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J. 333305-MONO-State
Galley
188
UNCORRECTED GALLEY PROOF
source. Sustained enforcement of disarmament depends upon the
avoidance of such rivalries.
A program of sweeping deindustrialization does not provide an
adequate basis for sustained international security cooperation, nor
does it provide a satisfactory alternative to such cooperation. A
program designed to impose lasting restraints on Germany's industrial
exports to Western markets also involves the danger of generating
serious, new rivalries in Europe and of weakening the basis for inter-
national security cooperation.
In the Department's view, our long-term objectives with respect to
economic treatment of Germany must be (1) abolition of German
self-sufficiency, and (2) elimination of German economic domination
over Europe. These two objectives conform to the general economic
foreign policy of the United States. More important, however, it
is
only through the kind of orientation of the German economy which is
envisaged in these objectives that the basis for international security
organization can be protected.
These two objectives are closely related. Abolition of self-suffi-
ciency requires the removal of all protection and subsidies to high-cost
domestic production. Elimination of German economic domination
over Europe requires the prohibition of all discriminatory trade con-
trols, clearing agreements and international cartel arrangements.
The basic objectives can be carried out only gradually, and in short-
run they will have to be qualified to conform to the immediate require-
ments of the occuption and transition period. Their adoption,
even over the longer term, will be dependent upon our general success
in achieving world trade expansion under liberal conditions of trade.
It is recommended that in discussion with the British and Russians,
we should adopt the policies given below as a basis for agreed action
during the period of Allied control.
a) We shall be obliged to go along with the British and Russians in
accepting large responsibilities for the guidance and reorientation of
German economic life. It is altogether unlikely that a "hands off"
policy would be accepted and adhered to by all three powers. Conse-
quently, we must be prepared to take all possible steps in the initial
phases of occupation to prevent development of a chaotically unman-
ageable economic situation, since this is a prerequisite to the exercise
of effective economic control.
b) Economic disarmament should include prohibition of the man-
ufacture of land and naval armament and all types of aircraft; destruc-
tion of specialized facilities used for the manufacture of these items;
and establishment of permanent or semi-permanent controls to
detect surreptitious preparation for rearmament and stockpiling of
key materials. Decisions regarding the synthetic oil and rubber in-
dustries should only be taken as part of an agreed, general program
for abolishing German self-sufficiency.
c) With respect to treatment of the German population, we
should favor, in the initial period, the lowest standards of health,
diet and shelter compatible with the prevention of disease and dis-
order. This standard should be maintained until it is agreed that
political tendencies within Germany justify some relaxation;
the
needs of liberated countries should, in any event, receive priority.
d) We should favor the conversion of the remainder of German
industry to peacetime purposes, including particularly the production
of reparation goods required to effect a large, early contribution to
the rehabilitation of liberated countries. Reparation in kind should
include any types of manufactured goods that claimant countries
desire and Germany is fitted to produce. In addition to restitution
of looted property, liberated countries may receive-as reparation-
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"ocrText": "J. 333305-MONO-State\nGalley\n188\nUNCORRECTED GALLEY PROOF\nsource. Sustained enforcement of disarmament depends upon the\navoidance of such rivalries.\nA program of sweeping deindustrialization does not provide an\nadequate basis for sustained international security cooperation, nor\ndoes it provide a satisfactory alternative to such cooperation. A\nprogram designed to impose lasting restraints on Germany's industrial\nexports to Western markets also involves the danger of generating\nserious, new rivalries in Europe and of weakening the basis for inter-\nnational security cooperation.\nIn the Department's view, our long-term objectives with respect to\neconomic treatment of Germany must be (1) abolition of German\nself-sufficiency, and (2) elimination of German economic domination\nover Europe. These two objectives conform to the general economic\nforeign policy of the United States. More important, however, it\nis\nonly through the kind of orientation of the German economy which is\nenvisaged in these objectives that the basis for international security\norganization can be protected.\nThese two objectives are closely related. Abolition of self-suffi-\nciency requires the removal of all protection and subsidies to high-cost\ndomestic production. Elimination of German economic domination\nover Europe requires the prohibition of all discriminatory trade con-\ntrols, clearing agreements and international cartel arrangements.\nThe basic objectives can be carried out only gradually, and in short-\nrun they will have to be qualified to conform to the immediate require-\nments of the occuption and transition period. Their adoption,\neven over the longer term, will be dependent upon our general success\nin achieving world trade expansion under liberal conditions of trade.\nIt is recommended that in discussion with the British and Russians,\nwe should adopt the policies given below as a basis for agreed action\nduring the period of Allied control.\na) We shall be obliged to go along with the British and Russians in\naccepting large responsibilities for the guidance and reorientation of\nGerman economic life. It is altogether unlikely that a \"hands off\"\npolicy would be accepted and adhered to by all three powers. Conse-\nquently, we must be prepared to take all possible steps in the initial\nphases of occupation to prevent development of a chaotically unman-\nageable economic situation, since this is a prerequisite to the exercise\nof effective economic control.\nb) Economic disarmament should include prohibition of the man-\nufacture of land and naval armament and all types of aircraft; destruc-\ntion of specialized facilities used for the manufacture of these items;\nand establishment of permanent or semi-permanent controls to\ndetect surreptitious preparation for rearmament and stockpiling of\nkey materials. Decisions regarding the synthetic oil and rubber in-\ndustries should only be taken as part of an agreed, general program\nfor abolishing German self-sufficiency.\nc) With respect to treatment of the German population, we\nshould favor, in the initial period, the lowest standards of health,\ndiet and shelter compatible with the prevention of disease and dis-\norder. This standard should be maintained until it is agreed that\npolitical tendencies within Germany justify some relaxation;\nthe\nneeds of liberated countries should, in any event, receive priority.\nd) We should favor the conversion of the remainder of German\nindustry to peacetime purposes, including particularly the production\nof reparation goods required to effect a large, early contribution to\nthe rehabilitation of liberated countries. Reparation in kind should\ninclude any types of manufactured goods that claimant countries\ndesire and Germany is fitted to produce. In addition to restitution\nof looted property, liberated countries may receive-as reparation-"
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