by Clay, which would scrap the idea of an immediate provisional government in exchange for moving up the date for a Constituent Assembly. Under this arrangement, it would be possible to have a permanent West German government by the beginning of 1949. While the conversation pointed the way to a possible solution, it had no immediate effect in the working parties. Indeed, when it was time for the military governors to submit their report to London, Clay was so aggravated that he refused to endorse the disagreed papers from the committees.13* Analyzing the fiasco, he thought it had been a "great mistake" to start working on details "before reconciliation of the principles involved." The French problem was more serious than even Clay recognized. The Socialist Party, which formed part of the governing coalition, had turned against Bidault's German policy. Partly in response to the tensions in
130
131
131
Lovett to Murphy, April 3, 1948, FRUS 1948 II:i65-66. Indeed the Department was more concerned about the alternative scenario. What if the Russians didn't proclaim an East German government? Murphy was asked to assess "how our position would be affected by our taking the lead in forming a western German government in advance of any similar Soviet step?" Would it be wiser to "represent our plan as having wider scope than western Germany?" Hickerson to Murphy, April 10, 1948, FRUS 1948 IL176-77. Murphy to Hickerson, April 8, 1948, RG 84 US POLAD Correspondence File, FRC; Robertson to FONOFF, April 8, 1948, FO 371/79585/PRO. Murphy to Hickerson, April 13, 1948; Clay, Decision in Germany, 398-400. Murphy to Hickerson, April 13, 1948; Robertson to FONOFF, April 12, 1948, FO 371/70585/PRO; Clay to Draper, April 13, 1948, RG 165 CSCAD 014 Germany, MMNA.
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Berlin, they sent a letter to the cabinet warning of the dangers of a divided country. Not only would there be competition with the Russians for the political allegiance of the populace,133 but the chances for war would multiply. Within a few years the Soviets might acquire the atomic bomb, raising even higher the price of international polarization. Instead of accelerating conflict, they hoped the Western powers would use this interlude to improve cooperation in Germany. Although the French cabinet deferred consideration of the socialist letter, Bidault warned the Americans and British that this was a major political development that might ultimately affect his government's approval of the London Accords.134 Although he was personally prepared to accept the Clay-de Murville plan for a rapid Constituent Assembly, it was more urgent than ever that there be safeguards for security. When the London session reconvened, the French and Benelux nations, agreed that such an assembly could meet in September to draw up a federal constitution. The document would be scrutinized by the military governors to insure conformity with federal principles. Following their endorsement and the positive vote of two-thirds of the Lander, a West German government would come into existence. Trizonal fusion would be delayed until after these steps, although in the interim France would improve "economic coordination" by participating in a Western currency reform and the Joint Export-Import Agency (JEIA).135 Having made these concessions, the Western Europeans were dismayed to find the Americans backtracking on the Ruhr. At the insistence of OMGUS, Ambassador Douglas introduced a series of amendments to the March agreement, specifying that an international Ruhr authority would be organized but not operational until there was a West German government, and that in the period when the United States was financially responsible for western Germany this body could not allocate resources.136 The Americans were also uncooperative on the other security issues. Ignoring Douglas' advice,137 the State Department was unwilling to put
133 134 135
136
137
Harvey to FONOFF, May 8, 1948, FO 371/70577/PRO. Ibid.; Douglas to the Secretary of State, April 28, 1948, FRUS 1948 11:207-9. While the French indicated that they were "in principle" willing to join JEIA, they also indicated that this was subject to financial examination. If the dollar drain was too overwhelming they might still stay out. This position was not acceptable to the Americans. Murphy to Hickerson, May 3, 1948, RG 84 US POLAD Murphy Correspondence, FRC. Douglas to Secretary of State, April 21 &c 22, 1948, FRUS 1948 IL197-99; Douglas to Secretary of State, April 27, 1948, Ibid.1205-6; Clay to Draper, April 26, 1948, Clay Papers, 11:637-38. Ambassador Douglas had personally counseled a different course, remarking that otherwise "it may be made to appear" that France had made "all concessions without compromise." Douglas to Secretary of State, May 10, 1948, FRUS 1948 11:230-31; Douglas to Secretary of State, May 11, 1948, Ibid.1233.
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permanent prohibitions or limitations on any German industry, to make a definite commitment on the length of military occupation, or to sign off on a German disarmament treaty. Policy makers did not see themselves as indifferent to the dangers of aggression, but thought the focus should be the Russians. During the recess, the Truman administration had taken additional steps toward a formal military alliance with western Europe. In collaboration with the State Department, Senator Vandenberg had drafted a resolution expressing American support for regional self-defense agreements and indicating the readiness of the United States to become associated. The administration had also scheduled a general security conference between itself and the Western Union, and was intending to participate in joint military planning talks for the event of a Soviet attack.138 Bevin's original notion of substituting a trans-Atlantic military alliance for the Byrnes treaty139 seemed increasingly meritorious to the Americans. The skirmishes in Berlin highlighted the importance of military strength vis-a-vis the Soviets, and if that strength could also assuage West European fears of Germany, so much the better. However, the replacement was significant. Though U.S. officials preferred to minimize the point, a military alliance had different implications for international safety than a disarmament treaty. And a combination against the Soviet Union (even if ambiguously described) would lead to different results from one aimed at Germany. While France and Benelux welcomed U.S. support for the Brussels pact, they stressed the importance of demilitarizing their former enemy. Over weeks of arduous negotiations in London, the West Europeans seemed to be slowly inching toward the American position. Ambassador Douglas had alternately used the promise of economic assistance, finally approved by the Congress, and the threat of U.S. withdrawal from European defense to gain piecemeal acceptance. Grudgingly, his colleagues retreated on the Ruhr, reparations, and the disarmament treaty. But then, quite suddenly, the suppressed dissatisfaction of the participants ripped through the fabric of the conference, as the dissent of the French Socialists hit home. Under instructions from his cabinet, on May zo Foreign Minister Bidault handed his Western colleagues a long letter withdrawing French agreement to a West German government.140 A Constituent Assembly would be premature. Even the West German politicians were reportedly "very reticent" about writing a constitution.
138
139 140
Secretary of State to Douglas, May 11, 1948, FRUS 1948 11:233-34. An especially helpful study of the origins of the North Atlantic Treaty Organization is Ireland, Creating the Entangling Alliance, 92-100. Sidney W. Souers, Memorandum for the National Security Council, April 23, 1948, PSF, Box 203, HST. Cited in Harvey to FONOFF, May 21, 1948, FQ 371/70590/PRO.
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The latter were "haunted by the idea of dividing Germany" and earning the opprobrium of their constituents. Who could really predict how an election to a Constituent Assembly might turn out? The French saw indications that "nationalism, if not National Socialism, is on the way to revive." They were also reluctant to provoke the Russians. Of course the quadripartite unification of Germany would be dangerous. But did this justify taking measures in the western zones, which would be "interpreted by the Soviet Government as a threat to themselves"? Such "would certainly be the case . . . if immediately after the London Tripartite Conference, the decision were announced to convoke a Constituent Assembly." The Russians might well construe this as a precursor to German rearmament.141 At the very least, the French wanted to postpone the announcement of a Constituent Assembly until fall. Meanwhile, they would proceed with more modest steps, including trizonal monetary reform, the pooling of foreign trade, and the revision of frontiers. In return, they desired the Western powers to "emphasize with all solemnity" that their intention "is not to modify in the slightest degree" their commitment to German disarmament and demilitarization. This loss of nerve seemed to vindicate Clay, who had been in a nasty, pessimistic mood throughout the session.142 His U.S. colleagues were infuriated by the last-minute wavering. Within the State Department there was a quick consensus that progress toward a West German government should continue, if necessary on a bizonal basis. Meanwhile, the French would be reminded that a German government was essential to the European recovery plan, and that their defection at a time of Soviet threat was "likely to provoke strong Congressional reaction."143 Under mounting pressure from the United States and Britain, the French ambassador promised to keep working on the German program, with the caveat that once the accords were signed they would be submitted to the assembly for public debate and approval.144 The specter of this democratic exercise disturbed the Truman administration, which had intended to provide confidential briefings to its own legislative leaders.145 An open fight in the French assembly would disclose "the secret draft instructions to the
141 141 143 144 145
Talks on Germany, May 21, 1948, FO 371/70590/PRO; Douglas to Secretary of State, May 21, 1948, FRUS 1948 11:267-68. Clay to Draper, May 22, 1948, Clay Papers, 11:656-58. Caffrey to Chauvel, May 25, 1948, FRUS 1948 11:278-79. Douglas to Secretary of State, May 25, 1948, FRUS 1948 II:28o-8i. Douglas was especially disturbed that the French discussion would precede any communication with the German minister-presidents, creating the impression that we "are imposing a form of government on Germany rather than requiring the Germans themselves to take the initiative." Ibid. Secretary of State to Caffrey, May 26, 1948, Ibid.:283; Caffrey to the Secretary of State, May 27, 1948, Ibid.:295-96; Lovett to Caffrey, May 28, 1948, Ibid.:296.
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Military Governors" for an Occupation Statute and the German constitution, potentially antagonizing both West European and German audiences. Acting Secretary of State Robert Lovett wondered why Bidault could not at least limit discussion to the terms of the conference communique. However, the French government was using up its domestic credibility by the very act of participating in the London meeting, and could not so easily discard its obligation to the assembly. Bidault's difficulties were compounded by the final shape of the accords. Although he finally accepted the September i date for a German constitutional convention, he had failed to obtain most of the safeguards he wanted.146 The International Ruhr Authority would be established before the West German government, but for the period of occupation would possess only advisory powers and would have to conform to bizonal plans for increasing German exports. The other security provisions were distressingly vague.147 Upward revisions of the German Level of Industry would be referred to the three Western governments, but the Americans and British would make the decisions. A commitment on "prohibited industries" was avoided by relegating the topic to a new working committee. As for the military occupation itself, this "would continue for a long period of time" and there would be prior consultation before a general troop withdrawal, but no time span was indicated. In the control period, the military governors would have the responsibility for insuring German demilitarization and disarmament with the help of a tripartite military security board. When the occupation forces were removed, a new agreement would be reached on demilitarization, disarmament, and the control of industry. Although the purpose of the London Accords was to launch a separate West German state, ameliorative language was added to the communique, explaining that the enclosed recommendations would "in no way preclude and on the contrary should facilitate eventual four-power agreement on Germany."148 Expecting Soviet retaliation for the schism, the participants offered the oblique stipulation that "the three occupying powers jointly give consideration,... as developments might require to all aspects of the situation in Germany which might result from the announcement." The latter was a concession to Bidault, so he could assure the assembly that in case of armed conflict, France would not be isolated.149 Because of the precariousness of Bidault's position, the Americans and
146
147 148 149
Final Report of the Drafting Committee of the United States, French and United Kingdom Delegation as Amended (Final), FRUS 1948 11:305-30; International Control of the Ruhr, Ibid.:285-87. Report on Security (Undated), Ibid.:29i-94. Communique of the London Conference on Germany, June 7, 1948, Ibid.:313-16. Douglas to Secretary of State, May 31, 1948, Ibid.
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British accelerated their approval of the London Agreements.150 The conference wound up its proceedings on June z, and by June 8 when the French Assembly began its consideration, Washington and London had already given their endorsement. Bidault remained pessimistic about the outcome. He emphasized to Ambassador Caffrey the opposition's fear of a Berlin confrontation. Suppose the Russians tried to force the Western powers out, his people were wondering, "What will you do?" Would the United States fight? And if so, with what resources? If France could be sure that "you could drop atomic bombs fast enough and often enough, we would not be so worried. But we doubt that you will." If a war occurred, the Red Army would easily overrun their country.151 For American ears, Bidault underlined the Russian danger. However, in Paris, the London Accords were widely deplored as an ominous victory for the Germans. They were certainly a personal triumph for General Clay, who had beaten back several major incursions on West German sovereignty. Describing the outcome to Draper, the military governor observed that "Douglas was the able diplomat and negotiator" while "I was the tough so-and-so injecting the needle."152 He hadn't "gained any friends" but Lew had taken "the injections and did a masterful job in getting an agreement which is much better to our position than I had ever really hoped." To Clay's disappointment, the west German politicians did not appreciate what they had won.153 As they scrutinized the communique, they found many objectionable items. The Ruhr agreement, even if watered down, still seemed a serious encroachment. How meaningful could a new government be if the country's main industrial resources were under an international authority? They also questioned how serious was the notion of self-government, when they had been excluded from London and were about to be handed guidelines for the work of their Constituent Assembly. Meanwhile the occupation was evidently going to continue, but with no indication of how authority would be divided between the Western powers and the new German state. Hence the practical result might be enhanced responsibility without commensurate power. Finally, there was the
150
151 I5X 153
Douglas to the Secretary of State, May 30, 1948, Ibid. 1300-301; The Americans and British were taking no chances. They had made it clear to the French that if assembly ratification was not forthcoming, they would create a governmental structure for the Bizone. More secretly, they decided that if, at a later stage, the French military governor tried to block the West German constitution they would also proceed on their own. Memorandum of Trans-Atlantic Telephone Conversation, Douglas and Saltzman, May 31, 1948, Ibid. Caffrey to the Secretary of State, June 2, 1948, Ibid.:3i7. Clay-Draper Teleconference, June 2, 1948, Clay Papers, II:664. Benz, Von der Besatzungsherrschaft zur Bundesrepublik: Stationen einer Staatsgrundung 1946-49, 156-66.
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excruciating matter of the eastern zone. If a government was created for West Germany, what would be the impact on friends and relatives in the Russian-occupied area? And would the west German public accept the explanation that the east had already been lost?154 These reservations were embodied in official protests by both major German parties.155 Though unable to cooperate with each other, both SPD leader Kurt Schumacher and Christian Democrat Konrad Adenauer were sharply critical. Most unsettling for the Americans was the vitriolic commentary of Adenauer, who proclaimed that the London decisions made such permanent inroads on the liberties of the German populace that they might justifiably refuse to cooperate.156 General Clay was sure that Germans had misunderstood the results of London.157 The communique did have a negative tone, but it had been written for French consumption. On substantive questions, German interests had been protected. The military governor had hoped to meet with the Germans before any public announcement to explain the real import of the conference. However, to assist Bidault through his travails, the State Department had agreed to postpone a discussion with the minister-presidents until the French Assembly had acted. To Clay, this was transforming a victory into a public relations debacle. If only he could inform the Germans "of the really favorable details of the proposals." Yet his pleas were temporarily unavailing, as the French government was engulfed in acrimonious dispute.158 To gain the necessary votes, much depended on the French Socialists, who were still looking for a rapprochement with the Russians. At the very least, they wanted the Western powers to agree that when the London recommendations were conveyed to the Soviet Union, they would explain that there was no desire to divide Germany and that the Soviets were welcome to participate. But since such participation was precisely what the Americans and British wished to avoid, they were unwilling to make this commitment.159
154
155 156 157 158 159
Robertson to FONOFF, June 7, 1948, FO 371/70584/PRO; Robertson to FONOFF, June 8, 1948, Ibid.; Murphy to Saltzman and Hickerson, June 11, 1948, RG 84 US POLAD Frankfurt, TS, Folder Berlin Cables, Box 35, FRC; Strang to Bevin, June 5, 1948, FO 371/70592/PRO; Con O'Neill to Steele, May 18, 1948, FO 371/ 70590/PRO; To Intelligence Division, Weekly Cable to Department of Army, June 4, 1948, RG 84 US POLAD 820, FRC. Robertson to FONOFF, June 8, 1948, FO 371/70584/PRO; Robertson to FONOFF, June 10, 1948, FO 371/70593/PRO. Ibid., Adenauer, Memoirs 1945-53, 113-16. Clay to Draper, June 9, 1948, Clay Papers, 11:672-72; Clay to Draper, June 15, 1948, Ibid.:678-79. Clay to Draper, June 23, 1948, Ibid. 1691-92. Douglas to the Secretary of State, June i, 6 6c 7, 1948, FRUS 1948 11:363-65536667; Secretary of State, Communication to Soviet Government About German Talks, June 8, 1948, FO 371/70584/PRO; Harvey to Foreign Office, June 8, 1948, Ibid.
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Inside the cabinet, Bidault faced an onslaught of criticism, most notably from his Socialist colleagues.160 While offering no substantive rebuttal, Bidault emphasized the political realities, which he had encountered in London. In his view, There is not the slightest chance of combining the benefits of Marshall aid and the rejection of a Germany which would all the same conform tofiftypercent of our desires. There are moments when it is necessary to know how to act to bring things to an end. If we want to act alone we will lose everything."161 While this line of argument aggravated fellow cabinet members, many recognized the constraints under which they were operating. In a close vote, the foreign minister gained enough support from the Socialists to place the accords before the assembly. Instead of asking for ratification, the French government requested an "order of the day" approving its position. In view of Communist and Gaullist opposition, and the dissatisfaction of many Socialists and independents, this remained a formidable assignment. On June 10 the Foreign Affairs Commission, by a vote of twenty-one to twenty, gave conditional support for London if the government obtained additional guarantees that the West German state would be organized on federal principles, that there would be international management of the Ruhr industries, and that French security requirements would be met. l6i Knowing the futility of these demands, Bidault took his case to the whole assembly.163 He acknowledged the shortcomings of the London Accords, but insisted that France had made definite gains. In rendering its judgment, the parliament must now choose between cooperation with known friends and isolation in the international arena. In a bitter, downto-the-wire contest, the Schuman government prevailed. On June 17 the National Assembly voted 300 to 286 to support the London agreements. Although it appended various reservations, these were presented as negotiating points rather than conditions for acceptance.164 This outcome reflected the reversal of the Socialists who, after trying unsuccessfully to alter the recommendations, were reluctant to jeopardize the governing coalition. Though delighted by the results, American policy makers knew their troubles were only beginning. The reconciliation of French and west German interests was already requiring extraordinary pressure. Yet so far only generalities were on the table and the west Germans had scarcely figured
160
Caffrey to Secretary of State, June 9, 1948, FRUS 1948 IL322.-23. Cited in Poidevin, "Ambiguous Partnership: France, the Marshall Plan and the Problem of Germany," in Maier (ed.), The Marshall Plan and Germany, 357. I<5 * Harvey to FONOFF, June 10, 1948, FO 371/70593/PRO; Douglas to Lovett and Saltzman, June 11, 1948, RG 84 US POLAD 800, FRC. 163 Caffrey to Riddleberger, June 12, 1948, Ibid. 164 Caffrey to Secretary of State, June 18, 1948, FRUS 1948 11:335-37; Pollock Diary, Entries June 17 6c June 20, 1949.
161
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in the deliberations. The conflict over the London Accords fed U.S. determination to maintain control of developments in the western zones and to minimize complications from the east. Ironically, the dissent of the French Socialists - including their pleas for diplomacy with the Soviets - was propelling Washington in the opposite direction. the Americans had shown little interest in arresting the East-West polarization. In May there had been two important opportunities to probe the possibilities for a European-wide settlement.165 On the instruction of the State Department, the U.S. ambassador, Walter Bedell Smith, had met with Molotov to convey the American attitude toward recent developments. The main object of the talk was to signal U.S. resolve, so that the Soviets would not create an incident through miscalculation.166 In support of the American position, Smith cited Soviet provocations. Years before, he had warned Stalin of the "inevitable reaction of the American people t o . . . a policy of the Soviet government which would appear to have as its purpose the progressive extension of the area of Soviet power."167 This admonition had been ignored and now both the European community and the United States were coming together for mutual protection. He wanted Molotov to understand that the United States was fixed in its course and would not be deflected by the forthcoming election. Despite this harsh rendering, there was an ambiguity in Smith's presentation. Observing the diplomatic proprieties, he closed with the reflection that the deteriorated state of U.S.-Soviet relations was "a grievous disappointment." Though driven to "this painful and undesired alternative" by the pressure of Russian policy, the American government was still hopeful "of a turn of events which will permit us to find the road to a decent and reasonable relationship." Therefore, the door would always be "wide open for full discussion and the composing of our differences." To the great embarrassment of the American principals, the Soviets seized upon the final segment of Smith's presentation to propose negotiations. In the meeting, Molotov had provided a spirited rebuttal to Smith's charges, but had also taken the ambassador's call for improvement literally.168 Noting that the United States was seeking a way to "establish good and reasonable relations between our two countries, together with a fundamental relaxation of the tension in international relations," the Soviet
D U R I N G THE SPRING,
165 166 167 168
See Walker, "No More Cold War: American Foreign Policy and the 1948 Soviet Peace Offensive," 75-91. Bohlen, Witness to History, 276-77; Smith, My Three Years in Moscow, 157-166. "Statements of Ambassador Smith and Foreign Minister Molotov, March 4, 1948, Cited in State Department Bulletin, May 23, 1948. Molotov Statement, May 9, 1948, Ibid.
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minister offered to join them in "finding the means to eliminate present disagreements." The two men's views were embodied in notes, which were published by the Soviet press. Smith's remarks had been edited to heighten their conciliatory features, while Molotov's first paragraph implied that the United States had requested negotiations: The Soviet government shares the desire, expressed in this statement by the government of the United States of America, to better those relations, and is in agreement with the proposal to proceed with this aim toward a discussion and settlement of the difference existing between us. To the State Department, the release of these notes was an act of utmost treachery. The Russians were palpably twisting Smith's strong demarche into a manifestation of weakness. The mildest interpretation was George Kennan's, who thought the Soviets might be trying to quell the war anxieties of their own people and those in the eastern bloc. From Paris, Caffrey cabled that the "Soviet maneuver . . . is evidence, if such were needed, that Kremlin has not the slightest idea of any compromise solution at this time." The Moscow embassy viewed the incident as "the first serious attack in . . . long psychological warfare offensive designed to undermine growing resistance to Soviet expansionism both in Europe and America." 169 With rumors of peace circulating throughout Europe and America, President Truman and Secretary Marshall hastily explained that Smith had not intended negotiations. 170 The Soviets had already demonstrated how adroitly they could use international conferences to create confusion and disruption. If they wished to improve the international atmosphere, they could do this through constructive action rather than misleading rhetoric. Given this attitude, the administration was particularly annoyed when several days later Marshal Stalin dispatched a friendly letter to presidential candidate Henry Wallace. The former vice president had jumped into the Smith-Molotov controversy with his own summons to the Russians for a settlement of differences. Wallace had sharply criticized both sides, 171 and offered a set of proposals - including the unification of Germany - to reduce conflict. In his reply, Stalin commended Wallace and emphasized that "despite the differences in economic systems and ideologies the
169
170
171
Memorandum of Conversation by the Secretary of State, May 11, 1948, FRUS 1948 IV:860-61; Caffrey to Secretary of State, May 12, 1948, Ibid. 1863; Durbrow to Secretary of State, May 12, 1948, 865. Statement by the President, May 11, 1948; Statement by Secretary Marshall, May 12, 1948, contained in State Department Bulletin, May 23,1948; "Soviet Note Did Not Raise Truman's Hopes for Peace," New York Times, May 13, 1948. Correspondence between Mr. Henry Wallace and Marshal Stalin, May 11, 1948, in Carlyle, Documents on International Affairs, 160-63. Discussed in Walker, Henry Wallace and American Foreign Policy, 190-95.
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coexistence of these systems and the peaceful settlement of differences between the USSR and the USA are not only possible but absolutely necessary."172 Among U.S. officials such language elicited wrathful cynicism. The "oracle has now spoken its awaited words of comforting assurance," cabled the Moscow embassy.173 Stalin's letter was "designed to confuse America, lend the appearance of substance to the vacuity of Wallace's declarations . . . and thus emasculate American foreign policy." Having sown confusion in Europe with their clever Molotov gambit, it was "the shrewd Russian purpose to befuddle the American public." Despite the manipulative aspects, it was by no means clear that the Soviet peace overtures were a trick. During the previous months, the Soviets had been faced with a series of profoundly alarming events the passage of ERP, the creation of a West European military alliance, and the impending reconstruction and division of Germany. Because of these developments, American intelligence sources had been speculating for some time that the Russians would seek a new dialogue.174 To American policy makers, whether or not the Soviets genuinely wanted to talk was of little moment. Since they presumed that the unalterable Russian goal was to disrupt West European recovery, the true function of their conversation was to divide enemies, sow uncertainty, and prevent effective countermeasures. When viewed in that light, the Soviet initiatives could not have come at a worse time. Though the new Western programs werefinallylaunched, the support for a military buildup and for the German partition was tenuous at best. If citizens in Europe of America perceived a safe alternative, they might prefer to explore it.175 Had they been so inclined, U.S. officials might have wondered if adversity was compelling the Soviets to seek a genuine compromise.176 However, it suited their purposes to embrace the most pessimistic conclusions. The separation of East and West, both within Germany and in Europe as a
I?z 173 174 175
176
Marshal Stalin's Reply, May 18, 1948, in Carlyle, Documents on International Affairs, 163-64. Durbrow to the Secretary of State, May 18, 1948, FRUS 1948 IV:87O-7i. Central Intelligence Agency, "Review of the World Situation as it Relates to the Security of the United States," May 12, 1948, PSF, Box 203, HST. One effect of the Smith-Molotov episode was to embarrass those West European leaders who had been resisting indigenous demands for negotiations. Memorandum of Conversation by the Secretary of State, May 11, 1948, FRUS 1948 IV: 8 60-61; Caffrey to Secretary of State, May 12, 1948, Ibid.1863-64. Bohlen, Memorandum of Conversation, May 11, 1948, RG 59 Bohlen MSS, Box 4, DSNA. As reported to the CIA, "Although the propaganda purposes in Soviet exploitation of the Smith-Molotov and Wallace-Stalin correspondence are evident, there is increasing reason to believe the Kremlin is also genuinely interested in exploring the possibility of easing the tension between the Soviet Union and the West, for tactical purposes." CIA, Report of the World Situation as it Relates to the Security of the United States, June 17, 1948, PSF, Box 203, HST.
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whole, was enhancing their independent influence over the western portion of the Continent. If dissenters like Henry Wallace emphasized the dangers of competition, many policymakers doubted that the Soviets could maintain long-term control in the east. The U.S. aversion to negotiations was especially marked on the German issues. They were, therefore, content to have the Allied Control Council in abeyance as they took the final steps toward a Western currency reform and a separate state. Since Sokolovsky's walk-out, OMGUS had become aware of a Soviet interest in reviving the quadripartite apparatus. From "frank" exchanges with junior Russian officers, Murphy learned of their surprise at Western reaction. "Having dropped the potato," they now feared "losing face if they had to pick it up again themselves." 177 They were thus looking for "a turn of events" that would enable them to recover. Military Government officials were determined to deny them that "turn." Having rejected French pleas for a direct invitation to the Soviets, they were dismayed when General Koenig asked his three colleagues on the ACC if anyone desired a meeting. 178 The Americans and British quickly refused, but when Sokolovsky seemed to hesitate, Clay exploded at Koenig: I do not know what the Soviet response will be although obviously if they are smart and express willingness for a meeting it puts the responsibility upon the British and us to either have the meeting while we are in the middle of currency reform and western German government, or to refuse the meeting and subsequently be charged with avoiding it for those very reasons.179 Regardless of the outcome, "the solid front" had been broken, offering another manifestation of the "French desire to appease USSR to the fullest extent possible." To Clay's relief, Sokolovsky's reply was sufficiently equivocal to keep the Allied Control Council in a state of suspension. 180 However, this state of affairs increased the likelihood of a showdown in Berlin. The Western presence in the city was predicated on the assumption of German unity and the operations of the Allied Control Council. If the quadripartite body was no longer functioning, the Soviets would lose their main reason for allowing the Western powers to remain. From a legal standpoint, the Western position was tenuous. Under Yalta they had gained the right of occupation, but there had been no formal guarantee of access across the Russian zone. 181 In July 1945, when SHAEF
177 178 179 180 181
Murphy to Hickerson, June 9, 1948, RG 84 US POLAD Murphy Correspondence, FRC. Robertson to Foreign Office, June 7, 1948, FO 3 71/705 84/PRO; Record of a Meeting Held in the India House, June 15, 1948, FO 371/70594/PRO. Clay to Draper, June 10, 1948, Clay Papers, IL673-74. Robertson to FONOFF, June 9, 1948, FO 371/70593/PRO. Daniel Noce to General Chamberlin, RE: Transit Rights Through the Soviet Zone to the U.S. Sector, Berlin, April 1, 1948, RG 165 CSCAD 014 Germany, MMNA.
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withdrew from Saxony and Thuringia and the Russians opened up Berlin, there had been verbal understandings between Marshal Zhukov and the Western commanders about the use of different transport routes. However, these particular arrangements had never been set to paper or granted permanent status. Although the Westerners could plausibly argue that the right of occupation entailed the right to travel, this was nowhere specified. By June 1948 conditions inside the city were very tense. Although the Soviets had not resumed their "mini-blockade," they continued to interfere sporadically with train and road traffic from the western zones. Politically, they were increasing their pressure on the Berlin administration while keeping the Kommandatura paralyzed.182 Although the Americans were eager to maintain Berlin as a quadripartite city, their hostility toward the Russians and commitment to partition tempted them into offensive behaviors. When the Socialist Unity Party circulated petitions calling for a referendum on German unification, General Howley outlawed it. Individuals who disobeyed were subject to arrest, allowing the Soviets to charge that "thousands of democrats" had been persecuted by the Western power for their participation.183 Although this was a gross exaggeration, the Americans had arrested at least sixty-one people on the basis of the policy, and were obviously obstructing the work of the SED in their sector. In the labor field, the buildup of resentment between the UGO insurgents and the FDGB leadership came to a climax. During April, a closely fought electoral campaign for control of the city convention had produced substantial opposition gains.184 Based on their showing, the UGO claimed forty percent of the delegate seats - a demand that was firmly rejected by the FDGB executive board.185 American Manpower officials, still fearful of the national drive for trade union unity, leaned on the UGO to secede from the organization. They were briefly thwarted by the intervention of two prominent Berlin politicians Speaker of the city assembly Otto Suhr
l8x
See Political Division reports on Kommandatura deadlock: Murphy to the Secretary of State, April 7, 1948, RG 84 US POLAD 820, FRC; Chase to the Secretary
of State, May 14, 1949, Ibid; Murphy to Secretary of State, June 2, 1948, Ibid. Murphy to the Secretary of State, June 9, 1948, RG 84 US POLAD 820, FRC. Manpower Division to Director of OMGUS (Berlin sector) Re: Report on the FDGB Elections, June 9, 1948; Manpower Division/OMGUS Historical Statement RG 260 Manpower Division, Records Pertaining to Trade Unions and Works Councils, FRC. The Executive Board argued with some justification that the opposition movement had deliberately violated the prescribed voting procedure. The UGO had countered, with equal plausibility, that there were many irregularities in the eastern sector and that the Soviets had bribed and intimidated workers to vote their way. McCluskey to Director of OMGUS (Berlin Sector), June 9, 1948; Albert Berman, "Berlin's Trade Union Fight." OMGUS Information Bulletin, June 15, 1948; Hans Gottfurcht, "Report on a Visit to Germany April 27 to May 5, 1948, RG 59 862.00, DSNA; Murphy to Secretary of State, April 17, 1948, Ibid.
183 184
185
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(SPD), and the former CDU leader Jacob Kaiser - who pursued a compromise.186 For the two Germans, the unfolding drama of the FDGB reflected the larger crisis in the city. At stake was not merely the viability of the union, but the preservation of Berlin itself. The politicians' attempts at conciliation proved unavailing. The FDGB executive was belligerent and American pressure unrelenting. On May 25 the Independent Opposition agreed to boycott the city convention and to constitute themselves as the only legitimate trade union federation in the city.187 The acting political advisor James Riddleberger alerted Washington that the delegate caucus had brought to an end "the short period of unexplained UGO hesitation and fumbling."188 Palpably relieved, he reported that "the die is cast." As relations among the four powers in Berlin disintegrated, the Americans and British expected the Western currency reform to be the decisive event. While alert to the risks, they were unwilling to contemplate delay. In their judgment, a new currency had become essential to West German recovery. Until money had real value no amount of reorganization or grand economic planning was going to jolt the factories into production or induce the farmers to deliver their crops. There was still a chance that quadripartite currency reform could be achieved, but to do this would introduce new obstacles to the impending partition. Determined to proceed, the Americans and British already possessed freshly printed marks, which since January had been placed in Frankfurt vaults.189 Once the French Assembly had approved the London Accords, General Clay swung into action. On June 18 he notified Sokolovsky that a Western currency reform would become effective within forty-eight hours.190 With amazing innocence, he explained to the Russian how for many months "we have been trying to obtain a quadripartite currency reform applicable to all of Germany" but now inflationary conditions required an immediate remedy. Sokolovsky replied furiously that "by your unilateral illegal decision you, without the knowledge and agreement of the Control Council... effect a
186
187 188 189 190
In early May British Military Government reported that "the Berlin opposition are under severe pressure from the Americans to split formally from the FDGB. Both they and we are opposed to this policy from which they can at present gain very little and lose a great deal." Control Commission for Germany to FRANCOMB FRANKFURT, May 10, 1948, FO 1030/113/PRO; Wallace Doerr. "Trade Union Situation in Berlin," May 3, 1948, Enclosure to dispatch from Chase to Secretary of State, RG 59 862.5043, DSNA. Riddleberger to Secretary of State, May 25, 1948, RG 59 862.5043, DSNA. Riddleberger to Secretary of State, May 28, 1948, Ibid. Bennett, "The German Currency Reform," January 1950. Clay to Sokolovsky, June 18, 1948, RG 84 US POLAD Murphy Correspondence, FRC.
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separate currency reform in Western Germany, whereby you liquidate the unity of money and complete the split of Germany."191 The Russian found it hard to accept Clay's explanation for his decision. Certainly, he was aware that "the most important principles for the carrying out of an all German currency reform... have already been agreed to on a quadripartite basis." From the Soviet standpoint, the only good news in Clay's announcement was the decision to exclude Berlin from the Western reform. Yet even this concession proved short-lived. The introduction of new Reichsmarks into the western zones necessitated similar action by the Soviets lest their area of occupation be inundated with worthless currency from the West. Unlike the Americans, the Soviets had not prepared any new money. To facilitate quick action, they affixed stickers to the old currency and pronounced this legal tender in both the eastern zone and Berlin.192 Anticipating this move, Clay had recommended to Washington that the Western powers recognize Soviet currency for the city so long as it remained under four-power control. Suddenly punctilious, the State Department insisted that the use of the eastmark "is not acceptable politically because currency issuance is a sovereign power."193 When discussions of a special Berlin currency quickly broke down, the Americans and British decided to defy the Russians and use their new marks in the city, with a B sticker affixed. This quick escalation made the French frantic. By a mere eighteen assembly votes, they had accepted the Anglo-American program for Germany but with great apprehension over possible repercussions in Berlin. Now their foolhardy colleagues were introducing a rival currency into the quadripartite city. Having burned their bridges, the French had no place to retreat. On June 23 they yielded to the decision, but in a statement startling for its bluntness, dissociated themselves "from all responsibility" for the consequences.194 These consequences were not long in coming. On June 24 Russian military authorities cut off the electricity, and stopped all railroads, barges, cars, trucks, and pedestrians going into and out of the western sectors of Berlin. With the real blockade finally beginning, the Americans had reached the Cold War crisis that they had long dreaded, but had practically invited.
191 192 193 194
Sokolovsky to Clay, June 20, 1948, Ibid, See discussion in Gottlieb, German Peace Settlement, 190-97. Clay to Department of the Army, May 2, 1948, FRUS 1948 11:903; Draft cable to Clay, April 20. 1948, RG 59 Saltzman, DSNA. Murphy to Hickerson, June 23, 1948, FRUS 1948 11:912-14 Clay to Draper, June 23, 1948, RG 84 US POLAD File "c" 1948, Box 460, FRC; Clay to Draper, June 23, 1948, Clay Papers, 11:692.
10 Cold War Germany
We are in Berlin as a result of agreements between the governments on the areas of occupation in Germany and we intend to stay. (Statement by Secretary of State Marshall, June 30, 1948 )x After the United States, Britain and France by their separate actions in the western zones of Germany destroyed the system of quadripartite administration . . . they thereby undermined as well the very legal basis which assured their right to participate in the administration of Berlin. (The Soviet Ambassador to the Secretary of State, July 14, 1948)2 no obvious way to defend the western position in Berlin, U.S. policy makers were at first disorganized and divided. They argued intensely over a range of tactical issues: the relative merits of an armed convoy versus an airlift, the number of planes that could be safely diverted to the German theater, the proper custodianship of atomic weapons, the form and character of Allied protest notes, and even the feasibility of utilizing the Russian eastmark in Berlin. Yet the most crucial decision was the one all the principals took for granted: the refusal to consider German unification. By insisting on partition, U.S. officials insured that the Berlin crisis must end with either a peaceful Soviet surrender or a Third World War. Eager to avoid armed hostilities, policy makers searched for alternative means of obtaining the Soviets' capitulation. However, their determination to create a separate west German state obliged them not only to risk a war but to develop a realistic plan for winning it. This pushed to the forefront the atomic arsenal, which became the indispensable accompaniment of an ambitious foreign policy.
B E C A U S E T H E R E WAS
1
1
Documents in International Affairs, 585. Soviet Ambassador to the Secretary of State, July 14, 1948, FRUS 1948 11:960-64. 411
Statement by General Marshall on the Berlin Situation, June 30, 1948, Carlyle,
41 z
Cold War Germany
As the Berlin crisis unfolded, the Americans grew increasingly confident. By October, the airlift had surpassed all expectation as a dramatic and effective means of supplying the city. Furthermore, rather than undermining the London Accords, Soviet militancy was facilitating their realization. Against the backdrop of the blockade, the Americans were enjoying unprecedented success in disciplining West European allies and enlisting the enthusiastic cooperation of west German inhabitants. As these political advantages became more apparent, their eagerness to end the confrontation was greatly diminished.
I. TWO AIRPLANES
To mobilize West European and especially French support for the London program, the Americans had tried to minimize the threat to Berlin. This had anesthetized their own bureaucracies so that when the crisis began, they lacked a strategy for coping with it. In forming their response, policy makers were uncertain of Soviet objectives. Could the Russians be trying to protect the east zone currency? Or were they seeking to arrest the formation of the West German government? If the latter, were the Russians simply bluffing? Or did the blockade signify a new willingness to go to war? Anxious to remain in Berlin, the Americans were disposed to challenge the blockade. But since the city was located one hundred miles inside the Soviet zone, there was no method of supply - neither the use of airplanes nor an armed convoy - that seemed altogether reliable. This led some officials to consider diplomacy. However, short of reopening London, it was difficult to see what concessions would lead the Russians to lift the blockade. Moreover, from the U.S. standpoint almost any concession seemed to imperil progress toward a new western state. Enhancing the confusion was the involvement of fresh actors who had not been privy to the esoteric world of "the German problem." The risk of war brought to the forefront President Truman, the Joint Chiefs of Staff, and other professional military figures. Until these men had assimilated the conventional wisdom of OMGUS and the State Department, American deliberations had a makeshift, even erratic aspect.
F R O M THE B E G I N N I N G of the blockade, General Clay set the terms of the discussion. His extraordinary influence as policy maker derived from his mastery of the German situation. No other American approached the military governor's level of knowledge and practical experience. While his tempestuous personality elicited criticism, his judgment carried immense weight. Moreover, Clay had a definite point of view on what should be done. By contrast to many of his colleagues, he was neither alarmed nor ambivalent.
Cold War Germany
413
As during the March "mini-blockade," Clay was determined to defend Western rights in the city. For him, the defense of Berlin was inextricably tied to the achievement of a West German government.3 He also considered it unlikely that the Soviets would go to war. If the Western powers stood fast, he expected them to back down, whereas fearfulness would encourage further harassment.4 He conceded the "rather remote" possibility that firmness could lead to armed conflict, but in view of the stakes it was worth running the risk. The military governor hoped to end the crisis quickly by sending an armed convoy down the autobahn. In this preference, he was backed by the upper echelons of OMGUS and his old associate William Draper, who was now Assistant Secretary of the Army.5 His proposal generated tremendous anxiety inside the War and State departments and among the British and the French. Objections ranged from the narrow claim that the Soviets could easily circumvent the convoy to the more serious charge that it would provoke a war.6 Underpinning the complaints was the fear that the Soviets were not quite so timid as the military governor thought. Clay's call for an armed convoy made other military measures appear moderate. Since most U.S. policy makers shared his desire to stay in Berlin, they quickly acquiesced when Foreign Minister Bevin recommended an airlift of civilian supplies.7 On a more limited scale, this course had already been followed during the mini-blockade, when the Americans and British had flown in goods for the western garrisons. Now that Soviet interference with the land and water routes was complete, it seemed only logical to expand the air support to the inhabitants. The airlift was controversial only in the technical sense that it was unclear how much freight the planes could carry and how many aircraft could be responsibly diverted to Berlin. In June, nobody in a position of authority, including Bevin, believed that an airlift could provide a long3 4
5 6 7
Clay-Royall Teleconference, June 25, 1948, Clay Papers, 11:706; Murphy to Secretary of State, June 26, 1948, FRUS 1948 IL919. Royall-Clay Teleconference, June 25, 1948, Clay to Draper, June 28, 1948, Clay Papers, 11:707-8; James Pollock to Agnes Pollock, June 26, 1948, Personal Correspondence File, Pollock MSS, UMI. Draper to Royall, June 1948, RG 335 Draper/Voorhees, MMNA. Issacson and Thomas, Wise Men, 456-58; Shlaim, The U.S. and Berlin, 201-2. Conversation between the Secretary of State and the United States Ambassador, June 25, 1948, FO 371/70497/PRO. The tremendous success of the airlift had led several U.S. policymakers to claim authorship of the idea and some Truman biographers have attributed it to the president. Clay, Decision in Germany, 265; Isaacson and Thomas, Wise Men, 458-59; Truman, Memoirs, II: 123; Shlaim, The U.S. and Berlin, 208-9; McCullough, Truman, 639-31. It would appear that Foreign Minister Bevin first took leadership on the matter. However, because of the prior experience of using planes to overcome the mini-blockade this second resort to an airlift seemed automatic. Its usefullness was so widely recognized so immediately, that it was easy for many people to see themselves as the originator.
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term solution to the problem. Berlin's need for food, medical supplies, replacement equipment, coal, and other raw materials was measured in the thousands of tons, whereas the existing Anglo-American capacity was estimated in the hundreds.8 However, the airlift had the great merit of buying time, while highlighting the humanitarianism of the Western powers.9 Also undisputed was Bevin's suggestion that American B-29 bombers be dispatched to Europe. It was this type of plane that had carried out the attack on Hiroshima. Since it was widely assumed that the B-29S were nuclear capable, U.S. policy makers hoped that by sending them to England and Germany, the Soviets would be discouraged from taking more dangerous actions.10 In reality, only a small fraction of these planes were designed to carry atomic weapons and these were not the ones selected for Europe.11 However, this was irrelevant to their psychological purpose. On June 28 the National Security Council met to examine overall strategy. Although the crisis was now four days old, it was the first occasion in which President Truman discussed policy with an assemblage of his top officials. To this point, he been closely monitoring events from the White House, and had already approved the diversion of planes for the airlift. But not since Potsdam had he engaged the important aspects of the German situation. For their session with the president, Lovett, Forrestal, and Royall brought detailed option papers that had been prepared in the Defense and State departments. These laid out three choices:12 1) to decide immediately to withdraw from Berlin and to concert with Allies on plans for doing so, 2) to decide immediately to continue in Berlin by all possible means, including an armed convoy, and 3) to stay in Berlin without using force, employing local negotiations to solve the problem, while postponing a final decision on whether or not to remain. Among leading policy makers there was no support for an immediate withdrawal. They wanted the president to choose between ^a commitment
8
9 10 11
IZ
For a daily food supply, Military Government estimated that Berlin would require two thousand tons, while for the foreseeable future the Americans and British would have a combined capacity of five hundred tons of food. Murphy to Secretary of State, June 26, 1948, FRUS 1948 IL918-19. Conversation Between the Secretary of State and the United States Ambassador, June 26, 1948, FO 371/70497/PRO. Betts, Nuclear Blackmail and Nuclear Balance, 26; Herken, Winning Weapon, 256. According to the official history of the Joint Chiefs of Staff, "The B-29S were widely known as atomic bomb carriers, but significantly, the 509th Bombardment Group, which still possessed the only atomic capability, was not deployed to England; it remained at home in its home base in the United States." Condit, The History of the Joint Chiefs of Staff, IIH39. Borowski, "A Narrow Victory: The 1948 Berlin Blockade and the American Military Response," (Unpublished Paper), December 28, 1979. Forrestal Diary, June 27-28, 1948 in Millis, Forrestal Diary, 452-454.
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to hold fast in Berlin, employing all necessary force (Option 2), or the implementation of temporary actions such as the airlift, with a flexible attitude toward the future (Option 3). To Truman this was hair splitting. Responding impatiently to a query from Lovett, he reflected that there was no need for discussion; "we were going to stay period."13 Thinking that Truman had just picked the second option, Royall argued that the U.S. government should not put itself in a position of having "to fight our way into Berlin" unless it was truly prepared for the consequences. However, the president was not choosing between options but simply avoiding the question, as was indicated by his subsequent comment that "we would have to deal with the situation as it developed."14 Beneath Truman's bravado was an unwillingness to face the serious concerns of the Defense Department. If in order to hold Berlin the United States was intending to go to war, this needed to be known and mapped out. The president's evasion of that necessity was of a piece with his offhand approval during the same meeting of the sending of ninety B-29S to Europe.15 In sanctioning this new form of atomic intimidation, he did not pause to evaluate whether the threat should be real or illusory, or what might be the practical consequences of either choice. Though partly a matter of temperament, the president's inability to explore these issues also stemmed from his unfamiliarity with the German problem. In his mind, the Berlin blockade was just another act of Soviet aggression - part of a pattern that had begun in Eastern Europe, was manifest in Iran and Greece, and was most recently apparent during the shocking events in Czechoslovakia. For Truman, there was no relevant connection between the London decisions authorizing a West German government and the Russian interference with the Berlin access routes.16 This obliviousness to context not only limited the president's contribution to the existing discussion; it prevented him from widening it. In the flurry of meetings that was occurring inside the Washington bureaucracies, the band of permissible speculation was exceptionally narrow. Even as an aspect of crisis management, U.S. officials were reluctant to ask how the world might look to their Soviet counterparts. With a Western military alliance on the horizon, the launching of the Marshall Plan, the revival of German heavy industry, the reappearance of Nazi industrialists and bankers
13
14 15
16
This quotation has been widely cited by historians and Truman biographers as an example of Truman's decisiveness and acceptance of responsibility for a crisis. See, for example, McCullough, Truman, 630. O'Neal, Foreign Policy Making, ftn 51, 284. While expressing "affirmative approval" for sending the planes to Germany, he was silent when Lovett remarked that two groups might be placed in England. In this first significant step toward the forward basing of nuclear weapons, the chief executive offered no reflections. Millis, Forrestal Diaries, 455; Herken, Winning Weapon, 258-59. Truman, Memoirs, II: 123-24.
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in the bizone, and the imminent creation of a West German state, what practical goals were driving Moscow's policy? Did decision-making there have any defensive aspects? And if so, what were the implications for a settlement either on an all-German or European-wide basis? Also outside the bounds of respectable discourse was any calculation of the costs of dividing Germany. Would a formal partition worsen the conditions of people living in the eastern zone? Could it intensify the repression in Eastern Europe? If one result was the militarizing of the European continent, was this a price worth paying either financially or as a matter of security? And what might happen if nuclear blackmail became a routine aspect of U.S. defense strategy? In this first crucial stage of the Berlin crisis, Truman was the one elected official with a voice in decisions. His intellectual abdication allowed the national security bureaucracies to continue in their own closed system of thought, immune from criticism and barely accountable to the American public. By late June, there was an administration consensus that the Western powers should try to stay in Berlin, and that for this purpose the airlift would be expanded and the new bombers placed in Europe. There was less clarity about the type of diplomatic initiative that should be undertaken. Bevin initially recommended a "careful study" of the Warsaw declaration, just issued by the East European governments, to see if it gave a basis for new talks on unification.17 This had little appeal to the U.S. State Department, which favored a protest note "asserting our rights in Berlin and stressing Soviet responsibility for, and callousness to threatened starvation of civilian population."18 The State Department viewed the note as a means of opening negotiations, but there were no concessions it was prepared to make. The best hope for a deal was if the Soviets would settle for a bargain on the Berlin currency. However, when the army instructed Clay to promote that option, the department strongly objected. The military governor himself had originally favored the use of the Russian zone currency for the city, but had suddenly backed away.19
17
18 19
Conversation between the Secretary of State and the United States Ambassador, June 25, 2948. The Warsaw Declaration was issued by the foreign ministers of the Soviet Union and the other East European countries. It included a five-point plan calling for the enforcement of German demilitarization, a four-power control of the Ruhr, the fulfillment of reparations obligations, the establishment of a unified provisional government "consisting of representatives of democratic parties and organizations in Germany," and the rapid conclusion of a peace treaty, leading to the withdrawal of all foreign occupation troops within a year. Declaration adopted by the Warsaw Conference of Foreign Ministers . . . on the decisions of the London Conference on Germany, June 24, 1945 in Carlyle, Documents on International Affairs, 566-74. State Department to Embassy (U.K.), June 28, 1948, FRUS 1948 11:930-31. Clay-Noce Teleconference, June 25, 1948, Clay Papers, 11:706; Clay to Draper, June 25, 1948, Ibid.:696~97; Royall to Clay, June 28, 1948, RG 335 SAOUSooo.i Germany, MMNA.
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The most impassioned advocate for compromise was an OMGUS economist, Manuel Gottlieb, who had worked on the reform measure. To him it was "obvious" that Berlin should have "a single and stable monetary system," which because of its "close relation to the eastern hinterland" must be based on Soviet zone currency. 20 He insisted to Clay that western interests would be sufficiently protected by placing the Berlin currency under the direct authority of the Magistrat, which could be supervised by a revived Kommandatura. Gottlieb's proposal expressed his own deviant sense of tragedy: The drift of events seems to have a momentum of its own. Can we challenge this momentum and reverse the tide? Is it not too late to think of peaceful measures? Even for men of good will and peaceful intent the terrible strain of dead-pan negotiation for great stakes takes a toll on the sensibilities. As blows are exchanged perceptions become dim and values blurred. Some claimed that "war cannot come," that the Russians were not prepared and would back down. And it was possible that in itself the Berlin crisis would not lead to violence. But "all the sourness and hatred, fear and antagonism evoked in the conflicts of the past three years" had come to bear on this geographic point, creating an impetus toward an armed encounter. At the top of U.S. Military Government, there was greater complacency. From Berlin, Clay intimate Jim Pollock wrote his wife that while the situation was "tense and difficult... I do not look for anything to happen." 21 Indeed, the American military governor had visited Sokolovsky after an accidental arrest for speeding and found him "neither happy nor confident" and obviously hopeful that the United States "would offer some proposal." This was consistent with intelligence reports that the reduction of goods from the west was producing a severe economic crisis in the eastern zone. 22 On June 30 Sokolovsky sent a conciliatory letter to General Robertson, which linked the blockade to the currency reform and held out the prospect that rail service might be restored once repairs were completed on the Berlin-Helmstedt line. 23 This inspired the British and French to call for a formal meeting of the four military governors, although to the Americans it confirmed the virtues of firmness. Under-Secretary of State Lovett saw no need for a military governors' meeting, but told the British that if one occurred its only purpose should be to ask Sokolovsky whether "the blockade was to be lifted and if so, when." 24
10 21 22 23 24
Gottlieb to General Clay, June 26, 1948, RG 260 Economics Division, Box 2409, FRC. J. Pollock to Agnes Pollock, June 26, 1948. Clay to Royall, June 28, 1948, Clay Papers, 11:709-10; Hillenkoetter to Truman, June 30,1948, RG 226 Records of the Office of Strategic Services, Leahy File 122, MMNA. Robertson to FONOFF, June 30, 1948, FO 371/70498/PRO. Robertson to FONOFF, June 30, 1948, Ibid.; Douglas to Secretary of State, July 3, 1948, FRUS 1948 11:944; Clay to Noce, July 1, 1948, Clay Papers, .11:714-19; Washington-Berlin Teleconference, July 2, 1948, Ibid.:7i9-24.
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When the military governors gathered early in July, the Russian was tougher than expected. He now indicated that behind the blockade was his government's unhappiness over the impending partition. 25 The Western powers wished only to consider the transportation problems of the city, but "other questions... were important to him." The eastern zone was experiencing economic disorders, which were the consequence of the London conference "to which he had not been a party" and whose "results should have been foreseen." Unless these decisions were reexamined, there was no sense discussing the blockade. The local talks in Berlin had outpaced the State Department's intention to send a protest note. The drafters had hit a snag, trying to justify the Western right of transit across the Soviet zone. Wishing to go beyond the claim that access was implicit in their right of occupation, 26 they had initially alluded to a written guarantee by Stalin: It [free access] was directly specified in a message sent by President Truman to Marshal Stalin on June 14, 1945 which agreed to the withdrawal of U.S. forces to the zonal boundaries provided satisfactory arrangements could be entered into by the military commanders, which would give access by rail, road, and air to U.S. forces in Berlin. His proposal was accepted by Premier Stalin in his reply on June
16.
To the British, who had been ransacking their files for such a document, this was welcome news. Bevin told the U.S. ambassador that he would "like urgently to see the language of Stalin's reply," since in the letter to Churchill he had been "completely noncommittal." When it emerged that Stalin's letter to Truman was no different from the one to Churchill, the foreign minister insisted on excising the dubious American claim. 27 State Department drafters also had difficulty formulating a position on negotiations. They had first written that when the blockade was lifted, a council of foreign ministers could be convened to discuss "any matter relating to the quadripartite administration of the city of Berlin." However, Ambassador Douglas pointed out that the Soviets would "snap at it" and try to "extend the area of discussion beyond the domain of Berlin." 28
zs 16 17
2-8
Clay for Royall and Bradley, July 3, 1948, Ibid.:722-24. Secretary of State to Ambassador Douglas, June 30, 1948, FRUS 1948 11:93.3-36. Douglas to Secretary of State, July 2, 1948, Ibid.:942. The final and much weaker statement on access rights noted that "they were specified in a message sent by President Truman to Premier Stalin, which agreed to the withdrawal of U.S. forces to the zonal boundaries, provided satisfactory arrangements could be entered into between the Military Commanders . . . which would give access by rail, road and air to U.S. forces in Berlin. Premier Stalin replied... suggesting a change in date but no other alteration in the plan proposed by the President." Secretary of State to the Soviet Ambassador, July 6, 1948, Ibid. 19 5 0-5 3. Secretary of State to the Embassy in France, June 30, 1945, Ibid.:935; Douglas to Secretary of State, June 30, 1948, Ibid.:93638; Secretary of State to the Embassy in the United Kingdom, July 3, 1948, Ibid.:946-48.
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The final version of the American note was handed to the Soviets on July 6.Z9 It reasserted the Western access rights, described the hardships inflicted on Berlin civilians, and demanded the cessation of the blockade. Reflecting the State Department's decision not to risk the dangers of a council of foreign ministers, it stated that when the crisis was over the Western powers would discuss "in Berlin" questions pertaining to the city's administration. No matter how carefully they couched their own letter, the Americans could not prevent the Soviets from publicly raising the issue of German unification. Chip Bohlen, the chair of a new intradepartmental crisis committee, expected them to ask for a CFM and for a simultaneous lifting of the blockade and suspension of the London decisions.30 This would place the Western governments in an awkward position since a rejection would give the impression of intransigence, whereas acceptance "would mean undoing all the progress that had been made." Bohlen's own view was that whatever the cost, the West should not allow the London decisions to be reopened.
IN W A S H I N G T O N ,
the reluctance to even discuss German unification on a four-power basis was a response to current problems with the west Germans and French. Support among both groups for a separate west German government was still very precarious, and could easily collapse if there was a serious prospect of a different settlement. Far from the central stage, where the drama of Berlin was being played to an international audience, was proceeding the quiet but urgent western struggle over the implementation of London. The bitter debate in the French National Assembly had delayed for several weeks any official presentation to the Germans. By July 1, when the three military governors met with the minister-presidents for the first time, the latter's feelings of insult and victimization had already been aggravated.31 The minister-presidents were asked to convene a Constituent Assembly no later than September 1 with representatives to be selected under regulations of the individual Landtage.3* They were also instructed to propose new Lander boundaries for approval by the military governors. And they were informed that while this work was being completed, the Allies would be drafting a statute that distributed powers between the new
Z9 30 31 32
Ibid. On the same day the British submitted an identical note to the Soviet ambassador in London. Bohlen, Further Action by Western Powers Following Receipt of Soviet Note, July 6, 1948, RG 59 Bohlen Papers Box 4, DSNA. As yet there are no substantial studies in English of the German reactions. A useful German source is Benz, Von der Besatzungsherrschaft zur Bundesrepublik, 156-235. Gimbel, American Occupation, 207-25; Clay to Draper, July 5, 1948, RG 165 CSC AD 014 Germany, MMNA.
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government and the occupying authorities. French General Koenig explained to the Germans that they would have legislative, administrative, and judicial responsibility in many fields. However, there would also be "reserved" areas, which would remain the domain of the Military Governments, including: foreign affairs and foreign trade, existing and future controls on the Ruhr, level of industry, reparations, disarmament, and demilitarization. 33 From the German perspective, these proposals were a mixed blessing. As prearranged the minister-presidents made no official response, but informally they evinced great disappointment. 34 Their complaints centered on the ambiguity surrounding the Occupation Statute. Without knowing the real extent of their governmental powers, they were being asked to risk their reputations on a new constitution. This step was especially dangerous since by cooperating in the formation of a government, they would be abetting the division of their country. 35 There was also significant dissent inside the west German parties. Apart from the expected opposition of the Communists, leaders of both the CDU and SPD found the September i deadline to be premature and questioned the wisdom of writing constitutional provisions that did not encompass such basic economic questions as socialization and reconstruction. 36 Although there were people in both organizations, who regarded the western proposals as an advance, there was enough overt resistance to alarm the Americans and British. As reported by Robert Murphy, the Germans were bluntly told that they had better take what was given: 1. If not they will only get less. 2. They should frankly recognize split of Germany as fact. 3. They should not become involved in legal fantasy of "sovereignty." Regardless of what Germans call new government document, administrative statute, etc., it will be translated into English as "constitution."37
33 34 35 36
37
Gimbel, American Occupation, 210-11; Adenauer, Memoirs, 117-20. Robertson to FONOFF, July 5, 1948, FO 371/70595/PRO; Military Governor to Regional Commissioners, July 4, 1948, Ibid. Merkl, The Origin of the West German Republic, 50-54. As reported by Robert Murphy, CDU officials were unhappy with the occupation statute, feeling that the "reserved" powers would make the constitution "a farce or front for allied purposes." Christian Democrats also considered it "extremely dangerous" to do a constitution at this time, "as automatically severing the Soviet zone from Germany." Murphy to Secretary of State, July 8, 1948, 6c July 9, 1948, FRUS 1948 11:381-84; CIA, Review of the World Situation, July 14, 1948, PSF, Box 204, HST. Murphy to the Secretary of State, July 9, 1948; General Robertson operated through his regional commissioners, urging them to "see your minister-president at once and speak to him strongly... before he goes to Coblenz." The commissioner should explain that if "an attempt is made at radical revision, it is likely to wreck the whole project on a French veto from which only the Soviets can be the gainers." Robertson to Regional Commissioners, July 4, 1948.
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Despite pressure from the two Military Governments, when the ministerpresidents reconvened at Coblenz on July 8-10, they were still hesitating. Although they welcomed "the Occupying powers' determination to combine the areas of Germany which are subject to their jurisdiction into a unified territory," they also cautioned against measures that would "widen further the rift between west and east."38 In a series of equivocal resolutions, they insisted that "everything should be avoided that would give the character of a state" to the new organization. Hence the future governmental structure should be provisional in nature and without sanction of a popular referendum. They also sought permission to defer decisions on the Lander boundaries, and to delay work on a German basic law until the Allies had prepared an Occupation Statute. More unpleasantly, they claimed that the statute "should express clearly" that the contemplated changes "are ultimately based on the will of the Occupying Powers" and would "lead to consequences different from those which would follow if the changes were an act of free selfdetermination of the German people." The Coblenz Resolutions expressed contradictory impulses by simultaneously rejecting political responsibility and demanding a larger role. Logically, the Germans might imply that there was no inconsistency, that they were declining responsibility because of insufficient authority. But their other ostensible reason for rejecting it was the prospective division of the country.39 Into this breach moved French General Koenig, who told his colleagues that since the minister-presidents did not want responsibility for dismembering Germany and creating a government, they should be obliged.40 Robertson and Clay would have none of his nonsense. They considered their job to be bringing the Germans into the framework of London by making clear "those things we could negotiate and those things which we cannot negotiate." In a private meeting with U.S. zone German leaders, Clay criticized them for taking less power than had been offered and for providing the French with new opportunities for troublemaking.41 As for splitting Germany, they would be charged with this regardless of their equivocations so they
38
Murphy to Hickerson, July 14, 1948, FRUS 1948 11:395-96; Minister-Presidents of the Western Zones of Occupation of Germany to the United States Military Governor for Germany, July 10, 1948, ibid.:385-92; Gimbel, American Occupation,
215.
39
40 41
Murphy to Secretary of State, July 14, 1948, FRUS 1948 11:393-96. In his incisive analysis of Coblenz, Gimbel finds a contradiction between the resolutions (which asked for more authority) and the accompanying letter (which seemed to reject it). Yet there is evidence of both tendencies in the full set of documents. Gimbel, American Occupation, 214-16. Murphy to Secretary of State, July 15, 1948, FRUS 1948 11:396-400. Gimbel, American Occupation, 217.
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would be wise to create something strong and effective. Certainly their hesitation was not helpful in Berlin, where it was important to display firmness. The military governor's remarks had a striking effect. The ministerpresidents claimed they were under the misimpression that the London proposals were subject to negotiation, and had intended their resolutions as friendly.42 They were quite aware that the eastern zone was not presently available. Their purpose at Coblenz was not to forestall progress, but to avoid giving the east Germans the feeling that they had been written off. Following the session with Clay, it was the U.S. zone ministers who sparked the way to an accord. Speaking on behalf of all the Lander leaders, Christian Stock (SPD) of Hesse informed the three military governors that they were "willing to create a western German organization in political and economic respects."43 The Germans still thought it unwise to hold a constitutional referendum, which could "disintegrate into a vote against the occupying powers," and they preferred to use the term Grundgesetz, which they translated as "basic law provisional constitution." This capitulation did not end the Western travail. The Germans had raised enough objections to enable Koenig to argue that matters must now be referred to the governments.44 Such a move could only weaken the west German position. Retreating further, Max Ehard of Bavaria explained that "it was not our intention to terminate the discussion in this fashion." They had simply wished to amplify their convictions, but if there was "no possibility, elasticity or room for change on your part, then of course we will be faced with a new situation." On behalf of all three military governors, Koenig replied that the German terminology could be accepted, but there must be no divergence on other items such as the referendum or the drawing of provincial boundaries. Minister Stock urged the Allies to take cognizance of German thinking, but if they did not the minister-presidents would "submit completely." General Clay was buoyed by these results. Reviewing the sequence for his friend Jim Pollock, he observed that the Coblenz resolutions were "cowardly in appearance and likely to lead to a type of government which could not exercise real authority."45 In his "heart to heart" with the U.S. zone ministers, he had explained to them that "they had failed their country." After this "friendly but very serious talk" these leaders had "carried the ball against the other Minister-Presidents and the political party leaders who through cowardice were inclined to accept the suggestions of the
42 43
44 45
Murphy to Secretary of State, July 16, 1948, FRUS 1948 11:380-81. Third Meeting of Military Governors and Minister-Presidents, July 26, 1948, Enclosure to Letter, Murphy to Beam, July 28, 1948, RG 84 US POLAD, Correspondence Beam, Box 461, FRC. Third Meeting of Military Governors and Minister-Presidents, July 26, 1948. Clay to Pollock, July 28, 1948, Pollock MSS, Box 17, UMI.
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French obstructionists." Clay was finally hopeful that there would be a West German government "that will be worthy of the name." As these delicate Western transactions were unfolding, the Soviets made their expected bid for German unity. In letters to the three Western governments, delivered on July 14,46 they contended that four-power administration of Berlin was "an inseparable component part" of the agreement for quadripartite administration of Germany as a whole. The Western powers "had destroyed" this system by their decision to create a separate West German government, and now they were complaining that Soviet restrictions on transport were causing "difficulties" for the Berlin population. They failed to recognize that it was their own unilateral actions that had jeopardized the economy of both Berlin and the eastern zone. The Soviets stressed that they were not indifferent to the well-being of Berlin citizens, and were willing to assure "the normal supply of essential goods." They were also eager for negotiations, but these "could be effective only in the event that they were not limited... to Berlin, since that question cannot be severed from the general question of four-power control in regard to Germany." The Americans perceived the Russian letter as a manifestation of aggressiveness. They saw no legitimacy in the Soviet contention that Allied rights in Berlin presumed a joint occupation. And they resented the latter's effort to embarrass them by reintroducing the topic of German unity. They also found no comfort in the Soviet promise to supply Berlin inhabitants with necessary goods - a pledge that was immediately followed by an offer of one hundred thousand tons of wheat.47 If the Americans' most vulnerable point was their opposition to unification, their strongest was the relief they were offering to possibly starving civilians. As an interim solution, Soviet relief to the citizenry was viewed by them as a cynical ploy.48 Since the Soviets now seemed intent on using the blockade to prevent a West German state, the Americans and British again faced the problem of how to defend the western sectors. For Clay, the Russian note provided new incentive to end the crisis quickly with an armed convoy.49 However, outside his immediate circle in Military Government, there was little support for that position. The British General Robertson thought the convoy "would probably start a war" and would be ineffective in any case. Even members of the U.S. State Department worried about a sudden confrontation from which the Soviets could not easily retreat.50
46 47 48 49 50
Soviet Reply, July 14, 1948, in Carlyle, Documents on International Affairs, 58992; CIA, "Review of the World Situation," July 14, 1948, PSF, Box 204, HST. Secretary of State to Douglas, July 20, 1948, 3, FRUS 1948 11:974-75. Smith to Secretary of State, July 15, 1948, ftn 2, Ibid. 1969. Clay to Bradley, July 15, 1948, Clay Papers, 11:739-40. Robertson to FONOFF, July 16,1948, FO 371/70502/PRO; Smith to Secretary of State, July 15,1948; FONOFF Conversation with Lovett, July 15,1948, FO 371/70504/PRO.
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The most serious opposition to Clay's scheme was still coming from the Defense Department, where officials believed that tactical decisions about Berlin should entail realistic planning for a war. General Bradley was particularly concerned that if Clay's calculation proved incorrect and the Russians attacked the convoy, the Western powers had insufficient troop strength to prevent the Red Army from overrunning western Europe. As underlined by Secretary Forrestal, America's total reserves were about two and one third divisions, of which only one could be committed with any speed.51 The consideration of the armed convoy lent urgency to the question of atomic weapons. After a brief delay,52 the B-29 airplanes had arrived in England and Germany. Although their purpose was to raise Soviet fears of an atomic attack, these planes were not outfitted for the bomb. More important, the U.S. government had made no decisions about whether the atomic bomb could be used. With the Berlin crisis deepening, such an evasion upset the military. If the Soviets decided to challenge the airlift by impeding traffic in the corridors, the nuclear option would became immediately relevant. More probable was that an armed convoy would elicit fighting on the ground. Under conditions of conventional inferiority, the Defense Department did not want to implement this high-risk strategy without a supply of usable atomic bombs and a commitment to employ them.53 These sentiments led Secretary Forrestal to resume a long-festering dispute with the Atomic Energy Commission over the custody of the bomb.54 For more than a year, the military had complained that civilian possession of America's atomic stockpile would hamper efficient deployment in a crisis. Now that the crisis had arrived, Forrestal asked Truman for a change in policy. However, the president understood that by shifting custody, he
51
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Secretary Royall to the Secretary of Defense, July 10, 1948, RG 335 SAOUS 0001.4 Germany, MMNA; Forrestal, Meeting with the President, July 19, 1948, in Millis, Forrestal Diaries, 439. Their dispatch had been briefly suspended by Secretary of State Marshall, who wanted time to "weigh the effect on the Russians" and balance it "against the appearance to our own people of what might be construed as a provocative action." Forrestal Diary, July 2, 1948, Ibid.:45 5-56. Royall to the Secretary of Defense, July 10, 1948. This attitude was not confined to the military. Averell Harriman had taken the same approach with Draper, insisting that the U.S. government "should determine definitely at this point whether if armed conflict does occur, we will or will not employ 'all of the weapons at our disposal.' *.. We should be absolutely clear on this point and if the decision should be in the affirmative, all details of the plans should be worked out and made ready for immediate execution." Draper, Memorandum of Conversation with Averell Harriman. RG 335 SAOUS 000.1 Germany, MMNA. See discussion in Reardon, History of the Office of the Secretary of Defense, The Formative Years, 425-32.
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would increase the probability of use and he did not want some "dashing young colonel" to make the decision when would be "the proper time to drop one."55 The topic was debated in a high-level policy meeting at the White House on July 21. The atmosphere was somber, as all the participants were acutely aware that "even at that moment some terrible thing might be happening in Berlin" that would sweep away volition.56 The military representatives pressed the claim that without physical possession of the bomb, they were liable to make mistakes. As explained by Air Force Secretary Stuart Symington, this was like using any new product. "When the salesmen go out on the road with it, they learn about the troubles the customer is griping about and the way you make it better."57 His attitude grated on Truman, who was aided throughout the session by the vigorous dissent of AEC Chairman David Lilienthal. The president made it clear that he did not want to use the atomic bomb "unless we absolutely have to." It would be "a terrible thing to order the use of something like that." This bomb is "so terribly destructive, destructive beyond anything we have ever had." It wasn't just "a military weapon." It would "wipe out women and children and unarmed people." So it had to be treated differently "from rifles and cannons and ordinary things like that."58 Truman's reflections disappointed Army Secretary Royall, who noted that "we have been spending ninety-eight percent of all the money for atomic energy on weapons... if we weren't going to use them, that doesn't make any sense." Coming at the height of the Berlin crisis, the exchange over atomic custody was profoundly disquieting to the Defense Department. Despite perfunctory disclaimers, its bid for possession was part of an effort to make the atomic arsenal more usable. In rejecting it,59 the president had revealed his deep resistance to bringing them into action. There had already been intimations of this during the spring, when the Joint Chiefs of Staff unveiled their nuclear war-plan "Grabber." The president had then indicated that he did not want to be dependent on atomic bombs to fight
55 56
57 58
59
Forrestal, July 15, 1948, in Millis, Forrestal Diaries, 458-59. The fullest description of this meeting comes from Lilienthal, The Journals of David Lilienthal, Vol. II The Atomic Energy Years 1945-50, 388-92. Forrestal has provided a sketchier version that conforms in its main outlines to the account of Lilienthal. Millis, Forrestal Diaries, 460-61. Cited in Lilienthal, Journals, 391. In the Forrestal diary, these comments are attributed to David Lilienthal. James Forrestal Diary entry, July 21, 1948. It seems likely that Lilienthal expressed this outlook and was supported by the president. Truman was also responding to factors, which he did not raise in this meeting, including the jurisidictional battling between the navy and air force. Reardon, Secretary of Defense, 430.
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a war, and had asked for an alternative nonnuclear option.60 It was one thing to proffer such an opinion, when the international situation was calm. Yet here was Truman, with a blockade on in Berlin, C-54S crowding up the air lanes, and Russian troops surrounding the city, sounding so negative about America's main weapon.61 Having sustained this defeat, the Defense Department would not approve Clay's request for an armed convoy. The general had just returned to Washington, hoping to convince his superiors of its viability. However, he had conceded to Forrestal that the Soviets were more likely to challenge the convoy than previously and that the chances of war might be one in four.62 To Clay these were acceptable odds if the United States was to retain its position as world leader. The Joint Chiefs of Staff were less reckless. They would not undertake a convoy until the United States was determined and ready "to meet the distinctly probable consequences of war." As explained by Army Secretary Kenneth Royall, Clay's proposal must not be adopted unless "we must make preparations for fighter and bomber support, and at the same time have several A-bombs available (in England or elsewhere) for immediate use, and that use be left entirely to the military."63 The Joint Chiefs were even willing to contemplate the evacuation of Berlin. If the Western powers could not draw on the atomic arsenal, they might find their position in the city untenable.64 In urging that there be plans for troop withdrawal, the military was expressing deep dissatisfaction, not so much with OMGUS, as with the government civilians who were demanding firmness without prescribing appropriate means. Within the Truman administration the prevailing mood was to hold on to Berlin to the point of war.65 A representative spokesman was Averell Harriman, now the European administrator for the Marshall Plan. With characteristic bluntness, the ambassador maintained that it was "absolutely essential for the United States, in concert with the British and the French, to arrive immediately at an absolute determination that we will
60 61
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Ibid., 434. Forrestal considered this a disaster, emphasizing that he was unable to "carry out my responsibilities without resolution of the question whether or not we are to use the A-bomb in war." Forrestal, July 28, 1948 in Millis, Forrestal Diaries, 462-63. Forrestal, Dinner with General Clay, July 21, 1948, Ibid. 1439-40. Clay to Draper, July 19, 1948, Clay Papers, IL743-46. Though not officially released until July 28, the main conclusions of the JCS report were available in time for the NSC meeting of July 22. Secretary of Defense, A Report to the National Security Council on U.S. Military Courses of Action with Respect to the Situation in Berlin, July 28, 1948, PSF, Box 204, HST; Royall to Secretary of Defense, July 10, 1948, RG 335 Draper/Voorhees, MMNA. Secretary of Defense, A Report to the NSC, July 28, 1948. Franks to FONOFF, July 19, 1948, FO 371/70502/PRO; Bohlen Memorandum: The Berlin Situation, June 21, 1948, RG 59 Bohlen MSS, Box 4, DSNA.
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not be forced out of Berlin by any measures short of armed conflict and that we are prepared to stand and fight on this issue."66 When the National Security Council met on July 22, its most important decision was to expand the airlift by providing seventy-five C-54 planes.67 Unlike the armed convoy, this option had mobilized almost universal support. Not only was the airlift so far feeding the city, it was also paying remarkable political dividends. Under the international spotlight, the arrival and departure of the American Skymasters carrying supplies to a beleaguered citizenry offered an unbeatable display of American generosity. Meanwhile, roused by the leadership of the local SPD, the people of west Berlin had found a voice.68 Since the war, the presence of the western garrisons had protected their political rights and economic well-being. Suddenly faced with the prospect of absorption into the eastern zone, tens of thousands were participating in emotional rallies and meetings where they defied the blockade. Across western Europe, the Berliners' brave resistance was creating the first stirring of sympathy and admiration for the behavior of Germans.
Y E T F O R A L L the virtues of the airlift, the Americans could not see a way to prevail. As of late July, nobody in the administration believed that it could maintain an adequate level of supply. At best the additional C-54S would support the city through October. But once winter came, the need for coal would far outstrip the aviation capacities of the Western powers.69 There was also a continuing threat that the Soviets would interfere with the air lanes. If war resulted, the Americans did not have an approved strategy for victory.
66
67 68
69
Although Harriman acknowledged that he was "not qualified, if the situation should come to this extreme, to express an opinion as to whether we should allow our people in Berlin to become a sacrifice garrison." He regarded a withdrawal from Berlin under such circumstances "as a more or less 'tactical' point which must be controlled by the practical requirements of the situation...." Draper, Memorandum of conversation with Mr. Averell Harriman, July 19, 1948. The only detailed discussion of this meeting is to be found in Truman's Memoirs, 11:124-26. This response has been widely discussed in the literature on the blockade. See for example Davison, Berlin Blockade, 100-103, I 0 7 ~ 8 J I 3 O ~44- Murphy to Secretary of State, July 20, 1948, RG 59 862.00, DSNA; Bohlen, The Situation in Berlin, July 29, 1948, RG 59 Saltzman, DSNA. As Secretary Marshall explained to John Foster Dulles, the airlift was good for about four thousand tons a day until October, "when it would decline rapidly on account of weather and create rapidly increasing food privation, cold and unemployment; this airlift could not now be much increased without drawing on the TC working planes, which the army would not agree to; that there must be some solution by October or our position would be untenable and that we would then have to try large scale force under time pressures that might mean war." J. F. Dulles, Washington Conference, July 19, 1948, JF Dulles MSS, Box 35, PU.
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II. A PRETTY GOOD STALEMATE

