Foreign Relations of the United States: Diplomatic Papers, The Conference of Berlin (The Potsdam Conference), 1945, Volume I

740.00119 (Potsdam)/5–2446

No. 327
Briefing Book Paper¹

top secret

[Undated.]

Policy Toward Germany

a: implementation of agreement on control machinery

Comment:

The Allied declaration on Germany² was issued June 5 in Berlin and simultaneously the first meeting of the Control Council was held. In spite of American, British and French willingness to discuss a number of questions, the Russian Commander Zhukov stated that the Control Council could not function until withdrawal into the zones was made. Consequently nothing beyond the issuance of the declaration on Germany was accomplished.³

Prior to the issuance of the declaration, the British Government had proposed that withdrawal into the zones be delayed until a number of questions outstanding with the Soviet Government were clarified, including zones of occupation in Austria. The United States Government agreed to go along partially with this, but in the meantime progress has been made in settling the Austrian zones and a decision is expected momentarily. As a result of telegraphic exchanges between the President, Stalin and Churchill,⁴ July 1 has been fixed as the tentative date for withdrawal into the zones. It is anticipated that SHAEF will be dissolved shortly thereafter.

There are a number of pressing problems, particularly economic, which require the immediate attention of the Control Council. In spite of repeated promises by the Soviet Government to send representatives to the “nucleus groups” formed in London last year as part of the Control Council machinery, no Soviet counterpart has ever been produced.

Recommendation:

The United States Government should urge at the meeting the immediate implementation of the agreement on control machinery⁵ and the establishment at once of the Control Council. It should be recalled that the Soviet Representative in the EAC⁶ has frequently stressed the need of uniform policies by the Allied Governments in Germany and this cannot be done until the Control Council is established and functioning. We should furthermore urge that questions now under negotiation in the EAC on Germany should be transferred to the Control Council upon its establishment.

b: draft agreement on the treatment of germany in the initial control period

Recommendation

It is recommended that this Government at the forthcoming meeting propose the initialling of the appended statement of policy toward Germany. (Appendix A)

The statement should thereafter be referred to the representatives of the three Powers on the European Advisory Commission, with instructions to expedite its formal recommendation as a protocol of agreement among the four occupying powers, in order that the French Government may express its views. France is an occupying power and the fourth member of the Control Council.

Discussion

The proposed draft agreement (Appendix A) is based on the U. S. policy memorandum of March 23, 1945.⁷ It reflects also the exchange of views which took place when the U. S. memorandum was considered in the European Advisory Commission.

Attachments:

Appendix A:—Draft Agreement on Treatment of Germany in the Initial Control Period.

[The text of Appendix A, which appears at this point in the original briefing paper, is printed post, page 443.]

c: establishment of a german government or local administrations

Comment

(1) The first task of military government has been to restore machinery of local government and find suitable people to run it. A further task incumbent on military government is to inaugurate political practices which will, we hope, in the long run make possible the development of genuinely democratic government in Germany. Since the process of appointing local officials has not been altogether wisely carried out, and since it would be desirable to begin democratic training when the Nazis are under the immediate impact of defeat, these two tasks of military government can be profitably undertaken in the immediate future by establishing popularly elected officials in office in the areas of local self-government.

The German people have had long experience in local self-government and a commendable administrative reputation. Restoration of their basically healthy local political institutions would be the most assured initial step in the fostering of a national democracy. The essential precaution would be to disqualify active Nazis from voting and office-holding and to attempt, in this early period, to secure a proportional representation of the several political groups. The participation of all the significant political groups in local self-government will be the best means of avoiding the highly dangerous situation which would arise if some parties were identified with doing the will of the victors and others with opposing it.

(2) Reports from Germany⁸ indicate that it is impossible to maintain the political vacuum created by defeat. We have even now a choice between underground politics and politics in the open which we can watch and in some measure influence. A healthier situation would obtain if we not only permitted but indeed encouraged political activity of a non-Nazi kind. Under present military government regulations we pursue the dubious policy of suppressing the expression and the action of those anti-Nazis who, we must hope, will eventually assume control of Germany.

