Foreign Relations of the United States: Diplomatic Papers, 1945, European Advisory Commission, Austria, Germany, Volume III

740.00119 Control (Germany)/3–2045

Memorandum of Conversation, by Mr. Edward S. Mason, Deputy to the Assistant Secretary of State (Clayton)¹

[Washington,] March 20, 1945.

Participants:	Mr. McCloy
	Gen. Hilldring
	Oscar Cox2
	Joe Fowler
	E. S. Mason
	Jim Perkins3
	Harold Glasser4
	Capt. Vanderbilt
	Another Naval Officer
	A Colonel, formerly with the Bureau of the Budget.

Mr. McCloy indicated that regardless of what policy is to be adopted towards Germany, the War Department is now of the opinion that the U.S. Control Group for Germany should now be activated. Although no immediate change is contemplated in the structure of the organization, which comprises twelve divisions, it was indicated that these divisions will be brought together in three main groups—military, political and economic. General Draper, who is to head the economic group, then said that his plan was to organize immediately a nucleus of 70 to 80 people, half of whom would be military, with the idea of expanding this to several hundred in the near future. The main purpose of the meeting was to get the views of the civilian agencies on the civilian personnel who might constitute the initial nucleus.

[Here follows an enumeration of the names of persons suggested to head various economic divisions of the U.S. Control Group for Germany.]

After this business was completed, Mr. McCloy raised the question of the significance of the new committee, chairmaned by Mr. Clayton, and of the directive initialled by the President. He said that the only interest of the War Department in political and economic policy for Germany was whether or not the policy determined upon was administrable in so far as the Army was called upon to undertake the administration. He said that it was his personal impression that the directive initialled by the President went somewhat beyond what was necessary in order to implement the Yalta decisions. In particular, he was disturbed by the language indicating that centralized control be established to the maximum extent possible. He then went on to say that he had received a call from Secretary Morgenthau, reporting on a conversation that Morgenthau had had with the President. According to Morgenthau, the President said he regarded the directive as a matter for discussion and that he, the President, was by no means committed to a policy of extensive centralized control. McCloy said also that Morgenthau had transmitted the results of his conversation to Acting Secretary Grew. Mr. McCloy then stated that he had had a meeting with Harry White on the question of whether JCS 1067 needed to be revised in the light of the Yalta decisions. He represented Mr. White as saying that the Treasury’s view was that no alterations were necessary. Mr. McCloy said that it was his opinion that probably some alteration was necessary in view of apparent decisions on the reparation question and that if 1067 is to be revised, it should be made a first order of business for the new Committee. I said that as far as I was aware no fundamental differences of opinion existed between the State Department and the War Department on the two questions that had been raised.

1. We were prepared to recognize that a centralized administration in Germany could not be undertaken immediately on the cessation of hostilities, but must await the completion of occupation and the determination of policy decisions by the four powers interested in the administration of Germany.

2. I said that in the interpretation of the State Department, the words of the directive were not to be understood as going beyond that amount of centralized control necessitated by the Yalta discussions and decisions. It was our feeling that if reparations are to be collected out of current production, considerable de-industrialization is to be attempted, and if the occupying powers recognized their responsibility for the maintenance of a minimum standard of existence in Germany, some considerable measures of centralized control were inevitable. Gen. Hilldring agreed with this position and Mr. McCloy indicated no dissent.

Conclusion: It is clear that at the first meeting of the informal policy committee on Germany the two questions which will have to be taken up will be:

1. An interpretation of the language of the directive dealing with central control, and

2. The question whether 1067 needs to be revised.

1. The memorandum was directed to Assistant Secretary of State Clayton. The meeting was held in the office of the Assistance Secretary of War (McCloy) on March 19, 1945.
2. Deputy Foreign Economic Administrator.
3. James A. Perkins, Assistant to the Foreign Economic Administrator.
4. Assistant Director, Division of Monetary Research, Treasury Department.