Case 323, Part A

DECIDING GERMANYS FUTURE, 19431945

David S. Painter
Georgetown University

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EARLY DISCUSSIONS
THroughout World War II, Great Britain, the Soviet Union, and the United States discussed a wide variety of proposals for dealing with Germany after the war. For example, at a December 1941 meeting with British Foreign Secretary Anthony Eden in Moscow, Soviet leader Josef Stalin proposed a treaty with a secret protocol that provided that after the war Poland would expand westward at Germanys expense; Austria would be restored as an independent country; and the Rhineland and possibly Bavaria would be detached from Germany. (Later in the talks, Stalin brought up the possibility of dividing Germany and of giving Poland German lands up to the Oder River.) Stalin also asked for Edens views on reparations from Germany and suggested that an alliance of the victorious powers with a military force at their disposal might be necessary to maintain peace and order in postwar Europe 1 Eden agreed that the military control of Germany would be necessary. While noting that Britain was in favor of an independent Austria and did not exclude the possibility of partitioning Germany, he explained that he could not commit the British government to any particular solution of the German problem.

Copyright 1992, 1989 Institute for the Study of Diplomacy. ISBN 1-56927-323-5 Publications, Institute for the Study of Diplomacy,School of Foreign Service, Georgetown University, Washington, D.C. 200571025 http://data.georgetown.edu/sfs/programs/isd/

Eden pointed out that Britain would oppose reparations in money; reparations in kind were another matter. Eden then explained that he could not agree to the secret protocol without consulting the cabinet and that President Franklin D. Roosevelt had asked Britain not to enter into any secret arrangements on the postwar reorganization of Europe without consulting him. The talks deadlocked on this issue 2 Because of the immediacy of decisions relating to the war, the postwar treatment of Germany did not become a major issue again until early 1943. On January 24, 1943, at the conclusion of the Casablanca Conference, President Roosevelt informed the press that peace could only come through the total elimination of German and Japanese war power and that the Allies would demand the unconditional surrender of Germany, Italy, and Japan. Unconditional surrender, the president explained, did not mean the destruction of the population of Germany, Italy, or Japan but rather the destruction of the philosophies in those countries which are based on conquest and the subjugation of other people. British Prime Minister Winston Churchill, who was present, immediately associated his country with this policy.3 Edens visit to Washington in March 1943 prompted the first serious Anglo-American discussions regarding Germanys future. Before leaving for Washington, Eden circulated to the War Cabinet a paper on the future of Germany that defined the basis of British policy as disarming Germany and preventing German rearmament. After warning that the

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West should take care not to drive Germany into the arms of the Soviet Union, Eden reviewed five possible policies for reducing Germanys war potential: restoring Germanys 1937 boundaries; dismembering Germany; depriving Germany of large frontier areas so that the remaining rump state would be too weak to endanger the peace; imposing less severe frontier rectification on the basis of ethnic, economic, and/or strategic criteria; and decentralizing or federalizing Germany. Eden noted that dismembering Germany sufficiently to prevent rearmament would have a serious economic impac t.The paper concluded by calling for reestablishment of an independent Austria; restoration of Czechoslovakia; return of Alsace-Lorraine to France; cession to Poland of East Prussia, Danzig, and part of Silesia; possible transfer of the Kiel Canal to the United Nations (UN); restoration of the prewar status quo in the Netherlands, Belgium, and Luxembourg; international control of German industry; and encouragement of an spontaneous particularist or separatist movements with a view to developing a federal Germany.4 In a meeting with Roosevelt on March 15, Eden noted that the most important thing we had to get a meeting of the minds on in regard to Germany was the question of whether we were going to be able to deal with Germany as a unit after the war, disarming them, etc., and also for the peace, or whether we were going to insist that it be broken up into several independent states. Eden was sure that Stalin, because of his deep-seated distrust of the Germans, would insist that Germany be broken up into a number of states. President Roosevelt expressed the hope that Germany would not be forcibly divided but agreed with Eden that under any circumstances, Germany had to be divided into several states.5 Two days later, in a meeting with the president and Secretary of State Cordell Hull, Roosevelts close personal adviser Harry Hopkins pointed out that the Allies had not yet reached an understanding as to which armies would be where and what kind of administration would be developed for Germany. Hopkins was concerned that unless the Allies acted surely and promptly, one of two things would happeneither Germany would go Communist or [an] out and out anarchic state would set in. The State Department, he thought, should formulate a plan in collaboration with the British and then seek the approval of the Soviets.6 Roosevelt agreed and on March 23 instructed Secretary of State Hull to begin consultations with the War Department, the British, and eventually the Soviet Union on the question of

what our plan is to be in Germany and Italy during the first few months after Germanys collapse.7 The meetings in Casablanca and Washington came as the tide of the war began to turn in favor of the Allies. In the fall of 1942, Germany seemed invincible. To the east, Hitlers forces occupied vast areas of the Soviet Union; to the north, Norway was occupied, Sweden isolated, and Finland an ally. To the west, German troops occupied the Netherlands Belgium, and northern France, and German U-boats were scoring spectacular successes in the Atlantic; and in the south, German power dominated the Mediterranean, the Balkans were either allied or occupied, and Rommels forces were poised to conquer Egypt. Then, in four climactic weeks, from the British counteroffensive in Egypt and Libya during the last days of October to the successful landings of U.S. and British forces in North Africa in early November to the encirclement of an entire German army at Stalingrad in late November, the Allies gained the upper hand. On the Eastern Front, where the Soviets faced two-thirds of Hitlers forces, the Red Army gained the initiative following the surrender of the German army at Stalingrad on February 2, 1943, and in mid-July the Soviets won a decisive victory at Kursk. In the West, resistance in North Africa ended in May, and in July Anglo-American forces invaded Sicily. On July 25, Mussolini was overthrown, and in early September, his successor, Marshal Pietro Badoglio, surrendered as Anglo-American forces landed on the Italian mainland. Almost a year before, in May 1942, Roosevelt had led Stalin to believe that a second front would be opened before the end of the year.In the summer of 1942, however, the United States and Britain opted for an invasion of North Africa instead of France This decision pushed the date for the second front back to sometime in 1943. In December 1942, Stalin wrote Roosevelt that he was confident that the promises about the opening of a second front in Europe given by the president and Churchill in regard to 1942, and in any case in regard to 1943, would be fulfilled.8 At Casablanca, in January of 1943, Roosevelt and Churchill pledged to open a second front in northern Europe as soon as practicable to help take the pressure off their beleaguered Soviet allies. After Casablanca, Stalin asked for more detailed information on U.S. and British plans. Churchill, with Roosevelts approval, mentioned the possibility of an operation in August or September 1943, depending on the condition of German defensive

Case 323, Part A

Deciding Germanys Future, 1943-1945

possibilities across the channel. Stalin argued that the blow in the West should come in the spring or early summer. Churchill replied that the attack would only come when German defenses wer weakened sufficiently that the Western Allies could be sure they would not suffer a bloody defeat. Stalin then warned Churchill on March 15, 1943, in the strongest possible manner how dangerous would be from the viewpoint of our common cause further delay in the opening of the Second Front in France.9 At the Trident Conference in Washington in May 1943, the United States and Britain agreed that Operation Overlord, the full-scale invasion of the continent, would be launched in the spring of 1944. Stalin was informed of this decision on June 2. Angered at the delays, the Soviet Union may hav discussed the possibility of a separate peace with German representatives. Possibly beginning as early as December 1942, these contacts may have continued throughout the spring and summer of 1943, but in the end no agreement was reached.10 Meanwhile, as part of planning for Overlord and for Operation Rankina plan for a quick descent on Germany by U.S. and British forces in the event Nazi resistance suddenly collapsedAnglo-American military planners took up the question of occupation zones in Germany. Assuming that British and U.S. armies would be physically separate after either plan, the British proposed three roughly equal zones of occupation, with the British in the northwest, the United States in the south, and the Soviets in the east. The Combined Chiefs of Staff (the joint organization representing the British and U.S. Chiefs of Staff) approved the British recommendations for German zones at the first Quebec Conference in August.