(3) The third recommendation proposes the extension of democratic procedure if trial at the local level is satisfactory. In the early stages it might be useful to have local councils send their representatives to regional bodies, of which there was a multiplicity in pre-Nazi Germany. The exact character of regional bodies and procedures for choosing their members can best be determined in consultation with Germans who have proven their sense of responsibility in local government. If we are to avoid duplication of poor choices of officials by military government and further unfortunate criticisms for such action, it is important to establish representative and elective procedures in regional and state administration as soon as possible.

(4) This fourth recommendation rests on belief in the necessity of treating Germany as a unity in so far as agreement between the four governments and on the Control Council is possible. If each zone is set up as a separate and distinct political or administrative unit of its own, the prospective result will be the creation of partite states having diverging political philosophies and the termination of inter-zonal commerce to the great detriment of the United States zone, and to the greater detriment of the British zone. Any break-up of the effective unity of Germany at the present time would mean either a poor-house standard of living in the West with Communism the probable end-result or an elaborate relief program at American and British expense.

(5) Until German affairs are more settled and until the Germans have suffered the immediate impact of the rigorous Allied measures under the banner of economic disarmament and reparation, it is preferable that there be no politically responsible central government in Germany. Any political groups which accept and carry out the heavy demands now contemplated will inevitably be quislings and Vichyites in German eyes and in so far as possible, moderate and anti-Nazis [sic] parties should be spared the odium of this collaboration. If, however, it should become necessary to agree to the formation of a politically responsible German Government we should use every effort to make it and to keep it a broadly based coalition. It is highly imperative, for long-range considerations that the Weimar experience be avoided; i. e., that rightist and nationalistic parties appear to have a monopolistic claim on German patriotism.

Recommendation

(1) It is recommended that this Government propose the restoration throughout Germany of local self-government through elective councils and proceed forthwith to put this proposal into effect in the United States zone.

(2) It is recommended that this Government propose the authorization for the whole of Germany of non-Nazi political parties with rights of assembly and of public discussion and proceed forthwith to put this proposal into effect in the United States zone.

(3) It is recommended that this Government propose the introduction of the representative and elective principles into regional, provincial and state (Land) administration as rapidly as results of local self-government seem to warrant this further step.

(4) It is recommended that this Government oppose the creation of separate integrated German administrative and political entities coinciding with the four zones of occupation and favor, on the contrary, the use of central German administrative machinery, in so far as possible, for the despatch of business above the provincial or state level. It is in consequence further recommended that this Government oppose the partition of Germany, either de facto or de jure, along the lines of the zones of occupation.

(5) It is recommended that this Government oppose the establishment for the time being of a central German Government in contradistinction to the restoration of such central administrative agencies as would serve the interests of the Control Council.

d: agreement on treatment of Germany as an economic unit

This Government should make clear its understanding that the division of Germany into zones of occupation does not imply the erection of barriers to the inter-zonal movement of goods. The U. S. zone of occupation is deficient in food and is almost completely lacking in coal and other major industrial materials. Its operation as a closed economic entity would be utterly impracticable. The British zone has an even larger food deficit, but would provide the logical source of supply for coal and some other industrial materials. The Russian zone has a food surplus and, apart from Berlin—which, according to present agreements, would be under quadripartite administration—has suffered much less bomb damage than Western Germany.

The British Government has expressed its adherence to the principle that Germany as a whole should be treated as an economic unit during the period of Allied military control, and they are particularly eager to secure access to Eastern European food supplies. However, this matter has not yet been raised by the Soviet Government except as regards reparation, and the British have made clear that they desire to retain existing combined arrangements among the Western Allies until the Russian position has become known.

The continuation of present combined arrangements among the Western Allies for supply and other economic and financial matters after SHAEF has been terminated would involve serious dangers. It would greatly prejudice the chances of reaching agreement with the Russians on economic matters, and it would tend toward the establishment of an economic wall between Eastern and Western Germany, and, probably between Eastern and Western Europe. The economy of Eastern Germany can be readily assimilated into an Eastern economic sphere. In contrast, acceptance by the Western powers of the task of finding a place for a Western German economy would create extreme difficulties and would greatly intensify the post-war economic problems of the United States, Great Britain and Western Europe.

