The

he establishment of the Control of German Industry Section in November 1945, formalized the functions contemplated within the scope of the conclusion stated by the four Power Industry Committee which reads: "The Committee agreed that each member would submit papers to the Industry Committee on the long-range program of industrial control." A study of the fundamentals of such controls had originally been undertaken by the personnel now constituting the Control of German Industry Section, in August 1945, at the request of the Chief of the Industry Branch.

Briefly stated, the functions imposed by the referenced Industry Committee "conclusion" contemplated the preparation of a "paper" or a series of papers recommending long-range controls for German industry, designed to prevent Germany from again developing the type of industrial structure which could be employed to wage a war of aggression and yet which would permit Germany to develop a peace-time economy free from restrictions except those which might be necessary to assure the primary objective stated above.

Given such an objective, it has been necessary in approaching the study to attempt to envisage a point of time and the conditions, internally in Germany and also of an international nature, which may possibly prevail when an acceptable autonomous government is established by the German people to effect adherence to recognized international agreements. It has also been

necessary to attempt to foresee and to predict the types of internal and external controls necessary to be imposed upon German industry for the maintenance of peace without the necessity for the continued presence of occupation forces. Sensing the fact that a wide variety of opinions on all phases of the subject exists and that only meager amount of material is presently available for reference, the method adopted in coordinating the study consisted of cataloguing the numerous opinions expressed by qualified economists and technical bodies, of analyzing the various types of controls employed previously in major German industries, and of studying the current controls instituted by Military Government with particular regard to their effect and long-range implications. As a result of the initial studies of the various types of controls previously employed in major German industries and their relation to those material controls employed in the United States during the past war, recommendations were made to the Industry Branch, in October 1945, through the issuance of a paper entitled "The Comparison of German Industrial Controls with United States Controlled Material Plan; Recommendations".

As the objectives of Military Government in Germany crystalized into formal policies and as the effect of controls established by Military Government upon German industry was capable of being more clearly observed, a second paper was prepared and issued by this Section in March 1946. It was entitled "A Long-Range Plan for the Control of German Industry". This paper recommended the establishment of a Quadripartite Economic Analysis Directorate containing a Reports and Statistics Committee and an Analysis Committee. It was suggested that through the functioning of such a Directorate and its departments, now and in the future, a complete economic pattern of the developing German economy could be maintained for study and analysis. It was furthermore suggested that a series of such economic patterns, properly analyzed and co-ordinated by experts, would disclose any attempt which might be made by Germany to develop a war potential. The conclusion was drawn that if and when such an attempt was noted and after proper investigation had been conducted by a proposed Quadripartite Compliance Directorate, appropriate controls could then be devised and imposed upon German industry.

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One

ne of the most controversial and complex problems to come before Military Government was the unprecedented task of removing Nazis and all vestiges of Nazism from public life. The threefold purpose of this process, to strengthen and assist democratic elements in Germany, to provide security, and to punish active Nazis and militarists, is one of the prime motives of the occupation.

The groundwork for denazification policy was laid by the Joint Chiefs of Staff in JCS 1067. The Potsdam Declaration gave authority for this policy in the following directive:

"... Nazi leaders, influential Nazi supporters and high officials of Nazi organizations and institutions and any other persons dangerous to the occupation or its objectives shall be arrested and interned.

"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 fro mpublic and semi-public office, and from positions of responsibility in important private undertakings. Such persons shall be replaced by persons who, by their political and moral qualities, are deemed capable of assisting in developing genuine democratic institutions in Germany."

The promulgation of Law No. 8, which came soon afterwards, proved to be

an effective instrument for carrying out the denazification of German business. And in order to meet arguments of fair hearing of individual cases where justice might have miscarried, provision was made for the establishment in every community of local German review boards, which gave all so-called nominal Party members who were affected by Law No. 8 a chance to clear themselves. The Law also provided an opportunity for non-Nazis to sit in judgment upon their own fellow Germans.

LAW NUMBER 8

Law Number 8 was designed to extend denazification over the entire German economy and thus to remove Nazis from positions of responsibility in every type of industry, large or small; to make Germans themselves criminally liable for failure to remove Nazis, as defined in the law and its implementing instructions, from all positions in business and industry above ordinary labor; and to give the German people a measure of responsibility in the denazification process.

The denazification of German business reached down into the economic life of the U. S. Zone of Occupation and was succesful in removing from managerial and supervisory positions those Nazis who had heretofore been unaffected by the denazification program.

An indication of the extent to which Law No. 8 would affect supervisory positions in business was seen in the initial findings of the Bremen Enclave. These findings revealed that out of the reported 15,000 Germans investigated in connection with the Law, 31 percent were ordered discharged because of their Nazi records.

In spite of the often-voiced fear that the U. S. denazification program might cause a breakdown of the civil administration and the economic structure in the U. S. Zone, this situation has not materialized. Industrial production was at such a low level last autumn that the effects of denazification of management, could not be evaluated apart from all other factors limiting production although individual situations were admittedly adversely affected. In the last six or seven months a sufficient number of replacements were found or trained to take part in the building up of industry. It is unlikely that denazification will prevent further progress.

The sanctions against militarists and Nazis were gradually broadened through successive regulations to remove political undesirables from every economic stratum above ordinary labor. Simultaneously, they increased the Germans' share in the responsibility for carrying out the program.

GERMANS HELD RESPONSIBLE

The "Law for Liberation from National Socialism and Militarism", promul

gated by the Germans with Military Government approval and published on March 5, 1946, was even more stringent than its predecessor. On the one hand it added the category of private ownership to the economic groups already encompassed in Military Government sanctions. On the other, it charged the German people with responsibility for carrying out the regulations.

By May 31, 1946, U. S. Military Government had removed or excluded from public employment and from important positions in private industry and other fields approximately 314,000 active Nazis and militarists, exclusive of removals and exclusions under Law No. 8.

Of these removals, some 201,000 or 56 percent were from public employment, approximately 102,000 or 21 percent, were from important positions in private industry, and 64,000 or 17 percent, from other fields.

By the end of July, 1946, 18 German trial tribunals were operating in Bavaria and 10,798 cases had been tried. The 104 tribunals in Greater Hesse had tried 3,38 cases, and the 103 tribunals in Wuerttemberg-Baden had tried 1,106 cases.

As of the first of June, investigations had been made of all but 91,000 or 6 percent of the 1,163,000 Fragebogen received since the beginning of the programm, and action had been taken on all but 65,000 or 4 percent of the 1,522,000 Fragebogen, which had been processed.