CONTRASTING PERSPECTIVES
Two lengthy reports by the State Departments Advisory Committee on Postwar Foreign Policy, although recommending extensive changes in Germanys boundaries to rectify past injustices and to reverse Nazi conquests, strongly advised against forcibly dividing Germany into several parts. To counter the argument that partition was the best way to eliminate Germanys ability to make war, the committee argued that effective controls and safeguards could be devised to guarantee a peaceful Germany; that German opposition to dismemberment would require a long-term commitment to maintaining

forces in Germany; that dismemberment would stimulate nationalist resentment that would undermine the peace; and that dividing Germany int separate states would result in a lower standard of living for Germany and for the rest of Europe.11 In July 1943, the Soviets had announced formation of a Free Germany Committee, composed of a variety of German political figures, and the State Department feared that communists could gain control of the democratic movement and establish a Russian hegemony in Germany after the war if the United States and Britain failed to support democratic forces in Germany.12 The committee argued that democratic institutions could survive only if Germany were allowed to maintain a decent standard of living; the peace treaty did not seek revenge; controls on German economic and political life wer limited to the minimum compatible with security; and the United States, Britain, and the Soviet Union agreed on policy. Therefore, the committee recommended that the United States adopt, in the interest of fostering moderate government in Germany, the principle of a program looking to the economic recovery of Germany, to the earliest possible reconciliation of the German people with the peace, and to the assimilation of Germany, as soon as would be compatible with security considerations, into the projected international order.13 President Roosevelts travels in Germany as a schoolboy in the 1890s and as assistant secretary of the navy in 1919 had left him with a strong distaste for German authoritarianism and militarism. Prussian militarism, the president told Congress in early 1943, had led to the rise of Hitler, and when Hitler and the Nazis go out, the Prussian military clique must go with them. . . . The war-breeding gangs of militarists must be rooted out of Germanyand out of Japanif we are to have any real assurance of future peace. In addition, the president apparently believed that disarmament and dismemberment of Germany would help meet Soviet concerns about a resurgent Germany and thus could contribute to moderating Soviet policy in Eastern Europe.14 In talks with top State Department officials in early October 1943 shortly before Secretary Hulls departure for the Moscow foreign ministers conference, Roosevelt argued that partitioning Germany into three or more states was the best solution to the problem of future German aggression. Roosevelt felt that the State Department exaggerated the undesirable effects of partition and insisted that German should be partitioned, although some sort of economic cooperation might be permitted.15

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Case 323, Part A

THE MOSCOW CONFERENCE

At Moscow later in the month, the United States and Britain pledged that the long-awaited invasion of Europe would occur in the spring. Stalin, in turn, privately assured Hull that reports that the Soviet Union might be seeking a separate peace with Germany were unfounded and that the Soviet Union would go to war against Japan after Germany was defeated. In response to Soviet complaints of being excluded from any role in decision making in Italy, the three powers approved a British proposal for the creation of an European Advisory Commission (EAC), to be located in London, composed of the U.S. and Soviet ambassadors to Britain and a Foreign Office representative to study such issues as surrender terms and occupation zones and policies The foreign ministers also issued a declaration on Austria stating that the three powers regarded the 1938 annexation of Austria by Germany as null and void and that they intended to reestablish Austria as an independent country. A declaration on German atrocities pledged that those responsible would be brought to justice. 16 In regard to the postwar treatment of Germany Hull proposed that the Three Powers occupy and disarm Germany within the context of the maximum decentralization possible with essential federal unity.17 Eden responded that the British government preferred to see Germany divided into separate states as well as disarmed. Soviet Foreign Minister Vyacheslav Molotov noted that the Soviet Union was somewhat behind in its study of the postwar treatment of Germany because of the greater preoccupation of its leaders with immediate military questions. There was a strong movement in Soviet public opinion for the dismemberment of Germany, however, and the Soviet government therefore felt that the U.S. program was a minimum and not a maximum one. Hull also presented U.S. plans regarding reparations. All three agreed that both questions needed further study and referred them t the proposed EAC.18

THE TEHRAN CONFERENCE

At the Tehran Conference, November 28-December 1, 1943, the Western Allies informed Stalin that they had set May 1, 1944 as the date for the cross-channel invasion. Stalin promised that the Red Arm would time its spring offensives to give maximum support to the operation and reaffirmed his pledge to enter the war against Japan after Germanys defeat.

The question of Germanys future occupied a prominent place among the topics discussed at Tehran. Churchill broached his idea of creating a federation of Austria, Bavaria, and Hungary to tak Germanys place in the center of Europe. Stalin rejected this proposal as insufficient and repeatedly emphasized the need to occupy strong positions in and around Germany to prevent future German aggression. The Germans were a very able and talented people, he noted, and they could easily revive in ten to fifteen years and again become a threat to peace. Stalin rebuffed Churchills suggestions that constant supervision over German industry would be sufficient to keep the peace, pointing out that peacetime production could easily be converted to military production and that such shifts could be concealed.19 Stalin also disagreed with Churchills distinction between German leaders and the German people and, at a dinner meeting on November 29, proposed that some 50,000 to 100,000 members of the German officer corps be eliminated as a way to prevent Germany from plunging the world into another war. Roosevelt jokingly offered to settle for 49,000, but Churchill took strong exception to the remark.20 At a later meeting, Roosevelt proposed the creation of five autonomous German states, including a reduced and isolated Prussia, with the Kiel Canal, the city of Hamburg, the Ruhr, and the Saar under UN control. Stalin endorsed the idea, but Churchill expressed reservations, proposing instead detaching Prussia, the evil core of German militarism, from the rest of Germany and the incorporation of southern Germany into a Confederation of the Danube. Stalin disagreed, arguing that such a confederation was artificial and would likely fall under German control. The Germans would always have a strong urge to unite, and an international organization would be necessary to neutralize this desire by applying economic and other measures, including military force. In the end, the three leaders agreed to let the EAC study the issue. Stalin closed the discussion by repeating the Soviet desire to acquire part of East Prussia.21 In a December 15, 1943 memorandum summarizing the Soviet position on various issues discussed at Tehran, State Department Soviet specialist Charles Bohlen noted that the Soviets wanted Germany broken up and kept broken up; opposed a federation of the states of eastern, southeastern, and central Europe; wanted to strip France of its colonies; and called for limiting the French, Polish, and Italian militaries. The result, Bohlen argued, would be that the Soviet Union would be the only

Case 323, Part A

Deciding Germanys Future, 1943-1945

important military and political force on the continent of Europe. The rest of Europe would be reduced to military and political impotence 22

FROM TEHRAN TO QUEBEC

In early 1944, with the Red Army in its drive westward rapidly approaching Germanys eastern frontiers, the British placed before the EAC a plan to divide Germany into three zones of occupation, a northwest zone, designated for the United Kingdom, a southern zone to be occupied by the United States, and a northeast zone to be under Soviet occupation. Berlin was to be occupied jointly by the thr powers, and East Prussia would be turned over to Poland. A month later, the Soviets submitted draft surrender terms for Germany that included occupation zones identical to those proposed by the British. The U.S. representative at the EAC, Ambassador John G. Winant, was without instructions and unable to take a position on the issue.23 Unknown to the State Department, President Roosevelt, while en route to the Tehran Conference had reviewed the occupation zones agreed upon at Quebec in August and decided that the United States rather than Britain should have the northwest zone, which he insisted be extended eastward to Berlin and Leipzig. In addition to giving the United States almost half of Germany, the presidents plan, as Army Chief of Staff Gen. George C. Marshall quickly pointed out, conflicted with the requirements of troop disposition for the invasion of Europe, which called for U.S. forces to drive into southern Germany and British armies to attack in the north. Roosevelt, however, apparently agreed with his White House chief of staff, Adm. William D. Leahy, former ambassador to Vichy, that probable postwar unrest in France would threaten the U.S. Armys lines of communication if U.S. troops were occupying southern Germany. Although Roosevelt was willing to keep a million men in Europe for a year or two to maintain order, he felt that France was Britains baby. 24 In response to a letter from Churchill explaining the British position on occupation zones, Roosevelt wrote the British leader in February 1944 that he had been worrying a good deal of late on account of the tendency of all of us to prepare for future events in such detail that we may be letting ourselves in for trouble with the time arrives. Roosevelt linked his desire for the United States to occupy northwestern Germany to his reluctance to get involved in France. Churchill, he noted, really ought to bring up his own children. In view of the

