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Volume 841, April 26 - April 27, 1945
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Volume 841, April 26 - April 27, 1945
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Henry Morgenthau, Jr. Papers
Diaries of Henry Morgenthau, Jr.
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PRECISION TRADE MARK MICROSTAT MICROFILM ROLL
NO.
INDEX TO BOOK 841 OF DIARY
Book Page
- B -
Bankers Association for Foreign Trade
Post-Nar Planning: Bretton Woods
841 186 r.
Belgium
Cutt objects to inadequacy of U.S. reimbursement
for Belgian payment of U.S. troops - discussed
in meeting of IPCOG 4/26/45
201-206
- C - -
China
DIARY
Treasury views on gold shipments to China - Coe
Book 841
teletype fo HMJr 4/27/45
263 f.
Correspondence
April 26-27. 1945
Mrs. Forbush's mail report 4/27/45
251 ff.
- -
Finance, War
Gamble memo for Trumen re payroll deduction
operation 4/26/45
142 ff.
Fortune, article in
Murphy memo on 4/27/45: refutes Fortune's attacks
on Treasury fiscal policies
248 ff.
- G -
Green, William (APL)
Post-War Planning: Bretton Woods
101
Outt, Canille (Belgian Minister of Finance)
Belgium
202 ff.
- H -
1
Halifax (Viscount - United Kingdom Ambassador)
Letter to H&Jr 4/26/45
145
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
MICROFILM
BOLL NO.
Book Page
- I -
Informal Policy Committee on Geruany (IPCOG)
Fost-War Planning: Germany
841 1-58, 148 ff.,
194-210
- P -
Intergovernmental Committee on Refugees
War Refugee Board: General
268
BOOK
PAGE
Pauley, Edwin W.
- K - -
Post-War Planning: Reparations
841
259
Post-War Planning
Kilgore, Senator Harley M.
Post-Var Planning: Germany
241 ff.
Bretton Woods
Green (AFL) tells HWr. 4/26/45 he will test-
tify for Bretton Noods the next day ....
101
Mexican Bankers Association and Banka Assoc-
- L -
intion for Foreign Trade send declatation
4/13/45 endorsing international collabor-
ation; thanked by HMJr. 4/26/45
186 f
Lend-lease: United Kingdom
Conference on H/Jr. radio broadcast for 4/30/45
222 er
HMJr's answer to Somervell (drafted by Coe) on British
260 rr.
a) Draft of speech
237
lend-lease. Status
reviewed - 4/27/45
See Book 840, page 96.
Germany
Meeting of IPCOG 4/26/45 on 1067 Revised.
Liquor
e) Financial directive read and discussed
2-21
See Tax Enforcement: Liquor
1) Text of directive
58-65
2) Restitution of seized property
....
6-9
3) Commander to report to Joint Chiefs
- M -
of Staff as well as to Control
Council
9 f
4) Elimination of undesirable personnel
12-17
Mexican Bankers Association
Post-War Planning: Bretton Woods
186 f.
5) Diplomatic immunity provision - re
forbidding differentiation because
of rank
19-21
Military Reports
b) General directive read with changes of
4/26/45
193
4/25
21-41
4/27/45
280
1) Denezification provisions reconsidered.
27-30
2) Objectives of occupation - re standard
Morgenthau, Henry, Jr.
of living
42-44
V-E Day broadcast - drafts 4/26/45
104-115
o) Directive to be presented to President
Germany articles: Truman says to e aheed 4/27/45
243
or Joint Chiefs of Staff first?
...
45-47
"Germany Is Our Problem" - DuBois neno with
Murphy, Robert
Loth's drafts of 3 articles from chapters
Post-War Planning: Germany
243 f.
of book 4/26
116-137
a) Truman tells HMJr. to go ahead 4/27/45.
243
A.H. Williams cannot head Financial Section
- o -
in Germany. Recommends Relph A, Young of
harton School - DuPois memo 4/26/45 ....
146
Final draft of 1067 Revised, with remo for
088
Truman 4/26/45
148-181
Report on Switzerland - Mari, Fascist refugees seeking
a) Larch 23 nemo
182 f
asylum - 4/26/45 - sent by Putze 1 4/27/45
265 ff.
Documents on Germany's Future:
67-A ff
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
MICROFILM
BOLL
NO.
Book
Page
- T -
- P -
Tax Enforcement
Liquor
Post-War Planning (continued)
BOOK
PAGE
"Suppression of the Black Market in Distilled
841
Spirits" - case history report 4/26/45,
Germany (continued)
not released
841 70 ff.
Meeting of IPCOG 4/27/45 to approve first
Revised 1067
194-210
195 f
Truman, President Harry S.
a) Covering nemo to Truman discussed
Finance, War
142
Truman promises to read all of directive,
212
Morgenthau, Henry, Jr.
243
HNJr. tells Coe 4/27/45
Post-War Planning: Germany
45 rr., 148,
Kilgore Subcommittee on War Mobilization,
208, 243 f.
discussed with Treas. group.
a) Kilgore asks Treas. for outline on
- D -
Germany to present Truman
241 ff
b) H/Jr. says Truman pleased at warning
against Robert Murphy
243 f
United Kingdom
c) Discussion of person to head repar-
Halifax (Ambessador) letter to H/Jr 4/26/45
145
ations
245 ff
Lend-lease
260 ff.
Reperations Frank Welker-HMr. conversation 4/26/45
99 f
a) Wolker refuses nomination as repar-
- u -
ations head, Truman tells HMJr
212
Pauley noninated for reparations post and
259
Walker, Frank
accepts - press release 4/27/45
Post-War Planning: Reparations
99 f.
a) To be Truman's personal envoy, not
responsible to State
Documents: Pauley letter 5/17/45 and Jack-
Uar Refugee Board
son neno; Reparations instructions
....
67-B ff
General - Cables
Schwartz 4/26 and 4/27/45 re personnel
188, 272
Leavitt to Schwartz re budget 4/26/45
191 f.
- R -
inant 4/27/45 giving message from Sir Herbert Emer-
son, Director of Intergovernmental Committee, on
Roosevelt, Franklin D.
asking other Member Governments for contributions
268
Condolences
Walter F. Dillingham 4/16/46
138 f
Reanik 4/27/45 TO Italian relief
273
140 f
Schwartz 4/27/45 saking for three qualified men to
L. Kinsudi (Governor of Banca d'Italia
no to Germany re stateless displaced persons
276
Lann 4/27/45: 3000 Jewo at Buchenwald
278
Rosennan, Samuel I.
Thanks Bell for staff's assistance in preparing
his Report to President
258
Balkans
Riegner 4/26/45 re liberated Jews and relief in Balkans
189
Portugal
- 3 -
Licen 4/27/45 re individual refugees
271
Trobe 4/27/45 re departure of 248 from Tangiers for
Switzerland
Palestine
274
038 report on Nazi and Fascist refugees' attempta
to enter 4/26/45
266
Trobe 4/27/45 re funds
277
Stabilization Fund
Sweden
Gold transactions Jan.1-Mar. 31, 1945, and
gold holdings in US - Coe memo 4/27/45 ..
250 -A f
Grow ssking re national composition of Jewish refugees
in Sweden 4/27/45
269
Regraded Unclassified
Book Page
- W - (continued)
War Refugee Board (continued)
Switzerland
Leavitt 4/26/45 re individual case
190
Katzki and McClelland 4/27/45 re arrival by truck
of 780 Mauthausen detainees in Switzerland
841 270
Katzki and McClelland 4/27/45 re prospects of further
truck convoys
275
Grossman 4/27/45 asking re individual refugee
279
Williams, A.H.
Post-War Planning: Germany
146
- Y -
Young, Ralph A.
Post-War Planning: Germany
146
$
RECISION
TRADE MARK
MICROSTAT
PAT.
ON,
MICROFILM
ROLL NO.
Carbon copy sent to
Col. McCarthy by Mr. Coe
2
5/7
2 -
April 26, 1945
9:30 a.m.
GEN. HILLDRING: Which will be added to that.
1067 REVISED
MR. CLAYTON: We will have that mimeographed as
soon as we agree upon it.
Present: Mr. Bard
Mr. Downey
April 25 draft of Ipoog I
MR. BARD: We've got to do this.
Mr. Crowley
which was originally attached
Commander Richardson
was recalled by the War Dept.
H.M.JR: We'll do the financial first.
Lt. Gilfuss
to be destroyed.
Lt. Bancroft
MR. CLAYTON: That's quite all right. Shall we
Mr. Clayton
read it paragraph by paragraph?
Vr. Despres
Mr. Riddleberger
H.M.JR: I just want to explain that I'll have to
Mr. Cox
excuse myself at ten-thirty to eleven. I have a regular
Gen. Hilldring
press conference.
Major Blewer
Col. McCarthy
MR. CLAYTON: (Reading attachment A) You will make
Mr. Fowler
full application in the financial field of the principles
Mr. Coe
stated elsewhere in this directive and you will endeavor
Mr. Glasser
to have the Control Council adopt uniform financial policies
D. W. Bell
necessary to carry out the purposes stated in paragraphs
l/r. Friedman
4 and 5 of this directive. You will take no steps designed
to maintain, strengthen or operate the German financial
MR. CLAYTON: Well, Mr. Secretary, we have the
structure except insofar as may be necessary for the pur-
minsographed copies now of the documents that we
poses specified in this directive."
passed on yesterday and the day before. We have a few
and there will be some more over shortly. Do you think
I'll go right on unless somebody stops me.
that we should 20 over those documents, or should we go
immediately to the financial? I really think that we
"2. The Control Council should regulate and control
ought to take time sometime this norning to read these
to the extent required for the purposes set forth in
two documents. It won't take very long if we do it
paragraphs 4 and 5 the issue and volume of currency and
rather hurriedly, and if me all understand that nobody
the extension of credit in Germany and in accordance
will make any suggestions of any change unless it's
with the following principles:
something really of substance. I don't think it would
take too much time, and I hink we'd all be a little
"a. United States forces and other Allied forces
happier about it if we did that than if we didn't.
will use Allied Military marks and Reichamark currency
or coins in their possession. Allied Military marks and
MR. BARD: Is the financial thing part of this?
Reichsmark currency and coin now in circulation in Germany
will be legal tender without distinction and will be inter-
MR. CLAYTON: No, the financial isn't part of this
changeable at the rate of 1 Allied Military mark for 1
because we haven't passed on that. This is what we have
Reichsmark. Reichskreditkassenscheine and other German
passed on, but there are several changes, as you recall.
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/
sse. M. PAT. OFF.
MICROFILM
SOLL NO.
- 3 -
- 4 -
military currency will not be legal tender in Germany.
a rate of exchange to be used exclusively for pay of
troops and military accounting purposes In your zone
"b. The Reichsbank, the Rentenbank or any other
will be communicated separately to you.
bank or agency may be permitted or required to issue bank
notes and currency which will be legal tender; without
"3. Subject to any agreed policies of the Control
such authorization no German governmental or private bank
Council, you are authorized to take the following steps
or agency will be permitted to issue bank notes or cur-
and to put into effect such further financial measures
rency.
as you may deem necessary to accomplish the purposes
of your occupation:
H.M.JR: Just one moment. This thing--one Allied
Military mark being exchangeable for one Reichsmark, do
"a. To prohibit, or to prescribe regulations
you Treasury people feel that is all right? I mean,
regarding, transfer or other dealings in private or
do we want to absorb all that, huh?
public securities or real estate or other property.
MR. COE: Yes, that has been the arrangement right
MR. BARD: What do they do if for several months
straight through. It is just the way we want it.
the Control Council doesn't agree on that?
MR. BELL: It is what we've done in all the other
MR. CLAYTON: Then the commander in our zone
countries.
carries out these instructions in his zone. That is
stated all the way through.
KR. CLAYTON: (Reading) "c. The German authorities
may be required tomake available Reichsmark currency or
MR. BARD: I see.
credits free of cost and in amounts sufficient to neet
all the expenses of the forces of occupation, including
MR. CLAYTON: Yes, he has complete authority in
the cost of Allied Military Government and including
his own zone and carried out these instructions there
to the extent that compensation is made therefor, the
pending such time 8.5 the Control Council may agree upon
cost of such private property as may be requisitioned,
It for the whole area.
seized, or otherwise acquired, by Allied authorities for
reparations or restitution purposes.
"b. To close banks, but only for a period long enough
for you to introduce satisfactory control, to renove Nazi
"Pending agreement in the Control Council you will
and other undesirable personnel, and to issue instructions
follow these policies in your own zone.
for the determination of accounts to be blocked under
"You will receive separate instructions relative
sub-paragraph 6d below.
to the currency which you will use in the event that for
"c. To close stock exchanges, insurance companies,
any reason adequate supplies of Allied Military marks and
Reichsmarks are not available, or if the use of such
and similar financial institutions for such periods as you
currency is found undesirable.
deem appropriate.
"You will not announce or establish in your zone,
"d. To establish & general or limited moratorium or
until receipt of further instructions, any general rate
moratoria only to the extent clearly necessary to carry
of exchange between the Reichsmark on the one hand and
out the objectives stated in paragraphs 4 and 5 of this
the U.S. dollar and other currencies on the other. However,
directive.
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT
MICROFILM
ROLL NO.
- 6 -
- 5 -
system and maintenance of tax revenues, as will further
"4. Resumption of partial or complete service on
the accomplishment of the objectives stated in paragraphs
the internal public debt at the earliest feasible date
4 and 5.
is deemed desirable. The Control Council should decide
the time and manner of such resumption.
H.M.JR: I want to raise 8. point. Does this speak
of restitution of property?
"5. Subject to any agreed policies of the Control
Council,
MR. CLAYTON: No. That is covered. Where did we
cover that point? We cover that in reparations.
"a. You will prohibit:
MR. COE: That is one of the general objectives
"(1) the payment of all military pensions, or
that is in the preamble of the committee in the initial
other emoluments or benefits, except compensation for
section of the document.
physical disability limiting the recipient's ability to
work, at rates which are no higher than the lowest of
H.W.JR: The reason I raised it is because the French
those for comparable physical disability arising from
have been in North Africa now for several months, and
non-military causes.
it was said that the people who had property taken away
"(2) the payment of all public or private pensions
from them would have it given back to them. I don't know
or other enoluments or benefits granted or conferred:
whether it has ever been given back yet, but certainly it
is six months or so after the French government took over,
"(1) by reason of membership in or services
and there is great difficulty. Just seeing this, I wondered
to the former Nazi party, its formations, affiliated
if we couldn't learn something from what took place in
associations or supervised organizations.
North Africa and see about restitution of property that
was seized. Couldn't it be turned over to them more
"(11) to any person who has been removed from
promptly?
an office or position in accordance with paragraph 6 of
part 1 or paragraph 10 of this part, and
MR. COE: There is 6. later provision in here which
establishes a blocking procedure for Internal restitution,
"(111) to any person arrested and detained in
and that is designed to speed up that very process of getting
accordance with paragraph 8 of part 1 during the term of
it back.
his arrest, or permanently, in case of his subsequent con-
GEN. HILLORING: I think we did much better in Italy
viction.
where we had a free hand. We had difficulty with the
"b. You will take such action as may be necessary to
French themselves in North Africa.
insure that all laws and practices relating to taxation
or other fields of finance, which discriminate for or
H.M.JR: I know.
against any persons because of race, nationality, creed
abrogated to the extent necessary to eliminate such dis-
or political opinion, will be amended, suspended, or
GEN. HILLDRING: They were very cautious and slow.
We ought to cover It in here.
crimination.
H.V.JR: I don't think it is enough, though. These
"c. You will hold the German authorities responsible
poor people that had stuff taken away from them should
for taking such neasures in the field of taxation and other
get it back into their hands, and it should be decided what
fields of public finance, including restoration of the tax
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT
MICROFILM
ROLL NO.
- 8 -
- 7 -
that. I think Emile is much more familiar with it. I
understand that there have been a series of negotiations
they should pay for it and what it is worth, and so forth.
at one time or another on restitution, but I an not
familiar with their nature or progress.
MR. CLAYTON: It should be covered, and we will see
what 1. said here later, and then take a look at it.
VR., FRIEDMAN: General Hilldring, isn't it truethat
under this blocking provision, paragraph 8, that your
MR. FOWLER: It is covered in paragraph 43. It is
people in the field are working out a system of regula-
mentioned in a very general way.
tions and planning for seizure?
MR. CROWLEY: I think it is fundamental.
GEN. HILLDRING: For restitution? I think the point
the Secretary makes is that we should tell him to do
H.M.JR: Church property.
that, and I think that is a good suggestion. I think it
is so important that we shouldn't leave it to the dis-
MR. CROWLEY: And individuals' property too.
cretion of the Control Council, but should tell him he
will institute plans for the promot restitution of con-
MR. CLAYTON: We will come to that in just a minute,
fiscated property, or--
Mr. Secretary, in this document, and we'll look at references
to it elsewhere.
IR, CROWLEY: General, I think with the kind of
government they have had there that I night own property,
(Mr. Clayton completes reading document.)
and Goebbels or somebody might force me to sell It to
them for ten cents on the dollar, and I think your
I don't see a direct reference to restitution.
commissioner ought to have the right to take whatever
evidence he has in the sale of property where they have
MR. DESPRES: It only calls for the impounding of
been sold under duress.
this type of property. Now, the disposition of it, finding
of the former owners, etc., isn't dealt with in this direc-
H.M.JR: In Algiers they took a chain of noving
tive at all because this is just the initial step to see
picture theaters away from 8. fellow for thirty million
that you bring the property under control.
francs, and when he wanted to come and get then back he
said they were worth seventy-five million francs. I'll
MR. CLAYTON: Where do we refer to restitution?
bet that fellow hasn't his chain of theaters back yet,
and the point is they should do something. Give him the
theaters back and let them fix the price afterwards.
MR. FOULER: Paragraph 43.
They should do something like that. He could get the benefit
of it in the meantime.
MR. BELL: It is in this other document we took up
yesterday.
MR. CROWLEY: If you got possession back, you could
adjust the difference afterwards.
MR. FOWLER: "You will carry out in your zone such
programs of reparation and restitution & S are embodied
in Allied agreements and you will seek agreement in the
GENERAL HILLDRING: As your people say, Mr. Secretary,
I know--I talked to Bernie when he was back here, and I
Control Council on any policies and measures which it may
be necessary to apply throughout Germany in order to ensure
know he has 6. lot of people working on this very thing.
They are working on very detailed plans, but in spite of
the execution of such programs.
that, I think to support Eisenhower particularly with these
I an not personally familiar with the background of
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/
PAT,
OFF,
MICROFILM
ROLL NO.
10
- 9 -
- 10 -
other partners there we should tell him to do this.
the Control Council, but prior to that time he should, if
he does this, report back to the Joint Chiefs of Staff.
H.M.JR: That would be just.
What we are trying to tell him is to report back to his
next highest authority. I think the Secretary ought to
MR. COE: If you turn to page five, on the top of
go through the whole document and see that it is the
the page, I think number (2) there is the category that
Control Council or, prior to an agreement in the Control
refers to this type of property. I would propose that
Council on any policy, the Joint Chiefs of Staff, so that
at the end of the paragraph, the whole thing, we add,
he would know we want him to report either to the Control
"In the case of property covered by (2) above, you will
Council or, prior to the adoption of the policy, to the
institute measures for prompt restitution. I think that
JCS.
would meet the Secretary's point.
MR. DESPRES: Do you think it ought to be "higher
MR. CLAYTON: Why not just put it in paragraph (2)
authority," or should we spell it out?
and say, "In the case of such properties you will institute
measures for prompt restitution?"
GEN. HILLDRING: I think If we said "higher authority,"
he might not look upon the Control Council as such. I don't
MR. COE: That will be all right. I thought otherwise,
know whether Eisenhower would look to that as higher authority.
because below We have, "In the case particularly of property
I think he would look to the Joint Chiefs of Staff.
blocked under (1) (a) above.
MR. BARD: Wouldn't one reason for that clause be
18. CLAYTON: Put it at the end of paragraph five.
so that the Control Council will accumulate a lot of infor-
mation?
MR. COE: Yes, sir.
GEN. HILLDRING: That is the reason there, I think,
MR. CLAYTON: Yes, put it down.
yes. But whether it is for information, guidance, or
appeal, we want to get it--I think we want to get back to
MR. DESPRES: Read it again.
this Committee. That is what you want, isn't it?
MR. COE: "As in the case of property blocked under
MR. CLAYTON: Gentlemen, why not have him report to
tion." (2) above, you will institute neasures for prompt restitu-
both the Control Council and the Joint Chiefs of Staff?
Wouldn't you think perhaps that would be advisable even if
you had agreement in the Control Council?
MR. CLAYTON: Now, with that change is this document
satisfactory?
GEN. HILLDRING: I think that is the right formula,
having him report to the Control Council and JCS--
GEN. HILLDRING: I have just one comment, Mr. Secretary.
It hasn't anything to do with this. It is just a protocol
MR. COE: When he reports to the Control Council--
thing, really. It is in regard to paragraph eight, and I
noticed it also in reading this thing: It says, "You
GEN. HILLDRING: Through the whole document, wherever
will take such measures, but in any event you will report
he is to report--
the facts back to the Control Council." Now, that
is all right after they have an agreed policy in
MR. CLAYTON: Wherever he is to report to the Control
Council, he reports also to the Joint Chiefs of Staff.
Regraded Unclassified
RECISION
TRADE
MARK
MICROSTAT/
MICROFILM
BOLL NO.
- 11 -
12
MR. COE: On this last suggestion which 1 made, ne
- 12 -
may want & safeguarding clause in there. We are trying to
draft one up here informally because, though we want prompt
restitution, we also don't want then to be told to do some-
MR. HELL: That is understood, is it, that--
thing where they 8 re really dealing with clocks and what
not, so we are trying to devise something.
would know what bodies had authority with respect to
as to what authority he thinks would be appropriate. He
MR. CLAYTON: Well, the commander would be the judge
GEN. HILLDRING: In other words, Mr. Secretary, this
is agreenble to the inr Department otherwise.
matter the Joint of this kind, It might be, of course, as Harold a says,
Chiefs of Staff in his own zone.
H.M.JR: It is all right with Treasury.
the Control Couneli.
something eise might he appropriate authority other than
MR. HELL: Even if the Control Council is established,
MR. PELL: I have two little questions on page three.
What does it mean, or is it proper to say that you will
exercise general supervision over German public expenditures
in order to ensure that they conform to the interests and
purposes of the occupying forces? Isn't it something else
have but it doesn't follow that they will agree, end they will
MR. CLAYTON: The Control Council will be established,
besides the interest and purposes of the occupying forces?
directives or regulations effective, 80 that--
to unaninously agree in order to make any of their
MR. CLAYTON: There are you reading from?
chead MR. or go BELL: same In place the else. absence of that agreement he can go
MR. BELL: Page three, (D), at the bottom.
GEN. HILLDRING: It would be better if you said, "The
MR. CLAYTON: Yes, in the absence of that
purposes of the occupation," leaving the forces out.
he is his own bose in these directives in his own agreement zone and
would report to the JCS.
MR. BELL: It seems to me it is the objectivesrather
MR. HELL: I see.
than the forces.
MR. GLASSER: We should use the standard language.
paragraph the nine on page seven which reads, "In addition to
MR. CLAYTON: The question has been raised here by
It should be "objectives stated in paragraphs four and five."
MR. CIAYTON: I think that is right. It is just a
the other undesirable personnel and influences you
eliminate provisions of paragraph 6c of this Directive, will
standard way, yes.
financial Reich Ministry of Finance and from all public and from private
was your point, Emile?
institutions, agencies and organizations. What
MR. RELL: On page five, (8) at the bottom says,
"Other appropriate authority. What do you mean by that
other than the Control Council?
was the made political directive. In the redreft of this an attempt of
MR. DESPRES: The reference to de is denasification
MR. CLAYTON: What is the answer to that?
are directive, and it is our view that the categories that in
the to get all those things together in one place
KR. GLASSER: That would be the Reparations Commission,
anybody you might want to eliminate.
covered there are sufficiently comprehensive to include
Control Council, or in the case of the zone, perhaps the
JCS. It depends on whatever is the appropriate authority.
There night be certain reasons for moving financial people is.
KR. FRIEDMAN: It is not entirely clear that it
Regraded Unclassified
MICROSTAT/
MICROFILM
SOLL NO.
RECISION
MARK
13
- 13 -
14
- 14 -
who are not covered by that provision. What is your
objection to the provision? Is it an editorial change?
MR. FRIEDMAN: I take it the military people, when
MR. RIDDLEBERGER: Confine the denazification pro-
you say "other undesirable personnel,' will understand it
vision to one place in the directive. If you want to
is undesirable from the point of military government to
enlarge it--we might want to go to the foreign office for
have them there. I take it you don't want just removing--
the same thing--you indicate special reasons, and I think
in the form of composition it would be well to put all
denazification provisions in one place.
right up at the top and work down.
MR. CROWLEY: Start from the top and work down. Start
MR. DESPRES: In the political directive it says,
MR. CLAYTON: Yes, I an in favor of that, too. The
"All other persons hostile to Allied purposes, and so
aspect of this that gives me & little concern is that it
forth, and it includes the category of finance.
probably puts on the zone commander a higher degree of
responsibility wi th respect to detailed management of
MR. FRIEDMAN: I think in the financial field, per-
German institutions than perhaps the Secretary had in
haps more than any other, you are going to have & difficult
mind, because we have di scussed & good deal of the desir-
time saying that somebody who is clearly undesirable is 8.
ability, with which I agree, of making the Germans them-
Nazi or militarist, particularly in the financial field. It
selves to the greatest degree consistent with our pur-
seems to ne a very wise precaution, and if the only objection
is the form of composition of the document, it seems very
poses Institutions. here responsible for the administration of their own
wise to have & provision in here to deal with people that
are not going to be necessarily Nazis or militarists. There
H.M.JR: When you say the Secretary--
are going to be more borderline cases of whether & person
is a Nazi or not a Nazi in the financial field than other-
wise, and there are going to be more undesirable people.
all agreed that what we want to do is to nake the Germans
MR. CLAYTON: I am referring to you. I think we have
themselves as much responsible as We possibly can for the
MR. RIDDLEBERGER: I don't agree with that. I can
administration of their own institutions consistent with
give you a good list in the political field that would be
very comprehensive.
and so on.
the purposes of the occupation and of the reparations,
MR. DESPRES: I think establishing in the criteria
just undesirable personnel" without any kind of n limita-
directive here about the removal of personnel--if We just
Now, if we in addition to the very broad, sweeping
tion is an example of the kind of thing Mr. Crowley was
else that you don't like, why, I think that it may put.
say in addition to all of that, "You can remove anybody
talking about yesterday. It is the only one I can think
of, actually, in the directive.
80 much responsibility on him that you endanger your funda-
mental objective of trying to make the Germans themselves
MR. FRIEDMAN: Are you afraid of taking out too many
run their own institutions.
people, or what?
MR. FRIEDMAN: I think that if I may--
MR. DESPRES: There is no kind of criteria given here.
It deals with people in very broad categories that are
H.M.JR: Sure.
covered in the political directive. Anybody else you
want can go. Now, actually, I--
MR. FRIEIMAN: I think that no one has ever been troubled
about the controls you have to impose to kick out undesirable
Regraded Unclassified
RECISION
TRADE
MARE
MICROSTATI
OFF.
MICROFILM
SOLL NO.
15
- 15 -
16
- 16 -
personnel. I don't think that is the kind of control the
discussions have been about. It seems to me that the other
kind of controls where you run the German economy, that is
doesn't say anything about that in this financial setup.
There is no harm in repeating it so you have got it in
one thing--but to get rid of the undesirable personnel,
various elements of the same document.
it seems to me no one has ever had any dispute or discussion
about that. I don't see quite what additional responsibility
MR. CLAYTON: That is part of the same document. This
is put on the zone commander.
is just e section of & big document.
MR. CROWLEY: Doesn't that come under the administra-
MR. FOWLER: I wonder if I could make 8. point. If I
tive thing, anyhow, if a man is going to run that for the
Allied Commission, that he himself is going to have to get
understand Mr. Bard's suggestion, what he would say in
rid of the undesirable personnel? It is part of his adminis-
paragraph nine is, "You will take special care to see to
it that the provisions of paragraph six of this directive
trative responsibility, isn't It?
are applied to the Reich Ministry of Finance."
MR. FRIEDMAN: That is correct, but my point is that
in the field it is important that it be understood, parti-
MR. BARD: He would refer back to the military para-
cularly in the financial field, that you don t let people
graph and see that he had the authority.
remain simply because they didn't belong to the Nazl Party
or weren't members of an Officers Reserve Corps, and in
MR. FOWLER: I think there is another point here,
the financial field it is particularly important that we
though, saving that--there is still a point of difference
get people out, and the people in the field have the broadest
apart from that emphasis here.
authority. I just don't see any objection to it.
MR. CLAYTON: May I just, in order to make--
MR. CLAYTON: Maybe I have some defect in expression,
but By point is this, that if in addition to the very broad
MR. BARD: As you say, military authority has to be
authority which is given here in the directive, rather to
given to him, anyway, but this just says, throw out anybody
the zone commander, that he must remove this and that and
you feel like throwing out.
the other--and if you look at that again, it is extremely
broad and would presumably cover all undesirable persons
MR. CLAYTON: May I just, in order to get it in the
that may be in these institutions. If in addition to that
record, read it again--nunber nine? In addition to the
you say, "Remove anybody else that you don't like," why the
provisions of paragraph 6 O. of this Directive, you will
fellow who is running the institution, the German, will
eliminate other undesirable personnel and influences from
probably say, "All right, if you are going to do that, come
the Reich Ministry of Finance and from all public and
and run it yourself. It is very difficult for a manager
private financial institutions, agencies and organizations."
to manage any kind of institution if somebody is going to
Now, we need to read paragraph 6 O., which reads as follows:
say, "I don't like the color of this follow's eyes, or this
"All members of the Nazi party who have been more than
or that or the other,' and you kick him out. That is just
nominal participatns in its activities, all active supporters
about what this gets down to. Let's read it again.
of Nazism or militarism and all other persons hostile to
Allied purposes will be removed and excluded from public
MR. BARD: There is one thing. Suppose & man has to
office and from positions of importance in quasi-public
do with just the financial elements and turns over just this
and private enterprises such as (1) civic, economic and
piece of paper to the one man who is doing the job. It
labor organizations, (2) corporations and other organiza-
tions in which the German government or subdivisions, (3)
industry, commerce, agriculture, and finance, (4) education, and
(5) the press, publishing houses and other agencies disseminating
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
MICROFILM
ROLL NO.
- 17 -
- 18 -
news and propaganda. Persons are to be treated as more than
nominal participants in Party activities and as active
MR. FRIEIMAN: "In the financial field."
supporters of Nazism or militarism when they have (1) held
office or otherwise been active st.ony level from local to
MR. BARD: I didn't make any particular point of it; I
national in the Party and its subordinate organizations, or
just thought that if you had this and didn't have the
in organizations which further militaristic doctrines, (2)
other, why, I think it would be altogether--
authorized or participated affirmatively in any Nazi rimes,
racial persecutions or discriminations, (8) been avoned
B.M.JR: As 8 matter of fact, General Hilldring, when
believers in Nazian or racial and militaristic creeds, or
you get this thing up in book form and verious field offices
(4) voluntarily given substantial moral or material support
get the book--
Nazi officials and lenders. No such persons shall be retained
or political assistance of any kind to the Nazi Party or
GEN. HILLORING: Yes, the directive goes out from the
in any of the categories of employment listed above because
JCS--this will be all one document, but 8.5 Kr. Bard said,
of administrative necessity, convenience or expediency."
it is likely that the fellow that deals with finance would
fold the other section under and work on the finance.
It just seens to me that that is 80 broad that it is
going to cover everybody that in hostile to Allied purposes
H.N.JR: You will have to run another school somewhere.
as well as Resi supporters or militaristic believers or
supporters, and that If you go beyond that and remove people
GEN. HILLDRING: We will have to police Bernie to see
from an organization, you s re going to take such en intimate
that he reads the other two sections.
and detailed control of the administration of that organiza-
tion that if I were the manager of it, I would just tell
MR. CLAYTON: Mr. Secretary, I have the time if the
rest of you have, and I think that we ought to reread this
you to come and run it.
document, the two sections of this document that were passed
H.M.JR: I feel all these documents are so far better
yestercay, because there were quite a few changes that were
than I had any hope for that I an perfectly willing to
made, and I think we should go through the whole business
sit tight. I mean, they are so much better than I had hoped
right here now with the understanding that nobody will
for, and I would elmost say so completely satisfactory to
suggest changes unless they are of real substance.
ne that I an not going to argue.
H.K.JR: Well, with that understanding I will slip out,
MR. CLAYTON: Is there any objection to the deletion
but there are four Treasury Representatives. Mr. Bell is
of nine? If not, we will just delete it.
here, and if you will just go right ahead, I em well rep-
resented here, so I can do ay regular press, but I will stay
H.M.J I an delighted.
until then. But when I slip out, you just go right ahead.
MR. COE: Do you went to consider Er. Bard's suggestion
MR. HIDDLERFROFR: Mr. Secretary, there is one point
you might like to hear. I would like to refer to the use
there?
of the word "diplematic" in paragraph eight.
MR. FRIED AN: or referring back?
H.K.JR: You fellows do look after your own kind.
MR. FOWLER: "You will unke sure that you will take
special care to see to it that the provisions of paragrach
MR. RIDULERERGER: Yes. May I give some explanation?
6e of this directive are vigorously applied."
This is not on our part, anyway.
Regraded Unclassified
RECISION TRADE MARK MICROSTAT MICROFILM
BOLL NO.
20
- 19 -
- 20 -
H.M.JR: How about the rural buergerneister?
all through the siege. The result of that was me were able
MR. RIDDLEREBGER: T will let Mr. WeCloy carry that
to make contact with any number of persons who were of
British or French nationality. A large number of Palestinian
torch.
able to arrange for their transfer to Berlin. Immunity gives
women, for example, got in touch with us. We were subsequently
R.M.JR: libet page?
you certain rights. I found out in 1940 that the Germans
MR. RIDDLERERGER: Page ten of the copy you have.
had transferred e number of these Palestinian women into
the Gestapo prison on the Alexandria plots. The Foreign
MR. CLAYTON: Mine, isn't it?
Office denied that they were there, so we put on our hats
and went down there and denanded to be admitted, and We were.
We found them, talked to them, and went straight back to the
MR. HELL: Nine.
Foreign Office and said, "Now we know. We have seen these
MR. RIDDLEBERGER: Page ten.
people there, and under the general right of protection for
British subjects, these persons who are of the Jewish race
MR. CLAYTON: Nine on mine.
have got British passports, and we demand they be accorded
some protection the same as the British subjects," and we
MR. RIDDLEBERGER: I beg your perdon. It is the end
insisted that they be taken to an internment camp where we
of eight-A, next to the last sentence, "In no event shall
could inspect conditions of their living.
any differentiation be mrde--"
The had 8. number of cases like that of other arrests
MR. GLASSER: It is eight-R, really, Jimy.
whereby we learned through the grapevine that persons were
held, and we saw them, and then we demanded that they have
MR. RIDDLEBERGER: I an talking about this new eight-H.
the rights of protection. Now, it is for cases like that
The sentence reads, "In no event shall any differentiation
so that we can move around and be certain that we can
be made between or special consideration be accorded to
matic immunity.
places that we want to maintain this whole theory of diplo- go
persons arrested, either AS to manner of arrest or conditions
of detention, upon the basis of wealth or political, diplomatic,
industrial, or other rank or position." The have no objection
H.W.JR: I compliment you on your case.
to that, except the word diplomatic, and this is the point
which I think I have been asked to make: We are very
case.
MR. RIDDLEBERGER: It is an actual case. We had another
dubious about inserting any provisions in this directive
that will in any way affect the theory of diplomatic immunity.
I understand you can arrest persons like Von Papen--in our
opinion you can arrest him and keep him arrested forever more.
and in he was representing these other countries--the Americans
H.M.JR: I nes with ay other in Turkey for three years,
There is 8 point when you commence to use the word diplomatic.
bookkeeper, they claimed, WRE a spy, and they held special
Bulgaria. I remember a famous case there where a British
The theory of imunity has been established over many years,
and we are most anxious to maintain it. I think there are
sessions of Parliament to have him expelled from the country.
very good reasons for that, and I think, Mr. Secretary, if
ER. RIDOLERERGER: Yes,
I gave you one or two concrete examples of what it means,
I think I could explain it better. For example, in 1939
and *40 we insisted on keeping our Consulate in Warsaw open
it KGE very interesting.
H.K.JR: I don't know whether you remember that, but
(Discussion off the record.)
Regraded Unclassified
RECISION
TRADE
MARK
MICROSTAT/MUMORMICROFILM
BOLL
NO.
22
- 22 -
- 21 -
of occupation and administration. It outlines the basic
H.E.JR: Let me just ask you this. If you leave that
after the termination of the combined command of the
policies which will guide you in those two capacities
word out specifically referring to them, does that mean
that all diplomate will not be tried for war guilt?
Supreme Commender, Allied Expeditionary Force. Supplemental of
directives will be issued to you by the Joint Chiefs
MR. It does not. They are still included.
Staff AS may be required.
H.M.JR: Von Papen or anybody eise?
20 e member of the Control Council you will urge the
adoption by the other occupying powers of the principles
MR. RIDDLEPERGER: Any diplomat.
and policies set forth in this directive and, pending
Control Council agreement, you will follow them in your
H.M.JR: The Minister of Foreign Affairs?
zone.
MR. CLAYTON: Hibbentrop?
That really ties the whole business to him 80 Supreme
Commander in his one zone under this directive if he basn't
H.M.JR: Any of those people, and you just want this
got the general agreement.
as a matter of precedent.
"It is anticipated that substantially similar directives
MR. CLAYTON: If there is no objection, we will eliminate
will be issued to the Commanders in Chief of the U.K., USSR
the word "diplomatic."
and French forces of occupation.
MR. FRIEIMAN: The other range of positions covers every-
"2. The Basis of Wilitary Government:
body.
"s. The rights, power and status of the military govern-
H.M.JR: As long 15 It means Ribbentrop end Von rapen
ment in Germeny are based upon the unconditional surrender
will be tried for war guilt, I an satisfied.
or total defeat of Germany. The Text of the Instrument of
Unconditional Surrender is at Appendix 'A'. You will assure
Is there anything else?
that the policies set forth in that Instrument are carried
out in your zone of occupation even though the defeat of
MR. RIDDLEBERGER: I have nothing.
Germany le not followed by 8 formal signing of the Instrument.
(Secretary -leaves the conference temporarily.)
"b. Subject to the provisions of paragraph 3 below,
you are, by virtue of your position, clothed with supreme
VR. CIAYTON: Now shall " go ahead?
legislative, executive, and judicial authority in the areas
occupied by forces under your commend. This authori ty will
(Reading "Directive to Commander-in-Chief of IL S.
be broadly construed and includes authority to take all
Forces of Occupation Regarding the Vilitary Government of
measures deemed by you necessary, appropriate or desirable
Germany, . attachment 8)
in relation to military exigencies and the objectives of e
firm military government.
"1. The Purpose and Scope of this Directive?
"c. You will issue 8 proclemation continuing in force
"This directive rescinds JCS 1067 and is issued to
such proclamations, orders and instructions as may hereto-
you as Commanding General of the United States forces of
fore been issued by Allied Commanders in your zone, subject
occupation in Germany. As such you will serve as United
States member of the Control Council and will also be re-
sponsible for the administration of military government in
the none or zones assigned to the United States for purposes
Regraded Unclassified
RECISION
TRADE
MARK
MICROSTAT/
MICROFILM
ROLL NO.
23
- 23 -
- 24 -
action to by the Supreme Commender, Allied Expeditionary Force,
such changes 8.5 you may determine. Authorizations of
"C" to fit in here today--
GEN, HILLDRING: As long as you have got an Appendix
may be considered as applicable to you unless inconsistent
with this or later directives.
"3. The Control Council and Zones of Occupation:
will hold until it is amended by French participation.
MR. RIDDLEBERGER: The have an Appendix today, and it
"s. The four Commanders-in-Chief, acting jointly, will
constitute the Control Council in Germany which will be the
Germany shall be directed towards the decentralization of
MR. CLAYTON: "c. The administration of affairs in
agreement supreme on Control Machinery in Germany at Appendix
organ of control over Germany in accordance wi 'B.' th the
ment of local responsibility. To this end you will encourage
the political and administrative structure and the develop-
For purposes of administration of military government,
agreed protocole on zones are at Appendix 'C.'
minimum extent required for the fulfillment of purposes
be decentralized. The Control vouncil may, however, to the
administration. The German economic structure shall also
autonomy In regional, local and municipal agencies of German
Cermany has been divided into four zones of occupation. The
"b. The authority of the Control Council to formulate
set forth herein, permit centralized administration or
policy and procedures and administrative relationships with
established central e ontrol of (a) essential national
respect to watters affecting Germany LE e whole will be para-
public services such as railroads, communications and power,
mount throughout Germany. You will carry out and support
in your zone the policies agreed upon in the Control Council.
distribution of essential connodities.
(b) finance and foreign affairs, and (c) production and
In the absence of such agreed policies you will act in s.c-
cordance with this and other directives of the Joint Chiefs
"d. The Control Council should adopt procedures to
able distribution of essential commoditles between the equit-
effectuate, and you will facilitate in your zone, the
of Staff."
GEN. HILLDRING: May I interrupt? with respect to
clauses "B" and "C," are they ready to attach to this?
matters of special concern to such zones.
you may deal directly with one or more zone coumanders on
In the absence of E conflicting policy of the Control Council, zones.
MR. RIDDLERENCER: They are all resdy, with the excep-
which has now been subject to modification es A result of
tion, of course, of the protocol on zones of occupation,
uniform travel policies and procedures with respect to inter-sonal
"e. Pending the formulation in the Control Council of
the French request for participation. I understand ve are
expecting daily the views of the JCS on the French zone.
and no to leave or enter your zone without your authority,
mitted and movement of civilians, no civiliens shall be per-
We cennot complete the negotiations until that is done.
Geruany except for specific purposes approved by you.
Germans within your zone shall be permitted to leave
GEN. HILLDRING: The reason I asked the question is
we are very anxious to get the thing processed. Therefore,
including the those dealing with regional and local branches zone,
"f. The military government personnel in each
the moment this is submitted to the JCS, which is supposed to
be right now, can't we amend this and my, "\1th respect to
these sections, the agreed protocols on zonez will be for-
of the liaison officers may be furnished by the zone
except that selected by authority of the Commander of that
shall departments be of any central German administrative machinery, of
warded to you.
shall have other three zones, The respective Commanders-in-Chief Commanders
KILL RIDDLEHERGER: You don't have to do that, because
there is R. protocol on zones already adopted and agreed upon
command and over the civilians who accompany then.
Germany over the members of the armed forces under their
exclusive jurisdiction throughout the whole of
and approved by the three heads of State. however, the one
on zones will have to be modified.
Regraded Unclassified
PRECISION
TRADE
MARK
MICROSTAT
MICROFILM
BOLL NO.
. 26 -
- 25 -
upon the German economy may be imposed to the extent that
"8- The Control Council should be responsible for
such controls may be necessary to achieve the objectives
facilitating the severance of all governmental and adminis-
enumerated in paragraph 4 above and also as they may be
trative connections between Austria and Germany and the
essential to protect the safety and meet the needs of the
elimination of German economic influences in Austria. Every
occupying forces and assure the production and maintenance
assistance should be given to the Allied Administration in
of goods and services required to prevent starvation or such
Austria in its efforts to effectuate these purposes.
disease and unrest 88 would endanger these forces. No action
will be taken in execution of the reparations program or
"4. Basic Objectives of Military Government in Germany:
otherwise which would tend to support basic living conditions
in Germany or in your zone on & higher level than that
"a. It should be brought home to the Germans that
existing in any one of the neighboring United Nations.
Germany's ruthiess warfare and the fanatical Mazi resistance
have destroyed the German economy and made chaos and suffering
"b. In the imposition and maintenance of such controls
inevitable and that the Germant cannot escape responsibility
as may be prescribed by you or the Control Council, German
for what they have brought upon themselves.
authorities will to the fullest extent practicable be ordered
to proclaim and essume administration of such controls. Thus
"b. Germany will not be occupied for the purpose of
It should be brought home to the German people that the
liberation but as a defeated enemy nation. Your aim is not
responsibility for the administration of such controls end
oppression but to occupy Geruany for the purpose of realizing
for any breakdowns in those controls will rest with themselves
certain important Allied objectives. In the conduct of your
and German authorities.
occupation and administration you should be just but firm
and aloof. You will strongly discourage fraternization with
"6. Denazification:
the Germen officials and population.
"a. A Proclemation dissolving the Razi Party, its
"c. The principal Allied objective is to prevent
formations, affiliated associations and supervised organi-
Germany from ever again becoming n threat to the peace of
sations, and all Nazi public institutions which were set
the world. Essential steps in the accompliment of this
up 6.8 instruments of Party domination, and prohibiting
objective are the elimination of bazion end militarism in
their revival in any form, should be promulgated by the
all their forms, the immediate apprehension of var criminals
Control wouncil. You will assure the prospt effectuation
for punishment, the industrial dissrmament and demilitariza-
of that policy in your zone and will nake every effort to
tion of Germany, with continuing control over Germany's
prevent the reconstitution of any such organization in
capacity to make war, end the preparation for an eventual
underground, disguised or secret form. Responsibility for
reconstruction of German political life on fi. democratic basis.
continuing desirable non-political social services of dis-
solved Party organizations may be transferred by the Control
"d. Other Allied objectives are to enforce the program
Council to appropriate central agencies and by you to ap-
of reparations and restitution, to provide relief for the
propriate local agencies.
benefit of countries devastated by Nazi aggression, and to
ensure that prisoners of nor and displaced persons of the
"b. The laws purporting to establish the political
United Nations are cared for and repatriated.
structure of National Socialism and the basis of the Hitler
regine and all laws, decrees and regulations which establish
"5. Economic Controls:
discriminations on grounds of race, nationality, creed or
political opinions should be abrogated by the Control Council.
"a. As at member of the Control Council and as zone
You will render then inoperative in your zone.
commander, you will be guided by the principle that controls
Regraded
Unclassified
PRECISION
TRADE
MARK
MICROFILM
ROLL NO.
28
- 27
28 -
"c. All members of the Mazi party who have been more
MR. FOWLER: That you really mean are Fasciats and
than nominal participants in its activities, all active
supporters of Nazism.
supporters of Mazisa or militarism and all other persons
hostile to Allied purposes will be removed and excluded from
MR. BELL: You certainly nean the SS Troops.
public office and from positions of importance in quasi-
public and private enterprises such 88 (1) civic, economic
KR. PAILD: I could interpret it that E soldier carry-
and labor organizations, (2) corporations and other organize-
ing a (un was a supporter of Nazisn.
tions in which the German government or subdivisions have
8. major financial interest, (3) Industry, connerce, agri-
MR. CLAYTON: You could 50 construe it. That may be,
culture, and finance, (4) education, and (5) the press,
General, something that will come up early in its application.
publishing houses and other agencies disseminating news and
participants in Party activities and as active supporters of
propagands. Persons are to be treated as more than nouinai
GEN. HILLDRING: Yes. This formula isn't much dif-
ferent from what his present denszification policy is, and
Basien or militarian when they have (1) held office or
I don't think be will apply it that rigicly.
otherwise been active at any level from local to national
in the party and its subordinete organizations, or in or-
MR. CROWLEY: You'd think he is going to have so damn
-anizations which further militaristic doctrines, (2)
much business he ion't going to get down to that right away.
authorized or participated affirmatively in any hazi crimes,
racial persecutions or discriminations, (3) been avowed
GEN. HILLORING: Not right amay, but what Mr. Hard
believers in bazism or racial and militaristie creeds, or
says is true.
(4) voluntarily given substantial moral or material support
or political assistance of any kind to the Masi Party or
MR. CROWLEY: It will be back for revision before he
Mazl officials and leaders. No such persons shall be retained
gets down that far.
in any of the categories of employment listed above because
of administrative necessity, convenience or expediency.
MP. CLAYTON: You will have to cable right away.
MR. BARD: That begins by saying that any nan that served
MR. PELL: Just about the same BE you had in Italy.
with the German Amy can't hold office or can't participate
in any of these-that means everybody, practically.
GEN. HILLDRING: Not as tight as that.
MR. CLAYTON: I don't so understand it, helph.
MR. FRIEDMAN: They will do it, anyway, if they want
to.
MR. BARD: It says, "All active supporters of Nazion
or militarism." & soltier is a supporter.
MR. GLASSER: Militarian in that sense is really an
ism, more of the doctrine of military organization. That
GEN. HILLDRING: That is 8. stricter interpretation
is what is intended here, and that is the may the isn is
than we have put on it, Mr. Bard.
usually interpreted. I think a soldier in the Army is part
of 8 military organization, is really 8. puppet of whatever
MR. HELL: Everybody above the age of six.
militariam there may be in the community.
MR. CLAYTON: of course, those soldiers-- an
GEN. HILLDRING: I think he will interpret this 8.8
ordinary private has no other choice; he has to serve.
saying he won't use Army officers or SS Troops. But I
Many of then, I dare say, have served that would have
others. think ne could assume that under this language be could use
liked very well not to.
RECISION
TRADE MARK
MICROSTAT/
PAY,
ON,
MICROFILM
ROLL NO.
30
- 29 -
30 -
MR. CLAYTON: You will recall, General, if you get
GEN. HILLDRING: I think the texts are already ready,
anything out of the discussion here as to what the intent
Mr. Crowley. They have been working on then with the help
is, and instruct his accordingly.
of your agency for over a year now, ano I think--I would
like to check on this but if they are not ready now, they
GEN. HILLDRING: If it is 6 question like that, cables
are practically ready. There will be very little delay.
will be coming back in the weeks and months ahead when he
gats down to it.
MR. CROWLEY: You will have a lot of bandits, letting
them run around.
(Mr. Clayton continues reading to the bottom of page
twelve.)
GEN. HILLDRING: To learned that in Italy, and we have
been pushing to get the public schools opened rapidly in
MR. CROWLEY: How far down do you go on that nom?
Germany. Tie were a little slow in getting the textbooks
in Italy.
MR. RIDDLEFERGER: They are the special party schools.
MR. CROWLEY: That is all I had.
MR. CROWLEY: You are going to leave the primary
schools open?
MR. CLAYTON: 1 hate to suggest A change, but how
about putting a period after eliminated and say, "Textbooks
VR. RIDDLEPERGER: That follows next.
and curricula which are free from Nazion and military doctrines
shall be provided as soon as possible?"
MR. CROWLEY: Pardon ne.
MR. CROWLEY: I can see where you couldn't use the
MR. CLAYTON: "b. A coordinated system of control
German textbooks at all, but operate your schools in order
over German education and an affirmative program of reorien-
to keep children off the streets. I don't nean use the
tation will be established designed completely to eliminate
German textbooks, but get the children off the streets.
Nazi and militaristic doctrines and to encourage the develop-
ment of democratic ideas.
MR. RI DDLE BERGER: You can have instruction without
textbooks. Didn't they do that in Italy, General, reopen
"c. You will permit the reopening of elementary
schools and forbid the use of certain texts?
(Volksschulen), middle (Mittelschulen) and vocational
(Berufsschulen) schools at the earliest possible date after
GEN. HILLDRING: They did get four or five schools
Nazi personnel has been eliminated and textbooks and curricula
open, I think, without any textbooks.
have been provided which are free of Nazi and militaristic
doctrine.
MR. CLAYTON: HOW would this be, have 8. period after
"eliminated," and then say, "Textbooks and curricula teaching
MR. CROWLEY: But you wouldn't keep your primary schools
Nazi and militaristic doctrines must not be used?"
closed until you get all your new textbooks written. You
wouldn't let those kids all roam the streets over there
MR. CROWLEY: I think that is all right.
without some form of educational supervision.
MR. CLAYTON: "Textbooks free from such doctrines will
MR. CLAYTON: That is e. good point.
be provided 8.5 soon as possible."
(General agreement.)
Regraded Unclassified
RECISION MARK MICROSTAT MICROFILM BOLL
NO.
21
22
- 31 -
- 32 -
MR. RIDDLEBERGER: Does that put an obligation on us
to provide textbooks in that case?
MR. CLAYTON: All right. That is 6 good point, Leo.
GEN. HILLDRING: We are doing it now.
"The Control Council should devise programs looking
toward the reopening of secondary schools, universities,
MR. RIDDLEBERGER: We are providing all the textbooks
and other institutions of higher learning. After hazi
features and personnel have been eliminated and pending the
for all the German schools?
formulation of such programs by the Control Council, you
GEN. HILLDRING: No, we find we don't need to change
may formulate and put into effect an interim program wi thin
algebra book, but on others we do have to say--for
your zone and in any case may permit the reopening of such
the on history books-- "Here is B book now that you use
institutions and departments which offer training which you
instance to teach history, and then they grind out 8 million copies.
consider immediately essential or useful in the administra-
tion. tion of allitary government and the purposes of the occupa-
MR. CROWLEY: The only way to get then is by free
textbooks.
"d. it in not intended that the military government
MR. CLAYTON: We are going to provide them.
will intervene in questions concerning denominational control
of German schools, or in religious instruction in German
GEN. HILLDRING: Tie are going to provide the basic
schools, except insofer 88 any be necessary to insure that
texts. Now, whether we are in this country going to them. print
religious instruction and administration of such schools
them all, Idon't know. We have printed 6. lot of
conform to such Ailied regulations as are or may be estab-
We did print millions of textbooks for Italy, but that for was
lished to purging of personnel and curricula.'
simply because there weren't any facilities in Italy
ing them or not and the Germans couldn't, we would do
doing it. I think if it came to 8. question of our provid- it
(Secretary re-enters the conference.)
H.V.JR: Could ! have one second?
to get their educational program started.
MR. GLASSER: Mr. Clayton's suggestion is that it
(Discussion off the record.)
wouldn't be necessary to wait for textbooks. You simply
"Textbooks and curricula which are not free from
B.V.JR: All right.
Nazi say, and militaristic doctrines are not to be used, and
leave the provision of the textbooks to some other--
MR. CLAYTON: "15. Arts and Archives:
MR. CLAYTON: If that is satisfactory, ne will change it and
"Subject to the provisions of paragraph 6 above, you
puta period after "eliminated," and then say, "Textbooks
will make all ressonable efforts to preserve historical
archives, museums, libraries and works of art."
and curricula--
VR. GLASSER: "...wnich are not free--"
(Mr. Bard leaves the conference.)
MR. CLAYTON: "...which are not free from Resi and
(ar. Clayton continues reading, pages 14 and 15.)
militaristic doctrines should not be used."
MR. FOWLER: Mr. Clayton, there is one little point
MR. GLASSER: That leaves the question open.
there in regard to instituting and maintaining a reporting
Regraded Unclassified
PRECISION
TRADE
MARK
MICROSTAT
MICROFILM
ROLL NO.
34
23
- 34 -
- 33 -
system. That may have in some cases afairly important
"22. You will urge upon the Control Council that
relationship to your disarmament control, and I wonder if
ration scales be applied throughout Germany, that
we couldn't include in seventeen, the third paragraph, the
uniform items be distributed equitably among the zones,
second line from the bottom, paragraph 19. Insert "19" just
essential net surpluses be made available for export to deficits Allied
before "20."
that countries, and that imports be limited to the net
of Germany 88 e whole.
MR. CLAYTON: I see no objection.
"Labor, Health, and Social Insurance:
MR. COE: No, that is all right.
"23. You will permit the self-organization of employees
MR. CLAYTON: I think that is good.
along be necessary to prevent the perpetuation of Nazi or militarist
democratic lines, subject to such sefeguords as may
MR. FOLLER: Nineteen and twenty hang together.
under any guise or the continuation of any group
hostile influence to the objectives and operations of the occupying
MR. CLAYTON: That is at the botton of page fourteen.
forces.
