740.00119 Control (Germany)/3–1645

Informal Record of a Meeting in the Office of the Secretary of State, March 15, 1945

Present: The Secretary of State (presiding)
The Secretary of War
The Secretary of the Treasury
Mr. Crowley76
Mr. Clayton77
Mr. Dunn
Mr. McCloy
Mr. Coe, Treasury78
Mr. Fowler, FEA79
Mr. Hensel, Navy80
Mr. Kane, Navy
Mr. Matthews, State
Mr. Despres, State
Mr. Riddleberger, State
Mr. Rothwell, State81
Mr. Yost, State82

The Secretary of State opened the meeting by giving to the heads of each Agency represented a copy of the “Protocol on the Talks [Page 453] Between the Heads of the Three Governments at the Crimean Conference on the Question of the German Reparation in Kind”.83 The Secretary stated that, as indicated in the Protocol, the United States had agreed that the position of the Soviet Government—that the total sum of the reparation in accordance with points (a) and (b) of paragraph 2 of the Protocol should be 20 billion dollars, of which 50 percent would go to the U.S.S.R.—seemed fair and reasonable and could serve as a basis for discussion. He stated that the figure of 20 billion-dollars is a nominal one and that the exact sum of reparations will have to be determined after the Allies are in Germany and can make an estimate of the German capacity to make reparation. Mr. Matthews pointed out that the Soviet delegation had suggested a period of ten years for the duration of reparation payments but this suggestion had been left out of the Protocol. Mr. Clayton added that he felt the Moscow Commission should adopt as a principle that the first charge on everything that goes out of Germany would be of a sum sufficient to take care of all that goes in. Mr. Matthews stated that the President’s mind is perfectly clear on the point that there should be no repetition of our past experience whereunder German reparations were indirectly financed through the medium of American loans to Germany.

The Secretary stated that he believed the basic thought of this Government with respect to reparations should be worked out and incorporated into a general statement prior to the departure of Dr. Lubin84 for Moscow within about two weeks. Mr. Clayton added that he had talked with Dr. Lubin who had agreed with this point.

The Secretary of State then handed to the principal representative of each Agency a copy of the memorandum for the President, “Draft Directive for the Treatment of Germany”,85 which had been prepared in the Department and approved by the President. The Secretary stated that he himself had fully endorsed the memorandum and the attached draft directive. He then called upon Mr. Riddleberger and Mr. Despres to summarize and comment upon it.

Mr. Riddleberger commented upon those sections of the draft directive dealing with military government, immediate security measures, and immediate political measures. Mr. Despres summarized and commented upon Section 4 dealing with economic control. Mr. Riddleberger stated that the military and political portions of the draft [Page 454] directive were based essentially upon agreements reached in the European Advisory Commission and approved by the three Governments just before the Crimean Conference. These agreements dealt with surrender terms, zones of occupation, and the control machinery. The principal emphasis was upon the establishment of a central Control Council for the purpose of developing coordinated policy, which would be carried out in each zone by the zone commander. The directive also was based upon the principle that German administrative machinery should be used wherever it is possible and advisable to do so. Mr. Riddleberger then commented in detail upon the military and political sections of the directive.

Mr. Despres, commenting on the program for economic control, stated that it was based fundamentally upon the principles laid down in the communiqué of the Crimean Conference. It rested upon the principle that Germany should be made to pay its own way with regard to reparation and that the German economy should be so controlled as to carry out the purposes stated in paragraph 2 of Section 4. Primary responsibility for the carrying out of this policy would be vested in the central Control Council. Mr. Despres then commented in detail upon the economic provisions of the draft directive. Mr. Dunn added that the policy laid down in the draft directive was based upon both the decisions of the Crimean Conference and long discussions with our Allies in London.

The Secretary of State asked Mr. Stimson, Mr. Morgenthau, Mr. Crowley, and Mr. Hensel, representing Mr. Forrestal, whether they wished to study the documents prior to discussion. Mr. Morgenthau and Mr. Crowley stated that they wished to study the documents; Mr. Hensel said that he would, of course, wish to take them up with Secretary Forrestal; Mr. Stimson also requested time to study the document, adding that he had seen it for the first time this morning. While it was similar to another statement of policy toward Germany which had been worked out earlier, he noted one principal change. The present draft directive appears to place a good deal of emphasis upon centralization, both as to policy formulation and as to administration. He referred in particular to paragraph 6 on page 7.

Mr. Dunn said that the true spirit of the document was a coordination and agreement upon policy in the Control Council with latitude for administration and the carrying out of these policies under the zone commanders. Mr. Stimson stated that he had assumed this was true. He felt that we were not going to get a four-headed body comprising three great nations to achieve uniformity in the application of details of policy. He believed that difficulties would arise from any attempt to force the uniform application of an agreed policy.

[Page 455]

Mr. Clayton stated that he thought some rewording of paragraph 6 on page 7 might be necessary in order to clarify its true meaning. It was intended that nationally organized institutions such as banking, the railroad system, and the telegraph system should be administered centrally in order to obtain uniformity throughout the country. It was not intended, however, to interfere with the adaptation of administration to local areas.

Mr. Stimson said that he had no quarrel with the assumption that Germany should be treated as one nation, since this was apparently a basic decision reached at Yalta with which he and the Army were not concerned. He, therefore, did not desire to combat the principle of centralization of policy determination but did not believe that administration should be handed over to the central office.

The Secretary of State said that the policy of treating Germany as a single country for the period of immediate military occupation had been reached at Yalta. Whether Germany would subsequently be partitioned was a matter for later decision. He felt that in the drafting of specific directives to military commanders it would be possible to meet Secretary Stimson’s point that administrative latitude in the application of agreed policy could be left to zone commanders.