fact that they may be your bulwark in future days, you should at least pay for their schooling now!25 Anglo-American forces landed in Normandy in June 1944 and by the end of July had broken out of their beachheads to begin driving the Germans out of France. A U.S. intelligence report concluded in late August that the enemy in the West has had it and that the end of the war in Europe was within sight, almost within reach. In mid-September, General Marshall advised his senior commanders that the war against Germany would probably end before November. The rapidly changing military situation underlined the need for agreement on policy towar postwar Germany.26 In Britain, the Foreign Office had sent letters to the Economic and Industrial Planning Staff (EIPS) and the Chiefs of Staff asking them to consider respectively the economic and military implications of dismemberment. In addition, the Armistice and Postwar Planning Committee and its successor, the Post-Hostilities Planning Committee (PHP), both chaired by Deputy Prime Minister and Labour Party leader Clement Attlee, were also active in the debate about the future of Germany.27 The Chiefs of Staff and the PHP both believed that, on balance, dismemberment of Germany would be to Britains strategic advantage as a means of preventing German rearmament and renewed aggression. They also regarded dismemberment as insurance against the possibility of a potentially hostile Soviet Union. In an August 25 report, which reflected the Chiefs of Staffs views, the PHP pointed out that in the event of a hostile Soviet Union, Britain would need all the help we can get from any source open to us, including Germany. We must above all prevent Germany combining with the Soviet Union against us. Although it was open to argument whether a united Germany would be more likely to side with the Soviet Union than with Britain, it was most unlikely that the Soviets would ever permit the rearmament of a united Germany unless they were satisfied that they could dominate a rearmed Germany. Thus, Britain was unlikely t secure help from the whole of Germany against the Soviet Union, and its interests were likely to be better served by dismemberment, because Britain might hope eventually to bring northwestern and possibly southern Germany also, within the orbit of a western European group. This would give increased depth to the defenses of the United Kingdom and increase the war potential of that group. For these reasons, the PHP concluded that dismemberment would at least reduce the likelihood of the whole of Germany combining with the USSR

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against us, [and] that as an insurance against a hostile USSR, it would be to our long-term strategic advantage. The report also noted that if Britain were to secure the positive benefits of dismemberment, it was vital that northwestern Germany be a British zone of occupation.28 The Economic and Industrial Planning Staff, on the other hand, opposed dismemberment of Germany. In an August 26 report it pointed out that some of the measures necessary to avoid a recurrence of German aggression might impoverish Germany to the extent of rendering it incapable of providing reparations, or even of existing without outside assistance. Thus, a balance had to be struck between the value of restrictive economic measures for security and the contribution German industry could make to the rehabilitation of Europe and to world prosperity.29 On September 20, Eden noted that he found it hard to resist the conclusion that dismemberment would fail to advance the main object we have at heart, viz., security from the German menace. Moreover, dismemberment had economic disadvantages. Eden also noted that he was against considering the German problem from the standpoint of reinsurance against possible Soviet aggression: If we prepare our postwar plans with the idea at the back of our minds that the Germans may serve as part of an anti-Soviet bloc, we shall quickly destroy any hope of preserving the Anglo-Soviet alliance and soon find ourselves advocating relaxations of the disarmament and other measures which we regard as essential guarantees against future German aggression.30 The Chiefs of Staff, however, maintained their position. In an October 2 memorandum they argued that they should not be debarred from taking into account the possibility that for some reason or other the [proposed] world security organization may break down, and that Russia may start forth on the path to world domination, as other continental nations have done before her. The memorandum continued If one looks at the situation which will exist in the world when Germany and Japan have been thoroughly beaten and demilitarized, one finds only two possible menaces to the security of the British Empire, namely the United States and Russia. We eliminate the United States, and are left with Russia, a country of enormous power and resources which has been cut off for 25 year from contact with the outside world and the

trend of whose policy no one can foretell. Taking a long view, we cannot possibly afford to eliminate from our mind the conception of an expansionist and perhaps eventually aggressive Russia, and this applies whether we are considering the German problem or any other problem which affects our security.31 The Foreign Office replied that although the possibility of war with the Soviet Union could not be excluded, such an event was unlikely for a number of years. In the meantime, Britain, without sacrificing its interests, should try to maintain friendly relations with the Soviets. The Foreign Office warned that if the Soviets began to suspect Britain of trying to build up a bloc, which included Germany, against them, they were in a position to make such a bloc ineffective and to ensure that all of Germany would be on their side and not the British side. Eden repeated these views at a meeting with the Chiefs of Staff on October 4, and they agreed to withdra their paper and prepare a fresh study.32 In the United States, the State Department and the War Department fought for control of planning for Germanys future. In general, War Department policy on postwar Germany was shaped by a desire to obtain maximum autonomy for the military during the occupation period. While recognizing that the formulation of long-term political, social, and economic policies was the responsibility of civilian agencies, the War Department wanted army commanders to have full power to interpret and implement policy during the period of military government. Therefore, theWar Department resisted attempts by the State Department to formulate detailed plans for the occupation period on the grounds that they would tie the hands of the military. In preparation for the invasion of Western Europe, Gen. Dwight D. Eisenhower, commander of Supreme Headquarters, Allied Expeditionary Forces (SHAEF), set up country units to draw up specific guidelines for the use of military authorities in liberated and enemy territories. By August 1944, the German country unit had produced a Basic Handbook for Military Government of Germany. Written by civilian experts who had been recruited into the army, the SHAEF handbook emphasized the need for centralized tripartite administration of occupied Germany and called for maintenance of German economic strength to serve the purposes of the occupying authorities 33 Meanwhile, the State Department had renewed its call for a moderate peace as the best guarantee

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Deciding Germanys Future, 1943-1945

against future German aggression. Although endorsing measures to ensure payment of limited reparations to Germanys victims, prevent reconversion of the German economy to war purposes, and eliminate German economic domination in Europe, the department, in an August policy paper, proposed integrating postwar Germany into the type of world economy envisaged by the Atlantic Charter. This course would require maintaining a tolerable standard of living and would preclude destruction of Germanys industrial capacity. Punitive policies would not work, the department argued: An indefinitely continued coercion of more than sixty million technically advanced people . . . would be at best an expensive undertaking and would afford the world little sense of real security.34 State Department officials expected the Soviet Union to demand extensive reparations from Germany to reconstruct their war-damaged economy. Heavy reparations, they warned, would wreck what was left of the German economy, thereby undermining efforts to promote democracy in Germany and possibly burdening the United States with a costly relief operation. Furthermore, economic collapse in Germany would threaten the recovery of Europe as a whole and thus endanger the departments goal of reviving a multilateral system of world trade. Although the department was concerned that Germanys economy should not again be directed to war-like purposes, it also felt that it was in the longrange interest of the United States that Germany be prosperous. Therefore, the United States insisted that reparations be limited to the extent that they may reasonably be expected to contribute to the strengthening of the post-war world economic and political order.35