MR. FOWLER: Yes,
"24. You will permit free collective bargaining between
and employers regarding wages, hours and working
MR. CLAYTON: "German Standard of Living:
ment of industrial disputes. Collective bargaining shall be be
employees conditions and the establishment of machinery for the settle-
"21. You will estimate requirements of supplies neces-
subject to such wage and hour controls, if any, as may
sary to prevent starvation or widespread disease or such
instituted or revived by your direction.
civil unrest as would endanger the occupying forces. Such
estimates will be based upon a program whereby the Germans
are made responsible for providing for themselves, out
to maintain or re-establish such health services and facilities
"25. You are authorized to direct the German authorities
economic and police measures to assure that Geruan resources
their own work and resources. You will take all practicable of
as may be available to them.
are fully utilized and consumption held to the minimum in
MR. BELL: Weren't there some other words in twenty-
order that imports may be strictly limited and that
four yesterday, Mage, hour, and other controls?"
pluses may be made available for the occupying force sur- and
for displaced persons and United Nations prisoners of war, end
MR. CLAYTON: Yes.
reparation. You will take no action that would tend to
than that existing in any one of the neighboring United
support basic living standards in Germany on 8. higher level
MR. FOWLER: That WES the way it was drafted.
Nations and you will take appropriate measures to ensure that
MR. DESPRES: I am afraid I am guilty, not the official
tasic than living standards of the German people are not higher
secretary.
Nations when such measures will contribute to raising the
those existing in any one of the neighboring United
MR. CLAYTON: I thought we agreed on "lage, hour, and
standards of any such nation.
other controls."
I would like to say that this morning I made a
VR. DESPRES: I am afraid I missed that. I am sorry.
here. I read certain significant paragraphs, this being
to the staff committee in the State Department on our report work
VR. CLAYTON: We are just putting that in. I am glad
one of them, and it seemed to meet their complete approval.
you brought that up, Dan.
I just read certain ones.
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/
MICROFILM
BOLL NO.
36
- 36 -
- 35 -
"s. prevent the production, acquisition by importation
"26. You are authorized to direct the German authori-
or otherwise, and development of all eras, ammunition end
ties to maintain or re-establish such health services and
implements of war, as well as all types of aircraft, and
facilities 85 may be available to them.
all parts, components and ingredients specially designed
or produced for incorporation therein;
"Agriculture, Industry and Internal Commerce:
"b. prevent the production of merchant ships, synthetic
"27. You will require the Germane to use all menns at
rubber and oil, aluminum and magnesium and any other pro-
their disposal to maximize agricultural output end to
ducte and equipment on which you will subsequently receive
establish ne rapidly as possible effective machinery for
instructions;
the collection and distribution of agricultural output.
"c. seize and safeguard all facilities used in the
"28. You will direct the German authorities to
production of any of the items mentioned in this paragraph
utilize large-landed estates-- me had in there "Public
and dispose of them 68 follows:
lands" right after "estates" and public lands in a manner
which will facilitate the accomodation and settlement of
"II) remove all those required for reparation;
Germans and others or increase the acrease under cultivation.'
"(2) destroy all those not transferred for reparation
KR. DESPRES: I think that may be wrong, "Acreage under
if they are especially adapted to the production of the
cultivation," not to change the subject, but I think we
items specified in this paragraph and are not of 8 type
said "Agricultural output.
generally used in industries permitted to the Germans
(cases of doubt to be resolved in favor of destruction);
ER. CLYTON: That is right, ne said, "Agricultural
output, and I think, "Agriculturel output" is perhaps
"(3) hold the balance for disposal in accordance
better, Emile, because it involves not only acresge, but
with instructions which will be sent to you.
Intensity of cultivation, or increased sgricultural output.
"Pending agreement in the Control Council you will
"29. You will protect from destruction by the Germans,
take these nessures in your own zone. You will not post-
and maintain for such disposition as is determined by this
pone enforcement of the prohibitions contained in subpara-
and other directives or by the Control Council, all large
graphs a and b and the instructions in subperagraph c without
plants, equipment, patents and other property, and all booke
specific approval of your government through the Joint
and records of large German industrial companies and trade
Chiefs of Steff.
and research associations that have been essential to the
Geruen war effort or the German economy. You will pey par-
"31. As an additional measure of disarmament, the
ticular attention to research and experimental establishments
Control Council should:
of euch concerns.'
"s. prohibit initially all research activities and
H.K.JR: Excure ne just 8. minute. After "Control Council*
close all laboratories, research institutions and similar
in persgraph twenty-nine you sald, "All large plants." Line
technical organizations except those considered necessary
reads "All plants. It is line three.
to the protection of public health;
VR. CLAYTON: Did I say lorge? It should be "All plants."
"b. abolish all those laboratories and related institu-
"30. In order to disarm Germany, the Control Council
tione whose work has been connected with the building of the
should:
Regraded Unclassified
PRECISION
TRADE
MARK
MICROSTAT/
MICROFILM
ROLL NO.
38
- 37 -
- 38 -
German wer machine, safeguard initially such laboratories
not over three pages, one on military and political, one
and detain such personnel as are of interest to your tech-
on economics, and one on finance, which would just give
nological investigations, and thereafter remove or cestroy
the salient and significant parts of the document so that
their equipment;
we can read it to the President or hand it to him.
"c. permit the resumption of scientific research in
MR. CROWLEY: I thought yesterday we kind of agreed
specific cases, only after careful investigation has estab-
that there would be something given to him. As I see this
lished that the contemplated research will in no way con-
thing, this is an occupational document that not only sets
tribute to Germany's future war potential and only under
out the occupational philosophy, but rather the primary
appropriate regulations which (1) define the specific types
or educational philosophy of Germany over a long period of
of research permitted, (2) exclude from further research
time, and I thought yesterday no talked in terms of a
activity any persons who previously held key positions in
meno or letter of transmittal, whatever you want to call it, and
German war research, (3) provide for frequent inspection,
that you are going to say that this is a draft that has been
(4) require free disclosure of the results of the research
recommended, and, of course, it would be subject to change
and (5) impose severe penalties, including permanent clos-
by whatever body he would determine to have the right to
ing of the offending institution, whenever the regulations
review this. I thought we were going to do that.
are violated.
VR. CLAYTON: Well, that would be agreeable.
"Pending agreement in the Control Council you will
adopt such measures in your own zone."
MR. CROWLEY: I think this is an excellent document,
but you wouldn' t want to say--go on record that it W&S
H.M.JR: Mr. Clayton, may I interrupt you a minute?
final and complete, never to be changed.
Early this morning I asked whether there was a letter of
transmittal to take over to the President. Couldn't one of
MR. CLAYTON: No.
the State Department gentlemen sort of go somembere in a
corner and draft such e letter so when you are through
MR. CROWLEY: Or never to be reviewed. Put it that
reading we will have it?
way.
GEN. HILLDRING: Vr. Secretary, AS the next step, I
MR. CLAYTON: I think we have to submit later when we
would like to suggest that before you take this to the
get this B. draft of a. general clause. Have you got that,
President you give the Joint Chiefs of Staff an opportunity
Emile, one that would cover those points?
to comment on It from a military point of view so that we
don t give to them something that bears the approval of the
MR. DESPRES: I have part of it, Perhaps I might best
President and is, therefore, concrete. It certainly would
go in a corner and do that.
make my life much easier.
MR. CLAYTON: I think if I were you I would.
H.M.JR: I en sorry I interrupted. Mr. Clayton will
proceed, and then we will discuss this.
H.M.JR: You were down to thirty-two.
MR. CLAYTON: -I don't know, Mr. Secretary, whether you
MR. CLAYTON: "32. Pending final Ailied agreements
want a letter or merely a short digest of what this document
on reporation and on control or elimination of German indus-
contains. I thought we might have a short digest, say, of
tries that can be utilized for war production, the Control
Council should:
(Mr. Despree leaves the conference temporarily.)
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
MICROFILM
BOLL
NO.
40
- 39 -
- 40 -
"a. prohibit and prevent production of iron and steel,
chemical, non-ferrous metals (excluding aluminum and magnesium),
necessary to take care of your purposes of occupation, which
machine tools, radio and electrical equipment, automotive
include the minimum standard of living, and so forth. But
vehicles, heavy machinery and important parts thereof,
you don't, for example, rehabilitate or repair a power plant
except for the purposes stated in paragraphs 4 and 5 of
beyond--if twenty thousand kilowatts are enough to take care
this directive;
of those services, you don't try to restore it to fifty
thousand or one hundred thousand kilowatts, and similar
"b. prohibit and prevent rehabilitation of plant and
analogies. You do everything that is necessary to get up
equipment in such industries except for the purposes stated
to the minimum, but you don't E° pest the minimum.
in paragraphs 4 and 5 of this directive; and
I'R. CROWLEY: You did that in Italy, General?
"c. safeguard plant and equipment in such industries
for transfer on reperation account.
GEN. HILLDRING: We haven't quite bit the minimum
there, as a matter of fect, sir.
"Pending agreement in the Control Council, you will
put such measures into effect In your own zone.
MR. CLAYTON: "b. emergency repair and construction
of the minimum shelter required for the civilian population;"
"33. The Control Council snould adopt E policy permit-
I can see that with regard to shelter, but transporation
ting the conversion of facilities other than those mentioned
services--
in paragraphs 30 and 32 to the production of light consumer
goods, provided that such conversion does not prejudice the
KR. CROWLEY: Would the military have to have transpor-
subsequent removal of plant and equipment on reparation
tation for their own selfish reasons? Your objection is
account and does not require any imports be, ond those neces-
that word minimum in there?
sary for the purposes specified in paragraphs 4 and 5 of this
directive. Pending agreement in the Control Council, you may
MR. CLAYTON: Yes. It seens to put the emphasis in
permit such conversion in your zone.
connection with the reconstruction of the transportation
system on making it just as poor as you can.
"34. Subject to the provisions of paragraphs 30 and 32,
the Control Council should assure that ell feasible measures
MR. DOWNEY: Minimum is & bad word so far 88 it is
are taken to facilitate, to the minimum extent necessary for
applicable to reparetions, and that is one of the objectives
the purposes outlined in paragraphs 4 and 5 of this directive
in four and five.
"a. repairs to and restoration of essential transports-
MR. CLAYTON: I think it would be . better document if
tion services and public utilities;"
you left minimum out.
I don't quite get that, "...for the purposes outlined
VR. FOWLER: I think you ought to say "only to the
in paragraphs 4 and 5 of this directive repairs to and
extent.
utilities.' restoration of essential transportation services and public
MR. HELL: You have got to have only if you leave out
minium.
MR. FOLLER: I think what is meant is that you do every-
thing that is necessary to get up to the level of repair of
MR. FOWLER: The German transportation system, for example,
transportation equipment or of E public utility. It is
before the war was just a huge and highly overdeveloped
institution. They had 5. carrying capacity developed for
Regraded Unclassified
RECISION TRADE MARK MICROSTAT/ MICROFILM BOLL
NO.
- 41 -
- 42 -
military purposes, end you don't want to restore that.
But there is nowhere n. statement as one of the objec-
tives to give to the German people an opportunity to
VR. CLAYTON: I won't press the point; we will just
achieve a minimum subsistent standard of living. I don't
leave it as it is.
know if that is properly stated as an objective, but with
these broad references to paragraphs 4 and 5 all the way
(Kr. Clayton finishes reading the draft.)
through, and with paragraphs 4 and 5 being blank on that
point, I think it would be & matter of some confusion in
MR. CLAYTON: Non, Mr. Secretary, would you like to
the field if we were implementing, for example, this
take up the--
section that we just discussed, paragraph 34.
VR. FOWLER: 1 would like to raise one general question
GEN. HILLORING: I see your point. It seems to me
here and get the opinion of the group on it. It is not a
that with the omission in paragraph 21 of these references--
matter of difference, just 8. question of interpretation.
All through this directive we have this reference to
MR. FOWLER: That is right, we have inadvertently,
all through the drafting here--
paragraphs four and five, either that you shouldn't do
anything, except to obtain those objectives, or that what
you do is limited to the minimum necessary, for example,
MR. PRIEDMAN: Five covers it. The reason for putting
in thirty-four, "...to the minimum extent necessary for the
five in here--in the discussion of the subject, you see,
that wasn't technically an objective, but the same result
purposes outlined in paragraphs 4 and 5 of this directive."
is achieved by putting in five, and you are not going to say
anything broader than what is in five, anyway.
Nom, looking back in paragraphs 4 and 5, the question
I wanted to ask 18--
MR. FONLER: Let's read 5a. I think that was the
object of the discussion, but I wonder--
GEN. HILLDRING: I think this bears on your problem:
Would the commander in the field feel that he W&S authorized
GEN. HILLDRING: It refers to controls, primarily.
tor eport the essential transportation services necessary
to keep the German standard--minimun standard of living in
MR. FOWLER: I think if you added after that, "You
operation? The objectives we have listed in 4 and 5 are,
will be guided by the principle that controls upon the
one, to prevent Geruany from ever again becoming a threat
German economy may be imposed to the extent that such
to the peace of the world, obtain and enforce the program
controls may be necessary to achieve the objectives
of reparations and restitution, to provide relief for the
enumerated in paragraph 4 above and also as they may be
benefit of countries devastated by Nazi aggression, and to
essential to protect the safety and meet the needs of the
ensure that prisoners of war and displaced persons of the
occupying forces and assure the production and maintengnce
United Nations are cared for and repatriated.
of goods and services required to prevent starvation--
There is 8 reference down in paragraph 5 to the effect
MR. FRIEIMAN: Where are you reading?
that you will use controls only to the extent that they are
necessary to meet the needs of the occupying forces and
MR. FONLER: Paragraph 5a.
assure the production and maintenance of goods and services
MR. RIDDLEBERGER: It is stated in & backhand way.
required to prevent starvation or such disease and unrest
as would endanger these forces.
MR. FOWLER: I think it la going to cause confusion.
Regraded Unclassified
PRECISION
TRADE MARK MICROSTAT/ MICROFILM
BOLL NO.
- 44 -
- 43 -
MR. CLAYTON: That is the way it reads.
MR. GLASSER: May I suggest the language under 5 8,
making a minimum change? To achieve the objectives enumera-
MR. FONLER: Just as long as we are--I don't want the
ted in 4 above and also as they say be essential to the
intent of this paragraph 32 to break down on some notion
accomplishment of your objective, to protect the safety
that it is a thoroughly impractical suggestion of not allow-
and meet the needs of the occupying forces end assure the
ing the boys to make steel rails over there, as it might be
production and maintenance of goods and services required
necessary to restore the German transportation system to
to prevent starvation or such disease and unrest as would
the extent that it is necessary. I an interested in pro-
enganger these forces.' Now, there you clearly state
tecting that provision so that it appears and is susceptible
that this is an objective. It is not tied up with the
of practical operation.
controls. I think that would do it.
If it is the opinion of General Hilldring that that
MR. COE: How would it be now?
is the may it will be understood, I think we are O.K.
MR. GLASSER: "As a member of the Control Council and
GEN. HILLDRING: I have read that many times, and I
think he will read into it the fact that he is to do these
as zone connender, you will be guided by the principle
that controls upon the German economy may be imposed to the
things and also to bring about this minimum standard. However,
he does have to infer, I think--
extent that such controls may be necessary to achieve the
objectives enumerated in paragraph 4 above and also as they
MR. CROWLEY: We have got to get to work. I have got
may be essential to accomplish the further objective of
some food fellows to talk to. Are we through with this?
protecting the safety and meeting the needs of the occupying
forces and assure the production and maintenance of goods
GEN. HILLDRING: With the exception of one paragraph
and services required to prevent," and so forth. We are
just inserting the words, to accomplish the further
which originated in your section, yes, sir.
objective of, and that clearly specifies the objectives.
MR. CROWLEY: That is the one the man is working on,
but outside of that, we are all through with this. And
MR. FOWLER: Now I understand that If--
don't let anyone open It up again. Let's close it up.
MR. CLAYTON: Does that meet your point?
101. CLAYTON: That is O.K. with me.
MR. FOWLER: Well, I an looking now particularly at
VR. CROWLEY: Joe, if you bring anything else up, you
paragraphs 32 and 34. The intention was, I think, in both
are going out that window. (Laughter)
of those cases to prohibit, for example, "...the production of
iron and steel except for purposes stated in paragraphs
MR. CLAYTON: All right.
4 and 5 of this directive." And what we had in mind there,
as I remember it, was to not prohibit completely, 0.8 me did
VR. RIDDLEBERGER: We won't change this.
in the case of synthetic oil and rubber, but in this period
ahead to say that they can go shead and produce iron and
MR. FOWLER: I thoroughly second those sentiments.
steel, but only to the extent necessary to achieve--
MR. CLAYTON: It will be corrected accordingly.
MR. COE: I think that is the way it reads. It is
clearly covered, I think.
Regraded Unclassified
PRECISION
TRADE
MARK
MICROSTAT/
MICROFILM
BOLL NO.
- 45 -
. 46 -
to wait for this gentleman here?
MR. CROWLEY: Now, what else have we got? We have got
MR. CROWLEY: But tomorrow morning it will be nice to
say they have looked it over.
KR. CLAYTON: The General raised A point which seens
GSN. HILLDRING: of course, Mr. KcCloy and I will go
to me to be very highly important, end I would think it
to work on General Karshall, and Bard will on Agmiral King,
wouldn't be very proper for us to write this document
but this 6. very important document, and General Marshall
and have the approval of the document until the Joint Chiefs
will want to put it in his briefcase and study it, and
of Staff have had 8 chance to look at It.
they are going to impose quite a burden on Eisenhower, but
I don't think they will change it. They didn't change 1067.
I think we have got that all fixed up. The General won't
VR. CROWLEY: Having been brought up in Madison politics,
They passed it just B.S. it came out of the State Department,
but they feel an obligation towards Eisenhower that they
press that, I don't think, and I think if we get this to
should have an opportunity to examine what it is that they
the President, he will do as he pleases with It after he
gets it.
are showing over on him.
MR. CROWLEY: That is right.
MR. CLAYTON: Perhaps it should be made clear to him
but General Hilldring has passed on it.
that it has not been submitted to the Joint Chiefs of Staff,
GEN. HILLDRING: And until these five-star fellows
have had a chance to read it, neither McCloy nor I are going
MR. C OE: And the Navy.
to get General Marshall to vote on it until he is ready.
H.M.JR: That doesn't mean--we have got this appointment
ER. CLAYTON: Yes, yes.
to walk across the street to see the President of the U.S.
with this document, and I still think we should have a
H.H.JR: He can refer it to the Joint Chiefs of Staff
letter of transmittal from this committee saying that the
for their pleasure.
committee has been sitting. We'll give this to him for
his consideration and then explain to him 8. little bit what
GEN. HILLDRING: Mr. Crowley recited a formula, Mr.
this group is. What I want to ask him is, does he want
Secretary, which in quite agreeable to me, end--
this group, as far as I an concerned, to continue next
week on reparations? I would like to got a little direc-
MR. CROWLEY: I would think he would, after he gets
tive, myself.
through, send it to his Chiefs of Staff and have then look
it over.
GEN. HILLDRING: That is quite all right, Mr. Secretary.
this document right now to the JCS. There is no objection
GEN. HILLDRING: There is no objection to submitting
H.M.JR: That is the principal thing I an after, to
PO over and inform the new President of the U.S. what I an
to that, sir, is there?
doing, and nsk if it is agreeable to him, and ask if he
wants me to continue to do this kind of work. That is
H.M.JR: It would save time.
why I an so anxious to get over there. lie may say yes or
no, but I would like to get an answer from him. I would
Joint Chiefs of Staff.
MR. RIDDLEBERGER: It comes out eventually from the
like to work on the reparations thing, but I want him to
say so, That doesn't hold you up?
Regraded Unclassified
PRECISION TRADE MARK MICROSTAT MICROFILM
ROLL NO.
- 47 -
- 48 -
GEN. HILLDRING:- No.
MR. BELL: You can say it has been approved by this committee,
but not by the Chiefs of Staff.
here. the morning fairly early and go over it and sign it
and in I suppose the best we could do would be to meet here
MR. CLAYTON: We will prepare' a letter this afternoon,
GEN. HILLDRING: That is fine, Mr. Secretary.
MR. CIAYTON: I am sorry, but I didn't get the last
H.M.JR: All right. Any time is all right.
part.
H.M.JR: I think the committee should walk in and
wouldn't the best be any chance for a change. The would get it up
MR. CLAYTON: Of course, if we take it over there, there
may we can.
call on him and inform him that all of the signatures are
on it.
H.K.JR: What time do you think we ought to meet?
How, I have worked with them twice. I would send him
a written memo, address it to President Truman and say, "Do
going KR. over CLAYTON: there at I ten. would think nine o'clock if you are
you like to work this way?" He does. He likes to have
something to see.
so nine H.M.JR: 'elock I am is not late. sleeping very well these nights,
MR. CLAYTON: Now, the letter, I take it, should give
a digest of the document.
before Icome.
VR. CLAYTON: I can do an hour's work in the office
H.M.JR: Yes.
H.M.JR: You win.
MR. CLAYTON: Do you think that it should go to the
extent, say, of three double-spaced pages like this, that
would be divided into three parts--three sections like the
if that MR. is CLAYTON: agreeable. I think we ought to start by nine o'clock
document is, first, military and political, second, economic,
and third, finance?
on
him. Emile is out there. You might tell hin ne are writing
MR. CROWLEY: I think you certainly ought to give him
enough of e digest 80 he would get--maybe not tomorrow
(Mr. Glasser leaves conference temporarily.)
morning--but 50 he would get the gist of this whole thing.
MR. CROWLEY: Could we let him work on that with the
H.M.JR: And with that letter should be a copy, a
in? if the subcommittee agrees, why don't we let them put it
fellows in the subcommittee? Maybe if they can agree on it,
photostat copy of the March 23 draft so he will know that
that was the springboard.
MR. CLAYTON: It is & very important paragraph. I
MR. CLAYTON: Send that with it.
final, and he may be nearly ready.
think we would all like to read it before It is made absolutely
H.M.JR: And I think we ought to put our signatures
on it and then say, "Here it is. The Chiefs of Staff have
not seen it, but--" and then ask him--I am going to ask
H.M.JR: General, will you deliver McCloy tomorrow morning?
him, anyway, if he wants me to continue.
Vr. Secretary, or thereabouts,
GEN. HILLDRING: Yes, I will deliver him at nine o'clock,
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT
MICROFILM
SOLL NO.
. 49 -
50
- 50 -
MR. CLAYTON: While me are waiting, would you like to
hear the document on reparations? It is just about agreed
on. Oh, here he is now.
MR. COE: That is agreeable to me.
(Mr. Despres and Mr. Glasser enter the conference.)
H.M.JR: That will mean that we will have to get
McCloy back from San Francisco.
H.M.JR: I promised Mr. Lubin that if we went into
that, I would phone him.
GEN. HILLDRING: I don't think he will be there very
long, Mr. Secretary. I don't think Mr. Stimson will let
GEN. HILLDRING: Mr. McCloy, with respect to that,
him right now.
hasn't read it at all, and he would like a chance to look
it over. Has the subcommittee passed on it?
1R. FOWLER: If you have got a mandate to go ahead on
the reparations document, you night 20 ahead.
MR. CLAYTON: The working committee has agreed--have
you not agreed on the reparations document?
MR. DESPRES: I have three separate items here.
(Passes around copies of attachments C, D, and E.) This
MR. DESPRES: I don'tthink you can quite say that now.
is the first one (indicating attachment C).
H.M.JR: But if you are going to go into that, shall
H.M.JR: Could you tell Lubin we are going to start
we phone Lubin to come on over?
that?
MR. CLAYTON: Is it your idea that along with this
MR. DESPRES: I took the liberty of crossing out the
other document we should present the one on reperations to
word "interim" in the fifth line. And this proposal, as I
him? I think it night be takingmalittle more than we would
understand it, is to go at the end of paragraph 1 8.8 b.
be able to get through with.
It would be the third paragraph I thought.
H.M.JR: My thought was that without talking to enybody
MR. COE: I should think it would be the second para-
we would just do 1067 revised, because I haven't studied
graph. It would go along with the rest of it, telling him
the reparations document.
what to do.
MR. CLAYTON: Suppose we postpone until--tomorrow is
13. CLAYTON: That is the second paragraph.
Friday--postpone until one day next week the reparations
document, and in the meantime have it mineographed and
10. DESPRES: That is better.
circulated?
KR. CLAYTON: (Reading attachment c) "This directive
H.M.JR: If you want to start Tuesday, I will be glad
sets forth policies relating to Germany in the initial
to. Do you want to set 6. time?
post-defeat period. Às such it is not intended to be an
ultimate statement of policies of this Government concerning
the treatment of Germany in the post-war world. It is
MR. CLAYTON: Tuesday?
therefore essential that during the period covered by this
H.M.JR: How about ten-thirty?
Directive you assure that surveys are constantly maintained
of conditions within your zone and that the results of such
LR. CLAYTON: All right, nake it ten-thirty Tuesday
surveys are made available through the Joint Chiefs of Staff.
on reparations.
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT
MICROFILM
ROLL NO.
52
- 51
- 52 -
The facts thus dirclosed will serve na a basis for determin-
you from are what you are asking in peragraph twenty. Your inventory--
I think what you are really after is something different
ing changes in the nessures of control set fortn herein 6.8
well 88 for the progressive formulation and development of
policies to promote the basic objectives of the United
the Joint Chiefs of Staff 55 say be required."
given to e change in the document.
a change in the document back here or that consideration be
reports in the judgment of 8 manner which would surveys suggest
thing different in this paragraph, and that is some- and
going to get that anyway. You are asking for
States. Supplemental :irectives will be issued to you by
GEN. HILLDRING: There le one suggestion I have there.
It is attributable to my own dreftsmen because--this is
to you have told his to do before or haven't told him
on send what to you the information which may have a bearing
back In other nords, I think you are really ssking him to
what thet one seid that : read on the may over here, but I
don't think we are only interested in the surveys of con-
ditions in our zone, hut in the whole of Geruany.
policy. do before, which requires change in policy or a nem
MR. FOULER: That is right.
GEN. HILLORING: And I think It should be enended to
for sentence, "The facts thus disclosed will serve as a basis
MR. CLAYTON: Isn't that pretty well covered in this
include the whole of Germany.
herein determining changes In the measures of control set forth
ment of as well as for the progressive formulation and develop-
KR. COE: Conditions within Geruany.
United States?"
policies to promote the basic objectives of the
B.E.JR: What are you going to survey? You don't my.
MR. COE: Conditions.
he the has there, that this is the recommendation we have in
MR. CROWLEY: That is what I was getting at, just what
MR. DESPRES: There is 8 more detailed paragraph on
your le problems, they will be subject to your review, end that
light of Information you have now, and 08 you study
this survey matter later in the directive.
what it says.
H.M.JR: Surveys of what?
why such don't you say, "These surveys should be developed in
MR. FORLER: Instead of saying, "facts just disclosed,"
MR. BELL: He has specific reference to it in the
document in the general over-all--
defines surveys a little bit.
a canner as to serve 42 5 basis for determining this
VR. FONLER: I would say, "..surveys are constantly
such a nanner--"
MR. CLAYSON: "These surveys should be developed in
maintained of conditions within your zone that may suggest
emendments changes, amendments, or net policy.
KR. FOWLER: to serve 68 a basis--"
MR. CLAYTON: May I suggest, Joe--excuse ne for inter-
rupting--that we just any that "surveys as outlined in para-
Ell. CLAYTON: That is fine.
graph twenty below."
ER. FOLLER: If you will read paragraph twenty, I think
point, ...and in the preceding sentence couldn't we say after this,
MR. FOLLER: Now, to take care of General Hilldring's
you will find that. I no familiar with paragraph twenty, but
that the results of such surveys and such other
Regraded Unclassified
RECISION
TRADE
MARK
MICROSTAT/
MICROFILM
BOLL
NO.
54
- 54 -
- 53 .
surveys as may be made in other zones, or under the direction
(General agreement)
of the Control Council?"
KR. CLAYTON: This would be inserted before the last
sentence of paragraph sixteen, so let's turn to that. The
GELL. HILLDRING: Yes, so it becomes countrymide--
last sentence reads, "Except BE may be necessary to carry
Germanwide.
out these objectives, and 50 forth. And just before that
we would insert, "Such industrial disarmement is an essen-
MR. DESPRES: I think that finishes that.
tiel security objective of the United States, and It is
also just that Geruany be required to make reporation for
MR. GLASSER: : have another suggestion on conditions.
the losses which she has caused to Allied Nations. The
It secued to are that we could spell it out by simply listing
measures required to fulfill these objectives will impose
"econonic, financial, industriel, social, and polltical
a heavy burden on the Germen people, but these measures
conditions, in order that the surveys should be as broad
rest upon considerations of security and justice, not
as possible.
oppression.
H.M.JR: I kind of like that.
"Loreover, measures of industrial disarmament and
MR. CROWLEY: There certainly would be no objection.
the German people eventually to reconstruct e tolerable
reporation will be held within such limits ES to allow
basis of livelihood."
MR. RI ODLEBERGER: What have you got?
H.E.JR: That is behind this?
MR. GLASSER: "Economic, financial, industrial, social,
and political."
MR. CLAYTON: This is carrying out the thought that
us expressed yesterday when it was agreed we would try to
GEN. HILLDRING Before conditions?
formulate 8 paragraph to put in here. I think the thought
MR. RIDDLEBERIER: "Reonomic--"
was expressed by Mr. McCloy, wasn't it?
GEN. HILLDRING: Mr. Crowley.
MR. GLASSER: "Economic, financial, industrial, social,
and political.'
WR. DESPRES: I don't know whether that meets the
MR. FOWLER: " surveys in other zones under the direc-
point.
tion of the Control Council" "nade in other zones, or
H.M.JR: I don't get that. I thought Mr. Crowley
"of other zones mode under the direction of the Control
end 1 were satisfied with that 4 B., that the Germans brought
Council?"
this stuff on themselves, and this is something different.
MR. CLAYTON: Wouldn't you want any kind? Let's see
ER. CLAYTON: Well, this was just drafted in accordance
if this doesn't meet it, "It is therefore essential that
with our understanding yesterday. If you don't like it, why,
during the period covered by this Directive you are assured
we'll leave it out.
of surveys constantly maintained of economic, industrial,
financial, social, and political conditions within your zone,
H.V.JR: I don't like it.
and that the results of such surveys and such other surveys
NE may be made in other zones are made available through the
MR. CROWLEY: What do we say in 4 B., Joe?
Joint Chiefs of Staff. These surveys should be developed
in such A manner as to serve as e besis of such--" is that
agreeable all the way around?
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/
PAT.
OR.
MICROFILM
ROLL NO.
56
- 56 -
- 55 -
MR. CLAYTON: Is that agreeable all the way sround?
MR. FOWLER: "It should be brought home to the Germans
R.M. JR: Yes. May I go back to that first one where
that Germany's ruthless warfore and the fanatical Nazi
you said this directive set the policy relating to Germany?
resistance have destroyed the German economy and made chaos
Shere you say "...make such surveys available only to the
and suffering inevitable and that the Germans cannot escape
Joint Chiefs of Staff,' would you mind including the words,
responsibility for what they have brought upon themselves.
to your Government?"
MR. CLAYTON: I think that is really sufficient.
MR. CLAYTON: No, I think that is all right.
MR. CROWLEY: Sure.
GEN. HILLORING: I have no objection.
H.M.JR: That insert before the last sentence--cut
KR. CLAYTON: That is in the first one that we make
that out.
available to the Joint Chiefs of Staff and to your Govern-
ment, "...to your Government and Joint Chiefe of Staff.
MR. DESPRES: This is to press Mr. Fowler's point
about lasting controls, "You will study and make recom-
H.M. JR: How is that?
mendations to your Governments through the Joint Chiefs
of Staff on the most effective and economical methods of
MR. CLAYTON: We solvaged one of the three. We will
maintaining international controls to prevent future
put that between paragraphs one and two. The salvaged the
German rearmament which will be continued after military
long one, end the two short ones don't go. That goes in
occupation of Germany has ended." It is premature at this
the first clause of the document?
stage.
KR. DESPRES: After paragraph two.
MR. CLAYTON: That is to be added at the end of
paragraph thirty. You might turn to that; it is on page
MR. CLAYTON: Between one ano two. I will concede to
eighteen.
make it paragraph two.
MR. DESPRES: It is not English as it stands now.
MR. DESPRES: That is right.
MR. CLAYTON: That paragraph deals with the disarmament
H.M.JR: Mr. Clayton, is it the understanding that
of Germany, "You will study and make recommendations to
this very excellent working committee will do the drafting
your Governments through the Joint whiefs of Staff on the
of the condensation of this thing and have it ready?
most effective and economical methods of maintaining inter-
national controls to prevent future German rearnament which
MR. CLAYTON: They will have to do it this =fternoon.
will be continued after military occupation of Germany
has ended."
H.M.JR: And they will have to have it ready by nine
'clock tomorrow morning.
MR. GLASSER: Isn't that really covered by our new
first paragraph--the addition to the first paragraph where
MR. CLAYTON: Yes, in the form of a letter directed to
we require surveys to be made, and that we will then send
the President, which the representative of each Department
out--
on this committee will sign, 08 I understand it.
MR. FOWLER: I think with the a doption of the change
yesterday in paragraph--this first introductory paragraph--
if me had that, it would be satisfactory without this.
Regraded Unclassified
- 57 -
MIL. RIDDLEBERGER: How about having a short memo plus
a digest of the document?
MR. CLAYTON: I think that is better, don't you, Mr.
Secretary, just a little short letter to the President
saying, We enclose documents and a digest?"
MR. RIDDLEBERGER: And a digest.
MR.. CLAYTON: I think that is probably better.
MR. DESPRES: May I no back to this addition to
paragraph one? Do we leave the words, . within your
zone unchanged, or was that going to be, in Germany?"
CLAYTON: Leave that unchanged and say here, "The
results of such surveys and such other surveys as may be
made in other zones--
Now, what else is there to come before the committee?
(No response.)
MR. CLAYTON: No further business? Ne will adjourn
until nine o'clock tomorrow norning.
Te will have in the morning a fresh draft of this
document with all corrections in it, and have them over
in the norning so each of you can have the advantage of
that.
RECISION
TRADE MARK
MICROSTAT
No.
U.
1.
PAT.
OFF.
MICROFILM
ROLL NO.
TOP SECRET
April 20,
TOP SECTIT
- 2 -
PAID III
FINANCIAL
reparations or restitution purposes.
Fending agrocuent in the Control Council you will follow these policies
1. You will nake full application in the financial field of the
principles stated elsewhere in this directive and you will endeaver to
in your - sono.
You will receive separate instructions relative to the currency
have the Control Councill adopt uniform financial policies necessary to
which you will use in the event that for any reason adequate supplies
carry out the purposes stated in paragraphs 4 and 5 of this directive.
of Allied vilitary narks and eichmarks are not available, of if the
You will take no stops designed to maintain, strengthen OF operate the
use of much currency 10 found undestrable.
German financial structure except insofar as may be necessary for the
You will not announce or establish in your some, until receipt
purposes specified in tide directive.
of further instructions, any general rate of exchange betwoon the
2. The Control Council should regulate and control to the extent
on the one hand and the Valle dollar and other currenates on
required for the purposes not forth in paragraphs 4 and 5 the Large and
the other. lovever, a rate of exchange to be used exclusively for pay
value of currency and the extension of credit in Generary and in accord-
of troops and military accounting purposes in your sone will be comuni-
anse with the following principles:
cated separately to your
a. United States forces and other Allied forces will use
3. Subject to any agreed policies of the Control Council, you are
Allied Military narior and ledehmark our rency or coins
authorised to take the following steps and to put into effect such further
in their presession, Allied illitary naria and
financial nameures as you may deem necessary to accomplish the purposes of
mark currency and coin now in circulation in will
your compations
be legal tender without distinction and will be inter-
a. To prohibit, or to prescribe regulations regarding, transfer or
changeable at the rate of 1 Allied Military nark for 1
other dealings in private OF public securities or real estate or
Medchmark. and other German
other property.
military surrency will not be legal tender in Cerrany.
be To close banks, but only for & period long enough for you to 10-
be The Redchatank, the lientenbank or any other bank or agency
troduce satisfactory control, to relove New1 and other undestrable
may be pemitted or required to Seous bank notes and currency
personnel, and to Learne instructions for the detemination of
which will be legal tender; without such authorization no
accounts to be blocked under sub-paragraph 6d below.
Deman or private bank or agency will be page
G. To close stock exchanges, insurance companies, and ad-ilar financial
nitted to issue bank notes or currency.
institutions for such periods - you dem appropriate.
Ge The Gervan authorities my be required to make available
de To establish & (eneral or limited noratorium or noratoria only to
ledchmark currency or credito free of cost and in amounts
the extent clearly necessary to carry out the objectives stated in
sufficient to neet all the expenses of the foross of
personaphs 4 and 5 of this directives
occupation, including the cost of Allied Vilitary Commissions
4a Resumption of partial or complete service on the internal public
and including to the extent that compensation is nade there-
deta at the earliest feasible date 10 deened decirable, The Control Council
should decide the time and namer of such resumption.
for, the cost of such private property as my be requisitioned,
5. Subject to any agreed policies of the Control Council,
suised, or otherwise sequired, by Allied authorities for
as You will prohibite
reparations
(1) the payment of all additary pensions, or other
Regraded Unclassified
RECISION TRADE MARK MICROSTAT No. U, PAT. OFF. MICROFILM
BOLL NO.
- la -
TOP 11037
TOP SIGNIT
evoluments of benefits, except compensation for
e. Yes will Inpound or block all gold, silver, currension,
physical disability limiting the recipient's ability
accounts ta financial institutions, credits, valaable papers, and
to work, at rates which are as higher the the lowest
all other ...... folling vithin the following entegariest
of those for comparable physical disability aristag
(1) Property evant or controlled directly or indirectly. is whole
from mon-ailiting causes.
or is part, by - of the felloving
(2) the payment of all public or private pensions OF other
(a) the German Meich, OF my of the Lender, Game or
encluments or benefits greated or conferred:
provinces, - Ereis, Manicipality or other similar lessl
(1) by of membership in or services to the
subdivision; or as agency or instrummielity of any of
they lest party, 110 formations, affiliated
then including all utilities, underschings, public corporations
associations or supervised ergenimations,
or menopolies under the control of - of the above;
(ii) to say porson who has been resoved fma an office
(b) Governments, actionals OF residents of other antions,
or position is assortance with paragraph 6 of part
including those of territories complet W then, at vaz
1 or paragraph 10 of this years, and
with any of the United Sations at say time state 1 September
(sss) to may person arrested sad detained in accordance
1939:
with paragraph il of part 1 during the term of his
(e) the Mast Party, its formations, affiliated associations
arrest, or permenently, in - of his schooquent
and supervised organizations, its officials. leading
conviction.
neabers and myperters)
b. Yes will take such notion AS may be to insure that
(4) All organizations, clobs or other asseciations
all Lews and practices relating to Inmition or other fields of
prohibited or discolved w military
flasses, which discriminate for or against my persons because
(e) Absentee events, of - action-lity including
of rece, actionality, creed or political opinion, will be
United Entions and neutral prements at Germans
anended, suspended, or abrogated to the extent memocrary to
outside of Germay:
eliminete such discrimination.
(f) any institution dedicated to public vership, charity,
9. you will hold the Germa authorities responsible for taking
education or the arts and sciences which has been used
such manures La the field of tenation and other fields of
by the Next Party to further the interests or to clock
public finance, including resteration of the tax system at
the activities;
maintenance of ME revenues, as vill further the accomplishment of the
(g) Persons subject to arrest under provisions of paragraph 4.
objectives stated is paragraphs " and 5.
and all other persons specified by military government w
4. Yes will exercise general supervision over Germa public
inclusion in lists or otherwise.
expenditures is order to ensure that they enfore to the interests
and purposes of the compring foress.
é
Regraded Unclassified
RECISION TRADE MARK MICROSTAT/ KEO. U. PAT. OFF. MICROFILM BOLL
NO.
TOP SIGNET
TOP SIGNAT
- -
- 6 -
(2) Property which has been the subject of transfer under
(e) letablish effective controls with respect to all foreign
duress or wrongful acts of confissation, disposition or
exchange transactions, includings
spoliation, whether pursuant to legislation or by pro-
(1) Transactions 18 to property between persons inside
cedure purporting to follow forms of law or other-
Germany and persons outside Gerenary:
vise.
(2) Transactions involving obligations and by or to
(3) Works of art or cultural material of value or importance,
become due from any person in Germany to my person
regardless of the ownership thereof.
outside Gerwmy, and
You will take such action - will theure that any impounded or blocked
(3) Transmotions involving the importation into or -
asseto will be dealt with only as permitted under licenses or other In-
portation from Germany of my foreign exchange asset
structions which you may Lenue. In the case particularly of property
or other form of property.
thecked under (1)(a) above, you will prossed to adopt licensing noss-
Fending agreement in the Control Council you will take in your
ures which while naintaining such property under surveillance would
- the setion indicated in subparagrapha (a), (b) and (a) above.
permit its use in consonance with this Directive.
Accomidingly, you will in your sons reduce to the possession and
6. All foreign exchange transmetions, including those artsing
control of a special agency established by you, within your Commend,
out of exports and imports, shall be controlled with the aim of pre-
all German foreign exchange and external assets as provided in sub-
venting Generary from developing a war potential and of achieving the
paragraph (a). You will endesvor to have similar agencies for the
other objectives set forth in this Mirective. To effectuate these pur-
name purpose artablished in the other sonne of occupation and to have
poses the Control Council should
then merged an soon na procticable in one agency for the entire
(a) Seek out and reduce to the possession and control of .
occupied territory. In addition you will provide full reports to
special agency all Carman (pablic and private) foreign
your * covernment with respect to all German foreign exchange and
exchange and external assets of every kind and descrip-
external morts.
tion located within or outside Commany,
(b) Prohdbit, except as authorised by regulation or license,
7. No extension of credit to Cermany or Germans by any foreign
person or Government shall be permitted except that the Control Commoil
all dealings in gold, silver, Careign exchange, and all
my in special emergencies grant persission for such extensions of
foreign exchange transactions of my kind. Make evail-
credit.
able any foreign exchange proceeds of exports for payment
8. n Le not anticipated that, you will make credits available
of Importe directly necessary to the accomplishment of
to the or any other bank, or to any public or private
the objectives stated in perscripts 4 and 5 of -
institution, If, in your optation, such action becomes essential, you
Directive, and authorise no other outley of foreign
may take such energency sekins as you may deen proper, but in any
exchange assets except for purpose approved by the
event, you will report the facts to the Control Council.
Centrol Council or /appropriate authority.
Regraded Unclassified
RECISION TRADE MARK MICROSTAT/ No. u. 1. PAT. OFF, MICROFILM ROLL
NO.
TUP secure
- 7 -
9. In addition to the provisions of paragraph be of this Directive,
you will elivinate other undesiruble personnel and influences from the
ADD NEW 4800 PARAGRAPH TO PARAGRAPH 1
Ratch Hindstry of Finance and from all public and private financial
This Directive sets forth policies relating to Germany in the
institutions, agencies and organizations.
initial post-defeat period. As such it 1a not Intended to be an
10. You will saintain much accounts and records as may be nee-
ultimate statement of policies of this Government conserning the
essary to reflect the financial operations of the additary government
treatment of Germany in the post-war world. It is therefore essential
in your sone and you will provide the Control Council with such in-
that during the interia period covered by this Directive you assure
formation as it my require, including information in connection with
that surveys are constantly maintained of conditions within your sone
the use of currency by your forces, any governmental acttlements,
and that the results of such surveys are nade available through the
occupation costs, and other expenditures arising out of operations OF
Joint Chiefs of Staff. The facts thus disclosed will serve M a basis
activities involving participation of your forces.
for determining changes in the of centrol set forth herein
as well M for the progressive formulation and development of policies
to promote the basic objectives of the United States. Supplemental
directives will be issued to you by the Joint Chiefe of Staff - may
be required.
Regraded Unclassified
RECISION TRADE MARK MICROSTAT/ aso. v. & PAT. OFF, MICROFILM SOLL
NO.
3
defore lestructure
87
Insert at-end of Par. 16
Add at end of hr. 30
Such industrial disarmment is an essential security objective of the
United States, and 11 1a also just that Germany be required to make
You will staty and miss recommendations to your Governments
reparation for the loases which she has caused to Allied Nations. The
through the Joint Chiefe of staff on the most effective and
seasured required to fulfill these objectives will tapose a havey burden
economical withods of maintaining international controls to provent
on the German people, but these name rest upon considerations of
future German rearment which will be continued after military
occupation of Germany has ended.
security and justice, not oppression.
Moreover, measures of industrial disarmant and reparation will
be held within such limits as to allow the German people eventually to
reconstruct a tolerable baste of livelihood.
Regraded Unclassified
67.A
INDEX
april ic
1945
1. Letter from Mr. Pauley of May 17 and memorandum
from Jackson transmitted therewith.
2. Reparations document as cleared with the
President. (See item 4 on pages 13 and 14)
3. Yalta Protocol (See item 2 on pages 1 and 2)
4. Directive on Germany (See item 8 on pages
51 and 52)
5. New Proposed Directive on the use of German
prisoners of war as submitted by the State
Department.
RECISION
TRADE MARK
MICROSTAT
ass. U. PAR. OFF.
MICROFILM
ROLL NO.
67-B
67-C
C
TOP SECIET
o
P
Y
MEMORANDUM FOR EDWIN W. PAULEY, UNITED STATES
THE WHITE HOUSE
REPRESENTATIVE ON THE HEPARATIONS COMMISSION.
WASHINGTON
Res DRAFT OF INSTRUCTIONS.
May 17, 1945
A part of this draft affects the trial of war criminals.
Section 4 from this point of view is open to serious objections.
Section 4 $ provides that *compulsory labor service should be
required only from war crisinals and individuals definitely determined
by appropriate process to be members of the Destapo, the s. S., the
The Honorable
Sicherheitedienst der S. S., leaders of the 3, Au or leading collabo-
niere supporters of and participants in the Nasi party or administration."
Secretary of the Treasury
This subjects persons to compulacry labor service for nere -
bership in these organisations. That would make it farcical to conduct
lty dear Mr. Secretary:
trials concerning the conspiratorial character of three organisations
or the guilt of their membership. The only purpose of a trial 10 to
I refer you to the report entitled
determine whether these organizations are of such & structure and char-
INFORMAL POLICY COMMITTEE ON GERMANY, INSTRUCTIONS
acter that membership should warrant punishment. All of this is pro-
FOR THE UNITED STATES REPRESENTATIVES ON THE
judged by the instrument in question. 4 di should not go farther than
REPARATIONS COMMISSION, Copy No. 30, and to Paragraph
to read substantially as follows:
4-D.
*Compulsory labor should be required only from
convicted war criminals and that for the period and in
In accordance with our last meeting it
accordance with the conditions of their sentence."
was agreed that I would discuss paragraph 4 in its
entirety with Justice Robert Jackson. I have
Beyond this, it 1a not my business what may be done about repa-
done this; likewise have discussed the matter with
aration through use of labor. But as I said to you, I think the plan
Judge Sam Rosemman and I am attaching you copy of
to impress great numbers of laborers into foreign service, which seans
a communication which I have received from Justice
herding them into concentration camps, will largely destroy the moral
Jackson and concurred in by Judge Roseman.
position of the United States in this war. AS Harrison podnted out to
us, the treatment of this labor is bound to be "appalling" by American
standards. In a year or two, there will come drifting out of Russia
I have suggested to William L. Clayton
tales of oppressive treatment of this labor, which I fear will be all
that he might want to call a meeting to rediscuss
too well-founded, and which in my judgment will arouse sharp condemna-
this in the light of Justice Jackson's memo before
tion by American sentiment, with serious results to those who have
By departure on Sunday.
favored it. I feal sure that President Roosevelt's commitments at
Talta did not comt emplate the sort of thing that 10 now being considered.
Sincerely yours,
What the world needs is not to turn one crowd out of concentration camps
and put another crowd in, but to end the concentration camp idea,
s/ Edwin W. Pauly
Respectfully submitted,
United States Representative
/a/ Robert H. Jackson
Allied Reparations Commission
I concur - /a/ Samuel I. Roserman
Enclosure
COPI
COPI
GOPI
Regraded Unclassified
RECISION TRADE MARK MICROSTAT/ REG. U.S. PAT. OFF. MICROFILM BOLL
NO.
67-E
67-D
TOP SECRET
TOP SECRET
ENCLOSURE
IPCOG 2/1
COPY NO. 63
1. It was agreed at the Talta Conference that Germany must
4 May 1945
pay in kind for the losses caused by her to the Allied Nations
Pages 10 to 18, Incl.
in the course of the war. The primary purpose of the Repara-
tion Commission should be the formulation of a general program
INFORMAL POLICY CONDITTEE ON GERMANY
for the exaction of substantial reparation and the establish-
nent of the policies under which this program is to be implemented.
INSTRUCTIONS FOR UNITED STATES REPRESENTATIVE
ON THE REPARATION COMMISSION
2. It is and has been fundamental United States policy that
Reference: a. IPCOO 2
Germany's war potential be destroyed, and its resurgence as far
Note by the Secretaries
as possible be prevented, by removal or destruction of German
plants, equipment and other property.
The enclosure, 6. revision of reference a as approved at
the IPCOG meeting of 4 May 1945, is circulated for information
While cooperating with the other powers in implementing
the basic purposes of the Yalta Agreement, the U.S. representa-
and guidance.
tive will bear in mind that whatever plan is formulated by the
Reparation Commission (hereinafter referred to as the Repara-
tion Plan) should be in conformity with the economic and security
CHARLES W. McCARTHY
objectives of this country with respect to Germany. The posi-
ALVIN F. RICHARDSON
tion of the United States on the various issues involved in
RAYMOND E. COX
this respect is summarized in the following paragraphs.
Secretariat
3. In determining the size and character of reparation in
accordance with points a and b of paragraph 2 of the Reparation
Protocol and the allocation thereof among the various claimant
nations the following principles are advocated by this Government:
n. The Reparation Plan should assist in the elimination
of industrial capacity in Germany considered to be danger-
ous to the security of the United Nations.
b. The Reparation Plan should aid in strengthening and
developing on a sound basis the industries and trade of the
IPCOG 2/1
TOP SECRET
IPCOG 2/1
- 10 -
Enclosure
Regraded Unclassified
PRECISION TRADE MARK MICROSTAT/ PAT. OFF. MICROFILM ROLL
NO.
67-G
67-F
TOP SECRET
TOP SECRET
German ocean-going merchant tonnage in the shipping pool
devastated non-enemy countries of Europe and of other
until the end of the war against Japan and its division
United Nations, and in raising the living standards of
on some fair basis thereafter, and negotiations with other
these countries.
governments are in progress on this subject.)
c. The reparation burden should be distributed in so
h. To the extent that for political reasons it may become
far as practicable so as to impose equality of sacrifice
necessary in the negotiations to agree that reparations be
collected in the form of deliveries of goods from current
upon, and result in an equal general standard of living
for the German populations of each of the zones under the
production over a period of years, such goods should be of
such 6. nature and in such amounts as not to require the
control of the respective occupying nations.
maintenance of the German war potential or the continued
d. This Government opposes any reparation plan based
dependence of other countries on Germany after reparations
upon the assumption that the United States or any other
cease. Accordingly, recurring reparations, over a period
country will finance directly or indirectly any reconstrue-
tion in Germany or reparation by Germany.
of years, should be:
e. The Reparation Plan should not maintain or foster
(1) As small as possible in relation to the reparations
to be paid in the form of industrial plants and equip-
dependence of other countries upon the Geruan economy.
ment; and
f. The Reparation Plan should not be of such a nature as
(2) Primarily in the form of raw materials and natural
to promote or require the building up of German economic
resources, and to the mallest extent possible in the
capacity.
form of manufactured products.
& To the maximum extent possible, reparations should
1. The removal of plants and equipment shall take place
be taken from the national wealth of Germany existing at the
time of collapse, with primary emphasis upon the removal
regardless of the fact that they are owned in whole or in
of industrial machinery, equipment and plants, particular-
part, directly or indirectly, by United Nations nationals.
ly the shipbuilding, metallurgical, machine tool producing,
Where plants or equipment which are owned in whole or in
electrical machinery, and chemical industries (including
part by 8. United Nation national are to be 80 removed
all industries producing oil and oil products, synthetic
arrangements shall be made, if practicable and desired by
nitrogen and synthetic rubber), ships, rolling stock,
the government of such national, for the owner to retain
patents, copyrights, and German foreign exchange assets
his interest in such plant and equipment after removal. If
including investments abroad. Capacity for the production
not practicable or so desired, Germany shall furnish to the
of component parts that enter into the production of the
government of such national adequate reparation to cover the
interest of such national.
industries noted above should also be eligible for removal.
1.
It will be inevitable that the German standard of liv-
Reparation in kind should not include arms, ammunition, and
ing will be adversely affected by the carrying out of the
implements of war. (This Government favors the inclusion of
IPCOG 2/1
- 12 -
Enclosure
IPCOG 2/1
- 11 -
Enclosure
Regraded Unclassified
RECISION TRADE MARK MICROSTAT 110. PAT. OH. MICROFILM BOLL
NO.
67-I
67.H
TOP SECRET
TOP SECRET
the Nazi party or administration.
Reparation Plan. However, the reparation exactions should
e. Agreement should be sought along the following lines
be held within such limits as to leave the German people
with regard to compulsory labor service:
with sufficient means to provide a minimum subsistence stan-
dard of living without sustained outside relief; but under
(1) Except for persons tried for specific crimes,
no condition should this limitation operate to require the
and convicted and sentenced to lifetime punishment,
retention in Germany of means to support basic living stan-
the period of compulsory labor service should be limited
dards on a higher level than that existing in any one of
to a definite span of years.
the neighboring United Nations.
(2) The Standard of living and conditions of employ-
k. The Reparation Plan should not put the United States
ment should conform to humane standards.
in & position where it will have to assume responsibility
(3) The Reparation Commission or Agency should
for sustained relief to the German people.
periodically servey the living and working conditions
4. It was agreed at Yalta that reparation in kind is to be
of compulsory workers and the uses nade of their services.
exacted from Germany, partly through the "use of German labor."
f. Apart from persons deserving of punishment as defined
In negotiations on labor reparation with the other powers in
above, German labor for reparations should be recruited
the Reparation Commission, the United States representatives
only on a voluntary basis.
will be guided by the following principles:
E. The net value of the services of both types of labor
1. The United States will not accept reparation in the
shall be included as reparations.
form of labor services.
5. The first charge on all approved exports for reparation
b. Both compulsory and voluntary labor services fur-
nished as reparation should be used outside of Germany only
or otherwise (other than removals of existing plant and equip-
for reconstruction and repair of war damage and not for
sent) shall be a sum necessary to pay for approved imports.
current production operations except for fuel and food.
Accordingly, to the extent necessary to pay for such minimum
c. This Government is strongly of the view that persons
German imports as may be determined to be essential, recipient
other than those specified in di below as deserving of
countries should be required to pay for German exports, except
punishment should not be called upon to perform compulsory
removals of existing plant and equipment. Imports for which
labor service outside Germany.
payment will be sought shall include supplies imported by the
d. Compulsory labor service should be required only from
occupying forces for displaced persons and German civilians.
war oriminals and individuals definitely determined by
6. Without the approval of an appropriate Allied body there
appropriate process to be members of the Gestapo, the S.S.,
shall be no re-export to third countries of goods received on
the Sicherheitsdienst der S.S., leaders of the S.A., or
reparation account.
leading collaborators, supporters of and participants in
IPCOG 2/1
- 14 -
IPC00 2/1
. 13 -
Enclosure
Enclosure
Regraded Unclassified
RECISION TRADE MARK MICROSTAT/ MICROFILM
BOLL NO.