The urgency of this problem and the need for prompt discussion arise from the fact that arrangements among the Western Allies, limited in their application to Western Germany, will soon be essential if initial agreements which include the Russian zone are not quickly reached. The U. S. zone in Germany depends on Ruhr and Saar coal and the British would need assistance from the United States in meeting the large food deficit in Northwest Germany.

If inter-zonal economic barriers are to be avoided and the whole German economy treated as a unit it will be necessary to ensure uniform economic treatment of the German population and of agriculture and industry. The occupying powers will have to agree on the scale of supplies to be permitted to the German people, on the type of economic or industrial activities which will be suppressed or allowed or encouraged to some degree, and on the measures which will be required to stimulate agricultural production and to facilitate the distribution of foodstuffs.

Full implementation of the principle that inter-zonal economic barriers should be avoided and the whole German economy treated as a unit for purposes of military government and control will require extensive, detailed Allied agreement covering a broad range of economic matters.

Although these agreements cannot possibly be framed in the time available at the forthcoming conference, it would be desirable to obtain explicit recognition of the need for agreement on the following matters:

a. equitable distribution and unrestricted inter-zonal movement of essential goods and services (e. g. food, coal);

b. adoption of uniform ration scales throughout Germany;

c. adoption of uniform policies for industry and agriculture;

d. formulation of agreed programs for German exports and imports;

e. establishment of an Allied agency for centralized issuance and control of currency;

f. agreed arrangements for financing of approved minimum imports required for Germany as a whole.

With respect to “f.”, this Government should obtain an agreement in principle that all the occupying powers should share the cost of financing initial German imports and should obtain repayment of this initial outlay from the proceeds of German exports in accordance with the principle that the first charge on German exports (other than removals of existing plant and equipment) should be a sum sufficient to pay for essential imports. In order to implement this agreement in practice, the governments should undertake to formulate as soon as possible a program which would (1) set forth the imports which will be needed for Germany as a whole both to meet the minimum needs of the population and to permit Germany to make such exports as will be required on relief, rehabilitation and reparation account, and (2) specify the respective contributions of the occupying powers to the cost of such initial imports.

Agreement on a Transportation Agency in Germany

Reports from Germany have made clear that transportation is a key problem which must be dealt with as a matter of top priority. Germany cannot be effectively treated as an economic unit and its resources cannot be adequately mobilized for the benefit of the occupying forces and the victims of Nazi aggression until Germany’s transport system is organized on a national basis and an integrated program of minimum essential rehabilitation is carried out. Such organization is also necessary in order to meet the pressing needs of Allied countries for locomotives and rolling stock which may be available in Germany.

This Government should, therefore, propose that the Commanders-in-Chief of the occupying forces in Germany be instructed by their respective Governments to establish at once an inland transport agency under the Control Council. The chairmanship of this agency should be rotated among the four occupying powers, and it should be given the following immediate tasks:

a. to receive information from the occupying forces of the four governments on the condition of the transportation system, and on the number, nationality, and state of repair of freight cars, locomotives, and inland waterway vessels;

b. to arrange for the prompt return to liberated countries of their transportation equipment found in Germany;

c. to coordinate and expedite plans for the minimum, essential repair of the German transportation network;

d. to determine the minimum German requirements for railroad rolling stock, and to arrange for the immediate use of surplus German rolling stock in liberated countries pending the subsequent, final allocation of such surplus as reparation;

e. to pool railroad rolling stock retained within Germany and to provide such central supervision of transportation as is necessary to assure integrated operation for the purpose of inter-zonal shipments.

Agreement on German Exports Prior to a Reparation Settlement

This Government recognizes that it may be necessary for each of the occupying powers to make available to the countries for which they have some supply responsibility German goods and equipment urgently needed for relief and rehabilitation. In many cases, it will be impossible to await the conclusion of formal agreements on reparation before undertaking such exports from Germany. This government, however, would like to obtain agreement among the occupying powers, (1) that such exports should be confined to goods and equipment which are urgently needed for the relief and rehabilitation of liberated countries, with special emphasis on railroad rolling stock, coal, and textiles, and (2) that a complete record be kept of all goods and equipment taken out of Germany for this purpose and that this record be made available promptly to the Control Council.