Without a realistic military scenario for ending the blockade, U.S. policy makers were subject to strong domestic and international pressures to try diplomacy. One influential voice was that of Republican foreign policy advisor, John Foster Dulles. By mid-July, he had become alarmed that the great powers were lurching toward war. With Thomas Dewey expected to win the presidency in November, Dulles persuaded Secretary Marshall that open-ended talks on Germany might be the necessary price for ending the blockade.70 At the secretary's behest, the National Security Council authorized an overture to Stalin. Using tough rhetoric, it mandated Western representatives to inform the Russian leader that their governments would not tolerate the continued interference with Allied rights in Berlin. In delivering that message, they could also point out that they "have never refused to discuss German matters in the appropriate place and . . . manner."71 This approach seemed too belligerent to the British. Bevin was troubled by the stream of alarming cables from General Robertson, which highlighted Western vulnerability in Berlin.72 Also weighing on him was the judgment of colleagues in the Western Union, who were anxious for serious negotiations to occur. For this purpose, it did not seem wise to serve the Soviets with an ultimatum. Hoping to tone down the Americans, the Foreign Office drafted a conciliatory note.73 The State Department found it "redolent of appeasement" and refused to approve. Exasperated, Bevin exploded at Ambassador Douglas, "I know all you Americans want war, but I'm not going to let you "ave it."74 By July 30 the American and British positions had been adjusted. In Moscow, the three Western ambassadors, Walter Bedell Smith (U.S.), Frank
70 71
7Z
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J. F. Dulles, Washington Conference, July 18, 1948; See important discussion of Dulles' attitude in Pruessen, John Foster Dulles, 374-83. Secretary of State to Lewis Douglas, July 20, 1948, FRUS 1948 IL971-72; Teletype Conference Between the Department of State and the Embassy in the United Kingdom, July 22, 1948, Ibid.:977-82. FONOFF to Franks, July 21, 1948, FO 371/70502/PRO; Franks to FONOFF, July 21, 1948, FO 371/70503/PRO; Bevin to Franks, July 22, 1948, Ibid. For months prior to the blockade, Robertson had been cautiously questioning the singleminded push for German partition. The Soviet threat to Berlin crystallized his pacific tendencies and in marked contrast to Clay led him to advocate a new initiative for unity. Memorandum by the Military Governor, Appreciation of the Situation in Berlin and the Effect on Our Policy for Germany as a Whole, July 12, 1948, FO 371/70501/ PRO; Robertson to Strang July 16, 1948, FO 371/70502/PRO. Bullock, Bevin, 582-90; Bevin to Franks, July 22, 1948; Teleconference, Department of State to Embassy in U.K., July 22, 1948, FRUS 1948 11:978. Cited in Brower, Independence, 298; Secretary of State to Douglas, July 21, 1948, FRUS 1948 11:975-76.
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Roberts (U.K.),75 and M. Yves Chataigneau (France) submitted identical letters to Valerian Zorin, the deputy foreign minister. These reaffirmed the Western rights in Berlin, while pointing out that "The willingness to negotiate in the absence of duress has always been there." The first result was a meeting with Foreign Minister Molotov, who wondered if the ambassadors were prepared to link a consideration of Berlin to a talk on all-German matters. Smith indicated that such an exchange was "possible."76 On August 2 the three ambassadors were summoned to the Kremlin for an evening session with Stalin.77 Acting as the spokesman, Smith stressed that the three governments had an "unquestionable and absolute" right to be in Berlin and did "not intend to be coerced by any means whatsoever." If the purpose of the blockade was to effect a settlement of the currency problem or to stimulate negotiations on the future of Germany, this was "unnecessary." The Western nations were always ready to negotiate "in an atmosphere relieved of pressure." Stalin explained that the Soviet Union had no intention of driving the Allied forces out of Berlin. However, Western juridical rights were linked to the city's status as the capital of a united country. The ambassadors were objecting to negotiations "under duress," but the special Western currency in Berlin was also coercive. Perceiving an opening, Smith wondered whether Stalin was offering to lift the blockade in exchange for a removal of the Berlin B mark. The Russian leader demurred, remarking that he was not only talking about currency, but about the London decisions. Could these be suspended while the four powers resumed their negotiations? Once these decisions had been implemented, "there would be nothing to discuss." Reacting to Stalin's concern about the West German Parliamentary Council scheduled to open on September 1, Smith maintained that "Nothing was being done. .. which could not be fitted into a central German government." However, it was evident that if eastern zone representatives played no part in the writing of the constitution, they would be bound by the Western model. To avoid this, Stalin proposed a simultaneous lifting of the blockade, the removal of the Western currency from Berlin, an announcement of a CFM to discuss all-German questions, and a (possibly private) decision to postpone London until the ministers convened.
75
76
77
The British Ambassador Sir Maurice Peterson had become ill. In view of the importance of the proceedings, the British sent Moscow veteran Frank Roberts, who was then serving as private secretary to Bevin. Smith, My Three Years in Moscow, 239. Aide Memoire from the Representatives of the Governments of the United Kingdom, the United States, and France, July 30, 1948, in Carlyle, Documents on International Affairs, 592-93; Smith to the Secretary of State, July 31, 1948, FRUS 1948 11:996-98. Smith to Secretary of State, August 3, 1948, Ibid. 1999-1006.
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When after repeated exchange it became evident that Smith and Roberts had no negotiating latitude on London, Stalin suddenly shifted ground. He wondered if the Westerners wished "to settle the matter tonight?"78 If so, the Soviet Union would agree to a simultaneous lifting of all restrictions on transportation and the introduction into Berlin of the Soviet zone marks in place of the Western currency. He would no longer make the deferment of London a condition of agreement, although he would like it recorded that this was "the insistent wish" of the Soviet government. With this change, all the discussants became convivial. Miraculously, it seemed to the Western ambassadors that the Berlin blockade could soon be over with the plans for the West German state still on track. Smith reported that Stalin and Molotov were "undoubtedly anxious for a settlement." He had never seen Molotov so amiable. Indeed, if one didn't know "the real Soviet objectives in Germany" one could easily be deceived as both leaders "were dripping with sweet reasonableness." He now thought the Russians so desperate for a deal, that even the concession on currency might have been unnecessary.79 Smith personally believed that the United States should compromise. Having dispensed hard-line advice for three years, he was suddenly moved by Stalin's reasoning. The currency situation in Berlin was clearly "a mess" and despite the political dangers "we might be well out of it on Soviet terms."80 And perhaps it would be wise to suspend part of London. This would give the United States "a good club" since once the arrangements were finalized "we will have fired one of the last shots in our political locker." Smith's commentary reminded Chip Bohlen of what he had disliked about the diplomatic course. Twenty-four hours after meeting Stalin, the U.S. ambassador wanted to suspend London. The Russians were plainly not going to sit through endless chimerical meetings while the West Germans formed a government.81 At a future CFM they would renew their demand for delay, and when they did France might bolt. Furthermore, in a public arena it would be psychologically difficult for the Western powers
78 79
80
81
Ibid. Ibid.; British Ambassador Roberts shared Smith's optimism: "I do not want to fall into the usual trap of visitors who succumb to Stalin's charm especially after I myself have so often warned of this danger, but I should not be painting a true picture if I did not say that we have all been very much struck by the affability of Stalin and Molotov." Roberts to Strang, August 3, 1948, FO 371/70506/PRO. Just how uncynical Smith had become is signified by his suggestion that if Stalin could be convinced that the United States would not accept communist domination, the "Soviet eagerness for reparations may induce them to be less aggressive in the political front," Smith to Secretary of State, August 3, 1948. Bohlen to Secretary of State, Lovett, Hickerson, and Kennan, August 4, 1948, RG 59 Bohlen MSS, Box 2, DSNA.
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to refuse a postponement, since this would discredit their claim of support for German unity. General Clay was also unhappy about the diplomacy of his old rival Bedell Smith. Although previously willing to retain Soviet currency in Berlin, he now emphasized that without careful provision for its quadripartite control the Soviets could gain unofficial control of the city's economy.82 Like Bohlen, Clay was eager to avoid another Council of Foreign Ministers. Under the arrangements contemplated in Moscow, such a meeting would coincide with the proceedings of the Parliamentary Council, generating "political uncertainties." That might be manageable if the Western powers upheld the "prompt execution" of London. But Clay doubted that even the American people would then sustain a commitment to the German partition. The State Department quickly dispatched new instructions to Smith, telling him to obtain four-power authority over Berlin's eastern currency.83 When Molotov complained that this was altering the bargain, Smith insisted that the previous talk had concerned matters of principle, whereas they were presently discussing technical details. For the Russian "control of Soviet currency in Berlin was not a technical detail but a completely new proposal." He also wondered what had happened to Stalin's "insistent wish" for a delay of London. Smith explained that since this was not "a condition" of agreement, it had been omitted. In any case, the "physical establishment of a West German government" would not be occurring for some time, so it was not relevant to the proceedings. Molotov retorted that the connection was "quite obvious."84 The ambassadors reported to their home offices that the Russians were trying "to sell the same horse twice."85 This appraisal reflected the intense pressures emanating from Washington. While their effort to tighten the currency accord was unremarkable, it was certainly they and not the Russians who had altered the understanding.86 Furthermore Stalin had stated very clearly that he wanted his "insistent" wish on London to be recorded. If there was dissimulation on this issue, it was on Smith's part. Although he considered German unification to be "a fiction," he had assured the Soviets that it was still possible.87
8z
83 84 85 86
87
Secretary of State to Smith, August 3, 1948, FRUS 1948 II: 1008-9. Harrison to FONOFF, August 7, 1948, FO 371/70506/PRO. Smith to Secretary of State, August 6, 1948, FRUS 1948, IL1018-20. This was clearly recognized by Bevin, who cabled Roberts, "The plain fact is that the control of the Berlin currency is not a technical matter, but lies at the very heart of our difference with the Russians." FONOFF to Moscow, August 8, 1948, FO 371/70506/PRO. Harrison to FONOFF, August 8, 1948, Ibid.; Smith to Secretary of State, August 3> 1948.
Clay for Bradley and Royall, August 4, 1948, Clay Papers, IL752-53.
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Their negative account notwithstanding, both Smith and Roberts had become spokesmen for moderation. Since speaking with Stalin, they had been infected with a sense of mission. To them this was no routine negotiation because the peace of Europe hung in the balance. If they could somehow preserve the plans for West Germany while halting the blockade and averting violence, it would be a special achievement. Resisting the pessimism of their superiors, they begged for more time and latitude.88 In Washington, the resistance to a four-power conference was continuing to build. According to a fresh study by the army's Plans and Operations Division, such a meeting would be "not only fruitless, but. .. dangerous." It would unleash "appeasement pressures in France and England, strong antiseparationist feeling in Germany and the typical American public opinion sentiment for compromise."89 Similar apprehensions induced the State Department to again toughen the Western negotiating position by calling upon the Soviets to recognize the Allies' "juridical rights" in Berlin.90 This was unacceptable to Bevin, who thought it might ruin any chance for a deal. Stalin had already made his position clear - that Western rights in Berlin presumed a unified country. Rather than bicker over an abstraction, it seemed more sensible to focus on concrete problems such as the opening of the access routes and the supervision of currency.91 In deference to the foreign minister, the State Department agreed to a two-stage procedure under which they would present the Soviet leader with a detailed directive for quadripartite control of the eastern D marks.92 If he approved, discussions would revert to the four military governors in Germany, who would hammer out the necessary arrangements. This would be followed by the introduction of the Russian zone currency, the lifting of the blockade, and the commencement of talks on German-wide issues. Carrying the stiffly worded directive, the ambassadors arrived in the
88
89
90 91
92
Roberts articulated their collective outlook in a letter to Whitehall: "One must certainly give the Russians more than the mere twelve days we have here to climb down from an untenable position . . . and if they are to do so, we should I think be well advised to provide them with a little bridge over which they can retreat without excessive loss of prestige. Otherwise we are wasting our time here." Roberts to Lord Strang, August 12, 1948, FO 371/70508/PRO. Dupuy to Draper, Brief Analysis of Current U.S.-Soviet Relations, August 9, 1948, RG 335 SAOUS 000.1 Germany, MMNA; Memorandum for the Record, Secretary Royall's Views With Regard to Molotov's Proposal, August 10, 1948, Ibid. Secretary of State to Smith, August 17, 1948, FRUS 1948 IL1053-56. Robertson to FONOFF, August 10, 1948, FO 371/70506/PRO; Robertson to Strang, August 11, 1948, FO 371/70508/PRO; FONOFF to Moscow, August 18 d>C 19, 1948, Ibid. The State Department wanted safeguards to insure no discrimination against holders of B marks, equal treatment as to currency and provision of banking facilities, a satisfactory basis for trade between Berlin and all zones of Germany, and the provision of sufficient currency for budgetary purposes. Smith to Secretary of State, August 24, 1948, FRUS 1948 II:io62.
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Kremlin on August 23, girded for battle. They found Stalin in an unexpectedly "jovial" temper with a brand new draft that conceded their main points on the currency.93 However, the Soviet leader maintained his objections to a separate West German state, and asked that the final communique stipulate that: The question of the London decisions and of the formation of a West German government was also discussed in an atmosphere of mutual understanding. The adoption of any decisions on this subject was, however, deferred until the next meeting of the Council on Foreign Ministers. This proposal, with its intimation of delay, was rejected by the ambassadors. Rather than delay the directive to the military governors, Stalin indicated that he would hold the matter in abeyance. With the deal seemingly in hand, General Clay bridled. Not only did he perceive technical weaknesses in the directive, but he was bothered by the neglect of juridical rights.94 The State Department concurred. True, they had not explicitly asked for a formal statement, but they had hoped the principle "would find reflection in the arrangements regarding currency."95 Now they wanted the ambassadors to get that recognition. Smith was livid. The situation on juridical rights had been clear for weeks, and it was understood that neither the Russians nor the Western powers were going to abandon their position.96 He and his colleagues had negotiated a practical accord that was precisely designed to sidestep the disagreement over principle. Did his government want this? The State Department needed to make up its mind "whether our position is better in Berlin" under the status quo "or whether it was better to have communications resumed under circumstances in which we would not have complete control." In his outrage Smith had ironically come full circle to occupy Clay's position in Moscow eighteen months earlier. The military governor had then been overwhelmed by the blindness of his superiors, who failed to recognize how the weakness of the Soviets could facilitate a favorable bargain that would salvage eastern Germany. On that occasion, it was the ambassador with all his talk of the omnipotent, nefarious Russians who had helped muffle Clay's voice. Now there were different stakes: the security of Berlin and the avoidance of war. And while Smith had lost none of his old distrust, he believed that the Soviets were seeking a practical exit
93 94
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Smith to the Secretary of State, August 24,1948, Ibid. 1065-71; Roberts to FONOFF, August 24, 1948, FO 371/70510/PRO. Teleconference Byroade and Clay, August 24, 1948, Clay Papers, 11:778-85; Memorandum by the Chief of Central European Affairs, August 24, 1948, FRUS 1948 11:1071-72. Secretary of State to Smith, August 24 &; 25, 1948, Ibid.: 1074-2079. Smith to the Secretary of State, August 25, 1948, Ibid.: 1078-79.
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from the blockade. It seemed incredible that his Washington associates, egged on by Clay, were barring that door. The British were also aggravated. General Robertson believed the directive was reasonable, and that it could end the blockade under conditions that would offer "a fair chance" of protecting the Berlin population.97 In Moscow, the U.K. ambassador Frank Roberts was stunned by American stubbornness. Telling Whitehall that it was suicidal to go back to Molotov with more modifications, he warned that unless there was some way of keeping "Clay, Douglas and the State Department in check we shall find ourselves with agreement dashed from our lips, a thirsty public wondering why, and an even worse position than if we had never started these talks in the first place."98 Bowing to criticism, the State Department again rescinded the demand on juridical rights.99 However, Smith was ordered to tell the Soviets that in the final communique, the Western powers would formally assert their right to exercise power in the city. To the ambassadors' relief, Molotov accepted several Western amendments on currency and took in stride Smith's announcement about juridical rights. But he also emphasized that the final communique must incorporate the Soviet dissent from London.100 By August 31, when this interim accord was completed, a large chasm had opened among the Western allies. The British and French were deeply concerned that Clay would try to sabotage the settlement during the Berlin round of talks. On the United States side, Secretary Marshall deplored the willingness of his partners to go "too far in order to get quick agreement."101 In the hardening U.S. position, one new factor was the coalescing of American public and congressional opinion behind the administration. According to a recent Gallup poll, eighty percent of the public thought the United States and her Western Allies "should stay in Berlin, even if this means war with Russia."102 This emerging consensus was reflected on Capitol Hill, where legislators from both parties were expressing outrage at the Soviets and unwavering support for the Berliners. Such sentiments were scarcely surprising, given the melodramatic coverage in the press. Throughout the summer, the media related a simple story in which good and evil were sharply counterposed. The Soviets were trying
97 98
99 100 101 102
Robertson to FONOFF, August 24,1948, FO 371/70510/PRO; Berlin to FONOFF, August 25, 1948, Ibid. Harrison to FONOFF, August 25, 1948, Ibid. Besieged by his subordinate, Foreign Minister Bevin again challenged the American approach. Smith to Secretary of State, August 25, 1948. Secretary of State to Smith, August 26, 1948, FRUS 1948 11:1083-84. Royall to Clay, August 28, 1948, RG 335 Draper/Voorhees SAOUS 000.1 Germany, MMNA; Roberts to FONOFF, August 27, 1948, FO 371/70511/PRO. Harrison to FONOFF, August 31, 1948, 1152 6c 1161, Ibid.; Marshall to Smith, August 26, 1948, FRUS 1948 11:1085. Gallup, The Gallup Poll, Vol. I. 1935-48, 748.
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to seize Berlin as a prelude to conquering all of Germany. The Americans and British were trying to stop them. As described in the lead feature of Time Magazine: The incessant roar of the planes - that typical and terrible 20th Century sound, a voice of cold mechanized anger - filled every ear in the city. It reverberated in the bizarre stone ears of the hollow, broken houses; it throbbed in the weary ears of Berlin's people who were bitter, afraid, but far from broken; it echoed in the intently listening ear of history. The sound meant one thing: the West was standing its ground and fighting back.103 In U.S. News and World Report, the editors inquired, "What is the U.S. stake in Berlin?" The answer: "Berlin, once the capital of a strong and united Germany is a symbol of German nationalism. Russia wants to make the city a seat of a German Government under Russian domination that would seek to unite all Germans." According to the Saturday Evening Post, "Crisis after crisis has produced a climax in perhaps the most vital battle of the Cold War with the Russians on the offensive. Are we going to lose?" Meanwhile Time maintained that U.S. withdrawal would mean "the retreat of an army which, however small, is the symbol of America's commitment to Western European safety.... Last week's ruthless siege of Berlin was a siege of all Germany and Europe as well." 104 Within the mainstream press, there were few heretics on the German problem. A significant exception was veteran journalist Walter Lippman, who from the inception of the blockade had challenged the prevailing interpretation. In a series of controversial columns, he insisted that the real issue was the London agreement, which had given the Russians "not only the pretext but the opportunity and the means for a powerful and effective diplomatic counteroffensive." 105 That accord "had no genuine support anywhere on the European continent," was economically irrational and posed a long-term danger of either a world war or "a German-Russian deal at the expense of Europe." The sensible solution, opined Lippman, was to forget London, take up the Russian offer of troop withdrawal, sign a peace treaty, and let the Germans work out their own political destiny in a unified country. 106 Such intricate argumentation carried little weight against the theatrics of the blockade: the Russian barricades, the hungry but stalwart Berliners, the power of the American planes, the good-humor and quiet competence
103
104
105 106
Th e Siege," Time, July 12, 1948. "Why U.S. Hangs on in Berlin," U.S. News & World Report, July 16, 1948; Demaree Bess, "Will We Be Pushed Out of Berlin?" Saturday Evening Post, July 31, 1948; "The Siege," Time, July 12, 1948. Lippman, "In Order to Repair the Damage," Washington Post, July 26, 1948. Lippman, "The Case for a German Treaty," Washington Post, July 31, 1948.
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of the pilots. What could surpass the magic of the airlift, which each day increased the tonnage of supplies to an encircled people? Not since World War II had the media feasted on this tasty raw material. Here was Lieutenant Lawrence Nelson of Waukegan, Michigan, learning that the air force transmitter in Berlin was jammed by Russian radio.107 "Isn't that risky?" asked the reporter. "This whole damn operation is risky," replied Nelson. "There's enough coal dust and flour in this ship to blast the whole damn thing sky-high with one spark." So "rev her up," he called to the copilot (Lieutenant Fred Smith - "A Rebel from Brooklyn"). "See how high she'll fly before she explodes." In the newsreels and radio broadcasts, and across thousands of front pages around the United States, the West was redoing Munich, demonstrating that appeasement was obsolete and that the ambition of tyrants would no longer be whetted by the weakness of their adversaries. However, the implied analogy was deeply misleading, for despite the valor of the airmen and the fortitude of the Berlin citizenry, the choices were different. The Soviets were not asking the Allies to evacuate Berlin, but to change its currency and stop the partition of the German nation. In its coverage of the crisis, the American media rarely mentioned the impending creation of a West German state. By emphasizing the isolation of the eastern zone, it conveyed the impression that the work of the Parliamentary Council was simply ratifying an existing condition. From the news, it was impossible for the public to discern that the sealing off of east Germany was not complete, that the Soviets were offering to create a freely elected government for the whole country, and that Stalin had promised to halt the blockade as soon as the London decisions were suspended. None of this information would have proved Soviet veracity, or constituted a prima facie case for German unification. But in its absence, there was no significant public debate of the merits of dividing Germany or of the necessity for the Berlin confrontation. The media's distortion of the underlying issues affected its treatment of four-power negotiations. In mainstream accounts the United States and its partners were hell-bent on diplomacy, while the Russians were holding back. According to Newsweek, the Western powers had "decided to press a diplomatic offensive into the inner sanctum of the Kremlin" but for it to be "anything more than a breathing spell, Moscow would have to change: and the intellectual climate of the Kremlin is permanently conditioned by a trade wind that blows straight out of the dialectic wastelands of Marxism."108 From such descriptions, Americans could scarcely guess that to Washington the real problem with the Soviets was that they wanted to discuss too many delicate German subjects in too public a forum.
107 108
"Lightening Clouds, Dangerous Cargo, Red R a d i o J a m m i n g . . . . " N e w s w e e k , July 16, 1948. "What's Behind the Breathing Spell?" Newsweek, August 2, 1948.
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The most reluctant negotiator was Clay,109 who had responsibility for the financial talks in Berlin. For the first time since his arrival in Germany, he was beginning to feel how much there was to lose. After his own arduous efforts, the west German Parliamentary Council had begun its work and the western currency reform was showing positive results. Writing to James Pollock, the military governor reflected that "hope and return of confidence among Germans is evident everywhere."110 It had been "a long hard road and now that we are winning on every hand, firmness in policy and implementation are essential." To Clay's relief, General Sokolovsky assumed the initial role of saboteur by reversing concessions that had been offered in Moscow. Not only would he accept fewer safeguards for quadripartite currency control; it was even unclear whether all the travel restrictions would come off. The Russian's performance disappointed General Robertson, who thought it "fantastic" that he had so altered Stalin's commitment.111 Over the next week, Sokolovsky edged toward the Western position,112 but was inflexible on certain key points - notably the arrangements for Berlin's trade and the functions of the four-power Finance Commission. As they approached the deadline for reporting back to Moscow, the Western military governors offered competing assessments. Clay claimed the Soviets were reneging on their agreement, whereas Robertson and Koenig thought they were storing up bargaining chips for the final round of negotiations.113 There were also divergent reactions when midway through the financial talks, Sokolovsky informed his colleagues that the Soviet air force would be conducting their annual maneuvers in Germany, and that these were "normal exercises" that had "no bearing on the present situation."114 Construing Sokolovsky's communication as a calculated threat to the airlift,
109
110 111
112
113 114
Clay's attitude generated serious concern in both Paris and London. Bevin to Robertson, August 30, 1948, FO 371/70512/PRO; Bohlen, The Berlin Conversations, August 30, 1948, RG 59 Bohlen MMS, Box 4, DSNA. Clay to Pollock, August 25, 1948, Pollock MSS, Box 17, UMI. Among the most disturbing items was his refusal to lift the travel restrictions that had been imposed before June 26, his reference to future limitations on the use of the air corridors, and his unwillingness to grant the four-power finance commission control over the German Bank of Emission. Clay to Draper, September 1, 1948, Clay Papers, 11:798-801. He essentially accepted the restoration of ground traffic to what it had been before the March mini-blockade, deferred the proposal for new air regulations, and accepted most of the Western views on the actual exchange of B marks for eastmarks. Telecon Clay-Draper, Bradley, Wedemeyer and Byroade, September 8, 1948, Clay Papers, 11:845-49; Robertson to FONOFF, September 6,1948, FO 371/70573/PRO. Berlin to FONOFF, September 6, 1948, Ibid. At the time of Sokolovsky's announcement General Robertson responded that he assumed that these maneuvers would not cause interference in the air corridors. Sokolovsky answered, "Certainly." Robertson understood him to mean that the Russians would not interfere, whereas the Americans drew the opposite conclusion. Berlin to FONOFF, September 5, 1948, Ibid.
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Clay urged Washington to lodge a vigorous protest. In contrast, Robertson advised the Foreign Office that the Russian had been trying to allay worry about crowding in the air corridors. Even in regard to the volatile political situation in Berlin, Clay's interpretation was the most negative. The existence of two currencies had aggravated the already troubled relations of the local government and the Soviet military authorities. When the city assembly defied Russian orders to make their currency the exclusive legal tender for Berlin, the Soviets had responded with a series of reprisals: interference with the municipal budget, harassment and intimidation of municipal officials, insubordination by SED officeholders, and increasingly rowdy street demonstrations.115 From these events the U.S. military governor discerned a definite Soviet plan to overturn the city government, whereas to his colleagues they were the local manifestation of a wider conflict, which might yet abate.116 While the financial discussions were in progress, there was a sudden crisis when the Socialist Unity Party and the FDGB brought angry crowds to the Berlin city assembly. On the first day, hundreds of demonstrators broke into this eastern sector meeting hall, shouting denunciations and threatening the politicians. Since the Soviet police stood passively by, the latter recruited volunteer policemen from the western sectors, whom the Soviet authorities then tried to arrest. On the subsequent day, noncommunist representatives, claiming that mob action was preventing their conduct of business, relocated to the western sectors.117 Clay stressed the gravity of these disorders to his superiors, linking them to Sokolovsky's stubbornness in the negotiations and the threat of air maneuvers in the corridors. "Pride is a cheap commodity," he opined, "or I could never hold my head up."118 The United States was "being pushed around here like a fourth rate nation." Because of the international implications, he was "taking it for the moment," but while "we maintain quiet . . . their pressure increases." General Robertson denied that crowd action had prevented the city assembly from meeting. In his account, the relatively small demonstration had been brought under control and the session did not open because SPD chairman Otto Suhr had failed to appear. To the British official the denouement was the culmination of ill-considered U.S. efforts to move the city assembly into the western sectors.119
115 116
117 118 119
Davison, Berlin Blockade, 168-81. Hence U.S. Kommandant Frank Howley encouraged the Berlin leadership to resist new Russian orders, while Whitehall counseled restraint. The British Foreign Office wanted the Americans to refrain from "instigating provocative action," but were not very hopeful. The problem, thought Patrick Dean, was that "General Howley is an ass." Dean, Minute, August 29, 1948, FO 371/70504/PRO. Davison, Berlin Blockade, 185-87. Clay-Draper Telecon, September 6, 1948, Clay Papers, 11:831-32. Robertson to FONOFF, September 6, 1948, FO 371/70512/PRO. In explaining Suhr's behavior, the British speculated that "the party leaders were thoroughly
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Clay's alarming reports consolidated hard-line opinion in Washington. On September 8 the State Department again told Smith to insist on Soviet recognition of Western juridical rights.120 Once more the ambassador complained that this was a transparent means of spiking the negotiations. If there was to be a breakup, let it be over real issues such as the disruptions of the city assembly or Sokolovsky's deviation from Stalin's promises. Smith thought the central question for his superiors was whether they were prepared to live with the blockade. If not, what compromises would they make to have it lifted? He had always said that Western concessions "might have to be substantial," and it would certainly be helpful to his digestion to know Washington's views.121 The silence of the State Department signified the answer. Top officials were not prepared to make "substantial concessions" to the Russians, or even modest ones. The odd exception was the policy planning chief George Kennan, who had been one of the earliest and most vociferous advocates of the German partition. Under the impetus of the Berlin crisis, he was becoming increasingly sensitive to the costs of division. During August his staff had drawn up a serious program for German unity122 that featured the establishment of an all-German government, the rapid termination of the quadripartite machinery, and the withdrawal of the occupying forces to the periphery of Germany. In advancing this program, Kennan conceded that there were valid arguments on both sides, but he thought the most compelling was that without German unification, the division of Europe would be congealed and militarized:
We can no longer retain the present line of division in Europe, and yet hope to keep things flexible for an eventual retraction of Soviet power and for the gradual emergence from Soviet control, and entrance into a free European community of the present satellite countries.... If there was any chance that Eastern Europe could be salvaged peacefully the moment to do it was now, when "the lines of cleavage have not yet hardened completely . . . when the Soviet Union (as I believe) is not yet ready for another war," when there was strong anticommunist feeling in Germany and widespread dissent in the Soviet-dominated countries. The diplomat might have learned from his previous bureaucratic triumphs that the rescue of Eastern Europe was nowhere as important as the scared and decided some time before the assembly was about to meet that it was impossible for it to do so. In fact, however... the meeting could have been started with more or less normal conditions at 12:20." Robertson to FONOFF, September
120 121 122
9, 1948, FO 371/70513/PRO. Secretary of State to Smith, September 8, 1948, FRUS 1948 11:1140-42. Smith to Secretary of State, September 9, 1948, Ibid.a 142-44. Kennan, Policy Questions Concerning a Possible German Settlement, August 12, 1948,
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reconstruction of Western Europe. And as for "cleavages being hardened" he as much as any person in government had contributed to the general impression that this had taken place in 1945. By September, the State Department had placed an epitaph on the Kennan recommendations. German reunification would be "highly dangerous" until western Europe was militarily and economically stronger.123 In pushing for a breach in Moscow, U.S. policy makers recognized the danger of armed conflict. The Soviets might feel more inclined to interfere with the air traffic over Berlin, setting off a chain of uncontrollable events. Even more likely was an incident inside the polarized city, which could spark an accidental military encounter. Such an episode had occurred on September 9, when after a massive pro-Western demonstration, a contingent of young people had jeered and trampled on the Sovietflagflyingnear the Brandenburg gate. After a police shooting of two of the participants, the crowd surged into the Soviet sector, assaulting some German and Russian officers. Though rapidly quelled, the disturbance highlighted the potential for a bloody debacle.124 With anxiety mounting, President Truman was briefed by top Defense Department officials on military strategy, bases, and bombs. In his diary he recorded "a terrible feeling.. . that we are very close to war."125 His sentiments were amplified by Budget Director James Webb, who disclosed to David Lilienthal that The situation in Berlin is bad.... The Russians seem prepared to kick us in the teeth on every issue, Their planes are in the corridor today, and anything could happen. "Anything - they might walk in tomorrow and shoot General Clay."126 Truman had always been "optimistic" about maintaining peace, but now "he is blue . . . mighty blue." Within the administration, these apprehensions led the Joint Chiefs of Staff to accelerate their planning for a military emergency.127 As arrangements were made to evacuate U.S. dependents and select German civilians from Berlin, the American commanders in Germany, Austria, and Trieste
123
124
125 126 127
Hickerson to Kennan, August 31, 1948, ftn 1, Ibid.: 1287. PPS-37 had an impressive list of rejecters, including Under-Secretary Lovett, Assistant Secretary Saltzman, and economic specialist Jacques Reinstein. See Reinstein to Thorp, September 6 1948, RG 59 PPS, Box 15, DSNA; Saltzman to Kennan, Policy Planning Paper 37, September 20, 1948, Ibid. Berlin to FONOFF, September 10, 1948, FO 371/70514/PRO; Telecon Washington-Berlin, September 10, 1948 &c Teleconference Dupuy-Gailey September 10, 1948, RG 335 SAOUS 000.1 Germany, MMNA. Ferrell, Off the Record, 148-49. Lilienthal, Journals, 11:406-8. Forrestal Diaries, September 7, 1948, 2474-75, Forrestal MSS, PU; Reardon, Secretary of Defense, 297.
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received their battle instructions. So far coordination between U.S. military forces and the Western Union was in its incipient stages, and American experts still anticipated that in a purely conventional conflict, the Red Army would easily overrun western Europe. As a consequence, attention remained focused on the availability of nuclear weapons. Lieutenant General Norstad was sent to England to look into the construction of nuclear support facilities, while the Chiefs examined other prospective bases for atomic aircraft. In a quiet sequel to their earlier imbroglio, the air force collaborated with the AEC on procedures for transferring nuclear custody should the bomb be needed. The most critical question for policy makers was whether they would have permission to use the weapon. Truman's July ruminations had revealed a sharp distinction in his mind between threatening an atomic attack and carrying one out. In mid-September, the National Security Council concluded that "in the event of hostilities, the National Military establishment must be ready to utilize promptly and effectively all appropriate means available, including atomic weapons." This increased Forrestal's desire for a presidential commitment to draw upon the atomic arsenal. The president was finally willing to say that while "he prayed that he would never have to make such a decision... if it became necessary, no one need have a misgiving but what he would do so."128 At this time, the American arsenal consisted of approximately fifty atomic bombs, none of which were completely assembled.129 Nevertheless their possession had provided U.S. policy makers with the confidence to confront the Soviets on a matter of vital interest without yielding even a marginal advantage. In challenging the enemy to the brink of war, the whole administration, including the president, was assimilating a vital lesson: that international relations were different from poker, where one could bluff an opponent with relative impunity. In the affairs of nations, where stakes were much higher, the ability to intimidate an adversary implied a willingness to implement threats. For the latter purpose, better planes, additional bases, and ultimately a larger stockpile would be needed. Meanwhile West European leaders were petrified. In an effort to salvage negotiations, Bevin and French premier Robert Schuman flatly refused to burden the Moscow conversations with some of the U.S. conditions. The State Department agreed to tone down its demands so long as there was "a firm and unmistakable commitment" by France and Britain to break off the negotiations if quick agreement proved elusive. Bevin thought it 'quite
128
129
Report by the National Security Council, United States Policy on Atomic Weapons NSC 30, September 30, 1948, PSF, Box 204, HST; Reardon, Secretary of Defense, 436; Millis, Forrestal Diaries, 486-87. David Rosenberg, "The Origins of Overkill: Nuclear Weapons and American Strategy," in Graebner, The National Security Its Theory and Practise, 131.
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impossible" to commit his own government "to something that could mean war" because the military governors had technical differences.130 When the Moscow talks resumed, it was clear that Molotov would not grant the Finance Commission as much control over the Berlin Bank of Emission as the Western powers thought desirable.131 The Russian was also unwilling to approve a deal that did not make some explicit reference to the London decisions. For weeks, Smith had pinned his hopes to Soviet acceptance of a currency bargain for Berlin and the promise of a Council of Foreign Ministers. Having expended immense personal capital to achieve this result, he felt personally betrayed.132 While the Soviets had strayed from the spirit, if not the letter, of the August 23 agreement, important changes had taken place in the interim. Not only were representatives from Berlin sitting as observers in the West German Parliamentary Council, but this body had made extraordinary progress in the writing of the Basic Law. It was now increasingly unlikely that the work would be interrupted to facilitate a Council of Foreign Ministers. In analyzing the Russian position, British ambassador Frank Roberts was agnostic. Perhaps they had expected greater gains in Berlin, or were
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Secretary of State for Clay and Murphy, September 11, 1948, RG 335 Draper/ Voorhees. Berlin Book II, MMNA; FONOFF to Washington, September 12, 1948, FO 371/70513/PRO. Ibid. In defense of their position, the Soviets pointed to a set of itemized functions listed in the directive. These functions were "to insure: a) no discrimination against holders of western B-marks, b) equal treatment as to currency and provision of fully accessible banking and credit facilities . . . c) satisfactory basis for trade between Berlin and third countries and the western zones of Germany, and d) the provision of sufficient currency for budgetary purposes and the occupation costs." They therefore claimed that Western insistence that the four-power body exercise a general "control" over the Bank of Emission had no basis in the text. Directive to the Four Military Governors in Berlin, August 30, 1848. Indeed at the time of signing, the U.S. State Department had wanted to tighten the language to eliminate this ambiguity, which arose from the arrangement of the paragraphs. After listing specific functions to be carried out by the four powers, the directive stipulated in a new paragraph that "the regulation of currency circulation in Berlin is to be undertaken by the German Bank of Emission of the Soviet zone." The concluding paragraph then specified that "a financial commission of the four military governors shall be set up to control the practical implementation of the financial arrangements indicated above, involved in the introduction and continued circulation of a single currency in Berlin." Controversy centered on the word "above." The Soviets contended that "above" referred to the four specific functions, whereas the Western powers argued that it referred as well to the paragraph on the Bank of Emission. Molotov did, however, indicate some areas where differences might be compromised, especially as regards Berlin's trade. Smith to Secretary of State, September 18, 1948, FRUS 1948 II: 1166-73. Yet Smith had recognized that Stalin was primarily concerned about the partition of Germany, and might not lift the blockade without some substantive assurances on unification. Smith to Secretary of State, August 31, 1948, FRUS 1948 11:1097-98.
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disappointed about the momentum toward partition. It could also be that "they had interpreted the American attitude throughout as showing reluctance to reach agreement and a desire to humiliate them."133 The failure of the Moscow discussions came as a reprieve to Clay, who thought it would expedite the work of the Parliamentary Council. Although for weeks Clay had besieged Washington with bulletins about the political emergency in Berlin, he wrote more truthfully to his friend Pollock that while "the Berlin situation is tense.... I am sure you know it not as tense as written about at home."134 Most gratifying to the military governor was the remarkable achievement of the airlift. Western planes were bringing in up to 5,500 tons a day, proving that "we can last indefinitely in Berlin and . . . do as much by air as we ever did by rail and highway."135 Increasingly confident that American and British aircraft could get Berlin through the winter, the military governor finally had an option that was more publicly attractive and less dangerous than the armed convoy. With the airlift it should be possible to avoid major incidents leading to war, while maintaining the progress toward a West Germany state. The confrontation in Berlin had become "a struggle of nerves until someone folds." The glowing reports on the airlift offered ballast to Secretary Marshall136 when he met with Bevin and Schuman at the end of September. The two had already agreed to refer the Berlin crisis to the U.N. Security Council, but Marshall wanted them to promise there would be no further direct negotiations with the Soviet Union until the blockade had been lifted. He urged them to realize the strength of their position. The airlift was an immense success, and was "buying time" while Western Europe rebuilt economically and militarily.137 Meanwhile the atomic bomb was discouraging the Soviets from armed interference. The latter may initially have believed that the "American public would never support the use of the bomb," but now they knew better. Obviously the Berlin situation was abnormal, but the West was "on the road to victory."
133 134 135 136
137
Roberts to FONOFF, September 6, 1948, FO 371/70512/PRO; Roberts to FONOFF, September 15 8c 19, 1948, FO 371/70515/PRO. Clay to Pollock, September 18, 1948, Pollock MSS, Box 17, UMI. Clay-Draper Teleconference, September 19, 1948, Clay Papers, IL867-75. On September 21, Marshall told Bevin that the Western powers could now put seven thousand tons daily into Berlin. If all the American aircraft were C-54S, as they would soon be, that figure would be eight thousand tons, also assuming two airfields. When there was a third the turn-around position would ease even further. Paris to FONOFF, September 21, 1948, FO 371/70516/PRO; Washington to FONOFF, September 25, 1948, FO 371/70517/PRO. Extract from Record of Meeting at the Quai d'Orsay, October 4, 1948, FO 371/ 705519/PRO. Memorandum of Conversation, Berlin Situation, October 6, 1948, RG 59 Bohlen MSS, DSNA.
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H A V I N G FINALLY obtained British and French consent to halt the fourpower talks,138 administration officials were appalled when President Truman unexpectedly proposed a peace overture to Stalin. Since the inception of the blockade, Truman had been preoccupied with his presidential campaign and had remained aloof from diplomatic efforts. Despite its gravity, the Berlin confrontation had figured very slightly in the race. Third party candidate Henry Wallace had sought to breach the silence with a stinging critique of the administration's German policy.139 But having already been stigmatized as a pawn of the Communists, his charges that the United States had violated Potsdam and was needlessly splitting the country made little impact. By contrast, the Republican aspirant Thomas Dewey blandly reaffirmed the imperatives of a bipartisan foreign policy and tried to prevent the topic from becoming an electoral issue. In early October the presidential contest was tightening, inspiring Truman to demonstrate his leadership in the crisis. Following the recommendation of two speech writers,140 he recruited Chief Justice Fred Vinson to convey to Stalin America's sincere desire for cooperation. This might induce the Russian to modify his stand on Berlin and other disputed questions. Once Vinson had concurred, the White House requested the radio networks to set aside thirty minutes for a special presidential address. It also instructed the State Department to make the arrangements with the Russians. Since Marshall was still in Paris, Under-Secretary Lovett was the first to hear of Truman's plan. Perceiving an emergency, Lovett ordered his driver to turn on the red lights and siren, and race the car to 1600 Pennsylvania Avenue. Ushered into the Oval Office, he quickly explained to Truman that the Vinson mission was a disastrous idea, which would ruin the efforts of the U.S. delegation to reach a settlement in the United Nations. Across the Atlantic, Marshall was alerted to the danger. As his aide was busily drafting a reply that began "Never in the history of diplomatic bungling... .",141 word came from Lovett that Truman was cancelling the Vinson visit. Reports of Truman's abortive scheme quickly leaked to the press, where
138
139 140
141
Behind the scenes, many upper-level officials in the French and British governments remained eager to restart the talks. Franks to FONOFF, October 6, 1948, FO 371/ 70518/PRO; Robertson to Kirkpatrick, October 6, 1948, Ibid. "Wallace Accepts, Calling on Allies to Give Up Berlin," New York Times, July 25, 1948; "Wallace Demands Berlin Discussions," New York Times, October 5, 1948. According to biographer Robert Donovan, Truman was concerned that Wallace was making inroads into his support in New York and California with charges of administration "war-mongering." By sending Vinson to Moscow, he sought to strengthen his image as a peace maker. Donovan, Conflict and Crisis, 422-25. See also discussion in Clifford, Counsel to the President, 231-24 and McCullough, Truman, 685-87. According to Forrest Pogue, Marshall instructed his aide that such language to the president was inappropriate. Pogue, George C. Marshall, 407-8.
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it became front-page news across the country. With his national security officials all unified in their disapproval, the president was accused of injecting partisan politics into a foreign policy crisis and thus weakening America's international position. By striking an unwelcome note of appeasement, he had apparently jeopardized the processes of the United Nations. As one anonymous bureaucrat complained: "J u s t a s w e 8 o t things rolling . .. some politician had to give the boss this brilliant idea."142 While partisan considerations had provided a stimulus, Truman's idea was consistent with his understanding of the Berlin crisis.143 For months he had worried that an episode in Berlin could lead to a wider conflagration. This reflected the alarmist idiom, which military officials had used to mobilize his support for their programs. As the constant recipient of Forrestal's most ominous ruminations, Truman had become keenly attuned to the possibility of a war. Moreover, like most ordinary citizens, the president assumed his job was to get the blockade lifted without impairing vital interests. On the off chance that the Soviets were responding to misplaced anxieties about Western intentions, the Vinson mission would be a constructive way of dispelling mistrust. The subtle aspects of the Berlin crisis had always eluded him. Truman had never appreciated the intimate connection between events in the city and the Western decision to partition the country. He was therefore oblivious to the perils of a foreign ministers' conference. Nor was he familiar with the immense efforts of his subordinates to extricate the Western powers from talks with the Russians. During the ensuing weeks, Truman defended his actions. In Miami he reminded an American Legionnaires Convention of "the plain fact... that while the President of the United States can delegate authority, he has the responsibility, under the Constitution, for the conduct of our foreign affairs."144 He would never be a party to a Munich-like compromise, but "history shows that rival powers can exist peacefully in the world." Political opponents offered their own postmortems. Having assumed a statesmanlike pose throughout the episode, Thomas Dewey privately told reporters: "If Harry Truman would just keep his hands off things for another few weeks! Particularly, if he will keep his hand off foreign policy, about which he knows considerably less than nothing."145 Henry Wallace
"Truman Blocked in Move to Send Vinson to Stalin," New York Times, October 9, 1948. In defense of the president, columnist James Reston maintained that the Vinson mission had originated "as a nonpolitical idea." Indeed Truman had been eager to send a personal emissary to Stalin since the very beginning of the crisis, and had initially hoped to dispatch Eisenhower. "Foreign Policy Issues Enter the Campaign," New York Times, October 17, 1948. "Truman Defends Vinson Trip Idea; Bars Appeasement," and "Text of President's Address to American Legion," New York Times, October 19, 1948. Cited in Donovan, Conflict and Crisis, 425.
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thought differently. The president, he charged, was "a prisoner" of the more influential members of the government, "the big brass and the big gold."146
III. "THE ROAD TO VICTORY"

