No. 342
The Secretary of War ( Stimson ) to the Secretary of State

Dear Mr. Secretary: I have given careful consideration to the points raised in the letter dated June 18, 19451 from the Assistant Secretary of State, Air. Clayton, to the Assistant Secretary of War, Mr. McCloy, with respect to the responsibility in this Government for financing imports into Germany.

Mr. Clayton’s letter was apparently written before the State Department had had an opportunity to consider my letter to the Acting Secretary of State dated June 14, 19452 in which I pointed out that no provision has been made by this Government to finance supplies which may have to be provided to Germany and Austria, [Page 480] from U. S. sources, beyond the limited provision the War Department is making to meet our strictly military obligation. As no funds have been appropriated for the purpose of financing imports to Germany beyond those necessary for purely military purposes, recourse to the Congress will be necessary. In my opinion, any approach to Congress for the purpose should be based upon an agreed governmental policy approved by the President.

General Eisenhower, during the period of the military government of Germany, will act in a dual capacity. As the Commanding General of U. S. forces in Germany his responsibility is purely a military one. In this connection he is responsible for the care, maintenance, and security of the troops under his command. The funds necessary to permit him to discharge this military responsibility, i. e., funds required to finance supplies for U. S. troops and for sufficient provision to civilians to assure the security of such troops in the zones which will be occupied by U. S. forces, have been included in the War Department budget estimates for 1946.

In addition to his purely military capacity, General Eisenhower will act as the U. S. member of the Control Council for Germany. In carrying on the military government in the U. S. Zone in Germany, General Eisenhower acts not merely as a soldier in accomplishing a military mission but as the representative of our Government in implementing the Government’s foreign policy with respect to Germany.

As a member of the Control Council General Eisenhower is also responsible equally with other governmental representatives on the Control Council for the government of the zones of Germany which our troops do not occupy. In this latter capacity the General will serve not as a military commander but exclusively as the representative of his government.

As Mr. Clayton states, directives have been given to General Eisenhower “in his dual capacity”. Such directives are transmitted through the Joint Chiefs of Staff. As is stated in Mr. Clayton’s letter, however, the directives represent “the basic objectives of United States policy”. They do not reflect the views or responsibilities of any single department but represent the policy of the Government as a whole. It follows that responsibility for their implementation is a governmental responsibility and not merely a departmental one.

I recognize the validity of the statement in the letter from the Assistant Secretary of State to the Assistant Secretary of War that “it has been decided as a matter of governmental policy that this Government will seek to make the reimbursement of all expenses [Page 481] incurred by it in importing supplies into Germany a first charge on German ability to make foreign payments”. At the present time, however, the stated policy has not been agreed by all of the governments who will be responsible for the government of Germany. Moreover, even if their agreement is obtained a substantial period of time will have elapsed before the expected reimbursement can be accomplished. In the meantime we are confronted with the problem of initial financing of German imports.

German imports during the period of military government will fall into the following categories:

Imports into the zone occupied by U. S. forces for the purpose of maintaining and protecting our troops.
Imports into the zone occupied by U. S. forces to implement the political policy of our Government.
Imports into the zones occupied by forces of the other occupying powers, either from abroad or from the United States Zone in Germany, for the maintenance and protection of their troops or to accomplish the political policy of the U. S. or of the other occupying powers.

It is probable that imports for the zone occupied by U. S. forces will be required not only from the U. S. but from other sources of world supply. It is also probable that the necessary imports for zone[s] occupied by the forces of our Allies cannot be met completely from their sources, and that imports will have to be procured in the U. S. for introduction into zones which we do not occupy.

After full consideration of the factors involved it is the view of the War Department that, in the absence of an authoritative governmental policy to the contrary, its responsibility, as a military department, should be limited to providing the initial financing necessary to maintain the flow of supplies for U. S. troops and sufficient supplies for civilians in the zone occupied by U. S. forces to assure the security of our troops. If the War Department is to finance additional supplies for import into Germany, it should do so only pursuant to policy established on a governmental basis and approved by the President.

In summary, it seems to me that the foregoing analysis discloses the necessity for determining the answers to the following questions:

For what areas in Germany, for what purposes (production for reparations, to meet British or Russian military needs, for European relief, etc.) will our Government initially finance supplies (a) procured in the U. S. and (b) procured from non-U. S. sources?
To what agency of the Government should Congress be requested to appropriate the necessary funds to implement policy determined in answer to the preceding question?

The questions raised above are applicable to Austria as well as to Germany.

[Page 482]

In my letter of June 14, 1945 to the Acting Secretary of State I stated my conviction that steps should be taken to centralize the administration of our assistance to Europe and that, as a prerequisite to our continued help, the European nations themselves should be induced to integrate the consideration of their own basic problems, such as coal and transportation. The question of how our Government will finance German and Austrian imports is merely one phase of the overall question as to what shall be our economic policy in Europe.

As I believe formulation of definite governmental policy on these questions is urgently required I renew the suggestion, made in my letter of June 14, that you or your representative call together Mr. Forrestal, Mr. Morgenthau, and Mr. Crowley, or their appropriate representatives, with Mr. McCloy and Judge Rosenman for the purpose of making recommendations to the President.

Sincerely yours,

Henry L Stimson
  1. Document No. 336.
  2. Not printed.