[Appendix A]

top secret

Draft Agreement on Treatment of Germany in the Initial Control Period⁹

1. The authority of the Control Council to initiate plans and reach agreed decisions on the chief military, political, economic and other questions affecting Germany as a whole shall be paramount,¹⁰ and those plans and decisions shall be carried out in each zone of occupation by the national Commander-in-Chief concerned. In matters exclusively affecting his own zone, each national Commander-in-Chief shall exercise supreme authority in accordance with directives received from his own Government.

2. The purposes of the occupation of Germany, to the promotion of which the above plans and decisions are to be directed, are:—¹¹

(i) The complete disarmament of Germany and the elimination or control of all German industry that could be used for military production. For these purposes:—¹²

(a) the German armed forces, including the General Staff and all para-military organisations, shall be demobilized as soon as practicable and disbanded in such manner as permanently to prevent their revival or reorganisation; and

(b) as part of the programme to attain this objective,¹³ all arms, ammunition and implements of war and all specialised facilities for their production shall be seized or destroyed. The maintenance and production of all aircraft and all arms, ammunition and implements of war shall be prevented.

(ii) To convince the German people 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.

(iii) To destroy the National Socialist Party and its affiliated and supervised organisations, to dissolve all Nazi institutions, to ensure that they are not revived in any form, and to prevent all Nazi and militaristic activity or propaganda.

(iv) To prepare for the eventual reconstruction of German political life on a democratic basis and for eventual peaceful cooperation in international life by Germany.

3. Nazi laws which provide the basis of the Hitler regime or which establish discriminations on grounds of race, creed, or political opinion shall be abolished. No such discriminations, whether legal, administrative or otherwise, shall be tolerated. National Socialist courts shall likewise be abolished.¹⁴

4. War criminals and those who have participated in planning or carrying out Nazi enterprises involving or resulting in atrocities or war crimes shall be arrested, with a view to their ultimate disposal.¹⁵ Nazi leaders and influential Nazi supporters and any other persons dangerous to the occupation or its objectives shall be arrested and interned.

5. 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 semi-public office, and from positions of responsibility in important private undertakings. Those Germans who are permitted to remain in, or are appointed to, official posts (e. g. in the police or the administration) should understand that they hold office only during good behaviour.

6. German education shall be so controlled as completely to eliminate Nazi and militarist doctrines and to make possible the development of democratic ideas.

7. The administration of affairs in Germany should be directed towards the decentralisation of the political structure and the development of local responsibility. The German economy shall also¹⁶ be decentralised, except that to the minimum¹⁷ extent required for carrying out the purposes set forth herein, the Control Council shall permit or secure the establishment of central controls¹⁸ and, in particular, of (a) essential national public services such as railroads, communications and power, (b) finance and foreign economic affairs, (c) production and distribution of essential commodities, and (d) such other matters as may be directed from time to time.

8.19 In the imposition and maintenance of economic controls, German authorities shall to the fullest extent practicable be ordered to proclaim and assume administration of such controls. Thus it should be brought home to the German people that the responsibility for the administration of such controls and for any breakdown in those controls will rest with themselves and their own authorities. Any German controls which run counter to the objectives of occupation will be abolished.

9.20 Allied controls shall be imposed upon the German economy but only as may be necessary:—

(a) to carry out programmes, as prescribed by higher authority,²¹ of industrial disarmament and demilitarisation, of reparations, of relief for liberated areas and of other supplies as may be notified;

(b) to assure the production and maintenance of goods and services required to meet the needs of the occupying forces and displaced persons in Germany and essential to prevent starvation, disease or civil unrest;

(c) to ensure the equitable distribution of essential commodities between the several zones;

(d) to control German industry and all economic and financial international transactions, including exports and imports, with the aim of preventing Germany from developing a war potential and of achieving the other objectives named herein. For the same purpose no extension of credit to Germany or Germans by any foreign person or Government shall be permitted, except that the Control Council may in special emergencies grant such permission.²²

(e) otherwise to carry out the objectives of occupation and prevent conditions arising which would endanger the occupying forces or impede them in their tasks.