Meanwhile, economic and political conditions inside western Germany were beginning to match American expectations. Despite differences over detail, U.S. policy makers had long been agreed on the main ingredients of recovery: a solid currency, the curbing of German labor, the freeing of managerial prerogative, the restoration of free enterprise in the Ruhr, and the creation of an independent political structure for West Germany. Each of these had been prefigured by the London Accords but under the shadow of the blockade advances were being made on every front.
T H E MOST SENSATIONAL change had occurred in June, when the Western powers instituted their own currency reform.147 Until then the great excess of Reichsmarks printed by the Nazis had been a prime obstacle to productivity and trade in the western zones. Military Government had attempted to offset the surplus of purchasing power by a policy of strict price controls. However, the result had been a suppressed inflation in which sellers withheld their goods from official markets and purchasers acquired even essential items for much higher sums on the black market. Under the new currency law, the West Germans were required to turn in their Reichsmarks for the new Deutschemark at a rate of ten to one,148 restoring real worth to the money supply. In introducing the Deutschemark, the Americans had been uncertain about how quickly to dismantle the price controls.149 OMGUS officials were convinced that the use of governmental regulations as a substitute for the marketplace, though temporarily necessary, was choking German economic life. Yet by decimating the cash saving of many German citizens, the currency reform created a short-term imperative for their continuation. While the Americans hesitated, the Germans on the Bizonal Economic Council seized the initiative. Under the leadership of council chief Ludwig Erhard, the CDU majority struck down the price and ration controls on most goods.150 Over the objections of many Germans, criticism by the British, and even reservations on his own staff, Clay had rallied to Erhard's defense. Whatever hardships were imposed on the poor, in the wake of the 146 147
148 149 150
" T r u m a n Prisoner, Wallace Asserts," New York Times, October 15, 1948. See discussion in Clay, Decision in Germany, 208-14; U.S. Department of State, Policy Statement on Germany, August 26, 1948, RG 84 US POLAD 800, FRC. However, the West German inhabitants were permitted to exchange their first sixty RM at a ratio of 1:1. Donald Humphry, Removal of Price Controls, August 5, 1948, Tennenbaum MSS, Box 4, HST. Adcock to Litchfield, June 23, 1948, RG 84 US POLAD 850, FRC.
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currency reform and decontrol of prices, hoarded items seemed to topple out of closets. Suddenly store windows were filled and people had things to buy. From July to December 1948 productivity soared, giving U.S. Military Government its long-awaited breakthrough. In an exuberant letter to Jimmy Byrnes, Clay wrote that the results of the reform were "unbelievable" - in a single month overall industrial output had increased by ten percent, the steel rate had jumped from five to seven million tons a year, and "building activities are . . . everywhere." Reflecting on the surge in coal production, U.S. political advisor Robert Murphy thought the changes "phenomenal." 151 To sustain these gains over the long haul would require more than a solid currency. In the judgment of OMGUS, it must also entail better cooperation from German labor. Fortunately, the situation in the trade union field had suddenly improved. Through the spring of 1948, the trade unionists from the British zone had resisted American pressures to definitively split the national labor movement.152 Even after the Berlin FDGB had ruptured, they kept afloat plans for an interzonal constitution, while rejecting U.S. demands for bizonal merger. Their reasons were hardly mysterious. As explained by the U.S. Manpower Division, British zone Laborites doubted that a bizonal trade union would be able "to pursue their policies as determined and effectively as they have been able to do in their own zone." In view of General Clay's well known antipathy to socialization and codetermination, a bizonal federation would put him "in a position to oppose actively their efforts in this direction." 153 By summer these sentiments had become moot. With the blockade on in Berlin and plans underway for a West German state, the British zone unionists recognized that "it is not very practical to resist a development which is going on in all other spheres of life."154 Yielding to the urging of U.S. Military Government and the AFL, at their August conference in Recklinghausen, they decided to begin merging their organizations with those in the U.S. zone, and to cooperate with U.S. zone representatives in halting the national deliberations.155 With the national labor project dead, western organization just beginning,
151 152
153 154 155
Clay to Byrnes, September 18, 1948, Byrnes MSS, Box 683, Clemson.; Murphy to Henry Parkman, September 10,1948, RG 84 US POLAD Correspondence File, FRC. Manpower Division/OMGUS, Daily excerpts from German Publications, Text of Communique issued by Eighth Interzonal Conference, May 17, 1948, RG 260 Manpower Division, Directors Records Pertaining to Trade Unions and Labor, FRC; Murphy to Secretary of State, Re: Eighth Interzonal Trade Union Conference at Heidelberg, June 29, 1948, RG 84 US POLAD 850.4, FRC. Wilfred Stark to Deputy Chief of Labor Relations Branch, Re: Recent conversations with Trade Union Leaders, June 16, 1948, RG 59 862.5043, DSNA. Gottfurcht, Report on a Visit to Germany. Murphy to Secretary of State, Recent developments in Four Zonal Trade Union Conference, August 13, 1948, RG 84 US POLAD 850.4, FRC; Stark to Deputy Chief of Labor Relations, August 30, 1948, Ibid.
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and individual unions ripped apart by suppression of the Communists,156 the Americans felt free to act. Not surprisingly, this period saw the culmination of Clay's efforts to block codetermination in industry. That campaign had been going on since 1946, when the U.S. government authored Allied Control Council Law 22, subordinating works councils to the trade unions and omitting economic issues from the list of works council tasks. Subsequently, works councils had sought their way around the restriction by negotiating individual plant contracts under the auspices of the trade unions.157 In August 1947 U.S. Military Government had closed this route by stipulating that all collective bargaining must be conducted directly by the unions.158 Since then, German labor had redirected its efforts into the legislative field. In the U.S. zone all three provincial governments and the free city of Bremen had enacted constitutional provisions permitting economic codetermination. In approving these charters, General Clay had put the Germans on warning that he would closely scrutinize enabling legislation to insure that it conformed to Law 22 and to "the general pattern of industrial management for Germany as a whole."159 By the spring of 1948, the Lander governments of Hesse, Wuerttemberg-Baden, and Bremen were completing comprehensive codetermination laws. During these deliberations Americans from the Manpower Division tried to weaken the bills of the left-wing parties. They were assisted in this endeavor by sympathetic representatives from the CDU, who successfully curtailed the managerial prerogatives of the works councils.160 Still the demand for these rights was not completely thwarted. The Hessian law, passed in June 1948, permitted codetermination in cases where the fate of the worker was in special jeopardy161 and also allowed
156
157 158 159
160
161
Murphy to Secretary of State, December 28, 1948, RG 84 US POLAD 850.4, FRC; W. P. Doerr to Secretary of State, December 31, 1948, RG 59 862.5043, DSNA; Hillenbrand to Secretary of State, June 27, 1948, Ibid. Murphy to Secretary of State, August 19, 1947, RG 84 US POLAD 850.4, FRC. Office of U.S. Military Government, Manpower Division, Advance Amendment to Title 15, Part 5, Military Government Regulations, RG 59 862.5043, DSNA. To defend his position, Clay had invoked the rhetoric of self-determination: "Military Government believes firmly that the German people must have the right to freely determine their future economic structure. However, it does not believe that such decision can be made freely in a democratic manner until the people as a whole, have an opportunity to express their opinion." Cited in Stauffer to Holland, February 5, 1948, RG 59 862.5043, DSNA. Werts, Labor Relations Project 2, November 3, 1947, RG 260, Manpower Division, Directors Records Pertaining to Unions and Labor, Folder: Labor Relations, FRC; Werts to Legislative Review Board, January 9, 1948, Ibid.; Meskiman to Civil Administration Division, Hesse Law on Works Councils, June 10, 1948, Ibid.; Riddleberger to Secretary of State, February 13, 1948, RG 59 862.5043, DSNA. This included such matters as changes in the utilization of plant and production facilities, alterations in purchasing, production, or sales methods, modifications in the size of business or partial and complete shut-down of factories. Murphy to Saltzman and Hickerson, June 19, 1948, RG 59 862.00, DSNA.
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two works council representatives to play an advisory role on the company's board of directors. Even these limited rights were objectionable to the Economics Division of OMGUS. As explained by Deputy Director Philip Hawkins, "If we are to continue to operate under a capitalist system in Germany it will be impossible to efficiently or effectively do so if the incentives for management... are removed."161 To avoid antagonizing the Hessian minister-president Christian Stock (SPD), who was a key player on the constitutional question, Clay delayed action until mid-August.163 He then suspended the codecision clauses of the works council bill, maintaining that until a Basic Law was in place he did not want to prejudge the distribution of powers by allowing the separate states to resolve "their separate economic patterns." During September, he used this peculiar conception of self-determination to justify a veto of codecision in Baden-Wuerttemberg and Bremen.164 As always, Clay's greatest concern about industrial organization was focused on the Ruhr, where his authority was still indirect. To keep these workers out of management he devised an agreement with the British on the bipartite board, prohibiting Lander action anywhere in the bizone.165 For consolation, workers were promised that once a constitutional West German government had been established, "the U.S. and U.K. Military Governors do not propose to reserve to themselves powers in the field of employer-employee relationships." Yet as on socialization, the Americans anticipated that by delaying legislation, they would curb the momentum of the campaign.166 In a related move, U.S. Military Government also vetoed Ordinance 55, a measure passed by the German Economic Council that would have given workers an equal voice in the newly created Industry groups.167 Though willing to have employer groups determining the allocation of scarce raw
l6z
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Hawkins to Litchfield, Comments on Works Council Law for Land Hesse of May
31, 1948, RG 260 Economics Division, FRC. In an initial cable to OMGUS, State cautioned that "in view (of) strong support by CDU and SPD after prolonged public debate, political considerations would indicate that a suspension (of) law would weaken democratic and trade union force and give communist propaganda opportunity throughout Germany." Cited in Murphy to Clay, June 19, 1948, RG 84 US POLAD Correspondence File, Department "S", FRC; U.S. Political Advisor to Clay, Proposed Letter on Hesse Works Council Law, June 19, 1948, Ibid.; Murphy to Saltzman and Hickerson June 19, 1948, Ibid.; Pollock Diary, June 17, 1948. Clay to Christian Stock, August 5, 1948; Murphy to Secretary of State, Wuerttemberg-Baden and Bremen Works Council Laws, October 10, 1948, RG 59 862.5043, DSNA. Murphy to Secretary of State, August 16, 1948, RG 84 US POLAD 850.4, FRC. In fact, the pressure for codetermination survived the formation of a West German government and led to the passage of the Works' Constitution Act of 1952. See discussion in Berghahn, Americanization of West German Industry, 203-30. C. Price to the Ambassador, Proposed Establishment of Industry Groups, September 27, 1948, RG 84 US POLAD 850.4, FRC; W. F. Doerr to Riddleberger September 1, 1948, Ibid.; Murphy to Secretary of State, October 23, 1948, Ibid.
164
165 166
167
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materials, OMGUS did not want employees to be part of the process. Ignoring British and German objections, the Americans transferred this function to the Joint Export-Import Agency, which was not subject to Economic Council legislation. As of November, there was rising discontent among the workers in the bizone. Not only were their plans for codecision utterly foiled, but the British had finally fulfilled the commitment to the Americans by vetoing the socialization bill passed by the North Rhine-Westphalian Landtag. All of this on top of a currency reform, which had devastated trade union treasuries and wiped out the life savings of most union members, plus the painful effects of the Erhard economic program. Even BICOs October decision to lift wage controls had not arrested the widening gap between prices and paychecks. Despite these circumstances, the emergency in Berlin combined with the organizational weakness of west German labor to constrain resistance. After much internal argument and foot dragging, the Bizonal Trade Union Secretariat called for a one-day strike to protest the mounting hardships.168 But they also prohibited strikers from engaging in picketing, demonstrations, or meetings of any kind. On November 12, approximately nine million workers from the U.S. and British zones walked off their jobs, and then forfeited their momentum by returning the next day. Confronted by this lame initiative, General Clay declined a negotiation of grievances.169 By this time Military Government's hostility to German workers had become a minor scandal in U.S. labor circles.170 Anticommunist operatives, who for years had helped the army with its trade union projects, were
168
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170
In their ten-point program, they demanded a proclamation of "a state of emergency" under which certain price controls would be restored and black marketeers more effectively prosecuted. They also reaffirmed their desire for "nationalization of basic industries" and "democratization of the economy." Socialization and codecision laws, which had already been passed by the parliaments, should be enacted. The Ten-Point Program of the Bizonal Trade Union Council, November 6,1948, CIO MSS, Labor History Archives, Wayne State University (WSU); Murphy to Secretary of State, November 17, 1948, RG 862.5043, DSNA. Murphy to Secretary of State, November 10 and 12, 1948, RG 59 862.5043, DSNA; Murphy to Secretary of State, November 17, 1948, Ibid.; James Wilkinson to Secretary of State, General Strike of November 12, 1948, Ibid.; P. Kenny to E. Barker, Re: 24 Hour strike, November 17, 1948, RG 260 Manpower Divison, Director's Records Pertaining to Trade Unions and Labor, FRC. Trade union advisory committees, which reported to the State and Labor departments, faulted the army for neglecting labor's interests. Based on these reports, the State Department's labor division asked for a high level "ad hoc commission," which would study the German labor situation. In proposing this commission, ILH noted that "the economic and political situation and U.S. policies (chiefly made in OMGUS) are eroding our support among the workers of Western Germany...." Mr. Swayze to Mr. Martin, December 24, 1948, RG 59 862.5043, DSNA; Secretary of Labor to Secretary of Defense, September 16, 1948, RG 174 TUAC File, Box 191, CIO MSS, WSU.
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appalled by the results. Among the most disillusioned was Henry Rutz, the director of the AFL's German office. In an angry speech to the national convention, he cited chapter-and-verse of how working-class opinion and been snubbed. He only hoped that the officials "responsible for these antilabor policies would take note of the November second election results and become awakened to the fact that the majority of Americans do not approve of such Taft-Hartley tactics."171 If the "majority of Americans" were thinking about Germany at all, they were undoubtedly attending to the Berlin blockade, the one subject that was regularly on the front pages. Military Government activities in such recondite areas as codecision, industry groups, socialization, and price controls were hardly popular priorities. At a time when Clay was being lionized in the press for his leadership against the Soviets, his curbs on German labor went largely unnoticed by the American public. Of marginally greater interest was U.S. policy in the Ruhr, another field where OMGUS was finally getting its way. Since the inception of the Marshall Plan, the Americans had been trying to expand their influence over its coal and steel industries. At the Washington Coal Conference in 1947, they had gained an equal voice in the oversight of the coal industry.172 However, at the operational level the British retained their position of leadership while exercising exclusive power in steel. Even after their postponement of socialization, U.S. Military Government remained contemptuous of British management. A particular irritant was the vigorous way it had decartelized, separating the coal and steel enterprises, and carving out twenty-eight individual steel companies from the larger combines under Operation Severance.173 Also distressing was British encouragement of trade union participation in management, both inside the factories and within the German supervisory boards. In conjunction with the continued uncertainty over ownership, the Americans believed these decisions were hampering production. As a remedy, U.S. Military Government had been nudging the British
Cited in Werts to Political Advisor, December 23, 1948, RG 260 Manpower Division, Records Pertaining to Unions and Labor, Folder: AFL, FRC; Woll to Clay, February 14, 1949, Enclosure to Woll to Acheson, February 23, 1949, RG 59 862.5043, DSNA. C. H. Gifford, Coal and Steel in Germany, Trusteeship, Ownership and Management, June 29, 1948, FO 371/71216/PRO. For discussion of Operation Severance, see Isabel Warner in "Allied Negotiations on the Deconcentration of the west German Steel Industry," in Turner, Reconstruction in Post-war Germany, 157-61. On U.S. attitude, Hawkins to Mr. Wilkinson, British Paper Entitled, 'Proposal for the Appointment of German Trustees for the Coal, Iron, and Steel Industries,'" June 29, 1948, RG 84 US POLAD 850. 3, FRC; Ferguson Commission Hearings, Testimony of Philip Hawkins, Brigadier General Oxbarrow &c Lawrence Wilkinson, December 1948, RG 200 Avery MSS, MMNA.
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toward a new bipartite law for the reorganization of the coal and steel industries.174 To their omnipresent financial leverage was added the crisis atmosphere created by the blockade. By November, they had obtained Robertson's approval for Law 75, transferring the British-held assets to German trustees. These individuals would be nominated by the two Military Governments in consultation with "appropriate German bodies," and would temporarily exercise the responsibilities of ownership, including the task of decartelization. Bizonal supervision would be applied through the already existing Coal Control and a newly formed U.S.-U.K. Steel Control. In key respects, Law 75 was a defeat for British policy. Though described as a measure "to decentralize the German economy for the purpose of eliminating excessive concentrations of economic power,"175 its actual thrust was to mitigate the stricter features of Operation Severance. Through careful wording, the Americans had provided a legal basis for vertical integration of coal and steel, and opened the door to the recombination of already segregated companies.176 Even the denazification clause was a subtle rejection of British wishes. Out of deference to the German trade unions, they had supported a statement barring the former owners from return to the industries. The Americans had preferred to limit the ban to people "convicted by an appropriate Tribunal on relevant charges or classified by duly authorized denazification procedure as Category I or II offenders."177 Though perhaps fair in theory, the drastic dilution of denazification enforcement made this a loophole through which many Ruhr industrialists could resume their leadership.178
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Warner, "Allied Negotiations on the Deconcentration of West German Steel/' 160; Gifford, Coal and Steel in Germany, Trusteeship, Ownership and Management, June 29, 1948, FO 371/71Z16/PRO. United Kingdom and United States Military Government Law 75: Reorganization of German Coal and Iron and Steel Industries, November 10, 1948, in Carlyle, Documents on International Affairs, 637-45. Price to Murphy, September 22, 1948, RG 84 US POLAD Correspondence, FRC. Interdeparmental Report on Law 75, August 31, 1949, RG 335 Ferguson Commission, MMNA; Hawkins to Brigadier Catton Oxbarrow, December 9, 1948, RG 260 Economics Division, Folder: Robertson-Clay, Box 2403, FRC. J. W. Nichols, Trustee Plan for Coal and Iron and Steel Industries, October 1, 1948, FO 371/71216/PRO. Berlin to FONOFF, October 1, 1948. Ibid. In its final version Law 75 provided that Military Government "will not permit the return to positions of ownership and control of those persons who have been found, or may be found, to have furthered the aggressive designs of the Nationalist party" (italics added). The addition of the words "or may be found" was a nod to the British, who wished to insure that the ban could apply to individuals who had not yet been found guilty by tribunals. FONOFF to Berlin, October 7, 1948, FO 371/71216/PRO. Though General Robertson accepted the wording, he remained fearful of its effects. How seriously Robertson took this prospect is suggested by a memorandum of Bevin: "I enquired about the American's desire to
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The outstanding concession afforded the British was a sentence in the preamble, authorizing "a representative, freely elected German government" to decide the eventual ownership of the coal, iron, and steel industries. This was a holdover from the Coal Conference, when the Americans had compelled them to renounce Lander socialization. Forced to veto the public ownership bill of the North Rhine-Westphalian Landtag, the British desperately wanted something tangible to substitute. 179 Ironically, it was this "ownership" clause that generated the greatest publicity. In approving the London Accords during June, the French National Assembly had announced its intention to reopen the subject of international ownership of the Ruhr. With talks imminent on an International Ruhr Authority, the French maintained that Law 75 - the "gravest decision of the twentieth Century," according to Charles DeGaulle - was improperly foreclosing that possibility. This put General Clay in the ludicrous position of defending the preamble in order to preserve British support for the legislation.180 Though abortive, French protests on the preamble eclipsed the other questionable aspects of Law 75: the probable reversal of Operation Severance, 181 the equivocal ban on former owners, the omission of labor's participation in the reorganization of the two industries. 182 However, the bill did contribute to the diffuse impression across Western Europe that the Americans were going dangerously far in restoring the old order. Such sentiments were fed by new machinations on the reparations question. During the London conference, Lewis Douglas had obtained British and French assent for a review of the factories scheduled for removal under the revised Level of Industry plan. This had been predicated on his reestablish the former owners. General Robertson said this was a real and genuine fear amongst the Germans, and the tendency of the American attitude was to accept it." Secretary of State, conversation with General Robertson, August 27,
179
180
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1948, FO 371/70502/PRO. Strang, Trustees for Coal and Steel Industries in Germany, June 26, 1948, FO 371/ 71216/PRO; Altaffer, Landtag of North Rhine-Westphalia Votes for Socialization of the Mining Industry, August 11, 1948, RG 84 863.6 Coal, FRC; Bevin, Cabinet Minute, November 1948, FO 371/71218/PRO. Cited by Milward, Reconstruction of Western Europe, 153; Clay to Department of the Army, November 13,1948, RG 165 CSCAD 014 Germany Sec. 8, MMNA; Saltzman to Murphy, November 13, 1948, RG 84 US POLAD Correspondence, FRC. This aspect of the law was discussed in the business press, but received less attention in the mainstream media. In the latter, it was the decartelization features that were emphasized. "Bizonal Coal and Steel Industries to Revert to German Ownership Soon: New companies to be Formed," Wall Street Journal, November 11, 1948; "Battle Over the Ruhr," Business Week, November 27, 1948. Thus trade unionists were initially unclear, from the text of the law, whether the reorganization would reduce the influence they had already achieved under the British. CIO, Office of Foreign Labor Conditions, Current Labor Problems in Western Germany, December 1948.
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assurances that relatively few installations would be affected and that most plants would be released within a few weeks.183 Now six months and one technical commission later, the United States was preparing to send a second investigatory commission to examine 316 plants for possible retention in Germany. When Bevin refused to delay British dismantling for yet another three months, he was advised by the triumvirate of Douglas, Averell Harriman, and ECA administrator Paul Hoffman that he could be jeopardizing the entire ECA appropriation.184 To allay unhappiness in the Parliament, Bevin was urged to adopt the "American type" of dismantling, which involved the unbolting of machines and the disconnecting of power, but not the removal of equipment or the tearing down of structures. OMGUS had followed this procedure "in practically all plants in the U.S. zone," leaving them in a condition where it would be "easily possible to put them back into operation within a short period of time."185 The foreign minister was startled, having naively assumed that U.S. Military Government had really dismantled, but finally yielded to American pressure. Among West Europeans, there was keen disappointment over the new delays. The Inter-Allied Reparations Agency (IARA) voted overwhelmingly to denounce the interference with reparations. Jacques Rueff, the organization's president, emphasized that the United States was bound to the Paris agreement of January 1946 to which it was signatory.186 The allocations had been determined through the combined work of nineteen governments, and it was "difficult to conceive that this decision could be set aside by a unilateral renunciation" of one. As had been manifest in their transactions with the Soviets, the Americans had never felt obligated by reparations agreements. Furthermore the new Humphry Committee, which was to examine the disputed plants, hoped to raise the 10.7 million ton figure for steel production. The latter had been the centerpiece of the 1947 bizonal Level of Industry, and even then was too high for the French and just barely acceptable to the British. To avoid an uproar the American proponents were stressing the retention of particular installations instead of openly challenging the limit. Despite their discretion, by December 1948 it was apparent to West
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184
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186
Indeed, the latter pledge had been crucial to Bidault in eliciting the support of the French assembly for the London accords. Bevin letter contained in Douglas to Secretary of State, June 16, 1948, FRUS 1948 11:766-67. Lovett to Marshall, September 24, 1948, Ibid.:8io-n; Holmes to Secretary of State, October 8, 1948, RG 335 DraperAVoorhees OUS 387.6, MMNA; Hoffman to Lovett, October 11, 1948, FRUS 1948 II:816-818. Memorandum of conversation by James P. Hendrick, October 16, 1948, Ibid.: 8 2223; Douglas to the Secretary of State, October 13, 1948, Ibid.:823~24; Bevin to Douglas, October 16, 1948, Ibid.:827~29. Kirk to Secretary of State, October 13, 1948, RG 335 OUS 387.6, MMNA; Rueff to Secretary of State, October 14, 1948, FRUS 1948 11:825-26.
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European governments that the Americans did not regard the steel level as permanent. In conjunction with Law 75, the hold up of allocations, and new OMGUS challenges to the prohibitions on war industries,187 the United States seemed distressingly oblivious to the peril of German militarism. As a consequence, France commanded more than usual support from the United Kingdom and Benelux for its plan to broaden the responsibilities of the International Ruhr Authority.188 As prescribed in the London Accords, six-power deliberations on the operations of the IAR had commenced in late November.189 To minimize French obstruction, the Americans promised they could immediately become members of the Bizonal Coal and Steel Control. This did not deter the Schuman government from introducing an ambitious proposal for the post-occupation period, under which the IAR would take over decartelization and denazification functions, and guarantee that managerial actions be consistent with the aims of nonaggression and the European recovery program. For these purposes, the Ruhr authority must be permitted to approve programs of production, equipment, and investment in the coal and steel industries.190 Ambassador Douglas was again confronted with one of the core dilemmas of U.S.-German policy: If the Ruhr settlement was too punitive the West Germans would not cooperate, but if it was too lenient the French government might be destabilized, opening the door to Charles DeGaulle and a chain of ominous consequences. Douglas' solution was to press the merits of European integration, urging Schuman to think about the eventual expansion of the IAR to encompass other geographical areas and the oversight of coal and steel distribution across Western Europe.191 Given the French preoccupation with the German security threat, this suggestion resonated poorly.192 By early December the French negotiating position was so unyielding
187
188 189 190
191 192
When the Level of Industry plan was revised in 1947, the Americans and British had agreed to set aside the question of the prohibited industries and review them at a later time. The military governors' negotiations in late 1948 were the fulfillment of that earlier pledge. Clay to Draper, September 5, 1948, RG 335 SAOUS 004 Germany, MMNA; Lt. Col Carl Smith, Memorandum for Major Miller and Lt. Col. Jorgensen, October 11, 1948, Ibid.; Minutes of Meeting Held at Berlin OMGUS/ ECA, October 24, 1948, RG 84 US POLAD Dept "S" F1948, Box 451, FRC. Harvey to FONOFF, November 17, 1948, FO 371/71136/PRO. See William Diebold, "The Choice in the Ruhr," 117-28; Hogan, The Marshall Plan, 177-79; Milward, Reconstruction in Western Europe, 153-64. Meeting of ministers at Paris, November 19, 1948, RG ^9 Bohlen, MSS Box 4, DSNA; Douglas to the Secretary of State, November 28, 1948, FRUS 1948 II: 540-34. Lovett to Douglas, November 18, 1948, Ibid.:509-14; Douglas to the Secretary of State, December 5, 1948. Ibid.:547~5O. Douglas to the Secretary of State, November 30, 1948, Ibid.:537-38; Lovett to Embassy in the U.K., December 3, 1948, 543-44.
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that Douglas began to fear that the conference would fail. With the State Department pushing for a deal, Clay came up with a subtle idea.193 During the period of occupation, all the security functions for the Ruhr would be exercised by the control groups and the yet to be created Military Security Board. Before termination, this board would evaluate the accumulated experience and decide which functions ought to be transferred to the IAR. The obvious advantage of the military governor's proposal was that it deferred the most controversial items, while granting surface legitimacy to French concerns. Perceiving a receptivity on Schuman's part,194 Douglas scrounged for related concessions, which could sweeten the bargain. He asked Washington whether there was anything he could offer on reparations, the Level of Industry, the prohibited industries, perhaps even from the old Byrnes treaty to reduce West European anxiety. His superiors granted meager fare: a commitment to keep the 10.7 million ton figure for steel production until a peace treaty was signed, a promise of quick negotiations on prohibited and limited industries, an assertion that some disarmament tasks mentioned in the Byrnes draft might be given to the Military Security Board.195 Despite the French complaints, these disparate elements were packaged into two documents - a communique and draft agreement - that paired international security with general economic recovery as the key objectives of an International Ruhr Authority. The communique stressed the "particular attention" given to "the supervision of the management and direction of the Ruhr coal, coke, and steel industries." Although these prerogatives were presently being exercised by the control groups, at the appropriate time, "such of these powers" as were deemed necessary to "the security and wellbeing of Europe" would be transferred to the IAR or some other international body.196 The Ruhr communique had been worded with an eye to French public
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Clay to Draper, December 3 &c 5, 1948, Clay Papers, 11:938-39; 941-42; Oppenheimer to Douglas, December 8, 1948, FRUS 1948 II: 5 51-5 2. According to Alan Milward, Schuman's personal outlook was linked to a broader evolution in the French foreign ministry. After the London conference, these officials "began to seek . . . instead of one-sided exercise of control over the Ruhr in a perpetually weak and fragmented Germany... some form of Franco-German association that would still guarantee access to the Ruhr's resources and diminish the threat to national security." Milward, Reconstruction in Western Europe, 159. Douglas to the Secretary of State, December 11, 1948, FRUS 1948 IL559-63; Lovett to Douglas, December 13, 1948, Ibid.:563-564; SAOUS to Clay, December 18, 1948, RG 335 SAOUS 004 Germany, MMNA. The signatories also stipulated that in the postoccupation period, "powers . . . should also be adequate to prevent the revival of excessive economic concentration in the coal, coke or steel industries . . . and to prevent persons who furthered the aggressive designs of the Nazis from acquiring ownership interests or positions of direction and management." Communique of the London Conference of the Ruhr, December 23, 1948, FRUS 1948 11:577-81.
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opinion and was, in the American press, heralded as a victory for France. However, the actual terms of the formal agreement were less generous. Those articles that pertained to the disputed functions left considerable doubt that they would ever be transferred to the international authority.197 In reality, the French had gained little that was not already in the London Accords.198 The main business of the international body was still to oversee the allocation of coal, steel, and iron ore between domestic and international use and to insure that German trade practices were of a nondiscriminatory nature. For these purposes an international board consisting of the six signatories and a representative for Germany would make decisions with the United States, the United Kingdom, France, and Germany199 each casting three votes. For the occupation period U.S. dominance was insured by a clause specifying that the actions of the authority must be "consistent... with any agreement between two or more of the Occupying Powers relating to financial assistance to Germany."200 The Ruhr agreement removed the last major impediment to the creation of a West German state. By contrast to the intense arguments over economic subjects, the differences on political structure were surprisingly mild. The west German political leaders had crossed their Rubicon in July, when the minister-presidents promised to convene a Parliamentary Council. Once
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According to article 18 of the agreement, at the end of the control period "such of the existing powers of the occupation authorities as are necessary to ensure (italics added): i) that there shall not be allowed to develop, or be restored any pattern of ownership... which would constitute excessive concentration of economic power, ii) that persons who have been, or may be found to have furthered the aggressive designs of the National Socialist party do not hold positions of ownership or control in the Ruhr coal, coke or steel industries...." would be "transferred to the Authority or to the Military Security board or its successor or to some other body created by international agreement and charged with achieving these objectives " Article 19 was even more porous, stipulating that at the end of the control period "only such of the existing powers of the occupation authorities over the direction and management of the Ruhr... industries as are necessary to ensure (italics added) that i) the general policies and general programs relating to production, development and investment in those industries are in conformity with the purposes stated in the preamble to the present agreement" would be transferred to the IAR, or the Military Security Board or some other body created by international agreement. Draft Agreement for the Establishment of an International Authority for the Ruhr, December 28, 1948, Ibid.:58i-87. Carey, "Germany Today: Security Versus Recovery," 243-44. For the foreseeable future, Germany's three votes would be cast by the occupying powers until they determined "that the German government by accession or by other means, had assumed the responsibilities placed on Germany by the above agreement." Draft Agreement for the Establishment of an International Authority for the Ruhr, December 28, 1948. This effectively incorporated the Bizonal Fusion Agreement of 1 9 4 8 , with its grant of economic predominance to the United States, into the Ruhr arrangements.
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that difficult decision had been made, progress toward a new government was rapid.ZO1 The council representatives had been chosen by the provincial Landtage, giving overwhelming power to the two leading parties: the CDU/CSU and the SPD. Despite their rivalry, in this endeavor they showed a notable capacity for cooperation.202 In the weeks prior to the council, a committee of constitutional experts named by the minister-presidents had gathered at Herrenchiemesee to produce "guiding principles" for the Basic Law. These men exceeded expectations by writing a complete constitution, accompanied by an analysis of the total document and commentary on individual articles.203 As a consequence, when the Parliamentary Council convened on September 1, the representatives were already in possession of a working draft.204 This facilitated a large measure of quick agreement among the delegates, amazing all Allied observers and almost certainly the Soviets. Some items, such as the distribution of financial powers between the federal and state levels, and the functions and composition of a second legislative house, proved controversial. However, in handling these disputes the disposition of party leaders - notably Konrad Adenauer for the CDU/CSU and Carlo Schmid for the SPD - was to minimize philosophical debates.205 By mid-December, the parliamentary council had completed two readings of the Basic Law, and had formed a Committee of Five to iron out the remaining differences. With a third reading scheduled for early January, there was a strong prospect that the West German constitution could be finished and submitted to the military governors within a few weeks. The Americans had their dissatisfactions. At times, the ideological narrowing of the German discussion (which they had themselves promoted) yielded an impression of pettiness and nitpicking.206 They were also irritated by the assertiveness of the Bonn politicians, who had begun to recognize their indispensability to the Americans. With the Germans pressing their claims
201 202 203 204 205 206
Golay, The Founding of the Federal Republic of Germany, 17-46 and Merkl, West German Republic, 55-119. Ibid., 63. Golay, Founding of Federal Republic, 18. On behalf of OMGUS, government expert Carl Friedrich reviewed the Chiemsee draft and found it consistent with U.S. policy. See note, FRUS 1948 11:418-19. Merkl, West German Republic, 66-79. In one burst of spleen, Murphy wrote Jake Beam: "As you know, there isn't a great deal we can teach these people about small-time party politics, and that particular form of indoor sport is developing too rapidly to suit my taste. There is an obvious tendency to play around with the Parliamentary Council for party political purposes, and there is of course a great deal of jockeying for political place." Murphy to Beam, September 16, 1948, RG 84 US POLAD Correspondence, FRC. Despite the progress of the Parliamentary Council in subsequent months, Murphy retained this jaundiced attitude.
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on reparations, the Ruhr Authority, and the Occupation Statute, the OMGUS leadership bridled at the intimations of entitlement. Still these were small clouds in an otherwise sunny sky. The prevailing American opinion was that the Germans would produce a document that met their standards of federalism and democracy.207 Whether French Military Government would share that sentiment was less certain. General Koening grumbled incessantly throughout the fall, but the Americans thought he might be exaggerating complaints to gain more leverage over the Ruhr discussions. To avoid future embarrassment, the military governors had collectively prepared a new memorandum for the Germans, clarifying their obligations under London.208 The ability of the three powers to agree on a draft and its ready acceptance by the Bonn politicians signified the changing climate.
IN LATE 1948, American policy makers found many reasons for satisfaction. On the social, economic, and political fronts they had scored important victories. Though a precise assessment was elusive, they increasingly perceived the Soviet blockade of Berlin as a diplomatic windfall. By trying to cut off the city the Russians had discredited the German Communists, demeaned Marxist ideology, sowed fear across Western Europe, and provided the Americans with the chance to display their humanitarianism and military might. In his year-end report, political advisor Robert Murphy reflected: "The Berlin blockade, with all its consequences, has had widespread repercussions, most of them favorable."209
z 7
Murphy Memorandum, Conversation with Adenauer, November 24, 1948, attached to Murphy to Bohlen, November 24, 1948, RG 84 Correspondence, FRC; Murphy, Notes of the meeting at Frankfurt, December 16, 1948, Ibid. 108 Military Governors of the Western Zones of Occupation to the Parliamentary Council, November 23, 1948, FRUS 1948 11:442-43. z 9 Murphy to Secretary of State, January 10, 1949.
11 Winning
Secretary Acheson. The only other position you could take would be to say to the Russians, "You must withdraw your troops." I think that is impossible. I do not see how we can say that the Russians must withdraw their troops without withdrawing ours, and it would be impossible and intolerable to think of withdrawing ours.. .. (Hearings held in Executive Session of the Committee on Foreign Relations, United States Senate, May 19, 1949).1 . . . I still feel that some day we may pay bitterly for our present unconcern with getting the Russians out of the eastern zone.... (George F. Kennan to Dean Acheson, May 20, 1949)*
As U.S. O F F I C I A L S lost interest in settling the Berlin crisis, one of the casualties was an independent role for the United Nations. The Americans had initiated discussions in this forum, but were then surprised when foreign delegations took seriously the search for a diplomatic solution. In evading proposals for compromise, they weakened the organization's peacemaking function, while keeping intact their plans for a separate West German state. However, as illustrated by the Berlin blockade, a divided Germany was not simply a symbol but also a stimulus to East-West confrontation. If West Germany was to be rebuilt and integrated into a bloc of Western nations, then the Soviets would have a permanent incentive to challenge the status quo. Under that condition, the West would need overwhelming military power both to prevent internal defections and to deter the Soviet Union. Although not originally Washington's intention, the formation of
1
Committee on Foreign Relations United States Senate, Consultation Prior to the Foreign Ministers Conference, May 19, 1949. This document was kindly brought to my attention by Melvyn Leffler. Kennan to Secretary of State, May 20, 1949, FRUS 1949 III:8 8 8-90.
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a new military alliance - the North Atlantic Treaty Organization (NATO) - became an integral part of their West German project. Until the Basic Law and the arrangements for NATO were complete, the temptation to prolong the Berlin stalemate was overriding. By April 1949 these complex tasks were finished, enabling the victorious Americans to accept the Soviet surrender.
EARLY IN THE blockade, American officials wished to approach the United Nations as a way of reassuring the public, mobilizing international support, and possibly opening a productive diplomatic line. Instead, they had yielded to the British and French preference for direct negotiations in Moscow. By mid-September, the U.S. motives for turning to the organization had subtly shifted, so that it then seemed a vehicle for escaping the dangerous deliberations in Moscow. Other than condemning the Soviets, they saw no positive function for this body.3 Fearing that the United Nations could be unruly, the State Department decided to go to the Security Council rather than the General Assembly. As outlined by Dean Rusk, "In SC we could clearly isolate the Soviet Union. Its only supporter would be Ukraine, which everyone would recognize as Uncle Joe talking out of the other side of his mouth." Furthermore, "SC gives us maximum flexibility inasmuch as we can control the parliamentary situation and either bring issue to head or extend consideration over longer period as we wish."4 Yet even the Security Council proved surprisingly independent. The Chinese initially promoted a resolution calling for all the disputants to refrain from measures that would aggravate the Berlin situation. There was also sentiment for restarting the four-power discussions of the Moscow Directive. Chip Bohlen was suddenly alarmed. The Western powers had approached the organization because the Soviet actions "constitute a threat to peace." Now unfortunately France and the "other neutral members" were construing this "as a request of the Council to use its conciliatory powers to bring the two parties to a dispute together." He thought this could lead to "a great propaganda victory" for the Russians.5 The "neutral members" to whom Bohlen was referring were the six nations on the Security Council that were not direct parties to the dispute.
3
For important discussions of these proceedings, see Shlaim, U.S. Policy and Berlin, 354-77 and Jessup, "The Berlin Blockade and the Uses of the United Nations," 16373Rusk emphasized that in the General Assembly the situation was less reliable. Apart from "the satellites," there was a "fair chance of Arab abstentions and certain countries like India, Burma, Sweden might get the jitters and abstain." Dean Rusk to Douglas, September 15, 1948, RG 335 Berlin Book III, MMNA. Draper to Clay, October 5, 1948, RG 335 SAOUS 000.1 Germany, MMNA; Bohlen to Marshall, October 8, 1948, FRUS 1948 11:1214-16.
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These included: Chiang Kai-Shek's China, Argentina, Colombia, Belgium, Syria, and Canada. With the exception of Syria, all were linked to the West, which was why the United States had opted for the Security Council. During the first round of discussion, the Six rallied behind a British draft resolution, condemning the Soviet blockade and demanding its cessation.6 This further specified that once the travel restrictions were eliminated, the military governors would begin talks in Berlin for a changeover to the eastern currency, using the "terms and conditions" of the August 30 directive. After ten days, a Council of Foreign Ministers would meet on the "outstanding problems concerning Germany as a whole." Unlike the original agreement with Stalin, which required a simultaneous lifting of the blockade and introduction of the Soviet zone marks, the UN version merely required that the currency discussions begin. While the resolution met the U.S. demand that there be no four-power negotiations until the blockade was over, the Americans had certain objections. Their own predilection was to drop any reference to the August 30 directive7 and to the possibility of another ministers' meeting, but they felt compelled to accommodate the British, who remained their most solid ally. One consolation was that the Soviets were disputing the Security Council's jurisdiction in the crisis, and were unlikely to approve the resolution. Just to be sure, the American representative Philip Jessup was told to slow down his approval until he knew that Vyshinski would veto.8 On October 25 the Russians fulfilled expectations by rejecting the Security Council measure. Yet paradoxically the nine to two vote, though an important moral victory for the Americans and British, generated new demands for compromise. UN Secretary-General Trygvie Lie now wished to involve the Secretariat in the quest for a solution, the Australian president of the General Assembly Herbert Evatt made similar claims for the General Assembly, while the "neutrals" on the Security Council continued unofficial talks with Vyshinsky,9 on the prospects for a currency deal.
6
7 8 9
Draft Resolution urging implementation of the Four-Power Directive on Berlin and a meeting of the Council of Foreign Ministers on Germany. Submitted to the UN Security Council October 22, 1945, in U.S. Senate, Committee on Foreign Relations, Documents on Germany, 137-38. Harvey to FONOFF, October 14, 1948, FO 371/ 705519/PRO; Harvey to FONOFF, October 19, 1948, Ibid. Bohlen to Jessup, October 19, 1948, RG 59 Bohlen MSS, Box 2 DSNA. Bohlen to Jessup, October 22, 1948, Ibid. Conclusions of the Cabinet, November 15, 1948, FO 371/70522/PRO. Although not recognizing the jurisdiction of the Security Council, Vyshinski had been in regular consultation with the Six all along and had indicated some interest in a settlement. Even before the UN resolution, John Foster Dulles reported that "intermediaries on council who have talked to Vyshinsky seem to feel that there is a fair chance that Soviets might de facto accept, while in principle rejecting Security Council jurisdiction." Dulles to Dewey, October 21, 1948, JF Dulles MSS, Box 36, PU; Paris to FONOFF, October 20, 1948, FO 371/705519/PRO; Paris to FONOFF, October 21, 1948, FO 371/70520/PRO.
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Given the choices, the Americans and British felt safest in the Security Council.10 They regarded both Lie and Evatt as politically unreliable and too susceptible to Russian arguments. According to Jessup, the best way to prevent consideration in the General Assembly was "to encourage activity on the part of the Council, or at least not discourage it, provided it were kept within reasonable bounds." That way if there were any reports from the Secretariat, they would go to the Six, whom "we could hope to . . . keep straight through the influence of our friends, particularly Belgian and Canadian."11 The Americans and British therefore accepted a proposal by the Security Council President Bramuglia for "a committee of experts" to study the Berlin currency situation.12 This would entail a nonbinding procedure under which four powers would present their views, the technical commission would formulate a proposal to meet their concerns, and the final product would be offered for consideration to the entire Security Council. Having thus acceded to the Bramuglia approach, the Americans generated impediments. While the work of the experts was supposed to be guided by the Moscow directive, the State Department decided this was no longer acceptable.13 There had been an unpleasant moment of truth when United Nations Delegate Philip Jessup examined the supporting documents and interpreted the directive in the same way as Molotov, inadvertently eliminating any lingering doubts about the perniciousness of the accord.14 Meanwhile, the Americans were also pressing the British and French to make the Western D mark the exclusive legal tender for the western sectors by no later than December 10.15 These positions confirmed the British
10
11 12 13
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15
Bohlen explained to Jessup that "In view of the state of timidity and weakness among the smaller nations, there is a real chance that a General Assembly resolution and debate would be weaker in its final result than the Security Council resolutions." Bohlen to Jessup, October 26, 1948, RG 59 Bohlen MSS, Box 2, DSNA. U.K. Delegation to the FONOFF. November 11, 1948, FO 371/70522/PRO; U.S. Del (Paris). November 12, 1948, RG 335 SAOUS 123.7 Germany, MMNA. U.S. Delegation Paris to Secretary of State, November 12, 1948, RG 335 SAOUS 123.7, MMNA. Bohlen wrote Jessup that, "While I still feel there is considerable danger in any attempt by the Secretary General, the six neutrals or other neutral commission to attempt to work out the Berlin currency question, I fully recognize that it would be difficult and probably unwise on our part to attempt to discourage any such further efforts . . . to find a settlement." To keep those discussions on track, "every attempt should be made to exclude any specific reference to the August 30th directive as a guide." Bohlen to Jessup, November 5, 1948, RG 59 Bohlen MSS, Box 2 DSNA. Jessup to Lovett, October 20, 1948, FRUS 1948 11:1228-30; Riddleberger to Lovett, October 21, 1948; Bohlen to Jessup, November 22, 1948, RG 59 Bohlen MSS, Box 2, DSNA. Murphy to Secretary of State, October 5, 1948, FRUS 1948 11:1213-14; G.A. Lincoln, Memo summarizing conversation Between Mr. Hickerson, Mr Beam and Col. Lincoln, October 30, 1948, RG 335 SAOUS 123.5 Germany, MMNA; see ftn 1, Lovett to Jessup, November 3, 1948, FRUS 1948 II: 1247.
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impression of "a strong feeling in the American delegation .. . that nothing useful can come of the present exchanges and that our chief objective should be to avoid being drawn into dangerous concessions or compromises."16 At the United Nations, the perception that the Americans were feigning cooperation was pervasive.17 It was, therefore, especially awkward for Jessup when, in mid-November, the New York Herald Tribune printed an interview with General Clay in which he contended that political conditions in Berlin were making it impossible to use a single currency. The UN delegate angrily wired Marshall that the Clay interview "has caused me major embarrassment" and "increased the suspicion" surrounding U.S. policy.18 He had also been disturbed to discover that there "is not and never has been" a technical U.S. plan for quadripartite control of the Soviet mark in Berlin. This realization had forced him to rescind positions, which he had taken with British and French colleagues, creating a "cumulative impression" that was "most harmful." Jessup was beginning to wonder whether there were any conditions under which his government would accept the eastern currency. Certainly nothing could be farther from his superiors' intention. Whatever their public posture, by late November American policy makers felt themselves to be in a stronger position than at any time since the war. And because the stand-off just then was yielding so many benefits in terms of the internal arrangements for West Germany, they were not inclined to end it. Such complacency might seem hypocritical at a time when the United States was mobilizing world sympathy for the cold and hungry Berliners. However, this was inwardly rationalized by the genuine disadvantages attending to any currency compromise. As suggested by the Clay interview, the most important obstacle to a single currency was the polarized political situation in the city. By November, OMGUS was predicting the imminent split of the Berlin city government, which could complicate the supervisory work of the Financial Commission. In their cables Clay and Murphy blamed the Soviets for this deterioration, claiming that a combination of SED mobs, party appointees, and the SMA itself was preventing legitimate government organs from carrying on their work.19 While many of the criticisms were accurate, OMGUS itself was pressing for schism. Against the advice of the British and the majority of the CDU,
16 17
18
19
Paris to FONOFF, November 22, 1948, FO 371/70523/PRO. Shlaim, U.S. Policy and Berlin, 368-69. In his article Jessup observes that, "It is striking how often one person after another stressed the point that we must convince others that we really wanted a settlement. The suspicion of our motives did not seem to slacken." Yet Jessup's dispatches from the period indicate some of the reasons for those doubts. Jessup, "The Berlin Blockade," 171. Clay to Murphy, November 24, 1948, Clay Papers, 11:93 7; Jessup to Marshall, November 24, 1948, FRUS 1948 11:1262-63; Murphy to Bohlen, November 24, 1948, RG 84 US POLAD Correspondence, FRC. Murphy to Secretary of State, November 24, 1948, FRUS 1948 11:1260-62.
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it was collaborating with the Berlin Social Democrats to consolidate a municipal administration in the western sectors.20 Mutual inflexibility also characterized the interaction over forthcoming elections. Approaching the end of its two-year term, the city assembly had submitted an electoral ordinance to the four Kommandants. Although the Western powers had quickly approved, General Kotikov offered a list of requirements he wanted fulfilled before the balloting could occur. With strong American backing, the city assembly voted unanimously to proceed with elections on December 5,21 leading to an anticipated Soviet ban on eastern sector participation. In view of the United Nations mediation efforts, one obvious course was to postpone the Berlin elections,22 allow the Bramuglia group to produce its plan on the currency, and see if the lifting of the blockade would improve political relations in the city. When the French offered this recommendation, Robert Murphy was so incensed that he refused to pass the information on to Clay. He insisted that to cancel the elections at this late date "could only be interpreted by Berlin population and by many segments of German and European population... as a weak-kneed if not cowardly surrender and retreat before the aggressive tactics of the SED." It would be a "political defeat equivalent in effect to Battle of Leipzig."23 At Clay's headquarters the determination to proceed with the elections had many sources,24 among them a fresh desire to tie the western sectors of Berlin to the new West German state. Despite the problematic location inside the Soviet zone, the Americans felt a burgeoning emotional affinity with the city's leadership. Not only was there gratitude for the courage and dignity displayed by this group; there was also a practical conviction that the Berlin politicians were the most vital force in western Germany,
zo
" "
13 24
209-18. While OMGUS reports focus on the schismatic activities of SMA, the reports from British Military Government display the American interest in producing a split administration. One example of this disparate reporting concerned the case of Waldemar Schmidt, the SED head of the city's labor department. When the City Assembly fired him, he refused to leave his post and was supported in his insubordination by the Soviets. For Clay, this illustrated Soviet disruptiveness. However, as reported by General Robertson, the decision to fire him was part of an American backed plan to move the Magistrat into the British sector and elect Reuter the Lord Mayor. Military Governor to FONOFF, October 4, 1948, FO 371/70517/PRO. Murphy to Secretary of State, October 26, 1948, RG 84 US POLAD 820 MG Berlin, FRC. Foreseeing that "the neutrals" might recommend such a postponement, the Americans and British had been slow to mention the Berlin political situation as a reason for reassessing the currency plan. Bohlen to Jessup, November 22, 1948, RG 59 Bohlen MSS, Box 2, DSNA. Bohlen to Jessup, November 26, 1948, Ibid. DSNA; Murphy to Secretary of State, November 26, 1947, RG 84 Frankfurt TS, Folder: Berlin cables, Box 84, FRC. Clay to Department of the Army, November 27, 1948 SAOUS 000.1 Germany, MMNA.
For a detailed description of Soviet interventions, see Davision, Berlin Blockade,
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who could immeasurably strengthen the wobbly Bonn experiment. Thus to U.S. Military Government, the division of Berlin had become nearly as attractive as the division of Germany itself. And as they were making no concessions to avoid the latter, they were becoming increasingly firm about the former.25 In fending off international demands for a delay of the municipal elections, American diplomats were rescued by the Russians. On November 30 a rump group of pro-Communist politicians gathered in the Berlin Opera House, proclaimed themselves the city assembly, and formed their own Magistrate6 A relieved Chip Bohlen reflected that by "this stroke of luck for us the Soviets have split the city before the elections," allowing the Western powers to proceed with the Berlin balloting and to make the D mark legal tender. More important, it offered an exit from the UN mediation. Instructing Jessup to grab the moment, he emphasized that "we have been given a better opportunity... to escape from some of the more dangerous consequences of Bramuglia's proposal and I think we should use it to the full."27 Not everyone in the administration was as cynical as Bohlen. During December Secretary Marshall was expressing interest in an agreement, as was Ambassador Douglas in London.28 However, power continued to reside with the hardliners. U.S. Military Government remained a powerful advocate for continued confrontation, bolstered by the Assistant Secretary of the Army William Draper, elements of the ECA establishment, the Central Europeanists in the State Department, and Under-Secretary Robert Lovett. Significantly, Bohlen himself was the chairman of the interdepartmental committee on the Berlin crisis, which gave him the reins of day-to-day decision making. With each passing day of the crisis, the Western powers were looking more like winners. Their counterblockade of the eastern zone was depriving its factories of the coal, steel, and machine tools that they needed to operate. Textile, metalware, and electrical equipment plants were curtailing production and in some cases shutting down - creating desperate shortages of consumer goods.29 Politically, Soviet popularity was at an all-time low.
25 26
27 28 29
Murphy to Holmes, January 13, 1949, FRUS 1949 111:156-58; Murphy to Secretary of State, January 26, 1949, Ibid. Teleconference Washington-Paris, November 29, 1948, RG 335 SAOUS 000.1, MMNA; Clay to Chief of Staff CSCAD, November 29, 1948, RG 165 CSCAD 014 Germany, MMNA; Teleconference Washington-Berlin Re: Berlin Situation, December 1, 1948, RG 335 SAOUS 000.1. Germany, MMNA. Bohlen to Jessup, October 22, 1948, RG 59 Bohlen MSS, Box 2, DSNA. Douglas to Secretary of State, November 25, 1948, RG 335 SAOUS 000.10 Germany, MMNA. Economic Section, S-2 Berlin Military Post, Industrial Crisis in the Soviet zone of Occupation, September 14, 1948, Enclosure to Murphy to Secretary of State, October 18, 1948, RG 84 US POLAD 801.46, FRC; John H. Holt, Economic Control in
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Disgraced SED leaders were known to be angry and demoralized.30 Lest any further proof be needed of how poorly the Soviets were faring, the December 5 Berlin elections provided sustenance. Despite an SED boycott, an impressive 86.3 percent of the registered voters came out to the polls anyway.31 By this action, the aggrieved residents of west Berlin were making a dramatic statement - against the blockade, against the Russians, and against German communism. These events enabled the Americans to disengage from the work of the "neutrals." Although the Bramuglia group was developing a currency proposal for a split city government, Lovett cabled Jessup that it would be impractical. Therefore, Western experts should not be drawn into any more discussions of a compromise. The British and French regarded Lovett's stand as a breach of previous understandings and an unacceptable demonstration of bad faith.31 With the cooperation of the British and French, on December 22 the UNs' committee of experts produced a plan for using the Soviet zone currency under a dual administration.33 As rumors circulated at the United Nations of imminent Soviet acceptance, the Americans decided they could not afford to boycott the proceedings. They hurriedly put together a counterproposal under which the Soviets would forfeit all control of their currency in the western sectors.34 Irked by this transparently unacceptable document, Bevin challenged the American intent:
Soviet Zone, September 14, 1948, Ibid.; Holt to Ambassador, October 29, 1948, Ibid. W.B. Lockling to Ambassador, November 24,1948, RG 84 US POLAD 800b, FRC. Comparing the voting figures to those in October 1946, U.S. Military Government concluded that SED strength had dropped from fourteen percent to under five percent. Cited in Davison, Berlin Blockade, 229; Murphy to Secretary of State, December 15, 1948, RG 84 US POLAD 800, FRC; Berlin to FONOFF, December 8, 1948, FO 371/70526/PRO. U.K. Delegations to FONOFF, December 11, 1948, FO 371/70526/PRO; FONOFF to Paris December 14, 1948, Ibid.; Lovett to the Embassy in Paris, December 16, 1948, FRUS 1948 IIH279-81; Jessup to State Department, December 16, 1948, RG 335 SAOUS 000.1 Germany, MMNA; FONOFF to U.K. Delegation, December 19, 1948, FO 371/70528/PRO. Department of the Army to Clay, January 4, 1949, FRUS 1949 111:643-49. The plan offered protection to Western interests in the form of detailed regulations and a powerful quadripartite finance commission. To avert paralysis in the four-power body while providing reassurance to the outnumbered Soviets, it included a complex formula for voting. Along with General Robertson, Bevin thought the proposal a reasonable one. Recalling that the Americans had pushed him into the Security Council, when he would have continued at Moscow, he did not wish to sabotage the present proceedings. Committee of Experts on Berlin Currency, Record of meeting held in Secretary of State's room on December 29th, 1948, FO 371/76537/PRO. Department of the Army to Clay, January 4, 1949, Lovett to London, FRUS 1949 111:643-49; Secretary of State to London, December 29, 1949, RG 335 SAOUS 001.o Germany, MMNA; Secretary of State to Holmes, January 5, 1949, FRUS
30 31
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Did it want to go on as at present in Berlin, or was it seeking a reasonable settlement? Frankly the impression made upon me by the United States counterproposals as a whole was that the United States did not want a settlement at present.35 As expected, the Soviets endorsed the Bramuglia proposal.36 Without American support, however, the United Nations effort fell apart. By late January, the UN economists were exhausted, disillusioned, and eager to go home. Their predominant attitude was expressed by the Swedish economist Gunner Myrdal, who had hoped to show the Russians that by being reasonable, they could "reap a harvest of good-will." Myrdal believed that Stalin had been personally overseeing the UN discussions and was aiming for a solution. If the blockade was now continuing this was the responsibility of the Americans.37 Though the experts' final report had carefully refrained from placing blame on any one party, its substance suggested Western culpability. To the relief of the British, the Canadians successfully persuaded the Security Council president not to publish it.38 The failure of the Bramuglia plan removed the United Nations as a significant actor in the Berlin crisis. This was by far the most serious conflict that had faced the organization. And while it had never been the American intention to have it play a mediating role, an unforeseen assortment of participants had gravitated to the task, among them the secretarygeneral, the president of the General Assembly, the chairman of the Security Council, the representatives of the six "neutrals," and finally the financial experts themselves. All had perceived legitimate grievances on both sides and all were seeking a means of reconciling competing interests. United States policy makers could see little value in such proceedings. Once the United Nations moved beyond a simple condemnation of the Soviets, its operations became a threat rather than an opportunity. By thus rejecting an independent role for the international organization, the
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1949 111:649-50; Records of a Meeting in Mr. Seal's Office, January 7, 1959, FO 371/76538/PRO. Bevin to Franks, January 11, 1949, FO 371/76539/PRO. In the final phases, the British and French failed to support the Bramuglia proposal, but neither would they accept the American plan, which seemed to them palpably fraudulent. Gifford, Minute, February 14, 1948, FO 371/765444/PRO. As reported by the British, "the impression created by the Soviet representative was most favorable. The committee was naturally gratified by his acceptance of their basic framework and found him concise, helpful and reasonable. Soviet stock rose as that of the Western powers slumped." D. M. Gordon, Technical Committee on Berlin Currency and Trade: Meetings at Geneva, January 7-April 7, Impressions. FO 371/76544/PRO; Geneva to FONOFF, January 21, 1949, FO 371/76541/PRO; Dean to Secretary of State, February 14, 1948, FO 371/76544/PRO. Gordon, Technical Committee on Berlin Currency: U.K. Delegation to FONOFF, February 5, 1949, FO 371/76543/PRO. So concerned were the British about the compromising contents of this report, that they directly urged Trygvie Lie not to publish it. FONOFF to U.K. Delegation, February 16, 1948, FO 371/76544/PRO.
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Americans helped weaken one of the few remaining mechanisms for the peaceful solution of East-West problems. power as the source of order on the European continent. Since December 1947 the movement toward a German partition had spurred Western interest in a military alliance. Bevin had first raised the idea at the conclusion of the London Conference of Foreign Ministers, as the efforts for unification ran aground. He clearly hoped that a West European military organization, especially one supported by the United States, would provide both protection against the Soviet Union and security against a revived Germany. Over the next months, the general deterioration in East-West relations - punctuated by the Czech coup - had given impetus to the project. But the important matrix for decision was the six-power conference in London, where West European fears of Soviet retaliation and German revanchism had inhibited progress toward a separate West German state.39 Despite the international pressures for an American commitment, the Truman administration moved slowly. After the passage of the European Recovery Program, it encouraged Republican Senator Vandenberg to introduce a resolution promoting U.S. association with the Western Union. According to its carefully worded provisions, the United States would support arrangements "for individual and collective self-defense" and might join "by constitutional process" with such arrangements "as are based on continuous and effective self-help and mutual aid, and affect its national security." The Vandenberg Resolution was approved by the U.S. Senate on June 11 in time to influence the debate in the French Assembly over the London decisions. However, the senators had so far avoided any commitment to a formal military treaty.40 The Soviet blockade of Berlin helped resolve the question by requiring the cooperation of the American and West European armed forces. In the first months of the crisis the Americans engaged in joint emergency planning with the Brussels Pact, and agreed to supply necessary equipment once members had coordinated their requirements. By September, they had initialled a working paper that recommended a North Atlantic security system that would include the United States and Canada, as well as the nations of the Western Union, Denmark, Norway, Iceland, Portugal, and Ireland.41 While exacerbating fears of Soviet military power on both sides of the Atlantic, the blockade taught other more complex lessons. For the West European governments it was an ordeal by impotence, as they found
T H I S LEFT MILITARY
39 40 41
Ireland, Entangling Alliance, 57; 92-100; Leffler. Preponderance of Power, 216-17. See discussion of Vandenberg Resolution in Ireland, Entangling Alliance, 93-112. Washington Exploratory Conversations on Security, September 9, 1948, in Gaddis Containment, 142-52.
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themselves unable to restrain both their Soviet adversary and their American friends. Whether in Moscow, in Berlin, or at the United Nations, their efforts to mitigate the conflict with the Soviet Union had been delicately, and sometimes not so delicately, deflected by Washington. Meanwhile U.S. terms for West Germany were far more lenient than what they had envisioned. On a range of issues - including reparations, prohibited industries, the organization for coal and steel, and the powers of the International Ruhr Authority - the United States was loosening restrictions much faster and more comprehensively than was deemed prudent. Ironically, Western Europe's desire for American military protection partly arose from the alarming activities on the American side. In Washington, the allies' timidity had made a profound impression. From a narrowly military perspective, most U.S. officials believed that their nuclear monopoly was proving decisive, that the deployment of the B-29S was both deterring Soviet interference with the airlift and limiting the pressures on the city. Yet this asset had not reassured the West Europeans, who still feared a conventional attack on their territories.42 Such insecurity strengthened the argument for a formal alliance, for until West European governments were confident of American assistance on the ground, they would be constantly tempted to undermine West Germany and appease the Russians. As a matter of practical politics, American leaders found it difficult to translate these perceptions into specific arrangements. Historically, the United States had avoided binding military commitments and, pending the November 1948 elections, the State and Defense departments were afraid of controversial initiatives. Only after Truman's victory did the administration begin the complex negotiations for the North Atlantic Treaty, and not until February 1949, did the new Secretary of State Dean Acheson have a completed draft. There were still legislative hurdles to be surmounted. In the U.S. Senate, there was concern about the wording of Article 5, which seemed to circumvent U.S. constitutional processes by requiring a military response to aggression in Europe.43 Also problematic was Acheson's announcement that he intended to request 1.5 billion dollars for a Military Assistance Program to Western Europe as a follow on to the treaty. By early spring, the administration had negotiated sufficient changes in Article 5 to give the NATO treaty excellent prospects in the Senate and to consolidate support for the Military Aid bill.44
42 43
44
CIA, Review of the World Situation, October 20, 1948, PSF, Box 204, HST. According to this version, an attack against one member would be considered an attack against all, obliging each to institute "forthwith such military or other actions... as may be necessary to restore and assure the security of the North Atlantic area." Cited in Ireland, Entangling Alliance, n o . Acheson, Present at the Creation, 364-74; Lawrence Kaplan, NATO and the United States, 28-29; Ireland, Entangling Alliance, 119-32.
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In a reversal of the original dynamic, the work on NATO now spurred progress toward a West German state. Although the Western principals had taken large strides toward the implementation of the London Accords, there was still a residue of unresolved questions. With signing ceremonies for the North Atlantic Treaty scheduled the first week in April, the State Department saw a chance to make a final breakthrough. Reparations remained a sore point. The Humphry mission had finished its work and was calling for the retention of 167 plants inside Germany.45 Bevin had privately indicated his willingness to give in if the United States would promise to retain the 1946 accord on Prohibited and Restricted Industries, which banned or limited certain war-related industries. For more than a year the Americans had been trying to make these ceilings temporary and to curtail the number of items on the list - a position that Clay continued to advocate.46 There was also a bad tangle over the terms for trizonal fusion and the Occupation Statute. U.S. Military Government had long resisted an amalgamation of the three western zones because of their hostility to the French. However, the imminent establishment of a West German government meant that fusion must occur with the French included in the supervisory apparatus. To minimize the pernicious effects, the Americans demanded the same "predominant voice" they had achieved in the bizonal accord, which proportioned power over trade and exchange to the level of financial contribution. This was completely unacceptable to the French, who were looking to increase their own influence by requiring a unanimous vote on many issues and a wide-ranging right of appeal on others.47 The question of allied voting rights was closely entwined with the matter of German sovereignty. As prescribed by the London Accords, a large number of "reserved powers" were to be incorporated into an Occupation Statute. So long as the military governors were acting by majority, allowing German legislation to go into effect unless specifically overridden, there would be wide scope for indigenous decision. However, if the French gained a veto and German legislation could be suspended while one nation appealed, such "reserve powers" would become seriously intrusive. General
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R. M. Cheseldine, Memorandum for the Under-secretary of the Army, Re: Digest of Industrial Advisory Committee, Report to the ECA administrator, RG 335 SAOUS 004. Germany, MMNA. Draper to Military Government Attache France, December 21, 1948, RG 335 Draper/ Voorhees OUS 387.6 Germany, MMNA; Secretary of State to the Embassy in the United Kingdom, February 6, 1949, FRUS 1949 111:550-51; Douglas to the Secretary of State, February 9, 1949, Ibid.:552-53. Margolies to Malenbaum, Issues involved in trizonal fusion, January 13, 1948, RG 59 Central Europe, Box 4, DSNA; J. Anthony Panuch to Tracy Voorhees, Re: Trizonal and Tripartite Organization of Germany Interrelationship of Constituent Agreements, January 29, 1949, Panuch MSS, Box 13, HST; Caffrey to Secretary of State, February 6, 1949, FRUS IIL32; Military Attache (London) to Clay, March 28, 1949, RG 165 014 CSCAD Germany, MMNA.
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Clay was particularly concerned lest the Germans end up with fewer rights under trizonal government than they already possessed.48 All of this was complicated even further by last-minute difficulties with the west German Parliamentary Council.49 In reviewing the Basic Law, Clay and his colleagues had concluded that there was too much centralization of power and that the Bonn politicians needed to rewrite certain clauses. Since the Social Democrats were refusing,50 OMGUS was relying on the Christian Democrats to complete the work. However, their assistance would not be forthcoming if the Occupation Statute was too onerous. Responding to Military Government's request that all outstanding issues be taken up simultaneously, the State Department promised to use the NATO meeting in Washington for this purpose. The sudden transfer of responsibility gave Clay a case of the jitters.51 Much depended on the new Secretary of State Dean Acheson, a relative novice on German problems. Questioning whether Acheson would have the requisite knowledge and firmness to wrest the needed concessions, the general feared he would fumble. Clay's uneasiness was also intensified by the departure of William Draper as Assistant Secretary of the Army. Since coming to work as OMGUS economics advisor in 1945, the banker had been his closest and most reliable collaborator. When Draper was subsequently appointed Assistant Secretary of the Army in 1947, he became the general's most powerful spokesman in Washington. Through the most trying moments of the Berlin blockade, Draper's had been the other voice on the telephone. In bidding good-bye, Clay reflected that his service had "made possible anything I may have accomplished."52 Draper assured him that "Damon will never forget Pythias." For all Clay's anxiety, U.S.-German policy did not depend upon his partnership with Draper. Despite press speculation about the erosion of Military Government's influence,53 in the preparations for Washington the army's views predominated. In this regard, Acheson's most important action had been to summon Robert Murphy home from Germany to become the
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51 52 53
Teleconference Voorhees-Clay, March 17, 1949, Clay Papers, II: 1048. Clay felt the Germans had exceeded their instructions by placing too much financial power at the federal level and ceding reponsibility over health, welfare, and other matters best left to the Lander. Murphy to Acting Secretary of State, January 6, 1949, FRUS 1949 111:167. Murphy to Saltzman, February 17, 1949, Ibid.: 199-203; Riddleberger to Murphy, Re: Military Governor's Consideration of Draft Constitution, March 3, 1949, Ibid.: 212-17; Clay to Voorhees, April 4, 1949, RG 165 014 Germany, MMNA; Riddleberger to Secretary of State, April 7, 1949, RG 59 862.00, DSNA. Clay to Voorhees, March 25 6c March 29, 1949, Clay Papers, IL1061-1963. Clay-Draper Teleconference, February 27, 1949, Ibid.: 1029. "Acheson is Studying Shift in Our Policy on Germany," New York Times, March 4, 1949; Stewart Alsop, "What Sort of Germany?" Herald Tribune, March 11, 1949.
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State Department's Director of the Office of German and Austrian affairs. Through him, Draper's successor Tracy Voorhees determined the content of the key policy papers for the conference.54 On the eve of the NATO meeting Ambassador Douglas unexpectedly produced a settlement on reparations and prohibited industries. Yoking the two subjects, he quickly got Bevin and Schuman to accept the recommendations of the Humphry report and to reduce the list of controlled industries.55 But when the two resisted Washington's schedule for reevaluating the remaining controls, the State Department ordered him to halt the discussions. The ambassador was appalled. "Perhaps," he cabled Washington, "my reports have not given you full flavor of the diet here, the heat to which we have subjected Bevin and Schuman, the unwillingness with which they permitted me to extract concessions and bitterness which remains."56 The United States was already getting a good agreement and he saw no justification for more coercion, "What stinkers we are," reflected the ambassador, though he issued the obligatory threat and gained their acquiescence to the American date for reexamining the controls.57 Douglas' achievement freed the Washington diplomats to concentrate on the Occupation Statute and the trizonal accord. With NATO as their carrot, the Americans scrapped the original texts in favor of simplified procedures that left all sovereignty in Allied hands, while reducing the number of "reserved powers."58 Civilian High Commissioners could exercise these powers by either initiating action or blocking German legislation with a majority vote. Where one power believed that a German law was "not in conformity with basic tripartite policies regarding Germany," it could obtain a twenty-one-day suspension, pending an intragovernmental appeal. Underneath this complexity, the State Department had expanded the rights of the Germans by permitting them to legislate in every field including those which were "reserved," subject to Allied disapproval.59 The consolation for France was the new military alliance with the United
54
55
56 57
58 59
When he saw the documents Clay reflected that "these magnificent papers . . . embody all if the things which I have struggled for during four years of frustration and some heartache." Clay-Voorhees Teleconference, April 3, 1949, Clay Papers, 11:1981. Over Clay's objections the ambassador had obtained permission to link these discussions with reparations. However, the State Department limited Douglas to five days of negotiations and tied his hands on concessions. Secretary of State to Douglas, March 11, 1949, FRUS 1949 111:560-63; Douglas to the Secretary of State, March 15, 1949, Ibid.:569-72. Douglas to Secretary of State, March 19, 1949, Ibid.:581. According to the final agreement, the limitations "shall continue until there is a peace settlment or until January 1, 1953, whichever is the earlier." Douglas to the Secretary of State, March 24, 1949, Ibid.:59o. Murphy, Tentative outline of approach in the discussions with the British and French Foreign Ministers on Germany, March 30, 1949, Ibid.:i4O-42. There was an expection that the three governments would only take action in the reserved fields. But they retained the right "to resume, in whole or in part, the
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States. Despite some modifications, the final version of Article 5 committed the signatories to mutual support in the event of armed attack,60 while Article 3 opened the door to potentially large-scale assistance. In interpreting the results for Truman, Acheson emphasized:
the success of these negotiations on German affairs has been greatly facilitated by the conclusion of the North Atlantic Treaty. Without it, I doubt that we would have come to a successful conclusion of these agreements... . 6l
Since the previous summer, the French had linked their acceptance of the German partition to a promise of American military aid. It was, therefore, fitting that their final acceptance of U.S. terms come with the formation of NATO. Such events were far removed from the original four-power deliberations, when German disarmament was regarded as the key to a demilitarized and harmonious Europe. Though not discussed at the NATO signing ceremonies, the Americans were already planning for the period when West Germany might affiliate with the organization.62 If the president regretted the bellicose trend, he gave no indication. Saying farewell to Bevin and Schuman, he reflected that the Washington meeting was "the best thing that had been done in his administration," for it had "carried forward our efforts for peace in the world and prosperity."63 BY NO w IT was almost time to settle Berlin. Following the collapse of the UN discussions, there had been a statement from Stalin, intimating that he might be willing to lift the blockade without any Western concessions on
exercise of full authority if they consider that to do so is essential to security or to preserve democratic government in Germany." Memorandum of Conversation by the Secretary of State, April 5, 1949, ftn 5, Ibid.: 163; Agreed Memorandum Regarding the Principles Governing the Exercise of Powers and Responsibilities of U.S.U.K.-French governments following Establishment of German Federal Republic, April 8, 1949, and Occupation Statute Defining the Powers to be retained by the Occupation Authorities, April 8, 1949, Ibid.:i78-83. The signatories pledged that "an attack against one or more of them in Europe or North America shall be considered an attack against all." If aggression occurred, " e a c h . . . will assist the party or parties so attacked by taking forthwith . . . such action as it deems necessary, including the use of armed force, to restore and maintain the security of the Atlantic area." The North Atlantic Treaty, April 4, 1949, contained in Kaplan, NATO and the United States, 219-21. Acheson to Truman, Negotiations on Germany, April 8, 1948, PSF, Box 163, HST. See discussion of the relationship between the NATO Treaty and the Washington agreements in Ireland, Entangling Alliance, 138-41. According to State Department policy paper, "The United States recognizes that as the German people, or a large part of them, may later become a firm part of such a structure of free European nations, it may become reasonable for them, to contribute to armed security of that structure, but only if there should be a strong prevailing sentiment within the membership of the g r o u p . . . . " Clay-Voorhees Teleconference, April 2, 1949, Clay Papers, I I : I O 6 8 - 8 I . Memorandum of Conversation by the Chief of Protocol, April 7, 1949, FRUS 1949 III:i73-75.
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the Berlin currency/4 At Bohlen's behest, Jessup asked Soviet Ambassador Malik if this "had any special significance?"65 Four weeks later, on March 15, Malik replied that the currency question could be deferred until a Council of Foreign Ministers. However, his government still wanted to know if the Western powers would postpone the West German government until the four-power meeting occurred. Jessup insisted that this was not a problem given the pace of events. If such "a meeting were held today, for example, it would be held before the establishment of a Western German government."66 During the next weeks Malik sought some clearer understandings. When could a Council of Foreign Ministers begin? And what guarantees would there be that once the council started that a West German government would not suddenly materialize? Jessup would only reply that if the council met soon, the West German government would not have been formed.67 Already the losers in Berlin, the Soviets were obviously hoping to avoid further embarrassment. If during the CFM proceedings a West German government was created this would be deeply humiliating. Knowing that the ratification of the Basic Law could not occur until mid-summer the State Department could readily have satisfied Malik's concern. However, mindful that the announcement of a CFM would give both the French and west Germans a new chance for trouble making, it preferred to withhold that guarantee until the Washington Conference was finished. During the western meeting, Acheson filled in Bevin and Schuman on the details of the Russian talks. While asking their cooperation, he also sought a written promise that they would carry on with the West German government after the Council of Foreign Ministers had adjourned.68 Suddenly Bevin had reservations about a settlement. What if the blockade ended before the U.S. Senate had ratified NATO and approved the Military Assistance program? Perhaps legislators would become too complacent about the Russian danger? Bevin also wondered about the German Social Democrats, who were still offering objections to the Basic Law. Absent the Soviet pressure, they could become even more obstructionist.69 The American saw no cause for alarm. U.S. senators would interpret the lifting of the blockade as a vindication of a tough policy. As for the SPD, Chip Bohlen was supervising the Russian negotiations with a careful eye on the internal German situation.70
64 65 66 67 68 69
70
Cited in FRUS, 1949, 111:666. Memorandum of Conversation by the Deputy Chief of the U.S. Mission to the UN, February 15, 1949, Ibid. 1694-95. Jessup, Memorandum of Conversation, March 15, 1949, Ibid.:695-98. Jessup, Memorandum of Conversation, March 21, 1949, Ibid.1701-04. Secretary of State, Memorandum of Conversation, April 1, 1949, Ibid.1709-12. Cabinet Committee on Germany, April 4, 1949, FO 371/76780/PRO; FONOFF to New York, April 20, 1949, 1524 & 1525, Ibid.; Douglas to the Secretary of State, April 25, 1949, FRUS 1949 111:730-31. Secretary of State, Memorandum of Conversation, May 2, 1949, Ibid.: 1949 111:748-49.
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Indeed Bohlen had instructed Jessup that it was "of utmost importance that we keep under constant review the timing of the discussions . . . on the Berlin situation."71 One aim of the Malik talks had been to clarify "the present Soviet attitude." Now that this was known, there was no need for haste. Bohlen considered that "the real advantage to U.S. policy" could be "the lifting of the blockade without the payment on the part of the three Western governments of any political price." However, everyone recognized "the possible disadvantageous repercussions of a CFM meeting on the development of the West German program." Hence the United States would peg the negotiations to the events in Bonn. Given the complexity of the East-West issues, Jessup should be able "to quicken or slacken the tempo without arousing Soviet suspicions." Fortunately, it was only necessary to delay for a short time. By April 25, after a ferocious round of arguments, the Bonn politicians and the military governors came to an agreement on the text of the Basic Law.72 Two days later, Jessup met with Malik and conveyed the Western terms. Although preparations for the West German government would continue, this would "not preclude four-power agreement whereby a Government for the whole of Germany could be established." At a future CFM, the Allies would make "a sincere endeavor to ascertain whether there is a real prospect for agreement."73 Though the emptiness of Jessup's pledge was plain to see, Stalin had been given the diplomatic cover he'd been seeking. Following Malik's acceptance, Bohlen now considered it safe to reinvolve the Security Council, unabashedly proposing it as the vehicle for terminating the blockade. This was unappealing, even to the British and French. Instead, it was decided to issue a four-power communique announcing the cessation of travel restrictions and the subsequent reconvening of the Council of Foreign Ministers.74 On May 12, 1949 - one minute past midnight - the lights went on in the western sectors of Berlin as cars, trucks, and trains resumed their travel into and out of the city. Clumps of citizens stood along the autobahn, where they cheered and placed flowers on the passing vehicles. Over the next two days, there were ceremonies and demonstrations honoring the bravery of the Allied airmen and the sacrifice of the local populace. At the city assembly, members unanimously voted to name the square in front of Tempelhof Airport "Platz der Luftbriiche" (Airlift Square). Finally Lucius Clay could go home. For months he had been seeking relief but had been told that this presence was essential. Following the Allied accord, he again offered his resignation and was granted permission
71
72 73 74
Clay to Department of the Army, April 25, 1949, Clay Papers, 11:1132. Statement by the U.S. Ambassador at Large (Jessup), FRUS 1949 111:735-36. Jessup, Memorandum of Conversation, April 27 6c 29, 1949, Ibid.:737-44.
Bohlen to Jessup, Murphy et. al., April 15, 1949, RG 59 Bohlen MSS, Box 2, DSNA.
Winning to depart. During his last days in Berlin, Clay was accorded a hero's treatment. On behalf of the city government, Mayor Reuter reflected that In our great demonstrations in the summer... we called on the world for help. The world heard our cry.... The memory of General Clay will never fade in Berlin. We know for what we have to thank this man, and we take advantage of this hour ... to say that we will never forget what he has done for us.75 When he reviewed the American troops, a battery of 105mm guns provided a salute, as sixty Thunderbolt fighter planes flew overhead forming a gigantic C-L-A-Y and F-80 jet fighters zoomed low over the grandstand. Later hundreds of thousands of Berliners lined the streets to bid him farewell, and as he waved from the steps of the air force transport plane, this normally undemonstrative man wept openly.76 For Clay, this was the end of an extraordinary effort. He had wielded more power in occupied Germany than any single individual, and in the face of immense international pressures had stamped "American" ideas on the western zones. His original goal had been to reconstruct a democratic, capitalist, unified nation and to make it a model of international cooperation. But once prevented from doing so, he had become the most zealous Cold Warrior of all. Where other policy makers became at times uncertain and confused, Clay had pursued their aspirations for West Germany with relentless energy and unalloyed confidence, and had brought the project to the point of fruition. Not one for second thoughts, he had presided over the remilitarization of Central European affairs without sorrow or apparent dread.
D E S P I T E THE STUNNING
triumph in Berlin, Washington officials still had qualms about the forthcoming Council of Foreign Ministers. The circumstances had surely improved. Under Robert Schuman, France was firmly committed to the German partition and the Bonn politicians had accepted the Basic Law. Yet suddenly some policy makers apprehended that the Soviets might accede to all Western requirements and allow the eastern zone to affiliate with the new West German government. Such was the intuition of General Clay, who viewed the Jessup-Malik discussions as "a complete change in Soviet tactics to win Germany."77 He predicted that they would accept the Occupation Statute and possibly the Bonn constitution in order to stop Germany from being integrated into a Western bloc. In a similar vein, the Moscow embassy thought it "quite possible" that the Russians would join the Washington agreements. This would "shake Western foreign policies to the very bottom, disorient developing West public opinion and present practical problems of first magnitude."78
75 76 77 78
Cited in Davison, Berlin Blockade, 273. "End of a Chapter," Time, May 16, 1948; Smith, Lucius D. Clay, 544-55. Clay to Voorhees, May 1, 1949, Clay Papers, 11:1137-39. Kohler to the Secretary of State, May 6, 1949, FRUS 1949 111:864-67; "Soviets Expected to Go far to attain a United Germany," New York Times, May 3, 1949.
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In Washington these speculations caused officials to think very carefully about their presentation at the CFM. How could they offer any plan for a unified Germany without running the risk that the Soviets would agree? But if the Russian leaders were of a mind to surrender, was there some deal that would be truly beneficial to Western interests? This exploration was complicated by the lingering influence of George Kennan.79 During the previous summer, the policy planner had raised eyebrows by contesting both the division and militarization of Europe. His position reflected two unfashionable priorities: a desire to preserve access to Eastern Europe and to diminish the risks of war. Though consistent with the administration's public posture, neither constituted a criterion for its policy decisions.80 In August, Kennan's deviant concerns had led him to advocate the unification of Germany. However, on the advice of the Central Europeanists, Under-Secretary Lovett had shunted the recommendations aside. In the intervening months Kennan had been permitted to keep puttering with the German policy papers.81 His bureaucratic survival reflected his enormous prestige as the author of "containment" and his reliability as an advocate for ERP. Moreover, until the spring serious people were busy with the blockade, the Basic Law, the negotiations on the Ruhr, and the North Atlantic Security Treaty, and there was no immediate prospect for a CFM. Thus the activities of Policy Planning were relatively harmless, as staff members conferred with outside consultants, drafting and redrafting the conditions for settlement. With the conclusion of the Jessup-Malik exchange, the United States suddenly needed a negotiating position. And Kennan was prepared with his revised Plan A ("A Program for Germany").82 As in the original, its central concept was the reduction of Allied power and the enlargement of German prerogative. Following UN-supervised elections in the Lander, the Germans would establish a new government that could exercise sovereignty, except for certain "reserved fields" where the Allies might overrule
79
Two informative explorations of Kennan's role are Hixson, George Kennan, 73-98 and Miscamble, George Kennan and the Making of American Foreign Policy, 1947In response to Kennan's statement that, "every consideration of national interest . . . indicates that we should not become involved in a war at this time," Bohlen argued that "reluctance to contemplate a resort to arms as a possible necessity, however undesirable a one, cannot but translate into a serious factor of weakness if at all suspected by the Kremlin." Bohlen to Kennan, October 25, 1949, RG 59 Bohlen MSS, Box 2, DSNA. British Embassy (Washington) to Dean, November 13, 1948, FO 371/70601/PRO; Kennan to Secretary of State, October 19, 1948, RG 59 PPS, Box 15, DSNA; Policy Planning Staff, Position to be taken by the U.S. at a CFM Meeting, November 15, 1948, FRUS 1948 IIH320-38. Memorandum by Ware Adams to Jessup, April 15, 1949, FRUS 1949 111:856-59.
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50, 154-77-
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them by majority vote. Occupation zones would be eliminated, the number of troops substantially cut, and the remaining forces redeployed to border areas. The obvious aim of the Kennan proposal was to end Soviet control of eastern Germany, while tying the united country to the West. Hence the Russians would be required to accept free elections, abandon the veto and join a diminished Control Commission, pull back their occupation armies, remain outside the Ruhr authority, abandon further claims for reparations, surrender their own AGS, and accept German membership in the Marshall Plan. What they would get in return was the deferral of the Basic Law pending a constitutional convention, the elimination of the American votes on the Ruhr authority, a guarantee of access to German exports, and the withdrawal of Western troops to the German periphery. By any construction, Kennan's proposal was extraordinarily one-sided in its conditions and probable effects. However, within the U.S. government there was no willingness to make any concessions to get German unification.83 The lone exception was Ambassador Jessup, who for months had solemnly asserted to Malik and others that America would reconsider the German partition once the blockade was lifted. By spring, Jessup certainly knew better, but he had given his personal pledge. To him it was still incredible that the United States "could reject a European settlement including the withdrawal of the Red Army to the east."84 Among Kennan's opponents in the State and Defense departments, it was easy enough to mobilize objections. Not only was the plan detailed and complicated; it had some obvious drawbacks. The suspension of Bonn and the relocation of the Western armies could erode West German confidence and would certainly agitate West European friends.85 By focusing on these and ignoring the manifold liabilities of partition, the program was quickly discredited. Since the president was uninvolved in this debate, final decision rested with Acheson. As during the Washington conference, he let himself be guided by Voorhees and Murphy. By May, Murphy had become chairman of the interdepartmental NSC steering committee for German policy, in which capacity he was supervising the preparations for the Council of
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As explained by Robert Murphy, "our ultimate aim should end the line of division through central Germany but we should not make important concessions to accomplish this purpose now. Soviet occupation of eastern Germany is a thorn in German flesh but it is also a political hazard to the Soviet Union." Murphy to Marshall Carter, December 6, 1948, RG 84 US POLAD 820, FRC. Jessup to Secretary of State, April 19, 1949, FRUS 1949 111:859-62. Division of Research for Europe, Effects of Postponement of the Western German State, February 10, 1949, Ibid.: 194-96; Ray T. Maddocks, Memorandum for the Chief of Staff, U.S. Army, Re: State Department Program for Germany, May 5, 1948, RG 335 SAOUS, MMNA; Secretary of Defense Johnson to Secretary of State Acheson, May 14, 1949, Ibid.; Kennan, Memoirs, 1:467-68.
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foreign ministers. Under his auspices Plan A was rewritten to eliminate all the concessions to the Soviets, while retaining all of its tough features.86 Making Bonn the foundation for German unification, the final American proposal invited the east German Lander to adhere to a previously established West German government. 87 This would enable the Soviets to join an Allied High Commission with strictly limited powers. Troop levels would remain relatively high and the regroupment of Western forces would not entail withdrawal from strategic areas. The Americans could keep their votes on the International Ruhr Authority, though the Soviets would be excluded. Most crucially, a united Germany would be free to adhere to international agreements, including membership in the European Recovery Program. Murphy's committee thought this particular package so inimical to Russian purposes that they would reject it. But there remained the nagging question: What if the Soviets were so desperate or so devious that they concurred? 88 In principle, this would be a major Western victory since the Soviets would have met every substantive demand and the east would be saved. But Bohlen still found the prospect daunting. Their willingness to make far-reaching changes . . . including the abandonment of reparations, a more flexible attitude on the Soviet eastern frontier, a limited participation in the existing Ruhr agreement, accompanied by a Soviet proposition to withdraw or very drastically reduce the occupying forces, would obviously present the Western powers with a very delicate and even dangerous situation.89 Bohlen's palpable preference was for a modus vivendi between two German states. The administration's rigid attitude came as a surprise to some members of the Senate Foreign Relations Committee. Testifying on the eve of Paris, Acheson explained that the unification of Germany was not "an end in itself."90 The important U.S. objective was "the strengthening and recovery
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88
89 90
In fact, the initial redraft still contained a number of Kennan's proposed concessions. These were picked up by Clay and the Joint Chiefs of Staff, and at the behest of the War Department the document was stregnthened. Webb to Secretary of Defense, May 4, 1949, RG 218 JCS CCS 092 Germany, MMNA; Louis Johnson to Joint Chiefs of Staff, Re: Military considerations in the conclusion of any agreement with respect to Germany, May 5, 1949, Enclosure Clay to Voorhees, May 5, 1949, PSF, Box 163, HST. Office of German and Austrian Affairs, U.S. Position at the Council of Foreign Ministers, May 15, 1949, and Enclosure, A Program for Germany (revised), May 9, 1949, FRUS 1949 111:895-909. Division of Research for Europe, The Soviet Approach at the Meeting of the CFM, May 17, 1949, Ibid.:9O9-i3; CIA, Review of the World Situation, May 17, 1949, PSF, Box 204, HST; CIA, "The Soviet Position in Approaching the CFM," May 18, 1949, RG 319 PRO 350.05, MMNA. Bohlen, An Estimate of Possible Soviet Intentions at the Forthcoming CFM, May 18, 1949, RG 59 Bohlen MSS, Box 4, DSNA. Committee on Foreign Relations, Consultation Prior to the Foreign Ministers Conference, May 19, 1949. Document provided by Melyn Leffler.
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of Western Europe." Any proposal for Germany would be judged by whether it advanced or retarded that purpose. The United States could have held up Bonn in order to get a deal with the Russians, but because of its concern with West European progress it had chosen to proceed. After hearing Acheson's detailed account of the U.S. negotiating position, Senator Vandenberg reflected that you "are building a program which projects a negative response." When the secretary acknowledged the point, the senator wondered whether since the U.S. program "is calculated to bring a 'No' answer does this mean that the result of this meeting is going to establish . . . the fact that there is a permanent Cold War...." Not necessarily "permanent," replied Acheson, but the immediate task would be "to see who develops more strength." Troubled, Vandenberg wondered whether there was some "sugar that you can put on this sour lemon you are presenting?" The secretary insisted that "we have tried to find some, but the only kind of sugar you have tried to put on is so dangerous to what you are doing...." Lest anyone be tempted to obtain that "sugar" from Kennan's Plan A, the Defense Department had selectively leaked it to the press. On May 12 James Reston of the New York Times gave a truncated description, which highlighted the possible regroupment of forces to the north German ports.91 Ripped out of context, this news sent ripples of panic through Whitehall and the Quai d'Orsai. For both British and French the most reassuring development of the previous weeks had been the progress toward NATO. The intimation of a weakened U.S. military commitment was enough to rally the two governments behind a hardline American position. To Kennan, this turn had the dimensions of tragedy. Writing Acheson, he deplored "the steady and progressive discarding of all possibilities which might really have led to something like the unification of Germany under allied blessing. "9Z He considered the worst decision to be the abandonment of troop withdrawal, which left the Red Army in occupation of the entire eastern zone. It was, therefore, futile to suppose that concentration camps would be dismantled, that Soviet industrial holdings would be surrendered, or that the Russians would stop exploiting the uranium resources there. Clearly the United States did "not want to see Germany unified" and there were actually "o conditions under which we would really find such a solution satisfactory." At present policy makers were assuming that the arrangements for Germany would remain fixed. But "some day we may pay bitterly for our present unconcern with the possibility of getting the Russians out of the Eastern zone." Kennan's dismay notwithstanding, the American position on Germany was merely a variation on an old theme. During the past two years, U.S.
Mayers, George Kennan, 148-49; Kennan, Memoirs, 1:468-69. Kennan to Acheson, May 20, 1949, FRUS 1949 111:888-89.
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negotiators had gone into international meetings proclaiming a desire for German unity but hoping for the opposite. Previously, ambiguous Soviet positions had made it possible to avoid agreement, but now the issues were more sharply drawn. The imminent creation of a West German state meant that the Soviets would have to accept partition or forfeit control of their zone as the price of unification. This situation highlighted for Kennan, Jessup, and perhaps even some senators the illogic of the American approach. From the standpoint of reducing Soviet power, would not Western Europe be safer if the Soviets were out of eastern Germany? How could it make sense to permit 180,000 or more Soviet troops to remain near the Rhine, if the Soviet Union was willing to take them out? Partly the answer was the one Kennan had previously used: that Houdini-like the Soviets could slip out of any bargain.93 In the case of Germany, they could use a revived KPD or manipulate East-West trade to destabilize the new regime. Moreover, the curtailment of Soviet power had never been the exclusive preoccupation of the administration. Since the end of the war, policy makers had wished to use German resources to promote an integrated, free market economy in Western Europe. The task had been unexpectedly difficult and had come to fruition only under the pressure of a Cold War crisis. So as shocking as it might be, even to some initiates, it was acceptable to leave east Germany as a Soviet garrison.94 At the Paris Council of Foreign Ministers, it was quickly apparent that U.S. fears had been exaggerated. The Soviets had not come there to make a sensational surrender. Working under tight instructions, Vyshinski and his associates recycled many previous demands: a return to Potsdam, reparations, a reconstitution of the Allied Control Council and the Berlin Kommandatura, the use of the eastmark for all of Berlin.95 In one curious bit of backpeddling, they abandoned their call for a unified government and recommended a "state council" for economics to be built on the already existing organizations in the east and western zones. Acheson was amazed by the Soviets' rigidity. Having braced himself for startling concessions, he now felt that Vyshinski had gone "out of his way to take agreement impossible." The propaganda value of this approach had been "minus." Unable to resist a little one-upsmanship, Bohlen professed surprise that Acheson and others on the delegation had "quite so seriously believed that the Russians were going to announce a complete change of policy." Yet Bohlen, too, was struck by the weakness of the Soviet propaganda position, their inability to offer any attractive option to
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Division of Research for Europe, The Soviet Approach at the Meeting of the CFM, May 17, 1949, FRUS 1949 111:909-13. See Leffler, Preponderance of Power, 284. For evolving Soviet positions, see collected papers on the Paris Council of Foreign Ministers, FRUS 1949 111:915-1065.
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the Germans. Evidently, they would permit nothing "to weaken or jeopardize in any way" their "absolute control" of the eastern zone and east Berlin.96 As a description of the Soviet negotiating position, the Bohlen-Acheson portrayal was not strictly accurate. While the Soviets had insisted on a veto in both the ACC and the Kommandatura, they offered to limit the fields where this would operate.97 As regards Berlin, they had agreed to supervised elections in the eastern sector, and indicated that they might forfeit a Kommandatura veto if Germany was unified. There was thus some nominal movement toward opening up the east. Yet considered as a whole, there was little in the Soviet package that was designed to elicit a bargain. With a West German state on the verge of formation, it was obvious that the call for Potsdam reforms and the resurrection of the Allied Control Council would fall on deaf ears. But the ears were deaf in any case. Going into the CFM the Soviets knew that there was no offer, short of fusing with Bonn,98 which Washington would accept. And even then, such adherence might not be welcome. Understanding that the West did not wish to do business, Vyshinski brought nothing to trade. Whether this represented a new enthusiasm for partition, or simply a desire not to look like the supplicant in an international forum was less clear. For at least two years, Washington had not wanted to know if there were compromises available that could hold Germany together and thereby prevent the fracturing of the European continent. With the Soviets seemingly inflexible, a sense of relief and vindication spread through the U.S. delegation. Having spent weeks fretting that the Soviets would diabolically permit the eastern zone to affiliate with West Germany, the Americans construed their rejection of the Basic Law as proof of malevolence. After extended negotiation, the group's main accomplishment was to strengthen the New York agreement on access into Berlin.99 There was also minor progress on a treaty for Austria. The bizarre finale came when the Western powers learned through a French wiretap that Vyshinski's superiors were furious over a loophole in the Austrian clauses. Confronted with his nervous request to reopen discussion, Bevin and Acheson returned to the Quai d'Orsai, where they fraternally linked arms and sang out the
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Acheson, Draft Telegram, June 8, 1949; Bohlen to Secretary of State, June 9, 1949, RG 59 Bohlen MSS, DSNA; Secretary of State to President Truman and Acting Secretary Webb, June 11, 1949, FRUS 1949 111:977-79. U.S. Delegation at the Council of Foreign Ministers to President Truman and Acting Secretary of State, May 26 & 27, 1949, Ibid.:924-26. Bevin to Harrison, Conversation between the Secretary of State and the Soviet Foreign Minister, June 11, 1949, FO 371/76780/PRO. Communique of the Sixth session of the Council on Foreign Ministers, June 20, 1949, FRUS 1949 111:1062-65.
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stanzas of "The Red Flag." Their music indicated no upsurge of benevolence, as the two men stood fast on the final wording and moved the session toward adjournment.100 By June 22 Acheson was back on Capitol Hill in a triumphant mood. He explained to the Senate Foreign Relations Committee that the Russian position was "absolutely sterile . . . absolutely defensive." One of "the most amazing things was that it put them in the worst propaganda position in the world, and they took a dreadful beating in Germany and Europe." Bob Murphy had brought a consultative committee of west German leaders to Paris and they had been "solidly behind" the Western position. It was now absolutely certain that a West German government would be rapidly established.101 Of course, the meeting had been personally vexing. Acheson confided to the legislators how Vyshinski never answered any questions directly and after absorbing an hour and a half of irrelevant translations, "you are so mad, so bewildered and so tired that it is all you can do to keep from breaking up everything." One interlocutor wondered if Vyshinski knew any English, to which Acheson replied irritably, "he speaks a few words of English* but he insists on speaking in Russian." Reverting to his preconference exchange with the secretary, Senator Vandenberg wondered about the longer implications. Would there be another CFM in September? Acheson thought there would be discussions about whether to hold one, but saw "absolutely no purpose in meeting again until some situation develops here." In other words, inquired Vandenberg "so far as the German situation is concerned there is nothing that prospectively lies ahead?" Assenting, the secretary reflected, "There is nothing ahead."
100 101
Acheson, Present at the Creation, 395-96; Bohlen, Witness to History, 286; Jessup to the acting Secretary of State, June 20, 1949, FRUS 1949 111:1038-39. U.S. Senate, Comrnittee on Foreign relations, Hearing held in Executive Session, Results of the Foreign Ministers Conference, June 22, 1949, 23-29.
Conclusion: The American Decision to Divide Germany
A H E A D WERE FORTY
years of Cold War, which ended abruptly on November 9, 1989, when euphoric Germans from east and west breached the wall in Berlin. Their reunion, oddly reminiscent of an earlier rendezvous when the two joyous Allied armies joined at the Elbe, terminated an exceptionally dangerous and tragic period of international relations. T o AN A M E R I C A N audience, the denouement in Germany held an obvious meaning: The Russians had split the country, and they had lost. For a generation, the Berlin Wall had been the prime symbol of the Cold War era. It exemplified the Soviet habit of foisting communism on unwilling people and imprisoning them forever. Although erected in 19 61, twelve years after the establishment of two separate German states, it was the tangible proof of the Soviet Union's culpability. Despite their manifold violations of human freedom, the Soviets were not the architects of the German settlement. It was the Americans and their British partners who had opted for partition with the associated congealment of the continental division. In contrast to their British confederates, U.S. policy makers had made their decision slowly and reluctantly, but it was America's wealth and power that assured its realization. Though long forgotten, the Americans and British had initiated all the formal steps toward separation. In violation of the quadripartite framework established at Yalta and Potsdam, they had opted to fuse their two zones economically (December 1946), to incorporate western Germany in the Marshall Plan (July 1947), to implement a separate currency reform (June 1948), and to convene a Parliamentary Council for the establishment of a West German state (September 1948). In each instance, there was some equivalent move in the eastern zone. Yet the pattern of U.S.-British action and Soviet response was a consistent one. As in a divorce where the party filing papers is not necessarily the one 485
486 Conclusion: The American Decision to Divide Germany