67-K
TOP SECRET
67-J
TOP SECRET
zone of occupation in Germany plants, equipment and
7. In order to prevent the treatment as war booty or as
materials (including current output) of such a nature
reimbursement for occupation costs of exports from Geruany which
and not in excess of such amounts as my be determined by
should properly be considered as reparations deliveries, agree-
the Reparation Commission. It shall be our policy to press
nent should be sought on the scope of war booty and reimburse-
or inclusion in such an initial removal schedule the cate-
ment for occupation costs. Agreement should also be sought on
gories of plant, equipment and materials (excluding ocean-
the scope of restitution in relation to reparation.
going merchant tonnage) described in paragraphs 30, 31 and
8. The governments participating In the Reparation Commission
32 of the "Directive to the Commander in Chief of the
will retain control over the disposition of German property
United States Forces of Occupation Regarding the Military
located within their respective borders. These nations will
Government of Germany" and in paragraph 3 & above.
seek agreement with other countries in which German assets are
b. The decision as to whether or not the removal of
located designed to eliminate continued German control of such
particular plants, equipment or materials out of a zone in
assets and prevent their eventual return to Germans.
Germany is consistent with the purposes of occupation would
9. The United States will expect to assert E claim for rep-
be made by the commander of such zone, subject to the fol-
arations before the Reparation Commission in accordance with
lowing conditions:
the principles of the Yalta Protocol in order to preserve its
(1) There would be constant consultation between zone
rights to its proper share of payment for losses caused to it
commanders.
by Germany In the course of the war. Pending the furnishing of
(2) In making a decision as to removal the zone com-
a more exact claim at a later date the United States representa-
mander would be responsible for carrying out any relevant
tive shall reserve the right to claim delivery of reparations in
agreed policies which my be formulated from time to time
a total amount to be determined. The United States will desire
by the Control Council.
to receive as much as feasible of Its share of reparations in
(3) The Control Council would have an opportunity to
the form of foreign exchange assets including Geruan invest-
consider any particular removal and could veto it.
ments abroad.
(4) Regular reports should be made to the Control
10. As an interim program, pending the formulation of more
Council of transfers for reparation account and the
definitive arrangements, this Government would favor formulation
Control Council should keep appropriate Allied agencies
of an immediate program by the Reparation Commission along the
currently informed.
following lines:
c. During this initial period any one of the four occupy-
:- During the initial period following the collapse of
ing powers could allow, if it so desired, any other United
Germany each of the four occupying powers-Great Britain,
Nation entitled to reparations in the fora of removals from
Russia, France and the United States--may remove from its
Germany to take out of its zone plants, equipment and
IPCOG 2/1
- 16 -
IPCOG 2/1
- 15 -
Enclosure
Enclosure
Regraded Unclassified
RECISION TRADE MARK MICROSTAT/ u. 1,ML OFF. MICROFILM
ROLL NO.
67-L
67-M
TOP SECRET
TOP SECRET
materials of such a nature and not in excess of such
The occupation authorities should be responsible for the
amounts as my be determined by the Reparation Commission.
execution of the plan within Germany. In the execution of the
Such removals would be subject to the policy and conditions
plan, the Control Council should have the authority to withhold
specified in sub-paragraphs a and b above.
from transfer as reparations specific items the removal of which
d. Records should be kept of all deliveries made on
in its judgment would reduce the available economic means below
reparations account under such interim arrangements and
the minimum required to meet the other purposes of the occu-
such deliveries should be made without prejudice to the
final allocation of reparation shares. The Reparation
pation. After review by the Control Council and in the absence
Commission should determine the principles for valuation
of agreement, the zone commander if he believes that any speci-
of such deliveries.
fie item should be retained within his zone may with the speci-
11. The Reparation Plan should include provision for the
fie determination of his government that such item is essential
early establishment of n. reparation agency including repre-
for the purposes of the occupation withhold the removal of such
sentatives of such governments as have suffered devastation
item. The zone commander may, of course, withhold the removal
or substantial damage. This agency, after detailed study of
of such items pending such determination.
Germany's capacity to pay and examination of claims to repara-
The long term plan referred to above should not be
tion by the various clai ant nations, shall develop a long term
spproved by the U.S. representatives on the Reparation Commission
plan for the delivery of reparations. This plan shall set forth
or Agency until it has been submitted to and approved by the
a description of the reparations to be delivered and their
United States Government.
physical allocation to the various claimant nations. It shall
The Control Council should advise the Reparation Agency
contain a time schedule indicating the rate at which stated deliveries
(or Commission) from time to time as deliveries are made. The
are to be nade to the several governments over a/period of
years. The reparation agency should be iven continuing res-
Reparation Agency (or Commission) should keep a record of all
ponsibility for drawing up at regular intervals detailed sched-
such deliveries, and should place appropriate values on the
ules of the amounts and kinds of reparations Items to be deliver-
respective amounts delivered.
ed and should have authority to determine the allocation of
specific items among claimant governments.
In lieu of the establis ment of the reparations agency re-
ferred to above the Reparation Plan may provide that the Repara-
tion Commission, appropriately expanded by the addition of rep-
resentatives of other claimant governments, my be continued in
existence and utilized for the same purpose.
IPCOG 2/1
- 18 -
Enclosure
IPCOG 2/1
- 17 -
Enclosure
Regraded Unclassified
TRADE MARK MICROSTAT / REG. V. 5. PAT. OH, MICROFILM
ROLL NO.
I
2"
67-N
3
PRECISION TRADE MARK MICROSTAT/ u, MICROFILM ROLL
NO.
C7-0
67.P
- 2 -
TOP SECRET
PROTOCOL
c) Use of German labor.
ON THE TA KS BETWEEN THE HEADS OF THE THREE
GOVERNMENTS AT THE CRIMEAN CONFERENCE ON THE
3. For the working out on the above principles
CUESTION OF THE GER AN REPARATION IN KIND
of a detailed plan for exaction of reparations from
The Heads of the three governments agreed 8.8
Germany an Allied Reparation Commission will be set
follows:
up in Moseow. It will consist of three representatives--
1. Geruany must pay in kind for the losses
one from the Union of Soviet Socialist Republics, the
caused by her to the Allied nations in the course of
United Kingdom, and the United States of America.
the war. Reparations are to be received in the first
4. With regard to the fixing of the total sum
instance by those countries which have borne the main
of the reparations as well as the distribution of it
burden of the war, have suffered the heaviest losses
among the countries which suffered from the German
and have organized victory over the enery.
aggression the Soviet and American delegations agreed
2. Reparation in kind is to be exacted from
as follows:
Germany in three following forms:
"The Moscow Reparation Commission should take in
a) Removals within 2 years from the sur-
its initial studies 8.8 a basis for discussion the sug-
render of Germany or the cessation of organized resist-
gestion of the Soviet Government that the total sum
ance from the national woalth of Germany located on
of the reparation in accordance with the points (a)
the territory of Germany herself as well as outside
and (b) of the paragraph 2 should be 20 billion dollars
her territory (equipment, machine-tolls, ships,
and that 50% of it should go to USSR."
rolling stock, German investments abroad, shares of
The British delegation was of the opinion that
industrial, transport and other enterprises in
pending consideration of the reparation question by
Germany, etc.), these removals to be carried out chiefly
the lioscow Reparation Commission no figures of repara-
for purpose of destroying the war potential of Germany.
tion should be mentioned.
b) Annual deliveries of goods from current
production for a period to be fixed.
The
e) Tise
Regraded Unclassified
67-Q
- 3 .
The above Soviet-American proposal has been passed
to the Moscow Reparation Commission as one of the pro-
posals to be considered by the Commission.
=
PRECISION TRADE MARK MICROSTAT NIG.V.S.PAT.OFF. MICROFILM
ROLL NO.
12"
67-R
4
RECISION TRADE MARK MICROSTAT/ PAT. OFF. MICROFILM
BOLL NO.
67-T
67-5
TOP SECRET
April 26, 1945
TOP SECRET
IPCOG 1/4
COPY NO. 82
DIRECTIVE TO COMMANDED IN CHIEF OF U.S. FORCES OF no-
CUPATION REGARDING THE MILITARY GOVERNMENT OF GERMANY
11 May 1945
Pages 42 to 72, Inel.
1. The Purpose and Scope of this Directive:
This directive rescinds JCS 1067 and is issued to you
INFORMAL POLICY COUNITTEE ON GERMANY
as Commanding General of the United States forces of occupation
DIRECTIVE TO COMMANDER-IN-CHIAF OF U.S. FORCES OF
OCCUPATION REGARDI G THE GOVERNMENT OF GERMANY
in Germany. As such you will serve as United States member of
References: a. JCS 1067 Series
b. SWNCC 2 Series
the Control Council and will also be responsible for the adminis-
2. IPCOG 1 Series
tration of military government in the sone or zones assigned to
Hote by the Secretaries
the United States for purposes of occupation and administration.
It outlines the basic policies which will guide you in those
The enclosure, a revision of IPCOG 1 as approved by the
two capacities after the terminatic of the combined command
President on 11 (a) 1945, is circulated for information and
of the Supreme Commander, Allied Expeditionary Force.
guidance.
This directive sets forth policies relating to Germany
CHARLES W. WeCARTHY
in the initial post-defest period. is such it is not intended
ALVIN F. RICHARDSON
to be an ultimate statement of policies of this Government
RAYMOND 1. COX
concerning the treatment of Germany in the post-war world.
Secretariat
It is therefore essential that, during the period covered
by this directive, you assure that surveys are constantly
mintained of economic, industrial, financial, social and
political conditions within your zone and that the results
of such surveys and such other surveys as may be made in
other zones are made available to your Government, through
the Joint Chiefs of Staff. These surveys should be developed
in such manner 0.8 to serve as & basis for determining
IPCOG 1/4
- 42 -
IPCOG 1/4
TOP SECRET
Regraded Unclassified
RECISION TRADE MARK MICROSTAT MICROFILM ROLL
NO.
67-V
TOP SECRET
67-0
b. Subject to the provisions of paragraph 3 below,
TOP SECRET
you are, by virtue of your position, clothed with supreme
legislative, executive, and judicial authority in the areas
changes in the measures of control set forth herein as
occupied by forces under your command. This authority will
well as for the progressive formulation and development of
be broadly construed and includes authority to take all
policies to promote the basic objectives of the United
measures deemed by you necessary, appropriate or desirable
States. Supplemental directives will be issued to you by
in relation to military exigencies and the objectives of a
the Joint Chiefs of Staff 68 may be required.
firm military government.
As & member of the Control Council you will wgo
0. You will issue a. proclamation continuing in force
the adoption by the other occupying powers of the principles
such proclamations, orders and instructions as may have here-
and policies set forth in this directive and, pending
tofore been issued by Allied Comanders in your zone, subject
Control Council agreement, you will follow then in your
to such changes as you may determine. Authorizations of
zone. It is anticipated that substantially similar
action by the Supreme Comander, Allied Expeditionary Force,
directives will be issued to the Commanders in Chief of
my be considered as applicable to you unless inconsistent
the U.K., USSR and French forces of occupation.
with this or later directives.
3. The Control Counell and Zones of Occupation:
PART I
8. The four Commanders-in-Chief, acting jointly,
General and Political
will constitute the Control Council in Germany which will be
2. The Basis of Military Government
the supreme organ of control over Geruany in accordance with
a. The rights, power and status of the military
the agreement on Control Machinery in Germany at Appendix "B".
government in Germany are based upon the unconditional
For purposes of administration of military government, Germany
surrender or total defeat of Geruany. The Text of the
has been divided into four zones of occupation. The agreed
Instrument of Unconditional Surrender is at Appendix "A".
protocols on zones are at Appendix "C".
You will assure that the policies set forth in that Instru-
b. The authority of the Control Council to formulate
ment are carried out in your zone of occupation even
policy and procedures and administrative relationships with
though the defeat of Germany is not followed by a
respect to matters affecting Geruany as a whole will be para-
formal signing of the Instrument.
mount throughout Germany. You will carry out and support in
your some the policies agreed upon in the Control Council.
In the absence of such agreed policies you will act in a.o-
IPCOG 1/4
- 43 -
cordance with this and other directives of the Joint Chiefs
of Staff.
- 44 -
Regraded Unclassified
PRECISION TRADE MARK MICROSTAT REG. U.S. PAT. OFF. MICROFILM ROLL NO.
TOP SECRET
67-X
W
Germany over the members of the arued forces under their
TOP SECRET
comuand and over the civilians who accompany then.
0. The administration of affairs in Geruany shall
E+ The Control Council should be responsible for
be directed towards the decentralization of the political
facilitating the severance of all governmental and adminis-
and administrative structure and the development of local re-
trative connections between Austria and Germany and the
sponsibility. To this end you will encourage autonomy in
regional, local and municipal agencies of Gerean administra-
elimination of German economic influences In Austria. Every
tion. The Geruan economic 8 tructure shall also be decen-
assistance should be given to the Allied Administration in
tralized. The Control Council may, however, to the minimm
Austria in its efforts to effectuate these purposes.
extent required for the fulfillment of purposes set forth
4. Basic Objectives of Military Government in Germany:
herein, permit centralized administration or establish central
a. It should be brought home to the Germans that
control of (a) essential national public services such as
Germany's ruthless warfare and the fanatical Nazi resistance
railroads, communications and power, (b) finance and foreign
have destroyed the German economy and made chaos and suffering
affairs, and (c) production and distribution of essential
inevitable and that the Germans cannot escape responsibility
commodities.
for what they have brought upon themselves.
d. The Control Council should adopt procedures to
effectuate, and you will facilitate in your zone, the equit-
b. Germany will not be occupied for the purpose of
able distribution of essential commodities between the zones.
liberation but as a defeated enery nation. Your aim is not
In the absence of & conflicting policy of the Control Council,
oppression but to occupy Germany for the purpose of realizing
you my deal directly with one or more zone commanders on
ertain important Allied objectives. In the conduct of your
matters of special concern to such zones.
occupation and administration you should be just but firm
e. Pending the formulation in the Control Council of
and aloof. You will strongly discourage fraternization with
uniform policies and procedures with respect to inter-zonal
the German officials and population.
travel and movement of civilians, no civilians shall be permit-
0. The principal Allied objective is to prevent
ted to leave or enter your zone without your authority, and no
Germany from ever again becoming a threat to the peace of the
Germans within your zone shall be permitted to leave Geruany
wrld. Essential steps in the accomplishment of this objective
except for specific purposes proved by you.
are the elimination of Nazios and militarism in all their
f. The military government personnel in each zone,
including those dealing with regional and local branches of the
forms, the imediate apprehension of war criminals for punish-
ment, the industrial disarmament and demilitarization of
departments of any central Gerean administrative machinery,
shall be selected by authority of the Commander of that sone
Germany, with continuing control over Germany's capacity to
except that liaison officers may be furnished by the Commanders
make war, and the preparation for an eventual reconstruction
of the other three sones. The respective Commanders-in-Chlef
of German political life on a democratic basis.
shall have exclusive juriadiction throughout the whole of
IPCOG 1/4
- 46 -
IPCOG 1/4
. 45 -
Regraded Unclassified
PRECISION TRADE MARK MICROSTAT/ No. U. 5. PAT. OFF. MICROFILM
ROLL NO.
TOP SECRET
67-Y
67-2
TOP SECRET
d. Other Allied objectives are to enforce the
zations, and all Nazi public institutions which were set
program of reparations and restitution, to provide relief
up as instruments of Party domination, and prohibiting
for the benefit of countries devastated by Mazi aggression,
their revival in any form, should be promulgated b the
and to ensure that prisoners of war and displaced persons
Control Council. You 111 assure the prompt effectuation
of the United Nations are cared for and repatriated.
of that policy in your zone and will make every effort to
5. Reonomic Controls:
prevent the reconstitution of any such organization in
a. AS & member of the Control Con cil and as zone
underground, disguised or secret form. Responsibility for
commander, you will be guided by the principle that controls
continuing desirable non-political social services of dis-
upon the German economy my be imposed to the extent that
solved Party organizations may be transferred by the Control
such controls may be necessary to schieve the objectives
Council to appropriate central agencies and by you to ap-
enumerated in paragraph 4. above end also as they may be 08-
proprinte local agencies.
sential to protect the safety and neet the needs of the 00-
b. The laws purporting to establish the political
cupying forces and assure the production and maintenance of
structure of National Socialism and the basis of the Hitler
goods and services required to prevent starvation or such
regime and all laws, decrees and regulations which establish
disease and unrest as would endanger these forces. No
discriminations on grounds of race, nat onality, creed or
action will be taken in execution of the reparations program
political opinions should be abrogated by the Control
or otherwise which would tend to support basic living
Council. You will render then inoperative in your zone.
conditions in Geruany or in your zone on a higher level than
0, All members of the Nazi party who have been
that existing in any one of the neighboring United Nations.
more than nominal participante in its activities, all active
b. In the imposition and maintenance of such controls
supporters of Maxien or militariam and all other persons
as may be prescribed by you or the Control Council, Geruan
hostile to Allied purposes will be removed and excluded from
authorities will to the fullest extent practicable be ordered
public office and from positions of importance in quasi-
to proelsim and assure administration of such controls.
public and private enterprises such se (1) civic, economic
Thus it would be brought one to the German people that the
and labor organizations, (2) corporations and other organi-
responsibility for the administration of such controls and
zations in which the German government or subdivisions have
for any breakdowns in these controls will rest with themselves
a major financial interest, (3) industry, comerce, agri-
and German authorities.
culture, and finance, (4) education, and (5) the press,
6. Denasification:
publishing houses and other agencies disseminating news and
a. A Proclamation dissolving the Nazi Party, its
propaganda. Persons are to be treated as more than nominal
formations, affiliated associations and supervised organi-
IPCOG 1/4
- 48 -
IPCOG 1/4
- 47 -
Regraded Unclassified
PRECISION
TRADE
MARK
MICROSTAT/
RSG.
PAT.
OFF.
MICROFILM
ROLL NO.
G7-AA
TOP SECRET
67-BB
TOP SECRET
(1) The Central Ger an Government and its subdivisions,
participants in Party activities and as active supporters of
Geruan military organizations, organizations engaged In military
Nazion or militarism when they have (1) held office or
research, and such other governmental agencies as my be deemed
otherwise been active at any level from local to national
advisable;
in the party and its subordinate organizations, or in or-
(2) The Nazi Party, its formations, affiliated associations
ganizations which further militaristic doctrines, (2)
and supervised organizations;
authorized or participated affirmatively in any Bazi crimes,
(3) All police organizations, including security and political
racial persecutions or discriminations, (3) been avoned
police;
believers in Nazion or racial and militaristic creeds, or
(4) Important economic organizations and industrial establish-
(4) voluntarily given substantial moral or material support
ments including those controlled by the Nasi Party or its personnel;
or political assistance of any kind to the Nazi Party or
(5) Institutes and special bureaus devoting themselves to
Mazi officials and leaders. No such persons shall be retained
racial, political, militaristic or similar research or propaganda.
in any of the categories of employment listed above because
7. Demilitarization:
of administrative necessity, convenience or expediency.
B. In your zone you will assure that all units of the German
d. Property, real and personal, owned or controlled
arued forces, including para-military organizations, are dissolved
by the Nazi party, its formations, affiliated associations
as such, and that their personnel are promptly disarmed and con-
and supervised organizations, and by all persons subject to
trolled in accordance with policies and procedures set forth in the
arrest under the provisions of paragraph 8, and found within
Instrument of Unconditional Surrender or in other directives which
my be issued to you. Prior to their final disposition, you will
your zone, will be taken under your control pending a decision
arrest and hold all military personnel who are included under the
by the Control Council or higher authority as to its eventual
provisions of paragraph 8.
disposition.
b. The Control Council should proclaim, and in your zone you
0. All archives, monuments and museums of Hasi
will effectuate, the total dissolution of all military and para-
inception, or which are devoted to the perpetuation of German
military organizations, including the General Staff, the German
militarism, will be taken under your control and their
Officers Corps, the Reserve Corps and military academies, together
properties hold pending decision as to their disposition by
C
with all associations which wight serve to keep alive the military
the Control Council.
tradition in Geruany.
f. You will make special efforts to preserve from
Ce You will seize or destroy all arm, ammunition and imple-
destruction and take under your control records, plans, books,
ments of war and stop the production thereof.
documents, papers, files, and scientific, industrial and
d. You will take proper steps to destroy the German war
other information and data belonging to or controlled by the
potential, as set forth elsewhere in this directive.
following:
IPCOG 1/4
- 50 -
TP/VV 1/4
- 49 -
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
use.
U.
PAT.
OFF.
MICROFILM
ROLL NO.
67-CC
61-DD
TOP SECRET
TOP SECRET
8. Suspected Ear Criminals and Security Arrests:
organizations; (b) corporations and other organizations
B. You will search out, arrest, and hold, pending receipt by
in which the government has a ajor financial interest;
you of further instructions as to their disposition, Adolf Hitler,
(c) industry, comerce, agriculture, and finance; (d)
his chief last associates, other war criminals and all persons who
education; (e) the judiciary: end (f) the pross, pub-
have participated in planning or earrying out Hazi enterprises
lishing houses and other agencies disseminating nows and
involving or resulting in atrocities or was crimes.
propaganda. It my generally be assumed in the absence
b. All persons who, if permitted to remain at large would
of evidence to the contrary that any persons holding such
endanger the accomplishment of your objectives will also be
positions are azis or Mazi sympathizers;
arrested and held in custody until trial by an appropriate send-
(2) All judges, prosecutors and officials of the
judicial body to be established by you. The following Le a partial
People's Court (Volksgerichtshof), Special Courts
list of the categories of persons to be arrested In order to
(Sondergerichte) and other extraordinary courts created
carry out this policy:
by the Hasi registed
(1) Officials of the Basi Party and Its formations,
(10) Any national of any of the United Nations or
affiliated associations, and supervised organizations, down
associated states who is belleved to have committed
to and including Local Group Leaders (Ortsgruppenleiter) and
offenses against his national law in support of the
officials of equivalent rank;
German war effort:
(2) All members of the political police, including the
(11) Any other person whose name or designation appears
Gestapo and Sicherheitsdienst der C.S.;
on lists to be submitted to you by the J.C.S. or whose
(3) The officers and non-co missioned officers of the
name may be so notified to you separately.
Waffen S.S. and all members of the other branches of the S.S.;
If in the light of conditions which you encounter in Cermany,
(4) All General Staff Corps officers;
you believe that it is not immediately feasible to subject
(5) Officials of the police holding a rank, or equivalent
certain persons within these categories to this treatment, you
positions of authority, above that of Lieutenant;
should report your reasons and recommendations to your govern-
(6) Officers of the SA holding consissioned rank;
nent through the Joint Chiefs of Staff. If you believe it
(7) The leading officials of all ministries and other
designble, you may postpone the arrest of those whose cases
high political officials down to and including urban and
you have reported, pending a decision communicated to you by
rural buergermeister and officials of equivalent rank, and
the J.C.S. In no event shall any differentiation be unde between
those persons who have held similar positions, either civil or
or special consideration be accorded to persons arrested, either
as to manner of arrest or conditions of detention, upon the
military, in the administration of countries occupied by
basis of wealth or political, industrial, or other rank or
Germany;
(8) Mazia and Masi sympathisers holding important and
position. In your discretion you my make such exceptions as
key positions in (a) National and Can civie and economie
you deem advisable for intelligence or other military reasons.
9. Political Activities:
IPCOG 1/4
- 51 -
a. No political activities of any kind shall be countenanced
Regraded Unclassified
RECISION TRADE MARK MICROSTAT aso. PAT. OFF. MICROFILM BOLL
NO.
TOP SECRET
67 -EE
TOP SECRET
67-FF
unless authorized by you. You will assure that your military
consider appropriate. Courts which are to exercise juris-
government does not become committed to any political group.
dietion over territory extending Leyond the boundaries of your
b. You will prohibit the propagation in any form of Mazi,
zone will be reopened only with the express authorization of
militaristic or pan-German doctrines.
the Control Council and under its regulation, supervision and
0. No German parades, military or political, civilian or
control. The power to review and veto decisions of German
sports, shall be permitted by you.
courts shall be included within the power of supervision and
d. To the extent that military interests are not prejudiced
control.
and subject to the provisions of the three preceding subpara-
12. Police:
graphs and of paragraph 10, freedom of speech, press and
With the exception of the teichskriminalpolisei (Criminal
religious worship will be permitted. Consistent with military
Police) all elements of the sicherheitspolizei (Security Police),
necessity, all religious institutions will be respected.
** Geheinestaatspolizei (Gestapo), and the Sicherheitsdienst
10. Public Relations and Control of Public Information:
der S.S. will be abolished. Criminal and ordinary police will
Às a member of the Control Council, you will endeevor to
be purged of Nazi personnel and utilized under the control and
obtain agreement for uniform or coordinated policies with respect
supervision of the vilitary government.
to (a) control of public information media in Germany, (b) se-
13. Political Prisoners:
crediting of foreign correspondents, (e) press censorship, and
Subject to military security and the interests of the
(a) issuance of official news communiq es dealing with Control
individuals concerned, you will release all persons found within
Council matters. U.S. policies in these matters will be sent to
your come who have been detained or placed in custody on grounds
you separately and you will be guided by these in your negotia-
of race, nationality, creed or political opinions and treat
tions on the Control Council.
then as displaced persons. You should make provision for the
11. German Courts:
review of convictions of alleged erizinal offenses about which
a. All extraordinary courts, including the Volksgerichtshof
(People's Court) and the Sondergerichte (Special Courts), and
there may be substantial suspicion of racial, religious or
all courts and tribunals of the Nazi Party and of its formations,
political persecumion, and in which sentences of imprisonment
affiliated associations and supervised organizations will be
have not been fully served by persons imprisoned within your
sone.
abolished imediately.
14. Education:
b. All ordinary criminal, civil and administrative courts,
except those previously re-established by order of the military
a. All educational institutions within your sone except
government, will be closed. After the elimination of all Nasi
those previously re-established by Allied authority will be
features and personnel you will permit those which are to exercise
closed. The closure of Nazi educational institutions such as
jurisdiction within the boundaries of your zone to resume opera-
Adolf Hitler Schulen, Napolas and Ordensburgen, and of Nazi
organizations within other educational institutions will be
tions under such regulations, supervision and control as you may
permanent.
IPC0G 1/4
- 58 -
IPCOG 1/4
- 54 -
Regraded Unclassified
PRECISION TRADE MARK MICROSTAT PAT. OFF. MICROFILM BOLL NO.
TUP SECRET
67.66
TOP SECRET
67-HH
b. A coordinated system of control over Geruan education
PART II
and an affirmative program of reorientation will be established
ECONOMIC
designed completely to eliminate Nazi and militaristic doctrines
General Objectives and Methods of Control
and to encourage the development of democratic ideas.
16. You will assure that the Gerean economy is administered
e. You will permit the reopening of elementary (Volkaschu-
and controlled in such a way as to accouplish the basic objec-
len), middle (Wittelschulen) and vocational (Berufsschulen)
tives net forth in paragraphs 4 and 5 of this Directive.
schools at the earliest possible date after Mazi personnel has
Loonomic controls will be imposed only to the extent necessary
been eliminated. Textbooks and curricula which are not free
to accomplish these objectives, provided that you -ill impose
of Nazi and militaristic doctrine shall not be used. The Control
controls to the full extent necessary to achieve the in-
Council should devise programs looking toward the reopening
dustrial disarmament of Certany. Except as my be necessary to
of secondary schools, universities and other institutions of
carry out these objectives, you will take no steps (a) looking
higher learning. After Nazi features and personnel have been
toward the economic rehabilitation of Certiny, or (b) designed
climinated and pending the formulation of such programs by the
to mintain or strengthen the German sconomy.
Control Council, you may formulate and put into effect an interin
17. To the seximm extent possible without jeopardizing
program within your zone and in any case may permit the reopening
the successful execution of measures required to implement the
of such institutions and departments which offer training which
objectives outlined in paragraphs 4 and 5 of this directive you
you consider immediately essential or useful in the administra-
mill use German authorities and agencias and subject t.ea to
tion of military government and the purposes of the occupation.
such supervision and punishment for non-compliance na is neces-
d. It is not intended that the military government will
sary to ensure that they carry out their tasks.
intervene in questions concerning denominational control of
For this purpose you will give appropriate authority
German schools, or in religious instruction in German schools,
to any German agencies and administrative services you consider
except insofar as may be necessary to insure that religious
cosential; provided, however, that you will at all times adhere
instruction and administration of such schools conform to such
strictly to the provisions of this directive regarding denarifi-
Allied regulat ons as are or my be established pertaining to
catlon ed dissolution 02 climination of Nasi organizations,
purging of personnel and curricula.
Institutions, principles, foatures, and practices.
15. Arts and Archives:
To the extent necessary you =ill establish adainistrative
Subject to the provisions of paragraph 6 above, you will
machinery, not dependent upon German authorities and agencies,
make all reasonable efforts to preserve historical archives,
to execute or assure the execution of the provisions of para-
means, libraries and works of art.
(raphs 19, 20, 30, 1, 32, 39 and 40 and any other measures neces-
....
sary to an accomplishment of your indus rial disarmanent objectives.
IPCOG 1/4
- 55 -
IPC00 1/4
- 56 -
Regraded Unclassified
PRECISION TRADE MARK MICROSTAT MICROFILM ROLL
NO.
TOP SECRET
67-11
57-JJ
18. In order to decentralize the structure and administration
TOP SECRET
of the German economy to the maximum possible extent, you will
German Standard of Living
a. ensure that the action required to maintain or restore
21. You will estimate requirements of supplies necessary to
essential public utilities and industrial and agricultural
prevent starvation or widespread disease or such civil unrest as
activities is taken as far LE possible on & local and
would endanger the occupying forces. Such estimates will be
regional basis;
based upon a program whereby the Germans are made responsible
b. on no account propose or approve in the Control
for providing for themselves, out of their own work and resources.
Council the establishment of centralized administration of
You will take all practicable economic and police neasures to
controls over the Geruan economy except where such centrali-
assure that German resources are fully utilized and consumption
sation of administration is clearly essential to the fulfil-
held to the minimum in order that imports may be strictly
ment of the objectives listed in paragraphs 4 and 5 of
this directive. <ecentralization in administration should
limited and that surpluses may be made available for the occupy-
not be permitted to interfere with attainment of the largest
ing forces and displaced persons and United Nations prisoners
practicable measure of agreement on economic policies in
of war, and for reparation. You will take no action that would
the Control Council.
tend to support basic living standards in Germany on a higher
19. You will institute or assure the mintenance of such
level than that existing in any one of the neighboring United
statistical records and reports as may be necessary in carrying
Nations and you will take appropriate measures to ensure that
out the objectives listed in paragraphs 4 and 5 of this directive.
basic living standards of the German people are not higher than
20. You will initiate appropriate surveys which may assist
those existing in any one of the neighboring United Nations
you in achieving the objectives of the occupation. In particular
when such measures will contribute to raising the standards of
you will promotly undertake surveys of supplies, equipment and
any such nation.
resources in your zone. You will endeavor to obtain proupt agree-
22. You will urge upon the Control Council that uniform
ment in the Control Council to the making of similar surveys in
ration scales be applied throughout Germany, that essential
the other zones of occupation, and you will urge appropriate
Items be distributed equitably among the zones, that net sur-
steps to coordinate the methods and results of these and other
pluses be made available for export to Allied countries, and
future surveys conducted in the various zones. You will keep
that imports be limited to the net deficits of Germany as a
the Control Council, United States Representative on the Repara-
whole.
tion Commission and other appropriate authorities, currently
Labor, Health, and Social Insurance
apprised of the information obtained by means of intermediate
23, You will permit the self-organization of employees along
reports or otherwise.
democratic lines, subject to such safeguards as may be necessary
to prevent the perpetuation of Mazi or militarist influence under
any guise or the continuation of any group hostile to the objec-
IPCOG 1/4
- 57 -
tives and operations of the occupying forces.
IPCOG 1/4
FA
Regraded Unclassified
RECISION TRADE MARK MICROSTAT REG. U.S. PAT. OFF. MICROFILM BOLL NO.
TOP SECRET
67-KK
TOP SECRET
67-11
24. You will permit free collective bargaining between
30. In order to disarm Germany, the Control Council should
employees and employers regarding wago, hour and working con-
a. prevent the production, acquisition by importation or
ditions and the establishment of machinery for the settlement
otherwise, and development of all arms, ammunition and imple-
of industrial disputes. Collective bargaining shall be subject
ments of mar, as well as all types of aircraft, and all parts,
to such wage, hour and other controls, if any, as may be in-
components and ingredients specially designed or produced for
stituted or revived by your direction.
incorporation therein;
25. Subject to the provisions of paragraph 48 of this dir-
b. prevent the production of merchant ships, synthetic
ective you are authorized to direct German authorities to main-
rubier and oil, aluminum and magnesium and any other products
tain or reestablish non-discriminatory systems of social insur-
and equipment on which you will subsequently receive instrue-
ance and poor relief.
tions;
26. You are authorized to direct the Corman authorities to
c. seize and safeguard all facilities used in the produe-
maintain or re-establish such health services and facilities as
tion of any of the items mentioned in this paragraph and dis-
may be available to them.
pose of then as follows:
(1) remove all those required for reparation;
Agriculture, Industry and Internal Commerce
(2) destroy all those not transferred for reparation
27. You will require the Germans to use all neass at their
if they are especially adapted to the production of the
disposal to maximize agricultural output and to establish as
items specified in this paragraph and are not of & type
rapidly as possible effective machinery for the collection and
generally used in industries permitted to the Germans
distribution of agricultural output.
(cases of doubt to be resolved in favor of destruction);
28. You will direct the German authorities to utilise large-
(3) hold the balance for disposal in accordance with
landed estates and public lands in a manner which will facilitate
instructions which will be sent to you.
the accomodation and settlement of Germans and others or In-
Pending agreement in the Control Council you will take
crease agricultural output.
these measures in your own zone. You will not postpone enforce-
29, You will protect from destruction by the Germans, and
ment of the prohibitions contained in subparagraphs a and b and
maintain for such disposition as is determined by this and
the instructions in subparagraph c without specific approval of
other directives or by the Control Council, all plants, equip-
your government through the Joint Chiefs of Staff except that, in
ment, patents and other property, and all books and records of
your discretion, you may permit the production of synthetic rub-
large German industrial companies and trade and research as-
ber and oil, aluminum and magnesium, to the minimum extent neces-
sociations that have been essential to the German was effort or
sary to neet the purposes stated in paragraphs 4 and 5 of the dir-
the German economy. You will pay particular attention to re-
active pending action by the Joint Chiefs of Staff upon such rec-
ommendation for postponement as you may make.
search and experimental establishments of such concerns.
31. As an additional neasure of disarmament, the Control
IPCOG 1/4
- 59 -
Council should
a. prohibit initially all research activities and close
all laboratories, research institutions and similiar technical
I'000 1/4
- 60 -
Regraded Unclassified
RECISION TRADE MARK MICROSTAT/ PAT. OH. MICROFILM BOLL
NO.
TOP SECRET
67-MM
organizations except those considered necessary to the protec-
67-NN
tion of public health;
TOP SECRET
b. abolish all those laboratories and related institu-
c. safeguard plant and equipment in such industries for
tions whose work has been connected with the building of the
transfer on reparation account.
German war machine, safeguard initially such laboratories
Pending agreement in the Control Council, you will put
and detain such personnel as are of interest to your tech-
such measures into effect in your own som as soon as you have had
nological investigations, and thereafter remove or destroy
an opportunity to review and determine production necessary for
their equipment;
the purposes stated in paragraphs 4 and 5 of this directive.
c. permit the resumption of scientific research in
33. The Control Council should adopt a policy permitting the
specific cases, only after careful investigation has estab-
conversion of facilities other than those mentioned in paragraphs
lished that the contemplated research will in no way con-
30 and 32 to the production of light consumer goods, provided
tribute to Germany's future war potential and only under
that such conversion does not prejudice the subsequent removal of
appropriate regulations which (1) define the specific types
plant and equipment on reparation account and does not require
of research permitted, (2) exclude from further research
any imports Leyond those necessary for the purposes specified in
activity any persons who previously held key positions in
paragraphs 4 and 5 of this directive. Pending agreement in the
German war research, (3) provide for frequent inspection,
Control Council, you may permit such conversion in your zone.
(4) require free disclosure of the results of the research
34. Subject to the provisions of paragraphs 30 and 32, the
and (5) impose severe penalties, including permanent clos-
Control Council should assure that all feasible measures are taken
ing of the offending institution, whenever the regulations
to facilitate, to the minimum extent necessary for the purposes
are violated.
outlined in paragraphs 4 and 5 of this directive.
Pending agreement in the Control Council you will adopt
1. repairs to and restoration of essential transports-
such measures In your own zone.
tion services and public utilities;
32. Pending final Allied agreements on reparation and on
b. emergency repair and construction of the minimum
control or elimination of German industries that can be utilized
shelter required for the civilian population;
for war production, the Control Council should
c. production of coal and any other goods and services
a. prohibit and prevent production of iron and steel,
(excluding goods specified in paragraphs 30 and 32 unless
chemicals, non-ferrous metals (excluding aluminum and
measures to facilitate production are specifically approved
magnesium), machine tools, radio and electrical equipment,
by this Government through the Joint Chiefs of Staff) re-
automotive vehicles, heavy machinery and important parts
quired for the purposes outlined in paragraphs 4 and 5 of
thereof, except for the purposes stated in paragraphs 4 and
this directive.
5 of this directive;
b. prohibit and prevent rehabilitation of plant and
You will assure that such measures are taken in your own
equipment in such industries except for the purposes stated
zone pending agreement in the Control Council.
in paragraphs 4 and 5 of this directive; and
35. In your capacity as -one connander and as member of the
IPCOG 1/4
- 61 -
Control Council you will take steps to provide for the equitable
IPCOG 1/4
- 62 -
Regraded Unclassified
PRECISION MARK MICROSTAT/ REG. U.S. MAT. OFF. MICROFILM BOLL
NO.
TOP SECRET
67-00
67-PP
TOP SECRET
intersonal distribution and the movement of goods and services
essential to the purposes set forth in paragraphs 4 and 5 of this
tion shall not constitute an additional ground for the Importa-
directive.
tion of supplies, nor shall it constitute an additional ground
for limiting removal, destruction or curtailment of productive
36. You will prohibit all cartels or other private business
facilities in fulfillment of the program for reparation, demili-
arrangements and cartel-like organizations, including those of
tarisation and industrial disarmament.
& public or quasi-public character such as the Wirtschaftsgruppen
Power, Transportation and Communications
providing for the regulation of marketing conditions, including
39. Both as member of the Control Council and zone commander
production, prices, exclusive exchange of technical information
you will take appropriate steps to ensure that
and processes, and allocation of sales territories. Such nec-
a. power, transportation and communications facilities
essary public functions as have been discharged by these organi-
are directed in such & way as to carry out the objectives
sations shell be absorbed as rapidly as possible by approved
outlined in paragraphs 4 and 5 of this directive;
public agencies.
b. Germans are prohibited and prevented from producing,
37. It is the policy of your government to effect E disper-
mintaining or operating all types of aircraft.
sion of the ownershipand control of Corman industry. To assist
You will determine the degree to which centralized con-
in carrying out this policy you will ake 6. survey of combines
trol and administration of power, transportation and comunica-
and pools, mergers, holding companies and interlocking director-
tions is clearly necessary for the objectives stated in para-
ates and communicate the results, together with recommendations,
graphs 4 and 5 and urge the establishment of this degree of
to your government through the Joint Chiefs of Staff. You will
centralized control and administration by the Control Council.
endeavor to obtain agreement in the Control Council to the mak-
Foreign Trade and Reparation
Ing of this survey in the other zones of occupation and you will
40. The Control Council should establish centralized control
urge the cordination of the methods and results of this survey
over all trade in goods and services with foreign countries.
in the various zones.
Pending agreement in the Control Council you will impose appro-
38. with due regard to paragraph 4 2. the Control Council
priate controls in your own sone.
should adopt such policies as are clearly necessary to prevent
41. Both as member of the Control Council and as sone com-
or restrain Inflation of a character or dimension which would
mander you will take appropriate steps to ensure that
definitely endanger accomplishment of the objectives of the
=- the foreign trade controls are designed to carry out
occupation. The Control Council, in particular, should direct
the objectives stated in paragraphs 4 and 5 of this direc-
and empower German authorities to maintain or establish controls
tive;
over prices and wages and to take the fiscal and financial
b. imports which are permitted and furnished to Germany
are confined to those unavoidably necessary to the objectives
measures necessary to this end. Pending agreement in the Control
stated in paragraphs 4 and 5g
Council you will assure that such measures as you consider neces-
IPCOG 1/4
sary are taken in your own sone. Prevention or restraint of Infla-
- 64 -
IPCOG 1/4
- 40
Regraded Unclassified
PRECISION TRADE MARK MICROSTAT/ PAT. OFF. MICROFILM BOLL
NO.
67-QQ
TOP SECRET
67-RR
TOP SECRET
PART III
c. exports to countries other than the United Nations are
prohibited unless specifically authorized by the Allied
FINA CIAL
44. You will nake full application in the financial field of
governments.
42. Both as member of the Control Council and as zone com-
the principles stated elsewhere in this directive and you will
mander you will adopt a policy which would forbid German firm
endeavor to have the Control Council adopt uniform financial
to participate in international cartels or other restrictive
policies necessary to carry out the purposes stated in paragraphs
contracts end arrangements and order the prompt termination of
4 and 5 of this directive. You will take no steps designed to
all existing Gerean participations in such cartels, contracts
maintain, strengthen or operate the German financial structure
and arrangements.
except in 80 far as may be necessary for the purposes specified
43. You will carry out in your -one such programs of repara-
in this directive.
tion and restitution as are embodied in Allied agreements and
45. The Control Council should regulate and control to the
you will sook agreement in the Control Council on any policies
extent required for the purposes set forth in paragraphs 4 and 5
and seasures which it may be necessary to apply throughout Gor-
the issue and volume of currency and the extension of credit in
many in order to ensure the execution of such programs.
Germany and in accordance with the following principles;
n. United States forces and other Allied forces will use
Allied Vilitary marks and Reichemark currency or coins in
their possession. Allied Military marks and Reichamark
currency and coin now in circulation in Germany will be legal
tender without distinction and will be intorchangeable at
the rate of 1 Allied Military mark for 1 Reichsmark. Reichs-
kreditkassenscheine and other Gorman military currency will
not be logal tender in Germany.
b. The Reichsbank, the Rentenbank or any other bank or
agency may be permitted or required to issue bank notes and
currency which will be legal tender; without such authorize-
tion no German governmental or private bank or agency will be
permitted to issue tank notes or currency.
c. The German authorities may be required to make avail-
able Reichsmark currency or credits free of cost and in
amounts sufficient to meet all the expenses of the forces of
IPCOG 1/4
- 66 -
IPCOG 1/4
- 65 -
Regraded Unclassified
PRECISION TRADE MARK MICROSTAT/ PAI. OH, MICROFILM BOLL
NO.
67-55
TOP SECRET
67.TT
TOP SECRET
similar financial institutions for such periods as you deem
occupation, including the cost of Allied Military Government
appropriate.
and including to the extent that compensation is made there-
d. To establish a _eneral or limited moratorium or
for, the cost of such private property as may be requisitioned
moratoria only to the extent clearly necessary to carry out
seized, or otherwise acquired, by Allied authorities for
the objectives stated In paragraphs 4 and 5 of this directive.
reparations or restitution purposes.
47. Resumption of partial or complete service on the internal
Pending agreement in the Control Council you will follow
public debt at the earliest feasible date is deemed desirable.
these policies in your own zohe.
The Control Council should decide the time and manner of such
You will receive separate instructions relative to the
resumption.
currency which you will use in the event that for any reason
48. Subject to any agreed policies of the Control Council,
adequate supplies of Allied Military marks and Reichemarks are
1. You will prohibit:
not available, or If the use of such currency is found undesir-
(1) the payment of all military pensions, or other
able.
emoluments or benefits, except compensation for physical
You will not announce or establish in your zone, until
disability limiting the recipient's ability to work, at
receipt of further instructions, any general rate of exchange
rates which are no higher than the lowest of those for
between the Reichamark on the one hand and the U.S. dollar and
comparable physical disability arising from non-military
other currencies on the other. However, & rate of exchange to be
causes.
used exclusively for pay of troops and military accounting pur-
(2) the payment of all public or private pensions or
poses in your zone will be communicated separately to you.
other emoluments or benefits granted or conferred;
46. Subject to any agreed policies of the Control Council,
(a) by reason of membership in or services to the
you are authorized to take the following steps and to put into
former Nazi party, its formations, affiliated associa-
effect such further financial measures as you may deem necessary
tions or supervised organizations,
(b) to any person who has been removed from an
to accomplish the purposes of your occupation:
s. To prohibit, or to prescribe regulations regarding,
office or position in a cordance with paragraph 6,
and
transfer or other dealings in private or public securities
(c) to any person arrested and detained in accord-
or real estate or other property.
ance with paragraph 8 during the term of his arrest,
b. To close banks, but only for & period long enough for
or permanently, in case of his subsequent conviction.
you to introduce satisfactory control, to remove Nasi and
b. You will take such action as may be necessary to in-
other undesirable personnel, and to issue instructions for
sure that all laws and practices relating to taxation or
the determination of accounts to be blocked under sub-para-
other fields of finance, which discriminate for or against
graph 48 . below.
FCOG 1/4
- 68 -
c. To close stock exchanges, insurance companies, and
- 1/A
- A7
Regraded Unclassified
PRECISION TRADE MARK MICROSTAT/ MICROFILM ROLL
NO.
67-00
TOP SECRET
67-VV
TOP SECRET
any persons because of race, nationality, creed or political
(e) Absentee owners, of non-German nationality in-
clusing United Nations and neutral governments and
opinion, will be amended, suspended, or abrogated to the
Germans outside of Germany;
extent necessary to eliminate such discrimination.
(f) Any institution dedicated to public worship,
C. You will hold the German authorities responsible for
takin such measures in the field of taxation and other
charity, education or the arts and sciences which has
been used by the Nazi Party to further its interests
fields of public finance, including restoration of the tax
or to cloak its activities;
system and maintenance of tax as will further the
(E) Persons subject to arrest under provisions of
accomplinement of the objectives stated In paragraphs 4 and 5.
paragraph 8, and all other persons specified by mill-
d. You will exercise oneral supervision over Corman
tary government by inclusion in lists or ol herwise.
public expenditures In order to ensure that they are consis-
(2) Property which has been the subject of transfer
tent with the objectives stated in paragraphs 4 and 5.
under duress or wrongful acts of confiscation, disposi-
s. You will Impound or block all old, silver, currencies,
tion or spoliation, whether pursuant to legislation or
securities, accounts in financial institutions, credits,
by procedure purporting to follow forms of law or other-
valuable papers, and all other assots railing within the fol-
wise.
lowing categories:
(3) works of art or cultural material of value or
(1) Property owned 07 congrolled directly or indirect-
importance, regardless of the ownership thereof.
ly, in whole or In part, by any of the following:
You will take such action as will insure that any impounded or
(a) The German Reich, or any of the Lander, Caue
blocked assets will be dealt with only as permitted under licenses
or provinces, any Kreis, Municipality or other similar
or other instructions which you may issue. In the case particu-
local subdivision; or any agency or instrumentality
larly of property blocked under (1)(a) above, you will proceed
of any of them including all utilities, undertakings,
to adopt licensing measures which while maintaining such property
public corporations or monopolies under the control
under surveillance would permit its use in consonance with this
of any of the above;
directive. In the case of property blocked under (2) above, you
(b) Governments, nationale or residents of other
will institute measures for prompt restitution, In conformity
nations, including those of territories occupied by
with the objectives stated in paragraphs 4 and 5 and subject to
them, at war with any of the United Nations at any
appropriate safeguards to prevent the cloaking of Mari and mill-
time since 1 September 1939;
taristic influence,
(o) The liazi Party, its formations, affiliated
49. All foreign exchange transactions, including those arising
associations and supervised organizations, its offi-
out of exports and imports, shall be controlled with the aim of
cials, leading members and supporters;
proventing Geruany from developing a war potential and of
(d) All organizations, clubs or other associations
IPC00 1/4
- 70 -
prohibited or dissolved by military government;
PCOG 1/4
- 62 -
Regraded Unclassified
PRECISION TRADE MARK MICROSTAT/ REG. V. 5. PAT. OFF. MICROFILM ROLL
NO.
67-XX
7-WW
TOP SECRET
TOP SECRET
achieving the other objoctives set forth in this directive. To
for the purpose established in the other zones of occupation
effectuate these purposes the Control Council should
and to have them merged as soon as practicable in one agency for
n. Seek out and reduce to the possession and control of &
the entire occupied territory. In addition you will provide full
special agency all German (Public and private) foreign
exchange and external assets of every kind and description
reports to your government with respect to all German foreign ex-
located within or outside Germany.
change and external assets.
b. Prohibit, except as authorized by regulation or
50. No extension of credit to Germany or Germans by any
license, all dealings in gold, silver, foreign exchange, and
foreign person or Government shall be permitted except that the
all foreign exchange transactions of any kind. Make available
Control Council may in special emergencies grant perulusion for
any foreign exchange proceeds of exports for payment of La-
such extension of credit.
ports directly necessary to the accomplishment of the objec-
51. It is not anticipated that you will make credits avail-
tives stated in paragraphs 4 and 5 of this directive, and
able to the Reichsbank or any other bank or to any public or
authorize no other outlay of foreign exchange assets except
private institution. If, in your opinion, such action becomes
for purposes approved by the Control Council or other appro-
essential, you my take such emergency actions se you may deem
priate authority.
proper, but in any event, you will report the facts to the Con-
:- Establish effective controls with respect to all
rol Council.
foreign exchange transactions, including:
52. You will mintain such accounts and records as may be
(1) Transactions as to property between persons inside
necessary to reflect the financial operations of the military
Germany and persons outside Germany;
government in your zone and you will provide the Control Council
(2) Transactions involving obligations owned by or to
with such information as it say require, including information
become due from any person in Germany to any person out-
side Germany; and
in connection with the use of currency by your forces, any
(3) Transactions involving the importation into or ex-
governmental settlements, occupation costs, and other expendi-
portation from Germany of any foreign exchange asset or
tures arising out of operations or activities involving partici-
other form of property.
pation of your forces.
Pending agreement in the Control Council, you will take in
your zone the action indicated in subparagraphs a,b, b, and of above.
Accordingly, you will in your zone reduce to the possession and
control of & special agency established by you, within your Com-
mad, all German foreign exchange and external assets as provided
in subparagraph a. You will endeavor to have similar agencies
IPCOG 1/4
- 72 -
IPOOG 1/4
- 71 -
Inclassified
PRECISION TRADE MARK MICROSTAT / REG. U.S.PAT. OFF. MICROFILM
ROLL NO.
2".
67-YY
14
5
$
67-22-1
67-22
TOP SECRET
TOP SECRET
TOP SECRET
COPY NO. 62
ENCLOBURE
IPCOG 4
PLANS FOR DISPOSAL OF GERMAN PRISONERS OF VAR
17 May 1945
AND DISARMED FORCES
Pages 1 to 8, Incl.
Report by the
Combined Administrative Committee
INFORMAL POLICY COMMITTEE ON GERMANY
THE PROBLEM
PLANS FOR DISPOSAL OF GERMAN PRISONERS OF W&R
1. To consider SCAF 372 (Appendix "D"), a nessage from
AND DISARMED FORCES
Supreme Headquarters, Allied Expeditionary Forces, and
Reference: A. IPCOG 2/1
A. To prepare an over-all plan for obtaining the infor-
Note by the Secretaries
mation requested by General Eisenhower; and
D. To recommend action to give General Eisenhower imme-
The enclosure, a proposed report to the Combined Chiefe
diate guidance on the nost important points on which he re-
of Staff by the Combined Administrative Committee, presented by
quires advice.
the State Department member of IP000, 18 circulated for consid-
eration of the recommendations contained therein by the Informal
FACTS BEARING ON THE PROBLEM
Policy Connittee on Germany.
2. Bee Appendix "0".
DISCUSSION
3. Denande which may be nade by certain European United
CHARLES V. NoCARTHY
Nations which are not now within the SHAEF area of responsibility
ALVIN F. RICH-RDSON
may raise political, rather than purely military, questions.
RAYMOND E. 00%
Therefore, "Rehabilitation work outside Germany" should be inter-
Secretariat
preted 8.6 referring only to those countries of the United Nations
which lie within the SHAEF area of responsibility, plus the
United Kingdom.
4. AB the question of reparations in kind will be decided
ultimately on the Governmental level, either by the Governments
concerned or by the Allied Reparation Commission in Moscow,
it is not possible to go beyond the formulation of an interim
decision at this time.
CONCLUSIONS
B. SHAEF should procure, through channels immediately avail-
able to it, the necessary data concerning the requirements of
each of the United Nations within the SHAEF area of responsi-
bility, plus the United Kingdom, for prisoner of var labor for
IP000 4
TOP SECRET
IP000 4
- 1 -
Enclosure
Regraded Unclassified
M
07-22-2
67-22-3
TOP SECRET
TOP SECRET
APPENDIX "A"
rehabilitation work outside Germany.
MESSAJE TO SUPREME COMMANDER ALLIED EXPEDITIONARY FORCE:
6. &- For the present, transfers should be limited to German
prisoners of var and should be made only to those United
This is in reply to SCAP 372. It 1a considered that in
Nations which are willing to accept and retain German prison-
view of the agreement to establish an Allied Reparation Com-
ere in a prisoner of war status under the Geneva Convention.
mission, which will consider reparation in kind as raised by
b. These transfers should be on a temporary basis, pend-
your message, the final solution in connection with your inquiry
ing possible future readjustments by the Governments don-
rests with the governments concerned. However, as an interim
cerned or by the Allied Reparation Commission.
measure, the following has been decided:
2. War criminals, other categories of wanted personnel,
1. "Rehabilitation work outside of Germany" 18 interpreted
or those persons retained on security grounds will not be
to mean reconstruction within those European areas that lie with-
transferred.
in your present area of responsibility plus the United Kingdom.
2. United States and British needs including those for the
7. a. If United Nations total requests for prisoner of war
United Kingdom will be given primary consideration when calcula-
labor fall short of the supply, SHAEF should be authorized
ting number of German prisoners available for transfer from their
to transfer such personnel to the United Nation concerned at
respective sources.
such time as the user nation can accept delivery. However,
3. All German personnel transferred to any of the United
should total requirements exceed the number of prisoners of
Nations concerned will be transferred under the condition that
var in custody, the pertinent data should be referred to the
they remain in the status of prisoners of war under the Geneva
Combined Chiefe of Staff for decision.
Convention.
b. United States and British needs, including those for
4. You should procure from each of the transferee nations
the United Kingdom, should be given primary consideration
an agreement to regard any allocations of such manpower as ten-
when calculating the number of German prisoners available
porary, and without prejudice to future readjustment to meet
for transfer from their respective sources.
subsequent neede and denande.
8. In the final analysis, the solution of this question rests
5. No prisoners of var or members of German disarmed forces
with the governments concerned. Therefore, the interim neasures
who fall within the category of var criminals or other categories
taken should be reported to the Department of State and the
of wanted Gernan personnel or whose retention is desired on
British Foreign Office, respectively, for reference of the prob-
security grounds, will be released to other United Nations or if
lem and the action taken to the Allied Reparation Commission in
inadvertently released they shall be returned upon demand.
kossow.
It is desired that you procure from the interested United
RECOMMENDATIONS
Nations, through those channels available to you, the informa-
9. a. That the message in Apcendix "A" be dispatched to SHAEF.
tion requested in your A, D, and E, and subject to the conditions
b. That the memorandum contained in Appendix "B" be dis-
outlined above, allocate German prisoners accordingly. Should the
patched through channels to the British Embassy, Washington,
estimated demande for labor of this kind exceed the total German
and the Department of State.
personnel available, you will report the pertinent data to the
Combined Chiefe of Staff for decision.
IPCOG 4
- 2 -
Enclosure
IP000 4
- 3 -
Appendix '''
Unclassified
PRECISION
TRADE
MARK
67.22.4
67-22-5
TOP SECRET
TOP SECRET
APPENDIX "C"
APPENDIX "B"
FACTS BEARING ON THE PROBLEM
DRAFT
1. A. In SCAF 372 General Eisenhower requests information
MEMORANDUM FOR THE SECRETARY OF STATE AND THE BRITISH AMBASBADOR:
regarding the requirements of the United Nations for German
1. There 18 inclosed for your information BCAF 372 and the
personnel to carry out rehabilitation work outside Germany.
interim action taken thereon by the Combined Chiefe of Staff re-
h. Specifically, information is requested upon the fol-
garding the requirements of the United Nations for German per-
lowing points:
sonnel to carry out rehabilitation work outside Germany.