President Roosevelt was sympathetic to Morgenthaus proposals. On August 19, he told his friend that we have got to be tough with Germany and I mean the German people not just the Nazis. . . . We either have to castrate the German people or you have got to treat them in such a manner so they cant just go on reproducing people who want to continue the way they have in the past. A week later, after reading a summary of the SHAEF handbook provided by Morgenthau, the president wrote Secretary of War Henry L. Stimson and demanded that the handbook be withdrawn.37 In late August, Morgenthau had his staff draw up detailed plans for the dismemberment, disarmament, deindustrialization, and denazification of Germany. The resulting plan called for the removal or destruction of all war material, the entire German armaments industry, and other heavy industry basic to military strength, and for placing the Ruhr and surrounding industrial areas under international control. Parts of East Prussia and Silesia would be ceded to Poland and the Soviet Union, the Saar would go to France, and the remaining portions of Germany would be formed into autonomous northern and southern states. The plan also called for the breakup of large estates, punishment of war criminals, and continuing controls over education, political and military affairs, and the German economy. Instead of long-term or recurrent reparations, the plan proposed that reparations be limited to the immediate transfer of German resources and territories. Morgenthaus assistant secretary, Harry Dexter White, who had drafted much of the plan, explained: What we want from Germany is peace, not reparations. If to obtain that objective, it was necessary to reduce Germany to the status of a fifthrate power, that should be done. 38 Discussions in a newly created Cabinet Committee on Germany, composed of officials from the State, War, and Treasury departments and Presidential Adviser Harry Hopkins, resulted in a draft policy statement. This document called for demilitarization of Germany, dissolution of the Nazi Party and prosecution of war criminals, extensive controls over German communications and education, postponement of decisions on partition and reparations, and the breakup of the great Junker estates in East Germany. It also called for economic policies aimed at holding down the standard of living in Germany to subsistence levels; elimination of German economic

THE MORGENTHAU PLAN

U.S. Secretary of the Treasury Henry J. Morgenthau, close friend and adviser of the president, found the State and SHAEF plans far too soft on Germany and began a campaign to replace them with a harsher program. Morgenthau argued that the only sure way to prevent future wars would be to eliminate not only Germanys war-making capacity but also its industrial plant. Morgenthau also objected t the occupying forces assuming responsibility for the German economy. Economic chaos would be a good thing, he thought, because it would bring the fact of defeat home to the German people 36

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power in Europe; and conversion of German economic capacity to keep Germany so dependent on imports and exports that it could not reconvert t war production on its own.39 Hull and Hopkins approved the statement, but Secretary of War Stimson objected that de industrialization of Germany would gravely endanger the economic stability of Europe. Europe, he argued, needed the industrial output of Germany to rebuild and maintain its economy and avoid dangerous convulsions. Stimson argued that plans to turn the Ruhr and the Saar into agricultural areas were unrealistic: I can conceive of endeavoring to meet the misuse which Germany has recently made of this production by wise systems of control or trusteeship or even transfers of ownership to other nations. But I cannot conceive of turning such a gift of nature into a dust heap. In addition, Stimson predicted that the harsh measures contained in the statement would generate resentment and war rather than peace. 40 After Stimson and Morgenthau presented their thoughts to President Roosevelt on September 6, both prepared new papers. The revised version of Morgenthaus proposals submitted to the president on September 9 argued that Europe did not need a strong industrial Germany; that the elimination of the industrial capacity of the Ruhr was indispensable to rendering renewed German aggression impossible for many years to come; and that British industry would benefit from the elimination of German competition. The Nazi regime was essentially the culmination of the unchanging German drive toward aggression. Therefore, peace could not be secured only by destroying nazism and disarming Germany but would also require the forcible reduction of German industrial capacity, extensive controls over the German economy for twenty years, the strengthening of Germanys neighbors, thorough reform of German education, and punishment of war criminals. Warning that an economically powerful Germany ipso facto constitutes a military threat to world security, the paper opposed reparations because they would necessitate rebuilding the German economy 41 Stimsons new paper, also dated September 9, reiterated his opposition to Morgenthaus plan. The elder statesman argued that what Morgenthau proposed would breed war, arouse sympathy for Germany, and destroy resources desperately needed for the reconstruction of Europe. Asking that no hasty decisions be made, Stimson suggested that the president accept a slightly revised version of the September 5 policy statement.42 Without informing Stimson or Hull, President

Roosevelt, on September 13, summoned Morgenthau to the Octagon Conference in Quebec t present his ideas to British Prime Minister Churchill. Churchills initial response was to say that he did not want to chain himself to a dead German; and t label the entire plan unnatural, unchristian, and unnecessary. Moreover, he dismissed as insignificant the economic benefits that the destruction of German industry would provide for Britain.43 The following day, after Churchills close personal adviser Lord Cherwell had assured him that Morgenthaus proposals offered Britain a chance to avoid bankruptcy by eliminating German competition, Churchill endorsed the plan and drafted a statement calling for dismantling the industries of the Ruhr and the Saar. The statement noted that this programme for eliminating the war-making industries in the Ruhr and the Saar is looking forward to converting Germany into a country primarily agricultural and pastoral in character. Although Foreign Secretary Eden objected that the plan went against a number of statements and plans already made, Churchill and Roosevelt initialed the joint memorandum on September 15.44 The same afternoon, Roosevelt agreed to accept the southern occupation zone proposed by the British with minor territorial adjustments and the provision that the United States have control over the ports of Bremen and Bremerhaven and free right of passage between these enclaves and the U.S. zone.45 In addition, the president, disregarding State Department plans to tie continuation of lend-lease to concessions in trade policy, agreed to provide Britain with an unconditional grant of $6.5 billion in lend-lease aid for the period between the defeat of Germany and that of Japan.46 Meanwhile, a committee composed of representatives from State, War, and Treasury was at work on a directive to guide the administration of military government after the defeat of Germany. The resulting directive, which was designated JCS 1067, defined the principal Allied objective as preventing Germany from ever again becoming a threat to world peace. It also called for the Allies to eliminate nazism and militarism, apprehend and punish war criminals, disarm and demilitarize Germany, establish continuing controls over Germanys capacity to make war, and prepare for an eventual reconstruction of German political life on a democratic basis. In addition, the Allies would enforce a program of reparations and restitution to provide relief to the countries devastated by Nazi aggression. Relief supplies to Germany were to be limited to the minimum necessary to prevent disease and unrest, and

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Deciding Germanys Future, 1943-1945

neither economic rehabilitation nor steps to maintain or strengthen the German economy were to be undertaken. JCS 1067 received White House approval on September 24, 1944, and became the official statement of U.S. policy toward postwar Germany.47 A third memorandum from Stimson to the president on the Morgenthau Plan argued that even if it were implemented (and Stimson doubted that seventy million educated, efficient, and imaginative people could be kept at the low level of subsistence proposed by the Treasury proposals), it would be a crime against civilization itself. Before Stimson could discuss the memorandum with Roosevelt, a series of leaks to the press led to unfavorable comment on Morgenthaus ideas and to Republican plans to use Morgenthau as an issue in the upcoming election. On September 27, Roosevelt told Stimson that he did not intend turning Germany into a purely agricultural country, but rather had been motivated by a desire to help the British, who were broke. Two days later,the president assured Secretary of State Hull that no one wants to make Germany a wholly agricultural nation again. The president told Stimson on October 3 that Morgenthau had pulled a boner and expressed surprise when Stimson read him the statement he and Churchill had initialed at Quebec.48 Roosevelt also continued to express reluctance about making detailed plans for a country that had not been defeated, let alone occupied. Nevertheless, in early November he signed a State Department-drafted letter stating that German productive skill and experience should be utilized for the general economic welfare of Europe and the world as long as this did not threaten the peace. Later in the month, the president gave his general approval to two State Department papers on the economic treatment of Germany that called for operating the German economy as a unit and for conversion of the German economy to peacetime production, including production for minimum German needs and for the reconstruction of the rest of Europe. Security would be obtained through an effective international security organization that would prevent German rearmament, through force if necessary, and through the eventual integration of the German economy into a liberal world economy on the basis of efficient specialization.49