10. No action shall be taken in execution of the reparations programme or otherwise which would tend to support basic living standards in Germany on a higher level than that existing in any one of the neighboring United Nations.²³

11.24 The first charge on all approved exports for reparations or otherwise shall be a sum necessary to pay for approved imports.

12.25 Recurrent reparations should not by their form or amount require the rehabilitation or development of German heavy industry and should not foster the dependence of other countries upon the German economy.

13. A suitable programme for the restitution of identifiable property looted by Germans from Allied territory shall be carried out promptly.

14. Subject to the overriding necessity for the maintenance of military security, political activities (including public demonstrations or meetings) shall not be forbidden, but support of Allied authority shall not be lent to any particular political party or policy in Germany.²⁶

15.27 Subject again to the necessity for maintaining military security, freedom of speech, press and religion shall be permitted, and religious institutions shall be respected. Subject likewise to the maintenance of military security, the formation of free trade unions shall be permitted.

16.28 This agreement does not apply to Austria.

[Supplement]

top secret

Draft Memorandum

Proposal on Treatment of Germany as an Economic Unit for Presentation to the British and Soviet Governments²⁹

It is the belief of the United States Government that the division of Germany into zones of occupation does not imply the creation of separate zonal economies. This Government believes that the maintenance of a single national economy in Germany during the period of occupation will have manifest advantages for all the occupying powers.

1. It will make possible full and effective mobilization of German economic resources for the relief, rehabilitation and reconstruction of countries which have suffered from German aggression.

2. It will permit all the occupying powers to share equitably both the advantages and the burdens of occupation.

3. It will make it possible to confine German imports to a minimum and to make adequate arrangements for maintaining in Germany a subsistence standard of living.

4. It will help to avoid substantial differences in the treatment accorded to the German people and minimize the effect of German efforts to play one occupying power against another.

5. It should render easier of execution the joint policy of the occupying powers of preventing the rebuilding of German military industrial power.

The Government of the United States hopes that the Governments of the United Kingdom and the Union of Socialist Soviet Republics [sic] share its view that Germany should continue to be treated as an economic unit and are willing, in cooperation with the Provisional Government of France, to implement this policy through the Control Council. In particular, the United States Government considers that it would be highly desirable to reach agreement at an early date on the following questions:

1. Equitable Distribution and Unrestricted Interzonal Movement of Essential Goods and Services

It would be desirable to agree in principle that no barriers should be erected to the movement of goods and services which are required for (a) the discharge of Germany’s reparation obligations, (b) the maintenance of occupying forces and displaced persons, and (c) the maintenance of a subsistence standard of living in Germany.

2. Adoption of Uniform Ration Scales Throughout Germany

Agreement in principle on free interzonal movements of essential goods and services would be difficult to translate into practice unless agreement were also reached among the occupying powers regarding the standard of living which they intend to maintain for the German population of their respective zones. It would be difficult, for example, for one occupying power to consent to the shipment of food from its zone of occupation to another zone of occupation if the ration scales in the latter zone were higher than in the former zone. Moreover, differences in the standard of supply in the various zones of occupation would undoubtedly be exploited by the German people for the purpose of causing dissension among the occupying powers.

3. Adoption of Uniform Policies for Industry and Agriculture

It would be advisable to reach agreements as early as possible on those types of industries which the occupying powers wish to destroy or discourage in Germany, and on those types of economic activity which the occupying powers wish to foster. Such an agreement would be essential not only to ensure uniform treatment of the German people, but also to ensure operation, in practice, of any agreement to permit free interzonal movement of raw materials and fuel essential to industry. For the same reasons it would be desirable to formulate uniform policies respecting the treatment of monopolies, combines and cartels. It would also be advisable to formulate a joint program for the exploitation of German agriculture in older to minimize the necessity for imports into Germany and to make available any surpluses for the relief of other countries. Such a program would involve agreement on the treatment of large landed estates and the extent to which it would be necessary to make available supplies to stimulate German agricultural production.

