A Program for German Economic and Industrial Disarmament

APPENDIX A

GERMAN ECONOMIC AND INDUSTRIAL DISARMAMENT SELECTED PORTIONS OF AN INTERIM REPORT

ON STUDY PROJECTS

JANUARY 10, 1945:

Memorandum:

To: Mr. Leo T. Crowley, Administrator.

From: Henry H. Fowler, Acting Director, German and Austrian

Branch.

Subject: Interim report on study project relating to German economic and industrial disarmament.

I am attaching herewith a report on this subject to outline the approach and progress of FEA in the conduct of the study project which was the subject of an Executive direction by the President to you in his letter of September 29, 1944.

I. BACKGROUND OF STUDY PROJECT FOR GERMAN ECONOMIC AND INDUSTRIAL DISARMAMENT

1. The study project envisaged by the President's letter of September 29 is based upon one primary assumption. The assumption is that it will be a major objective of the United States after surrender to assure the undertaking by the Allies of measures designed to limit the power and capacity of Germany to make war in the future.

2. This objective may be achieved by various means. A wise occupation policy, including affirmative economic and industrial controls, is a first step. Suitable terms that condition the return of sovereignty to a government selected by the German people is a second measure. Appropriate international arrangements providing specific machinery for maintaining security from German aggression are likely to be necessary to attain this objective. All of these require preparation and negotiations on the general policy and specificprogram level.

3. There is substantial current discussion and consideration here and abroad of economic and industrial disarmament devices. It is thought that they might be utilized as a buffer against the redevelopment of an effective German war-making power, if backed up by an international security organization of the type contemplated at Dumbarton Oaks. It is the opinion of many persons, both lay and expert, that peace from new German aggression cannot be maintained without these economic and industrial disarmament measures. In any event, it is clear that such measures are an important aid in maintaining the peace for the maximum period of time with a minimum of bloodshed, with a proportionately small military police force, and with

a greatly reduced risk of grave threat and damage from some explosion of German war power uninhibited by mighty forces potentially arrayed against her.

4. This interest in the possibilities of conditioning to peace the economic and industrial pattern in Germany after surrender is based on realistic considerations. It is derived primarily from a recognition of the direct relationship of certain types of industrial potentials and economic weapons to a national war-making power. It is prompted also by the feeling of many that the plan and practice of a completely uncontrolled or self-sufficient German industrial economy, coupled with the temperament of its people, constitutes a constant menace to the peace of Europe and the world.

5. This concern with the appropriate treatment of German industrial war potential is to be distinguished from any desire for a "soft" or "hard" peace; it is held by the advocates of both types of peace. Nor is it derived from feelings of vengeance. Indeed, it has its origin in an unemotional and scientific point of view. It is responsive to a simple common-sense purpose. A first protection against lawlessness is to disarm the lawless persons. A second and equally essential protection is to prevent those who are lawless from reacquiring the power and capacity to forge any new weapons with which they can again menace society.

6. Indeed, it may be that the development of a scientific, internationally administered system of economic and industrial disarmament is the only acceptable alternative to a thoroughgoing political, cultural, or industrial dismemberment of Germany. Excesses in other fields may follow victory unless some formula for providing protection against German aggression is devised. History has not yet provided a check against a congenitally aggressive industrial power. A new method must be developed.

7. The study project now under way in the Foreign Economic Administration under the guidance of the State Department in response to the President's letter is not in duplication of, or competitive with, certain other answers to the question, "What shall we do about Germany?" For example, it must be distinguished from the orthodox and strictly military problem of regulating Germany's armed forces or initially confiscating her finished munitions and aircraft. Nor is it a substitute for or to be considered in lieu of the punishment of German war criminals. It should not preclude the utilization of certain political or educational measures designed to change the political disposition or will of Germany to make war. It is premised upon a period of full and complete occupation and the development of some international security organization of the type projected at Dumbarton Oaks.

8. The development of long-term economic and industrial disarmament measures is a relatively novel and unexplored field. It inevitably leads into very complicated and technical considerations for which all of the powers are lacking to some extent in an organized corps of trained experts. Changing technology, the passage of time, the danger of disagreement of the Allies on specific measures to be used, and the cooling off of world opinion are some of the hazards to be overcome. 9. To master this new technique is likely to be a continuously challenging problem, changing somewhat with advancing technology and forms of industrial and economic activity. As a nation we have

watched with increasing interest and concern the emergence of fullfledged economic warfare, the competition of varying types of industrial mobilization, and the rise of new and fearful technologies. To perfect and mass-produce deadly weapons, such as a more powerful explosive, a faster plane, a robot bomb, an atom-smashing device, or a better tank, may condition a victory or defeat. The ability to do so may prompt an aggression as much as the ability to assemble and train an army. The perfection of processes for the manufacture of synthetic oil and rubber in Germany in 1926 and the unfettered trend of her heavy industry toward over-expansive development in the 1920's and 1930's were sure harbingers of war.

10. A league that offered only protection against an actual German aggression once begun and backed up by huge industrial war potential became outmoded. It was an idealistic symbol rather than a practical force. Some were influenced by a resurgent German power to attempt to play it off against targets other than themselves rather than resist it.

11. The most lasting form of economic and industrial disarmament of Germany would be one with a minimum of damage to the economic fabric of Europe and with a maximum of administrative feasibility. The search for and reshaping of measures meeting these criteria, yet achieving the desired paralysis of an industrial war potential, requires careful study and trained judgment.

12. Other interests conflicting with long-term security may intervene and be skillfully played upon by the German economic and industrial spokesmen. Such interests as reparation, trade, and relief and rehabilitation needs may cut across the interest of long-term security and must be appropriately reconciled. This is particularly important to the United States to whom long-term security is the basic stake. But, policies, procedures, and arrangements insuring appropriate measures of German economic and industrial disarmament, which represent a lasting but flexible agreement of the nations vitally concerned, require difficult and complicated negotiations.

13. It is highly desirable that the culmination of these international negotiations should result in conclusions that are simple, direct and understandable for the common people of the world. If these conculsions could be summarized on a single sheet of paper and become the household property of all people, a base for a powerful and vigilant public opinion might be created.

14. However, behind simply stated conculsions there must be a detailed specification of what is intended. Recent events have proved again how desirable it is to have agreement not only to the general conculsions but on a bill of particulars as to what is intended. General conclusions must be translated into operative orders, decrees, or instruments of understanding if they are to be lasting and enforceable. These in turn must be subject to change to meet new conditions if they are to be flexible and administrable. This is the only method of avoiding a break-down in a system of economic and industrial disarmament ever differences as to whether or not a particular German action or failure to act should be treated as a breach of the international security regulations.

15. These plans and programs for German economic and industrial disarmament, it should be emphasized, do not pertain solely to occupation policies and procedures. They should be designed to outlast