who caused the rupture, formal situations are not always illuminating. Indeed at the time they adopted these measures, the Americans and British maintained that the Soviets had created the schism through their unofficial obstruction of German unity. Such claims nurtured the impression of both their publics that Germany was divided because the Soviet Union had closed off the east. From the beginning of its occupation in April 1945, the Soviet authorities had imposed a repressive regime, which significantly curtailed German liberties. However, at the point when the Americans and British began their formal moves toward partition, the eastern zone was still a relatively open place - certainly in comparison to what it subsequently became. Not surprisingly, the greatest latitude existed in the quadripartite city of Berlin where, under the protection of the Allied Kommandatura, people and goods were circulating freely and political parties were competing fiercely for public support. Because Berlin was inside the Soviet zone, this ferment and diversity spilled over to the surrounding areas, limiting the Russians' ability to control the sentiments and activities of the populace. While the relationship among the four zones was less fluid than the situation in Berlin, there was controlled trade and travel with an associated transmission of books, newspapers, and ideas. Political conditions inside the eastern zone tightened appreciably after March 1946, when the Soviets forced the merger between the Communist and Social Democratic parties, and granted the new Socialist Unity Party (SED) predominant power over administrative agencies. Even then, two bourgeois parties - the Christian Democrats (CDU) and the Liberal Democrats (LDP) - were allowed to operate independently with their own press and regular public meetings. Though frequently harassed, these anticommunist groups participated actively in provincial elections and polled a strong vote during the fall of that year. The same mixed pattern obtained in the economic sphere, where the Soviets pursued an inconsistent, opportunistic policy. In late 1945 they had pushed through a radical land reform measure, which divided all estates over one hundred hectares, but the resulting parcels were widely distributed into the private hands of landless settlers and poor farmers. In the industrial field, they had authorized the Lander to sequester "ownerless property" as well as the property of the German government, the Nazi organizations, and the "leading members and influential followers" of the Nazi Party. Yet they were slow to transfer ownership to the state. During the summer of 1946 the eastern provinces held referenda on the disposition of the sequestered facilities, thus paving the way for substantial socialization. However, some portion of these confiscated enterprises were returned or resold to private individuals. In conjunction with those properties that had not qualified for sequestration, this meant that much of the eastern industry was still under private ownership. Between 1947 and 1949 Soviet policy accelerated in a dictatorial direction. By the end of the period, their alleged commitment to political and
Conclusion: The American Decision to Divide Germany 487

