Foreign Relations of the United States, Diplomatic Papers, 1944, General, Volume I

740.00119 Control (Germany)/12–2644

Memorandum Prepared in the Division of Central European Affairs for the Secretary of State

[Washington,] December 26, 1944.

Mr. Secretary: In conformity with your arrangement with Secretary Morgenthau, Messrs. Luxford¹³ and Dubois¹⁴ of the Treasury met with Messrs. Riddleberger and Despres on Tuesday afternoon, December 19, and went over the Department’s recent policy documents on Germany, including the interchange of memoranda with the President. Mr. Luxford telephoned Mr. Riddleberger on the following day to suggest a further informal discussion on German questions, saying that his reading of our recent memoranda led him to believe that State and Treasury might be less far apart on treatment of Germany than both had supposed. Messrs. Riddleberger and Despres had an extended discussion of German questions with Messrs. Luxford, Dubois and Glasser¹⁵ on Thursday afternoon, December 21.

Although the Treasury people held that they were not retreating from their earlier position—which they alleged had been misconstrued or distorted—it became clear from the discussion that they were prepared to abandon or modify a number of points in their original plan if this could lead to agreement with the State Department. It appeared that they were primarily interested in two objectives:

(1) Vigorous de-Nazification, and

(2) A substantial and lasting contraction of the heavy industrial sector of the German economy.

They proposed that we explore further the possibility of getting together on a mutually acceptable statement of policies. Messrs. Riddleberger and Despres agreed to consider this proposal.

Although the Treasury view on economic matters, even in its more moderate form, diverged in important respects from the position the Department had been taking, Mr. Riddleberger, after discussion with Mr. Matthews, informed Mr. Luxford on Friday, December 22, that we would like to continue our exploratory efforts to reach agreement with the Treasury specialists, subject to the understanding that the matter would be kept informal and that Departmental clearance on any policy statement would be sought only if the specialists had arrived at a point where it appeared that such clearance would be fruitful.

Pursuant to this arrangement, Mr. Despres has made an appointment for further discussion with Mr. Glasser of the Treasury on Tuesday afternoon, December 26. It is requested that he be informed whether to carry forward this effort to reach agreement, or, alternatively, to tell Mr. Glasser that we have been instructed by the President not to engage in such discussion for the present.¹⁶

13. Ansel F. Luxford, Assistant to the Secretary of the Treasury.
14. Josiah E. DuBois, Jr., Assistant to the Secretary of the Treasury.
15. Harold Glasser, Assistant Director of the Division of Monetary Research of the Treasury Department.
16. A handwritten note, dated December 30, at the end of the memorandum, states that Henry P. Leverich, Assistant Chief of the Division of Central European Affairs, was informed by phone that the Secretary “would like discussions to continue in effort to reach agreement”.