4. Formulation of Agreed Programs for German Exports

Such programs would have to cover, not only the types and quantities of equipment and supplies which Germany would have to make available on reparation account, but also the types and quantities of goods which Germany would have to export in order to make payment for such imports as are essential to the German economy.

5. Formulation of Agreed Programs for German Imports

It is highly desirable that the occupying powers reach agreement on the types and quantities of goods which it will be necessary to import into Germany for the needs of the occupying forces, for the execution of the reparation program, and for the minimum requirements of the German people. Once agreement on an import program has been reached, it will also be necessary to determine how such imports will be financed, and to what extent the occupying powers should contribute to the initial financing of such imports in the event that German means of payment are inadequate.

6. Formulation of an Agreed Program on Coal Production and Allocation

It is clear that adequate production and distribution of coal is of key importance to all European countries. At present, the acute shortage of coal is the most important obstacle to the revival of economic life in Europe. It is essential for Europe, as a whole, that maximum efforts be made to increase coal output in Germany and to allocate the output equitably among all countries having a coal deficit. To this end, a program for the German coal industry as a whole should be worked out as quickly as possible.

7. Agreement on Centralized Organization of Transport

Transportation, like coal, is a key problem which must be considered a matter of top priority. It is essential that the occupying powers agree promptly on the measures which must be taken to rehabilitate the German transport system and to operate it as a unit. Until such measures are taken, it will be impossible to mobilize resources effectively for the benefit of countries which have suffered from Nazi aggression and to effect restitution of looted rolling stock and locomotives. Such measures will also greatly facilitate the task of occupying and administering Germany.

8. Establishment of an Allied Agency for Centralized Control of Currency

If it is agreed that Germany should be administered as a single national economy, it follows that Germany must also be treated as a unit with respect to currency and credit. It is essential, therefore, that a centralized agency be established to control currency and credit and that a uniform policy be followed with respect to the use of Allied military currency. It will be impossible to treat Germany as an economic unit if inflationary policies are adopted in one zone and deflationary policies in another. The establishment of a single centrally controlled currency will also necessitate prompt agreement on measures of foreign exchange control.

This Government hopes that it will be possible to obtain agreement in principle on all these points and that all of the occupying powers will instruct their representatives on the Control Council for Germany to take prompt steps to implement these agreements in practice.

[ Washington ,] June 29, 1945.

1. Annex 2 to the attachment to document No. 177.
2. Treaties and Other International Acts Series No. 1520; 60 Stat. (2) 1649.
3. With respect to the initial meeting of the Allied Control Council, see Dwight D. Eisenhower, Crusade in Europe (Garden City, 1948), pp. 435–437, and Lucius D. Clay, Decision in Germany (Garden City, 1950), pp. 20–23.
4. See document No. 75.
5. i. e., the agreement signed at London, November 14, 1944, as amended by a further agreement signed at London, May 1, 1945. For texts, see Treaties and Other International Acts Series No. 3070; United States Treaties and Other International Agreements, vol. 5, pt. 2, p. 2062. Text of the agreement of November 14, 1944, also in Foreign Relations, The Conferences at Malta and Yalta, 1945, p. 124.
6. Fedor Tarasovich Gusev.

7. The text of the memorandum referred to is as follows (here printed from the annex to the appendix to IPCOG 1/1 (Revised), from the IPCOG Files):

   “The following is a summary of U. S. policy relating to Germany in the initial post-defeat period. As such it will be introduced into the European Advisory Commission, and will be used as the basis for directives to be issued to the U. S. Commanding General in Germany.

   “The authority of the Control Council to formulate policy with respect to matters affecting Germany as a whole shall be paramount, and its agreed policies shall be carried out in each zone by the zone commander. In the absence of such agreed policies, and in matters exclusively affecting his own zone, the zone commander will exercise his authority in accordance with directives received from his own government.