(1) The numbers of Germans required for labor by each
of the United Nations for rehabilitation work outside
2. The foregoing action vas taken in view of the pressing
Germany.
need for early disposal of the vast numbers of prisoners of var
(2) Their status during such employment, 1.0. whether
and disarmed German forces now in Allied hands. However, it is
required as prisoners of war or civilian labor.
considered that the final solution of this problem reste with
(3) The authority responsible for specifying the
the Governments concerned or the Reparation Commission. Accord-
source or sources from which these demande are to be
ingly, this reference 18 made for your information and for
filled.
possible communication to the Allied Reparation Commission in
(4) The dates on which each user nation can accept
Moscow.
deliveries of personnel increments and the size of such
increments.
(5) Whether any of the United Nations holding prisoners
of var are averse to the transfer of prisoners of var to
another United Nation for use 8.0 prisoner of var Inbor.
de Pending reply, SHAEF intende to release from prisoner
of var camps those German personnel who may be discharged
as part of the priority categories of labor mentioned in
Eclipse Neuorandum No. 17, together with such others as
are urgently required for essential work.
2. &- Eolipse Memorandum No. 17, subject "Disbandment of
German arned Forces" provides that discharges of German per-
sonnel will be subject to the following priority calls upon
such manpower:
One. Demande for much personnel to carry out essen-
tial labor for the Allied Forces in occupation.
Two. Demande from the Governments of Allied and 11b-
erated territories for labor for purposes of reconstruc-
tion.
- 4 -
Appendix "B"
IPOOG 4
IPCOG 4
. 5 -
Appendix "C"
Regraded Unclassified
67-22-7
67-22-6
TOP SECRET
TOP SECRET
b. Subject to the foregoing the following priority cate-
European holding countries of the British Commonwealth, will be
available for such transfer to the interested European United
gories of labor are established:
(1) Personnel for work in certain public utilities
Nations, if desired.
service.
7. There will be & need for large numbers of German prisoner
(2) Fersonnel for work in transportation services.
of var labor in the United Kingdon, and in support of the British
(3) Personnel for work in certain classes of building
and United States occupation forces on the continent, but the
trades.
precise numbers to be BO utilized are not yet firm.
(4) Agricultural workers.
(5) Such other specialist personnel ne may be re-
8. SHAEF already has direct channels of communication with
the competent authorities of the United Nations within ice eron
quired by Zone Commanders.
of responsibility.
3. Previous C.O.S. directives have authorized SHAEF to
utilize certain German prisoners of var in agriculture, coal
mining, and transportation (C.C.S. 844 Series).
& The Combined Chiefs of Staff (C.O.S. 823 series) have
also authorized the release from prisoner of var status and
treatment as disarmed Gernan Forces of those German prisoners
in allied custody who were not evacuated from Germany at the
time of the cessation of hostilities.
b. The foregoing was subject to the proviso that the
United Kingdom might require additional prisoners for labor
outside Germany, that such personnel in the desired numbers
night be declared British prisoners of war and therefore
were not to be included in the category of disarmed troops.
4. It 10 not known to what extent German personnel will be
desired or needed for rehabilitation work outside Gernany by any
of the other European United Nations concerned. However, it may
be assumed that demande for substantial numbers of such personnel
will be made.
5. An Allied Reparation Commission 10 to be established in
Roscow. Its agenda includes, among others, questions of repera-
tione in kind, such 0.0 the one under study.
6. Upon their being returned to Europe, German prisoners of
war now held in the United States and in the various extra
Appendix "O"
IPOOG 4
- 7 -
Appendix "C"
IPOOG 4
- 6 -
Regraded Unclassified
PRECISION
TRADE MARK
MICROST
67-22-8
TOP SECRET
APPENDIX "D"
From: Suprene Headquarters, Allied Expeditionary Forces,
kain, Versailles, France.
To:
War Department for Combined Chiefs of Staff.
Nr:
8 87417
SCAF 372
B May 1945
In order that plans may be completed for the early die-
posal of the vast numbers of prisoners of var and disarned German
forces in allied hands, it 1s urgently necessary that information
should reach this headquarters at an early date regarding the
requirements of the United Nations for German personnel to carry
out rehabilitation work outside Germany, 8.6 it 10 presuned that
such decande will receive priority over discharge and/or
repatriation of the German Wehrmacht.
Information upon the following specific points 10 there-
fore urgently requested:
the The numbers of Gernans required for labor by each of
the United Nations for rehabilitation work outside Germany.
=
B. Their status during such employment, 1.0., whether
required a.e prisoners of var or civilian labor.
O. The authority responsible for specifying the source
or sources from which these demande are to be filled.
D. The dates on which each user nation can accept deliv-
eries of personnel increments and the size of such increments.
E. Whether any of the United Nations holding prisoners of
war are averse to the transfer of prisoners of var to another
United Nation for use as prisoner of var labor.
In the meantime, it 10 intended that after the announce-
nent of VE-Day, prisoners of war whose release from prisoner of
war camps has been authorized by your FACS 207* shall be dis-
charged as part of the priority categories of labor nentioned in
"Eclipse" Memorandum no. 17, together with such others no are
urgently required for essential work.
CM-IN-7643
(8 May 45)
DTG 08/1630B
da
- Quotation in C.C.S. 844/1; answer to
SCAF 308 (Enclosure to 0.0.8. 844).
IP000 4
- 8 -
appendix "D"
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT MICROFILM BOLL
NO.
- 2 -
April 26, 1945
MR. SHAEFFER: Ray was in the office about a week
10:25 a.m.
ago and talked with several people. He talked with Mr.
Trey, I believe. He was up in my office.
PRE PRESS
They are also going to ask you what you think of the
Morgenthau Plan in view of these atrocities.
Present: Mr. O'Connell
Vr. Gamble
H.V.JR: "No coment" is still good. Don't you think
Mr. Shaeffer
no? I have never explained what the Morgenthau plan is.
Mr. Bernstein
(Mr. Gamble enters the conference.)
MR. GAMBLE: They stopped running the elevators over
there.
MR. SHAEFFER: Here is a mineographed case history
report which expands on that progress report on black
H.M.JR: What did you do, run downstairs?
markets if you want to mention it to the fellows. (Hands
Secretary meio entitled "Suppression of the Black Market
MR. GAMBLE: Weil, partly.
in Distilled Spirits," copy attached.)
H.M.JR: There is really a lot of stuff which is
accumulating. I don't know whether you men have read
Charles Bell's report on his trip and really how badly we
are doing--the increase of business. Tie are really making
very few more cases than we had two or three years ago.
Have you seen his report?
MR. O'CONNELL: No, I haven't.
H.M.JR: The story is very bad. I mean, the volume
is about four times as many cases more in the different tax
fields. It is about the number of arrests, and so forth.
MR. O'CONNELL: We have no more people working than
we had three or four years ago, and we don't have as good
men. We have over five hundred men working on this new
project.
H.M.JR: I think I would rather wait until you say to
ще, "Look, we can talk about this now, these thousand-dollar
bills, and what has happened." No one is pressing us yet
that we are not doing our job. Incidentally, Ray Tucker
wrote a good story on that. Who saw Ray?
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
aso,
PAR.
OH,
MICROFILM
ROLL NO.
71
not Released
- 2
dealers. This procedure has been subsequently pursued in the inves-
-
tigation of these cases with a view (1) to the prosecution of the
principals for price ceiling violations, and (2) the identification
of these funds for Income tax purposes.
Supprussion of the Black Market
These investigations reveal that millions of dollars in cash
in Matilled Spirite.
"side-noney" was collected over and above ceiling prices, which
funds for the most part were not recorded in the books of account
of the seller and on which there was no intention to pay income
The investigation of the black market in distilled spirite was
taxes. The fact that practically all black market transactions
underteken on November 15, 1943, nt the direction of Secretary
in liquor were of the unrecorded cash "side-money" character, as
Morgunthnu with the Trunsury Dupertment assuming concurrent juria-
distinguished from more overcharges, leads to the conclusion that
diction with the OPA in supprussing liquor price ceiling violations.
the primary objective was not meroly to derive four or five times
the normal profits on such transactions, but to evode income taxes
A whiskwy shortage developed in 1943, caused by (1) a 35 por
on such profits in toto.
curt. ruduction in sales by distillors during the year through e
sulf-imposed industry retioning program (2) hoarding of whiskey
Civil suits in the nature of truble damage actions aggregating
stocks by distributors and consumers, and (3) to unusual dumnnd
many millions of dollars have been instituted by the OPA as a ru-
brought about by increased purchasing power. Black arrkut opera-
sult of the evidence secured by the Bureau in thuse cason.
tions auro the result of the existing shortage rother then the cruse
of it. The shortego originally developed cerly in 19/3 in the
The following statistics as of March 1, 1945, portray in a
Southern states and soon extended to the states umploying the mono-
general way the accomplishments of the Burgou in suppressing the
poly system of liquor control and by the latter part of the your it
black Market in distilled spirits:
had aprued to all parta of the country, with the result that only
very limitud quantitive of whiskey wuru buing offured for sale in
Cases Sub-
Persons hocon-
Indictments
Persons (or
pockage storus.
mitted to
nended for
Auturned
Corporations)
U.S. attys.
Indictment
(Casus)
Indicted
On receiving this navignment, the Burchu of Internal
immodiately took stops to act up investigative procedure with a
735
1,924
308
724
view to criminal prosecution of block market opurators, toking full
advantage of the applicable provisions of the Emerguncy Prico Control
Persons (or
Taxpaid Liquor
Value of
Suspension
Act, the Federal Alcohol Administration Act, the Internal Ruvungo
Corporations)
Seised
Liquor
Proceedings
laws, end the Criminal Code. Drastic regulatory provisions sure
Convicted
(Tine Gallons)
Seized
Instituted
devised and promptly put into effect in order to suppruss the traffic.
Within 90 days after the program was instituted, the block markut
404
57,381
2721,883
132
in distilled spirite who broken at and above the sholescle lovel,
end thereffter very for large-scrlo transnctions were mide. After
Pumits Suspended
Purmits
the distillor's holiday in August 1944, which resulted in en rdoqunte
or havoloed
Surrendered
supply of blended spirits, the black market at the retril level
practically disapponred.
42
65
The largo-scelo black merket transactions in distilled spirits
The following casua have been selected for discussion for the
were conducted nImest wholly on a cash "side-moncy" bnsis. In
purpose of portraying the scope of the major black market operations,
attacking this problem originally, the stretogy of the Burenu was
the namer in which relatively largo suns of money (currency) were
to cut off the black markut at its source by tracing the eash
transferred without rucord from one purson to another, and the income
"side-moncy" paid in connection with those transnetions to the ulti-
tax fraud potentialities implicit in those black market transactions:
moto recipient, namely, distillors, rectifiors, and wholestle liquor
4/20/45
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT
MICROFILM
ROLL NO.
3
- 4
CASE I
the cash "sido-monoy" required on caso goods averaged 516 to 26 por
caso on whinkey (318.50 on *86 proof" and 26 on "Bottlod in Bond") and
510 to 512 on brandy and $2 to 05 on run. Whore the transaction involved
One of the major black market conspiracy casua under investigation
bulk whiskey, the cash "sido-monoy" vas about four or fivo timos the
by the Bureeu involves eriminal operations of a notion-wide ayndicate
coiling prico for whiskey of the typo and ago. For examplo, "A" said to
which appears to have been aninly directed by the principal owner and
ono of the wholesalors socking to buy whiskoys
directing hand of à whiskey brokernge company, which au will initily
as company "X", and a similar official in another brokurage company, "Y".
"You are a good follow and I vill lot you have somo
The hund of company "X" may be designated DB defundent "A", and the burd
bulk whiskoy, but nobody is solling it at the coiling prico.
of company "T" na defundant "B".
The coiling is $1.31 a gallon. It will cost you 36.50 por
gallon. The difforunce of $5.19 por gallon will havo to ba
While the investigation of this case was originally prodicated
paid in cash when the morchandise is invoicod."
on black market OPA price coiling violations, it has sinco developed
into n. anjor incomo tax fraud conspiracy involving the colluction by
In most instances the purchasor 105 roquired to dolivor the cash
these interests of en estimated $2,000,000 in overage and/or cash
"sido-monoy" to "A" or age bofore the norchandiso you invoicod. The bulk
"sido-money" which who not entured on the books of secount of the tax-
whiskey and/or caso goods could then be invoiced to the purchaser at or
payers.
below the OPA coiling. Shipment would then be mado and the amount of the
invoico collocted oithor by check on open necount or by sight draft,
It apports that the conspiracy to defunt both the OPA and the
the the transaction involved the salo of bilk whiskey, the spirits voro
income tax Irwa had its inception nt the Kuntucky Durby in the Spring
subsquently bottlod by the controlled distillorios, and the par-
of 1942, na the result of a discussion butwoon "A" and n. whiskey broker
chasor would be billod for and sould pay all taxos and bottling chargos.
of Boston, Mnsarchusutts. Those non wore swere that F11 distilleries
The books and records of both vundor and vondoo would theroby refloct
were then or soon would be solely signged in producing :100hol for vor
shot appoared to be a logitimato liquor transaction.
purposes; that this would chubu a whiskey shortage;nnd no DI result
C
prices would sonr.
The above transactions aro typical of other salos mndo by thoso
intorosta to other wholoselo liquor doalors, the cash "sido-monoy" aspocts
Taking advantigu of this opportunity, several pursons formed a pool
of which have not boun fully tracod. One of those transactions involved
or syndicate for the olloged purpose of expending their individual und
60,000 casos of whiskoy and approximately a million dollars in cash "sido-
joint holdings and trading in whiskey rnd other bevorige spirit sucur-
noncy."
ities and distillery propurtice. This joint operation we instituted
in June 1942 and continued until June 1944.
All sido-monoy payments word in currency which was usually wrappod
in packages with the amounts writton on the outsido wrappors. On somo
During the life of this conspiracy, the conspirators controlled
occasions "A" counted the curroney in the prosonco of the purchasor, but
and directed the purchase and rearlo of thousands of berruls nd
usually ho would take the package into another room in his office with-
hundreds of thousands of chaus of whiskey end other distilled spirita
out counting it.
into the blnck market.
Onco whon #: solosman of ono of the wholosalors was dolivering n. pack-
While the complete picturu of the syndicate's activitive hrs not
ago of currency to "A" at his offico, "A" took sovon $1,000 bills from
been unfolded to date, the following will briefly illustrito the methods
a small safo and askod the anlossan to tako them to e cortain bank tollor
employed and the megnitudo of the opurations:
and have them changed into currency of smaller donominations. During the
investigation, nn offort vea nado to identify the tollor who had changed
Evidence has boun developed through disclosures mnde by four whole-
thoso $1,000 bills. One of the tollors, whon questioned, said ho know
selo liquor denlors located in Illinois, Kuntucky, and Ohio that during
that ho had DOCR the withose but could not rocall whether ho had changed
the period March 16, 1943, to December 3, 1943, they auro foreud to pay
any 51,000 bills for him. Ho further romarked that "A" had sont so many
cosh "Aide-money" of $817,326 to "A" end $162,121, to " or a total of
non to him to chango $1,000 bills that it was impossible for him to ro-
$979,447, to obtrin approximately 36,499 of whiskey, brandy, and
momber all of than,
run rnd 1,787 barrels of bulk whiskey,
Employues of this BOMO bank have stated that "A" habitually cano
in with packages of curruncy in 1, 35, and to domominations in amounts
C
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT
REG.
PAT.
OFF,
MICROFILM
ROLL NO.
6 -
5 -
"A" then saids
of approximately 10,000 to have the mall bills elanged into 31,000
bills. Another tollor rocalled that on one or noro occasions "A" brought
If instover overago you said that you prád no you will
twenty 01,000 bills to his window to be changed into bills of smallor do-
have to pay nn income tax on. You collucted the overago
nominations,
nnd you'll have to pay 11. "C", (another wholoselor) vill
have to pay on the )500,000 and whatover you toll then you
Apparontly it was "A's" intention, if my of those cash "sido-moncy"
poid no, you will have to pay on."
trunsactions voro dotocted, to arrango for the purchaser to pay the in-
como tax on such profits. Thus if he ("A") could not avoid payment in
To this the wholosaler repliods
toto, ho would tako advantago of the difforontial, innamach no those porsona
or firms wordbox in lower incomo tax brockots. For example:
"I don't know how they con nake mo pay it when I
didn't got any of it. All that I collected vont to you."
In the Spring of 1944, a Kentucky cholceclor who had paid "A"
0350,000 in sido-money and two of his employees word indicted for violating
"A" repliod:
the OPA laws. Aftor the indictment, but before conviction of the dofand-
ento, "A" contrated the cholosaler and advisod him to undervor to compro-
you collected it for as and if you toll thom
misc the 0000, and stated that ha would pay all expenses incurred, such na
that you will have to pay on every bit of it,
fince, otc. "A" statode
Regardless of what NCR says or what you boys say, Pm
going to dony that I over received a punny of overago
That difforence doos it make shother it costs $20,000
from any of you. No anttor what you say, Pu dony 11,
or moro, I'll pay 16."
and that' a what you boys should do. You have no proof
that you paid no any monoy, and if "C" 10 the only ono
"A" also advised the wholosalor to have one of the selognon who
who says that no pedd so, what the hell -111 it amount
collocted the ovorago money to tako all the hinno as charged in the In-
to? I'vo got noro money than all of you fullows have
dictmont; furthor, that this selosmen should imodiately file nn amonded
and I'll fight this thing until I go broko, and I'll
incono tax roturn and pay the tax on the noney involved. "A" explained
novor compromiso. They con't got anything on no. I'vo
that by doing this the dofundents could not bo charged with conspiracy,
takon all my papers and lodgors to the bank and locked
and that they could all got out on fines only, and could compromiso the
than in & veult."
OPA overages. The anlosman propared an encnded incomo tax roturn on this
portion of the sido-moncy, docloring additional taxas of 12,039.53. "A"
Another mothod employed by the syndiento to channel -hiskoy into
examined this roturn, furnished 12,100 (four 500 bills and one 100 bill)
the hlnck markot was the uso of so-called brokors, who contacted wholo-
for the seloman's uso in paying the tax, and directed that the roturn be
salo liquor dollors throughout the southwostorn part of the United Statos
filed immodiately and the tax paid, and that the sclosson koop the dif-
in the allogod capacity of a findor for the purchnsor when actually ha
forenco for his trouble. This roturn was filod and the tax poid na dirocted.
vas nothing moro than a "go-botwoon" for "A" and his associatos. This
During the notual trial of the wholoseler' is caso, "A" and one of his attor-
broker quoted the wholesalers a case goods price on a specified number
noys gave the wholosclor 31, 500 in ceah for uso by the dofendents in pay-
of cases of whiskey, the offer visa accepted accordingly, and the case
ing counsel for dofunding them,
goods ere subsequently received by the purchasers. Some shipments were
made direct from the distillery where the case goods had been bottled.
In spito of this apparent conspiracy to obstruct justico, the dofond-
Other shipments were cleared through the records of other wholesalers or
cnd wholosaler and his employees voro convicted, and subsoquently mado full
rectifiers, obviously for the purpose of concealing the transactions.
disclosuros. As a result of those and similar disclosuros by the other
Most of the whiskey was bottled at "A-3" controlled distilleries.
Kontucky wholesalor, throo indictments wore roturned against "A" and "B",
charging them with OPA violations.
Payments for the liquor were made in one of two ways-either by pay-
mont of the full amount, including the overage, direct to the byckers or
Subscquent to the roturn of the indictments and the publicity attond-
by payment of an amount equal to the taxes and bottling charges to the
ing thom, "A" again contacted the wholosale liquor doalor who had boon
distillery and a separate payment of the balance due, which included not
convicted and asked him whother ho had signed any papors or nndo any stato-
only the ceiling price for the bulk whiskey, but also the overage under
nont. The wholesaler repliod:
the purchase agreement. It is believed that the go-betwoon turned over
to "A" all this "overago" noncy, except possibly a commission of 31 or 52
"You BOW what wes in the papors, didn't you?"
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT
OFF.
MICROFILM
ROLL NO.
- 7 -
- 8 - -
a case, and that neither "A" nor the agent had any intention of paying
income tax on this noney unless the fraud was detected. This theory is
On November 28, representatives of the Intelligence and the
Alcohol Tax Units were able to locate and question this nan, who
supported by the following facts:
stated, in part, as follows:
This agent was registered at the Plaza Hotel in New York from
October 25 to liovenber 2, 1944, and "A" at the Waldorf-astoria from
"I have just returned from New Tork City where I have
October 20 to 30, 1944, inclusive. During "A's" stay at the Galdorf,
conferred with my attorneys there. I also spent some time
be obtained a safety deposit box at the hotel on October 27, 1944,
with my accountant, seeking advice which concerns the same
which nas opened by him on October 28 and 29. On October 30,
matter you are asking ne about. I know "," very well and
this agentwalked into a just lork bank and deposited $60,200, with the
have done business with his for a long time. I solo a lot
request that the bank transfer that anount to his [ellas bank. These
of "A'g" liquor during 1943, and I collected a lot of
funds were transferred to his [ellas account on October 30, 1944.
money that you night call black market money. I make no
The records of the New York bank show that this deposit was in currency
bones about 11,-1 sold the licuor-I got the money--And
and that $50,000 of it consisted of fifty $1,000 Federal Reserve Notes.
: dann well kept it. Right in that safe there (pointing
Twenty of these bills word in consecutive serial mmbers. Sixteen of
to a small office safe of the type ordinarily used to
safeguard valuable books), I never gave " or any one
them, according to the records of the Federal Reserve Bank, were
else e penny of that money. He or his distillery never
shipped to the First National Bank, Semport Seve, Virginia, on
(ct a pmay above the regular price.
December 14, 1943.
It in believed that this 460,200 in currency 1a a part of the
"I first becare aware in the latter part of 1942 that
cash "side-mmey" previously collected by the conspirators from black
liquor was going to be scarce, but did not realize what it
SRE (oing to lead to with customers began offering
market operators in the Norfolk, Virginia, arva; that this money
practically any amount of seney for se to got then liquor.se
represents a rebate of a mill portion of the overage collected by
"A's" agent for the syndicate; and that it was intended to be used for
paying income tax on part of the previously undeclared "off the record*
"AB none could toll THE how I stood as regard finder's
foun, 1 old not know what to do with the money, and just
income of "A".
cached the checks and left the mmay in my safe until the
On Hovember 14, 1944, a Special Agent of the Intelligence Unit
other day, siber. I was advised that I could show it on my 1944
contacted "A's" agent at nis office in Dellas, who refused to sake
income tax. So I deposited the money last wook. (Hu here
waddhited the deposit slip covering the deposit on
any statement or discuss his salos of whiskey during 1943 with
the Special Agent until be had consulted his local attorney. He
Somber 24, 1944 of the $202,410.) In all, the money
enounted to shout $352,000 deposited some more the other
promised to de this and to give the agunt a definite ensur within
forty-vight hours. Instead of doing this, he proceeded to New York
day about $60,000. I'm mine to pay the tax on it just as
where has checked into the Waldorf-astoria Hotel on dovember 18, and 1944,
soon as the accountant con put around to fixing up the
return=probably in the nixt fow days."
and remained until November 21. During this period, this man,
"A" and "5", along with other memburs of the syndicato, conferred with
counsel and accountants in live York OD further strategy to to followed
when hukud if he had Bush "⑇" recently, the soluman suide
in this CHOW.
"Yon, as a mattur of feet, I happened to run into him
On November 24, the syndicate's "salvanen" salkud into a Bank
in In York a week ago Saturday night."
in iellas with a paper-covered package under his am and advised one
of whather the officer wanted to count "the confutti* in the package.
the officers that he had *some lettuce* to duposit and inquired
Be derived this meeting was by appointment.
On November 30, 1944, this sap filed with the Collector of
One of the employees of the bank counted the currency and found it
to total $292,410. The currency was in denominations of $50 and
Internal Agreeme, Dellos, Texas, amended doclarations representing
$100 with the excuption of one $10 bill. This our was deposit to
additional tax lisbility for himself and his wifo of $270,623.49 for
the men's account, which, toguther with the $60,200 deposited on
the yun 1944. The prior declarations and payments of the community
projecty sure shown as only 89,255. Two checks totaling
October 30, 1944 nade a total of $352,610.
1270,623.40, dated November 30, 1944, wore submitted to the Collector
to cover the unpoid belance. These fundo with All collected in 1943
end DUTO not included on Me intome tex for that year.
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/
aso. v. PAT. OFF.
MICROFILM
ROLL NO.
- 9 -
- 10
"A" and the syndicate used may other individuals, partnerships,
and corporations for the purpose of concealing not only price onling
CASE II
violations, but also to cover up both legitimate end illegitimate
profits derived from the liquor business in order to evade payment
of Income tax. For instance, "A" used his sister, brother-in-law,
This is perhaps the most intricate black market investigation under-
and their families as n. noans of purchasing and liquidating the assete
taken by the Bureau in that the principal defendants resorted to greater
of rectifiers and wholesslers holding large stocks of bulk whiskey,
subterfuge in their efforts to conceal their illegal operations. The
15 sell na case goods, all of which were ultimately sold into the
conspiracy was conceived by the principal officers of the "R" Company
black market.
and its subsidiary, and had for its object the block marketing, in part,
of the whiskey inventories acquired by purchase. The real purpose of the
These purchases and liquidations, it appears, were solely for
scheme, however, was to enable these officers to ultimately pocket the
the purpose of securing control of liquer stocks and bottling facili-
cash "side-money" derived from these transactions, thereby evading income
ties and to conceal the fact that "A" WIS actually the owner. ","
taxes on these funds in toto.
used these relatives und other persons as a menns of selling culk
spirite to himself, with a rebate of the net profit for hinself.
In order to ostensibly divorce the "H" Company from the contemplated
In all such dunny transactions "A" directed them to pay incose tax
black market operations, a. partnership was formed in April 1943 by the
on all taxable income of record.
officers of the parent company to consumnate the purchase deals after all
The methods used in creating and controlling the liquor black
preliminary arrangements. The crestion of the partnership permitted both
the black market and the legitimate profits from the whiskey acquired in
market are typical of those used by rncketeers. In this respect they
connection with the deals to be channeled to these officials, thereby de-
did not hesitate to bring n. legitimate industry into disrepute in
order to fill their own pockets. These individuals no doubt have had
priving the stockholders of "A" Company of their right to participate at
the benefit of very excellent legal advice, as well na financial backing
least in the legitimate profits.
in these enterprises.
The black market transactions with wholesale liquor dealers located
An Attorney recently visited the Department of Justice and the
in practically every section of the country were carried out through the
Burenu apparently with the view of offecting a settlement of all
use of some 30-odd intermediaries or brokers, the principal coses of which
criminal and civil linbilities incurred by the "A"-"B" inturests whom
were connected with the sales organization of a competitor. The chief
be stated he represented. He said that his clients wure tired of
intermediary and apparent contact nan for the principals in this case was
fighting the Government and writed to make A complete disclosure.
one "D", a super salesman and promoter, and widely known an a "play-boy."
Be concluded his remarks by anying, "All I want to know in-how to
go about 11, and how such." The attorney was informed that the
In anticipation of the whiskey shortage, "E", president of "R" Company
Bureeu would insist upon crininal prosecution in this case.
and the other officials canvassed the market for balk whiskey. Large whole-
sale liquor dealers were contacted as early as February and March 1963,
On January 8, 1945, a Federal Grand Jury returned four indictments
and their wants determined. It was apparent the wholesalers' needs were
charging a total of fifty-eight substantive counts of OPA price cuiling
so great that they were willing to advance funds for the purchase of large
violations by "A"-"3" and others. Those indictments ware braud solely
quantities of whiskey. Large sums were collected from prospective pur-
on the overowiling sales to the two wholesslers proviously referred
chasers and kept in escrow for months. Some were returned and collected
to end are intended to superavdo those returned on Octobur 16, 1944.
again. Contracts were executed by purchasers who had advanced large de-
posits. Other wholeselers agreed to acquire their whinkey of a liquidating
Insemuch na the statute of limitations had expired on -11 but
dividend on stock and advanced money for this purpose. The objective of
: small fraction of the tronsnctions involved before the price odling
all was to acquire whiskey in bottled form for the purpose of resale.
violations were detected, the OPA truble drango action in this casa
and restricted to a suit for $420,000.
After extended negotiations, two concerns, one with an inventory of
On January 15, 1945 "A" and his brother filed mendud declarations
110,000 barrels of whiskey, and one with 16,000 barrels, were purchased
of sotimated tax (1944) in mounts of 4477,500 and $80,000, respectively.
for, respectively, $11,500,000 and $2,000,000.
In preparation for the channeling of large stocks of whiskey in the
black market, the "A" Company and its subsidiary reduced allocations to
wholessle distributors and monopoly states, and in some instances entirely
discontinued sales to regular customers. After receiving and using deposit
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
MICROFILM
BOLL NO.
81
12 -
11
An intermediary had brought it and was counting it out for "D". The
money from contract purchasers, many of the orders were delayed, contracts
nurse thought there had been a robbery and notified the police. This
were reduced, and refunds made. In some instances, wholesslers who were
currency was later placed in a safety deposit box in a local bank.
unable to get delivery on their advance payment contracts received imme-
diste shipments of large quantities as soon 55 cash "side-money" payments
On another occasion, the owner of a liquor company in South
Carolina, forwarded to "D" a series of packages containing $286,000 in
were nade to an intermediary.
cash "side-money" collected on whiskey purchased from the "R" Company,
or its subsidiaries.
The black market transactions were handled as follows: The "R"
Company, or its affiliates, would ship only (1) on written order, (2) to
an established wholesaler, (3) at ceiling prices, and (4) with sight
So huge were the suns which "D" had been receiving that $2,000 began
draft bill of lading attached. This, to all ostensible purposes, would
to look like small change. Another Intermediary set SP an office in
Saltimore, Maryland. In a few months be collected from other intermedi-
make the transaction appear to be lawful, and the records of all con-
cerned would so show. However, as a corollary or adjunct to this, cash
aries over a quarter of a million dollars. After entering a plea of
"side-money" of approximately $15 a case (in some instances sore OF less)
guilty, this man made an affidavit that he had passed on overceiling
would have to be paid in advance before such order would be accepted. This
money (minus commissions) to still another intermediary, who subsequently
"side-money" was always paid to an intermediary and channeled through other
testified that the money was passed on (minus commissions) to yet another
intermediaries (sometimes four or five), the principal of whom WAS "D".
intermediary. One time $175,000 (in bills of onall denominations) was
Approximately $1,600,000 in cash "side-money" has been traced from the
involved. The two intermediaries spent considerable time counting this
various intermediaries to "D", who passed on the major portion thereof for
money and finally, wearying, advised the donor that they could not accept
the money unless it was understood that the giver would assume the risk of
distribution among the actual, rather than the ostensible, partners.
any shortage upon its final count on delivery to "D". This was agreed
While "D" received approximately $1,600,000 in cash "side-money"
upon and the money was carried to New York to "D". The latter hired a
during 1943, an examination of his income tax return for that year shows
bank teller to count it, The teller announced that the fund was $2,000
an income of only $30,000. In an effort to secure an accounting of these
short. "D" thought a while, then shrugged his shoulders and said, "Ch,
what the Hell."
funds, and to force "D" to surrender, a jeopardy assessment was secured
in September 1944 against him in the amount of $700,000.
Every indication points to "D" as the "bag nan" and "full guy" for
Substantial additional amounts of "side-money" are involved in this
the principals in this case. Shortly after the grand jury investigation
case, the ultimate disposition of which has not been traced due to the re-
was undertaken in May 1943 "D" disappeared after having advised close
fusal of some of the intermediaries to make disclosures.
associates that he had to leave "to protect other people.* À United States
Commissioner's worrant was issued for his arrest and subsequently an
The following incidents are typical of the manner in which the cash
information was filed containing 43 separate counts charging violations
of the Emergency Price Control Act. A Vanted Circular was issued and a
"side-money" was handled:
nation-vide search made, including Mexico and Cuba. "D" was finally
In the Kensas City ares, an internediary and former district sales
arrested on January 15, 1945, at # summer cottage in an isolated area,
manager for the "R" Company, vas arrested as a collector of overceiling
where be had been living for appreximately six months. Investigation
money. In the St. Louis area, another was likewise arrested. Both made
discloses that "D" during this period of time never left the imediate
disclosures to the effect that they had turned over the cash "side-money"
neighborhood where he was arrested; that he used en aliss; and that he
in question to a third intermediary. Subsequently, No. 3 made à statement
posed as a New York playwright in seclusion. On arrest, he vas noncon-
establishing that he had turned over to "D" the "side-money", less con-
mittal except to remark that "he had served his purpose by hiding out."
missions. received, as well 45 money from other wholeselers and inter-
mediaries. On two occasions, No. 3 vias seen with a 22-inch Gladstone bag
Completion of the investigation awaits the reconvening of a grand
pecked full of currency (allegedly of large denominations).
jury. It is pessible that if "D" 18 brought to trial prior to the grand
jury's considering the indictment of other principals involved, his case
"D" suffered & spine injury and went to a hospital for an operation.
may be regarded as an income tax fraud case, rather than an OPA case.
While he was in the hospital, business went on as usual. Currency was
brought to him shile he ESS in bed. In order to consumate the transactions,
he used the telephone, and shipments went forward. On one occasion, a
nurse, upon entering "D's" room, SON the bed covered with currency ($80,000).
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/
M PAT. OFF.
MICROFILM
sou NO.
- 14 -
- 13 -
CASE III
Criminal informations have been filed against all intermediaries
and brokers who have refused to make complete disclosures of their
cash "side-money" transactions. On the basis of the evidence developed
Company "2", a Inrgo rectifier, like many other concerns, entered
in this case, the OPA has filed a treble damage action aggregating
the black market in the early part of 1943. The corporation's tangible
$5,300,000 against the "R" company, its affiliates, and the individuals
net worth is well over one-half million dollars, with current assets
involved in this case.
of $752,000. Two of its officials have prior criminal records.
This case vividly portrays the investigative problem presented in
This concern, like many others, conducted its black sarket
major black market cases where intermediaries are used for the purpose
operations primarily through internediaries, billed the nerchandise
of concealing the transmission of cash "side-money" to the principals.
at ceiling prices or below, and shipped sight draft bills of lading
attached, the cash "side-noney" on auch transactions not being
In fact, the evidence in the larger cases is almost entirely dependent
recorded in the books of account. Some $600,000 in cash "side-money"
on the development of a series of smaller cases, some of which may
has been traced to either the president.or to the general manager and
involve operations of considerable magnitude.
reputed principal owner. The black market dealings were with whole-
sale liquor dealers in Louisiana, Texas, South Carolina, Georgia,
New Mexico, Arkansas, Florida, and Illinois.
One of the principal internediaries in these transactions was
"1/", a qualified liquor importer and broker with a large clientele in
the South. Early in 1943, "F", in an endeavor to supply his cus tomers
with distilled spirits, established an office in New York, operating
as a free-lance broker and accepting the listings of other brokers
who were acting as "go-betweens" in black market transactions.
After investigations were started in a number of cases in which
"N" acted as an intermediary, "N" nade a 60-page confession in which
he outlined the details concerning all his cash "side-money" transactions.
He kept voluminous records and, contrary to the usual rule, paid income
tax on his commissions of $1 a case. Consequently, his testimony was
well documented.
It in believed that the conversations had by *W* with the manager of
"2" Company, at the time of his first contact with that concern, well
illustrate the utter contempt of these black market operators for the
income tax statutes.
It appears that during the first week in April 1943 *X*, along
with the inporter and purchasing agent for a large hotel chain, visited
2 Company relative to the purchase of Scotch for the hotel chain.
After the usual preliminaries, and determining that Scotch was then
solling from 110 to al2 over the ceiling, the manager of "2" Company stated
that he would be glad to sell Sootch to then, but asked, "Shere is the
currency?" "N" replied, "we are propared to givo you a deposit by
check-but wu understand you will bill us the full price of the Scotch."
The "2" official then replied, "Listen, Mr. "N", I will bill the
Scotch at my ceiling which is much lower than what I an selling it
for-but the differential must be paid in cash." *y* then stated,
"If I pay you the differential in cash, I will declare it in my income
tax return and I assune that you will do the sme." The executive
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/
156. U. 5. PAR, OFF.
MICROFILM
BOLL NO.
- 16 -
- 15 -
CASE IV
replied, "If you give se the money in currency, I will accept it, and
if mything is said later on, and you declare that you gave it to
se, I will say that you are a lipr." This particular deal was never
One of the largest black market operators was the *p* Company,
consumated for the reason that the dustomer; stated he represented
a rectifier. This company, a partnership, NÃO owned ostensibly by
a legitimate hotel chain which had no way of supplying eurrency on
"P", an attorney, and "0", an accountant, neither of store was over
the side and handling transactions not recorded on the books of account,
active in the of the business. There is every reason to
even though his hotels were urgently in need of Scotch. Subsequently
believe that this company is actually owned by a large wholosale
"N" acted ns "go-between" in transactions for "2" Company in connection
liquer decler.
with which more than $400,000 in cash "side-money" was collected.
Prior to March 1, 1943, the up* Company conducted a small rectifying
An extensive grand jury investigation was subsequently conducted
business. On March 1, 1943, "g" and "O" entered into a contract with
in this case. The two principals subsequently pleaded guilty to an
one "B", who had a criminel recoro, whereby "H" was installed 00 sales
indictment in this case and were sentenced to servo two years and one
manager on a commission banis. Business was immodiately expended.
year and a. day in the Federal penitentiary and pay fines of $25,000
The records of "P" show that between March 1 and December 31, 1943,
and $5,000, respectively on price ceiling violation charges.
"H" was paid commissions of $140,000. Investigation reveals that during
this puriod up" Company shipped liquor to wholesslers in the South end
AB a result of the investigation conducted by the Bureau in this
the southwustern part of the United States on which "H" collected,
caso, the OPA instituted a treble damage suit in the amount of
either direct or through intermediarios, more then 8. million dollars
$572,641 on that part of the evidence not barred by the statuto of
in cash "side-money." The cash "side-money" payments of some of the
limitations. It is understood that property of an approximate value
sholesslers mounted to as much as $300,000. AS usual in this type
of $360,000 har been attached by the OPA to satisfy this claim.
of case, the "side-monuy" was not recorded in the books of account.
The very charneter of other transactions about which the wholeselers
Trial disposition of the character in this case will do much to
have refused to make disclosures lends to the belief that much larger
suppress black market operations of all types.
tuma of eash "side-nonvy" are involved in this case. Overceiling prious
from L5 to $20 a case were charged, dupending upon what the troffic
would boar.
AS the liquor shortago bucame more acuto, the price increased
and the quality decreased. A concection composed of 5 pur cent
whiskey and 95 per cunt imported molesses spirits was finally marketed
by this concurn in the State of Texas at overceiling prices. Because
of the distances involved, and in order that the cash "side-monuy"
might be in hind bufore the liquor was shipped, the intermedieries
in BORN instances travuled butween New York and points na distant as
Texas and Georgia by airplane. The cash "side-money," as usual, was in
both large and small denominations.
It is, of course, obvious from the above that "H" who hirud
IS the "front nan* and "foll guy* for the netual financial intervate
buhind this concurn.
Severr1 witnesses (wholessle liquor denlers) tustified that after
the Alcohol Tax Unit had instituted its investigation in this chao
"H" refused to recept any further cash "side-monoy", but statud that
the "p" Company would thereofter supply them with limited quantitics
of liquor.
While the investigation was under wey, "0", one of the partours,
was inducted in the military service. Thereafter a squib appuered
in the crap nowspaper to the effect that Private "O" had purchased
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT
OFF.
MICROFILM
BOLL NO.
- 18 -
- 17 -
CASE V
a million dollars worth of Sar Bonds. Than subsequently interviewed,
"O" stated that his wife had actually subscribed for a million
This was one of the first cases perfected under the Bureau's
dollars worth of aar Bonde with a brokurage house but that up to that
black market enforcement program.
time she had bought bonds worth about $100,000. He stated that the
funds used were derived from the business of the ap* Company. The
Zhen the liquor shortage developed, the "L" Company, the principal
income tax aspects of this case are under investigation by the
partners of which were "J" and "X", was engaged in the pinball and
Intelligenco Unit.
music box distribution business. There WEB no apparent reason why this
concern should engige in black market operations, inasmuch as it had,
"H" was indicted and subscountly convicted after a two wooks'
according to "J", sade a net profit of $180,000 during 1942. It was not
trial. Be was sentanced by the court to surve 18 months' imprisonment
In the liquor business and, consequently, held no permit. The incentive,
end to pay a fine of $56,000. On conviction, "E" still refused to
however, to make a lot of money was too great. The company's pinball
disclose the disposition mndo of the "side-monoy". The chou against
and nusic box customers, who were primarily taverna, could not obtain
the other principals is still punding. AS the result of evidence
a sufficient supply of distilled spirits.
developed by the Burunu end submitted to the OPA (not barred by the
statute of limitations), a suit for truble dasagia in the amount of
Before the liquor shortage became acute, "," acquired large
$577,000 was instituted ngainst the up" Company.
quantities of whiskey. This group, in its attempts to conceal the
movement of the liquor in the black market, used many schemes and
devices, such as fictitious license tage on vehicles, convoys, and
secret caches, reniniscent of the pre-Repeal era. "J" was a former
light-weight fighter of considerable renown who had a prior criminal
record. Some of this whiskeywas shipped through regular distribution
channels as coin boxes. Another scheme was to ship the liquor by truck
under fictitious billing to State Liquor Commissions. This was necessary
inaseuch as the states through which this liquor noved employed the
monopoly system of liquor control. Consecuently, a shipment not billed
to the State was subject to seizure.
Thile the investigation established that overceiling prices were
paid for this liquor, the Investigatore were unable to trace the cash
"side-money" back to either "," or "X". Consequently, a conspiracy
indictment was secured charging a violation of the Internal Revenue laws
and Section 204 of the Criminal Code.
Insomuch as the Government could not trace the cash "side-money",
counsel agreed that "J" would furnish the evidence to the Government
on which to predicate criminal informations. The conspiracy indictment
was dismissed on motion of the Government, and & criminal information
was filed based on evidence furnished by the defendanta.
On pleas of guilty to the OPA violations, the principal defendants
were sentenced to serve 18 months and six months and to pay fines of
$7,500 and 410,000, respectively. The court, in its extended remarks,
stated "The hectic days of national Prohibition will descend on this
country if liquor is handled by men who flaunt the laws and connive
and conspire to defeat the regulations which the states have placed on the
handling of liquor. Certainly the court cannot escape its responsibility
in meting out sentences which will tend to restrain and discourage such
beneful activities."
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT
MICROFILM
ROLL
NO.
I
- 19
- 20 -
CASE VI
CASE VII
"I" Company operated a rectifying business. The president
is also une of the principal owners of a wholeasle grocery business.
This concern shipped large quantities of liquor into the black market
In the early part of 1943 the State of Ohio, like other Liquor
in Ohio, Texas, Mississippi, Winnesota, and other states. Some five
nonopoly states, was able to obtain from distillers only a fraction
intermediaries were utilized in handling the cash "side-money,"
of the whiskey necessary to supply permit holders (taverns) and oon-
$210,000 of which was satisfactorily traced.
sumers. In order to meet this situation, the State permitted tevern
owners to purchase whiskey from out-of-state dealers and import it
Considerable difficulty was encountered in perfecting this case
into Ohio after payment of the State tax under what was designated
due to the fact that some of the intermediaries, even after indictions
the "consent system" in conformity with new regulations issued.
and conviction, refused to cooperate. Finally one of the "go-betakens,"
who operated a whiskey brokerage business was convicted and after Inving
At that time the major defendant in this case, "X", a one-time
sentenced to serve a. year and a day in the penitentiary, made a confession
public energy, was the principal owner and operator of a brewing
which assisted naterially in tracing the cash "side-coney" in this and
company. Associated with him as # "front man" was one "F", a disbarred
other cases. The brokers in this case were so brazen they did not
attorney. Uhen the tavern owners to whom the browing company was
hesitate to assure their customers that the cash "side-soney" mllected
supplying beer 1676 unable to secure distilled spirita, " DAN an
by them was being passed on to the officials of the company. One of the
opportunity to make a lot of money quickly. "%", operating primarily
brokers in this case has since been convicted. He ctid business 56
through his "front nan," "P", imediately arranged to purchase large
a broker from his "hip-pocket." The following in illustrative of his
quantities of distilled spirita from wholesale liquor dealers. This
method of operations
liquor was transported end distributed to the brewer's preferred
customers at prices up to $20 a case over and above the ceiling price.
A member of a law firs representing tavernkeepers, went to
bome of the cash "side-coney" collected in connection with these
New York in search of sources of supply for them. He checked into an
transactions (the exact amount of which is not known) WOB passed on
uptown hotel, and then visited a local restaurant (a rendezvous frequanted
back to the wholesalers.
by liquer brokers) where be nace known his wants and indicated he had
cash "side-money" for liquor. Heing unable to readily contact the
After the whiskey shortage became nore acute end " and "p"
brokers there, he returned to his hotel shore he found notes at the desk
were unable to secure further shipmente of case goods, large quantities
and under the donr of his hotel room from lieuor brokers requesting
of bulk whiskey were purchased through the medium of warehouse receipts.
appointments. Before he could decide which one to meet first, the above
arrangements were effected with rectifiers for the bottling of this
mentioned broker rapped on his door and entered. AS a result, be
whiskey. It was then distributed to the sano outlets at black market
consumated a deal for "I" Company's whiskey, securing the cash "side-
prices. On one of these deals (involving the bottling of 800 barrels
money" in advance.
of bulk whiskey) $156,000 in cash "side-money" was collected.
Two officers of the corporation were convicted after & ton-day trial
AS soon as the Bureeu undertook the investigation of this case,
on a. criminal information charging violations of the imergency Price
" immediately discontinued his black market operations. At that time
Control ACT. after the jury had brought in its verdict, the Federal
he owned warehouse receipts covering 457 barrels of whinkey (the coiling
Judge dismissed the jury with the following remark:
price on which was $29,000) which he disposed of to the chairman of
a retail liouor association for $182,000.
"Your verdict (in this case) is the rightest thing
that could have been done."
"W" and "7" subsequently pleaded guilty. Both defendants were
sentenced to servo four months in jail and pay fines of $5,000 each.
The imposition of sentence in this case vas delayed penning the
trial of other black market cases.
AS a result of the investigation, a troble damage action in the
amount of $650,000 was instituted by the OPA covering such transactions
as were not barred by the statute of limitations.
Unclassified
PRECISION
TRADE MARK
MICROSTAT/
REG.
U.
PAT.
OFF.
MICROFILM
BOLL NO.
- 21 -
91
. 22 -
CASE VIII
CASE X
& certain Permit Holders Association was typical of any
during the liquor shortage in 1943 in nn effort to secure a source of
tavernkeepers' associations which were formed throughout the country
This case deals with the activities of "0" liquor importer and
supply through pooling their assets. This particular Association
black market operator, who was indicted for price ceiling violations
appointed a committee to make contact with distillers and brokers.
(cash "side-noney" transactions) on seven counts. "0"8" business vas
Subsequent investigation disclosed that this association purchased
conducted primarily with wholesale liquor dealers in the South. Ede
warehouse receipts covering 582 barrels (28,000 proof gallons) of bulk
function was to pass on the cash "side-money," thereby making it un-
whiskey which was bottled later and delivered to its various members.
necessary that there be a direct personal contact between the seller end
This whiskey was purchased through a whiskey broker representing
the buyer.
barrels of bulk whiskey was approximately $32,000. The Association, 502
extensive undisclosed interests, The ceiling price covering the
thile the case against "C" was of itself relatively unimportant,
however, was required to pay $199,400, or six tines the ceiling price.
its implications were large because he was in a position to involve
distillers and rectifiers who were undoubtedly the actual recipients
AS a result of this investigation, fines totaling $137,000 were
of if the actual principals in these cases were to be reached. "0" refused
the cash "side-money." Vigerous prosecution was therefore essential
assessed guilty. by the court against several defendants on their pleas of
to naice disclosures of the disposition of the cash "side-money" involved.
CASE IX
It night be added that this case 18 typical of many perfected
Government to the end that these "side-money" transactions could be traced
against internediaries who have refused to cooperate with the
This is a typical black market conspiracy case and involves the
disposition of approximately 12,000 barrels of bulk whiskey which the
to their ultimate disposition.
conspirators processed and bottled, and of which 1% is estimated that
approxim/ tely °0 per cent found its way into the black market, and on
This case vest to trial on January 19, 1945. after presentation
or cash "side-ecney."
which it is estimated that more than 11,000,000 WSS collected in overages
of evidence, the jury required only 40 minutes to return . verdict of
guilty.
two fires of abolesale liquor dealers.
The directing heade of the syndicate were "G" and "S", representing
these two groups formed a combine, and on April 7, 1943, purchased
In the spring of 1943 when the acute liquor shortage first developed,
ascertaining that an additional 6,500 barrols of whinkey was owned by On
a distillery, with its inventory of 4,896 barrels of bulk whiskey.
a partnership, arrungements were promptly consumnated whereby one of the
principal partnerse would act as agent in processing, bot:ling, and
distributing this whiskey. Imediate arringements were nade for the
bottling of this whiskey. The whiskey was bottled without regard to regular
industry marketing practices, some of it representing recent production-not
more than nine months old.
Originally it was the apparent purpose of the two groups to cispose
of this whiskey in the black market through wholesale liquor establishments.
A Company was formed by the group for this purpose in order to divorce the
distributors from these opurations as far as possible. In the muentime, the
shortage had become 80 acute and the demand DO great that this whiskey
was listed with brokers and disposed of through intermediarios on a strictly
cash "side-money" basis. More then $400,000 in cash "side-money" was
traced to "0" in connection with these operations.
This investigation is continuing.
by limitations. the OPA, involving such transactions se were not barrud by the statute of
A truble damage suit in the amount of $856,000 has boun filed in this CRE ,
Regraded Unclassified
83
- 23 -
- 24 -
CASE XI
GASE and
This concern operated a rectifying business and had . net worth
of approximately $500,000. Like many other rectifiers, the officials
In the early part of 1943, the "U" Company, operated 55 a Large
thereof could not resist the temptation of engaging in black market
wholesale liquor desler. One of the principal owners, "S" had a
operations. Both bulk and case goods were sold in the black market.
long criminal record. Then the critical liquor shortage developed,
Cash "side-money" transactions have not been fully traced, as the
this company seized the opportunity of naking excrbitant profits by
business was carried on through intermediaries who have refused to make
entering the black market. It catered particularly to retail outleta
disclosures. The principal intermediary used was one "H", a liquor
diek tad contricts with known liquor runners operating in the dry States
broker also unintained offices in New York City, and who acted as
of ,klabown and Lanses, where the denand for liquor was DO great that
"go-betwoon" for several concerns in the best engaged in black market
is commended almost my price. At the same time, the company almost
operations.
entirely ignored the plen for whiskey from its regular customers, and
is at lerst one area which 11 supplied, it sold no high 65 98 per cent
The following transaction is illustrative of those conducted by
of the Hounr allocated to that territory to one customer, namely,
this concern, and typical of the nethods used by black market operators
a reteil Houor deler. A number of the regular customers of this
in making sure that they were not being double-crossed by the intermeditry.
The affidavit of a representative of o liquor dealers associations
company who were desperately trying to secure liquor for resale to
cescribes graphically one of the transpotions had with "H" and the sales
their trade, and who were unable to get narchandise elsembers, were
compelled to pry this retailer from 60 to 870 a case for brands of
manager for the company, as follows:
whisley having established coiling prices of from 125 to L30 a case.
e - e I registered as a hotel in New York
I
net
de typical example of the way in which this concern sought to
"H" in his office and told him I had the money. He picked
didotrack its regular customers in order to supply the black market
ne up the following morning and we drove to Newark * o . we
la shown by negotiations had with the owner of a Large chain of retail
went into a hotel and "H" took us up to a room - when
"H" knocked on the door of the room it NAB opened by the
liquor stores, who states:
sales amager. "H" then introduced the nanager to no and
"I have known " for the past 35 years and since
then asked him If he would not step into the adjoining private
repeal =7 company has been one of "O" Company's largest
bathroom, saying, two have some business to discuss.' There-
accounts, purchases in recent years running to an ennual
upon, the sales nanager stepped into the bethroom and while
be was there I gave the each accunting to $36,111 to "H".
volume of firm 4350,000 to 4400,000; but since the
blnck market in liquor our volume of whinkey business with
"H" then called his nasociate back into the room and said
"U" Company starunk to a negligible amount. Early in 1943
to hin, *01ve 9112 the certificates.' : was then handed the
I could seu what "0" was doing. On one occasion "5" and
serehouse certificates representing 150 barrels of Bourbon
An associate were in my place and I remonstrated with
whiskey."
then about it. I asked them then why they wanted to
enter the black market liquor business when they already
Previous to the payment of the cash *side-money*, the essociation
bird sere money than they could ever spend. Thereafter
representative described above, has given "H" a check for $9,586 payable
I received a telephone call from the sales manager of
to the company, for 150 barrels of bulk whiskey at the coiling price.
" Company, at which time I was informed that I could
This case La still persing.
purchase $75,000 worth of merchandise consisting nostly of
cordinls and wines which included only 100 cases of
whiskey. I refused to go through with the deal, reminded
the onles name ger that he had pulled two similar deals on
DU resulting in my buying about 4150,000 worth of
in order to got a couple of hundred cases of
whinkey. I than told his I would neverset foot in "D's"
premises again."
One of the principal intermediaries used by "U" Company in contacting
black market outlets was a former state manager for a distilling company.
RECISION
TRADE MARK
MICROSTAT
166.
v,
PAT.
OFF.
MICROFILM
ROLL NO.
- 26 -
25 -
CASE XIII
after considerable proliminary work on this case, a complaint was
filed, charging four of the group with conspiracy to violate the
At the time the whiskey shortage developed in the spring of 1943,
Internal bevenue lane and the Amergency rrice Control Act. The
"A-Y" Company had a thriving import and wholesale liquor business in
were arrested and held in bail. This complaint was based primily on
the New York area. The company employed 36 salesmen and had more than
falsification of records, which had been resorted to in order to conceal
5,000 customers. Gradually the allotments to their retail liquor
the black market transactions. AB far as price ceiling violations Auto
accounts in New York City were reduced and larger quantities of liquor
concerned, the evidence was limited to cash "side-monoy" pada to
channeled through intermediaries to wholesale liquor dealers in the
salesman of the "U" Company.
South and Southwest and into private outlets in the monopoly states,
Cash "side-money" ranging from 410 to 416 a case was collected in
connection with these transactions. The allocation to retail outlets
in New York City finally become so limited that the salessen of the
company, who were working on a commission basis, were unable to sake
a living. The matter was then taken up with the salesmen's labor union,
which in turn exerted pressure on "V", the principal partner to allocate
more liquor to the metropolitan area.
This concern, like several other large black market operators,
resorted to the subterfuge of paying small commissions to intersediaries
80 their books would reflect a consideration for the sale of liquor and
nake the transactions appear legitimate. These commissions, however,
had to be "kicked-back." For example, the head of a retail liquor
association who functioned as an intermediary between * you and members of
the Association, and who passed on some $200,000 in cash "side-money",
was paid a commission of 25 cents à case by the "X-Y" Company wi. th
the express understanding that he would cash the commission checks
and return the money to "T". This was done.
More than $400,000 in cash "side-money" was traced direct to
*1". This amount probably does nos represent more than 50 per cent of
the "side-money" actually collected.
On September 20, 1944, " pleaded guilty to a criminal information
charging fifty separate violations of the Emergency Price Control Act.