THE ROAD TO YALTA

Meanwhile, Churchill, in conversations with Stalin at the Tolstoy Conference in mid-October, had echoed

the Morgenthau Plans call for a harsh peace. Stalin also endorsed the concept of a hard peace and stated that German heavy industry would have to be reduced to a minimum to deprive Germany of the possibility of revenge. Otherwise, every 25 or 30 years there would be a new world war which would exterminate the young generation, Stalin said. Churchill assured Stalin that he would support the Soviet desire to use German machinery and machine tools for reconstruction of the areas of the Soviet Union destroyed by the Nazis and suggested adding the electrical and chemical industries to the list of industries to be prohibited. Britain, he added, deserved to get the markets previously dominated by German exports. Churchill suggested placing the Saar, the Ruhr, and the Kiel Canal under international control and creating a separate Rhineland state and a south German confederation composed of Austria, Bavaria, Wurttemberg, and Baden. Stalin argued that the small nations could help in occupying Germany, adding that if Poland got Silesia and part of East Prussia, as he proposed, the Poles would be very interested in assisting in the occupation. Churchill and Stalin also agreed that German should not have a merchant fleet or civil aviation because both could be converted to military uses 50 Eden and the Foreign Office quickly expressed opposition to Churchills statements to Stalin. A stream of memorandums argued that dismemberment was impractical and that de industrialization meant the end of any chance of gaining reparations. The Foreign Office pointed out that dismemberment would be injurious to the economic health of Western Europe and that Eden had repeatedly stated publicly that Germany could not be allowed to become a trouble spot affecting all Europe.51 In a report on the Morgenthau Plan in late December the Economic and Industrial Planning Staff argued that turning Germany into an agrarian nation was not the most effective means of providing security against future German aggression; that there would be few or no economic benefits to Britain because of de industrialization; and that the Morgenthau Plan would wreak havoc in the Ruhr and the Saar, both in the planned British zone of occupation.52 The Post-Hostilities Planning Committee continued to argue that the reduction of German military potential by dismemberment would be greatly to Britains advantage should a hostile Soviet Union try to obtain German help against the Western powers The creation of a separate state in northwestern Germany would make it more difficult for the Soviets to exert influence over the area where the bulk of German war potential was located, an area that was

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also of major strategic importance to Britain for extension of its defenses. In addition, Britain and its allies would probably have enough influence over northwestern and southern Germany that separate states in these areas would cooperate with them instead of with the Soviets. Moreover, eradicating German ability to wage war was one way to avoid provoking Soviet hostility. On the negative side, dismemberment might accelerate the inevitable tendency for eastern Germany to fall within the Soviet sphere of influence, thus bringing Soviet military power nearer the western nations. 53 No attempt was made to reconcile these differences. In a January 4, 1945 note to Eden, Churchill observed that it was much too soon to try t decide Germanys future. Such practical questions as partition and the treatment of the Ruhr and Saar industries had not been settled, and no one could foresee what the state of Europe or relations among the great powers would be after the war. Moreover, although the public probably preferred harsh treatment of Germany, he was well aware of the arguments about not having a poisoned community in the heart of Europe. In these circumstances, it was best to concentrate on the practical issues which will occupy the next two or three years, rather than argue about the long-term relationship of Germany to Europe.54 In the United States, communication between the president and the State Department increased significantly after Edward R. Stettinius, former president of U.S. Steel, replaced the ailing Cordell Hull in late November. Stettinius appointed Soviet expert Charles E. Bohlen as special liaison officer to the White House. Both Stettinius and Bohlen accompanied the president to Yalta. The departments briefing papers on Germany, prepared for the presidents use at Yalta, stressed the importance of tripartite agreement on centralized administration to ensure that the industrialized parts of Germany under Anglo-American control would receive badly needed food shipments from the predominantly agricultural Soviet zone. Moreover, the department believed that the establishment of a comprehensive military government would prevent the equally undesirable development of the importation into Germany of a substantially ready-made provisional government perhaps recognized by and functioning under special foreign auspices. Although the department favored extensiv revisions in Germanys borders, including the transfer of East Prussia to Poland, it continued to oppose the forcible partition of Germany, recommending

instead a return to federal decentralization.55 In the economic field, the department called for reducing but not destroying German industrial capacity in order to provide limited reparations but to prevent rearmament. In the long run, economic efforts should be directed toward the eventual assimilationon the basis of equalityof a reformed, peaceful and economically non-aggressive Germany into a liberal system of world trade.56 On the issue of reparations, the department warned that a mistaken reparations policy may not only have adverse effects on the future economic stability of Europe but may jeopardize the political and economic objectives of this country with respect to Germany. Reparations claims of the Soviet Union and other countries should be supported only to the extent they did not conflict with more important U.S. objectives. Payments should be in kindgoods and services rather than in money to avoid a recurrence of the currency transfer problems that had plagued the Allies in the interwar years, and it should be made clear to everyone that the United States would not finance the transfer of reparations either directly by extending loans or credits to Germany, or indirectly by assuming a burden of supplying at its own expense essential goods or equipment to Germany. Therefore, reparations would have to come out of the surplus left over after occupations costs, essential imports, and other charges needed to maintain a minimum standard of living in Germany had been met.57 Morgenthau, who was not invited to Yalta, continued to argue that the elimination of German heavy industry was essential to preventing Germany from starting a third world war in the next generation. In a memorandum to the State Department on January 19, 1945, Morgenthau warned that any program which has as its purpose the building up of Germany as a bulwark against Russia and communism will inevitably lead to a third World War. Instead, he recommended that the industrial equipment removed from Germany and the resources of the Rhine and Ruhr areas be used to build up industry in the countries surrounding Germany, thus ending German dominance.58 As for the Soviets, Morgenthau had a week earlier proposed that the United States grant the Soviet Union a $10 billion credit for purchase of reconstruction goods in the United States, with provision for repayment chiefly in strategic raw materials in short supply in the United States.59 In early January, Soviet Foreign Minister Molotov had presented U.S. Ambassador to the USSR Averell Harriman with a request for $6 billion in postwar

Case 323, Part A

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11

credits to run for thirty years at an interest rate of 2.5 percent. In delivering the request Molotov made plain that the Soviet government placed high importance on a large postwar credit as a basis for the development of U.S.-Soviet relations. In his report to the State Department, which was forwarded to President Roosevelt, Harriman argued that although it was in the interest of the United States to help the Soviet Union develop a sound economy, the question of credits should be linked to overall relations with the Soviet Union: At the appropriate time the Russians should be given to understand that our willingness to cooperate wholeheartedly with them in their vast reconstruction problems will depend upon their behavior in international matters. 60 Deputy Commissar for Foreign Affairs Ivan Maisky told Harriman in late January that the principal objective of the Soviet government was security. Maisky explained that the Soviet Union favored independence for the Ruhr, the Rhineland, and possibly the Catholic south. Germanys heavy industry should be stripped of equipment that might be used for rearmament, and light industry and agriculture should be encouraged. Reparations should be distributed on the basis of damage suffered and on the principle that those who had done the most fighting should get the most. Nevertheless, Germany should be left enough to meet its own needs and pay for essential imports.61 Although the Soviet Union was in favor of heavy reparations, there were divisions over the reparations issue that reflected ambiguity over what to do about Germany. Georgii Malenkov, whose party responsibility was to oversee Soviet industry and who headed a Special Committee for the Economic Disarmament of Germany, recommended stripping Germany of its industry. Malenkov was supported by L. M. Kaganovich, minister for building materials, who wanted advanced German machinery for the ministrys plants, and by secret police chief Lavrenti Beria, who wanted economic resources for the secret polices vast empire. Andrei Zhdanov, Stalins chief ideological adviser, and Anastas Mikoyan, minister of foreign trade, opposed stripping Germany for practical and political reasons. Mikoyan argued that the cost of dismantling, transporting, and reassembling heavy machinery was enormous and did more harm to the German economy than the Soviet Union could benefit from utilizing the equipment at home. Rather than the removal of industry from Germany, factories and machinery should be left in place and exploited to produce goods badly needed in the Soviet Union.62

