Standard of Living Board The United States' contribution to the solution of this problem began with the organization of the German Standard of Living Board to frame preliminary recommendations concerning future production levels. The Board's report, commonly referred to as the Hoover Report in honor of the Board's Chaiman, Dr. C. B. Hoover, was published on 21 September 1945 and was introduced into the Quadripartite machinery as a basis for discussion. Other overall plans were submitted by the British, French and Soviet delegations in January and February, 1946, and a second U. S. Memorandum, prepared under the direction of Dr. B. U. Ratchford, was presented officially as the American position to the Economic Directorate on 29 January 1946. The final plan as approved by the Control Council embodied work of all the delegations modified by quadripartite reconciliation of the differing viewpoints reflected in the several reports. To facilitate the preparation of a plan acceptable to all occupying powers, the Economic Directorate agreed on 15 August 1945 to organize the Level of Industry Committee. At its first meeting on 17 September 1945 this committee created a Technical Staff to operate as a Working Party of economists. During the six months between the date of its organization and preparation of the Economic Directorate's draft plan, the LOIC and Technical Staff held sixtyfour meetings in an effort to develop and agree upon the hundreds of separate questions requiring answers. Some issues were not resolved until 8 March 1946 when the Control Council accepted a complete set of proposals subject to final approval by the several governments. The plan rests on four major assumptions: Germany will consist of the present German territory lying between the The population within these boundaries will be 66,500,000 in the target Exports will encounter no special discriminations in foreign markets. Zonal Authority Unworkable The importance of these assumptions is apparent. Placing Germany's eastern boundary on the Oder-Neisse line eliminated about 25 percent of the former Reich's agricultural resources, but did not greatly affect total population, since the anticipated immigration of Germans not permitted to remain on foreign soil is expected to offset the loss. If substantial changes should be made in Germany's western boundaries, industry important to the whole of Germany would be affected, thus necessitating revision of permitted production levels in the remaining Reich territory. Similarly, if the population proves to be greater than 66,500,000, necessary imports of food and raw materials will require higher levels of production, both for export and for domestic consumption. The salability of German exports is a critical assumption. If it is in error, the problem of German self-support will be almost insoluble. Finally, since the plan is intended to apply to the whole of Germany, zonal autonomy in such matters as reparations removals and trade would make the plan unworkable. With these assumptions as a starting point, the economists were confronted with the problem of estimating requirements for major consumer goods, such as food and clothing; the kind and amount of exports necessary to balance imports; and the amount of basic production in mining, metallurgy, machinery, chemistry, and electric power necessary to support estimated consumption and export levels. And this had to be consistent with a maximum reduction in war potential, on the one hand, and the encouragement of agriculture and peaceful industries on the other. The resulting pattern of restricted and unrestricted industries is obviously not the only possible answer, but it is one answer to an extremely complex problem. Most important, it is an answer that was acceptable to the Four Powers. The plan as written begins with the specific disarmament features of the Berlin Protocol elimination of the production of arms, ammunition and implements of war, as well as all types of aircraft and seagoing ships. In addition to these prohibitions the plan states that all industrial capital equip ment for the production of fourteen specific items of critical military importance will be eliminated. These items include synthetic rubber, gasoline, and ammonia; ball and taper roller bearings; heavy machine tools of certain types; heavy tractors; aluminum (primary), magnesium, beryllium, and vanadium (from Thomas Slag); radioactive materials; radio transmitting equipment; and specific chemical products. The elimination of domestic production of the first four items is contingent upon the availability of imports and the means of payment. Thus, by striking out items of critical military importance not essential to the German peacetime economy, the first step toward industrial disarmament is achieved. Certain other industries, primarily the metallurgical, machinery, and chemical industries, are necessary to both war and peace. It was necessary, therefore, to restrict such production to amounts no more than enough to support the prescribed standard of living. Ingot steel capacity is thus reduced to 7.5 million metric tons, or to 39 percent of 1936 production, and annual production was limited to 5.8 million tons until otherwise determined by the Control Council. Similarly, drastic restrictions have been placed upon the production of such non-ferrous metals as copper, zinc, lead, tin, nickel, aluminum, and magnesium. Only reclaimed aluminum will be produced domestically, and a limited amount of magnesium will be imported. Restrictions on the mechanical and electrical engineering industries differ in the several branches depending upon relative military significance. Thus |