social pluralism had given way to one-party control and state direction of economic life. However, in distinguishing cause-and-effect, the chronology remains pertinent. In the summer of 1947, when the Americans and British reached a clear decision to divide Germany, the presence of these trends had not yet obliterated the alternative voices, political organizations, and social institutions in the east. Furthermore, while the American and British officials deplored the internal trends in the Soviet zone, this was never their primary focus. Among U.S. representatives in Germany it was widely assumed that if a satisfactory formula for reunification could be found that troublesome conditions in the east might still be ameliorated. However, during a succession of foreign ministers' meetings - commencing in April 1946 and culminating in November 1947 - the leaders of both governments decided that such a formula was impossible. When they referred to Soviet intransigence and obstructionism, they had chiefly in mind the Soviet Union's conditions for amalgamating the zones. To a remarkable extent, these Soviet conditions remained unchanged from the time of Yalta and were devoid of Marxist content. Especially noteworthy was the Soviet negotiating position at the Moscow Council of Foreign Ministers in March-April 1947. This was the first such meeting that was devoted exclusively to a consideration of German and Austrian problems, and it was by universal agreement the most important policy discussion since the war's end. Because the conclave occurred against the background of the Truman Doctrine speech and an overall deterioration of East-West relations, it would not have been surprising if the Soviet Union had been uncooperative. As presented by Foreign Minister Molotov, the Russian package was designed to meet pragmatic security and material requirements. In speeches grown stale with repetition, Molotov stressed the necessity for reparations and reaffirmed the figure of 10 billion dollars, which he insisted should come from current production rather than capital equipment. He also recycled demands for four-power control of the Ruhr and a vigorous policy of "democratization" - by which he denoted land reform, denazification, decartelization, the rapid reconstruction of trade unions and other social initiatives. In the biggest change of Soviet policy, he accepted the concept of a freely elected German provisional government, which he expected to be centralized along the lines of the Weimar constitution. During the official sessions, Molotov promised that if the Soviet terms were met, his government would accept an upward revision of the German Level of Industry and would facilitate the rapid reintegration of the zones. Off the record, the Russians intimated to their Western colleagues that many of their planks could be modified if reparations demands were satisfied. Whatever the merits of the Soviet program, it did not differ appreciably from that previously advanced by liberals in the Roosevelt administration, whose ideas had been partly embodied in the Yalta reparations clauses, the