   “The administration of affairs in Germany should be directed toward the decentralization of the political structure and the development of local responsibility. The German economy shall also be decentralized, except that to the minimum extent required for carrying out the purposes set forth herein, the Control Council may permit or establish central control of (a) essential national public services such as railroads, communications and power, (b) finance and foreign affairs, and (c) production and distribution of essential commodities. There shall be equitable distribution of such commodities between the several zones.

   “Germany’s ruthless warfare and fanatical Nazi resistance have destroyed German economy and made chaos and suffering inevitable. The Germans cannot escape responsibility for what they have brought upon themselves.

   “Controls may be imposed upon the German economy only as may be necessary (a) to carry out programs of industrial disarmament and demilitarization, reparations, and of relief for liberated areas as prescribed by appropriate higher authority and (b) to assure the production and maintenance of goods and services required to meet the needs of the occupying forces and displaced persons in Germany, and essential to prevent starvation or such disease or civil unrest as would endanger the occupying forces. No action shall be taken, in execution of the reparations program or otherwise, which would tend to support basic living standards in Germany on a higher level than that existing in any one of the neighboring United Nations. All economic and financial international transactions, including exports and imports, shall be controlled with the aim of preventing Germany from developing a war potential and of achieving the other objectives named herein. The first charge on all approved exports for reparations or otherwise shall be a sum necessary to pay for imports. No extension of credit to Germany or Germans by any foreign person or Government shall be permitted, except that the Control Council may in special emergencies grant such permission. Recurrent reparations should not, by their form or amount, require the rehabilitation or development of German heavy industry and should not foster the dependence of other countries upon the German economy.

   “In the imposition and maintenance of economic controls, German authorities will to the fullest extent practicable be ordered to proclaim and assume administration of such controls. Thus it should be brought home to the German people that the responsibility for the administration of such controls and for any breakdowns in those controls, will rest with themselves and their own authorities.

   “The Nazi party and its affiliated and supervised organizations and all Nazi public institutions shall be dissolved and their revival prevented. Nazi and militaristic activity or propaganda in any form shall be prevented.

   “There shall be established a coordinated system of control over German education designed completely to eliminate Nazi and militarist doctrines and to make possible the developments [sic] of democratic ideas.

   “Nazi laws which provide the basis of the Hitler regime or which establish discriminations on grounds of race, creed or political opinion, shall be abolished.

   “All members of the Nazi party who have been more than nominal participants in its activities, and all other persons hostile to Allied purposes will be removed from public office and from positions of responsibility in private enterprise.

   “War criminals and those who have participated in planning or carrying out Nazi enterprises involving or resulting in atrocities or war crimes, shall be arrested, brought to trial and punished. Nazi leaders and influential Nazi supporters and any other persons dangerous to the occupation or its objectives, shall be arrested and interned.

   “A suitable program for the restitution of property looted by Germans shall be carried out promptly.

   “The German armed forces, including the General Staff, and all para-military organizations, shall be promptly demobilized and disbanded in such a manner as permanently to prevent their revival or reorganization.

   “The German war potential shall be destroyed. As part of the program to attain this objective, all implements of war and all specialized facilities for the production of armaments shall be seized or destroyed. The maintenance and production of all aircraft and implements of war shall be prevented.

   “Joseph C. Grew

   “J. J. McCloy

   “Harry D. White

   “J. H. Hilldring

   “William L. Clayton

   “H. Freeman Matthews

   “Frank Coe

   “Henry Morgenthau, Jr.”

   This memorandum was endorsed by Roosevelt as follows: “O.K. F.D.R. superseding memo of Mar 10 ’45.”

