740.00119 Control (Germany)/1–545
Memorandum by the Director of the Office of European Affairs (Matthews)35
You will recall that Secretary Morgenthau36 at the lunch yesterday complained that we had not kept the Treasury people informed [Page 374] with regard to the revision of the proposed interim directive (JCS 1067)37 on Germany and that we had not discussed with the Treasury any of the papers submitted to the European Advisory Commission. With regard to 1067 I explained that the revision was being undertaken at the request of the War Department and that it was up to them to have so indicated if they desired Treasury participation. (I did not say so but Mr. McCloy definitely told me that he did not want Treasury participation in the revision discussions. He undertook to clear the revised paper with the Treasury afterwards.)
As regards the larger question of discussion of all EAC papers with the Treasury, I should like to present some important considerations. Of course any questions having to do with the financial aspects of treatment of Germany should and would be discussed with the Treasury before transmission to our representative on the EAC. As it happens, no such questions (aside from the financial section of 1067) have yet arisen. All matters which to date we have studied and transmitted to the EAC have had to do with political and military matters and they have been carefully and sometimes at considerable length coordinated with the War and Navy Departments before transmission. The functions of the EAC in recommending governmental policy are highly important in the political field of our foreign relations. For this reason the American representative on the EAC is a representative of the State Department, the American Ambassador at London. I know of few questions in the field of foreign policy of importance equal to the treatment of Germany and to take the position that our instructions to our Ambassador in this field should be subject to review or approval of the Treasury Department would, in my opinion, be tantamount to abdication of our traditional function as the instrument for the execution of the President’s foreign policy. (The Treasury’s position that they should be consulted with regard to political instructions to our representative on the EAC seems to me analogous to a claim on our part that the Treasury should consult the State Department on the timing, amount and interest rate of a war bond issue, or on a new tax program.)
Aside from the important question of principle involved, we have the practical question of urgency. You are aware of the long delays we have encountered in obtaining clearance for the many urgent papers by the War and Navy Departments and the Joint Chiefs of Staff. If to this is added the need for clearing with the Treasury Department, I should hate to forecast how long it would take to get Winant the instructions for which he has in recent weeks been so urgently pleading.
[Page 375](By the foregoing I do not wish to imply that we should not exchange views with the Treasury on the question of the long-term economic treatment of Germany. I am referring specifically to Mr. Morgenthau’s complaint that our EAC papers are not communicated to or drafted in consultation with the Treasury Department.)
- Addressed to Assistant Secretary of State Dunn, Under Secretary of State Grew, and the Secretary of State. The memorandum bears the following handwritten marginal notations by Mr. Dunn and Mr. Grew: “I think this is extremely important; we should consult Treasury on financial but not all questions. J C D” “I concur. J C G”↩
- Henry L. Morgenthau, Jr., Secretary of the Treasury.↩
- See footnote 17, p. 370.↩