On recommendation of the United States attorney, the court sentenced
him to serve 30 days in jail and to pay a fine of $100,000.
about February 14, 1945, one "6", who operated a wholesale liquor
business, and who acted as an intermediary in collecting approximately
470,000 in cash "side-monuy" on liquor shipped to wholesalers in Texas
by the "2-Y" Company, was convicted after a jury trial. "L" had refused
to disclose the disposition of the cash "side-money" involved. after
conviction the Federal Judge in sentencing him stated in substance,
"I can find very little to say in your buhalf.* The court thereupon
sentenced "M" to BUTVU a year in jail and fined him 425,000.
AS a result of the evidence developed in this case, the OPA
filed a treble damage action in the amount of (600,000 covering the
transactions not harred by the statute of limitations. A similar action
in the amount of $280,000 was filed against "A" and his company.
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT
PAZ.
OFF.
MICROFILM
BOLL NO.
27 -
- 28 -
CASE XIV
4a + *J" at that time stated to ne that I was
lucky that I was dealing with a nan like him; that some
and "J" were employed as liquor salemen. On March 15, 1943,
concerne would no doubt *go South with the money* and
they filed income tax returns for the calendar year 1942 on a net
leave ne holding the bag.
"J" then explained
taxable income of $1,700 and $2,700, respectively. In June 1943 they
they were no longer shipping whiskey into Chio because
forned "A-B" Company, with capital of $5,000, and installed an accountant,
things were getting too hot to handle' and that the State
"K", as *front man" and president of the corporation. During the
of Chio was denanding from the permit holders an affidavit
remainder of the calendar year 1943 some 70,000 cases of whiskey were
showing that they sere paid only the ceiling price e
sold in the black market by "A-B" Company, principally in the State of
Ohio (at en average price of more than $20 per case above the established
"J", as I recall, returned to no 9 . + $6,000, repre-
ceiling), on which the corporation made a net profit of $27,000, as shown
senting payment for merchandise undelivered. This money
on its books, and on which *A* and "J", the intermediaries, and their
was taken from a suitease that "J" had with him. This
sub-agente collected an estimated $1,000,000 in cash "side-money."
suitcase was full of currency. In counting out the money
The cash "side-money" was not reflected in the corporate records or
to no, I saw that "J" had bundles of new $20 bills. He
included in the income tax returns of "2" und "J".
stated that he did not want to handle big bills because
they (I suppose be meant the banks or the Government)
The most profitable enterprise was started at a time when whiskey,
were keeping track of the large bills. These 20 bills
because of the shortage, was virtually unobtainable. The source of
were new 4 * 9 and still had the bank wrapping around then.
supply was the "X" syndicate, whose black market operations have already
They were in consecutive serial numbers and *J* stated
been discussed. Instruch as "A-B" Company had virtually no resources,
that he did not want to give ne consecutive serial
it is obvious that it was formed for no other purpose then to set us
numbers because the banks were watching e - ", In counting
a clock for channeling the "I" whiskey into the black market.
out the money, be would take bills from each of nuserous
packages and by ao coing mixed up the serial numbers so that
Shortly after the company was formed and in order to have a
they would not be consecutive. He stated that in this
suitable place to meet customers and to employ agents and intermediaries,
marcer they would be lesst apt. to be noticed by the bank."
** established himself in a suite in Chiengo under nn alias. Similar
quarters were obtnined in Clevoland, by "J" under on alims. Some
at the the the above-described funda were returned to the witness,
10 of 12 intermodisries were utilized who, in turn, hired sub-sgunta
"J" was believed to have been on one of his trips for the purpose of
who actually sold the whiskey to the retailers end collected the cash
turning over the cash "side-money" to the "X" interesta supplying him
"side-money."
with whiskey, which accounts for the beg full of currency.
One of the intermediaries who mode full disclosures during the
A law firm had N° experience with "J" which is interesting. These
investigation, in discussing his employment, mado nome significant
attorneys represented retail liquor dealers who were interested in
observations:
importing liquor into the State of Unio under the "consent system."
On determining that liouor was commending almost any price, these men
" 4 o I had numerous conversations with "J" - . +;
decided to function as brokers rather than as attorneys in these
he explained on one occasion that be and - were shipping
transactions. Largo eune of money were collected from retail liquor
liquor into Ohio in excess of ceiling prices and that a san,
dealers and carried to Nuw York City, Philadelphis, and Chicago in the
"K", * - a was buing 'carried' as President of "A-B" Company,
hope of finding sources of supply. do difficulty was encountered in
and that * * a and if my trouble areso in rugard to the
securing merchandise once they made it known that they had the cash
whiskey transactions that "X" was the ann that would have to
to pay "side-money." For their services, these lawyers charged
take the 'rap.' If I naked "," if I was going to get
a commission of $4 for each case of liquor purchased. Substantial
into any trouble handling this whiskoy and he saids
quantities of liquor were purchased from "A-B" Company, on which
The only violation 18 the OPA law-there are no touth in
large surs in cash "side-money" were paid to "J". After the investi-
the OPA law anywny--uverybody in the country 18 violating
gation had been instituted by the Alcohol Tax Unit and these attorneys
OPA laws a R + you have nothing to foar."
had mode full disclosures of their participation in these transactions,
"J" cane to Cloveland md remonstrated with then, stating, "If you were
In further discussions with "J" consuming the handling of the
going to talk to the Government, why did you enter into these deals?*
currency involved in these cash "side-monny" deals, this witness
Thereupon one of the lowyers, using the proper epithet, responded,
says:
"You didn't think that we more going to pay income tax on the
'side-money' you got, die you?*
Regraded Unclassified
ROLL NO.
- 29 -
BB
AB a result of the evidince furnished the OPA, a treble drange
ouit in the amount of $1,900,000 has been instituted against
"A-t" Company.
*," and "2" subsequently nade a statument as to the cash
"side-money" paid to the "I" syndicate. They admit collecting 4600,000
in "side-monuy" exclusive of that retained by internediarios and sub-
agents, $450,000 of which they allege was passed on to the "X" syndicato.
Evidunce in the possession of the Burenu indicates that the admissions
do not constitute a full disclosure. The dovelopments in this case
will assist materially in determining the income tax liability of the
"1" interusts.
-co-
=
PRECISION TRADE MARK MICROSTAT/ MICROFILM BOLL NO.
Aoril 26, 1945 30
10:77 A. X.
- 2 -
100
HMJr:
Hello,
V:
Sure. Yel , then, let's
Operator:
The Postmaster General.
HNJr:
I'm going up to see my old nan. He's 89 today.
HMJr:
Hello.
V:
Oh, say, could I get his on the chone, do you think?
Xr. Fronk
HWr:
Welker:
Oh, he'd love 11.
Hello, Henry?
%:
HMJr:
All right. I eure will cell --- what's the number?
Spenking.
HMJr:
Sacremento 2 -
W:
I hope I didn't cruse you any inconvenience
this corning.
W:
Sacramento?
HKJr:
Only the lack of the pleasure of your company.
HMJr:
27182.
V:
Yell, that's very nice of you. I tell you - I
V:
Secremento 2 -
did It for your ovo good. It may have been Just
A fruitless engagement.
HMJr:
7162.
HMJr:
Ch? What hnooened?
V:
-7182. : sure vill he's 89 today, 1sn't he?
W:
Well, : don't -- I'm standing by -- the boes anked
HKJr:
That's right.
me to stand by end have a talk with him. So I
thought I'd rather see him before I FBV you, don't
V:
I surn call him right away.
you see?
RMJr:
HMJr:
Yell, Int de know, Frank, how....
You mean the President?
V:
X:
Yell, that's the only resson I didn't know because
Yeah.
there would be no sense having e lot of discussion...
HMJr:
I can't get used to it. There's only one bone for
HMJr:
Well, let ne know how 11 turns out.
you and se.
W:
%:
I'll an that, Menry.
Well, he's the bone nov, Henry.
HMJr:
HMJr:
: thank you.
That's something? true. Oh, I see, something's happened or
%
All right.
V:
Huh?
HMJr:
Something's come 407
V:
Well, I -- be and I have had quite n few dis-
cussions about it, you know,
HMJr:
I cee.
V:
Well, they are not -- there's no finality to it
yet.
HMJr:
Well, whether you E° or you don't E°. let's have
5 beall together next week anyway.
Regraded Unclassified
PRECISION
MICROSTAT/ MICROFILM BOLL NO.
April 26, 1945
April 26, 1945
2:22 P. X.
2:26 P. M.
102
Congressan
Spende:
HMJr:
Hello.
Mr. Secretary?
HMJr:
Operator:
William Green. Go chend.
How are you?
5:
HMJr:
Hello.
How 1e your good vital
HMJr:
Mr. Villiam
She's getting along pretty well, thank you.
8. Greent
Hello.
S:
That's fine.
HXJ::
Henry Morgenthau.
HMJr:
: just make to Villiam Green..
0:
Yes, Mr. Becretary.
8:
Yes,
HMJ,:
Bow are you?
HMJr:
And he 10 going to testify before your committee
0:
Pretty well, thanks. Hov are your
at 10 s'olock tonorrow morning.
Oh, : can't comilain.
:
HNJr:
10:30.
HMJr:
That's good.
10:30?
G:
HMJr:
Mr. Green, you remember sume time REP : called you
3:
Yes.
up and said how useful it yould be if you could
testify in the interest if Bratton Moods...
HMJr:
Oh, you've got the word.
5:
Yes,
G:
Yeah.
And Chairman Sornce, of Banking and Currency, n1so
HMJr:
HMJr:
Vell, I didn't know.
1 = very much interested in having you come un, and
be sold 11 would be a grost service.
S:
Yeah, 10 - I colled and told them it would be 10:30.
Yeah. Vell, I's scheduled to 20 in the morning At
HMJr:
Oh,
0:
ten o'clook.
St
I guess I'd better call them up and tell them It's
Tomorrow morning?
10:30, hadn't I?
HWr:
HMJr:
Yest.
Yell, I any have misunderstood, but
=
5:
HMJr:
Oh, that's wonderful.
Yell, I'll t=11 then down there to tell him to come
us at 10:30 - fine. And I'm going to have him test-
0:
I've maile the engagement, and I'm prepared to go in
1fy whatever happens to this bill because ve want
the morning at 10 d'clock.
to get his before he goes out there.
I's delighted. Thank you no much.
HMJr:
Good,
HMJr:
All right, sir. Thank you.
S:
G:
The Chicago Tribune says that I an very unfair.
HMJr:
HMJrt
Goodbye.
They do.
Bs
0:
Goodbye.
That I haven't let the other elde testify and I'm
determined to record the bill.
Regraded Unclassified
- 2 -
103
HMJr:
Oh, ny.
5:
It would embarrass as very much if the Chtongo
Tribune said anything good about Be because I'd
have to apologize to all the constituents that
elected ne.
HMJr:
That's right.
8:
50 I think 1: :, a very good thing all around.
HMJr:
Doesn't the Tribune get down into Kentucky?
S:
No, (Laughs) but I don't they carry any weight
wherever they go.
HMJr:
I see, (laughs)
5:
They are just opcosed to us.
HMJr:
(Leughs)
3:
All right, Mr. Secretary, thank you.
HMJr:
Rye.
=
S:
All right, bye.
Regraded Un
PRECISION TRADE MARK MICROSTAT/ REG. v. s. PAT. OFF. MICROFILM ROLL
NO.
- 2 -
Suggested Radio Remarks
4/22/45
for Secretary Norventhau for Phase 2 VE Day Program
month-out on the payroll savings plan.
with the end of major military operations in Europe,
Through the purchase of war Fonde we have been able to
one of our two ware is officially over. Ye and our Allies
contribute greatly to the stabilization of our economy.
have f=shioned an overwhelming victory out of what once
de have siphoned off the dengerous dollars that routd
seesed to many the sahes of defent, and have destroyed
otherwise have produced inflation.
forever the Nari threat to our democratic institutions and
If value to win the peace 08 well as the var, the cost
our way of life.
of living must be kept down and the purchasing power of
Our job nov 1s to mobilize our strength for the defeat
money preserved. A reckless inflation het would
of Japan with the 14,91 singlenses of purcose. the case
followed by the catastrophe of deflation -- with its
concentration of the 8438 overwhelsing Dover, that
uneaployment, bankruptoies, misery and heartache -- must be
ve employed to crush Hitler Germany.
prevented at all cost. Let's make no mistake -- .
dangerous period lies shead. The American people have nothing
Ve're going to crush Japan, but it's going to take
to fear If they show in the future the same common
time, herebo and backbreaking effort overpowering equipment.
sense they have shown in the past, and continue to put every
Ve'll need more of everything ships tanke trucks
penny over rock-bottom expenses into the purchase of sore
whole nev air force. And that to
and more War Bonds.
le still have . long, bitter road to travel before
Up to now Americans on the home front have done a
final victory is ours. Each of us should
magnificent job in financing this wer the voluntary vay.
that
dedicate himself anev to the teek of doing all in his power
In no doing they have neted with extraordinary rood common
to bring this wer to complete and absolute victory One
sense. Over 85 million Americans have purchased War Bonds.
thing that all of us enn and must do 10 rally to the support
Over 26 sillion working sen and vomen buy them month-in,
of the Seventh Vor Loan with att 18 ve Inc. 1 know of no
D-2
Regraded Unclassified
PRECISION TRADE MARK MICROSTAT REG. U. 5. PAT. ON, MICROFILM
ROLL NO.
- 3 -
more important way in which Americans can give concrete
expression and force to their determination to back up our
fighting nen than by buying Wggen extra bonds in this war
loan drive. Puttine the Seventh War Loan over- the-quota,
is the biggest most important 10b ve on the home front
have to 48.
The Seventh Wer Loan is the greatest ver financing
operation ve've ever undertaken. The 7 billion dollar
individual quote is the highest yet, and the 4 billion
dollar E bond quota A terrific, hard-to-sake 60 por cent
increase over the last drive.
=
Let's each and everyone of us promise that partiel
victory shall not breed the kind of weskening over-
confidence which can rob us of complete victory ... that
our thinking, our money, our time will stay in this war to
the finish that this var shall be fought through to a
finish with all that we have and all that we are
that
we, the people, will dig into our pookets, purses, and
savings to nake the success of the 7th War Loan a symbol of
our determination.
-000-
Regraded Unclassified
MICROSTAT
No.
v.
PAI.
OFF.
MICROFILM
BOLL NO.
PRECISION
TRADE MARK
- 2 -
Suggested Radio Renarks
for Secretary Morgenthau for Phase 2
month-out on the payroll savings plan.
With the end of major military operations in Europe,
Through the purchase of War Bonds we have been able to
one of our two ware is officially over. We and our Allies
contribute greatly to the stabilization of our economy.
have fashioned an overwhelming victory out of what once
We have siphoned off the dangerous dollare that would
seemed to many the ashes of defeat, and have destroyed
otherwise have produced inflation.
forever the Nazi threat to our democratic institutions and
If we're to win the peace as well as the war, the cost
our way of life.
of living must be kept down and the purchasing power of
Our job now 18 to mobilize our strength for the defeat
money preserved. A reckless inflation that would necessarily
of Japan with the case singleness of purpose, the name
be followed by the catastrophe of deflation -- with its
concentration of energies. the same overwhelming DOMOR, that
unemployment, bankruptcies, misery and heartache -- must be
we employed to crush Hitler Germany.
prevented at all cost. Let's make no mistake -- a
dangerous period lies shead. The American people have nothing
We're going to crush Japan, but it's going to take
to fear, however, if they show in the future the same common
time, heroic and backbreaking effort, overpowering equipment.
sense they have shown in the past, and continue to put every
We'll need more of everything ships tanks trucks
penny over rock-bottom expenses into the purchase of more
whole nev air force. And that's going to cost money --
and more War Bonds.
plenty of money.
We still have a long, bitter road to travel before
Up to now Americans on the home front have done a
final victory 18 ours. Each and every one of us should
magnificent job in financing this war the voluntary way.
dedicate himself anew to the task of doing all in his power
In 60 doing they have noted with extraordinary good common
to bring this war to complete and absolute victory. One
sense. Over 85 million Americans have purchased War Bonds.
thing that all of us can and must do le rally to the support
Over 26 million working men and women buy them month-in,
of the Seventh War Loan with all we've got. I know of no
D-2
Regraded Unclassified
RECISION TRADE MARK MICROSTAT/ MICROFILM BOLL
NO.
- 3 -
more important way in which Americans can give concrete
expression and force to their determination to back up our
fighting men than by buying bigger extra bonde in this war
loan drive. Putting the Seventh War Loan over-the-quota,
1a the biggest and most important job we on the home front
have to do.
The Seventh War Loan is the greatest wer financing
operation we've ever undertaken. The 7 billion dollar
individual quota 18 the highest yet, and the 4 billion
dollar E bond quota a terrific, hard-to-make 60 per cent
increase over the last drive.
Let's each and everyone of us promise that partial
$
victory shall not breed the kind of weakening over-
confidence which can rob us of complete victory ... that
our thinking, our money, our time will stay in this war to
the finish that this war shall be fought through to a
finish with all that we have and all that we are ... that
we, the people, will dig into our pockets, purses, and
savings to make the success of the 7th War Loan a symbol of
our determination.
-000-
Regraded Unclassified
RECISION TRADE MARK MICROSTAT/ MICROFILM BOLL
NO.
Revision of Suggested Radio Remarks
- 2 -
for Secretary Morgenthau for Phase 2, VE Day Program
In so doing they have acted with extraordinary good common
(Revised April 26 on basis of Secretary's comment)
sense. Over 85 million Americans have purchased War Bonds.
Over 26 million working men and women buy them month-in,
with the end of major military operations in Europe,
month-out on the payroll savings plan.
one of our two wars is officially over. le and our Allies
have fashioned an overwhelming victory out of what once
Through the purchase of war Bonds we have been able to
seemed to many the ashes of defeat, and have destroyed for-
contribute greatly to the stabilization of our economy. To
ever the Nazi threat to our democratic institutions and our
have siphoned off the dangerous dollars that otherwise would
way of life.
have produced inflation.
Our job now is to mobilize our strength for the defeat
If ne are to win the peace as well as the war, the cost
of Japan with the same singleness of purpose, the same con-
of living must be kept stable and the purchasing power of
centration of energy, the same overwhelming power, that we
acney preserved. A reckless inflation followed by the catas-
employed to crush Hitler Germany.
trophe of deflation - with its unemployment, bankruptcies,
alsery and heartache -- must be prevented at all cost. Let's
We're going to crush Japan, but it's going to take
make no mistake - a dangerous period lies ahead. But the
time, backbreaking effort and overpowering equipment. We'll
American people have nothing to fear If they show in the
need more of everything ships tanks trucks whole
future the same common sense they have shown in the past, and
new air force. And our national obligation to the wounded
continue to put every penny over rock-bottom expenses into
and otherwise disabled, and to men discharged as they ful-
the purchase of more and more Har Bonds.
fill the duties for which they have been called, will con-
tinue to grow.
We still have a. long, bitter road to travel before final
victory is ours. Each of us should dedicate himself anew to
Up to now Americans on the home front have done a
that objective. One thing that all of us can and must do
magnificent job in financing this war the voluntary way.
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/ MICROFILM
ROLL NO.
- 3 -
is rally to the support of the Seventh War Loan with every-
thing se have. I know of no nore vital way in which Americans
can give concrete expression and force to their determina-
tion to back up our fighting men than by buying more extra
bonds In this war loan drive. Putting the Seventh Har Loan
over-the-quota, la the most important immediate job we on
the home front have to do.
The Seventh War Loan is in nany respects the greatest
war financing operation we have ever undertaken. The 7
=
billion dollar individual quota is the highest yet, and the
4 billion dollar E bond quota a terrific, hard-to-make 60 per
cent increase over the last drive.
Let's each and everyone of us promise that the victory
of our men in Germany shall not breed the kind of weakening
over-confidence which can rob us of complete victory that
this war shall be fought through to a finish with all that
we have and all that we are that we, the people, will dig
into our pookets, purses, and savings to sake the success
of the Seventh Har Loan a symbol of our determination.
-(Oo-
Regraded Une
PRECISION
TRADE MARK
MICROSTAT
MICROFILM
ROLL NO.
Revision of Suggested Radio Remarks
4/26/43
- 2 -
for Secretary Morgenthau for Phase 2, VE Day Program
In so doing they have acted with extraordinary good common
(Revised April 26 on basis of Secretary's comment)
sense. Over 85 million Americans have purchased War Bonds.
Over 26 million working men and women buy them month-in,
with the end of major military operations in Europe,
month-out on the payroll savings plan.
one of our two wars is officially over. We and our Allies
Through the purchase of sar Bonds we have been able to
have fashioned an overwhelming victory out of what once
contribute greatly to the stabilization of our economy. ne
seemed to many the ashes of defeat, and have destroyed for-
have siphoned off the cangerous dollars that otherwise would
ever the Nazi threat to our democratic institutions and our
have produced inflation.
way of life.
If we are to win the peace as well as the war, the cost
Our job now is to mobilize dur strength for the defeat
of living must be kept stable and the purchasing power of
of Japan with the same singlenessof purpose, the same con-
money preserved. A reckless inflation followed by the catas-
centration of energy, the same overwheiming power, that we
trophe of deflation with its unemployment, bankruptcies,
employed to crush Hitler Germany.
misery and neartache must be prevented at all cost. Let's
We're going to crush Japan, but it's going to take
nake no mistake a dangerous period lies ahead. But the
time, backbreaking effort and overpowering equipment. We'll
American people have nothing to fear if they show in the
need more of everything
ships
tanks
trucks
whole
future the same common sense they have shown in the past, and
new air force. And our national obligation to the wounded
continue to put every penny over rock-bottom expenses into
and otherwise disabled, and to men discharged as they ful-
the purchase of more and more har Bonds.
fill the duties for which they have been called, will con-
We still have a long, oitter road to travel before final
tinue to grow.
victory is ours. Each of us should dedicate himself anew to
Up to now Americans on the home front have done a
that objective. One thing that all of us can and must do
magnificent job in financing this war the voluntary way.
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/ MICROFILM
ROLL NO.
TREASURY DEPARTMENT
41
- 3 -
INTER OFFICE COMMUNICATION
DATE
is rally to the support of the Seventh War Loan with every-
April 20, 1045
thing we have. I know of no more vital way in which Americans
TO
Secretary
can give concrete expression and force to their determina-
FROM
-
DUDOIS
tion to back up our fighting men than by buying more extra
atthorid are Chose artinlon which 2063 has prepared
bonds in this war loan drive. Putting the Seventh War Loan
The DU Ilection in the following order:
over-the-quota, is the most important immediate job we on
(1) to Peace Tate includes . coubination
of calorial THIS CREDITOR ED of the Sook, dealing with the
the home front have to do.
HEAVEL of luavy Initiatry, and Chapter un, dealing with
The point that = strow Generary is not necessary for n.
The Seventh War Loan is in many respects the greatest
strong Director
war financing operation we have ever undertaken. The 7
(2) 20,000,000 UP ANS weat Store -- This combines
starful 18 Chepter ST of the liner on End SEN# subject
white V.
billion dollar Individual quota is the highest yet, and the
4 billion dollar E bond cuota a terrific, hard-to-make 60 per
(5) Desocratic 0,015 CRE Cleak The Plans -- This
- The 4120 15 = of the Book.
cent increase over the last drive.
After reading Chese three articles, I - Inclined
to the visa Limb the Rest article which is
cublished 18 be Chapter All of the Book, dealing
Let's each and everyone of us promise that the victory
WERE the voint that Terring has the All to THE it again.
of our men in Germany shall not breed the kind of weakening
It to 14 Vat 1: 1a Important that the moblic first
THE courtaced 31 this point before a drantle program for
over-confidence which can roo us of complete victory that
taking suay - To discussed. Although
there iss been # lot with has heen weitten on this
this war snall be fought through to a finish with all that
vosation, 1 000°C believe there has been scough. And
what there 145 been LES not been nearly LE effective as
We have and all that we are that we, the people, will dig
believe Clarter VIST and be, particularly 11 we
added to It couse references to the recent ovidence of
the misrector of the Loth In in Lew York and
into our pockets, purses, and savings to make the success
T ave not Had EN tunity to illness this point with
of the Seventh har Loan a symbol of our determination.
goo
-000-
Regraded Unclassified
RECISION MICROFILM BOLL NO.
117
118
- 2 -
THE MORGETTHAU PLAN
usapons of war. Then the power to make до» ones would be
I. A PAYS to PEACE
completely eliminated. The comunity of nations would not, If
The first thing to do with 1 houleidal maniac who has mm
they were using as sensible standards 0.0 those of a parole
smok is to take away his revolver and search his for consealed
officer recommencing treatment for a maniac, take any chances
waspons. Then comes the problem o, shat to do with Nin. If he
that Cornany could roarn for another try at world conguest.
is nee of the nost export guneaithe the town has over known, that
Like the neighbors of the gunsmith, the community of nations
would not be regarded so nn extenuating aircumatance. Even the
night hope that & oure for war máness would be possible. But they
mildest, most sympathetic community would balk at the 1dea of
would not Ive Certany - chance to run anok again with anything more
deadly than her care hands.
setting him up in a well equipped metal-working shop chile his
Once that simple decision is mile, the execution of it becomes
relatives and neighbors see whether It 10 possible to eure him.
E Little more complicated than the treatment of any individual
Suspicion, perhaps uven anger would be pollsed by any suggestion
maniac. But not out of proportion to the size of the task.
from some fellow over in the next county that the loss of such
Any country's wer potential these days can be neasured by its
a highly chilled murderer's talents and strength NO le be just
heavy industries much more accurately than by the size of its army,
too mich to bear. If by any chance the local milborities were
navy -no air force at any iven moment. In four years the peace-
so bewildered or Inbecile no to yield to the suggestion, overy
time incustrial machine of the United States usa converted into
nan in town would probably are himself against the chance of
& weapon that courfed Germany's once l'amous Lathuarie, Wehrmscht
meeting the gunnaith como dark night. Before long there would
and the rest. That only lends point and emphasis to the equally
be an epidemic of nervous shooting.
partinent fact that Gernany's industrial machine in not much
The application of the rather obvious little rules of comon
more time use converted into a seapon that crushed the proud
sense to international problems is often wonderfully effective.
French oray theoretically safe benind its Maginot Line. Soldiers
Suppose the test of the individual homicidal manime were to be
understand this very well. For every big air raid on a fortress
tried with Generary, who twice in a generation has run work in the
or an army camp that we have read about in the newspapers, we
world to precipitate mass surders which have cost several times
now accounts of hundreds directed against important industrial
more lives than all the provious wars of recorded history put
centers. The Allied high command know where Germany's real
together.
strength ky, and pounded the factories accordingly.
First of all, she would be stripped of gune and tanks and
That being so, It would coem rather obvious that to disarm
planes, submarines and Cortifications and bombs, all the actual
Germany in any real sense of the word is to remove the industries
Regraded Unclassified
RECISION
MICROSTAT
MICROFILM
ROLL NO.
119
- 4
120
- 3 -
In removing all heavy chenical factories from the Reich, it
that would make rearmanent possible. It is all very well to con-
would be necessary to see that che was deprived of her position
fiscate guns, planes, tanks, submarines, military installations
in International cartels in this field. The production of such
and so on. That is like taking anay the revolver the homicical
Items ne pharmaceuticals night be permitted as It can be carried
maniac vas brundishing. The next step is to destroy or confiscate
on In small units which could not become a danger. However, the
the Cerman plants where now and more horrifying weapons of war
Items permitted mut be carefully selected, hearing in aind that
could be forged. That is like keeping the homiciesl [unamith out
n. perfume factory, for example, can turn to the manufacture of
of a netal-working shop.
poison gue without any conversion problem at all.
Germany's real arnament is a triple threat of metallurgical,
3. The Electrical Group. It is more then D. coincidence that
chemical and electrical industries. The pre-uar Reich dominated
"power" has Lecome n. synonya for electricity. of that kind of
Europe in those fields. Therefore, she dominated Europe militorily
nower Germany should be permitted to rotain only so much as she
as well, until she challenged even groater industrial powers.
needs for her household and reduced Industrial needs. The
Without these factories, the Cermans could not DATE Insulged their
tresendous londs that served to produce aluminum and magnesium
lust for conquest in 1914 or 1939. without these Inctories, they
could be unnecessary for her, ulnee she would not be peridited to
could not GO it again. The specific factories which will always
retain any mobinery to make the light metals which can so easily
be E threat to peace in Corman hands are:
be fabricated into planos. Hor would she be allowed plants for
1. The Extals Group. Blast furnaces, electric furnices,
the manufacture of dynamos, turbines, communications devices or
rolling mills all the plants used in turning iron oro into
electronic equipment. Factories Inenpable of producing electrical
finished primary iron and stool products -- operate exactly the
goods asre deadly than breaters, vacuma cleaners and hair curlers
semo for war as for poace. To carry through disarmant of Cormany
pould be left.
in this area, she would have to be deprived not only of these basic
The Emotories taken from Dermany would be rebuilt in other
establishments but also of all factories caneble of making machine
parts of Europe. They pould constitute some reparation for
-
tools, airplane engines, airplanes, loconotives end other havey
damage done, but they would also help balance Europe better
railroad equipment, Diesel engines, stool rails, heavy tractors,
industrially 80 that the Continent need never again
automobiles.
be overshadowed by the mehine power of n. single nation.
2. The Chemical Group. These plants are the source of Germany's
Devastated countries should have priority in claiming what is
explosives, rubber, gasoline. They were so important & weapon that
left of Germany's havy Industrial equipment, the nechanics of
their development and operation were largely supervised by the Army.
Regraded Unclassified
MICROFILM
BOLL
RECISION
TRADE MARK
122
121
- 6 -
- 5 .
The notion that Genera heavy industry in essential to the well
alloting it to be worked out by agreement asong the Allies.
Delay would be the chief danger. Each claimant country,
being of Europe la a 18th sedulously nurtured by German propaganda
therefore, should be given no 2018 Uhan six months to dismentle
over many years.
But examined in the light of pre-war facts and postwar
end remove what It wants from Geriany. Any heavy industry any-
where in the Reich that remains after that should be destroyed
probabilities, the theory breaks down at every point. In its
imediately.
place are the realities, which prove:
There have been transfers of Industry quite 18 spectacilar
1. That Certany filled a relatively small proportion of
Europe's real harry industry needs.
and 0.0 difficult LE this. Ger any herself noved a whole group
2. That these needs could readily be supplied by other nations.
of war industries from her western borders Into Silesia and
3. That If efficiency and 00.000 sense had been the only
behind the Sudeton nountains in A1 effort to escape nir rulde.
factors, other nations would have been supplying these
needs lon since, but were prevented by ruthless German
German war plants In Auntria and Voravis have operated with
trade practicos.
" That Terrary absorbed a relatively small asount of Europe's
heavy machinery looted from Pance and Poland. Hor has the
(and the world's) exports.
ability to move heavy industry over the Inndscape been 11. Germen
" That not suppliers all find ever larger markets when the
monopoly. Russia took any plants apart in the face of advancing
Industry of the Continent in better balanced than it can
be under German domination.
German araies and pus then together again hundrede of miles away
6. That lemacy herself cen achieve a fair level of prosperity
without heavy industry.
in places whose people had hardly leason what a factory looked
7. That reseral of German heavy Industry will holp develop
like. America has shipped mole factories overseas 1.0 Lend-Lease.
the industrios of other nations and result in a. higher
standard of living for Europe, making her 8. better market
China noved hundreds of establishments Into the Interior on the
for and neighbor to all the rest of the world.
backs of men, women end children.
The advocates of a Seriany strong in heavy industry usually assert
Just as the end of German heavy Industry will relieve the
that such a menacing colossus is necessary to "Enropean economy"
world of an intolerable fear of returned appression, so it will
or at least to the maintenance of "economic equilibrium in Europe."
rellove all Durope of the iron bonis which were made In Germany
Actually there le no *European economy," certainly not in the sense
to confine the Industries of the rest of the Continent within
that there is a. United States economy. Some thirty countries in
mall, unnatural limits. Once set free from German chains, which
Europe have their separate sconomies, and " great variety of then,
have barred Its expansion, - repean industry in general will soon
100. They are Interrelated as all countries are related, but not
far more than replace the production taken from the Reich. The
Isolated within their own continental boundary. For there is no
net result 111 be nore steel, checicals and electrical equipment,
European economic border which can be marked out for any such
as well as a rising standard of living for all the people in
separate consideration as the backers of fi. strong Germany indicate.
Europe, not just 60 million Corpans.
Regraded Unclassified
MICROFILM
- 8 -
124
123
- 7 -
Americans, who have creatly increased their plant capacity during
As for "oconomic equilibrium in Europe," it has been upset n creat
the mr, could easily serve this additional market, and probably
deal more than it has been stabilized by Gorman incuntry and its
just 0,0 cheaply as Germany. The whole amount in about 45 of the
overlords.
alaima estimates of postmer United States exports under full
In point of fact, Germany never 616 su, ly surope with very much
production.
iron and stool, natallurgical products, chemicals or electrical equip-
It is impossible to neasure statistically just how such German
nent -- the chief industries to be forbidden her. In her best years
oppression prevented the normal, natural industrialization of other
of exports, 1929 and 1937, she sold ,775 million worth of these
European countries. But we know it WES cruelly effective. Cartels,
products to all the countries of Europe, except Russia, jut together.
export subsicies, special kinds of currencies and clearing agreements
And even Germany's small porcentage of the suropean market
1020 the chief nungons.
was only achieved by vish use of trade practicus which the world
Clearing appropents word bilstoral arrea coente octensibly
hoper to abolish in the interest of peace and properity. Formany
designed to provent exchange fluctuations. They did it by carrying
gave government subsidios of fantustic size to stimulate cuports.
on trude Detwoon the two countries at en arreed rate of exchange
Clouring arrangements, multiple currency manoguyres and foreign
without either usin the currency of the other. Each set up a clearing
exchange discrimination were used as part of e system to force other
03.100. Importers jadé to this clearing office in their own currency.
countries to buy in Termany or give up the Cerman market for their
Expectors 1020 joid by the clearing office, also in Under own currency.
awn products.
In the lou run the amounts ase to balance as between imports and
Under any kind of fair competition, Comany would be lucky after
exports and as between the two countries. A typical transaction
the war, and oven if her factories couli be rebuilt and reconverted
between Commany and Poland would work out like this:
quickly, to roach much more than half her pre-war sales in the heavy
A Fole solls a Cornan - trainload of timber. The Polish clearing
industries. Perhaps $400 million worth could be disposed of without
07:100 pays its citizen in clotys; the German timber buyer pays his
violent artificial aids. In the proportion of exports in Germany's
clearing office in marks. In order to get its money back, the Polish
most successful years this would be divided:
clearing office has to be sure a Polo buys something in Cormany of
Iron, stool and other motal products
S 72 million
Machinery (except electrical)
100
the same value as the timber automobiles perhaps. men the
Electrical equipment
48
Chemicals
48
Polish denler buys Corran coro, Le pays zlotys into his own clearing
Automobiles
32
office; the German clearing office pays the Gorman car manufacturer
The idea that these amounts could not be supplied by plants which
off in marks. It counde like good business until one of two things
will be established outside Seriany and by existing industries in
Europe is fantastic. But even if it W01°0 true, the British and
Regraded Unclassified
MICROFILM
126
125
- 10 -
- 9 -
either drive competitors out of business or force them into
happens maybe both. Germany Tears Poland may be building up her
agreements to restrict their output. In either case, European
own industries with Gerund steel or the Polich dealer any profer
Industry in general una stanted in its natural growth.
Lo buy American ears because they stand up better under Polish
But the really big thing was the international cartel.
road conditions. In either case, Dereasy weekens Poland, and
Fermany even forced t.0 powerful industries B.S. the United States
usually in 5. vital industrial point. Berlin Inclate that
electrical, alusinus, optionl goods and chenical glants to accept
Poland take harmonicas and Christmas tree decorations instead
restrictions on volume, territories and prices. If they could do
of bullding up her Industry and Poland yields because she has
that to General Electric and Stendard 011, what they could do to
the money standing to her credit in Germay and nannot use It
D. struggling Industry in n. country like Tugoslavia or Greece
any other way. Or Poland forces the Polloh douler to buy
or Telgium use literally a shame.
Geruan instead of American CAPE either by a discriminatory
German dominance of cartels use not bused upon superior wisdom
tariff, Import quotas OP exchange controls.
or strength or worlth, but upon . difference in aim. German members,
Multiple marks achieved the care ends through to different
abo virtually had their government as - silent senior partner, were
device. Germany would malte payments to Toreign creditore only
minly bent on carrying out that government's aggressive policies.
in special kinds of marks. There vas I travel mark quoted at
Other mationalition joined the cartels for strictly business reasons.
25 cents, good only for tourist travel in Generally, But there
The Service was linked with his government in E campaign of economic
use EL foreign trade mark valued by the at 35 cente,
conquest. The American, on the other extreme, was frequently defying
good for the purchase of Geress goods by foreigners who had
his government and in any . case concerned solely with the cartel IS n.
mde special arran ements. This in effect with the Versan
20118 of wking money or consolidating industrial power. Therefore
products cheoper. Foreign holders of there mais were tempted
the German had EL clear field for deploying industry 0.8 an auxiliary
strongly to et machinery from the winh Instead of from their
of the arry. Their collosgues in other countries were usually
own manufacturers or from another country shick did not offer
satisfied with profits, freedom from competition at home and at
this bribe of bargain-basenent currencies.
most a share of foreign markets on a. comfortably arranged basis to
Export subsidies schieved the identical purpose. Part of
keep prices up.
B. special tax placed on all Geruan industries was used to
The nord "cartel" is used rather indiscriminately, often nerely
subsidize exporters, who could then undersell any local
AS a term of abuse. Strictly speaking, it is an organization by which
manufacturer in Europe In his own market. The German could
producers in a given line combine to carry out E common policy of
production, prices or sales. It in frequently meant to apply only
Regraded Unclassified
PRECISION TRADE MARK MICROSTAT/L.OM MICROFILM BOLL HO.
127
128
- 11 -
- 12 -
to an arrangement by which producers restrict their output. In either
dollar a ton. For, as any Frenchman would have told you, a dollar
case, the members retain individual Identity although they set
was 25 france. The Germans on the other hand seemed to have gone on
production quotes and prices, divide exclusive territories and
a spree. They regularly exceeded their quota and cheerfully paid the
conetines even operate branch plants and sales offices jointly.
fine. In one year it anounted to about $10 million for 2,500,000 tons
For the most part, cartel agreements are illegal in the United
excess production. But It turned out that the Germans knew what they
States. In Germany they are not only legal but congulsory. They
were doing. After E. few years they argued pleusibly that their In-
are rigidly controlled and supervised by e, special administrative
creased capacity was so great that 10 entitled then to de bigger quota.
agency and by the Maintry of Economic Affairs, to the government
Their increased capacity second only to that of the United States
really directs their policies. Between the world ware, some two or
by chen gave then the power to best their European rivals over the
three thousand cartels mere organized in Geruany. Vore than 100 of
head to get what they mated. Their pig iron quote was raised, and
them operated on an International seele. These are the ones that
by 1988 German steel production mas 168% bigger then that of France.
carried on Germany's pre-war economic hostilities.
Without the cartol deal, the two countries novid normally have
They were 1. menace and worse in more ways than one, but nowhere
developed along about the proportions of 1926. As it was, France
as such n.s. in keeping other countries from a natural, healthy Indus-
sold her iron ore to Germany in greater volume, contented herself
trial growth. They did it by restrictive agreements within the
with en Inadequate steel capacity and relinguished to Germany markets
cartela, by selling et El loss to prevent EL now competitor from getting
ahe night only have kept or galned for herself. Germany could
started, by control of patents often the patents of Americans
get using with It in part because German cartel nombers were part
and by simple boycott. The result was always n. swellen German and
owners of all the Important steel and chemical companies in Europe.
is shrunken European industry. Geruany never made 0.0 smoh LS the others
It use the cane steel cartel that showed how an industry can
lost. Actual examples are the best illustration of how cartels helped
be stran led at birth In a little European country. Shortly before
Germany wealten or prevent the birth of neighboring Industry.
the outbreak of the war, Greece was planning to build steel mills
In 1926 nn international steel cartel was organized. At the
of her om. Germany not only refused to supply any equipment after
time, Germany produced only about 2 1/2, more pig Iron than France.
having gained a predominant place in the Greek economy, but used her
The cartel agreement fixed the quota of each meaber, and each mas
influence to keep other members of the cartel from doing 00. In
to pay into a common pool $1 for every ton it produced. But for
= letter from the German Steel Cartel to the international body,
every ton produced over the quota, the producer had to pay by way
Attorney General Francis Biddle found this paragraph:
of a fine nn extra $4 a ton. The French very thriftily kept within
% have left no stone unturned in order by all usens to prevent
their quota and even cut production a bit now and then to save the
the establishment of an iron industry in Graece."
Regraded Unclassified
MICROFILM
129
130
- 14 -
- 13 -
Hearly half of the 0160 million was in Iron ore. There can be
Gerun cartellate prevented the growth of French aye industries
little doubt that a properly balanced European distribut on of
and blocked the establishment of a Franch synthetle oil industry.
industry would easily absorb this iron and more, as well as all the
French industrialists were permitted to nake noney, but their country
other Items formerly sold to Gerenny. Some will be used nt home in
was fatally weakened both in the useful crafts of gesce and the pla
non Industries and to Improve local standards of living. Others will
necessities of war.
be purchased by auropean countries which are pormitted to develop
Initiplied through all the hundred international cartels in which
or expand their Industries according to the dictates of free compe-
German industry took part, these practices broke down the strength of
tition.
Europe. The weakoning process case first in the oconomic field and
The loss of heavy Industry sould docrease German imports of
of course use reflected in military Limotence Inter on.
agricultural products, and in value this wes always important
Through all the growth of Gersan power -- selieved because
to merces than the buying of German heavy industry. But the net
the German government joined the German marteliste in un uniqual
amount of food for Europeans to eat alll be bigger than over. Many
economic battle against Coroign industries there - up c. lagend
of displaced industrial workers will to on the land and
that Geruany was & huge and essential and Trrepleceable mint for
Improve the matoriously inefficient and archanic German farming methods.
the raw materials of Europe. Yet the flgires also she was even
The 1007 Imports of those products were unusually high for
less of a factor us a buyer than no = sumlier. Almost no one will
Termany and reached : total of $350 alllion -- the equivalent of
nice her heavy Industries 12 a market.
about 1 of the American people's food 6111 that year. Whether
The year 1937 marked Gerunny's United purchases of industrial
Certany keeps heavy Industry or not, this standard could not be
raw materials and sani-maufactures since the back of the 1929 bood.
mintained after the sar and would not be reached for di great many
The enorgous Iron and stool, metaller Teal, electrical and chealeal
78820. For one thing. e good desl of the imports of food were taken
indestries along thes bought from all Europe, except = grand
is part of to empalys for aking other countries dependent on the
total of 0100 million worth. This la less than the total of PAW
Roich, not because the food was needed in Germany. For another thing,
exterials and sexi-manufactures imported that year by a single
Germany will be unable to exchange products of heavy industry for
United States industry automobiles.
DO such food unless the Allies are prepared not only to give up
For were these Gerumn purchases = watter of life and death
reparations but notually to grant Geruany a priority for machinery
for any single country. Sweden une topo -- 350 million of the
and materials ahead of the needs of liberated nations. Under any
$160 million total. Aight other European countries shared in it
circumstances, Germany will have little food except what she can
to the extent of more than (5 million each. Eleven others had a
raise for herself.
small, constimes 5. negligible portion.
Regraded Unclassified
PRECISION MICROFILM
132,
131
- 16 -
- 16 -
in the first place if access to raw materials, markets, labor and
This does not nean that the other countries of Europe will not
pourse had been the really decisive factors in European development.
sell food. They will sell pore than ever before. The de suppliers
The shift will be all the conior because =0 many Corman heavy
of Germany in 1937 mere Dennark to the extent of 150 million; the
incustrial plants will have been destroyed in the mr. It will be
Motherlands, Italy and Domanie with more than 40 villion each;
quite 4a Personable to retuile then outside the Reich's corders as
Yugoslavia and Hungary, about 135 million each. This accounted for
within. Holland, for example, will make electrical equipment and
more than two-thirds of Germany's agricultural imports. Tet ell
metal products instead of being meroly a port through which German
of these countries except periode Denember and Holland need food for
exports were routee. France will make stool herself from her own
their oun people far more than they need exports. Increased in-
iron ore, win_ Cerson coke as she always has. Britain may find a
dustrialization, which they night be able to nehieve when freed Iron
reviving market for her coul. Chemical Industries will spring up
German bondage, would pendit Yugoslave, / and
all over Europe. The onuxite of Southenstern Europe and Danube
Italians to eat better. They would stat n. market for real surplus
power giver the clue to the location of the future aluminum plants.
crops in the factory town of other mirica. Dennark and Holland,
Horony, Holland and other maritime states will easily fill the EAP
particularly the latter, novld also have blower home wrkets and would
laft by the Forman shipyards -- and not with submarines either.
find buyers in such countries as France, England, and Czechoclovakla.
One other loopholo for Dorman heavy industry and future German
Actually, even 15 Germany ceared to be . purchaser of anything
aggression would remain. That is the Serman-controlled factory
at all, un entirely different group of countries from those The cold
abroad, linked to the network of German foreign trade, Steel
lost to her muld have to sake the bigger readjurtments. They are
mile in Succen, machine tool plants in Swifzerland, a chemical
countries that ATO going to face petty staggering readjustments
incustry In Argentine ni ht serve a now not of Comman war lords
anymy. In 1937, five Eastern countries aid rely upon
almost as nell as the Krupp Works at Essen. This is no fanciful
Germany for & very large part of their exports, both food and other
fear conjured out of a fevered imagination. It is a very real
materials. Bulgaris sold 43, of her total exports to the Roloh;
threat and one which the Germans brought into reality with deadly
Turkey, 36% Latvia, 35, Greece, 11,4; Astonia, 30,5. The percentages
effect in the past. The United States Senate's Kilgoro Committee,
were hight the netual anounts relatively small. A very (em Indus-
after e careful study of this whole problem reported that after
tries In these countries would enable then to absorb locally all
the war:
they sold to Gerhany. A few more industries in other neighboring
the firm of Carl Zoiss, by creating a manufacturing
countries would enable them to expand their exports over the 1937
subsidiary in Holland, was able to evade the prohibition on the
figure.
The end of heavy industry in Germany will perit transfer of
factories to the very places where they would have been located
Regraded Unclassified
MICROFILM
133
134
- 17 =
- 18 -
manufacture of military optical instruments, such 0.0 range-finders
Under the Mazia, German business assets abroad never were
and periscopes. The firm of Pricorich Krupp nullified a restriction
considered 88 the private property of their owners but as a weapon
on the manufacture of armaments by ,aining control of Bofors, a
of economic accrossion, politionl intervention 02 military prepara-
Swedish aruament firm."
tion for the German State. The State decided just what business
The same pattern has been developing for many months, as the
Its citizen night keep abroad. Then the State told his what to do
Hazis recognized the inevitable. Enough evidence vas brought before
with it. One ,roup would be kept operating at enormous loss (not
the Kilgore Committee to inspire the charge:
by domestic subsidies, to CP&W E. foreign nation's economy or part
"The Germen appressors have begun to pursue a strategy which
of It under Torman influence. Another mould be commanded to use
they found successful a quarter century ago; they are alroady ce-
its funds for propaganca, emplonage, secotage, cribery or some
ploying their economic reservos throughout the corld in preparation
stair form of politionl penetration. Still another would be the
for & third attennt at world domination. They plan to resume the
medium for stockyllin materials needed in the cowing war -- oil,
old commercial pattern which served then 10 well. Je must Insure
rusber, nickel, tungsten, etc.
that in the defect of Comany the economic forces of approssion
The effect of this USA so obviously cangerous that six months
will be forever eliminated along with the military forces."
before Form the United States had to "froeze" all German
À practical program for carrying out this Senatorial recor-
accete In this country. l'ost of the other American republics
mendation would have to include:
followed our cample for their own protection from the Hosts If
1. Confisuation of German assets abroad.
these Remans could crate 20 much distureance in a moro powerful
2. Prohibition of German investment in foreign
industries.
country an ocean any Iron the center of Jasi infection, it is
3. Strict United Nations control of all German
plain with shat devestating effect their trading ethics and assets
credits obtained by exports, by inheritance
or in any other way.
cords is used upon relatively helpless nations within easy bomber
4. Similar control over all Sorman foreign ex-
range.
change operations.
An it is not anouch to dectroy Gorman var industry without
5. Prohibition of Corman perticipation in inter-
national cartols. (If cartoli chamgelves are
makin sure it cannot be recuilt, so the possible renewal of German
abolished, it would be all to the good, but
that is another problem.)
oconomic approssion must be locked at the source after the current
6. Elimination of Corman ownership of property
assets are confiscated. Outright ownership could be replaced by
in neutral countries.
the control of a dominant trader which would permit the Reich to
attompt once more the purchase of military supplies and of mon's
consciences.
Regraded Unclassified
135
136
- 19 -
- 20 -
One proventive messure is Allied control over all Comman
foreign exchange transactions. The Gormane perfected the use of
built up a network which impoired the production of other nations,
such control as an instrument for war. Funds for foreign purchases
obtained courees of foreign exchange for Cernany, gathered
were allocated to Items that sould help the Cerman var effort
economic intolligence and spread Ensi propaganda."
a shiplone of butter or a foreign politician. The rame controls
The argument against sttempting to control another nation's
my be used to vaice Termany's foreign trade en Instrucent for
economy dovm to the last detail is that even with whole armies of
penco. IL would at loast camble the Allien to be cortain that
inspectors car technicians it is almost impossible, EF the Masis
= tractor ostensibly meant for form use doos not have e motor
found in the countrier they occupied. Applied to the internal
powerful enough to haul = field un.
economy of this in 5 cound arguent. Aut foreign trade
Exclusion of Depainy from cortols in en obvious lesson of
is enstrur miss. It con - controlled by c [00 key people In
experience. An one specific example, the production of ma_nezium
1. It: buy places. The two poblem are RE different as collecting
in the United States use limited by cartel agreements 80 that even
E metion's Internal revenue cas collectin the customs. The
under the spur of the delense amergency, Thurnan Arnold tentified
United States assés
persons for the lest back; the
before the THEC in 1940, our output had [one up from 4,000 tons
second is efficiently by
to only 6,000 while the Cormans were turning out 80,000 to 70,000
...
tons. It was this sort of thing which prompted the Kilgore Con-
The all instion of German usavy industry is no hate campaign.
mittee to declare:
The world has seen enough of instred, and the United Rations have
"Almost immediately, as a consequence of this unholy alliance
no noco Lo adopt the policy of their enemios. Hor is the Togren
between Hitler and the cartelists, Termany's plans for economic
c panaces for react, It 10, honever, an escential preliminary to
warfare, aimed at ultimate world comination, varo expended. The
perce, to realization of the 16001n for which the United States
German Government become a silont partner In the miltitude of
has been righting, to the security of all nations (even Including
cartel agreements anon, Crean, American, Tritish, rench and
Cormany), and to tast better corld which the smorifices of all
other concerns with which German industry ind established cartel
peoples have entitled them to expect.
relations.
that to do with Cordany it the first of the de postwar
"Under cover of cartel agreements, Cernany penetrated the
questions the United Entions must answer. The right answer will
sconomy of other nations, including the United States. Veing
-ive no a tremendous lift tourd the attainment of our other aims, --
their cartel affiliates or subsidiaries, Cerman industrialists
137
- 21 -
toward that Hoodrow .lleon called a "comunity of power to replace
the balance of power and Icean the nense, tount the increasing
exchange of roods oné Idean amon, nations, toward the continuence
of full production and full employment at home.
RECISION TRADE MARK MICROSTAT MICROFILM ROLL
NO.
25
April 26, 1945
Dear Walter:
Thank you for your letter of April 16,
with its heartfelt expression of grief in
the death of President Roosevelt. I know
that to you this has been a personal tragedy
and I know that you too realize what a great
loss it 1 = to our country and to the whole
world.
Ve shall both have many memories of
our contacts during these past years and I
appreciate your comment upon my own part in
his Administration. I join with you in
hoping that the peace for which he gave his
life may come and quickly.
Mrs. Morgenthau has been 111 and 1s
away from Washington, but I know if she were
$
here she would wish me to add her thanks
for your greetings.
Sincerely,
(Signe4) will
Mr. Valter F. Dillingham
P. o. Box 3268
Honolulu 1, T. H.
Regraded Unclassified
RECISION
TRADE
MARK
MICROSTAT/
MICROFILM
BOLL NO.
WALTER F. DILLINGHAM
HONOLULU.T.H.
CABLE ADDRESS RETURN
P. 0, Fox some, Anne 1
- 14. 194F
25
PERCHAL
April 26, 1945.
Honorable lieney Momenthau
Trensury Desertment
Washforten Plateter - Columnia
Denr llenzy Monganthan
The trade minest which broke over the world tent week -- en ment
Centlemen:
that It in hard for no to express my feelings, An 70" know my personal
relations and friendable with Franklin Hoonevelt cree been to the time
when he wild Assistent Decentary of the Mavy and be end T struggler -
The letter which you both signed, express-
en intelente Pearl Herber problem in 1912 end 14. From that time untill
the your grief in the death of President Recesselt,
now T have had the createst recent and wiche for his. To exchanged
has just reached - at I viali to thank you
letters when he who elected Governor of New York, end from time to time
for your courtesy in vriting - you 414. This
since then we have had little eatch visite in Weshington, and telen
has been, - you My, a terrific loss, not only
more then the prescribed ten minutes visit here in Honolulu, It ---
for our our country bet for all the countries of
through him, you any remember, that , had the placeure of seeting you and
the write Tour expression of grief - behalf
Vri. Morganthau when you case here for " period of met,
of others in your organization and in your
country 1a very mmly approciated.
Knowing from the President and frie you of the very close and
devoted friendable with - yours 1 medize what bie entre senne to you.
Sincerely,
Tt should be and I know 11 will be - nouree of ecefort to you to told the
thought of hns loyally end only you have supported him in the prest task
which be enstened to you le her been anny times expressed, the death of
the President 14 trade and traventle to our Country. T know from de
(Signed) H. Morgenthaw, JA
cram line of bis feeling that his lob was to carry on and nee 5 Instine
trende in the world established. For Via T m/ret that be - dented -
this instrunte revent for the wirk which be sccomplished.
With creatings and sichs to Pre. Vorgenting end to you,
Sincerely
Resere. 1. Handl, Governor,
N. Introns, General Manager,
Tenan d'Italia,
NAME F. DILLINGHAM
home, Italy.
GMF/dhs
Regraded Unclassified
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Banca d' Italia
Capitale versato L 300000-000
Rome, 14 April 1945
AMMINISTRAZIONE CENTRALE
TREASURY DEPARTMENT H 142
INTER OFFICE COMMUNICATION
Dear Dr.Secretary :
DATEAPRIL 26, 1945
It in with the deopent grief that we
TO
Mr. FitsGerald
have received the news of President Recuevelt's
FROM Ted R. Camble
death.
All the world is moved for the Super-
ture of the Nan who vas feeling, telking and neting
The Secretary asked - for a nemo that he might want
ne the true champion of humanity.
to use for telling the President about our payroll operation.
Italy is sepecially grieved with the
I think the attached answers his request.
loss of a precious friend that understood and
assisted her during the most difficult period of
Attachment
her history.
Ze beg you to accept, less Nr. Secre-
try, the nost profound regret of cursolves per-
sonally and of our Bank.
with best regards, believe us,
Yours very truly,
Lurge Enaml
=. Introna
L.Sinnuff
General Manager
Governor
Ite.HINRY MORGENTHAU Jr.
Secretary of the U.S.A. Treasury
Tashington, D.C.
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Secretary Morgenthau
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April 26, 1945
INTER OFFICE COMMUNICATION
DATE April 26, 1945
objective of which la to 000 that each nan and woman
worker In the plants, shipyards, factories and nines of
TO
Secretary Eorgenthau
the country la personally solicited and [Iven an oppor-
tunity to participate in the 7th War Loan drive by buying
extra Sonds in an amount commensurate with his or her
FROM Ted R. Camble
ability to pay.