German provisions of Potsdam, and the Joint Chiefs of Staff Directive 1067. Such convergence was admittedly of slight comfort to the less reform-minded members of the Truman team who viewed these documents skeptically. Their displeasure notwithstanding, the Soviet Union was still exhibiting a surface willingness to accept the norms of parliamentary democracy and to open a wider door for capitalism in the eastern zone. During the Moscow meetings, U.S. officials recognized that the Russians were desirous of German unification, even though some versions would not be acceptable. The Soviets would not, for example, forfeit reparations removal from their zone in order to reintegrate the country. However, the Soviets' appetite for a bargain was apparent for a reason that was scarcely mysterious. As prescribed by Yalta, the western zones of Germany included the majority of the land, people, and resources of the country. The Ruhr alone contained sufficient coal, steel, and chemicals to make West Germany an economic and political power in its own right. Should the country be split, not only would the Soviet Union lose access to the wealthiest portion; it ran the risk that West Germany could, in association with the Western nations, become a grave military threat. In the two tense years that followed the Moscow deliberations, the Americans and British never lost sight of the Soviet wish to reconnect the zones. Once the Marshall Plan was launched, with its presumption of West German participation, their policy was shaped by a fear that the desperate Soviets might offer a deal that could not be rejected. It was this anxiety that Ambassador Walter Bedell Smith was voicing, when he wrote his friend Eisenhower in December 1947: The difficulty under which we labor is that in spite of our announced position, we really do not want nor intend to accept German unification in any terms that the Russians might agree to, even though they seemed to meet most of our requirements. In the wake of the Berlin blockade, Smith himself would become more receptive to unification. However, even in the darkest days of that crisis - when the success of the airlift was in doubt and a third World War seemed to threaten - the U.S. government was skittish about negotiations, perceiving a Soviet ambush that could forestall the German partition. As they implemented the division of the country, the Americans and British were not simply ratifying an already existing situation. The conditions of the eastern zone remained unsettled and the Soviet bargaining position showed numerous signs of flexibility. In the gathering momentum for a separate West German state, there was continuing evidence that unification could be achieved. Why did U.S. officials prefer schism? At the end of the Second World War, American policy had been different. The prevailing view then, even among administration conservatives, was that Germany should be kept together and supervised by the Great Powers. During 1946-47, as this