DECISIONS AT YALTA
At the time of the Yalta Conference, February 411, 1945, Anglo-American armies had barely entered German territory and were still west of the Rhine River, recovering from the effects of the German counteroffensive in the Ardennes (the Battle of the Bulge). In contrast, Soviet forces had just completed a winter offensive carrying them to the line of the Oder and Neisse Rivers, less than thirty-five miles east of Berlin. It seemed probable that Berlin, Prague, Vienna, and even areas west of the Elbe River might fall to Soviet forces before the Western armies could advance that far eastward. At Yalta, Churchill, Roosevelt, and Stalin made decisions in five key areas: occupation, control, and postwar treatment of Germany; Polands boundaries and postwar government; the pattern of postwar government in liberated Europe; the structure of the new United Nations Organization; and Soviet entry into the war against Japan. The future of Germany was the first item on the agenda at Yalta. 63 The Big Three reaffirmed the principle of unconditional surrender, and the United States and Britain agreed to the transfer of Polish territory east of the Curzon Line to the Soviet Union. To compensate Poland, the three leaders agreed that Poland must receive substantial accessions of [German] territory to the North and West. Final delimitation of the Polish-German border would await a peace conference Stalin also called for a decision on the dismemberment of Germany, pointing out that both the United States and Britain previously had supported the idea. Roosevelt and Churchill, however, were reluctant to discuss dismemberment, although Roosevelt noted that the proposed zones of occupation could well serve as the beginning of a permanent partition of Germany. After much pulling and tugging, the Soviets settled for an addition to the draft terms of German surrender to the effect that the three Allies will take such steps, including the complete disarmament, demilitarization and dismemberment of Germany as they deem requisite for future peace and security. The study of procedure for dismemberment was referred to a committee consisting of Eden and the U.S. and Soviet ambassadors to Britain. The EAC had successfully dealt with the questions of the zones of occupation and the formation of an Allied Control Council. The recent addition of France to the EAC and to the proposed Security Council of the United Nations, however, raised the question of

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French participation in the occupation of Germany. Stalin reluctantly agreed to a French occupation zone, though insisting that it be formed from the British and U.S. zones. Stalin opposed allowing the French a seat on the Allied Control Council, however, arguing that control of Germany should be reserved for the great powers that had contributed to Germanys defeat. The British, convinced that the rehabilitation of France was necessary to fill the power vacuum that they feared would follow the defeat of Germany, insisted that France be given a role in controlling Germany. Initially, Roosevelt agreed with Stalin, but when the president changed his mind, Stalin acquiesced and agreed to French participation on the control council. The question of reparations proved the most difficult issue to resolve. The Soviet Union had suffered widespread destruction at the hands of the Germans, and its recovery would depend, to a large extent, upon the compensation it could extract from the remains of the Nazi empire. Deputy Commissar for Foreign Affairs Maisky explained that the Soviet Union felt that reparations should be in kind rather than in money and should include the removal of German factories, machinery, machine tools, and rolling stock for the first two years after the end of the war, and yearly payments in kind for ten years. The Soviet proposal called for Germany to be disarmed economically through the removal of 80 percent of heavy industry (iron and steel, metalworking, engineering, chemicals, and electrical engineering) and all of such specialized military industries as aviation and synthetic fuel plants. The Soviets proposed that priority for receiving reparations should be based according to a countrys contribution to the victory over Germany and the extent of damage suffered at the hands of the Nazis. The Soviets estimated that they should receive approximately $10 billion and proposed that a special reparations commission composed of representatives of the Big Three be established to work out the details on the basis of the Soviet plan. The United States and Britain feared that the Soviet proposals would lead to economic chaos and mass starvation in the industrialized but food-poor western zones. Churchill conceded that Soviet sacrifices were greater than any other country. He would agree to the removal of German plants to the Soviet Union but not to any specific figure on reparations. Concerned that heavy reparations would interfer with the economic recovery of Germany, Churchill argued that if one wanted a horse to pull a wagon, one at least had to feed the horse. True enough,

Stalin replied, but care should be taken to see that the horse did not turn around and kick you. Roosevelt also expressed sympathy for the great suffering and destruction endured by the Soviets and agreed that they were entitled to extensive reparations. Roosevelt agreed that Germany should pay reparations, but not to the point of causing economic chaos. The United States did not wish to contemplate the necessity of helping the Germans to keep from starving. The United States, he added, had lent Germany over ten billion dollars after World War I and would not repeat that mistake. Maisky responded that the Soviet plan, by calling for reparations in kind rather than in money, eliminated the problems associated with the reparations imposed on Germany after World War I. He defended the Soviet demand for $10 billion, pointing out that it was only 10 percent of the U.S. budget for that year, and that the Germans had been spending $6 billion a year on arms alone. He also denied that the Soviet plan would lead to starvation in Germany, pointing out that nothing in the Soviet plan prevented the Germans from developing light industry and agriculture The Soviets continued to press for a decision on reparations, but the differences between their position and that of the United States and the British proved too deep to resolve at Yalta. On February 10, the Soviets agreed to refer the question to the proposed Interallied Reparations Commission. The United States agreed that the commission would use the Soviet proposals as a basis for discussions. The British, however, refused to discuss specific sums prior to the meeting of the commission.64

FROM YALTA TO POTSDAM

By the spring of 1945, the British had concluded that a Europe divided into small states would be dominated by the Soviet Union. I hardly like to consider dismembering Germany until my doubts about Russian intentions have cleared away, Churchill noted six weeks after Yalta. Although both Roosevelt and, later, President Harry S. Truman remained uncertain about the wisdom of dismemberment, the State and War Departments and the Joint Chiefs of Staff all advised against partition. On March 26, the Soviet government, in giving its views on the terms of reference for the committee to study dismemberment, informed the committee that it understood the decision of the Yalta Conference regarding the dismemberment of Germany

Case 323, Part A

Deciding Germanys Future, 1943-1945

13

not as an obligatory plan . . . but as a possibility for exerting pressure on Germany with the object of rendering her harmless in the event of other means proving inadequate. In his victory speech on May 9, Stalin announced that the Soviet Union did not intend to dismember or to destroy Germany. Meanwhile, the Soviet Union had, in mid-March, turned over to the Polish Provisional Government German territories lying east of the Oder-Neisse line.65 In late March, after bureaucratic infighting between the State, War, and Treasury Departments, President Roosevelt approved a revision of JCS 1067, the directive governing U.S. occupation policy Drafted by the War Department, the new statement called for the retention of some basic industries and the maintenance of coal production to meet the needs of the occupying forces and to prevent disease, starvation, and civil unrest. Nevertheless, Germanys war-making industries would be eliminated, production capacity would be limited, and there would be no extensions of credit to Germany without special permission of the control council. These changes were incorporated into the final revision of JCS 1067, which gained presidential approval on May 11, 1945.66 As the war came to an end, U.S. officials began increasingly to worry about the economic and political implications of the impending shortages of food and fuel facing Europe. Roosevelts trusted White House counsel Samuel Rosenman reported in March 1945 on the desperate food situation facing northwestern Europe. A few weeks later, Assistant Secretary of War John J. McCloy briefed Stimson and President Truman (who had become president after Roosevelts death on April 12) concerning conditions in Germany. There is complete economic, social, and political collapse going on in Central Europe, the extent of which is unparalleled in history unless one goes back to the collapse of the Roman Empire.67 The war in Europe ended in early May. With Soviet troops occupying the smoldering ruins of Berlin and the Western Allies poised to attack remaining areas of resistance, the German High Command surrendered simultaneously and unconditionally to all of the Allies at Eisenhowers headquarters on May 7, 1945, to take effect at midnight May 8. At Soviet insistence, a formal ratification took place the following day at Soviet headquarters in Berlin. On VE Day, U.S. forces occupied most of the U.S. zone and portions of the British and Soviet zones. The Soviets were in control of most of the eastern part of the country, including Berlin, while British forces

were mainly in the northwest. Adhering to previous agreements, U.S., British, and Soviet forces completed their transfer from positions held at the end of the war into their respective occupation zones and into their sectors in Berlin by early July A detailed report on the coal situation in western Europe in early June warned that northwest Europe and the Mediterranean faced a coal famine of such severity as to destroy all semblance of law and order, and thus delay any chance of reasonable stability.68 Drawing on these and other reports, Truman wrote Churchill on June 24 that without immediate concentration on the production of German coal we will have turmoil and unrest in the very areas of Western Europe on which the whole stability of the continent depends.69 Three days later, Undersecretary of State Joseph C. Grew, who briefed the new president on a daily basis, sent Truman a long report on the international communist movement, warning that Europe affords now a perfect background for spontaneous class hatred to be channeled by a skillful agitator.70 The U.S. military governor in Germany, Gen. Lucius Clay, immediately turned his attention to reviving German coal production. Clay, chosen because of his experience in matters of allocation, industrial management, and production, soon realized that the successful large-scale mining of coal means some restoration of the German economy, and some industrial activity to support coal mining. By the eve of Trumans departure for the Potsdam Conference, top policy makers had concluded that the sums necessary to pay for imports of food, clothing, and machinery needed to revive the German economy should be a first charge against German production. Newly appointed Secretary of State James F. Byrnes explained these conclusions and their implications to President Truman on the way to the Potsdam Conference.71 The Interallied Reparations Commission met in Moscow during June and July. The Soviets insisted that first priority be given to the removal of $20 billion of goods from Germany, half of which would go to the Soviet Union. The United States and Britain, fearing the impact of such a course on the European as well as the German economy, placed primary emphasis on maintaining the German economy intact, even if this meant restricting reparations shipments. Moreover, neither the United States nor Britain wanted to be put in the position of paying, even indirectly, Germanys reparations bill. Therefore, the United States and Britain insisted on a first charge principle that would allow the extraction of