Booklets, posters, Bond envelopes and B. special War
I thought perhaps you night want to call the attention
Dond movie for the plants were sritten, produced and made
of the President to the very important home front notivity
ready for distribution.
currently being carried forward by the War Finance Division
of the Treasury.
Early in February there were & series of regional
meetings held to present our plans and materials to our
Naturally, everyone who 1s aware of the present high
State committees.
Income of the people as related to the scareity of the goods
available 10 gravely concerned with the situation which
Starting Earch Ist over 150 meetings with the top
faces us now and In the months Immediately shead.
executives and labor lenders of concerns employing nearly
17 million people were held. At these meetings the urgency
with this in mind, we have set in the 7th unr Loan an
and needs for this money was explained and the support of
all-time high coul of 07 billion for sales to individuals,
these londers enlisted.
and 14 billions of which will be raised In E Bonds. This
34 billion If Bond goal represents a 33% increase over the
Almost without exception the larger companies of the
objective set for any previous Drive.
country and thousands of smaller firms have accepted a quota
for 7th use Loan sales to employees. These quotas based
Obviously It 10 doctrable to draw na much of this money
on the avorage wage scale of the company followed a formula
as possible out of current Income. Therefore, particular
developed by the Treasury's Division of Research & Statistics.
emphasis 1s being laid on securing maximm subscriptions the from
the 30 million men and women workers on the payrolls of
In the plants themselves over 20,000 labor-menagement
country, and 2 billion of the à Boni goal is being charged
committees have jointly planned their Individual company
to the Payroll Savings phase of the over-all 7th Nor Loan
drives. Generally speaking, after a rally, the actual sell-
activity.
inc to done by a nan or woman worker designated as a captain
or Vinute Ean, who is charged with soliciting from 10 to 20
There are now 27 million workers buying Bonda through
of his fellow workers.
ench month, but ns this =111 not be sufficient to reach the
the regular Payroll Plan at the rate of over 3500 million
In addition to the use of the Treasury material, hundreds
staggering goals set for them, It will be necessary to sell
of firms have developed elaborate plans of their own as
these workors additional Bonds during the 7th aar Loan.
additional stimuli of War Bond sales et their plants.
To give these men and vomen an opportunity to nake
Though the drive Is just two weeks old, the reports
maximum subscriptions over and above their present regular
from all over the country are most encouraging, and &
monthly allotments now going into Bonds, we started an
number of the country's bigger employers have alroady
advance 7th war Loan Payroll drive on April 9th at the plants.
announced that their quotas have been oversubseribed,
In this way the extra allotments will be accumulated so that
the actual purchase of the 7th War Loan Bonds will be ende
during the accounting period of the Loan.
To meet this great challenge our office in Washington
and workers and volunteers in the field have had a trenendous
organization Job on their hands. After consultation with
our field forces, NO set a plan of campaign, the ultimate
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Uxited KINGDOM DELEGATION
SAN FRANCHCO COMPERENCE
26th April, 1945.
My deer Mr. Morgenthau,
Your letter of the 17th April has been sent on
to no here, end I SR having your reply to the Chencellor
of the Exchequer forwarded to him by feat beg.
Events in Europe are moving at e fentestic pecel
1 wish we were doing the sene here!
Yours very sincerely,
Halifax
The Hon. Henry Morgenthau, Jr.,
Secretary of the Tressury.
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TREASURY DEPARTMENT
THE UNDER SECRETARY OF THE TREASURY
Mr
INTER OFFICE COMMUNICATION
WASHINGTON
DATE will 26, 1945
April 26, 1965.
TO
FROM
MEMORANDUM TO THE SECRETARY:
IT. Doe
Testerday : called A1 Williams, President of the Federal
The corretary arreed to furnter stenotype notee of this emeting
Reserve Bank in Philadelphia, and told him you were looking for
. me to bend the Financial Section of the American organization
to Nie affilary secretary of the one cerrittee which gete there
to control the German sone assigned to the American Any and that
you would like to talk to him about the matter with 5. view to his
dreumento out, I will talk with you shous this later.
appointment to that position, and I told his you would like to
talk to him on Priday of this week If It was at all possible for
his to accept such an offer. In this first telephone conversation
he said it sounded like 8. real challenge and an opportunity to
render some real service. Be was interested, be and, but be would
have to think it over and look over his own position there with the
bank before he gave e definite renly.
Be called back this morning and said he had had time to
think the matter over and appraise his own situation, and be
regretted to have to advise that be just couldn't accept It.
He mid Mr. McCabe, who 1s Chairman of his Board, in going to
be absent for the next three or four months in connection with
the onle of surplus property abroad. Mr. Drinnen, First Vice
President, has been sick for the peet three months and Le able
to none to the office only an hour or no A day. lb. Sienkiewice
is tied un with the Colner Committee In Congress and Mr. Hopp,
who is next to Mr. Sienkiewics, in working for the Board, largely
on Bretton Woods and related entters, so he mys He staff 1a
pretty well shot for the next several months, and it would be
rather dengerous for his to commit hisself to leave the Bank for
the time that would be required to handle this Gormen job. Purther-
nore, he said he had gotten to the age where he didn't work no well
under pressure and is afraid If he had to do that again his old
back trouble would return and he would be in for 6 long spell of
sickness.
I asked his If he had any suggestions N.B. to any individual
who might do the job and he gave me the name of Mr. Rnlph A. Young,
who vid e Professor of the Wharton School of Finance and is in charge
of financial studi-s for the National Bur-eu of Keenemic Research.
There mm't any doubt in his mind but what Mr. Young had the quali-
fications and that he would do en excellent job. On the other hand,
POLYICTORY
he realized that he will not very well known and that in seeking 8.
BUY
person for this place you were also seeking . name. I told his I
would send Mr. Young's name to you.
WAR
/
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DEPARTMENT OF STATE
WASHINGTON
SECRET
April 26, 1945
MEMORANDUM FOR THE PRESIDENT
The Informal Policy Committee on Germany is presenting
to you, for your approval, a revised directive for the
military government of Germany prepared on the basis of
the policy memorandum of March 23, which was approved by
President Roosevelt. The memorandus of March 23 has been
introduced into the European Advisovy Commission by
Anbessedor Winant for negotiation as & protocol of agreement
with the U.K., the U.S.S.R. and France. Copies of the
memorandum of March 23 and the revised directive are
attached.
In the opinion of the committee the revised directive
embodies policies and neasures which faithfully carry out
the principles set forth in the memorandum of March 23.
The committee believes that this directive furnishes the
basis for effective initial action to prevent Germany from
again becoming & threat to world peace.
The revised directive 1a being submitted to the
Joint Chiefs of Staff for consideration from the military
point of view. Thereafter it will be transmitted to
General Eisenhower as the basic instrument for the initial
post-defeat period in Germany. The directive is designed to
serve a dual purpose in that it will give him this Govern-
ment's policy as formulated to date for his guidance as
American member of the Control Council in Germany and will
likewise guide him in the administration of the U.S. zone.
If you approve, the Informal Policy Committee on
Germany will continue, under your direction, to develop
basic policies of this Government for the treatment of
Germany, including the pending matter of reparation.
Youth Prin
Acting Secretary.
S William L. Clayton Herry
Passe and
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April 26, 1945
26 April 1945
Pages 1 to 30 Incl.
DIRECTIVE TO COMMANDER IN CHIEF OF U.S. FORCES OF OC-
CUPATION REGARDING THE MILITARY GOVERNMENT OF GERICARY
INFORMAL POLICY COMMITTEE ON GERMANY
DIRECTIVE TO COMMANDER-IN-CHIEF OF U.S. FORCES OF
1. The Purpose and Scope of this Directive:
OCCUPATION REGARDING THE MILITARY GOVERNMENT OF GERNANY
References: a. JCS 1067
This directive rescinde JCB 1067 and 1a issued to you
b. SWNCO 2 Series
no Commending General of the United States forces of occupation
Note by the Secretaries
in Germany. As such you will serve n.a. United States member of
the Control Council and will also be responsible for the adminis-
The attached directive has been approved by the Informal
trition of military government in the zone or zones assigned to
Policy Committee on Gernany.
the United States for purposes of occupation and administration.
It outlines the basic policies which will guide you in those
two capacities after the termination of the combined counand
of the Supreme Connander, Allied Expeditionary Force.
CHARLES W. McCARTHY
ALVIN F. RICHARDSON
RAYMOND E. COX
This directive sets forth policies relating to Gernany
Secretariat
in the initial post-defent period. AB such it 18 not intended
to be en ultimate statement of policies of this Government
concerning the treatment of Geruany in the post-war world.
It is therefore essential that, during the period covered
by this directive, you nesure that survoys are constantly
maintained of economic, industrial, financial, social and
politionl conditions within your zone end that the results
of such surveys and such other surveys na may be nade in
other zonos are nade available to your Government, through
the Joint Chiefs of Staff. These surveys should be developed
in such manner no to serve 88 a basis for dotormining
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b. Subject to the provisions of paragraph 3 below,
you are, by virtue of your position, clothed with suprene
changes in the measures of control set forth heroin a.s.
legislative, executive, and judicial authority in the areas
well P.S. for the progressive formulation end development of
occupied by forces under your connand. This authority vill
policica to promote the basic objectives of the United
be broadly construed and includes authority to take all
States. Supplemental directives will be issued to you by
measures deened by you necessary, appropriate or desirable
the Joint Chiefs of Staff no may be required.
in relation to military exigencies and the objectives of A
firm military government.
AS A member of the Control Council you will urgo
C. You will issue 8. proclemation continuing in force
the adoption by the other occupying powers of the principles
euch proclemstions, orders nd instructions no may have nere-
end policies set forth in this directive and, pending
tofore been issued by Allied Commendere in your zone, subject
Control Council agreement, you will follow then in your
to such changes no you may determine. Authorizations of
zone. It is anticipated that substantinlly similar
action by the Suprene Connender, Allied Expeditionary Force,
directives will be issued to the Commenders in Chief of
may be considered as applicable to you unless inconsistent
the U.K., USSR and French forces of occupation.
with this or later directives.
3. The Control Council and Zones of Occupation:
PART I
n. The four Commenders-in-Chief, acting jointly,
vill constitute the Control Council in Germany which vill be
General and Political
the supreme organ of control over Germany in accordance with
2. The Basis of bilitary Government
the agreement on Control Machinery in Germany at Amendix "3".
A. The rights, power end status of the military
For purposes of administration of military government, Germany
government in Gernany are based upon the unconditional
has been divided into four zoneo of occupation. The agreed
surrender or total defent of Gernany. The Text of the
protocols on zones are at Accondix "C".
Instrument of Unconditional Surrender 18 at Appendix "A".
b. The authority of the Control Council to formulate
You will assure that the policies set forth in that Instru-
policy and procedures and administrative relationships with
ment are carried out in your zone of occupation even
respect to matters affecting Germeny as n whole vill be para-
though the defent of Germany is not followed by n
mount throughout Germany. You vill carry out and support in
formal signing of the Instrument.
your zone the policies agreed upon in the Control Council.
In the absence of such agreed policies you will not in no-
cordance with this and other directives of the Joint Chiefe
-1A-
of Staff.
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0. The administration of affaire in Germany shnll
be directed towards the decentrelization or the politionl
Germany over the members of the armed forces under their
and administrative structure and the development of local re-
command and over the civilians who nocompany then.
sponsibility. To this end you will encourage Autonomy in
g. The Control Council should be responsible for
regional, local and nunicipal agencies of Gerann administro-
facilitating the severance of all governmental and adminis-
tion. The Gerunn coonomic structure shrll also be decen-
trative connections between Austrio and Gernany and the
tralized. The Control Council any, however, to the minium
climination of Gernan coonomic influences in Austria. Every
extent required for the fulfillment of purposes set forth
assistance should be given to the Allied Administration in
heroin, pormit controlized administration or establish control
Austria in its efforts to effectunte these purposes.
control of (n) essential national public services such na
4, Bnsic Objectives of Militory Government in Germany:
ret lronds, and power, (b) finence and fordgn
n. It should be brought home to the Germane that
affairs, and (c) production end distribution of essential
Germany's ruthless worfare and the fonation] Mazi resistance
connodities.
have destroyed the German coonomy and made cheos and suffering
d. The Control Council should adopt procedures to
inevitable and that the Germana cannot codane responsibility
effecturte, end you vill facilitato in your zono, the oquit-
for what they have brought upon themselves,
able distribution of essential commodities between the zonos.
b. Gernany vill not br occupied for the purpose of
In the absence of P. conflicting policy of the Control Council,
liberation but na n defented enemy nation. Your ain is not
you may dorl directly with one or more zono counanders on
copression but to occupy Germany for the purpose of realizing
matters of special concern to such zones.
certain importent Allied objectives. In the conduct of your
0. Pending the formulation in the Control Council of
occupation and administration you should be just but fire
uniform policies and procedures with respect to inter-sonnl
and aloof. You will strongly discourage fraternization with
travel end novement of civilians, no civiliens shell be cerdit-
the German officials and population.
tod to leavo or enter your zono without your authority, and no
C. The principal Allied objective is to prevent
Geraens within your zone shril be permitted to lunvo Geranny
Germany from ever again becoming a threat to the penoc of the
except for specific purposes approved by you.
world. Essential stops in the accomplishment of this objectivo
f. The military government personnel in under cono,
are the elimination of Nazion and militarism in all their
including those domling with regional nd loonl brenches of the
forms, the immediate apprehension of var orininals for punish-
departments of any contral Gorunn administrative machinory,
ment, the industrial disarmament and denilitarization of
shell be solected by authority of the Comender of that zono
Germany, with continuing control over Germany's cannoity to
except that linison officers any be furnished by the Commendore
make var, and the preparation for en eventual roconstruction
of the other three zonos. The respective Commenders-in-Chief
of German politionl life on e democratic basis.
shall have exclusive jurisdiction throughout the whole of
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zations, and all Nazi public institutions which were net
d, Other Allied objectives are to enforce the
up na instruments of Party domination, end prohibiting
program of reparations and restitution, to provide relief
their revival in any form, should be promulgated by the
for the benefit of countries devestated by Nazi aggression,
Control Council, You will assure the prompt effectuation
and to ensure that prisencrs of var and displaced persons
of that policy in your zone end vill make every effort to
of the United Nations are cared for and repatriated.
prevent the reconstitution of any such organization in
D. Economic Controls:
undorground, disguised or scoret form. Responsibility for
a. As n member of the Control Council and no zone
continuing desirable non-politionl cocial services of dis-
commender, you will be guided by the trinciple that controls
solved Porty organizations may be trensferred by the Control
upon the German coonomy my be imposed to the extent that
Council to monroorinte central ngenoice and by you to no-
such controls may be necessary to nohieve the objectives
proprinte loorl agencies.
enumerated in paragraph 4 above and also no they any be ce-
b. The lave purporting to establish the politionl
sential to protect the safety and meet the needs of the 00-
structure of National Socinliam and the basic of the Hitler
cupying forces and assure the production and maintenance of
regime and all lave, doorees and regulations which establish
goods and services required to prevent starvation or such
discriminations on grounds of race, nationality, oreed or
disense and unrest no would endanger these foroes. No
politionl opinions should be abrognted by the Control
action vill be taken in execution of the reparations program
Council. You will render then incperative in your zone.
or otherwise which would tend to support borie living
o. All nenbers of the Noti party who have been
conditions in Gernany or in your zono on a higher level than
more than naminal participants in its notivities, pll notive
that existing in any one of the neighboring United Nations.
sup.orters of Nazion or militarism and all other persons
b. In the imposition and maintenence of such controls
hostile to Allied purposes vill be removed and excluded from
NO may be prescribed by you or the Control Council, German
public office and from positions of importance in ounci-
authoritics vill to the fullect extent practicable be ordered
public and private enterprises such n.B. (1) civic, coonomio
to proclaim and assume edministration of such controls.
and labor organizatione, (2) corporations and other organi-
Thus it should br brought home to the German people that the
antions in which the German government or subdivisions have
responsibility for the administration of such controls and
n. major financial interest, (3) industry, connerce, agri-
for any brenkdowne in those controls will rest with themselves
culture, and finence, (4) education, and (5) the press,
nd German authorities.
publishing houses and other agencies disseminating nove end
propegenda. Persons are to be trented as nore then noninel
6. Denazification:
a. A Proclemation dissolving the Nozi Party, its
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(1) The Central German Government and its subdivisions,
German military organizations, organizations ongaged in military
participants in Party activities and no notive supporters of
research, and such other governmental ngencica no DAY be decmed
Nazion or militarion when they have (1) hold office or
advisable;
otherwise been notive nt any 10.01 from looal to national
(2) The Nazi Party, its formations, affiliated Associations
in the party and its subordinato organizations, or in cr-
and supervised organizations;
panizations which further militaristic doctrinco, (2)
(3) All police organizations, including security and politionl
authorized or participated affirmatively in any Nazi crimes,
police;
racial persecutions or discriminations, (3) been avoued
(4) Important economic organizations nnd industrial establish-
believers in Nazion or racial and militaristic creeds, or
menta including those controlled by the Nnzi Party or its personnel;
(4) voluntarily given substantial noral or material support
(5) Institutes end spocial burenus dovoting themselvos to
or politionl assistance of any kind to the Nazi Party or
racial, political, militaristic or sinilar research or propagande.
Nazi officials and leaders. No such persons shnll be retained
7. Demiliterization:
in any of the ontegories of employment listed above because
n. In your zono you will nesure that all units of the Gornan
of administrative necessity, convenience or expediency.
nrmod forces, including pera-military organizations, ero dissolved
d, Property, real and personal, owned or control ed
P.G. such, and that their personnel are promptly disarmed and con-
by the Nozi party, its formations, affiliated associations
trolled in accordance with policies and procedures set forth in the
and supervised organizations, and by nll persons subject to
Instrument of Unconditional Surronder or in other directives which
arrest under the provisions of paragreph B, and found within
may be issued to you. Prior to their final disposition, you vill
your zone, vill be taken under your centrol pending n. declaion
arrest and hold All military personnel who are included under the
by the Control Council or higher authority ne to its eventual
provisions of paragraph 8.
disposition.
b. The Control Council should proclain, and in your zono you
0. All archives, nonumento and of Nezi
will effectuate, the total dissolution of all military and para-
inception, or which are devoted to the perpotuation of Germen
cilitary organizations, including the General Btnff, the German
militerism, will be taken under your control and their
Officers Corps, the Reserve Corps and military mondenies, together
properties held pending decision no to their disposition by
with nll associations which night serve to keep alivo the military
the Control Council.
tradition in Gormany.
r. You vill make special efforts to procerve from
C. You will soizo or destroy all arms, ammunition and imple-
destruction and take under your centrol records, plans, books,
nonta of war and stop the production thoreof.
documents, perera, files, and scientific, industrial and
d. You will take proper stops to destroy the Gornan war
other information and data brlonging to or controlled by the
potential, n.s. not forth elsewhere in this directive.
following:
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organizations; (b) corporations and other organizations
in which the government has a major financial interest;
B. Suspected War Oriminals and Security Arrosts:
(o) industry, connerce, agriculture, and finance; (d)
8. You will search out, arrest, and hold, pending receipt by
education; (e) the judiciary; and (f) the press, pub-
you of further instructions na to their disposition, Adolf Hitler,
liching housee and other agencies dissominating neve and
his chief Nazi associatos, other war oriminals and all persons who
propeganda. It may generally be assumed in the absence
have participated in planning or carrying out Nazi enterprises
of evidence to the contrery that any persons holding such
involving or resulting in atrocities or war crimes.
positions are Natis or Nazi sympathizers;
b. All persons who, if permitted to renain At large would
(9) All judges, prosecutors and officials of the
endanger the accomplishment of your objectives will also be
People's Court (Volkegerichtshof), Special Courts
arrested and held in custody until trial by nn approprinte occi-
(Sondergerichte) and other extraordinary courts created
judicial body to be established by you. The following is n portiol
by the Mazi regine;
list of the ontegories of persons to be arrosted in order to
(10) Any national of any of the United Nations or
cerry out this policy:
associated states who 10 believed to have connitted
(1) Officials of the Nezi Party and its formations,
offenses against his national law in support of the
affiliated associations, and supervised organizations, down
German var effort;
to and including Local Group Lundors (Ortsgruppenleiter) nnd
(11) Any other person whose nane or designation appeare
officials of equivalent rank;
on listo to be submitted to you by the J.O.S. or whose
(2) All members of the politionl police, including the
name may be DO notified to you senarately.
Gostapo and Sicherheitsdionst der S.S.;
If in the light of conditions which you encounter in Germany,
(3) The officers and non-commissioned officers of the
you believe that it 10 not innediately fessible to subject
Weffen S.S. and nll monbers of the other branches of the S.S.;
certain persons within those categories to this treatment, you
(4) All General Staff Corps officers;
should report your reasons and recommendations to your govern-
(5) Officials of the police holding n rank, orequivalent
nent through the Joint Chiefe of Staff. If you believe it
positions of authority, above that of Licutenant;
desirable, you may postoone the arrest of those whose cance
(6) Officers of the SA holding commissioned rank;
you have reported, pending n decision connunicated to you by
(7) The lending officials of all ministries and other
the J.C.S. In no event shall any differentiation be made between
high politionl officials down to and including urban and
or special consideration be nocorded to persons arrested, either
rural buergermeister and officials of equivalent rank, and
no to manner of arrest or conditions of detention, upon the
those persons who have held sinilar positions, olther civil or
basis of wealth or politionl, industrial, or other rank or
military, in the administration of countrics occupied by
position. In your discretion you may nake such exceptions no
Gormany:
you doen advisable for intelligence or other military reasons.
(8) Nezia and Nazi sympethizers holding important and
9. Politionl Activities:
koy positions in (n) National and Gnu civio and oconomic
B. No political activities of any kind shall be countenanoc
IPCOG 1
IPOOG 1
- 10 -
-9-
Regraded Unclassified
RECISION
MARK
MICROSTAT
MICROFILM
ROLL
NO.
161
162
TOP SECRET
TOP SECRET
consider appropriate. Courts which are to exercise juris-
diction over territory extending beyond the boundaries of your
unloss authorized by you. You will assure that your militery
zone will be reopened only with the express authorization of
government doce not become committed to any political group.
the Control Council and under its regulation, supervision and
b. You will prohibit the propagation in any form of Enzi,
control. The power to review end voto decisions of Gormen
militaristic or pen-Gernan doctrines.
courts shall be included within the power of supervision and
O. No Gornan parades, military or politionl, civilian or
control.
sports, shall be permitted by you.
d. To the extent that military interests are not prejudiced
12. Police:
With the excoption of the Reichskrininalpolizci (oriminal
and subject to the provisions of the three proceding subpera-
Police) =11 elenente of the Sicherheitspolizci (Security Polioc),
graphs and of paragraph 10, froodom of speech, pross and
0.5., Gchcinestnatspolizei (Gcatopo), and the Bichorhoitsdionst
religious vorship will be permitted. Consistent with military
der S.S. will be abolished. Criminal end ordinery polico will
necessity, All religious institutions will be respected.
be purgod of Nnzi personnel and utilized under the control end
10. Public Relations and Control of Public Information:
supervision of the militery government.
AS A member of the Control Council, you will undervor to
13. Polition] Prisoners:
obtain agroement for uniform or coordinated policies with respect
Subject to military sccurity and the intereste of the
to (n) control of public information nedin in Germany, (b) no-
individuals concerned, you will rolenso nll persons found within
ordditing of foreign correspondents, (c) pross consorship, and
your zono who have boon detained or placed in custody on grounda
(d) issuanco of official nove comuniques donling with Control
of rnco, nationality, orced or political opinions and treat
Council matters. U.S. policics in these matters will be sent to
them na displaced persons. You should make provision for the
you separately end you will be guided by these in your negotia-
review of convictions of alloged criminal offensos about which
tions on the Control Council.
there any be substantial suspicion of racial, religious or
11. German Courts:
politionl persocution, end in which sentences of imprisonment
n. All extraordinary courts, including the Volkagerichtshof
have not been fully served by persons imprisoned within your
(People's Court) and the Sondergerichte (Special Courts), and
zono.
all courts and tribunals of the Nazi Party and of its formations,
14. Education:
affiliated associations and supervised organizations vill be
R. all educational institutions within your zono except
abolished immediately.
those previously re-cetmblished by Allied authority will be
b. All ordinary orininal, civil end administrative courts,
closod. The closure of Kezi educational institutions such no
(scept those proviously re-cetablished by order of the military
Adolf Hitler Schulen, Napolns and Ordensburgen, and of Nazi
government, will be closed. After the climination of all Hast
organizations within other educational institutions will be
features and personnel you will permit those which are to excrcise
permanent.
jurisdiction within the boundaries of your zone to rosume opera-
IPCOG 1
-12-
tions under such regulations, supervision and control PG you any
IPC0G 1
-11-
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT
PAT.
ON.
MICROFILM
ROLL NO.
164
TOP SECRET
TOP SECRET
b. A coordinated eyatem of control over Gerunn education
PART II
and an effirmative program of reorientation will be cetablished
designed completely to eliminate Nazi and militaristic doctrints
ECONOMIC
and to encourage the development of domocratic idens.
General Objectives and Methods of Control
0. You will pormit the roopening of elementary (Volkesoku-
16. You vill assure that the German economy 18 administory
lon), middle (Nittolechulen) and voontional (Borufeschulon)
and controlled in such a vey no to nocomplish the bnsio objoo-
schools nt the enrlicst possible date after Nezi personnel hns
tives set forth in paragraphs 4 and 5 of this Directive.
been eliminated. Textbooks and curricula which are not free
Economic controls will be impoded only to the extent necessary
of Nazi and militaristic doctrino shall not be used. The Control
to nocomplish those objectives, provided that you will impose
Council should devise programs looking toward the reoponing
controls to the full extent necessary to nohiove the in-
of secondary schools, universities and other institutions of
dustrial disarmment of Geruany. Except no any be necessary to
higher learning. After Nesi fentures and personnel have been
0-rry out these objectives, you will take no stops (n) looking
climinated and pending the formulation of such programs by the
toward the economic rchabilitation of Germany, or (b) designed
Control Council, you may formulate and put into effect en interia
to maintain or strongthen the Gerunn economy.
program within your zone and in any onso may pernit the reoponing
17. To the paximum extent possible without joopardizing
of such institutions and departments which offer training which
the successful exccution of morsures required to implement the
you consider immodiately cecontial or useful in the ndministro-
objectives outlined in peragraphs 4 and 5 of this directivo you
tion of military government and the purposes of the occupation.
vill use Germen authoritics and ngencius and subject then to
d. It is not intended that the military government will
such supervision end punishment for non-compliance na 18 necca-
intervene in questions concerning denominational control of
enry to ensure that they carry out their tasks.
Gernan schools, or in religious instruction in Gernan schools,
For this purpose you will give approprinte authority
except insofar ng any be necessary to insure that religious
to any Gernen rgonoios end administrative services you consider
instruction and administration of such schools conform to such
cosontial: provided, however, that you will At all times adhore
Alliod regulations na are or may be established portaining to
strictly to the provisions of this directivo regarding donnzifi-
purging of personnel and curricula.
ontion end dissolution or elinination of Nazi organizations,
15. Arts and Archives:
institutions, principles, fentures, and practices.
Subject to the provisions of paragraph 6 above, you vill
To the extent necessary you will establish administrative
nake all reasonable offorts to preserve historical archives,
machinery, not dependent upon German authorities and agencios,
nuscuss, libraries end works of art.
to exccuto or nesure the execution of the provisions of para-
graphs 19, 20, 30, 31, 32, 39 and 40 end any other nonsures neces-
enry to en accomplishment of your industrial discrusment objoo-
IPCOG 1
tives.
-13-
IPCOG 1
-14-
PRECISION
TRADE MARK MICROSTAT MICROFILM BOLL
NO.
TOP SECRET
166
TOP SECRET
German Standard of Living
18. In order to decentralize the s.ructure and administra-
21. You will estimate requirements.of supplies necessary to
tion of the German economy to the maximum possible extent, you
prevent starvation or widespread discase or such civil unrer W
will
would endanger the occupying forces. Such estimates will be
n. ensure that the action required to maintain or restore
essential cublic utilities and industrial and agricultural
based upon a program whereby the Germane are made responsible
for providing for themselves, out of their own vork and resourc.
activities 10 taken 6.8 far as possible on a local and
You will take all practicable economic and police neasures to
regional basis;
assure th t German resources are fully utilized and consumption
b. on no account propose or approve in the Control
held to the minimum in order that imports may be strictly
Council the establishment of contralized administration of
limited and that surpluses may be nade available for the occupy-
controls over the German economy except where such centrali-
ing forces and displaced persons and United Nations prisoners
zation of administration la clearly essential to the fulfil-
of var, and for reparation. You will take no action that would
ment of the objectives listed in paragraphs 4 and 5 of
tend to support basic living standards in Germany on a higher
this directive. Decentralization in administration should
level than that existing in any one of the neighboring United
not be permitted to interfore with attainment of the largest
Nations and you will take appropriate measures to ensure that
practicable measure of agreement on economic policies in
basic living standards of the German people are not higher than
the Control Council.
those existing in any one of the neighboring United Nations
19. You vill institute or assure the maintenance of such
when such measures will contribute to raising the standards of
statistical records and reports 8.8 may be necessary in carrying
any such nation.
out the objectives listed in paragraphs 4 and 5 of this direc-
22. You will urge upon the Control Council that uniform
tive.
ration scales be applied throughout Germany, that essential
20. You will initiate appropriate surveys which may assist
items be distributed equitably among the zones, that net sur-
you in achieving the objectives of the occupation. In particular
pluses be made available for export to Allied countries, and
you will promptly undertake surveys of supplies, equipment and
that imports be limited to the net deficits of Germany as a
resources in your zone. You will endeavor to obtain prompt agroo-
whole.
ment in the Control Council to the making of similar surveys in
Labor, Health, and Social Insurance
the other zones of occupation, and you will urge appropriate
23. You will permit the self-organi:ation of employees along
stops to coordinate the methods and results of these and other
democratic lines, subject to such safeguards as may be necessary
future surveys conducted in the various zones. You will keep
to prevent the perpetuntion of Nazi or militarist influence under
the Control Council, United States Representative on the Repara-
any guise or the continuation of any group hostile to the objoo-
tion Commission and other appropriate authorities, currently
tives and operations of the occupying forces.
apprised of the information obtained by means of intermediate
reports or otherwise.
IPCOG 1
- 16
IP000 1
- 15 -
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/
MICROFILM
BOLL NO.
168
TOP SECRET
189
TOP SECRET
30. In order to disars Germany, the Control Council should
b. abolish all those 1:boratories and related institu-
&- prevent the production, acquisition by importation
tions whose work has been connected with the building of the
or otherwise, and development of all arns, ammunition end
German var machine, safe,uard initially such laboratories
implements of var, as well no all types of aircraft, and
and detain such personnel as are of interest to your tooh-
all parts, components and ingredients specially dosigned
nological investigations, and thereafter remove or destroy
or produced for incorporation therein;
their equipment;
b. prevent the production of merchant ships, synthotic
c.- permit the resumption of scientific research in
rubber and 011, aluninum and magnesium and any other pro-
specific cases, only after careful investigation has estab-
duote and equipment on which you will subsequently receive
lished that the contemplated research will in no way con-
instructions;
tribute to Germany's future var potential and only under
2. seize and safeguard all facilities used in the produc-
appropriate regulations which (1) define the specific types
tion of any of the items nontioned in this paragraph and
of research permitted, (2) exclude from further rosearch
dispose of them no followe:
activity any persons who previously held key positions in
(1) remove all those required for reparation;
Gorman var research, (3) provide for frequent inspection,
(2) destroy all those not transferred for reparation
(4) require free disclosure of the results of the research
if they are especially adapted to the production of the
and (5) impose sovere penalties, including permanent clos-
items specified in this paragraph and nre not of a type
ing of the offending institution, whenever the regulations
generally used in industries permitted to the Germans
are violated.
(cases of doubt to be resolved in favor of destruction);
Pending agreement in the Control Council you will adopt
(3) hold the balance for disposal in necordance with
such measures in your own zone.
instructions which will be sent to you.
Pending agreement in the Control Council you vill take
32. Pending final Allied agreements on reparation and on
these neasures in your own zone. You vill not postpone enforce-
control or elimination of German industries that can be utilized
ment of the prohibitions contained in ubperagrache la and b and
for var production, the Control Council should
the instructions in subperagrach loo without specific approval of
&. prohibit and prevent production of iron and stool,
your government through the Joint Chiefs of Staff.
chemicals, non-ferrous netals (excluding aluminum end
magnesium), machine tools, radio and electrical equipment,
31. AS an admitional measure of disarmanent, the Control
automotive vehicles, heavy machinery and important parte
Council should
thereof, except for the purposes stated in paragraphs 4 and
&- prohibit initially all research activities and close
5 of this directive;
al: laboratories, research institutions and sinilar technical
b. prohibit and prevent rehabilitation of plant and
organizations except those considered necessary to the protoc-
equipment in such industries excent for the purposes stated
tion of public health;
in paragraphs 4 and 5 of this directive; and
IPCOG 1
- 18 -
IPOOG 1
- 19 -
Regraded Unclassified
PRECISION
TRADE
MARK
MICROSTAT/ REG.U.S.FAT.OFF. MICROFILM
ROLL
NO.
TOP SECRET
TOP SECRET
170
171
2. safeguard plant and equipment in such industries for
36. You will prohibit all cartels or other private business
transfer on reparation account.
arrangements and cartel-like organizations, including those of
Pending agreement in the Control Council, you vill your
a public or quasi-public character such ns the
such scasures into effect in your own zone.
providing for the regulation of marketing conditions, including
production, prices, exclusivo exchange of technical information
33. The Control Council should adopt & policy permitting the
and processes, and allocation of sales territories. Such neo-
conversion of facilities other than those mentioned in ours-
essary public functions as have been discharged by these organi-
graphs 30 and 32 to the production of light consuner goods,
zations shall be absorbed 86 rapidly as possible by approved
vided that such conversion docs not prejudice the subsequent
public agencies.
renoval of plant and equipment on reparation account and Coop
not require any inporte beyond those necessary for the purposes
37. It 16 the policy of your government to effect a dispor-
specified in paragraphs 4 and 5 of this directive. Pending
sion of the ownership and control of German industry. To nesist
agreement in the Control Council, you may permit such conversion
in carrying out this policy you vill make a survey of combines
in your zone.
and pools, mergers, holding companies and interlocking director-
ates and comunicate the results, together with recommendations,
34. Subject to the provisions of peragraphs 30 and 32, the
to your government through the Joint Chiefe of Staff. You vill
Control Council should assure that all fensible mensures an
endeavor to obtain agreement in the Control Council to the nax-
taken to facilitate, to the minimum extent necessary for the pur-
ing of this survey in the other zones of occupation and you will
posea outlined in paragraphs 4 and 5 of this directive
urge the coordination of the methods and results of this survey
a. repairs to and restoration of essential transporta-
in the various zones.
tion services and :ublic utilities;
h. energency repair and construction of the minimum
38. With due regard to paragraph 4 A. the Control Council
shelter required for the civilian population;
should adopt such policies ne are clearly necessary to prevent
la production of coal and any other goods and services
or restrain inflation of a character or dimension which would
required for reparation, for your forces and, subject to
definitely endanger accomplishment of the objectives of the
the provisions of paragraph 21 of this directive, for the
occupation. The Control Council, in particular, should direct
Gernan people.
and enpower German authorities to naintain or establish controls
You will assure that such measures are taken in your otm
over prices and vages and to take the fiscal and financial
zone pending agreement in the Control Council,
mossures necessary to this end. Pending agreement in the Control
Council you vill assure that such measures 0,8 you consider neces-
35. In your capacity as zone consander and as member of the
sary are taken in your own zone. Prevention or restraint of infle-
Control Council you will take steps to provide for the equitable
tion shall not constitute an additional ground for the importa-
interzonal distribution and the movement of goods and services
tion of supplies, nor shall it constitute an additional ground
essential to the purposes set forth in paragraphs 4 and 5 of this
IPCOG 1
- 21 -
directive.
IPCOG 1
- 20 -
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
MICROFILM
BOLL NO.
TOP SECRET
173
TOP SECRET
172
42. Both as member of the Control Council and 8.0 zone con-
for limiting removal, destruction or curtailment of productive
mander you vill adopt a policy which would forbid Germon fires
facilities in fulfillment of the program for reporation, demill-
to participate in international cartele or other restrictivo
tarization and industrial disarmament.
contracts and arrangements and order the prompt termination of
Power, Transportation and Communications
all existing Gorman participations in such cartels, contracts
39. Both 0.0 member of the Control Council and zone connander
and arrangements.
you will take appropriate steps to ensure that
43. You will carry out in your zone such programs of repara-
n. power, transportation and communications facilities
tion and restitution as are embodied in Allied agreements and
are directed in such a vay as to carry out the objectives
you will seek agreement in the Control Council on any policies
outlined in paragraphs 4 and 5 of this directive;
and measures which it may be necessary to apply throughout Gor-
b. Germans are prohibited and provented from producing,
many in order to ensure the execution of such programs.
maintaining or operating all types of aircraft.
You vill determine the degree to which contralized con-
trol and administration of power, transcortation and countrion-
tions is clearly necessary for the objectives stated in para-
graphs 4 and 5 and urge the establishment of this degree of
centralized control and administration by the Control Council.
Foreign Trade and Reparation
40. The Control Council should establish centralized control
over all trade in goods and services with foreign countries.
Pending agreement in the Control Council you vill impose appro-
priate controls in your own zone.
41. Both no member of the Control Council and no zone con-
mander you will take appropriate stops to ensure that
a. the foreign trade controls are designed to carry out
the objectives stated in paragraphs 4 and 5 of this direc-
tive;
h. imports which are permitted and furnished to Germany
are confined to those unavoidably necessary to the objectives
stated in paragraphs 4 and 5;
& exports to countries other than the United Nations are
prohibited unless specifically authorized by the Allied
IPCOG 1
- 23 -
governments.
IPCOG 1
- 22 -
Regraded Unclassified
RECISION TRADE MARK MICROFILM
ROLL NO.
TOP SECRET
175
TOP SECRET
occupation, including the cost of Allied Military Government
PART III
and including to the extent that compensation is made ther -
FINANCIAL
for, the cost of such private property as may be requisitionsc
seized, or otherwise acquired, by Allied authorities for
44. You will make full application in the financial field of
reparations or restitution purposes.
the principles stated elsewhere in this directive and you will
Pending agreement in the Control Council you will follow
endeavor to have the Control Council adopt uniform financial
these policies in your own zone.
policies necessary to carry out the purposes stated in paragraphs
You vill receive separate instructions relative to the
4 and 5 of this directive. You will take no steps designed to
currency which you will use in the event that for any reason
maintain, strengthen or operate the German financial structure
adequate supplies of Allied Military marks and Reichsmarks are
except in so far as may be necessary for the purposes specified
not available, or if the use of such currency is found undesir-
able.
in this directive.
45. The Control Council should regulate and control to the
You will not announce or establish in your zone, until
extent required for the purposes set forth in paragraphs + and 5
receipt of further instructions, any general rate of exchange
the issue and volume of currency and the extension of credit in
between the Reichemark on the one hand and the U.S. dollar and
Germany and in accordance with the following principles:
other currencise on the other. However, a rate of exchange to be
A. United States forces and other Allied forces vill use
used exclusively for pay of troops and military accounting pur-
Allied kilitary marks and Reichamark currency or coins in
posse in your zone will be communicated separately to you.
their possession. Allied Hilitary marks and Reichemark
45. Subject to any agreed policies of the Control Council,
currency and coin nov in circulation in Gernany will be legal
you are authorized to cake the following steps and to put into
tender without distinction and will be interchangeable at
effect such further financial neasures as you may doom necessary
the rate of 1 Allied kilitary mark for 1 Reichenark. Reiche-
to accomplish the purposes of your occupation:
kreditkassenscheine and other German military currency will
E. To prohibit, or to prescribe regulations regarding,
not be legal tender in Germany.
transfer or other dealings in private or public securities
b. The Reichsbank, the Rentenbank or any other bank or
or real estate or other property.
agency may be permitted or required to issue bank notes and
E. To close banks, but only for a period long enough for
currency which will be legal tender; without such authoriza-
you to introduce satisfactory control, to remove Nazi and
tion no German governmental or private bank or agency will be
other undesirable personnel, and to issue instructions for
permitted to issue bank notes or currency.
the determination of accounts to be blooked under sub-para-
2. The German authorities may be required to nake avail-
graph 48 of below.
able Reichsmark currency or credits free of cost and in
2. To close stock exchanges, insurance companice, and
amounts sufficient to meet all the expenses of the forous of
similar financial institutions for such periods as you doem
IP000 1
IPCOG 1
- 24 -
- 25 -
Regraded Unclassified
PRECISION
TRADE
MARK
MICROSTAT/ MICROFILM BOLL
NO.
176
TOP SECRET
TOP BECRET
177
appropriate.
any persons because of race, nationality, creed or political
4. To establish a general or limited moratorium or
opinion, vill be mended, suspended, or abrogated to the
moratoria only to the extent clearly necessary to carry out
extent necessary to eliminate such discrimination.
the objectives stated in paragraphs 4 and 5 of this directive.
2. You will hold the German authorities responsible fur
47. Resumption of portial or complete service on the internal
taking such mensures in the field of texation and other
public debt at the carliest fensible data is deemed desirable.
fields of public finance, including restoration of the tax
The Control Council should decide the time and manner of such
system and maintenance of tax revenues, no will further the
resumption.
accomolishment of the objectives stated in paragraphs 4 und 5.
4. You will exercise general supervision over Gormen
48. Subject to any agreed policies of the Control Council,
public expenditures in order to ensure that they are consis-
&- You will prohibit:
tent with the objectives stated in paragraphs 4 and 5.
(1) the payment of all military pensions, or other
2. You will impound or block all gold, silver, currencies,
emoluments or benefits, except compensation for physical
securities, accounts in financial institutions, credits,
disability limiting the recipient's ability to work, at
valuable papers, and all other assets falling within the fol-
rates which are no higher than the lowest of those for
lowing categories:
comparable physical disability arising from non-military
(1) Property owned or controlled directly or indirect-
causes.
ly, in whole or in part, by any of the following:
(2) the payment of all public or private pensions or
(a) The German Reich, or any of the Lander, Gaue
other encluments or benefits granted or conferred:
or provinces, any Kreis, hunicipality or other similar
(a) by reason of membership in or services to the
local subdivision; or any agency 02' instrumentality
former Hazi party, its formations, affiliated nesocia-
of any of them including nll utilities, undertakings,
tions or supervised organizations,
public corporations or monopolies under the control
(b) to any person who has been removed from an
of any of the above;
office or position in accordance with paragraph 6
(b) Governments, nationals or residents of other
and
nations, including those of territories occupied by
(c) to any person arrested and detained in moord-
them, at war with any of the United Nations at any
once with peragraph B during the term of his arrest,
time since 1 September 1939;
or permanently, in case of his subsequent conviction.
(c) The Nazi Party, its formations, affiliated
h. You vill take such cotion as may be necessary to in-
associations and supervised organizations, its offi-
sure that all laws and practices relating to taxation or
cials, leading members and supporters;
other fields of finance, which discriminate for or against
(d) all organizations, clubs or other associations
IPCOG 1
- 26 -
prohibited or dissolved by military government;
IP00G 1
- 27 -
Regraded Inclassified
RECISION
TRADE MARK
MICROSTAT
MICROFILM
BOLL
NO.
179
TOP SECRET
TOP SECRET
achieving the other objectives set forth in this directive. To
(e) Absentee owners, of non-German nationality in-
effectuate these purposes the Control Council should
cluding United Nations and neutral governments and
n. Seek out and reduce to the possession and control of n.
Germane outside of Germany;
special egency all German (public and private) foreign
(f) Any institution dedicated to public vorship,
exchange and external assets of every kind and description
charity, education or the arto and sciences which hns
located within or outside Germany.
been used by the Nezi Party to further its intereste
b. Prohibit, except na authorized by regulation or
or to cloak its activities;
license, all doalings in gold, silver, foreign exchange, and
(g) Persons subject to arrest under provisions of
all foreign exchange transactions of any kind. Make available
paragraph 8, and all other persons specified by mill-
any foreign exchange proce/ds of exports for payment of in-
tary government by inclusion in lists or otherwise.
ports directly necessary to the acconplishment of the objec-
(2) Property which has been the subject of transfer
tives stated in paragraphs 4 and 5 of this directive, and
under duross or wrongful acts of confiscation, disposi-
authorize no other outlay of foreign exchange assets except
tion or spoliation, whether pursuant to legislation or
for purposes approved by the Control Council or other appro-
by procedure purporting to follow forms of law or other-
priato authority.
vise.
&- Establish effective controls with respect to all
(3) Vorks of art or cultural material of value or
foreign exchange transactions, including:
importance, regardless of the ownership thereof.
(1) Transactions as to property between persons inside
You will take such action no will insure that any impounded or
Germany and persons outside Gernany;
blocked assets will be dealt with only no permitted under licenses
(2) Transactions involving obligations oved by or to
or other instructions which you may issue. In the case particu-
become due from any person in Germany to any person out-
larly of property blooked under (1)(a) above, you will proceed
side Germany; and
to adopt licensing measures which while maintaning such procerty
(3) Transactions involving the importation into or OX-
under surveillance would permit its use in consonance with this
portation from Germany of any foreign exchange asset or
directive. In the caso of property blocked under (2) above, you
other form of property.
vill institute messures for prompt restitution, in conformity
Pending agreement in the Control Council, you will take in
with the objectives stated in paragraphs4 and 5 and subject to
your zone the action indicated in subparagraphs A. le and of above.
appropriate safeguards to prevent the clooking of Kasi and mili-
Accordingly, you will in your zone reduce to the possession and
taristic influence.
control of a special agency established by you, within your Con-
mand, all German foreign exchange and external assets 86 provided
49. All foreign exchange transactions, including those arising
in subperagraph a. You will endeavor to have similar agencies
out of exports and imports, shall be controlled with the ain of
preventing Germany from developing a war potential and of
IP000 1
- 29 -
IPOOG 1
- 28 -
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT
MICROFILM
ROLL NO.
181
180
TOP SECRET
TOP SECRET
COPY NO.
99
TOP SECRET
for the same purpose established in the other zones of occupation
27 April 1945
and to have them nerged as soon as practicable in one agency for
the entire occupied territory. In addition you will provide full
INFORMAL POLICY COMMITTEE ON GERMANY
reports to your government with respect to all Germen foreign OX-
CORRIGENDUM
change and external assets.
TO
50. No extension of credit to Germany or Germens by any
IPCOG 1
foreign person or Government shall be permitted except that the
DIRECTIVE TO COM-ANDER-IN-CHIEF OF U.S. FURCES OF
Control Council any in special emergencies grant permission for
OCCUPATION REG.ADING THE MILITARY GOVERNMENT OF GERMANY
such extensions of credit.
Note by the Secretaries
51. It is not anticipated that you will make credits evail-
All holders of IPCOG 1 are requested to make the follow-
able to the Reichsbank or any other bank or to any public or
ing change therein:
private institution. If, in your opinion, such action becomes
Page 26, paragraph 48 a (2) (b), second and third lines:
essential, you may take such energency actions as you my deem
Dolete "or paragraph 02".
proper, but in any event, you will report the facts to the Con-
trol Council.
52. You will maintain such accounts and records as may be
CHARLES N. McCARTHY
necessary to reflect the financial operations of the military
ALVID F. RICHARDSON
government in your zone and you will provide the Control Council
RAYMOND E. COX
with such information as it nay require, including information
Secretarist
in connection with the use of currency by your forces, my
governmental settlements, occupation costs, and other expendi-
tures arising out of operations or activities involving partici-
pation of your forces.
TOP SECRET
IPCOG 1
- 30 -
Regraded Unclassified
RECISION TRADE MARK MICROSTAT REG. u. MT. OFF. MICROFILM ROLL
NO.
28 March 1945
#14
- 2 -
The following is a sumary of U.S. policy relating to
Germany in the initial post-defeat period. As such it will be
Controls may be imposed upon the German economy only as may
introduced into the European Advisory Commission, and will be
be necessary (a) to carry out programs of industrial disarmament
used as the basis for directives to be issued to the U. S.
and demilitarization, reparations, and of relief for liberated
Commanding General in Germany.
areas as prescribed by appropriate higher authority and (b)
to assure the production and maintenance of goods and services
The authority of the Control Council to formulate policy
required to meet the needs of the occupying forces and displaced
with respect to matters affecting Germany as $ whole shall be
persons in Germany, and essential to prevent starvation or such
paramount, and its agreed policies shall be carried out in each
disease or civil unrest as would endanger the occupying forces.
some by the some connander. in the absence of such agreed
No action shall be taken, in execution of the reparations program
policies, and in matters exclusively affecting his own sone,
or otherwise, which would tend to support basic living standards
the zone commander will exercise his authority in accordance with
in Germany on a higher level than that existing In any one of
directives received from his own government.
the neighboring United Nations. All economic and financial
The administration of affairs in Germany should be directed
international transactions, including exports and imports, shall
toward the decentralization of the political structure and the
be controlled with the aim of preventing Germany from developing
development of local responsibility. The German economy shall also
a war potential and of achieving the other objectives named herein.
be decentralized, except that to the minimum extent required for
1 The first charge on all exports for reparations or otherwise shall
carrying out the purposes set forth herein, the Control Couneil
be a sum necessary to pay for imports. No extension of credit
may permit or establish central control of (a) escential
to Germany or Vermans by any foreign person or Government shall
national public services such as railroads, communications and
be permitted, exdept that the Control Council my in special
power; (b) finance and foreign affairs, and (e) production and
emergencies grant such permission. Resurrent reparations should
distribution of essential commodities. There shall be equitable
not, by their form or amount, require the rehabilitation OF
distribution of such commodities between the several zones.
development of German heavy industry and should not foster the
impendence of other countries upon the German economy.
Regraded Unclassified
PRECISION TRADE MARK MICROSTAT REG. v. 5. PAT. OFF, MICROFILM ROLL
NO.
2"
- 3 -
In the imposition and maintenance of economic controls,
- 4 -
Jerman authorities will to the fullest extent practicable
War criminals and those who have participated in planning
be ordered to proclaim and assume administration of such controls.
or carrying out Nasi enterprises involving or resulting in
Thus it should be brought home to the German people that the
atrocities or war orines, shall be arrested, brought to trial
responsibility for the administration of such controls and for
and punished. Nasi leaders and influential Nasi supporters and any
any breakdowns in those controls, will rest with themselves
other persons dangerous to the occupation OF its objectives, shall
and their own authorities.
be arrested and interned.
The Nasi party and its affiliated and supervised organizations
A suitable program for the restitution of property looted
and all Nasi public institutions shall be dissolved and their
by Germans shall be carried out promptly.
revival prevented. Nasi and militaristic activity or propaganda
The German armed forces, including the General Staff, and
in any form shall be prevented.
all para-military organisations, shall be promptly demobilised
There shall be established a coordinated system of control
and disbanded in such a manner as permanently to prevent their
over German education designed completely to eliminate Nami and
revival or reorganization.
militaris: doctrines and to make possible the development of
The German war potential shall be destroyed. As part of
democratic ideas.
the program to attain this objective, all implements of way
liasi laws which provide the basis of the altler regime or
and all specialized facilities for the production of armants
which establish discrimination on grounds of race, creed or
shall be seised or destroyed. The mintenance and production
political opinion, shall be abolished.
of all aircraft and implements of war shall be prevented.
All members of the Nasi party who have been more than nominal
participants in its activities, and all other persons hostile to
Allied purposes will be removed from public office and from
;ositions of responsibility in private enterprise.
Regraded Unclassified
MICROSTAT/
REG. M. 5. PAT. OFF.
MICROFILM
ROLL NO.
12"
Are
%
Dear 10°. Johnsons
I an (Lad to be able to express wholehearted agree-
nent with the principles embodied in the joint declaration
of the Mexican lankers Association and the Bankers Asso-
clation for Foreign Trade wideh you sent to the Treasury
Department on April 19th.
I wish to thank you for forwarding the text of the
declaration to no. The issuance of such & declaration 10
a heartening expresidion of the same desire for international
cooperation that led this government and the governments of
the other United Nations to participate in the liretton
=
loods Conference. I feal that adoption of the agreements
reached at Protton Vooda will be the beat guarantee that
- will realise the principles held and the objectives
hoped for by the Bankers Association for Foreign Trade and
the liexican Bankers Association.
Sincerely,
Signed H. Murpent
Mr. A. The Johnson, Secretary,
liankers Association for Forei/n Trade,
e/o National Shammut bank of Hoston,
Boston, Mansachusetts,
H4Drl -4/24/45
E
L
G
1945 APR 13 PM 5 59
A
P
H
T
WU49 DL PD BOSTON MASS APR 13 1945 434P
R
E
HON HENRY MORGENTHAU JR
A.
5
SECRETARY OF THE TREASURY
U
ON APRIL 11 APRIL 11 AT THE CLOSING SESSION OF A CONFERENCE HELD IN
Y
MEXICO CITY BETWEEN MEXICAN AND UNITED STATES BANKERS THE
T
FOLLOWING JOINT FINAL DECLARATION WAS UNANIMOUSLY ADOPTED
E
L
QUOTE THE MEXICAN BANKERS ASSOCIATION AND THE BANKERS
E
ASSOCIATION FOR FOREIGN TRADE (OF THE UNITED STATES) IN
G
R
VIEW OF THE CONFLICTING CURRENTS AND TENDENCIES WHICH AT THIS
A
P
TIME STIR WORLD ECONOMIC THOUGHT DEEM IT TIMELY AND NECESSARY
H
TO MAKE A JOINT STATEMENT COVERING THE FOLLOWING FUNDAMENTAL
PRINCIPLES FIRST FINANCIAL INTERNATIONAL COLLABORATION IN
T
PRINCIPLE AND IN PRACTICE THROUGH WHATEVER INSTRUMENTS MAY
E
BE CREATED FOR THAT PURPOSE MUST RESPECT THE RIGHTS OF ALL
A
si
NATIONS INVOLVED LARGE AND SMALL IN ITS APPLICATION THIS
U
COLLABOARTION MUST FOLLOW NORMS AND METHODS PROVEN BY
Y
EXPERIENCE BASED UPON SOUND TECHNICAL BANKING AND FINANCIAL
T
PRINCIPLES AND MUST PROCEED WITH GREAT CAUTION IN ADOPTING ANY
L
UNEXPLORED NEW AND UNTRIED METHODS THAT MAY ENDAGER THE
E
G
ECONOMIES OF THE NATIONS INVOLVED SECOND WE RECOGNIZE
A
PRIVATE ENTERPRISE AS THE MOST ADEQUATE MEANS TO GUARANTEE
P
AND ASSURE PRODUCTION GENERAL ECONOMIC DEVELOPMENT AND THE
T
LIFTING OF THE STANDARD OF LIVING OF THE PEOPLES
CONSEQUENTLY IT IS IMPERATIVE THAT THERE SHOULD BE A VAST AND
E
A
ORDERLY DEVELOPMENT OF PRIVATE ENTERPRISE THIRD THE
$
U
INTERVENTION OF THE STATE IN THE ECONOMIC FIELD MUST BE
R
Y
LIMITED TO THE ESTABLISHMENT AND IMPROVEMENT OF BASIC
T
GENERAL CONDITIONS AND THE PROPER ORGANIZATION GUIDANCE
E
AND SUPERVISION OF PRIVATE INITIATIVE WITHOUT CURBING IT
L
E
OR DISPLACING IT THE STATE MUST SUPPLANT PRIVATE ENTERPRISE
G
R
ONLY WHEN THE SUMS OR RISKS INVOLVED ARE so GREAT AND
A
ABNORMAL AS TO PREVENT HANDLING THROUGH NORMAL CHANNELS THE
P
H
PRECISE UNDERSTANDING OF THE FUNCTIONS OF THE STATE AND
T
PRIVATE ENTERPRISE WILL CREATE THE MOST SOLID BASIS OF
E
COOPERATION BETWEEN THE STATE AND PRIVATE ENTERPRISE
A
5
INDISPENSABLE TO REACH THE OBJECTIVES OF BOTH FOURTH
U
INCREASING COMMERCIAL RELATIONS BETWEEN THE COUNTRIES OF
Y
THIS HEMISPHERE REQUIRE ACTIVE AND PERMANENT COOPERATION
BETWEEN ITS RESPECTIVE PRIVATE BANKING ORGANIZATIONS THIS
COLLABORATION MUST BE ORGANIZED AND FOSTERED UNQUOTE
E
G
A W JOHNSON SECRETARY BANKERS ASSOCIATION FOR
FOREIGN TRADE CARE NATIONAL SHAWMUT BANK OF BOSTON
A
P
558P.