attitude was reevaluated, one pervasive element was the mounting fear of Soviet aggression. Washington policy makers were strongly affected by the reports from George Kennan and others, who perceived a Soviet plan to take over Western Europe. As applied to Germany, that analysis presumed the Soviet Union would use any centralized machinery to subvert democratic institutions in the western zones. Thus even if unification was attainable, it would be too dangerous. Significantly, the leaders of U.S. Military Government in Germany did not share Kennan's assessment. In hundreds of cables and oral reports, they highlighted the weakness of the Communist Party in western Germany, the ineffectiveness of the Soviets in reversing that situation, the fragility of the SED's grip in the east, and the probability that unification would extend democratic influences beyond the Elbe. These observers also believed the Russians were economically desperate, and would forfeit political advantages in order to garner reparations. If Washington officials listened more to Kennan than their representatives in Germany, this was because his gloomy prognostications fit their policy preferences. The core of realism in their position was the appreciation of a genuine clash of interests between even the minimum Soviet program for reparations and security, and their own aspiration for West European recovery and integration. Though it had initially seemed possible to reconcile the two agendas, difficulties in procuring coal, steel, and chemicals from the Ruhr, and restoring the German market for West European goods had reduced that prospect. As the western zones stagnated, each Russian demand - for reparations deliveries, for quadripartite controls in the Ruhr, for a breakup of the large German combines, for denazification of management, for a politicized labor movement - became harder to tolerate. Ultimately, it became an intellectual fine point whether these Russian claims reflected sincere anxieties about German militarism or nefarious schemes for taking over the country. To U.S. officials what mattered was the Soviet interference with their plans for German rehabilitation. After mid-1947 there was even less room for argument as Soviet rhetoric and behavior became significantly more provocative. Within Europe, the formation of the Comintern was accompanied by a summons to Western communist parties to engage in disruption and sabotage, and by mounting repression in Hungary, Rumania, and Poland. Inside Germany itself, the western Communist Party (KPD) was mobilizing working-class resistance to the Marshall Plan, while the Soviet military authorities were accelerating the trend to one-party rule in the east. Taken in aggregate, these developments seemed to confirm the analysis of those American officials who viewed the Soviets as unscrupulous partners, whose only genuine goal was world revolution. When these transgressions were capped by a Russian decision to blockade Berlin, the brief against the Soviet Union hardened into doctrine. Yet even in this latter phase, there was a willful narrowness in American

thinking. If Soviet behavior was getting worse, it was also true that they were being locked out of western Germany and denied the benefits of their World War II victory. The likelihood that these situations were connected, that Soviet belligerence was partly the result of feeling cheated and threatened, were topics that could not be probed. Only on the political fringes would a dissident like Henry Wallace wonder if a German compromise could still reverse the most dangerous developments in Western and Eastern Europe. Within mainstream circles, such an inquiry was anathema. During 1948-49, as in the earlier period, the American disposition to adopt the most pessimistic view of Soviet intentions was sustained by external considerations. Of special weight were the cleavages that had opened in the Western camp during the London conference, as the United States pushed the pace of West Germany's economic and political restoration. With neighbors questioning the rapid dismantling of controls, and German politicians bridling at the terms of governance, any prospect of Russian reinvolvement was unappealing. The Berlin blockade also played a major role in fixing Washington's attitude, not only for the obvious reason that it demonstrated Russian malevolence but because it revealed the uses of Cold War polarization. Mindful of fissures among the Western principals, the Soviets had begun the blockade hoping to widen them, and thereby arrest the movement toward partition. Yet with the inception of the airlift, U.S. policy makers were surprised to discover that the East-West confrontation was enabling them to solve previously intractable problems. Under the shadow of the blockade they were able to forge agreements on the international organization for the Ruhr, the reduction of economic controls in western Germany, and the structure and powers of the new West German state. While there was a rational underpinning for the rigid anti-Sovietism, the indulgence in hyperbole produced some irrational effects. At crucial moments, American officials were unable to make hardheaded assessments of diplomatic opportunities. One such occasion was the Moscow Conference of Foreign Ministers, when General Clay urged his American colleagues to authorize a technical study of current production reparations in order to determine whether there was some level of allocations that could be harmonized with a German recovery program. This modest but sensible idea was buried by the ideologues in the U.S. delegation, for whom the practical arithmetic was eclipsed by the diabolical nature of the Soviets. Eighteen months later, a similar dynamic was at work when a chastened George Kennan offered Plan A as a possible solution to the Berlin crisis. By this time, Kennan had drastically modified his earlier views and had become profoundly disturbed by the impending division of Europe. To arrest this development in Germany, he had crafted a proposal that provided for a single provisional government and the scaling back of the political and military presence of the occupying authorities. Because the

plan was stacked with one-sided clauses, such as the provision for a united Germany to participate in the Marshall Plan, Kennan was doubtful that the Soviets would accept it. Yet were they acquiescent, they would be surrendering their exclusive position in the east in exchange for a very limited role in the west. Remarkably, Kennan's superiors were loathe to explore the matter, preferring not to know whether the Soviet Union would accept the strict conditions. This willed ignorance and reluctance to explore negotiating possibilities was a recurrent feature of the American stand in Germany. While partially stimulated by the ostensible advantages of polarization, it also derived from a perception of Soviet vulnerability. For all their alarms about Russian aggression, U.S. policy makers saw the Soviets as weak both economically and militarily. This judgment allowed them to make careless calculations, to disregard the Soviet interests with a sense of impunity, and to sacrifice potentially favorable bargains with the expectation of a complete collapse down the road.
T H E ROAD WAS
very long, and there is reason to wonder if ordinary citizens would have chosen it. In retrospect, it is shocking to consider how inaccurately the U.S. government communicated its German policy to constituents. For the first two years after the war, little was said about the effort to rebuild the country. As far as most Americans knew, the main goal was to punish Nazis and reform the society. After mid-1947, the focus shifted to the containment of Soviet aggression. With the inception of the Berlin blockade, President Truman articulated a simple story that featured the Russians, trampling the wartime agreements in their ruthless grab for the former German capital. The president did not explain that the United States had abandoned Yalta and Potsdam, that it was pushing the formation of a West German state against the misgivings of many Europeans, and that the Soviets had launched the blockade to prevent partition. In offering this distorted account, Truman was partly responding to the pressures of confrontation and the need for a short, intelligible description that would rally public support. Yet since his experience at Potsdam, the president had never involved himself in the German problem, and it is doubtful that he understood its complexities. Though informed of the London decisions, he did not seem aware that his subordinates were propelling separation, nor did he apprehend the gravity of the Soviet response. The importance of German policy, notwithstanding, momentous decisions were made without the significant participation of any elected officials. Even Senator Vandenberg, the most informed of Washington legislators, was startled when Secretary Acheson came before the Foreign Relations Committee in 1949 and outlined the State Department's approach. Until that point, neither Vandenberg nor his colleagues on the
49 2 Conclusion: The American Decision to Divide Germany

committee had realized how determined the State Department was to create a separate West German state, regardless of Soviet terms. This abdication of political leadership framed the public's obliviousness to the issues. Without accountable officials, able and willing to outline the existing options, there was little opportunity for democratic debate. Instead, policy was established by the national security bureaucracies, with their strong penchant for secrecy. Lacking pertinent information, citizens were relegated to the sidelines, where they could cheer for the airlift. There are some grounds for claiming that the public interest was well served, even in the absence of informed consent. U.S. policymakers aimed to protect the nation's security by salvaging free market economies in Western Europe. For this purpose the exclusion of the Russians from the western portion of Germany seemed increasingly attractive. Once the severance had occurred, West Germany played the projected role, reviving quickly and providing goods and markets to its neighbors. The success of the Marshall Plan sustained American prosperity and offered a margin of military safety through the stabilization of Western Europe. One price of these accomplishments was that East Germany was abandoned to the Russians, along with the rest of Eastern Europe. Ironically, it was George Kennan - the earliest and most vigorous proponent of "containment" - who became most disturbed by this consequence. For years, he had lamented the Soviet infringements of eastern rights and called upon his government to disassociate itself. But at the point of partition, Kennan apprehended how much more repressive the regimes could become and discarded his own counsel. Another charge for the division of Germany was the militarizing of Europe. As illustrated by the Berlin blockade, the splitting of the country meant that the United States and the Soviet Union would become mortal enemies, whose urgent interests could engender armed conflict. U.S. policymakers reckoned that their monopoly of nuclear weapons and ability to join with Western Europe in a buildup of conventional forces would deter Soviet advances. However, the very reliance on military power made the international environment more menacing. Not only did it insure that the Soviets would cling to every scrap of territory they had gained; it guaranteed a costly arms race and endowed even remote places on the globe with a strategic significance they might not otherwise have held. Later many would wonder why young Americans were dying in Korea and South Vietnam, but the logic of a military rivalry lent reason to these encounters. Among the small circle of Americans who set policy for Germany there was little attempt to weigh alternatives. What finally gave shape to their deliberations was a conception of national security that took the expansion of West European free trade as an absolute requirement for the United States. Though this reflected the aspirations of the large internationally