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reparations only after imports essential to maintain the German economy had been covered. Because of these differences, the commission was unable to reach a decision.72 Secretary of War Stimson wrote President Truman on July 16 that the problem which presents itself...is how to render Germany harmless as a potential aggressor, and at the same time enable her to play her part in the necessary rehabilitation of Europe. Stimson stressed that it would be foolish, dangerous and provocative of future wars to adopt a program calling for the major destruction of Germanys industry and resources. Not only would such action preclude any reasonable prospect for European recovery, but it would also be bound to

leave a focus of economic and political infection which might well destroy all hope we have of encouraging democratic thinking and practices in Europe. Stimson also warned that severing the Ruhr from the rest of Germany and placing it under international control would provoke German irredentism, damage the economy of Germany and of Europe as a whole, and drive the remaining portion of Germany toward the east in her economic affiliations and outlook. He, therefore, recommended that the United States strongly support a policy of treating Germany as an economic unit so as to permit it to contribute to its own and to general European rehabilitation. 73

NOTES
1. Sir Llewellyn Woodward, British Foreign Policy in the Second World War, 5 vols. (London: H.M. Stationery Office, 19701976), 2:22123. The secret protocol also called for the Soviet Union to regain its frontiers of 1941 with Finland and Romania; for the Soviets to recover the Baltic states; and for the Soviet-Polish border to be based on the Curzon Line. In addition, Stalin wanted the right to establish military bases in Finland and Romania and noted that the Soviet Union would not object to British bases in Denmark and Norway. 2. Ibid., 22336. In late May 1943, Britain and the Soviet Union signed a mutual assistance treaty that did not deal with the issue of frontiers; for text, see ibid., 66365. 3. U.S. Department of State, Foreign Relations of the United States, The Conferences at Washington, 19411942 and Casablanca, 1943, 72631 (hereafter FR, followed by year and volume title or by year and volume number). 4. Woodward, British Foreign Policy, 5: 2531. 5. FR 1943 3: 1617. 6. Ibid., 26. 7. Ibid., 36. 8. E.L. Woodward, British Foreign Policy during the Second World War (London: H.M. Stationery Office, 1962), 546. 9. Ibid., 54649. 10. Vojtech Mastny, Stalin and the Prospects of a Separate Peace in World War II, American Historical Revie 77 (December 1972): 136588. 11. Harley Notter, Postwar Foreign Policy Preparation, 19391945 (Washington: Department of State, 1949), 55457. 12. According to Vojtech Mastny, the conspicuous feature of this organization [the Free Germany Committee] was not so much the predictable presence of Communist luminaries as the participation of individuals of impeccable nationalist and conservative reputation, recruited from among the prisoners of war. Russias Road to the Cold War: Diplomacy, Warfare, and the Politics of Communism, 19411945 (New York: Columbia University Press, 1979), 80. 13. Notter, Postwar Foreign Policy Preparation, 55860. 14. John Lewis Gaddis, The United States and the Origins of the Cold War, 19411947 (New York: Columbia University Press, 1972), 99101. 15. FR 1943 1: 542. 16. U.S. Department of State, A Decade of American Foreign Policy: Basic Documents, rev. ed. (Washington: U.S. Government Printing Office, 1985), 13, 1415. 17. FR 1943 1: 72023. 18. Ibid., 62932, 74041. 19. FR 1943, Conferences at Cairo and Tehran, 51011, 513, 53233. 20. Ibid., 55354. 21. Ibid., 600604. 22. Ibid., 845. 23. William M. Franklin, Zonal Boundaries and Access to Berlin, World Politics 16 (October 1963): 13. 24. Ibid., 1011; FR 1943, Tehran, 25356. 25. FR 1944 1: 18889. 26. Gaddis, U.S. and the Origins of the Cold Wa , 11415. 27. Robert M. Slusser, Soviet Policy and the Division of Germany, in Susan J. Linz, ed., The Impact of World War II on the Soviet Union (Totowa, NJ: Rowman & Allanheld, 1985),110,115. Despite its title, this article is primarily about British policy toward Germany. See also Trevor Burridge, Great Britain and the Dismemberment of Germany at the End of the Second World War, International History Review 3 (October 1981): 56579. 28. Slusser, Soviet Policy, 11517; see also Woodward, British Foreign Policy, 5: 203204. 29. Sir Llewellyn Woodward, British Foreign Policy, 5: 21617. 30. Ibid., 204207. The Foreign Office was also concerned that official references to the possibility of AngloSoviet hostility after the war could come to the notice of the Soviets. Ibid., 205n. 31. Ibid., 207208.

Case 323, Part A

Deciding Germanys Future, 1943-1945

15

32. Ibid., 208210. 33. Warren F. Kimball, Swords into Ploughshares? The Morgenthau Plan for Defeated Nazi Germany, 19431946 (Philadelphia: J.B. Lippincott, 1976), 21. 34. FR 1944 1: 27687. 35. Ibid., 31213. 36. Kimball, Swords into Ploughshares, 2528. 37. Ibid., 2829, 95100. 38. FR 1944, The Conference at Quebec, 8690; White quoted in David Schoenbaum, The World War II Allied Agreement on Occupation and Administration of Postwar Germany, in Alexander L. George, Philip J. Farley, and Alexander Dallin, eds., U.S.-Soviet Security Cooperation: Achievements, Failures, Lessons (New York: Oxford University Press, 1988), 32. 39. FR 1944, The Conference at Quebec, 9597. 40. Ibid., 98100; Henry L. Stimson and McGeorge Bundy, On Active Service in Peace and War (New York: Harper & Brothers, 1947), 56973. 41. FR 1944, The Conference at Quebec, 12843. 42. Ibid., 12328. 43. Ibid., 32328. 44. Ibid., 32830, 342, 344, 35963. 45. Ibid., 36569. 46. Ibid., 34446. 47. FR 1945, Yalta, 14254. 48. Stimson and Bundy, On Active Service, 57882; FR 1945, Yalta, 155; Kimball, Swords into Ploughshares, 4244. 49. Gaddis, U.S. and the Origins of the Cold War, 12021; FR 1944 1: 398403, 409410. 50. Kimball, Swords into Ploughshares, 13540. At the conference, Churchill and Stalin also divided southern and eastern Europe into spheres of influence. For the British record of these conversations, see Joseph M. Siracusa, The Meaning of TOLSTOY: Churchill, Stalin, and the Balkans, Moscow, October 1944, Diplomatic History 3 (Fall 1979): 44363.