Mr. Morgenthau asked whether it had been definitely settled at Yalta that Germany should be treated as one nation. Mr. Stettinius said that such a decision had been reached for the immediate period of military occupation. He stated that he would speak privately with Mr. Morgenthau, Mr. Stimson, Mr. Crowley, and Mr. Hensel concerning plans for the future. Mr. Morgenthau stated that he would appreciate receiving this private information and added that the policy would appear to be that the power of the German Empire would be continued and reconstructed. The Secretary of State said that the directive did not mean that. Mr. Dunn added that the principle of centralization would apply only to services national in scope. Mr. Morgenthau said that the question was just how much would be continued of the present German centralized Government. He had heard the question discussed for a long time and wanted a direct answer. The impression he received was that the present German Empire is to be continued through the medium of a central unit in Berlin. The Secretary of State said that this was not the intention. The agreements reached at the Control Council in Berlin would be applied in four areas. Moreover, this plan was for the immediate period of military occupation. At a later stage, further consideration would be given to the problem of decentralization and partition.

Mr. Crowley said the economic policy would appear to be (1) that Germany was to receive no loans for reconstruction, (2) that Germany would be required to pay reparations in kind or in wealth manufactured [Page 456] within Germany, (3) that German cartels would be broken nip, (4) that aircraft industries and other war industries would be destroyed, (5) that all production over that required for a minimum standard of living would be utilized in accordance with the purposes Stated in Section 2 of part 4, (6) that we would take over and control the banking system, etc., and (7) later, if we wished to break up Germany, we could proceed to do so.

Mr. Stimson quoted the first paragraph of the draft directive and stated that it indicated a clear intention to run Germany as a whole during the immediate occupation period. The Secretary stated that this was the intention. Mr. McCloy, commenting upon this objective, stated that the plans of the Army had been made upon the assumption of decentralized methods of administration and that any change in this principle would cause an extensive revamping of plans. The Army has taken the position that a decision as to what aspects of administration could be centralized would have to wait until we are inside Germany and can estimate the existing situation. Agreement on administrative procedures should, therefore, not be made too far-ahead. Meanwhile, the zone commanders will proceed into their zones and the troops must have the right to carry on administration on the basis of residual authority until coordinated policies are handed down to them. Whether the administrative policy would be one of laissez faire or some other policy would be determined later on. The administration would meanwhile be carried on within the zones by the zone commanders unless and until the Control Council decides differently.

Mr. Matthews pointed out that the provisions for control machinery in the draft directive were based upon provisions in the communiqué of the Crimean Conference. Mr. Stimson said that any arrangement under which inspectors representing the central authority would visit the zone commanders periodically would not be conducive to harmony or coordinated administration. Mr. Stettinius stated that he felt Mr. McCloy had hit upon a very important factor in stating that we could not specify all administrative arrangements until the Allied forces actually get into Germany. In response to Mr. McCloy’s statement that “from this standpoint the emphasis appeared to be wrong in the draft directive”, the Secretary of State said that this was not intended and that the administrative latitude desired by Mfr. McCloy could be obtained in the drafting of the military directives.

Mr. Fowler said that it would probably be necessary to carry out the provisions of paragraphs 15 and 16 on page 10 only after the Allies were established within Germany. Mr. Riddleberger replied that it would be desirable to go into Germany with as fully a determined policy as possible. Such specific policy would be worked out through the European Advisory Commission. In some instances it may be possible to have only a minimum of policy. Mr. Fowler stated [Page 457] that there would be no point in going into Germany without a uniform program. Mr. Riddleberger added that for this reason it is necessary to emphasize the coordination of control.

The Secretary of State then suggested the appointment of a subcommittee under the chairmanship of Mr. Clayton in accordance with the memorandum approved by the President. Mr. Dunn stated that the establishment of such a committee is urgent because our representative on the European Advisory Commission needs instructions in order to get on with common agreement with our Allies. He added that much of the spade work for the proposed subcommittee would be done by the present working committee.

Mr. Morgenthau named Mr. Harry White to serve as his representative on the committee, Mr. Frank Coe as alternate. Mr. Stimson named Mr. McCloy as his representative, General Hilldring as alternate. Mr. Crowley named Mr. Fowler as his representative. Mr. Hensel stated that he would inform Secretary Forrestal of the necessity to name a representative but added that this representative would probably be Mr. Gates.86

At the request of Mr. Stettinius, Mr. Stimson, Mr. Morgenthau, Mr. Crowley, and Mr. Hensel remained for a private discussion.

  1. Leo T. Crowley, Foreign Economic Administrator.
  2. William L. Clayton, Assistant Secretary of State for Economic Affairs.
  3. V. Frank Coe, Director of Monetary Research of the Department of the Treasury.
  4. Henry H. Fowler, Assistant to the Foreign Economic Administrator.
  5. H. Struve Hensel, Assistant Secretary of the Navy.
  6. C. Easton Rothwell, Executive Secretary of the Central Secretariat of the Executive Staff Committee.
  7. Charles W. Yost, Executive Secretary of the Central Secretariat of the Executive Staff Committee.
  8. For text, see Conferences at Malta and Yalta, p. 982.
  9. Dr. Isador Lubin, whose appointment as United States Member of the Reparations Commission in Moscow under terms of the Yalta Conference was announced on March 12, 1945. For documentation regarding the establishment and activities of the Reparations Commission at Moscow, see pp. 1169 ff.
  10. Ante, p. 434.
  11. Artemus L. Gates, Assistant Secretary of the Navy for Air.