RECISION TRADE MARK MICROSTAT/ R$6. U, 5. PAT. OFF. MICROFILM ROLL
NO.
PLAIN
Ben
Dated April 26, 1945
MS-1691
PLAIN
Rec'd 11:05 p.m.
Paris
Secretary of State,
Dated April 26, 1965
Washington.
lec'd 9:10 p.m.
2455, Twenty-sixth
Secretary of State,
FOR VRB FROM MCCLELLAND
Hashington.
Kindly deliver following INSURED to Arish
Tartakever of Verid Jewish Congress from Gerhart
2116, Twenty-sixth
and Dragotin Resemberg.
FOR MOSSS LEAVITT FROM JOSHPH SCHWARTZ
"According report received free Intercress Belgwade
"Have received following from Filderman,
consider nominator
delegate, there are in liberated Turoslavia about 4,000
Jacobson very desirable, but be
accepts on condition retain right continue [ficen work.
Jewish survivers of whom some 1500, including 283 children
Assuming emigration continues suspended and since cor-
respondence now well organised he will be able to devote
mently erphans, are in Belgrade; about 720 in Hacedenia
all time necessary. Surprised no response shipment
antityphus necicamente promised long time ago.
and Serbia; about 750 in Veivedina: and approximately
Vessage unde.
1000 in Creatia and Delmetia. Dr. Pope in Relgrade is
Despite nany drawbacks this proposed arrangment,
directing the relief verk, Situation there 1s extremely
believe 11 should be accpeted especially view Filderman's
recommendation and urgency our having American representa-
precarieus through lack of feed, clothing and medicines.
tive there. If you agree, would appreciate your under-
taking necessary steps with Hicen Now York. Expect visit
Funds can be transmitted through Intercress via Pucharest.
Saly Lawrs Margolis, Harold Linder and Harold Trobe
before my return."
Please examine also pessibility shipping clething
CAPP 201
directly from South American via Dart". 1635
-
MARRISON
JWS
Regraded Unclassified
130
CARLE TO AMERICAN LEGATION, asso, FOR DOCIALLAND, FROM THE WAR REPUBLES HOARD
191
CARLE TV AMERICAN FAITS, PROM THE MAR REPUTER HOARD
Please deliver the following message to Saly mayor, St. Gall, from 11. A.
Leavitt of American Jevish Joint Distribution Condittee,
Please deliver Los following cuanage to Joseph Schwarts fro a
QUOTE PLEASE ASK FILIORIAN GIVE ALL POSSI ASSTSTANCE JOSEP
No 4+ Loavitt of American Jevish Joint Instruction Committee:
PORTAGE 128 CALEA MOSILO: HUCHARIST AID SEVD US REPORT. INQUOTE
QUOTE APP 4075 TINTATIVE GRANT FITATHOUSAND POUNTS
2011 CLOTHING INTERNES ADVICE PARTICIPA-
not SOYPTIAN COMMITTIES WICH UNIERSTAND fill
THIS IS THE BRN CARE NO. 512
COVER RAJOR POTTION COSTS.
10:20 a.m.
April 26, 1945
10:20 Balla
will 20, 1'45
Regraded Unclassified
1°2
CARLS TO AMERICAN SUBASSY, PARIS, your THE WAR REPUBLIC HOARD
Please deliver the following cessage de Joseph Schwarts from
3/4 A. Leavitt of American Jewish Joint Distribution Condition:
JUCTA REAVINGICS PUICHASES PALSSIONS ADVISS TOTAL COST
30,000 PAIR BHOWS DESTINED TERMAN ALSO
COST PM PAIR. PLACTIC CRDS: ADDITIONAL 70,000
POR HUNGARY WOULD RECEIVE COMPARATIVE
ESTIMATED HIGHS SOUTHAISCLICA. COST 5560,000 APPEARS HIGH
ATSTATE a PSR PATR. ADVISS WAT PART COTARS COST
HOLE PL. PAIR EXCLUSIVE PREDIT INSURANCE ETC. DARLING
JS ASCIDIATED POSSI-L DO NOTTLE YES SUBTANTIAL
AMOUNT INVOLVED ONE COMMUTT. UN.JOTE
10,20 3.00
Aril 26, 1945
PRECISION
TRADE MARE
NOT TO BE RETRANSMITTED
SECRET
COPY NO.
H
OPTEL NO. 133
Information received up to 10 a.m. 26th April 1945.
NAVAL
1.
Mediterranean. 23rd/24th, Allied constal forces sank 7
enemy coastal craft Gulf of Genoa. 24th. 3 enemy craft sunk
during unsuccessful attack on Leghorn while 3 other small craft sent
to carry out sabotage surrendered in Gulf of Genoa.
2.
Anti-submarine Operations. 24th. One H.M. Destroyer probably
sank U-boat off Farn Island. 25th. Liberator made promising attack
in S.W. approaches.
3.
Enemy Attack on Shipping. 23rd. (6825) Norwegian Tanker
torpedoed off Cape Ratteras.
MILITARY
4.
Western Front. Southern Sector. First French Army captured
Biberach and now 10 miles to East. Enemy pocket south Stuttgart
which previously encircled by junction, First French and Seventh
U.S. Armies being steadily reduced. Seventh U.S. Army is in Ulm and
now 18 miles to south while further east bridgehead at Dillingen
expanded to width 10 miles and depth 12 miles, On sector between
these 2 touns rapid advances have brought forward troops within 6
miles River Denubo, Central Sector: Third U.S. Army made general
advances from 10 to 20 miles while thrust to S.E. has entered Cham
end Rogen while armoured column reported within 15 miles Passou on
Austrian border. Northern Sector: Stubborn resistanco continues on
whole Second British Army front with eastorn outskirts Bromen pone-
trated up to 3 miles on cost bank of Weser thile attack from south
has roached outskirts of city to west of river.
5.
Eastern Front. Northern Sector: Pillou on Baltic coast
captured. Contral Sector: Russian forcos have linked up N.W.
Potsdam thus completing encirclement Berlin. Reduction German pocket
south cast of Borlin continued from direction Frankfurt-on-Oder and
from direction Kottbus. Still further south River Elbe reported
crossed 35 miles N.W. Drosdon. Southorn Sector: Fighting reported
in outskirts Brno.
6.
Italy. Eighth Army Sector: Rivor Po reached along almost all
this front though some pockets resistance still remain to south while
bridgehood won on north bank in area Ficarole. Fifth Army Sector:
U.S. and South African troops have crossed River Po on wido front
towards Nogara and Mantus with latter having one brigade across river
in area of latter town. Londing elements are reported 9 miles S.W.
Verona. Further west Reggio captured while other forces advancing
to north of Parma. On west coast sector further progress made N.E.
Spezia.
7.
Burma. Central Sector: British troops on eastern bank of
Irrawaddy now within 10 miles Solin while other troops having crossed
to west bank of river at point 7 milos S.E. this place where no
opposition so for encountered. Further S.S. armoured column fighting
in outskirts Pyu,
AIB
3,
Western Front. 25th. Bomber Connand escorted aircraft 787
(missing 9) attacked in clear weather targots at Berchtesgaden (1248
tons) and gun emplacements on Wangerooge (2153 tons) in Frision Is-
lands, At Berchtesgodon the chalet hit and considerable damago caused
0,8. barracks. U.S. escorted heavy boubers 553 (outstanding bombers
rio and Czechoslovakio including Skoda Works, Pilson (469 tons) and
14 and fighters 8) dropped 1203 tohs torgets South Germany West Aust- 3
railway contres (478 tons) with minly good results. SHARF (Air).
Modium bombers dropped 160 tons Bremon and 474 tons on flak positions
and Ordnance Depot Munich-Salsburg Arca, with good results while
fighter bombers and rightors 2116 (missing 11) operated battle areas
destroying or damaging 2,200 road and rail vehicles and inflicting
onemy air casualties 12:3:11 in combot and 62:0:91 on ground.
9, bridges area Verona. 24th. Heavy bonbers 702 (Missing 3)
Mediterronean. 23rd/24th. Liborators dropped 163 tons on
bombed bridges and supplies plops Brenner Boad in North Italy and
Austria. Tactionl Aircraft 1266 (missing 6) attacked enery communic-
ations and concentrations North Italy destroying or damaging 1343 rood
and Fáil vehicles.
10. French Indo-China. 22nd and 23rd. Liberators dropped 100 tons
Noval Base Salgon when one large ship sunk and two others damaged.
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
ass, PAT. OFF,
MICROFILM
ROLL NO.
195
- 2 -
April 27, 1945
9:00 s.m.
MR. CLAYTON: I believe they spoke to you about that
1067-REVISED-MEMO FOR THE PRESIDENT
matter and you are in agreement--
Present: Mr. D. N. Bell
H.M.JR: What?
Kr. Crowley
Mr. Downey
digest of this detailed directive because the nemo of
MR. CLAYTON:
that we shouldn't attempt to prepare
Col. McCarthy
Mr. Coe
March a 23rd was deemed to be the best digest that could be
Mr. Friedman
prepared, and it is only four pages long, full spaced, and
Mr. Classer
sets out fully the principles and the policies that have
Commander Richardson
governed us in drafting this detailed directive, so that
Mr. Fowler
we thought ne would just make that statement to the
Mr. Clayton
President.
Mr. Despres
Mr. Riddleberger
H.M.JR: Do we have a copy of the March 23rd memo?
Mr. McCloy
Lieutenant Bancroft
MR. CLAYTON: Yes, sir. We are sending this to him
Mr. Bard
along with the document we finished yesterday. This memo
which we have prepared for him, which has already been
signed by Acting Secretary Grew, and which I believe that
MR. CLAYTON: Could We have a return of the documents
the rest of the Committee would sign reads as follows:
that were used yesterday and which were corrected? They
have been replaced by at final and correct document and
"Memorandum for the President. The Informal Policy
we would like to have the old ones returned to the
Committee on Germany is presenting to you, for your
Secretariat.
approval, a revised directive for the military government
of Germany prepared on the basis of the policy menorandum
MR. FOTLER: We returned one and Mr. Crowley has the
of March 23, which was approved by President Roosevelt.
other one.
The memorandum of March 23 has been introduced Into the
European Advisory Commission by Ambassador Winant for
MR. CLAYTON: Now, Mr. Secretary, as we agreed yesterday,
negotiation as a protocol of agreement with the U.K.,
we have prepared a memo to the President. The working group
the U.S.S.R. and France. Copies of the memorandum of
decided after considerable thought on the matter that &
March 23 and the revised directive are attached.
digest was not cailed for because the memo of March 23rd
was the best digest that could be made, because It gives
"In the opinion of the committee the revised directive
in general outline the principles and policies we had
embodies policies and measures which faithfully carry out
governing us in writing this detailed directive.
The committee believes that this directive furnishes the
the principles set forth in the memorandus of March 23.
(Lieutenant Bancroft enters the conference.)
basis for effective initial action to prevent Geruany from
again becoming a threat to world peace.
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
OFF.
MICROFILM
BOLL NO.
107
- 3 -
4
Joint Chiefs of Staff for consideration from the military to
"The revised directive is being submitted to the
MR. McCLOY: He has that document.
point of view. Thereafter it will be transmitted the
General Eisenhower as the basic instrument for
10t. CLAYTON: I know.
initial post-defeat period in Germany. The directive
is designed to serve a dual purpose in that it will for give
MR. McCLOY: It won't do any harm.
him his guidance as American member of the Control Council
this Government's policy as formulated to date
MR. CLAYTON: It would make the file complete by
in Germany and will likewise guide him in the administra-
sending it.
tion of the U.S. zone.
H.M.JR: While Mr. Crowley is reading it, on page
Germany will you continue, under your direction, to develop of
"If approve, the Informal Policy Committee on
two at the top of the page where it says, "The revised
directive is being submitted to the Joint Chiefs of Staff
basic policies of this Government for the treatment
for consideration from the military point of view," some-
Germany, including the pending matter of reparation.'
how or other if you could get in before the next sentence,
"Thereafter it will be transferred," meaning it will
H.M.JR: I think it is very zood, except it doesn't do
only be transferred to General Eisenhower if the President
Cromley and I wanted it to CO. I don't know why
approves--
what that that Mr. part four-A was business would dropped determine to out, point what that out Crowley to they the brought thought. President this That that want thing was this, to on
Vk. CLAYTON: In the first part me say, "The Informal
Policy Committee on Germany is presenting to you, for your
so to speak, hends, and that was what--I mean, I just sort of
approval-- say, the very first line, and if he shouldn't
their own out that 1 thought that 185 coing to be a and
approve, of course--
point preamble, "whereas, the Germans so and so and so so;
H.T.JR: Yes.
therefore," and the rest would follow.
MR. CLAYTON: I didn't realize that ne were to
MR. BELL: Isn't It the one at the end?
incorporate that in the memo.
MR. CIONLEY: well, as 1 see this thing, in order to
H.E.JR: I am correct, Mr. Crowley, am I not?
get any thought like that in it will have to be rewritten.
MR. CHONLEY: Yes. I an sorry I didn't see that.
MR. CLAYTON: You would have to rewrite it.
I was reading something else.
KR. CHOWLEY: The thing I had back in my mind, maybe
MR. which we substituted for the digest which we discussed, that
CLAYTON: Of course that is in this March 23rd
you can just carry it out in your analysis and things like
that. But I think the one concern I have is that these
nemo would expect to say to the President verbally whole
Germans brought this on themselves and now, for instance,
we detailed memo that he would find that this March
and think we that if he shouldn't have time to read the 23rd
they are fighting in Berlin and they are going to have
wholesale destruction of Berlin. Now, this program
document is a faithful digest of what is in the other.
that you have here is rather something to try to untangle
or rehabilitate something that they did themselves, Jack.
Now, of course, you do bring that out in 4a there.
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
PAT.
OH.
MICROFILM
ROLL NO.
199
- 5 -
- 6 -
MR. McCLOY: It would do no harm, would it, Will, to
just stick in somewhere in this thing that ne have proceeded
MR. BELL: As a part of this document.
on the basis of that and put in the 4a language?
H.M.JR: If Mr. Crowley is satisfied, I an.
MILL CLAYTON: We can do it without rewriting the memo.
MR. CROWLEY: It's all right with me.
Mr. MoCLOY: Suppose you just add a paragraph.
MR. CLAYTON: I would like the steno in your office
MR. CLAYTON: It has already been signed by Mr. Grew.
to add "Acting Secretary under Mr. Grew's name.
MR. McCLOY: I didn't realize that.
MR. CROWLEY: Does that take care of everything, Will?
MR. CHOLEY: Well, 1 withdraw that, then. The only
MR. McCLOY: We have copies of that, don't we?
thing I feel is that this committee ought to very definitely
get thenselves on record in this whole country that this
B.M.JR: I'll have that photostated while me wait.
Isn't anything we did.
M... CLAYTON: Don't you want us all to sign it?
MR. McCLOY: It should be a part of our propaganda
We should sign it 8.8 a Committee. I didn't know if you
that the Germans brought this on themselves.
wanted the title of each one or not. I have no opinion
one way or another.
MR. CLAYTON: I can see that there may be some advantage
in saying that to the President, but of course it is all
H.V.JR: No. The other one we did, the March 23rd
through the document.
one, we just signed.
H.M.JR: What Mr. Crowley said about Wisconsin polities--
MR. CLAYTON: That's right, no titles of any kind.
but if he's satisfied, I an.
H.M.JR: he just signed it.
MR. CROWLEY: At least that qualifies Wisconsin politics,
doesn't it?
MR. CROWLEY: Will thinks we go along very peacefully
this morning.
H.M.Ja: That does it pretty good.
Joe has given ne a memo here. I don't know very much
"Germany's ruthless warfare and the fanatical Nazi
about it. It might start an argument. (Laughter)
resistance have destroyed the German economy and made
chaos and suffering inevitable and that the Germans cannot
Ma. FOLLER: You sign this first, Mr. Crowley. (Laughter)
escape responsibility for what they have brought upon
themselves."
Mh. CROALEY: 1 mon't go into it in regard--
MR. CLAYTON: That's in the March 23rd document, and
MR. FOWLER: Vie are not going to have any arguments
it is copied verbatim in the document we finished and
this morning. I can see that me don't intend to, but Mr.
approved yesterday.
Crowley is certainly going to sign the memo, but in signing
this transmittal nemo I thought It only fair and appropriate
RECISION
MARK
MICROSTAT/
MICROFILM
SOLL NO.
201
- B -
- 7 -
that the members of the Committee understand our position
MR. CLAYTON: The Navy has to sign this.
on the March 23rd memo, which we think is fine so far as
it goes, but we think it could be usefully supplemented
(Mr. Bard enters the conference.)
particularly spelling out the last paragraph In 8 little
more detail. Bow, this memo is not for action by the
MR. MoCLOY: You shouldn't sign the Joint Chiefs of
Committee this morning but it is to place on the agenda
Staff document.
of the Committee for its deliberation at your convenience,
Mr. Clayton, a proposal to bear out, not the neuo itself,
MR. CLAYTON: No.
but by an interpretive supplement, some of the points I
think we have taken care of in this military directive,
H.M.JR: How many copies would State like? I'll
but which the EAC might miss out on if it is going to
have a photostat made and have 8.8 many copies as you
negotiate the document as a protocol, and I just wanted
want. A couple of dozen?
to get that on the agenda of the Conmittee for its meeting
MR. CLAYTON: Yes. I would like to send one to
next week.
each member of the Staff Committee, about six or seven.
H.M.JR: Let's sign this and get it photostated.
We better have a dozen.
This has to do with what?
Mk. CHOWLEY: How many do we want, Joe?
MR. FOWLER: The business next week.
MR. FONLER: Three or four.
MR. McCLOY: I can't get my name under you fellows;
MR. MoCLOY: half a dozen.
you have been too modest.
H.M.JR: Navy?
MR. CLAYTON: We will discuss this when Te meet Tuesday
LT. BANCROFT: About three or four, I think.
morning.
H.M.Jk: Somebody has to sign for Navy.
(The Secretary leaves the conference temporarily.)
IS., DOWNEY: Mr. Bard will be here in a very few
H.W.JR: I just got a message. I don't know what it
minutes, Mr. Secretary.
is. It will just take a split second. Mr. Gutt of
Belgium says he isn't satisfied. Does that effect all
MR. CLAYTON: Do you think we should sign the big
of you? They are interested aren't they?
document?
lik. GLASSER: State is interested, too.
H.M.JR: No.
MK. COE: Troop pay?
VR. CLAYTON: I don't know anything about protocol.
H.M.JR: would we take two minutes now? Do you mind?
MR. BELL: The Joint Chiefs of Staff document, lan't it?
Go ahead, what's the trouble with Gutt?
Regraded Unclassified
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- 10
MR. COE: The trouble is ne are not paying enough
We have understood that the Army won't accept anything
money. we have an arrangement under troop pay under which
like that sum. ae also have similar arrangements as with the
the Army has gotten from the Belgians a good many billions
Belgians with sbout six other countries including France and
of francs, a good many million dollars worth of francs,
one hundred and thirty-eight million dollars worth of francs.
Italy, all on the same arrangements, and we have told them
we are reluctant to change the method of estimates and method
RR. BELL: One hundred and thirty-eight million dollars
of payment. It's the last business he has here, and he has
been seeing us, trying to get it upped.
in france.
H.M.JR: He tried to see me, too. I think he saw you.
M.R. COE: On the other band, we pay out to the Belgians
in dollars for francs on the basis of certifications from the
MR. McCLOY: Yes, he saw me and 1 told Aichardson that
War Department of how much our troops have actually spent.
the figures he gave ne were rather on the conservative side
The figures are somewhat delayed in coming to us. The
and we would take another look at it and try to up it some,
result has been that after a good deal of discussion with
but we wouldn't abandon the principles we have been following
the Army and consideration of how much we could possibly
with other countries. It's a matter of exchange. That
pay the Belgians, when Mr. Gutt kicked we upped the kitty
from three million dollars to five million dollars, but
places a very high value on the franc, and soldiers just
don't spend the money. They get the paper and they come
that's against the Army having received for various purposes
back with it, and we give it back to them in terms of
one hundred and thirty-eight million dollars. The amount
which they have turned over to the troops is apparently
their own paper.
thirty-eight million dollars. Now, Mr. Gutt says the
MR. BELL: You have paid them thirty-eight million
discrepancy is too large ano he thinks that more ought
dollars worth. You figure a large percentage of it will
to be paid over to him. In the end it is envisaged
como right back into your hands?
that It will be settled one way or mother according to
exact figures as to how much the troops have actually
Mh. McCLOY: Yes, 80 why go through all that? It
spent, but there is & problem of estimating in here.
gives un the advantageous position, but it seems to me
The Army estimates it fairly low. ár. Gutt has another
we have the advantageous position, and fundamentally it's
sort of arrangement with the British whereby the British
the rate of exchange. They have pressed for it. However,
pay him for all the money that they receive for troop
maybe we can raise 8. little bit beyond where we are now,
expenditures, and it is expected under that arrangement
but I don't think we ought to E° to the principle.
that Belgium will later return the money to the British.
H.M.JR: You're talking about three million--
What they have paid them is much greater than what
we have paid them. If me decide to meet him in principle,
VR. 008: He mon't be satisfied with that. I believe
the principle he alleges being that no matter how much
you can raise it, and the Army people are working and expect
they have actually spent be should receive approximately
to have n. new basis of estimates slightly changed under
what it is intended that they spend, what is disbursed
which they would--
to them, to the troops. I an sorry if this is complicated,
but It is. If we meet them in principle, it would involve
H.M.JR: Do we--under that arrangement do we have
paying him about forty million dollars.
the pleasure of telling them yes or no? Is that the way
it is?
MR. 005: Yes.
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204
- 12 -
- 11 .
VR. McCLOY: Why don't they one us in light of the
H.M.Jht The Treasury does it in consultation with
fact that we have net then on the exchange.
the Army.
MR. CLAYTON: Is it as simple as that, Frank? Can't
VR. MoCLOY: Yes,
you make some estimate from your experience up until now
as to approximately how much the soldiers would turn back?
MR. BELL: what we are doing is spending or turning
over War Department money in a sense. They have paid
Mh. COE: They do. There's where the trouble comes in.
us for all of the france we have taken over and we have
set aside the money in a special account, and the arrange-
MR. BELL: It's somewhere between seven million and
ment Le have and which has been cleared with the Comptroller
thirty-eight million.
General is to turn over the money to the Belgians based on
certification of the war Department that that money has
MR. CLAYTON: I was wondering if perhaps you mouldn't
actually been spent. The certification so far only amounts
know from your experiences that they spent at least half
to seven million dollars, whereas you have over one hundred
of it.
million dollars of francs.
Mr. McCLOY: The figure we are paying them is the
MR. McCLOY: We overestimated the amount we asked
result of our experience, we say.
for first.
MR. CLAYTON: Is it? (Laughter)
Mr. BELL: The other thing is he has put, so he
says, the bulk of francs he has issued to us and the
MR. McCLOY: However, it's amazing hom little they
British in a bank statement which looks very bad. He
spend.
has no dollars or exchange on the other side to offset
it, so it makes it look bad from a public standpoint.
MR. 00E: I think it's only ten percent.
The British are paid, as I understand, something like
eighty million dollars under similar arrangements.
Mr. McCLOY: The rate is so damn tough.
HR. McCLOY: There will have to be reimbursement
Mr. CLAYTON: Why do they take the francs in the first
back from the Belgians to the British on that.
place?
Miss COE: That's right, and they have an agreement
MR. McCLOY: I think they overestimated the amount.
to that effect.
why can't we turn over some france?
MR. McCLOY: They want to do the same thing. Our
MR. BELL: We asked you to do that, and you are going
position is much more advantageous.
to turn over nine hundred million france which isn't much
money.
H.M.JR: Suppose me sit tight?
MR. GIASSER: The finance officers in the field are
MR. COE: It will just disappoint him in the end.
too conservative and that's really causing the trouble.
It's & question of whether we advance more. Initially,
If ne had only taken three billion francs into Belgium,
it's a question of whether we owe them or they owe us.
it wouldn't have been serious.
Regraded Unclassified
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200
- 14 -
- 13 -
continue with that same group.
MR. McCLOY: I told Aichardson to get after it to
MR. McCLOY: where does that fit in with the arrangements
see if he couldn't cut it off on both ends.
we had with the secretarist?
MR. BELL: That would be the way. but it on both
MX. CLAYTON: I should have mentioned that first, Jack.
ends more drastically than you have with respect to
It was agreed, Mr. Secretary, some time ago that in order
returning of francs. If you can get down to three billion--
to avoid any overlapping or duplication of the work between
this Committee and the SwHC Committee, State, War, Havy
H.M. The will you see him?
Coordinating Committee, that the SWNC Committee's secretariat
would be the secretariat for triscommittee, and that I assume
ZR. BELL: I have seen him. We have upped it from
there will be no objection.
three to five, but he isn't satisfied with that. I'll
be glad to see him again.
B.M.JR: Swing, sung--
AK. McCLOY: Tell him we are continuing with it.
MR. CLAYTON: SWNCC.
MR. BELL: ne can no on home.
H.M.JR: What does SINCC do? Treasury is not on that.
10.. McCLOY: de's a nice fellow, isn't he?
MR. McCLOY: Treasury is not in on that. That's one
H.H.JR: I am sorry, but I just wanted to use this
of the fen things Treasury is not in on. That's a political,
military group that--
time because he said he has got to go home.
VR. CLAYTON: would you like to take a few minutes
H.M.JR: I'll let that one pass.
to discuss some organization matters of the Committee's
IDC.
McCLOY: that deals with problems all over the
work?
world that affect the military and political policy. It has
dealt with all manner of subjects. There was a committee on
H.H.JK: Yes, if 1 may be excused at twenty minutes
of to get prepared for the twenty minutes I have over there.
Germany in SWNCC on which it was proposed to put in Treasury
and FEA which met with some objection, and in the face of
I an seeing him ten minutes shead. I don't know whether
that Mr. Clayton thought it would be wiser to have a separate
you appreciate it, but I had half an nour and he gave
committee for Germany. We wanted to be sure that we didn't
twenty minutes of my time to you fellows.
have another committee on Germany that would be dealing
with the Joint Chiefs of Staff through a different secretariat,
Go ahead, Mr. Clayton.
$0 the arrangement was we should have a separate committee,
ML. CLAYTON: would it be the pleasure of the Committee
which is this one, but use the SWNCC secretariat in its
relations with the military.
that we continue in force the same working group that we
have had and which group did such excellent service in the
preparation of this document? They will have, presumably
H.M.JR: Let me just say, for myself, I think the working
pretty soon, a lot of work to do, probably telegrams and
staff of this--I would like to personally compliment all of
cables coming in and daily matters that may arise in
connection with interpreted and suggested changes, and
so forth, in the document and I would suggest that we
Regraded Unclassified
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- 16
- 16 -
them. I think they did a magnificent job. I don't give a
and Patterson to do that. I spoke to Mr. Crowley and he
damn how it is formed, if the President of the United States
said he didn't think he was particularly interested.
says for us to 2° shead, the same people in this room. Call
it anything you want to, but if the same group can continue,
Mine CROWLEY: I would like to say this, Mr. Secretary,
I would be delighted to have them participate on any basis.
that we don't on all these things like China and Germany--
That's the way I feel. I have seen committees rise and fall.
FEA does have an interest, and I don't want to unnecessarily
President Roosevelt appointed the Secretary of State, war,
put FEA on things like gold into China, because I feel that's
and Treasury to deal with Germany. He appointed that at
Treasury's business. On the other hand, in assuming the
Cabinet. I don't know what the standing of that Committee
responsibility that we assume we have to know what is
is. That was done last September, I think, before Quebec.
going on and participate in these things. I don't mean
by that that ne mouldn't follow the Treasury or anything
MR. McCLOY: This supersedes that.
on the gold In China.
H.M./R: It was Mr. Stimson's suggestion.
B.M.JK: why not say for the time being that we would
take up the reparation thing next, because I suppose some
MR. McCLOY: was it?
day Le will have to take up Japan?
H.S.JR: Yes, he suggested it at Cabinet. Do you
IR. CLAYTON: I don't know. I was fixing to raise
recall that, Mr. Crowley?
that question with regard to Austria, for example. That,
of course, would fit in a good deal easier than Japan
HR. CHOCLEY: I remember that.
because for sometime now it has been a part of Germany.
of course, if they are going to be separate, there is
H.M.JR: I don't know what the status is, but is this
coing to have to be some policy agreed upon with respect
secretariut all right as far as you are concerned?
to the treatment of Austria, and I think we should consider
whether that would come in this committee. (Discussion off
MR. 00E: The SWNCC secretarist is excellent. And
the record.) Have you any views on that, Jack?
as you see, this enormous document is turned over to them.
10. McCIOY: It seems we should do austria.
H.A.JR: AS far as 1 an concerned, if the President
wants it, and would like us to continue asking him, I don't
MR. We have some--
care what the form is or what, but me are delighted to
particpate because it gets results.
the CLAYTON: We have considerable information and
data already on those.
MR. CLAYTON: In other words, we E° on as is. Is that
satisfactory with everybody?
MR. DESPRES: That's really pretty far advanced, I
believe.
MR. CROWLEY: Yes.
MR. CLAYTON: 1 don't know whether that is a question
H.M.JR: May I just point out that it's a little bit
we should raise with the President. We have said in the
different? I don't know where that would fit in, but this
last paragraph, "If you approve, the Informal Policy Committee
thing President Truman asked me to do--China--and in that case
on Germany will continue, under your direction, to develop
the only difference is that we arranged with Messrs. Stimson
basic policies of this Government for the treatment of Germany,
including the pending matter of reparation."
Regraded Unclassified
210
- 17 .
1 suppose we should raise It with him since the put
it in that form. This committee was appointed by the
Decretary of State and not by the President, and it was
appointed by the general authority and direction which
President Roosevelt gave to the Secretary of State to
see that the policies agreed upon, the objectives agreed
upon at the outset were carried out by different
departments of the Government.
May I excuse myself? I'll say as far as
I em concerned, you can call this committee by any name
you want, see? I full delighted to participate in reparations
and in austria 1f you want It.
- CLAYTON: Even Japan.
H.H.JR: Or Japan, but I have to excuse myself now.
I think it la informal--you call it informal--but it gets
results, so what the hell!
Mr. MoCLOY: when are we to be there?
H.M.JR: Ten-ten.
MR. CLAYTON: 1 suppose we'll have the photostats?
H.E.JR: Yes,
MR. CROWLEY: Do you want to leave your proxy with
anyone while you're gone?
H.M.JR: Mr. bell is accustoned to acting for DE.
MR. I thought maybe you would give it to
one of us.
H.R.JR: I'll even do that. Dut again I want--I think
pleased. the working committee did & beautiful job and I as very much
PRECISION TRADE MARK MICROSTAT/ ass. PAT. OFF. MICROFILM
ROLL NO.
12"
DEPARTMENT OF STATE
WASHINGTON
SECRET
April 26, 1945
MEMORANDUM FOR THE PRESIDENT
The Informal Policy Committee on Germany is presenting
to you, for your approval, a revised directive for the
military government of Germany prepared on the basis of
the policy memorandum of March 23, which was approved by
President Roosevelt. The memorandus of March 23 has been
introduced into the European Advisovy Commission by
Anbassador Winant for negotiation as a protocol of agreement
with the U.K., the U.S.S.R. and France. Copies of the
memorandum of March 23 and the revised directive are
attached.
In the opinion of the committee the revised directive
embodies policies and measures which faithfully carry out
the principles set forth in the memorandum of March 23.
The committee believes that this directive furnishes the
basis for effective initial action to prevent Germany from
again becoming a threat to world peace.
The revised directive is being submitted to the
Joint Chiefs of Staff for consideration from the military
point of view. Thereafter it will be transmitted to
General Risenhower as the basic instrument for the initial
post-defeat period in Germany. The directive 1a designed to
serve a duel purpose in that it will give him this Govern-
ment's policy as formulated to date for his guidance as
American member of the Control Council in Germany and will
likewise guide him in the administration of the U.S. zone.
If you approve, the Informal Policy Committee on
Germany will continue, under your direction, to develop
basic policies of this Government for the treatment of
Germany, including the pending matter of reparation.
Youth They
Acting Secretary.
Pear Tash and
William L. Clayton Henry
Regrade
213
- 2 -
April 27, 1945
212
10:44 A. M.
HMJr:
Well, that's -- I don't quite understand. You tell
it to se another time. Bit I did give the President,
Mr. Fronk
and I told them over there - told Clayton that I
Coe:
oh, thanks.
gave it to him - the March 1st document of the
President.
HMJr:
He said he had that thing of the 23rd..
:
Fine.
C:
Yes,
HMJr:
I told then the informal status of the thing, and
HMJr:
and he read it last night, and he's going to take
I told them I thought the thing ought to be regularized
this and rend It every word hinself.
and he agrees.
C:
Oh, vonderful.
C:
Ahuh.
HMJr:
And Frank Malker has refused, and be 1- now looking
HKJr:
See?
for another man. And ve continue DR Tunnday. but it
vm wholly satisfactory.
C:
Yoh.
C:
Very, very good.
HKJr:
So State knows I've given his that other thing.
HMJr:
Yeah, wholly entisfactory.
0:
All right. I rang Harry as we agreed.
C:
Mr. Secretary?
HKJr:
Yesh.
HMJr:
Yes,
C:
...end suggested about commitments. He seld there
VAE no problem of any -- of his making any commitments
C:
Well, I know -- just one thing.
or maything there because his - as advisory enid If
he'd think book to the Bretton Voods situation and
HMJr:
Yesh.
the position of some of the advisory staff -- be
doesn't know whether his views vill have any weight
C:
I think the very you oitched in on this has made oll
there for It's nurely in an individual basis.
the difference.
HMJr:
Yell, he took 1: in perfectly good humor?
HMJr:
I agree with you.
:
He took it In good humor, and he anid that on this
C:
(Laughe) All right, you should.
particular telegrou - he sent it through direct -
because he hoped we had the stuff, but be doubted if
HMJr:
Yesh.
ve did.
C:
Our Gergen consittee 1: very happy. One notes thing..
HMJr:
No. the way you handled 1% If I have a breathing spell
-RE to yourself, I's most pleased
HMJr:
If I hadn't called up and driven this thing through,
I'm going to have you bring in everybody that worked
I bet it would be another month.
on 1t this afternoon and thank them.
0:
Quite true. I talked afterwards about that Svink
C:
Fine.
thing that come UD...
HMJr:
Seet Tell that to Fittgerald.
HMJr:
Yesh.
C:
I vill.
0:
and it changed an agreement with Riddleberger
that they yould clear un the existing business
HKJr:
I vant to are everybody that bed anything to do with it.
Germen business-in the Bvink condittee, and thereafter
no more German business in the Swink committee.
Regraded Unclassified
PRECISION TRADE MARK MICROSTAT/ MICROFILM
BOLL NO.
214
-3-
215-220
0:
Thank you.
HMJr:
Goodbye.
C:
Bye.
NOTE:
Pages 215-220 were erronemsly
inserted in this colume and belong
in Book 842, April 28th.
They have been put at beginning
of book as papes A-P.
Regraded Unclassified
221
April 27, 1945
222
2:26 P. X.
April 27, 1945
3:05 p.m.
Mr. O'Connell:
Bob Bannegan colled ne at home last night
about that Kansas City matter...
PROPOSED SPEECH FOR RADIO
HXJr:
Oh, yes.
Present: Mr. Feltus
0'0:
So If you vant to send se Charlie Bell's seno-
Mr. Fussell
rendum which you started to give no yesterday,
Lieutenant Levy
I'll take care of it.
Mr. Clark
Mrs. Klots
HMJr:
I'm giving it to Mrs. McHugh now.
O:
Thank you very much.
H.M.JR: Now what have we got?
HWr:
He called us last night?
MR. FELTUS: Fussell has a draft which is a serious
O:
H- colled se at home about 9:30.
operation on the draft we had before, and we have this
problem of where you come in on the program.
HMJrt
For heaven's salte. the h+ classed?
H.M.JR: Yes, well that's Admiral Levy, isn't it?
:
H+ seemed to be outte pleased.
MR. FELTUS: The Admiral tells ne you ought to be
HMJr:
Good.
going on in the beginning.
0:
Yes, and I told his that I would send In the Infor-
nation that be should have today, and V+ vors honeful
H.M.JR: On the advice of counsel. He didn't put
that be vould by able to soke . constructive eug-
ne up to that just as an old experienced radio commentator.
gestion to us.
Hollywood always overruns, don't they?
HMJr:
Good. All right, thank you.
LT. LEVY: Bob Hope does.
0:
Thank you.
MR. FELTUS: I would much rather see the speech done
at the end rather than beginning for a variety of reasons.
One is I think it is & little presumptuous on our part to
tell them where you will come in. It's their program.
H.M.JR: Who's paying for this?
MR. FELTUS: The network. It's a sustaining show.
Another thing is the dramatized program will build up a.
listening audience which you will inherit, whereas any
straight speech loses audience. By the time you finish
speaking they won't have their audience that they would
have ordinarily which they will object to.
H.M.JR: What do you say? Of course it is a little
bit different than wisecracking. This thing can be clocked,
can't it?
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LT. LEVY: Oh yes.
MR. FELTUS: Do you want him?
H.M.JR: It isn't like one of these things--singing
H.H.JR: Who la he?
and joking.
MR. FELTUS: Clark.
LT. LEVY: It is straight dranatics.
H.M.Jk: Where is he?
MR. FELTUS: It is a sustaining show. They will not
out you off.
Mit. FELTUS: In my office. Major Clark. I'll tell
you who he is If it is of interest to you. Be just nub-
H.M.JR: What do you think, Levy?
lished another book, Robinson Crusoe, U.S. Navy." Have
you seen it?
LT. LEVY: It's & straight dramatic program. I should
think they could give us a definite time when ne will come
H.V.JR: No.
in and we will have a specific time on this and we can take
just that time.
MR. FELTUS: It deals with the experiences of this
man, Tweed, lost on Guam for two and one-half years. Clark
MR. FELTUS: Fussell cut the script to about five
is a very fine writer who is a Sergeant in the Army. He is
minutes. It gives then three minutes' time lag over
in civilian clothes non and was loaned to us by OSS. He
their original time. They can certainly--
was on my staff some years ago. He writes for Reader's
Digest regularly. He has published about five books
H.M.JR: Okay.
and he was on your Treasury Hour once. He wrote 6. book
called "Remember Pearl Harbor." He was there when it was
MR. FELTUS: In that connection I think it's always
bombed, and the hook was a best seller. An excerpt from
for your own sake best to either do what they want or
the book was put on the Treasury Hour.
nothing because of the relations with them. They get
swfully insulted over any changes they have to make, the
H.M.JR: He was loaned to us. Is he actually in the
people who handle the programs.
Army?
H.M.JR: I never had any trouble with them. I'm in
MR. FELTUS: Yes, he is a sergeant.
demand on the radio. Is that right, Dave?
H.M.JR: Like a lot of these OSS men. And we borrowed
LT. LEVY: Pretty true. We didn't have any trouble
him for a couple of months?
particularly. we had ordinary troubles, I'll say.
MR. FELTUS: Until Bretton Woods is finished.
H.M.JR: Now, but I mean--well, anyway--
H.M.JR: How long has he been here?
MR. FUSSELL: Mr. Secretary, that's in bad shape
because moving the time up I had to farm it out among
MR. FELTUS: About & month. I an trying to think of
two girls on two different machines.
the name of the man--the Superior Officer--Colonel Dougherty.
H.M.JR: where is the original outhor?
attached.)
H.K.JR: (Reading from "Proposed Speech for Madio,"
Regraded Unclassified
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226
- 5 -
- 4 -
"The Crew of Model T' dramatizes a great basic fact
MR. FELTUS: I agree.
of modern times--that nations must live together. Living
together means exchanging goods in a friendly, businesslike
H.M.JR: He is not interested In people, just
way.
production.
"Just now, some of our neighbors are hard hit."
MR. FELTUS: I think there may be some of that
in here. I'm not sure.
Did you do the ending on this?
E.M.JR: (Reading) "As a businessman--and & farmer
Mk. FUSSELL: Dick Brenner and I did, Mr. Secretary.
must be & businessman--I have never advocated giving
Mr. Luxford sent Brenner to me and it hasn't been gone
away anything, and I do not favor making indiscriminate
over by Luxford's office. All we had was out down sharply
gifts abroad even now. But, it is poor business indeed
and we made several changes as we went along.
not to sell a man seed-corn on time. The world is still
& good credit risk. Actually, beaten and bloody as it
H.M.JR: (Reading) "The needs of war-torn countries
is, it prefers & 'leg-up' to a 'handout.''
exceed anything our imagination can conceive. Transporta-
tion systems, factories, power plants, bridges, ports,
I would like to say, "The people of the world are
and harbor installations that were 8. thousand years in
still 8. good credit risk. Actually, beaten and bloody
developing are in ruins. The task of getting blood
83 they are, they prefer--"
circulating again in the veins of industry depends
largely upon the people in the countries affected; but
(Mr. Clark enters the conference.)
they must have help."
H.M.JR: The first thing I suggested is this: In
You don't say anything about the people themselves.
the first paragraph he talks about systems, factories,
You left out the human side.
and power plants. If you get it, the most important
thing is the human angle, men, women, and children,
MR. FELTUS: We are not talking about it.
and I want to get something in, I mean, that we can keep
repeating across Bretton Woods--but I certainly don't
H.M.JR: You can say you can't do this, but somebody
want to be a machine and only talk about machines.
has to do the human side.
MR. CLARK: That's right.
MR. FELTUS: I think we can add that here and there
if you want to.
H.M.JR: Does that appeal to you?
H.M.JR: I don't want to just talk about machines.
MR. CLARK: Certainly. I think that's fine.
They are talking about machines.
H.M.JR: All right. And at the bottom of the first
MR. FELTUS: Let's go through it once and we will
page where it says, The world is still & good credit risk,*
inject that.
1 would like to say, "The people of the world," huh?
MR. FUSSELL: That can be put in.
MR. CLARK: Yes.
H.M.JR: You can say, "Of course we can't do that,"
but somebody has got to do it.
RECISION
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ROLL NO.
209
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- 6 -
To make it perfectly clear, while Bretton Woods can't
H.M.JR: Use the phrase, "the masses." But I like
do this, this is UNRRA's job, and I definitely want to
that phrase ...sell a man seed-corn on time.
talk about the human wreckage, huh?
MR. CLARK: I think that's good. I picked that up
(Reading) "...of the program they developed was an
from & friend of mine.
international bank, the working capital of which will be
subscribed by all 44 nations, each according to its
H.M.JR: It puts me in the same class 8.8 Henry Wallace,
capacity.
but it's all right.
"The bank proceeds on tried principles roughly similar
MR. CLARK: It's a good fundamental figure.
to those used so successfully for the past ten years by the
Federal Housing Authority in helping American citizens to
H.M.JR: Are you from the South?
become home owners.
MR. CLARK: Tennessee. Are you familiar with that
Well, I would like to say "not only become--" oh yes,
part of the country?
Federal Housing. Yes.
(Mrs. Kletz enters the conference.)
MR. FUSSELL: That ought to be "Administration."
H.M.JR: (Reading) *We learned that from the liberated
H.M.JR: (Reading) "In the case of FHA, the U.S.
countries in Europe, which ask not for relief, but for a
Government guarantees against loss the banker lending
chance to rebuild their shattered economic lives."
to 8. prospective home-builder. The International Bank
operates the same way, by guaranteeing against loss the
I an just going to make some suggestions as we go
individual or institution backing & productive enterprise
along. Spyros Skouras was over here for twenty-four
in a foreign country. The member governments stand
hours the other day and what he wanted was to get five
behind this guarantee, and share the risks.
thousand horses for Greece. That's what they wanted to
help put in the spring crops.
"But helping these countries to rebuild their economies
is not enough to insure prosperity after the war.
MR. CLARK: That's very interesting.
You don't mind if I go along--and the thing some people--
LT. LEVT: That's a specific touch.
talking around this thing, we have got to do this or we will
have Bolshevism or Fascism. I don't know whether Bolshevism
H.M.Jk: "Give us some horses and some seed and we'll
is a popular word these days but I would like to throw that
do the rest."
out. This is what I would like to get over, if you will just
make some notes, that the conservative thing to do is to
MR. FELTUS: That can be injected.
help these people so they won't go either Fascist or Bolshevist.
That's the conservative thing. The radical thing is to do
H.M.JR: I'm just trying to inject & little of myself
nothing and sit by and let then go to hell. Is that right?
in these things.
MR. FELTUS: Yes.
(Reading) "In July of last year, representatives of
44 nations net at Bretton Woods, New Hampshire, to deal
with this problem."
Regraded Unclassified
RECISION
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220
- 8 -
- 9 -
H.W.Jk: If & person wants to be a radical, he will
H.N.Jh: Somebody used it--McCloy.
sit by and let them go to hell. If you are conservative,
you do the other thing. That's the conservative thing
MR. FELTUS: It's good.
If you want to keep this form of Government. It's like
any other disease, it's catching. You can't just isolate
H.M.JR: I won't use the word "Bolshevism." But
it over there. I am just throwing these things at you
these people who are sitting back, if they only realized
because if you don't mind my saying, I don't know who
that if we let Europe go to hell we will have either
all worked on it, but I would rather say something like
Fasciam or Bolshevism. It's going to spread. That's
that if I can sell it to you people rather than go
what we fought to keep from spreading.
through all this stuff about forty-four nations. When
you are working with ne I throw these things out. You
(Reading) "All countries, including the United
don't have to accept them.
States, need to expand their foreign trade. This
cannot be done in the kind of financial atmosphere
MR. CLARK: All right.
that existed before the war. Led by Nazi Germany
practically all the countries were forced to engage
H.M.JR: But, do you like that idea?
in discriminatory currency practices to try and hang
on to their foreign markets.
MR. FELTUS: I have a definite reservation on it.
That's a little bit heavy, "discriminatory."
H.V.JR: What?
Why not just say competitive currency," something
like that?
MR. FELTUS: It has a great deal of tendency toward
anti-Russian propaganda by some of our more reactionary
MK. FELTUS: They are both heavy.
forces which are playing havoc with the San Francisco
Conference at the moment. The use of the word "Bolshevism"
H.M.JR: Well, Dave, you have got to watch the words.
attributes to that.
But "discriminatory currency practices, huh, Dave?
H.M.JR: You don't have to say that. You can say,
LT. LEVY: Yes.
order to keep Europe from going into complete
decay.
H.M.JR: (Reading) "They used such familiar devices
as changing the value of their currencies and putting
MR. CLARK: That's the conservative thing to do.
restrictions on the ability of importers to get the
currencies they needed to buy goods abroad. The result
H.M.JR: "And lose all semblance of government.'
was that world trade declined and all countries suffered."
MR. FELTUS: Use radical and conservative.
That's pretty repetitious. We have used that so much.
H.M.JR: All semblance of any form of government in
MR. CLARK:It is well it should be set up. Once a
order to keep stable government in these countries. The
mechanism is set up it works.
conservative thing to do is to help them.
MR. CLARK: Yes, I think that would be 8. very con-
structive way of putting It.
Regraded Unclassified
RECISION
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PAT.
MICROFILM
ROLL NO.
232
- 10 -
-11-
H.M.JR: (Reading) "To solve these problems, the
H.M.JR: Get 8 little fresh approach to this thing,
Bretton Woods Conference proposed an International Monetary
if there is such a thing.
Fund. Member nations agree to abandon these destructive
monetary practices. To help them do so money is subscribed
MR. FELTUS: Clark had what I considered to be a
for use in stabilizing currencies. The technique of
very new analogy originally here. Was there any reason
stabilization is so well understood as that of making
for taking It out?
loans, and once the mechanism is set up it works. The
technical machinery is no more complex than in any other
MR. FUSSELL: No, except it was treated very radically.
specialized device of our time. The inner mechanism of an
ordinary traffic system is 8. mystery to most of us, but
H.N.JR: From my standpoint it's awfully dry, if you
its purpose is clear.
don't mind my saying. There is nothing new here. It's
awfully dry. Dave, do you agree or not?
"As technical methods are improved, traffic systems
and similar devices are continually modernized. Similarly
LT. LEVY: I think--
the Bretton woods proposals will doubtless be improved in
the light of practical experience. The vital need is to set
H.M.Jk: You're so polite all the time, that's the
up the machinery as soon as possible--not to risk the rejection
trouble.
of something that is admittedly 99% good because it may not
LT. LEVY: No, the thing--the suggestion you nade
be 100% perfect.
about five thousand horses--specific bits of news like
"We have within our grasp history's greatest opportunity."
that--is good.
I'll just stop one minute. I'll talk to you.
the "seed-corn" and "leg-up" and "handout" and that, see?
H.M.Jh: That's not enough. I like the first page,
(The Secretary and Mrs. Klotz leave the conference
MR. CLARK: This "seed-corn" was part of that
temporarily.)
original figure. The original figure was I felt,
H.M.JR: Look, can I be very frank? What I want to
too, that what people really need is an idea of how
say is this: I would rather repeat part of the stuff
foreign trade really will help, a conception of it
that I said in Detroit. My mind is pretty tired. I
that they never really had before. And I thought it
can't think of anything original except talking about
would easily be explained by showing here in the United
ten percent exports or what it means to the mest dealer
States before the war the manufacturers produced about
and cotton farmer, export generally. Ten percent of
five thousand generators of electricity to send to farms.
exports controls profits and that sort of thing, rather
Well, now, every anti-aircraft battery has to have one,
than doing this thing by giving a. general description
so they are producing about a hundred thousand every
of Bretton Woods which we have been doing now for 8 couple
four or six months. After the war there is going to
of months. I personally can't spark to apply anything new.
be over 8. million. What shall we do? If we hand then
I am squeezed dry, but--
back to the manufacturers, they can tell their people
to come back one hundred years from now, but if those
MR. FELTUS: Wednesday Clark had what I considered--
things should be even given away in Yugoslavia or
Bulgaria, some place that needs them, even maintenance,
PRECISION
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234
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Cut it to seven or eight hundred words. Put it on my
just maintenance will be a bigger business for the manu-
teletype, which I have here, and send it down to me In
facturers than they had before the war, and as they wear
Daytona. Why not give him the job to do that?
out, why then replacement would be equal to 8 war-time
market.
MR. CLARK: I an just an ordinary layman myself,
but in these matters I feel if it impresses ne and
H.M.JR: Plus the important thing that the American
nakes me understand what foreign trade can do, it will
product would be established in a country.
impress anybody, and I think it will do that.
MR. CLARK: Exactly, and when a farmer had a
H.M.JR: You take your article and keep--how
generator he would have electric appliances that go
fast do you work?
with electricity.
LT. LEVY: Well, I'll do it in time to get it
H.M.JR: I like that.
done.
MR. FELTUS: Then he pointed out--
H.M.JR: Could you do it so 1 will have it by
noon tomorrow?
MR. CLARK: And none of the fear.
Mr. CLARK: Certainly.
MR. FELTUS: lie pointed out that that generator
is only one of twenty-four thousand items of that kind.
H.M.JR: Give it to Mr. Fitzgerald and he will see
that it is put on the teletype.
H.M.JR: You see,unfortunately I have been so pressed;
but I accomplished my mission this week. We handed to
What I suggest is before he comes out let him show
President Truman 8. directive on how to run Germany. That's
it to him. (Bernstein)
why I am squeezed dry, and believe me, after he signs that
the Germans will be squeezed dry, but every single morning
MR. FELTUS: For accuracy.
ne had a meeting. day I start all over? I haven't had
time. Supposing I give you the job? (To Clark) I go
H.M.JR: Yes.
how many words a minute?
MR. FELTUS: I'll tell you right now Bernstein will
LT. LEVY: One hundred and twenty.
not like that generator analogy.
H.M.JR: How many minutes are they giving us?
H.M.JR: Send it down and let ne decide. When are
you going to New York?
LT. LEVY: Five minutes.
LT. LEVY: Not for n. little while.
H.M.JR: I thought you said eight.
H.M.JR: Are you available?
MR. FELTUS: They did, we out it to five in order
to make it a little lighter. Eight minutes is a long time.
LT. LEVY: I am available.
H.M.JR: Make it around eight hundred words, seven
or eight hundred words. Why not let him take his own piece?
Regraded Unclassified
PRECISION
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BOLL NO.
230
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- 14 -
H.M.JR: By noon tomorrow. Are you going to be
H.M.JR: Levy, in private life, was producer of
here over the week end?
"The The People" which is a damn good show. He knows me,
knows what I like, knows my language, and knows radio, so
LT. LEVY: Yes.
why not work with him? Do the cutting yourself and let
him see it as to words, and so forth. Between the two
H.M.Jk: Both of you? Well, then, arrange it so
of you you can get it to ne so that it can be put on the
If I shoot the thing back for corrections, they will
teletype by noon tomorrow. How's that?
know how to get you.
MR. FUSSELL: Fine. How about Luxford or Bernstein
LT. LEVY: All right.
or Brenner checking it?
H.M.JR: Okay.
MR. FUSSELL: Does it make any difference which one?
H.M.JR: No, let them send it to ne unadulterated,
and let them fuss with it afterwards. Just let the two
men send it down. I have a little sense, not much. Just
let the two men get something on the teletype by noon
words a minute.
tomorrow and see what it looks like. sun It off sixty
MR. FUSSELL: I an responsible for cutting this
but it had to be slashed pretty radically, Mr. Secretary.
H.M.JR: I'm direct. I haven't time to say "Pardon
ne," three times. I just say what I think, and I am just
repeating it. Às it is, I couldn't give it. Don't ask
me what I want to give. I'm too exhausted.
MR. FELTUS: I think he's got your idea.
H.M.JR: But the two of you--this nan worked with
me 80 he knows my radio personality.
MR. CLARK: All right, fine, Mr. Secretary.
H.M.JR: All right, get something. Show it to
Fussell before it comes down, will you?
LT. LEVY: Yes, sir.
Regraded Unclassified
RECISION TRADE MARK MICROSTAT/ ass. u, 5. PAT. OFF. MICROFILM ROLL
NO.
Proposed Speech for Radio
- 2 -
"The Crew of Model " dramatizes & great basic fact of
of the program they developed was an international bank, the
modern times -- that nations must live together. Living
working capital of which will be subscribed by all 44 nations,
together means exchanging goods in a friendly, businesslike
each according to Its capacity.
The Bank proceeds on tried principles roughly similar to
way.
Just now, some of our neighbors are hard hit. The needs
those used so successfully for the past ten years by the Federal
of sar-torn countries exceed anything our imagination can
Housing Authority in helping American citizens to become home
conceive. Transportation systems, factories, power plants,
owners. In the case of FHA, the U. S. Government guarantees
bridges, ports, and harbor installations that were a thousand
against loss the banker lending to 8. prospective home-builder.
years in developing are in ruins. The task of getting blood
The International Bank operates the same way, by guaranteeing
circulating again in the veins of industry depends largely
against loss the individual or institution backing a productive
upon the people in the countries affected; but they must have
enterprise in a foreign country. The member governments stand
help.
behind this guarantee, and share the risks.