8. e. g. document No. 339.
9. In Matthews’ copy of the Briefing Book, the title has been changed by hand to read as follows: “Proposed Agreement on the Political and Economic Principles To Govern the Treatment of Germany in the Initial Control Period”. Manuscript subtitles have also been inserted in this copy as follows: Authority of the Control Council before paragraph 1; Political Principles before paragraph 2; and Economic Principles before paragraph 7.
10. In Matthews’ copy there is the following manuscript interpolation at this point: “in Germany”.
11. In Matthews’ copy, the last fifteen words have been stricken from the draft and the following manuscript substitution has been inserted: “by which the Control Council shall be guided”.
12. In Matthews’ copy, the last three words have been changed by hand to read: “To these ends”.
13. In Matthews’ copy, the first nine words of this subparagraph have been stricken from the draft.
14. The final sentence of this paragraph has been stricken from the draft in Byrnes’ and Matthews’ copies.
15. A manuscript change by Byrnes substitutes “and prosecuted to final judgment” for the last seven words of this sentence. In Matthews’ copy the words “and brought to judgment” are substituted for the same seven words.
16. The word “also” has been stricken from Matthews’ copy.
17. The word “minimum” has been stricken from Matthews’ copy.

18. In Matthews’ copy this sentence, which is marked to become paragraph 9, ends with the word “controls”, the rest of the paragraph being stricken from the draft. The following revised version of the Recommendations (ante, p. 439) is marked for inclusion at the end of the paragraph:

    “To this end:

    • “(i) Local self-government shall be restored throughout Germany through elective councils.
    • “(ii) Non-Nazi political parties with the rights of assembly and of public discussion shall be allowed and encouraged throughout Germany.
    • “(iii) Representative and elective principles shall be introduced into regional, provincial and state (Land) administration as rapidly as results of local self-government seem to warrant.
    • “(iv) For the time being no central German political government shall be established.”

    In the margin opposite this redraft is written the word, “Done”.

19. In Matthews’ copy this paragraph has been marked to become paragraph 10.
20. In Matthews’ copy this paragraph has been marked to become paragraph 11.
21. The words “as prescribed by higher authority” have been stricken from the draft in Byrnes’ and Matthews’ copies.
22. Manuscript revisions in Matthews’ copy make the final clause read as follows: “except that in special emergencies on notice to the control council which shall have power to prohibit such transactions.” In Byrnes’ copy there is the following marginal shorthand notation by Byrnes, apparently intended as substitute language: “in special emergency and on or with notice to the Control Council and the Control Council shall have power to prohibit such extension”.
23. The following manuscript notation appears in the margin of Byrnes’ copy opposite this paragraph: “out”. In Matthews’ copy this paragraph has been stricken from the draft.
24. In Matthews’ copy this paragraph has been marked to be stricken from the draft.
25. In Matthews’ copy this paragraph has been stricken from the draft and the following manuscript substitute written in the margin: “12. The principles governing the exaction of reparations from Germany are set forth in Annex i to this agreement.”

26. The last eighteen words of this paragraph have been stricken from Byrnes’ copy. The entire paragraph has been stricken from Matthews’ copy, in which the following revision of the “Proposal on Treatment of Germany as an Economic Unit” (see footnote 29, post) has been marked for insertion here as paragraph 14:

    “14. During the period of occupation Germany shall be treated as a single economic unit. To this end:

    • “(i) no barriers should be erected to the movement of goods and services which are required for (a) the discharge of Germany’s reparation obligations, (b) the maintenance of occupying forces and displaced persons, and (c) the maintenance of a subsistence standard of living in Germany.
    • “(ii) To the fullest extent possible there shall be Uniform Ration Scales throughout Germany[.]
    • “(iii) To the fullest extent possible there shall be Uniform Policies for Industry and Agriculture throughout Germany.
    • “(iv) There shall be agreed programs for imports and exports for Germany as a whole.
    • “(v) There shall be Agreed Programs on German Coal Production and Allocation[.]
    • “(v) [(vi)] There shall be Centralized Organization of Transport[.]
    • “(vi) [(vii)] There shall be established a Centralized Control of Currency.”

27. In Matthews’ copy this paragraph has been marked to become paragraph 8.
28. In Matthews’ copy this paragraph has been marked to become paragraph 15.
29. In Matthews’ copy of the Briefing Book, this supplement has been drastically shortened and revised by hand, and the revision has been marked for inclusion as paragraph 14 in the above “Draft Agreement on Treatment of Germany in the Initial Control Period”. See footnote 26, ante.