oriented corporations and banks, it was less clearly in line with the predilections of the public, for whom issues of East European freedom and the maintenance of peace held greater salience.
F R O M THE PERSPECTIVE of the mid-1990s, with Soviet communism so severely discredited, there is a temptation to again lay at their feet the blame for every international transgression. This disposition has been quite naturally strengthened by the opening of archives, which offer new manifestations of Eastern bloc despotism. Though the atmosphere is unpropitious, there is still good reason for historical fairness. The oppressive internal policies of the Soviet Union that were gradually imposed upon the population of East Germany were not the source of the postwar schism. In the aftermath of victory, what produced that unwanted result was an ambitious American agenda, which was juxtaposed on a European continent that was more impoverished, strife-ridden, and unruly than anyone in Washington had envisioned. In conjunction with America's preponderance of military and economic power, this yielded high-risk policies, whose most painful consequences were mainly borne by others. Had American officials been more flexible and sought a compromise solution in occupied Germany, it is possible that the Soviets would have blocked or overturned it. But this is something we cannot know since the United States selected a different course. In the wreckage of the Cold War, America has yet to acknowledge responsibility for the structures that it built.
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Index
Abs, Hermann, 262 Acheson, Dean, 12, 16, 28, 176, 206, 230, 289, 302, 470, 472 and the New York Conference of Foreign Ministers, 254-8 as Secretary of State, 475, 479, 4801, 483-4 Ackermann, Anton, 216 Adenauer, Konrad, 276, 356, 402, 458 Adler, Julian Ochs, z66n, z6jn Advisory Committee for Postwar Foreign Policy, 16 AFL-CIO rivalry, 154-7 Agartz, Victor, 311, 342.-3 Agreement on Control Machinery, 58 Airlift, 413-14, 4i3n, 416, 427, 427n, 443 Allied Control Council (ACC) announcement of bizone to, 241-2 British attitude toward, 239 Byrnes' undermining of, 240 and decartelization, 149, 264 decision-making apparatus of, 168-9 disagreements concerning the bizone, 259-61 and eastern zone politics, 218-21 and the export-import program, 201-12 and French obstructionism, 167-76 and the Level of Industry plan, 113-14,
201-12
quadripartite functioning of, 72-89 and reparations, 114-16 Soviet attitude toward, 241 Soviet walk out from, 391-2 in a state of suspension, 407 Allied Control Council (ACC) laws Law 5, 204-5 Law 8, 134, 135-6, 137, 138, 149 Law 9, 148-9 Law 22, 220-1, 344, 448 Allied Reparations Commission, 22, 87-9, 115-16, 178 American Association of the International Chamber of Commerce, 284 American Federation of Labor (AFL) activities in Germany, 152, 154-7, 219 rivalry with the CIO, 154-7, 345, 346 Antifa, 126, 127, 188 Antitrust campaign, in the United States, 140-1 Armstrong, Hamilton Fish, 16, 40-1, 51, 282, 283 Arnold, Thurman, 140 Atomic bomb role in the Berlin crisis, 424-6, 441, 443 role at Potsdam, 95, 96, 104, 112, ii2n Atomic Energy Commission (AEC), 424-5, 441 Attlee, Clement, 262 Avery, Johnston, 269 B-29 bomber, 414, 4i4n, 416 Baruch, Bernard, 90 Basic Law, 442, 458, 472, 475, 476, 477
limitations on authority, 292-3 and occupation forces, 353-4 preliminary plans for, 27, 50, 57, 58, 61, 62
513
Index
Baumgartner, Josef, 30911 Bavaria, 130, 132-4. See also Patton, George Bell, Laird, 136-7, 138, 199, 203-4 Benelux nations, 370, 371, 455-7 Bennett, Jack, 382 Berghahn, Volker R., 14m Berlin access routes into, 79 blockade of, 10, 13, 79, 379~94> 411-76, 490, 491 supply of, 79-80 Berlin Wall, 485 Bernstein, Bernard, 33, 79n, 131, 143, 146-7, 149, 160 Bevin, Ernest, 258 and the Berlin blockade, 413, 416, 418, 428, 432, 441-2., 454, 467-8, 46711, 469, 471, 475 and bizonal fusion, 27m, 272-3 and bizonal governance, 367, 368, 379 and Byrnes' disarmament treaty, 239-40, 241 and the European Recovery Plan, 324, 332-, 339, 360, 361 and the Moscow Conference of Foreign Ministers, 294-5, 309-11 and Potsdam, 109-10, 111, 114 Bidault, Georges, 295, 308, 324, 328, 356, 360, 361, 397, 398, 400-1, 403 Biddle, Francis, 141 Bizonal laws Law 56, 269, 375, 375-6n Law 75, 452.-3, 45*n Bizonal ordinances Ordinance 55, 449 Ordinance 78, 269 Bizone Allies' disagreements over, 364-79 Bizonal Fusion Agreement, 457n French objections, 365-6 fusion, 261-76 Black marketeering, 89n Blum, Leon, 207 Boehling, Rebecca, i29n Boettiger, John, 64 Bohlen, Charles E. ("Chip"), 56, 94, 280, 288 role in Berlin crisis, 419, 430-1, 461, 466, 475-6, 480, 482-3 Bonnet, Henri, 328, 330 Bowie, Robert, 80 Bowman, Isaiah, 16, 41 Boyd, James, i35n Bradley, General, 392, 393, 424 Bramuglia proposal, 463-8 Bronson, Richardson, 376, 377, 378 Bruening, Heinrich, 159 Brussels pact, 388, 389, 390 Buchenwald, 124-6 Bundy, Harvey, 34 Burgess, Randolph, 249 Byrnes, James, 170, 176, 202, 206-7, 256, 258, 273 disarmament treaty, 228-31, 234-48, 294, 307-8, 368 inexperience in politics, 90, 93-4,
117-18, ii7n
and the Paris Council of Foreign Ministers, 228-31 and Potsdam, 93-105, 106-11, 114 Caffery, Jefferson, 208 Cartel agreements, 139-40 Cartels, German, 139-40. See also Cartel agreements; Decartelization Chataigneau, M. Yves, 429 Christian Democratic Union (CDU), 189, 2-53 eastern zone, 251, 349, 356, 383, 486 Churchill, Winston, 43, 72, 74 at Potsdam, 89-105 at the Teheran Conference, 24 and troop movements, 72, 74-5, 76-9 and the Yalta Conference, 57-61 Clark, Delbert, 377 Clay, Lucius DuBignon appointment as Military Governor, 66-7 and the Berlin crisis, 379-94, 411-76 and bizonal fusion, 261-76 and bizonal tensions, 364-79 and Byrnes' disarmament treaty, 234-48 cooperation with the Soviets, 167^9 crusade for unification, 244-5, 2.48-61, 288-9, 315-16 and decartelization, 374-9 and deteriorating Allied relations, 379-94 and eastern zone politics, 212-21 and the European Recovery Plan, 325-62 end of Military Governorship, 476-7 and the export-import plan, 201-12 and French obstructionism, 167-76
Index
governance of the U.S. zone, 121-65 and JCS 1067, 67-8 and the Level of Industry plan, 201-12 and the London Conference of Foreign Ministers, 394-404 and the Moscow Conference of Foreign Ministers, 291-317 opposition to British ideas, 310-11 and the quadripartite Allied Control Council, 72-89 and reparations, 176-86 "stop order" of, 212-13 trusteeship plan, 334-42 See also Allied Control Council (ACC); U.S. Office of Military Government (OMGUS) Clayton, William, 9, 64-6, 68, 92, 99n, 173, 177, 3*i-2-> 332, 337, 338-9 and Potsdam, 98-105, 107, 109, 116, 118 Clifford, Clark, 256 Clifford-Elsey report, 256 Coal Coal Conference, 339-42 coal directive, 84-6, 208 Coal Management Plan, 342 production, 130 supply of, 84-6, 171, 208, 234-5, 281 Coblenz resolutions, 421, 422 Codetermination, 447-9 Cohen, Ben, 94, 280, 288, 301, 314 Cominform, 348 Comintern, 348 Committee for European Economic Cooperation (CEEC), 324 Congress of Industrial Organizations (CIO), 152, 154-7, 345 Connally, Thomas, 245 Containment, Kennan doctrine of, 478-9 Cope, Elmer, 346, 347n Council on Foreign Relations (CFR), 16 Committee on War and Peace Studies,
16, 18-19,
2 I
German study group, 281-4 Currency reform, 380-2, 409-10, 446-7 Czechoslovakia, communist coup in, 369, Dachau, 126 Dahrendorf, Gustav, 214 Daniell, Ray, 131, 132, 135, 149, 180, i99n, 267, 267n Davies, Joseph E., 91-3, 94-106, 111-12
Davis, Norman, 16 Dean, Patrick, 295 Decartelization, 139-51, 195, i99n, 375n, 45i abandonment of, 374-8 proposals for the Ruhr. See Ruhr, the U.S.-British efforts, 264-9 Defense Department, 415, 424, 425-6, 440 DeGaulle, Charles, 170, 455 Deighton, Anne, 29 5 n Deindustrialization, 37, 41-3, 56, 65, 114 Demilitarization, 22-3, 37, 56, 60, 114, 119, 237 Denazification, 11, 36-7, 47, 50, 56, 68, 118-19, 122-38, 267, 452-3 British attitude toward, 262-3 end of program for, 372-4 failure in the Ruhr, 297-8 and SMA Order 124, 194-5 in the U.S. zone, 122-38 Despres, Emil, 83n Devereux, Fred, 144 Dewey, Thomas, 444, 445 Diebold, William, 19 Dillon, Read & Company, 144 Dinkelbach, Heinrich, 262, 298 Disarmament. See Demilitarization "Disease and unrest" formula, 48-9, 80-1, 83 Division of Cartels and External Assets (DICEA), 147, 149, 150, 160, 199 Dodge, Joseph, 146, 148, i48n, 149 Dodge-Goldsmith-Colm report, 38on Douglas, Lewis, 67, 81, 86n, 370, 371, 380, 387 and the Berlin crisis, 418, 453-4, 455, 456, 466, 473 and the European Recovery Plan, 330, 331-4, 339 and the London Conference of Foreign Ministers, 397, 398 Draper, William P., 67, 80, 93, 209, 210, 340 and the Berlin crisis, 413, 466, 472 and bizonal fusion, 264-6, 268, 271 and Byrnes' disarmament treaty, 242, 243 and Clay's crusade for unification, 248-9, 256, 259-60 and decartelization, 144, 150, 151 and the Moscow Conference of Foreign Ministers, 291, 292, 311 and reparations, 179, 180
i6
Index
Forrestal, James, 12, 223, 387, 424, 426n, 441, 445 Fowler, William, 178-9 Fox, Abijah, i48n France, obstructionism of, 167-76, 206-8, 295, 308, 328-34, 395 Frankfurter, Felix, 40 Free German Trade Union Federation. See Freier Deutscher Gewerkschaftsbund Free Germany Committee, 21-2, 53-4, 124, 126-7 Freier Deutscher Gewerkschaftsbund (FDGB), 193-5, 197, *98 2,17-18, 219-21, 345-7, 385, 408-9, 438 Friedrich, Carl, 458n Fusion, battle over, 212-18 Galbraith, John Kenneth, 235, 245, 282 Gardiner, Ted, 385n Gaullists, 356 German-Austrian Affairs (GA), office of, 227, 2 3 0 - 1 , 242, 292, 325 German Country Unit, 30 German External Property Commission (GEPC), 204, 205 Gimbel, John, 85n Gottlieb, Manuel, 417 Gould, Joseph, i53n, 161 Grew, Joseph, i77n Grotewohl, Otto, 190, 213, 214, 2i4n, 216 Group Control Council, 48-9 Gusev, Fedor, 25 Gutehoffnungshiiette (GHH), 376, 376n, 378 Hall, Ted, 374 Harriman, Averell, 12, 23-4, 24n, 87 and the Berlin crisis, 424n, 426-7, and the bizone, 368, 373, 375 and Potsdam, 92, 93, 97, 112, i i 2 n , 117-18, n 8 n Harris, David, 225-6 Hawkins, Philip, 376, 449 Hayes, Peter, 14 5 n Henschel und Sohn, 376, 378 Herod, William R., 282, 283 Hesse and codetermination, 344-7, 447-9 and socialization, 274 Hickerson, John, 339, 353 Hilldring, John, 13 5n, 205, 280
DuBois, Josiah, 86 Dulles, Allan, 134, 137-8, 203-4, 28711 and the Council on Foreign Relations, German study group, 282-4 and OSS activities, 73, 123, 124, 287n Dulles, John Foster, 12, 286-8, 28 8n, 291, 301, 3i3n, 428 Dunn, Andrew Joseph, i54n Dunn, James, 92 Durbrow, Charles, 254 Eastern zone and agricultural policy, 191-2 and industry, 194-5 and labor, 192-4 politics in, 187-91, 212-21 and socialization, 195 and the U.S. Military Government, 196-9 Economic Commission for Europe (ECE), 324 Economy, postwar European and administration conservatives, 15-31 and administration liberals, 31-51 Eden, Anthony, 33 Ehard, Max, 422 Eisenhower, Dwight D., 30, 72, 124, 167-8 and the Patton scandal, 132-5 and reparations, 182-3 during World War II, 72, 74-8, 74n Elsey, George, 256 Erhard, Ludwig, 446 European Advisory Commission (EAC), 24, 25-6, 72 European Recovery Plan, 10, 318-62, 492 Evatt, Herbert, 462 Executive Committee of Foreign Economic Policy (ECFEP), 28, 30 Export-import plan, 184, 201-12 Fahy, Charles, 150 Farben, IG, 139, i39n, 141, 145-6, i45n, 148-51, 375 Faulhaber, Cardinal, 130 Fichter, Michael, i54n, i63~4n "First-charge" principle, 89, 115, 116, 184, 315 Fischer, Louis, 249 Folsom, Marian B., 284 Food, supply of, 83-4, 234, 281 Foreign Economics Administration (FEA), 178-9
Index
Hillman, Sidney, 156, 15611, 160 Hitler, Adolf, 75 Hoaglund, Peter, 144 Hdgner, Wilhelm, 134 Hoover, Calvin B., 179-81, 208 Hoover, Herbert, 2,84-5, 2.85n Hoover report, 325 Hopkins, Harry, 9, 25, 36, 40, 41, 46n,
62, 91
background of, 38-9 on reparations, 60, 6on Soviet confidence in, 77-8 on the Yalta Conference, 61 Howard, Graeme, 30, 3on, 48, 49 Hull, Cordell, 16, 25, 36, 38, 39, 43, 44 background of, 334 and wartime diplomacy, 22-3 Humphrey, Donald, i i 3 n , 242, 291, 300 Humphry Committee, 454 Independent Workers Opposition (UGO), 385-6, 408-9 Instrument of Surrender, 58 Inter-Allied Reparations Administration (IARA), 177, 454 IT8cT, 144 Ivanov, V. S., 352 Jacobs, George, 300 JCS 1067, 64, 65, 118, 131, 142, 145, 244 anxiety concerning, 80-1 and the Clayton committee, 68 content of, 47-51 and denazification, 122-3 dilution of by U.S. policy makers, 372 and the Potsdam protocol, 139, 151 proposed revision of, 226 J. Henry Schroder Bank, 286n, 28 7n Jeffrey, Newman, 1 5 4 ^ 156-7, 158, 159,
161
Karmack, A. M., 131 Keenan, Joseph P., 159, 159ml, 341 Kennan, George, 26, 329, 405, 481 anti-Soviet rhetoric of, 55, 223-4, 256-7, 489 and the Berlin crisis, 439-40 and containment, 492 versus Murphy, 222-7 Plan A, 478-9, 490-1 recommendations for European recovery,
320-1
Keynesianism, 17-18, 32 Kilgore Committee, 141-2, 265, 266-8 Kindleberger, Charles, 203, 242-3, 301, 32.5 Koeltz, Louis M., 168, 170 Koenig, Pierre, 168, 170, 336n, 395, 396, 407, 420, 421, 422, 437, 459 Kolpakov, Deputy, 242, 249-50 Kommandatura, 198, 241, 253, 350-1, 386-7, 408 Kotikov, General, 465 Kotzebue, Alfred "Buck," 2 Koval, General, 259-60 KPD, 187-93, *96-7, 2.13, 216-17, 2.20, n 279, 279n, 296n, 349-5> 3$3 > 384 Kreise elections, 213 Krock, Arthur, 44-5 Krug, Julian, 368 Kurt Schroder Bank, 287n Landerrat, 235 Lane, Bliss, 304-5 Law for Liberation from National Socialism and Militarism, U.S. zone, 2.63, 373 Leahy, William, 93, 93n Lemmer, Ernst, 219, 383 Leonhard, Wolfgang, i88n Level of Industry plan (LIA), 178, 185-6,
201-12, 242, 299, 311, 327-34, 367
Jessup, Philip, 462, 463, 464, 475, 476, 479 Johnson, Ed, 131 Joint Chiefs of Staff, 27, 28, 51, 74n, 392 and the Berlin blockade, 425-6, 440-1 Joint Export-Import Agency (JEIA), 397, 397n, 450 Justice Department, and decartelization,
140-2, 145
Kaiser, Jacob, 219, 252, 349, 356, 383, 409
Levin, Carl, 131 Liberal Democratic Party (LDP), 189, 251, 253, 486 Lie, Trygvie, 462 Lightner, Milton C , 282 Lilienthal, David, 425, 425n Lippman, Walter, 435 Litchfield, Edward, 291, 395 London accords, 390-1, 400-4, 429, 455, 471 Soviet dissent from, 429-34
i8
Index
and the Moscow Conference of Foreign Ministers, 296-300, 296n, 298n, 302, 3O3, 305 and Potsdam, 102-3, 105-9, 111, 114 Monnet, Jean, 35 Monnet Plan, 328, 331 Morgan, Shephard, 282 Morgenthau, Henry, Jr., 9, 52, 63-6, 68, 84, 90-1, 9on, 142, i46n and Treasury opposition to postwar plans, 32-51 Morris, Brewster, 11 n, 125, 196 Moscow Conference of Foreign Ministers, ^77-317, 487-8 Mosely, Philip, 26, 30, 33, 51, 52-3 Muir, Malcolm, 266n Mullaney, Harold Francis, i54n, 163 Murphy, Robert, n n , 49ml, 67-8, 99, 99n, 196-7, 198, 218, 221, 222n, 241, 254, 273, 354^ 356, 407^ 479-80 and the Berlin crisis, 447, 459, 465, 472-3 and denazification, 123, 125-6, i28n, i29n, 134, 135 and the German economy, 205-6, 209 versus Kennan, 222-7 Murville, Couve de, 174, 396 Myrdal, Gunner, 468 Naimark, Norman, n n National Security Council, 414, 427, 441 Nazi Labor Front, 158 New Dealers, 9 and decartelization, 140-2 and postwar planning, 32-51 New York Council of Foreign Ministers, 254-8 Niethammer, Lutz, i23n Nixon, Russell, 138, 147-8, 149, 151, 205 North Atlantic Treaty Organization (NATO), 470-4 North German Coal Control (NGCC), ^35> 336, 34i North German Iron and Steel Control (NGISC), 271 North Rhineland-Westphalia, 271, 275-6 Occupation Statute, 420, 421, 459, 471-2, 473-4, 477 Oder-Neisse territories, 101-2, 224, 304-5 Office of European Affairs, 54
London Conference of Foreign Ministers, 353-62, 394-404, 49O Loreiaux, Franz, i53n Lovett, Robert, 34, 330, 332, 396, 400, 417, 444, 466, 467 Lubin, Isidor, 68-9, 69n, 86, 89n Luce, Henry, 266n McCloy, John, 9, 80, 82, 93, i46n, 282 and the atomic bomb, 95 background of, 34-5 concern about German militarism, 7on and JCS 1067, 39-5 1 and the partitioning of Berlin, 101 proposal for a western coal committee, 171, 173, 175 McLean, Donald, 80 McSherry, Frank, 125, 128, i56n, 158, 160, 163 Maisky, Ivan M., 99, 100 Malenkov, Georgi, 348 Malik, Ambassador, 475 Marshall, George, 12, 291-4, 380, 434, 443, 466 and the Moscow Conference of Foreign Ministers, 301, 302-7, 311-16 Marshall Plan. See European Recovery Plan Martin, James Stewart, 264-7, 2-69, 375 Mason, Edward, 143, 282 Matthews, Freeman, 37, 50, 76, 94, 225, 280, 288, 301 Meader, George, 267-8, 268n Meany, George, 156 Media assessment of Eisenhower, 134-5 critiques of denazification, 131-2 and Germany's industrial reconstruction, 180-1 and the Patton scandal, 132-4 unfavorable portrayal of FDR, 44-5 Meskiman, James, 347 Messer, Robert, 93n, 247n Miller, Francis P., 266 Mills, Percy, 262, 265 Molotov, Vyacheslav, 22-3, 229, 231, 258, 404-5, 487 and the Berlin crisis, 429, 431, 434, 442 and Byrnes' disarmament treaty, 237-8, and the European Recovery Plan, 324, 356-61
Index
Office of Strategic Services (OSS), 123 Office of War Information (OWI), 32 Operation Severance, 375, 451 Operation SUNRISE, 73 Paris Council of Foreign Ministers,
228-31, 233-40
at Potsdam, 100-1, 104, 105-11, 113-18 State Department recommendations, 87-9 U.S.-Soviet differences over, 176-86,
300-1, 306-8
Pasvolsky, Leo, 16, 36, 53 Patterson, Robert, 135n, 175, 176 Patton, George, 124, 130 and the scandal in Bavaria, 132-4 Pauley, Edwin, 69, 86, 86n, 87-9, 89n, 99, 99n, 100, 107-8, io8n, 116,
117-18
Peasant Mutual Aid Committees, 192 Peoples Congress Movement, 383 Peterson, Howard, 274-5, 3 2 9 Peterson, Maurice, 429n Pieck, Wilhelm, 213n, 216 Pillsbury, Edward, 148, 149 Poensgen, Ernst, 298 Pollock, James, i69n, 209, 21m, 268n, 4i7 Polowsky, Joseph, 1-6 Poole, DeWitt, 203, 282 Porter, Paul, i54n Potsdam accord, 113-22, 139, 151, 170, 176-7, 178, 179, i82n, i84n, 191, 280-1, 293 CFR attack on, 282-3 rejection by the Cohen-Hilldring team, 280, 281 State Department's attack on, 183-5 Potsdam Conference, 89-120, 291 Potter-Hyndley report, 84-5 Price, Byron, 175-6 Price, Hoyt, 282 Progressive Bloc, 189, 191, 192, 197 Protocol on Zones of Occupation, 57-8 Pruessen, Ron, 28 8n Quebec communique, 43-5 Quebec Conference, 42-6 Rathvon, N. Peter, Reconstruction Finance Corporation (RFC), 250 Reparations, 19, 22, 23, 29, 37, 56, 59-61, 66, 69, 87-9, 367, 453~4> 47i "first-charge" principle, 89, 115, 116, 184, 315 Molotov's demand for, 298-300, 358-60
Reston, James, 445n, 481 Reuter, Ernst, 351 Richter, Willi, 164 Riddleberger, James, 172-3, 203, 226-7, 273n, 409 Robert Bosch Company, 376, 376n, 378 Roberts, Frank, 429, 429^ 434, 442-3 Robertson, Bill, 3 Robertson, Brian, 168, 241, 257, 260, 311, 334-5, 364-6, 379n, 382, 395 and the Berlin crisis, 420, 423, 434, 437-8 and bizonal fusion, 271, 275-6 Rooney, Andy, 3 Roosevelt, Eleanor, 265 Roosevelt, Franklin D., 9, 15, 62, 68, 73,
91-2
and the partitioning of Germany, 20, 23, 24 at the Teheran Conference, 24, 25 and the Treasury Department's postwar plans, 32-51 and the Yalta Conference, 57-61 Root, Elihu, 34 Rostow, Walt, 227-8, 235, 236 Royal Institute, 28 Royall, Kenneth, 330, 392, 415, 425, 426 Rueff, Jacques, 454 Ruhr, the, 39-40, 44, 99-100, 108-9, n o , i n , 174, 207, 238-9, 287, 332, 370-2 denazification in, 297-8 U.S. influence in, 451-8 Ruhr communique, 456-7 Rusk, Dean, 461, 46m Rutz, Henry, i54n, 159-60, 451 Sargent, Orme, 243 Saxony law on socialization, 192 Scandrett, Richard, 86 Schacht, Hjalamar, 286 Schaffer, Fritz, 130, 134 Schiefer, Gustav, 164 Schleicher, Markus, 164 Schmid, Carlo, 458 Schmidt, Waldemar, 465
2O
Index
and the European Recovery Plan, 318-62 and French obstructionism, 171-3, 174-6 influence on the Moscow Conference of Foreign Ministers, 277-317 influence on Potsdam, 98 influence on U.S.-German policy, 278, 280, 316-17 and the movement toward partition, 236 opposition to unification, 242-3, 244-5 perspective on German recovery, 257 and postwar planning, 15-70 and reparations, 53-4, 56, 87-8, 89, 108, 116-17, 177-8, 180, 181-2, 183-5, 2.01-8 and Robert Murphy, 222-5 and the Western Union, 368 State-War-Navy coordinating committee (SWNCC), 117, ii7n, 319-20 Stettinius, Edward, 56, 62, 63 Stimson, Henry, 9, 34-6, 46n, 77, 81-2, 90, 93> 95 reaction to the Morgenthau Plan, 39-51 Stinnes, Edmund, 159 Stock, Christian, 422, 449 Stone, Shephard, 282 Strang, William, 26, 340, 341 Stuttgart speech, 245-8 "Suggested Post-Surrender Program for Germany," 36-7 Suhr, Otto, 408 Sullivan & Cromwell, 286 Swing, Ray, 181 Symington, Stuart, 425 Tarnow, Fritz, Teheran Conference, 24-6, 34 Thorp, Willard, 340 Trade unions, 151-65 approach toward unification, 345-7 "bottom-up" approach, 153-4, 156-7, 158, 160, 162 "top-down" approach, 158, 160, 163, 164 Treasury Department and decartelization, 142, 145 and denazification, 122-3, I 3 I I 38 influence on Potsdam, 118-20 and "interim financing," 83-4 and postwar planning, 15-70
Schnitzler, Georg von, 145-6 Schorske, Carl, 282, 283 Schumacher, Kurt, 190, 213, 272, 356, 402 Schuman, Robert, 441, 477 Semenov, 218, 352 SHAEF handbook, 30-1, 36 Shirer, William, 133 Silver, George, 215 Smith, Walter Bedell, i74n, 227, 359, 404-5, 488 and the Berlin crisis, 428-34, 439, 442 and the Moscow Conference of Foreign Ministers, 278-80, 292, 301, 304 Sobolev, Arkady, 53 Social Democratic Party (SPD), 189-91, 192, 197, 212-17, 2-7i-3> 335 Socialism, U.S. and British attitudes toward, 272-5, 334-47 Socialist Unity Party (SED) and elections, 250-3, 279, 467 formation of, 216, 21819, 486 Sokolovsky, Vassily, 168, 169, i69n, 172, 260-1 and the Berlin crisis, 381, 391, 407, 409-10, 417, 437 and Byrnes' disarmament treaty, 241, 242, 243 and reparations, 177, 182, 183, 186 Soviet Military Government Order 124, 194-5, i94n, 217 Stalin, Joseph, 9, 21, 73, 167, 324, 405-6 and the Berlin blockade, 429-30, 433 and the Moscow Conference of Foreign Ministers, 305-7 and Potsdam, 89-105, 106, 107, 111, 113 at the Teheran Conference, 24, 25 and troop movements, 79 and the Yalta Conference, 5761 Standard Oil of New Jersey, 141 State Department acceptance of socialization, 274-5 and the Allied Control Council, 76 assessment of the Soviet Union, 54-5, 397-8 attitude toward German trade unions, 161, 163 attitude toward partition, 104, 396 and the Berlin crisis, 411-76 and decartelization, 1423, 264-6, 269 and denazification, 122-7, 373"4
Index
Truman, Harry S., 69, 176, 388-9, 474 and the atomic bomb, 96n, 441 and the Berlin blockade, 414-16, 424-5, 440, 444-6, 491 inexperience in politics, 93-4, 117, H7n and Potsdam, 89-105, 107, 108-9, n o , 113, 117 and troop movements, 76-9 Truman Doctrine, 289-90, 322 Tulpanow, Colonel, 219, 351 Turner, Mark, 272 "Two-camps" doctrine, 348, 357 Ulbricht, Walter, 53, 187, 188, 189, 217,
221
521 and reparations, 176-86 and Soviet policy in the eastern zone, 195-9 and trade unions, 151-65, 345-7 and the Washington bureaucracy,
221-31
See also Clay, Lucius DuBignon Vandenberg, Arthur H., io9n, 245, 398, 469, 481, 484, 491-2Vandenberg Resolution, 469 Vandercook, John, 181 Vereinigte Kugellager Fabriken A.G. (VKF), 376, 376n, 378 Vereinigte Stahlwerke, 144 Versailles, 15 Vinson, Fred, 444 Volkskongress. See Peoples Congress Movement Voorhees, Tracy, 473 Vyshinski, Andrei, 94, 105, 462, 462n, 482, 484 Wallace, Henry, 265, 405-6, 444, 44<>, 490 Walsh, Joseph, 159 War Department attitude toward the Soviet Union, 81-2 and decartelization, 144 and denazification, 122 and the European Recovery Plan, 330 and French obstructionism, 173-4, 175-6 and the Level of Industry plan, 206 perspective on German recovery, 257 and postwar planning, 15-70, 80 and reparations, 179, 180-1 survey data, 81 and troop deployment, 77 Warsaw Declaration, 416, 4i6n Washington Conference of Foreign Ministers, 472-4 Webb, James, 440 Weimar constitution, 296, 303, 314 Weir, Cecil, 311 Welles, Sumner, 25 Werts, Leo, 163 West German Parliamentary Council, 429, 437, 442, 472 Western Union, 368, 428 Wheeler, George, i53n White, Harry Dexter, 9, 33, 36-7, 42, 43
United Nations, and the Berlin crisis, 462-9 Universal Military Training (UMT), 387, 389 U.S. Office of Military Government (OMGUS) anticommunism in, 165 and the Berlin crisis, 379-94, 411-76 and bizonal fusion, 261-76 and bizonal tensions, 364-79 British circumvention of, 259-61, 334-42 and Byrnes' disarmament treaty, 234-48 and Clay's crusade for unification, 248-61, 315-16 and coal supply, 84-5 cooperation with the Soviets, 167-9 and decartelization, 139-51, 374-9 and denazification, 122-38, 373-4 and eastern zone politics, 212-21 and the European Recovery Plan, 325-62 and the export-import plan, 201-12 filling of top position, 49 and food supply, 83-4 governance of the U.S. zone, 121-65 influence on U.S.-German policy, 278 key appointments to, 66-7 and the Level of Industry plan, 201-12 and the London Conference of Foreign Ministers, 394-404 media assessment of, 134-5 and the Moscow Conference of Foreign Ministers, 291-317 opposition to British ideas, 310-n opposition to JCS 1067, 67-8, 80 rejection of socialization, 274, 275
522
Wiesner, Louis, n n , 155, 157, 215, 220, 251, 252, 346, 384 Wilkinson, Lawrence, 265 Winant, John, 25, 27, 33, 50 Wisner, Frank G., 382n Wolf, Mortimer, 153, 153ml, 154, i56n, 158, 160-4 Wolff, Kurt, 73 Working Security Committee (WSC), 278 Works councils, 154, 157, 164, 193-4, 220-1, 448
Index
World Federation of Trade Unions (WFTU), 155, 345-7 Wright, Will, 130 Wysor, Rufus, 144 Yalta Conference, 51-69, 101-2, 106, 488 Zangen, Wilhelm, 262, 298 Zhdanov, Andrei, 348 Zhukov, Georgy Konstantinovich, 75, 78, 79, 79n, i28n, 182, 183, 189, 193 Zonal distribution, 58, 61

Drawing The Line

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Drawing The Line

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In this fresh and challenging study of the origins of the Cold War, Professor Eisenberg traces the American

Drawing the line

Drawing the line

CAROLYN WOODS EISENBERG

233 277 318

485 494 5*3

Preface and acknowledgments

Preface and acknowledgments

Preface and acknowledgments

Preface and acknowledgments

Berlin t administration USSR ZONE

UNITED STATES ZONE

Germany - Occupation Zones, 1945

Introduction: Private Polowsky's Oath

Introduction: Private Polowsky's Oath

Introduction: Private Polowsky's Oath

Introduction: Private Polowsky's Oath

Introduction: Private Polowsky's Oath

Introduction: Private Polowsky's Oath

Introduction: Private Polowsky's Oath

Introduction: Private Polowsky's Oath

Introduction: Private Polowsky's Oath

Introduction: Private Polowsky's Oath

Introduction: Private Polowsky's Oath

Introduction: Private Polowsky's Oath

Introduction: Private Polowsky's Oath

I. AN OLD DEAL FOR GERMANY

II. MCCLOY'S FINE PRINT

104 105 106

Memorandum Initialed by Roosevelt and Churchill, September 15, 1944, FRUS

135 136 137 138

III. YALTA AND ITS USES

agreed basis. 7 see no reason to doubt the genuineness of these assertions.1*7

191 I9i 193 194

201 202 203 204

I. HANDS ACROSS THE ELBE

II. POTSDAM UPHEAVALS

III. POTSDAM RESOLVED

In doing this calculation, Pauley was working in a somewhat different framework

153 154 155

163 164 165 166

Gimbel, American Occupation, 9-13.

The Limits of Reform: The U.S. Zone

The Limits of Reform: The U.S. Zone

The Limits of Reform: The U.S. Zone

The Limits of Reform: The U.S. Zone

The Limits of Reform: The U.S. Zone

The Limits of Reform: The U.S. Zone

The Limits of Reform: The U.S. Zone

The Limits of Reform: The U.S. Zone

The Limits of Reform: The U.S. Zone

The Limits of Reform: The U.S. Zone

The Limits of Reform: The U.S. Zone

The Limits of Reform: The U.S. Zone

The Limits of Reform: The U.S. Zone

The Limits of Reform: The U.S. Zone

The Limits of Reform: The U.S. Zone

The Limits of Reform: The U.S. Zone

The Limits of Reform: The US. Zone

The Limits of Reform: The U.S. Zone

Testimony of Russell A. Nixon, February 25, 1945.

The Limits of Reform: The U.S. Zone