51. Sir Llewellyn Woodward, British Foreign Policy, 5: 23135. 52. Ibid., 23739. 53. Ibid., 24243. 54. Winston S. Churchill, Triumph and Traged , vol. 6 of The Second World War (Boston: Houghton Mifflin, 1953), 35051. 55. FR 1945, Yalta, 17887 56. Ibid., 19093. 57. Ibid., 19396. 58. Ibid., 17576. 59. Ibid., 315. 60. Ibid., 31215. 61. Ibid., 17678. 62. Mastny, Russias Road to the Cold Wa , 215; Timothy Dunmore, Soviet Politics, 19451953 (New York: St. Martins, 1984),112. 63. This discussion regarding the German issue at Yalta is drawn from Diane Shaver Clemens, Yalta (New York: Oxford University Press, 1970), 14072. 64. U.S. Department of State, Documents on Germany 19441985 (Washington: U.S. Government Printing Office, 1985), 1011. 65. Sir Llewellyn Woodward, British Foreign Policy, 5: 32036. 66. FR 1945 3: 46973; Documents on German , 1532. 67. Melvyn P. Leffler, The United States and the Strategic Imperatives of Reconstruction Policy in Europe, 1945 1949, unpublished paper, 1987, 56. 68. FR 1945, Conference at Berlin (Potsdam), 1: 61921. 69. Ibid., 61214. 70. Ibid., 26780. 71. Leffler, U.S. Reconstruction Policy, 89. 72. Bruce Kuklick, American Policy and the Division of Germany: The Clash with Russia over Reparations (Ithaca: Cornell University Press, 1972), 13139. 73. FR 1945, Potsdam, 2: 75357, 99091

Case 323, Part B

DECIDING GERMANYS FUTURE, 19431945
David S. Painter
Georgetown University

COPYRIGHTED MATERIAL
Do Not Duplicate This is Copyrighted Material for Classroom Use. It is available only through the Institute for the Study of Diplomacy. 202-965-5735 x3002 (tel) 202-965-5811 (fax)

THE POTSDAM CONFERENCE

President Harry Truman, Prime Ministers Winston Churchill and Clement Attlee (who succeeded Churchill on July 26, 1945following British national elections), and Josef Stalin met at Potsdam from July 17 to August 1. As the conference began, the United States successfully tested the first atomic bomb. The three allies reached agreement on Soviet participation in the war against Japan and adopted a U.S. proposal for the creation of a Council of Foreign Ministers to negotiate peace treaties with the defeated Axis nations. The United States and Britain agreed to the ultimate transfer of the city of Knigsberg and adjacent territory in East Prussia to the Soviet Union.74 No agreement was reached on the political reorganization of Poland and the former enemy states of Eastern Europe, and the United States and Britain rejected Soviet requests for revision of the international agreement governing the Black Sea straits and control of the former Italian colony of Tripoli. The hardest questions and the toughest negotiations at Potsdam revolved around Germany. At the beginning of the conference, President Truman pre-

Copyright 1992, 1989 Institute for the Study of Diplomacy. ISBN 1-56927-323-5 Publications, Institute for the Study of Diplomacy,School of Foreign Service, Georgetown University, Washington, D.C. 200571025 http://data.georgetown.edu/sfs/programs/isd/

sented a memorandum containing a draft of a proposed agreement on the political and economic principles to guide the occupying powers 75 The conference accepted the main political principles set out in the U.S. draft. The military commanders of the respective zones of occupation would exercise supreme authority in their respective zones and jointly in matters affecting Germany as a whole through an Allied Control Council. Decisions of the council were to be unanimous. Although no central government was to be established for some time, the Potsdam agreement specified that during the period of occupation Germany was to be treated as a single economic unit with central administrative agencies to be established to oversee the German economy. The Allied Control Council was also charged with establishing uniform policies for the occupation aimed at the disarmament, demilitarization, and denazification of Germany. Such policies were t include destroying Germanys capacity to wage war trying all war criminals, purging committed Nazis from public life, and reforming Germanys educational system and judiciary. The ultimate goal was the reconstruction of German political life on a democratic basis and . . . peaceful cooperation in international life by Germany. 76 The United States and Britain insisted that Germany be treated as an economic unit and that imports approved by the governments concerned had to be paid for before reparations deliveries wer made. In addition, the United States and Britain argued that each of the zones of occupation should

16

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Deciding Germanys Future, 1943-1945

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draw its supplies from the regions of Germany that had provided them before the war. The Soviets countered that reparations, rather than imports, be the first charge against German exports. Moreover, on the question of supplies, the Soviets wanted to exclude the part of Germany they had already handed over to Polish administration.77 On July 23, Molotov offered to withdraw his opposition to treating Germany as an economic unit if the United States and Britain would withdraw their demands on the provision of supplies. Molotov also proposed that any deficiency in German production be divided equally between exports and reparations deliveries. Eden and U.S. Secretary of State James F. Byrnes rejected both ideas and pointed out that the Soviet proposal on reparations and exports would leave Britain and the United States with the burden of providing their zones with the necessary imports without payment. The Soviets also repeated their Yalta proposals on reparations and proposed that, pending the establishment of a permanent Allied reparations agency, removals be based on the urgency of need of nations that had suffered from German aggression.78 At an informal meeting with Molotov on July 23, Byrnes pointed out that the United States would not pay out money to finance imports to Germany and suggested that each country take reparations from its own zone. If the Soviets wanted additional equipment from the Western zones, which contained the bulk of German heavy industry, they could trade for it with food, coal, and other raw materials from their zone. In other matters, Germany would be treated as an economic whole. Molotov objected that Stalin still strongly favored an overall plan for reparations and offered to reduce Soviet claims and to try to meet Western concerns about essential imports. Byrnes, however, held to the position that there would be no reparations until imports into the U.S. zone were paid for.79 At the foreign ministers meeting on July 27, Molotov charged that the United States had gone back on its agreement that the total figure for German reparations should be $20 billion. Byrnes replied that the figure had only been taken as a basis for discussion and that in the changed circumstances it did not apply. In addition to the destruction of property by military action and the exclusion of large parts of Germany from the area from which reparations could be extracted, Byrnes charged that the Soviets had already seized and removed a lar amount of machinery under the guise of war booty. Molotov admitted that Soviet authorities had

removed some machinery but argued that they had taken only a small fraction of the amount the Germans had destroyed in the Soviet Union. As for Byrness proposal on reparations, Molotov asked Byrnes if the U.S. proposal meant that each country would have a free hand in their own zones and would act entirely independently of the others? Byrnes replied that this was true in substance. 80 On July 30, Byrnes put forward a comprehensiv solution to the interrelated problems of reparations, the economic treatment of Germany as a whole, and the Polish western border. The United States and Britain would agree to the transfer to Polish administration of all German territory up to the eastern Neisse River. In return, the Soviet Union would undertake to meet Polish as well as its own claims for reparations from the Soviet zone. In addition, the Soviets would be entitled to 25 percent of any industrial capital equipment removed from the Ruhr if it was deemed unnecessary to a peace economy, provided that they supplied an equivalent value in foodstuffs and raw materials from the part of Germany under their control (including the territory under Polish administration). An additional 15 percent of such capital equipment from the Ruhr would be transferred to the Soviets without any equivalent.81 The United States, Britain, and the Soviet Union reached agreement on the main elements of Byrness compromise plan on July 31. After the United States and Britain rejected a Soviet proposal for four-power control of the Ruhr, they agreed that the Soviet Union would receive from the Western zones 10 percent of such industrial capital equipment as is unnecessary for the German peace economy, and another 15 percent of such material from the West in exchange for an equivalent amount of food, coal, or other commodities from the Soviet zone. The Allied Control Council would decide how much capital equipment could be spared from the Western zones for reparations shipments to the Soviet Union and other claimants, subject to the approval of the zonal commander from whose territory the material was to be removed. At British insistence, the final agreement included a statement that payments for approved imports into Germany should be a first charge against the proceeds of exports. This principle did not apply, however, to the equipment and products included in the allocation to the Soviet Union from the western zones. Finally, the United States and Britain agreed that Polish administration of former German territory would extend to the Oder and western Neisse River line. Final disposition of this territory would be settled at a peace conference.82

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David S. Painter

Case 323, Part B

NOTES
74. U.S. Department of State, Documents on Germany 19441985 Washington, D.C.: U.S. Government Printing Office, 1985), 5455, 62. 75. U.S. Department of State, Foreign Relations of the United States, The Conference at Berlin (Potsdam) 1945 2:775778 (hereafter FR, followed by year and volume title or by year and volume number). 76. Documents on German , 5657. 77. Sir Llewellyn Woodward, British Foreign Policy 5: 44245. 78. Ibid., 44546. 79. FR, 1945, Potsdam, 2: 27475. 80. Ibid., 42831, 450. 81. Ibid, 48485, 921, 115051. 82. Ibid., 51222; Documents on German , 5960, 63.