As a businessman -- and a farner must be a businessman --
But helping these countries to rebuild their economies is
I have never advocated giving away anything, and I do not favor
not enough to insure prosperity after the war. All countries,
making indiscriminate gifts abroad even DOA. But, it is poor
including the United States, need to expand their foreign trade.
business Indeed not to sell a nan seed-corn on time. The world
This cannot be done in the kind of financial atmosphere that
is still & good credit risk. Actually, beaten and bloody LS it
existed before the war. Led by Nazi Germany practically all the
is, It prefers a "leg-up" to a "handout." lie learned that from
countries were forced to engage in discriminatory currency
the liberated countries in Europe, which ask not for relief, but
practices to try and hang on to their foreign markets. They used
for & chance to rebuild their shattered economic lives.
such familiar devices as changing the value of their currencies
In July of last year, representatives of 44 nations net at
and putting restrictions on the ability of importers to get the
Bretton woods, New Hampshire, to deal with this problem. Part
currencies they needed to buy goods abroad. The result was that
world trade declined and all countries suffered.
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT
REG. V. 5. PAT. OFF.
MICROFILM
ROLL NO.
- 3 -
To solve these problems, the Bretton Woods Conference pro-
posed an International Monetary Fund. Member nations agree to
military warfare is not far off. Dumbarton Oaks offers a police
abandon these destructive monetary practices. To help them do
force to settle quarrels in the world neighborhood. Bretton Woods
so money is subscribed for use in stabilizing currencies. The
proposes to eliminate from the world neighborhood the source of
technique of stabilization is so well understood as that of
many of Its cuarrels.
making loans, and once the mechanism is set up It works. The
You and I will prosper in the post-war world only if it
technical machinery is no more complex than in any other
enters a new era of expanded trade between nations. Let no one
specialized device of our time. The inner mechanism of an
fear loss to the United States from the development of other
ordinary traffic system is a mystery to most of us, but its
countries that this flow of trade will bring. Once these coun-
purpose la clear.
tries have developed their resources they will be in an even
Às technical methods are improved, traffic systems and
better position to buy from the United States. Only 11 million
similar devices are continually modernized. Similarly the
people In highly developed Canada buy four times as much American
Bretton wods proposals will doubtless be improved in the light
goods as all the 800 million people of undeveloped China and
of practical experience. The vital need is to set up the
India put together.
machinery as soon as possible -- not to risk the rejection of
World peace requires an Economic Magna Charta -- & Bill of
something that is admittedly 00% good because it may not be
Rights for the world. The Freedoms from Fear and Want will be
100% perfect.
realized only If ire build a solid foundation of world prosperity.
We have within our grasp history's greatest opportunity.
Bretton Woods is offered to the world as the first stone for
If it is not seized it may turn into history's greatest calamity.
this foundation.
de are the most powerful of all nations. The rest are looking
to see if we are going to lead in world cooperation or withdraw
-000-
into isolationism. If Bretton Noods fails, the hope of economic
peace flies out the window. And de economic warfare is rampant,
Regraded Unclassified
RECISION
TRADE
MARK
MICROSTAT/
MA. PAT,
MICROFILM
ROLL NO.
April 27, 1945
- 2 -
3:20 p.m.
It developed on the proposed hearings on Germany
KILGORE COMMITTEE
they intend to 2° into practically the whole industrial
economic picture there.
Present: Mr. Feltus
Mr. Fussell
H.M.Jk: Who?
Mr. Luxford
Ar. Coe
MR. COE: The Kilgore Committee. Schimmel and Kramer.
Mr. DuBois
H.M.JR: And they have a committee on what?
H.M.JR: All right, now let's have the londown on
MR. FELTUS: War Mobilization of which I was &
consultant for six months at one time.
this Kilgore business.
MR. COE: Well, the lowdown--
H.M.M. Did they come down under their own steam?
H.M.JR: If you are bored, Joe--
MR. COE: They spoke to Harry White two or three
weeks ago to ask If we mouldn't help them in outlining
MR. COE: Drew Pearson--
the hearings, and so forth. We didn't settle it but we
have promised to give them assistance. However, they
MR. DuBOIS: There is one they won't print in the Post,
got that question of Kilgore's into view tomorrow
an article by Pearson. It's really a honey, too.
with the President and decided to get a little help
on that and let the hearings go for a day or two. Now,
MR. LUXFORD: Now he won't listen.
they wanted--they sald that this was arranged as n.
discussion between Kilgore and the President on the
H.M.JR: Where is it?
intelligence setup. OSS has been getting at Kilgore
trying to convince him of the need for a super-duper
MR. DuBOIS: They won't print it in the Post.
intelligence setup in the post-war world which is to
be their setup, and so he was to talk it over with
H.M.JK: Do you want to give it to ne later on?
the President.
MR. DuBOIS: I'd like to at least leave it here.
We were talking of some more constructive things
that he might say on the German situation. They say
that he would be very influential with the President
on this whole German question, but that it would have to
H.M.JR: Get it photostated so I can take It with me.
be hit on something more sensational, let's say the
1067 memo, either In terms of our personalities
MR. COE: These fellows came in to get some technical
conspiracy, cartel conspiracy, banking conspiracy,
assistance in connection with their proposed hearings on
that sort of thing.
Germany.
is. DuBOIS: They mentioned that Kilgore Was going
to show that Drew Pearson article yesterday to the
President, and I wondered if we couldn't develop something
along that line for him to show, a one-page memo for
him to show the President together with some attachment.
Regraded Unclassified
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PAT.
OFF.
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BOLL
NO.
244
- 4 -
- 3 -
ae by the hand, and he loves the idea of Claude Bowers
MR. 00E: So they wanted before very late this
for Robert Murphy, so that's & wonderfully strong wind.
afternoon a page or two of outline which they could
But don't, for God's sake, breath 8. word of it, because
show Kilgore fast and which he could nake the basis
if it got out, it would--let him break it and get all
for his remarks and show the President tomorrow.
the credit.
H.Z.JR: I think Joe has something up now.
(Discussion off the record.)
MR. 00E: Then we were discussing personnel and
H.M.Jk: What do you want from me?
the general setup under Clay. They thought both Truman
and Kilgore were going to be very rough on Clay because
MR. COX: I beg your pardon.
it was Clay and Somervell with whom both of them clashed
repeatedly before and that the kind of group of mixed
H.M.JK: Just 8. report?
brass hats and industrialists that Clay is getting in
there is just what Truman would be on to, would know
VR. COE: I think me may want to change it when
that he was doing that sort of thing and be on the
we discuss it with Schimmel, but this would be--
lookout for it, on the personnel thing.
H.M.JR: There's no harm to that. I think it ought
H.M.Jk: Could I interrupt you and tell you a
to be pointed out, but I an sure he knows, he wants to
little something very much in the room? I told--
set up a list in war and liavy and just go down--
incidentally, President Truman has given me the green
light to go ahead with my articles.
MR. DuBOIS: lie are getting that.
MR. LUXFORD: Good.
H.M.JR: ...and go down from the top.
H.M.JR: But I wasn't satisfied and I said I wanted
MR. DuBOIS: lie are getting a list of personnel
to come back and show them to him on Germany--the Morgenthau
and--
Plan--so I said 1 wanted him to see them before they were
published, although he didn't ask me to show them, and I
H.M.JR: Starting from the top to the bottom, and
said President Roosevelt gave me a green light and I
what their connections are in war and peacetime.
said, There is one other thing I talked to him about.
Vk. COE: we considered more specifically than
I don't know whether you ever knew of a fellow named
this whether there was anything that you would advise
Robert Murphy, economic political advisor to Eisenhower.
He's no good. He is a very dangerous fellow, and he
to be put through that would be helpful on this
jumped out of his chair and came over and shook ay hand.
reparations thing? he discussed Kilgore going himself.
He jumped right out of his chair and said, "Wonderful!"
I told the President he should swap him with the
American Ambassador to Chile.
MR. LUXFORD: Bowers?
H.M.JR: Bowers. He said, "That's wonderful!" I
said, "Break the little clique." He said, "That's
marvelous!" But be jumped out of his chair and shook
Inclassified
PRECISION
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MICROSTAT.
PAI.
OFF.
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ROLL NO.
246
- 5 -
- 6 -
H.M.JR: If the Senator would go, that would be fine,
but he will have to move fast because the President is
MR. COE: Do you think Baruch would take it?
offering it to somebody else, but I think from all
H.M.JR: I don't know. I'll tell you something,
indications that Kilgore wants to get into public
life, and this 1a as good a may as any because this is
boys, You can't one minute talk Wall Street and in the
a permament thing.
next minute be advocating Baruch. The Baruch-Burns-
Krook triumvirate may be temporarily split but they
MR. LUXFORD: lie could suggest Summer Welles.
are still there. You can't get all "het" up about
Wall Street and then bring in Baruch who typifies
H.M.JR: I think it would be a mistake.
Wall Street certainly in the minds of the world. It
would mean a change of heart. I wouldn't. There must
MR. DuBOIS: Yes.
be some two-fisted guys that people like Kilgore or
Truman know, see?
MR. LUXFORD: Right. I said could he?
MR. FELTUS: How long will this assignment last?
Mk. FELTUS: No, he mon't.
Miss COE: Two months.
MR. COE: And Hull would get up and say--
H.M.JR: No, if he says the Reparation Commission,
MR. DUBOIS: It would be bad.
it may take years, but the actual meeting in Moscow will
take a couple of months and then he could step down and
H.M.JK: Hull would oppose that?
let the administrator step in. 1 don't see why a man
would have to resign from the Senate to do this.
MR. FELTUS: He won't do that. It would do no good.
MR. LUXFORD: I shouldn't think so.
H.M.JR: As far as Kilgore, himself--
MR. CO2: lie know it.
MR. DuBOIS: He mentioned Max Lowenthal. I have
known him for some time.
H.M.JR: I don't see why, but, you know they keep
talking all the time about your former boss for different
H.M.JR: What for, reparations? No.
jobs. You have seen that.
Mr. 00E: Do you think Baruch would take It?
MR. FUSSELL: Boettiger and Schwellenbach.
H.M.JR: The man was in a business and had a contract--
H.M.JR: You have seen that.
MR. LUXFORD: You're thinking of Morris Rosenthal.
MR. FUSSELL: I have seen one or two mentions of it.
He might be all right.
H.M.JR: Who are you thinking of?
MR. IUXFORD: Who's that?
MR. LUXFORD: Max Lowenthal.
H.M.JR: Schwellenbach.
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT
g. PAT. OFF.
MICROFILM
BOLL NO.
TREASURY DEPARTMENT
M
INTER OFFICE COMMUNICATION
- 7 -
DATE April 27, 1945
Mr. LUXFORD: I know who you nean, one of those two
men somebody said had aged 8 great deal.
TO
Secretary Morgenthau
MR. DuBOIS: Schwellenbach.
FROM
Mr. Murphy NCM
H.M.JR: I don't know where he stands but either
Hugo Black or Bill Douglas.
I agree with you that the article in Fortune 18 sour-
rilous; and, in view of the approaching Seventh War Loan,
MR. LUXFORD: Roberts took a mission to Hawaii.
shows an amazing lack of a sense of public responsibility.
for six months.
H.M.JR: And Murphy from Detroit went in the Army
Inflation in as such & disease of the nerves and the
mind of the economy as it 16 a matter of disequilibrium of
physical quantities of money and goods. It can be caused
MR. FELTUS: Black would be magnificent.
by suggestion, and this article makes a good try.
You nek what the article 18 driving at. It seems to
other?
H.M.JR: Why not Black or Bill Douglas, one or the
ne that it represents a part of a major play on the part of
business for postwar position vis a via Government. It 16
the greatest struggle of our times -- that represented by
Kill LUXFORD: That's the kind of man we need.
the conflicting points of view in Beveridge's "Full Employ-
Senator Black would be good.
ment in a Free Society" and Hayek's "The Road to Serfdom".
The article, in effect, goes all-out for the position that
H.M.JK: I mean--just to bring back the Baruch-Burns-
the control of the individual by his Government 18 serfdom:
while the control of the individual by business 1s freedom.
Arthur Krook crowd, I 42 opposed to that. This fellow--
from the may he talked I think he wants a little fresh
I emphatically disagree.
blood. Does that strike you? Does that give you what
The Treasury Department and its wartine policies seea
you want out of me?
to se to be serely n conveniently selected battleground,
but not what the fighting 18 really about. The main issue
MR. LUXFORD: Yes, sir.
of the fighting 10: Who shall control the postwar acene --
Government or business? The issue is 8. big one, and no holds
H.M.JR: All right?
are barred.
MR. LUXPORD: Yes, very good.
Coming down to cases, as near as can be done within the
deadline, I think that the following points should be noted:
(1) Fortune complains that taxes have not been high
enough. The Treasury has consistently urged that taxes
should be higher. The responsibility rests primarily with
Congress: but the Treasury. not Congress, 18 Fortune's
primary target in the article.
(2) Prices have advanced less in this war than in any
other major war in which the United States has been engaged.
Unclassified
RECISION
TRADE MARK
MICROSTAT
REG. PAT. OFF.
MICROFILM
BOLL NO.
Secretary Morgenthau - 2
Secretary Morgenthau - 3
They have also risen less in this country than in any of the
United Nations. Fortune passes over these facts very lightly.
about the $4.5 billion interest on the public
debt which must be paid next fiscal year. What
(3) Fortune says that "Between the spring of 1942 and
would this figure be if interest rates were
March, 1945, the market value of stocks on the New York Ex-
revised to suit them?
change moved up 89 per cent in a great bull market with echoes
of 1929." The Dow-Jones industrials are still (April 26)
(c) Fortune's third and last suggestion for "putting
16 percent below their 1937 highs, and 45 percent below their
the Treasury's house in order" 18 that non-
1930 highs. No one questioned the soundness of the dollar
military expenditures should be cut. Strictly
because of either of these levels of stock prices, and cor-
speaking, this 10 not a Treasury matter at all.
porate profits are now at approximately their all-time high
:
It 18 interesting to observe, however, that total
much higher than in the years just mentioned. Fortune just
Federal expenditures, other than military (which
can't stand prosperity!
Fortune does not attack), veterans, tax refunds,
and interest on the public debt (which Fortune
(4) Toward the end of the article, Fortune says what
wishes to raise) will amount this fiscal year to
the Treasury might do to get its own house in order. The
about $3.5 billion, or less than 2 percent of
assumption that the house 18 not in order 18 made gratuitously
the gross national product. The impact of these
and never proved. But let's look at the particular suggestions.
expenditures on inflation can hardly be the main
They are:
issue.
(a) "If the war boom continues, additional excise
taxes are in order." Why excise taxes?
The final question is *Should the article be answered?"
Fortune does not say. The probable answer
I do not believe no. To answer it, would greatly increase
is that they would be ashamed to propose n.
the attention which it is likely to receive, and would be
schedule of income tax rates which would bear
definitely harmful on the inflation front. The Treasury
so hard on the poor and so lightly on the
should show a higher sense of public responsibility than
well-to-do, as would additional excise taxes.
Fortune. In any event, the article will please a large
segment of the Fortune clientele, and can do little hara
(b) "If it /the Treasury7 cannot find it in its
circulating among then.
heart to revise interest rates, at least it
might abandon its present policy of subtly
As a last remark, the fact that "Fortune costs a dollar
lowering them by keeping 80 much of the
a copy* 10 still impressive 18, in itself, a pretty good
public debt in short-term securities.' The
comment on the progress of inflation and the value of the
article does not say a word about how this
dollar.
would help the problem of inflation. As a
matter of fact, it would not help at all.
Capital expenditures of business are subject
to direct control, and interest rates have
no impact upon consumer spending. Have you
ever known a nan who postponed buying a new
suit because he could invest his money at
3 percent instead of 2 percent? Higher
interest rates, on the other hand, would
increase Government spending -- just one
paragraph earlier, Fortune had been worrying
Regraded Unclassified
PRECISION TRADE MARK MICROSTAT/ REG. u. 5. PAT. OFF. MICROFILM
ROLL NO.
250 B
TREASURY DEPARTMENT
- 2 -
INTER OFFICE COMMUNICATION
DATEAPRIL 27,
The Fund purchased approximately $6.0 million of gold
1945
from the National Bank of Belgium, $1.0 million of gold
TO
Secretary Morgenthau
For Information
from the National Bank of Denmark and $2.0 million from
FROM Mr. Coe &C
the Central Bank of Peru.
1. Stabilization Fund's Gold Transactions
In order to maintain its gold balance, the Fund also
During the three months ending March 31, 1945, the Sta-
purchased $185.0 million of gold from the Treasury General
bilization Fund sold approximately $174.0 million of gold
Fund.
to foreign countries principally to be earmarked for their
AS a result of the above transactions, there was a net
accounts with the Federal Reserve Bank of New York. Sales
increase of approximately $20.0 million in the Stabiliza-
by countries were as follows:
tion Fund's gold holdings by March 31, as shown in the
1
Gold Sales to Foreign Countries
following summary:
Millions of dollars
Country
Summary of the Fund's Gold Transactions
49.876
Argentina
Sales
Millions of dollars
.998
Bolivia
9.975
Brazil
To foreign countries
173.975
.997
Chile
3.324
China
Purchases
25.000
Cuba
Netherlands East Indies
.058
From foreign countries
9.012
22.943
Portugal
From the General Fund
185.000
26.089
Switzerland
9.477
Uruguay
Total
194.012
4.987
Turkey
.251
Vatican City
Net increase in the Fund's gold holdings
20.037
20.000
Venezuela
2. Treasury Gold Stock
Total
173.975
During this quarter, the Treasury's gold stock decreased
$200.2 million from $20,618.8 million on December 31, 1944
Regraded Unclassifi
RECISION
TRADE MARK
MICROSTAT/
No. PAI. OFF.
MICROFILM
ROLL NO.
251
- 3 -
MEMORANDUM FOR THE SECRETARY.
to $20,418.6 million as of March 31, 1945. Known and esti-
April 27, 1945.
mated amounts of sales and acquisitions were as follows:
Mail Report
Millions of dollars
Sales
185.000
The mail report this week could be the sentence,
Sold to the Stabilization Fund
"Exactly the same as last week". There was & falling
20.350
Sold to industry
off in receipts, but the subjects covered remained
5.432
Miscellaneous
just the same. There were fewer letters of condo-
lence because of the death of the President, and fewer
210.782
Total
suggestions regarding memorials, but these both fol-
lowed the lines of letters which came shortly after
his death.
Acquisitions
Newly-mined domestic
2.460
There continue to be requests for material about
Bretton Woods, and inquiries as to the objectives of
Imports bought directly by mints
the San Francisco Conference. There are also the same
and assay offices
7.060
ideas as to the disposal of the gold and art treasures
Miscellaneous (coin and scrap)
1.100
captured from the Nazis. One writer wanted these
prizes credited against World War I debts, another
10.610
Total
wanted then to be used to eliminate the 8th Drive,
and still another suggested the redemption of German
Net decrease in the Treasury gold stock
200.172
bonds and currency held by Americans. Recent atrocity
stories have elicited little comment, but there are
3. Total Gold Holdings of the United States
still occasional protests against the reported pamper-
ing of prisoners of war. There Was nothing new in the
Dec. 31, 1944
March 31, 1945
tax mail, while bond communications largely related to
the Drive. Aside from the suggestions for honoring
$20,418,657,287
President Roosevelt in connection with the Drive, much
Treasury gold stock
$20,618,829,939
32,084,585
promotional material was submitted, and a New Hampshire
Stabilization Fund gold
12,046,716
town reported that it has already exceeded its quota.
Total
$20,630,876,655
$20,450,741,852
The decrease in the gold holdings of the Treasury and
the Stabilization Fund during this quarter was $180.1
million.
Regraded Unclassified
PRECISION
TRADE
MARK
MICROSTAT/
U. 5. PAT. OFF.
MICROFILM
ROLL NO.
General Comments
- 2 -
James A. Durham, Arlington, Virginia. Today the San
Francisco Conference begins, with a substantial chance
of age, in fact, and he could have used the $18.75
of success. At the same time, however, many of us
to further his own needs. Very much so, Mr. Morgen-
are concerned that Congress will emasculate the
thau. But he is behind the war effort so much that
Brotton Woods Agreement. # - People who are sin-
he donates practically all of his earnings to
cerely in favor of the Agreement are openly conceding
canteens and to War Bonds. a e # I know what the $18.75
that it is a dead duck. If supporters feel this way,
means to this man, and to me he is one of the unsung
it is a very bad sign. I suggest that the people of
heroes of this war. 4) 4b # Mr. Stack wishes this bond
this country who want Bretton Woods need a. boost in
to be donated to the U. S. Treasury.
their morale. # ti e I know that your Department has
issued some official brief statements on the Agreement,
but I submit that you need wider newspaper and cinema
Merl M. Privett, Cushing, Oklahoma. May I take this
publicity. I beseech you, Sir, to get an advertising
opportunity to suggest that a. new dime be issued in
man, if necessary, to carry the message of the Agree-
commemoration of E. Roosevelt, and his idea of the
ment to every home in America in plain, simple terms.
March of Dimes for infantile paralysis veterans.
In other words, something in the nature of the job
Mr. Roosevelt's picture could be put on one side and
that Chester Bowles has tried to do in OPA. Time is
B. crippled child on the other, then the American people
going fast.
would be reminded every day to help carry on this great
work. If a President's picture can't be put on a small
Mrs. Lee Maran, Secretary, Parents-Teachers Association,
hospital could be.
coin, then the Warn Springs, Georgia, infantile paralysis
Public School 100, Brooklyn, New York. Because we,
as parents with children in the Public Schools, feel
strongly that the proposed plan of Bretton Woods is not
only a plan concerning the bankers alone, but is the
concern of every living American who is looking ahead
for everlasting peace, may we urge you to mail to us
any factual information on the issue of Bretton Woods.
Thanking you for your cooperation to make possible an
enlightened people.
Willie Mosconi, Audubon, New Jersey. Enclosed please
find a $25 War Bond which was given to no in good faith
by one Mr. Richard Stack of Carrollton, Illinois. At
the present time, I an the holder of the World's Pocket
Billiard Championship. 6 A short time ago, I had
the privilege of performing in Mr. Stack's place of
business. This gentleman is quite old, over 70 years
Regraded Unclassified
RECISION
TRADE
MARK
MICROSTAT
PAT.
MICROFILM
ROLL
NO.
- 3 -
- 4 -
Favorable Comments on Bonds
Renslow P. Sherer, Chairman, War Finance Committee,
Chicago, Illinois. Thank you for your thoughtful and
Walter W. Head, State Chairman, Missouri War Finance
gracious letter of April 16, addressed to no. You
Committee, St. Louis, Missouri: Thank you very much
are far too generous. This organization is a team
for the gracious and generous manner in which you ex-
and all who are playing their part deserve equal credit.
pressed yourself relative to the sale of Government
Therefore, I an taking the liberty of passing on your
securities in the State of Missouri during the previous
letter to them as if It were addressed personally to
six War Loan Drives. It is refreshing, encouraging and
each of them. I am confident Illinois will do its part
inspiring to know that you are closely following the
as well or better in the Seventh Loan 8.5 in the pre-
work of the Finance Committees of the various states and
ceding Drives.
that, in your busy life in this period of uncertainty
and anxiety, occasioned by the stress and strain of war,
you find time to write to your State Chairmen express-
Glendon V. Weir, Executive Vice President, First State
ing words of encouragement and commendation. 9 e It
Bank, Greenville, Michigan. Would you be willing to
is our purpose to make & thorough, a vigorous and an
consider a. method to decrease the redemption of
intensive solicitation for the sale of War Bonds to
Series E War Savings Bonds? The increase in the re-
individuals in every county for our present Drive, and,
demption of these bonds is due to the fact that B.
so far as it is possible to do so, in every home in our
large part of the liquid assets of most individuals
state. Please accept my deep appreciation for your
now consist of the se securities. # * # I have found
letter and the encouragement which you have given us.
by inquiry in case after case that these bonds are
redeemed due to the fact that the owner is confronted
with a sudden need for cash due to sickness, the down-
Henry T. Bush, State Chairman, Delaware War Finance
payment on a home, a farm or something of a similar
Committee, Wilmington, Delaware. Thank you for your
nature. In seventy-five percent of these cases, I also
letter of April 16, in regard to the Seventh War Loan
find that the owners of these bonds do not wish to dis-
Drive. We appreciate your comments on our achievements
pose of them. If it were possible for these people to
here in Delaware, and I would like to say, in return,
borrow against these bonds (at 8. low rate of interest,
that we feel here that & great measure of our success
such debt to be retired by weekly, monthly, or semi-
has been due to the fine cooperation and support
annual installments) they would prefer to do so rather
offered by you and your associates, particularly those
than to turn them in. I have in mind a 4% rate. I have
who head the War Finance Division. ...
made loan after loan to prevent the sale of Series E
Bonds and in every instance the borrowers have paid
these loans promptly and were greatly pleased that it
Sanchez Sight Saving Class, San Francisco, California.
was not necessary for them to dispose of the bonds.
We are the seven pupils of the primary sight saving
Under present regulations, I could loan only to those
class in the Sanchez School at San Francisco, California.
whose credit was extremely good since these bonds are
We thought that you would like to know that we equipped
ineligible as collateral. The people want to keep
one G. I. Joe for battle in five weeks. We have twelve
their War Bonds. If I could have used these bonds as
dollars and sixty cents left to start equipping another
security, I know that I could have prevented the cash-
soldier. We hope that we can equip him in five weeks
ing of a great many more of them.
also.
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
REG. u. PAT. OFF.
MICROFILM
SOLL NO.
257
- 6 -
- 5 -
Unfavorable Comments on Taxation
Unfavorable Comments on Bonds
F. B. Griffith, Alexandria, Minnesota. I am sending
you herewith some correspondence which I have had
H. W. Cooling, N.P., Havre de Grace, Maryland.
with the Collector of Internal Revenue at St. Paul,
I enclose U. S. Bond of Mr. Wheeler Vine, who was,
with regard to a refund which I have coming on my
before no, a Notary Public of Havre de Grace, Maryland.
1944 income tax return. I have asked that office
After signing his name, I notarized same, which was
to refund the money for the reason that I need it but
then presented at the banks and they refused to cash
I cannot get any more information or satisfaction
same, stating he should have signed in their presence.
out of them. 9 # 9 Last year I had to wait 11 solid
In reading the instructions, I find that the owner is
months for the refund and no good reason could be
supposed to appear before an officer to be identified.
given ne for the delay after having written them
As I am an officer, appointed by the Government,
several times and called them up over the telephone.
I felt I had the power to notarize same. Please
# * e They have all the informa tion in the office and
let me know what form to take 80 as the said party
when the taxpayer files his return, it should take
can have bond cashed 8.3 his mother is ill and he
but & few minutes to sudit. There certainly is no
really needs the money.
shortage of good accountants, and it seems perfectly
ridiculous to pack these returns up and send them to
a "processing office" instead of leaving then in the
district. - 9 #
Regraded Unclassified
$
THE WHITE HOUSE
WASHINGTON
April 27, 1945
Dear Mr. Bell:
I cannot tell you how
much I appreciate your assistance,
and that of your staff, in getting
together my Report to the President
in bound form.
It 18 A beautiful job --
as usual.
Very sincerely,
SAMUEL I. ROSENHAN
Hr. Charles S. Bell,
Administrative Assistant
to the Secretary,
Treasury Department,
Washington, D. C.
PRECISION TRADE MARK MICROSTAT MICROFILM
ROLL NO.
IMMEDIATE RELEASE
APRIL 27, 1945
The President today addressed the following letter to the
Honorable Edwin N. Pauley:
"My dear Mr. Pauley:
"I hereby designate you to act as my personal
representative, with the rank of Anbassador, to represent
and assist ne in exploring, developing and negotiating the
formulae and methods for exacting reparations from the
aggressor nations in the current war.
*In this matter, you will represent no in dealing
with the other interested nations.
"At the Crimea Conference, it was agreed that
Germany would be obliged to the greatest extent possible to
make reparations in kind for the damage caused by her to the
Allied countries. It was further agreed that a commission
would be established to consider the question of the extent
and methods for collecting such reparations.
"I wish you also to represent the United States
$
and ne personally as a member of that commission.
"In all matters within your jurisdiction you will
report to ne personally and directly.
"May I express By gratification at your willingness
to assume this important but arduous mission.
"Very sincerely yours,
"HARRY S. THUMAN"
-
-
-
In connection with the foregoing letter, the President said:
"I wish, also, to announce that I have asked Dr.
Isador Lubin, Commissioner of Labor Statistics, to serve with
and accompany Mr. Pauley as his associate.
"Dr. Lubin will be given the personal rank of Minister.
I an very grateful to Dr. Lubin for accepting this post."
-
-
-
-
Treasury Department
. Division of Monetary Research
280
Date April 27, 1945
To:
Secretary Morgenthau
FC
From: Rr. Coe
This Le In answer to
General Somervell's telephone
query. Re scened to be under
the ercheous Impression that
on overall agreement had been
signed.
RECISION
TRADE
MARK
MICROSTAT
No.
u.
PAT.
ON.
MICROFILM
ROLL NO.
- 2 -
for new and spot requirements but the British requested an additional
contingency provision of 075 million for certain types of naval aircraft
abould these become available. At a. combined meeting in K/ office on
25
November 10, 19th Itr. Gates and Sir Robert Sinclair reported that agree-
sent had been reached to provide this additional item. A supplementary
memorandum of agreement to that effect was signed November 5, 1964 by the
signatories to the original joint nemorandes covering the air program.
Dear General Somervell:
to your telephone request of yestarday, I write to
3. decommindation that Land-Lease to British be conditioned on
program inform you for Creat Britain as it partains to the British ground
In response officially of the present status of the stage II Land-lessa any,
acceptance by U. L. of responsibility for furnishing of 10-
ciprocal A14 throughout British Repire and Commonwealth AS
required by the comion interest.
air and floot air are requirements.
overall agreement with the British was entered into and the
A recommendation to the above effect, subscribed to by the U. S.
No approved by the American Condittee does not constitute any by
representatives only, was contained in Paragraph 10 of the Sub-Committee
program The American Comitties, appointed for this purpose to the
report on British ground any requirements and in Paragraph 11 of the
consitent. reviewed the conclusions and recommendations submitted
Sub-Committee report on air requirements. As you know, it was objected
President, by the various Joint Sub-Committees and, with some modifications,
to by the British, Dominion and Indian representatives and was the
it approved them as constituting a suitable basis for this government's
subject of much U. 3. inter-departmental discussion as well as joint
discussion with the British at various committee levels.
budgetary and production planning.
Car as the British ground any requirements are concerned, the
At & combined meeting of the British and American groups in my
30 approved by the Committee embodies substantially the conclusions
office on liovember 22, 1944, 15 vas decided that Mr. Dean Achemon, of
program recomendations submitted to it on Jetober 23, 19th by representa-
the State Department, should, after conferences with the interested
and of the U. 3. Mar Department and the British. (Covering nemorandum
parties, recomend to the American Committee a suitable solution of the
signed liserency for the Brittsh). Similarly, for the British and
tives by l'atterson, Somervell and Clay for the U. S. and by Venning, air
problem. Mr. Acheson's recomendation, which was to the effect that the
assurances of the Dominion and Indian governments pertaining to Reciprosal
Resks and air are requirements, the approved program embodies substantially 19th by
Add be accepted and the conditional clauses above referred to be eliminated,
flest conclusions and recommendations submitted on November 2,
vas approved by the American Committee. This information, together with the
the of the U. 5a lar and Navy Departments and British Air
relevant documents, vas transmitted to Under Secretary of Har Patterson in
and Brig. General 0. C. Junison and covering emorandas signed and
representatives Admiralty officials. (Latter of transmittal, November 2, signed by by
a letter from - dated January 15, 1965.
U. 5. Lovett, Arnold, Gates, Firsh and Riley for the 0, 5.
I believe that the foregoing points constitute the only modifications
Courtney, Patterson, Fairey, villock, somerville and Abal-Omith for the British).
that have been pade in the ground any and air programs and their covering
amoranda as submitted by the Joint Sub-Committees. Other matters con-
There were, however, as 1 have indicated, some modifications of
nected with the Stage II negotiations have been the subject of discussions
the approved by the American Comittee. These modifications of ware
reports submitted by these Joint Sub-Committees in the program
and correspondence between the Treasury and Har Departments but these de
not sodify in any my the Land-Lesse progrem as approved.
finally at through correspondence and discussions, the resords which the
arrived are doubtless available to you but for your convenience I summarise
Sincerely yours,
principal points as follows:
1. Duplication of certain Items in ground any and navy program.
Signed H. Morgenthaw, Jr.
minor modification in the ground any schedule as submitted by
the of landing vehicles tracked, an item which also appeared Under Secre-
Sub-Committee A was made in order to aliminate provisions for the Army on
procuremt the navy schedule. See in this connection letter to - from
General Brehon 3. Semervell,
tary Patterson dated govember 14, 1944
General, Commanding,
Any Service Forome,
2. Addition of 175 million contingency provision to air program.
Office of the Commanding General,
Washington, D. C.
The original air program provided & contingency item of $200 million
INC,Ah 4/27/45
Regraded Unclassified
RECISION TRADE MARK MICROSTAT No. U. 5. PAT. OH, MICROFILM ROLL
NO.
12"
DVE V VTD 27 APRIL 5148 PM CR 516
4. IN ANY CASE, ALL FURTHER COLD SENT TO CHINA SHOULD BE OUT OF
2
SERIAL NBR --I/27TH==
THEIR OWN FUNDS, AND NOT OUT OF THE $500 MILLION LOAN. YOUR OWN RES-
TO I SECRETARY MORGENTHAU
PONSIBILITY FOR THE USES TO WHICH THIS LOAN IS PUT IS THE BASIS FOR
THIS RECOMMENDATION. THE PROGRAM OF FORWARD SALES OF COLD, LIKE THE
FROM I MR. COE
PREDECESSOR PROGRAMS OF $200 MILLION U.S. SAVINGS CERTIFICATES AND
TOP SECRET
FOR INFORMATION
BONDS, HAS BEEN USED AS A DEVICE FOR ENRICHING A FEW INSIDERS AND HAS
HAD NECLIGIBLE EFFECTS UPON THE CHINESE INFLATION.
SUBJECT: CHINESE COLD
FOR YOUR INFORMATION THESE ARE OUR TENTATIVE VIEWS ON THE SUBJECT
5. AFTER CONSIDERATION OF THE WHOLE HISTORY OF THE $500 MILLION
or GOLD FOR CHINA. IN ADDITION TO THE DISCUSSION WITH PATTERSON,
LOAN, AND THE USES TO WHICH IT HAS BEEN PUT, WE THINK THAT YOU SHOULD
VE HAVE MET WITH MR. COLLADO OF STATE AND THE ACTING HEAD OF THE CHINA
TELL THE CHINESE THAT YOU WISH THEM TO PUT ASIDE THE REMAINING $240
DIVISION THERE. I THINK WE CAN GET THEIR AGREEMENT ON ALL THE POINTS
MILLION OF THE LOAN, AND AN ADDITIONAL SUM OF THEIR OWN U.S.
BELOW, EXCEPT THE ONE INDICATED.
DOLLAR EXCHANGE, OF PERHAPS $269 MILLION, AS A FUND TO BE USED FOR
1. THE TREASURY SHOULD CONTINUE TO OPPOSE ALL EXCEPT USE MINIMUM SHIP-
STABILIZATION AND RECONSTRUCTION PURPOSES, IN ACCORDANCE WITH AN AGREED
MENTS OF COLD, WHERE THESE ENDANGER AMERICAN LIVES OR SCARCE TRANS-
PROGRAM, TO CO INTO EFFECT AT AN AGREED DATE. THE PROGRAM SHOULD
PORT. THIS POLICY SHOULD CONTINUE TO APPLY TO CHINA.
INCLUDE THE FISCAL, ECONOMIC AND
ADMINISTRATIVE
(CCTM LINE 7 11TH EDSSHUD BE USE NOT SUE)
MEASURES NECESSARY TO STABILIZE THE CURRENCY, AND THE DATE SHOULD BE
THE EARLIEST TIME WHEN WE AND THE CHINESE AGREE THAT THEY CAN CO FOR-
I
2. WE CANNOT NOW AGREE TO PROMISE THE $50 MILLION OF COLD SHIP-
WARD ON SUCH A PROGRAM.
MENTS WHICH THE CHINESE WANT IN THE NEXT FEW MONTHS IN ORDER TO MEET
IF THE CHINESE ARE NOT WILLING TO ACCEPT THIS PROPOSAL, WE THINK
THE GOLD CERTIFICATES WHICH FALL DUE. THE CHINESE DID NOT CONSULT us
IT WISE POLICY TO ALLOW NO FURTHER DEPLETION OF THE LOAN. (IN ADDITION
ABOUT THESE FORWARD SALES OF COLD, WHICH ARE OBVIOUSLY IMPRUDENT IN THE
TO THIS $249 MILLION THE CHINESE NOV HAVE SOME 8790 MILLION OF U.
CIRCUMSTANCES AND WERE DESIGNED TO ACT AS A PISTOL AT OUR HEADS.
S. DOLLAR EXCHANGE).
STATE HAS NOT INDICATED THAT THEY ARE AFRAID OF THE POLITICAL
WE HAVE PREPARED CHARTS AND ANALYSES TO SHOW THAT THE ACQUISITION
CONSEQUENCES OF THIS REFUSAL. I SUPPOSE, HOWEVER, THAT IF IN LATER
BY CHINA OF ADDITIONAL FORIEGN EXCHANGE AND THE SALE of COLD OR ANY
MONTHS A GREAT FUSS IS MADE AND IF STATE TELLS US THAT THEY ARE
OTHER FORM OF FOREIGN EXCHANGE BY CHINA HAVE HAD NO DISCERNIBLE
AFRAID OF GRAVE POLITICAL CONSIQUENCES, VE WOULD AGREE TO STEP UP
EFFECT IN HALTING THE INFLATION.
GOLD SHIPMENTS IN ORDER TO CLEAR UP THESE ARREARS.
TOD: WU APRIL 8105 PM VTD (RAJ)
3. WITHOUT CONDONING THE PAST PROGRAM, WE SHOULD TELL THE CHINESE
TOR: 27 APRIL 8105 PM DWH (WAG)
:
THAT WE EXPECT THEM TO STOP ALL FORMS OF FORWARD SALES OF COLD IMMED-
IATELY.
Regraded Unclassified
PRECISION TRADE MARK MICROSTAT MICROFILM ROLL
NO.
RESTRICTED
OFFICE OF STRATEGIC SERVICES
WASHINGTON, D.C.
27 April 1945
Honorable Henry Morgenthau, Jr.
Secretary of the Treasury
Treasury Department
Washington, D. C.
My dear Mr. Secretary:
If
-
Te are forwarding herewith as
of possible interest to you radiotelephone mes-
sage #294, dated April 26, 1945.
=
It was received last night from
our representative in Berne.
Respectfully yours,
Putzell/
Lieut. (jg), USNR
Acting Executive
Officer
RESTRICTED
Regraded Unclas
RECISION
TRADE MARK
MICROSTAT
NEG. v. $ PAT. OFF.
MICROFILM
ROLL NO.
ONE Perso
PAGE
Form
OFFICE OF STRATEGIC SERVICES
257
OFFICE OF STRATEGIC SERVICES
1
OFFICIAL DISPATCH
OFFICIAL DISPATCH
REF. No. 294
DATE 26 April 1945
2294
FROM
Berne
TO DIRECTOR. OFFICE OF STRATEGIC SERVICES
FROM Borno
mo
PRIORITY
RECEIVED
ROUTINE
RESTRICTED
DEFERRED
TO
DIRECTOR. OFFICE OF STRATEGIC SERVICES
The 0080 of Petain 1a of porticular interest. If he had asked
asylum here it would have presented a difficult problem for the Swise.
DISTRIBUTION
However, since he only asked the priviloge of crossing to face trial,
(FOR ACTION)
(FOR INFORMATION
thore was no issue. The old ann had quite an enthusisstie reception
from the people in tho streets 0.0 he peased through Switzerland today
to the French frontier to give bincelf up.
The wherenbouts of Hitler and Himilor are still u. mystery. A
fow days age they were both in or nour Borlin. Have they remained there,
to go down in the ruins, or have they got away by plane? This is a
RECEIVED IN PLAIN TEXT RESTRICTED
question we can't answer. with the sky patrol of Anglo-American and
RESTRICTED
Russian planes in this area, retrect by air during recent days would
have been a hazardous job. Is is conceivable that Hitler will just dis-
GERMANY
appear and that une will nevor know definitely what has happened to him.
The laot recente of Huzi and Fascist power still oling to
This vill give his fenatical followers the possibility of continuing to
their link with Switzerlend us the lost land outlet to the outside
uso his name to keep alive the underground novement.
17 1d. The areas of contrict are becausing hourly nerrevor und nerrowor
Today the valloys londing from southern switzorland and to Itely are
almost entirely controlled by Portisons, and even the zio rellany
link,that from Chicogo to Code ond Milon, 10 now out. Como 10 still
soid to be di fundod by Fonolat forces, but thoir position 1.0 hopoless,
as they are out off, both on the Svion and Micn cides, by Purtisons.
Como 18 also reported to bo the pluce of refuge of anny high Fasciats,
and rusers have it that Dussolini in thore, Hewever, since he suddenly
left Milon in ecuplo of days LCO, there to no older ovidenco as to his
whorosbouts. In any event, Fuscist Italy 10 fast dyinc. and it poeso
doubtful whother it will ovon be ablo to pull together hor lust stand
in the custern corner of the Venoto, This doponds upon whother Victing-
hoff's boaton foroos can rully on the 44100, now that the PO 10 woll
and they profer anclo-Sexen prisonor compo to the alternative of failing
past. This aceas unlikoly, us the Germino have lost the till to fight.
into the hunds of Vito cr the Pupsions. Hot rany of the Germans appear
to have any intorest in joining the hodge-podge of arades that are
drifting book into the redult.
on the Swine frontier with Germany, there only renains o part
of the Intro of Constance oni the nurrov area to the South, chere one
railway runs to Dunich and the other through the Voruriberg to Innsbruck.
Пото, in Lnd about Broconz, is a notley gothoring of refugees of all
nationalities, many of when would 11ke to cross the frontior into Switz-
erland, Lovel 1a reported to have tried to 0000 over and been refused.
The problem ni separating the whout from the cheff anong those prossing
at the Swint Prontior 1a nos only. It is fair to any, however, that un
h est affort 1a boing rade here to koup out those the ure not worthy
RESTRICTED
of asylum.
RESTRICTED
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT
ass.
al
PAT.
OFF.
MICROFILM
BOLL
NO.
April 27, 1945
7 p.s.
CONFIDENTIAL
AIRGRAM
London
lated April 27. 1945
AMLEGATION
Rec'd 5 D.S., May 3
STOCKHOLM
Secretary of State,
774
Washington
Re your 1447 April 19 and 1476 April 20,
will April 27, 1945
Department questions stated nationality of the reported
For Department and Karl 0, Harrison, United States
representative on Intergovernmental Committee on Refugees.
5,000 Jewish arrivale in Sweden in view of information
Department's telegram No. 2308, March 24, 6 p.s.
received previously that of 8,000 leve fermarly in Denmark,
Sir Ferbert Boorson, Director of 190 replied in a
comprised of 6,000 native Jawa and 2,000 refures, 1,000
letter dated April 26, 1945, as follows to the Embassy's
suggestion that the 100 press other Government members
had been departed to the met and 5-6,000 had escaped to
for voluntary contributions:
Sweden thus leaving only 1-2,000 in German concentration
Tear Verner:
came,
I AM writing to acknowledge with thanks your
letter of Anril 10, 1945, relating to contributions
Please clarify .. to character of this group.
by Member Governments towards operational expendi-
ture, As you know, the same point has been raised
GRS.
by the British Government. is the ordinary course,
(Acting)
ve should have pressed Member Governments, other than
(Gav)
those of the United Kingdom and the United States or
Marica, to contribute towards operational expenditure
when ve circulated to then the operational budget for
the current year. Ve have, however, been unable to
circulate that budget because ve have not heard that
your Government has agreed to the provision of funds.
IKI:
I now propose to include the matter in the agenda
4/26/45
of the next Inscutive Committee on the basis of the
views expressed by the two Governments, and to seek
the adpress authority of the Committee to press the
invitation in strong terms on Member Governments.
This will be more effective than If 1, as Director,
issued a circular to Member Governmente in the ordinary
course of business, since 11 will direct the attention
of Member Governments of the Executive Committee to
the importance of the question, and 11 vill enable
- to send a Circular to all Hember Governments
under the specific direction of the Resentive Committee."
No indication has been given M tb the date of the
nett meeting of the Executive Committee. Any comments
which the Department may care to min should be sent by
telegraph as soon as possible.
XR, CARLOS VARIEIR
VIHANT
CJVIDE
PRECISION TRADE MARK MICROSTAT REG. v. & PAT. OFF. MICROFILM BOLL
NO.
271
Born
Dated April 27, 1945
PLAIN
Lisben
Rec'd 8:15 p.s.
Dated April 27g 1945
Rec'd 1:51 a.m., 28th
Secretary of State,
Secretary of State,
Washington,
Washington,
2458, April 27, 4 p.s.
915, Twenty-seventh
708 07 -12 PROM KATIKI AND MCCLULLAND
via 400 708 MIAS, 425 LAFAYETTE STRIET, NEW YORK,
Third truck convey bringing detainess from
FROM DAVID SCHVEITIES HICEM
Mauthausen reached Switzerland April 25, (Legation's
425 April 25) It is BOW efficially reported that
Inform Isadere Geldbergher, 2417 Felson Street,
these 3 monvoys evacuated 781 detainees almost all
Les Angeles, Charlette Geldebergher husband Tereno
vones of French, Belgian and Dutch nationalities,
Takace arrived healthy Pucharest care of Teedesis 63
Group is at present being cared for at St. Gall where
Dfintii Apestali expecting baby June asking urgent
11 will remain segn days prier to repatriation (with
financial help.
probable exception of Dutch).
William Altram, 1165 Gerard Avenue, Breax, Bela
Germans permitted release these people en basis
Pepper wife Eather sons George Proest 51 Olteni Ducharest
"=xnhange" agreement reported is Legation's 2175
returned Transmistrie *** wgent financial help.
April 17 negatisted by ICRC which applied only to
French and Belgians, Va de not yet know en what greunde
Themas Forbeth, care of Tiber Fabyan, 114 lest
Dutch were extricated although Burchardt stat ed durine
32nd Street, New Terk, father mother, sister Dusy
April 12 meeting that be "heped be ablede something
departed last June, Lucy Tanyt Fisch also departed
about evacuating Putch achutshaeftlinge".
sinter time and husband Peter Alder living father's house
and Name Liest Agesten inform grandmether Papper with
Va have urged ICRC attempt bring back detainees
stater brother-in-123 deported December 8,
of other nationalities in future evacuations If at all
pessible.
Hassage for Pertalan Magyar, 1000 Park Avenue,
New Tork, from Marcel Acsel Pucharest "Whele families
Safe Vasarhely1 including newly bern Nicelai family
HARRISON
Armands alive well".
JKS
Inform Arne Vistman, Hatel Deverly, Lexington Avenue
and Fiftieth Street, that Klari Ilenks Paul Reberts advised
Richards departed Sved brothers killed Klart and child
safe ask neve of Georges Trice and request certificate
brothers American citizenship.
Barwh
JH
Regraded Unclassified
PRECISION TRADE MARK MICROSTAT R$G. U. 5. PAT. OFF. MICROFILM BOLL
NO.
PLAIN
LPO - 1919
Rine
Paris
This telegram must be
paraphrased before being
Dated April 27, 1945
communicated to anyone
Dated April 27, 1945
other than a Government
Rec'd 7:03 ...., 28th
Agency, (RESTRICTED)
Rec'd Id 2,15 p.m.
Secretary of State,
Secretary of State,
Washington
Washington.
2151, Twentyaeventh
1063, April 27, 5 p.m.
FOR WAR REPUGES BOARD FOR MOSES LEAVITT AMERICAN
FOR MOSS LEAVITT FROM REUBEN RESNIX
JOINT DISTRIBUTION COMMITTEE FROM JOSKPH SCHWARTS.
28. Have been to Bologna and tiodena now in
Connection Passman's cable of his discussions
Ferrara. Have obtained all records from concentration
with Leo Feit approve fully principles and precedures
camp at Fassoli di Carti and given emergency assistance
suggested and have advised Passman accordingly. Have
to all communities.
also furbished full information concerning programs
KIRK
France Belgium and Helland sending out additional
RR
information concerning our Balkan program".
CARVERY
JWS
Regraded Unclassified
PRECISION TRADE MARK MICROSTAT REG.U.S.FAT.OFF. MICROFILM ROLL
NO.
12
10°D-90
jern
ALB-1903
Lisbon
Distribution of true
Distribution of
reading only by special
Dated April 27, 1945
true reading only by
Dated April 27, 1945
arrangement (SECIST *)
special arrangement
Reo d 11:02 p.m.
(SECRET =)
Rec'd 4:52 p.m.
Secretary of State,
Secretary of State
mashington
Washington
2473, April 27, 6 p.m.
916, April 27, 5 p.m.
POR O'DITER OF uma FROM KATZKI AND MCCIALLAND
THIS in WIB 398 JDC 229 FOR LEAVITT FROM THOSE
No were informed by DEC on April 26 (Legation's
On April 25, 248 people left Tangiers for Palestine.
2421, April 25) that prospects for getting further
Departed via Cibraltar.
truck convoys of relief supplies for detainees in
BARUCH
Certany out of Switserland looked nore favorable than
no
two days ago. Attempt will be made dispatch at least
one sore convey to carp of Mauthausen near Line which
has not yet been overrun by Russians and possibly other
maller convoys to the Resignatedt and Landsberg.
The will keep you posted all developmente this
dituation.
HARRISON
a
JM
Regraded Unclassified
RECISION TRADE MARK MICROSTAT/ REG. U. & PAT. OFF. MICROFILM ROLL
NO.
12"
AME-181
PLAIN
Puris
Dated April 27, 1945
Rec'd 7:07 a.m., 28th
LP0-168
PLAIN
Secretary of State,
Liabon
Mashington.
Dated April 27, 1945
2150, Twenty-seventh
Rec 'd 6:47 a.m., 28th
FOR WAR REFUGES BOARD FOR 1108%5 LEAVITT AMERICAN
Secretary of State,
JOINT DISTRIBUTION CONSITTES FROM JOBSPH SCHWARTZ.
Washington.
"Prospects now favorable for us send staff umbers
to Germany to deal with problem displaced persons espec-
917, Twentymeventh
ially stateless. Arrangment will be apeled out either
and J99 JTC 230 FOR LEAVITY FROM TROMS.
through UNIQUA or intergovernmental committee or else
layer received 1400,000 Cottfard received $1,000.
through direct negotiations with military authorities.
BARUCH
JIS
Important therefore you select immediately at least 3
hightly qualified persons and get then over here sconest
possible. Usarwhile important also persons already
selected for France proceed immediately."
CAPPIELT
MF
Regraded Unclassified
RECISION TRADE MARK MICROSTAT/ MICROFILM
ROLL NO.
12
INV-1936
PLAIN
London
Dated April 27, 1945
Rec'd 'd 2:53 p.m.
Secretary of state
Mashington
4293, Twentymeventh.
FOR O'DAYER FROM SANN
Information believed reliable transmitted to
JDC by Any chaplain indicates that there are 3000
=
June at Buchermald of which approximately 600 are
orphan children. Please advise Leavitt.
WINANT
REP
Ineles
MICROFILM
ROLL NO.
270
CARLE TO AMERICAN ISTATION, 1501, POR Part THE TAY REPUCES SOARD
Please deliver Ue following reasage to Terhard Hudgner, 37 quai
Wilson, Deceme, from Cart R. trutinan of world Jowish Congress:
nota PLEASE CONTACT N/A DISCRIPANT, 135 AVAIPT,
AND FIND FAST ICHN TAY 23, 1900, HAD 4801
PASSPORT may THE TO
THIS IS TU - CARES NO. 514
=
9145 Refie
April 27, 1945
RECISION
TRADE MARK
MICROSTAT
NOT TO BE RETRANSMITTED
SECRET
COPY NO.
OPTEL NO. 134
Information received up to 10 a.m. 27th April, 1945,
NAVAL
under 1. delivery to the U.S.S.R. escorted by ships of the Home Fleet
Northern Waters: A convoy of 26 ships and 16 submarine chasers
have arrived North Russian ports without loss.
2.
Home Waters. 25th/26th. M&T,B's torpedoed and probably sank
an armed coaster off Dutch coast.
MILITARY
East 3. bank of Rhine have reached Swiss frontier East of Basle, 7th
Western Front. (Southern Sector): French troops driving down
U.S. Army continues to close to River Danube and have completely
cleared Ulm and enlarged bridgehead at Dillingen. (Central Sector):
3rd U.S. Army also closing to Danube in conjunction with 7th U.S. Army
while further East armour of former army now within 12 miles Passau
on Austrian border. (Northern Sector): U.K. infantry have captured
hole of Bremen while slight advances also made by Canadian troops
in Ema Estuary area.
Eastern Front. (Northern Sector): Canal connecting Frisches
inff with Baltic Sea crossed by Russians who have developed this
advance along the Frische Nehrung. (Central Sector): Stettin
;aptured and an advance of 18 miles made West of River Oder, In
battle for Berlin both sides threw in reserves and heavy fighting now
raging Southern, Eastern and Northern parts of city with capture of
Gartenstadt, Siemensstudt and Dahlen districts reported by Russians
as also Goerlitze railway station. West of capital Russians have
advanced to areas of Fehrbellin (25 miles N.W.), Rathenow (40 miles
W.N.W.) and Brandenburt (30 miles West). In pocket to S.W. of
Frankfurt on Oder further places taken. South of this towns of
Torgau and Strehla on Western bank River Elbe have been occupied.
Further South, in area Bautzen, Russians state continued counter
attacks by large forces German Infantry and tanks thrown back while
Cermans claim destruction Russian forces operating this area and re-
lief of Bautzen itself. Further slight progress also made in re-
duction Fortress of Breslau. (Southern Sector): Russians report
capture of Brno.
5. Italy. (8th Army Sector): Troops this Army now well across
River Po at many points and line now runs Adria, Roviga, Fiesso and
along River Adige, Test of Badia. (5th Army Sector): Troops have
crossed River Adige in areas Legnano and Verona capturing latter city.
Line then runs approximately South, with Hantua still in enemy hands
to Carpi (South River Po) and from there approximately N.W. to
Trescali where River Taro has been crossed. South of this Parma has
been captured and second crossing of River Taro made along highway 9,
some 6 miles N.T. of city. In coastal area reconnaissance troops
reported as entering Genoa on morning 26th,
AIR
6, aircraft 397 (missing 4) operating Southern battle area and destroying
Western Front. 25th. SHAEF (Air) report further results with
or damaging 297 road and rail vehicles while inflicting enemy air
casualties 2:1:2 in combat and 165:0:103 on ground, 25th/26th, Bomber
Command despatched aircraft 290 (missing 1) 119 oil depot (384 tons)
at Vallo (40 miles S.V. Oslo) 82 Transformer Station Unich, Pasing
{111 tons) and 89 on other operations when both main attacks obtained
good results, 26th, No heavy bonbers operated. SHAEF (Air) Mediums
attacked airfield Plattling (114 tons) while fighters and fighter
bombers 1545 (missing fighters 9) operated battle areas destroying or
flicting enemy air casualties 24:0:10 in combat and 54:0143 on ground.
damaging 113 locomotives, 655 reilway waggons 674 39 AFV and in-
Coastal Command aircraft attacked shipping off Norway leaving floating
dock and coastor on fire mbile also obtaining hits on two vessels of
Mosquitoes 120, against four hirfields Germany, 12 Kiel and 9 Bomber
15,000 and 4,000 tons. 26th/27th, Bogber Command despatched
support.
Mediterranean. 25th. Escorted heavy bombers 519 (missing
bridges North Italy and Austr; and railway centre Corizia while
targets with good results. Medium bombers 115 (missing attached
15) dropped 1079 tons on reilway centres Line and Wels and other
fighters and fighter bombers 1152 attacked targets battle areas
destroying or damaging 517 road and rail vehicles,
8.
S.E.A.C. 24th, Liberators dropped 107 tons Burma/Siam railway.
Regraded Unclassified