Warmongers Unmasked: History of Cold War in Germany, Wilfred Burchett. 1950
When the Russians captured Berlin, they fought for it bunker by bunker, building by building, and street by street. What the R.A.F. and U.S. bombers had left intact was destroyed in the unprecedentedly heavy street fighting as the capital of the Thousand Years’ Reich was won inch by inch from its S.S. defenders. Trams, underground, water supply, electricity and gas were all disrupted. The Russians set up a City Council of technicians and representatives of the four political parties which they licensed when they first crossed the border from Poland into Germany.
As mayor they chose a non-party man, Dr. Werner, a former professor from the Berlin University. The City Councillors were told to pick teams to help them and to get the city cleaned up and running again. The Soviet Army immediately put large stocks of food at the Council’s disposal to avoid mass starvation during the first weeks.
The work done during the first 15 months of occupation by the Council appointed by the Russians was monumental. Volunteer gangs were enlisted to clear the streets. They were soon reinforced by batches of Nazis, too unimportant to prosecute, and batches of sturdy girls from the Bund Deutsche Maedel, the Hitler youth movement for girls. They could work out their penance by shifting rubble. The two outstanding figures in the administration were baldheaded, white-moustached Joseph Orlopp (in charge of food), and swarthy, young and energetic Karl Maron (head of the economics department). There was little time for playing politics in that first administration. It was work, work and work to get the city running again. By the time elections were held, in October, 1946, the fusion of Social-Democrat and Communist parties had taken place, and the most important members of the Council were S.E.D. members.
The elections, which were held under four-power supervision, were fought on unreal issues, and had nothing to do with the government of Berlin. The Western Allies and the western licensed press presented the elections as the only means of stopping the floodtide of Bolshevism from sweeping west to the Rhine. The platform of the Social-Democrats could have been taken straight from Goebbels’ propaganda arsenal. “Vote Social-Democrat and Stop Bolshevism” was the keynote from first to last.
The West-end Berlin middle-class trooped out stolidly and voted for the Social-Democrats for the same reasons they had voted for Hitler. “Only the Social-Democrats can stop the Communists,” they said.
The Social-Democrats got slightly more than 50 per cent. of the votes; the Socialist Unity Party, 19.5 per cent.; Christian-Democrats, supported by the Americans, 21 per cent.; and the Liberal-Democrats, the champions of private property and free enterprise, only 9 per cent. Despite British pressure in the beginning to retain a coalition City Council with men like Orlopp and Maron back in their old positions, the Social-Democrats demanded a clean sweep. All the excellent technicians were thrown out. Key jobs went to Social-Democrats. Efficiency and experience were ruthlessly sacrificed for party political considerations. Reconstruction in Berlin came to a stop.
The Americans, who had hitherto backed the Christian-Democrats as they had in their own occupation zone, now swung their support behind the Social-Democrats when they saw the election results. (As a result of American food-packages instead of the meagre rations he had got from the British, Neumann, the hulking Social-Democrat leader in Berlin, filled out noticeably in the weeks that followed.)
When it came to choosing a new mayor, there were long discussions between Social-Democrat leaders and their Western advisers. In the end the choice was narrowed down to two men: Paul Loebe, former president of the German Reichstag, and Dr. Ostrowski. Both men were old Social-Democrats. The supporters of Ostrowski won the day, because they were able to prove that Loebe had some leftist leanings which might incline him to co-operate with the Russians or the S.E.D. Ostrowski got the job.
Within a few months, however, Ostrowski was in trouble. By late winter, 1947, the food crisis in Western Germany affected Berlin. Rations were cut, there was no coal, and it was a hard winter, which lasted well into spring. In the Soviet sector of Berlin “warming halls” were organised where people could crowd together and get a little heat from fuel provided by the Soviet authorities. Discontent among the workers was rising. Many factories shut down through lack of fuel and electric power. A worker could earn as much food in a day by taking a packet of razor blades to the countryside and exchanging them for potatoes, as he could by working in the factory.
Mayor Ostrowski went to the various Allied commandants in Berlin to see what could be done about getting increased food and coal supplies. He spoke at first with the western commandants, and then with the Soviet commandant, white-haired General Kotikov. After the discussions with the four commandants were completed, Ostrowski made a statement that if he “had found the same consideration from the western commandants as he had found from General Kotikov, Berlin’s food and coal problems would be well on the way to being solved!” Kotikov, it seems, was quite conscious of the difficult situation, and had made specific promises of extra allotments of coal and food.
The statement released by Ostrowski was his first “mistake.” His second was that, in view of the desperate situation, he agreed to set up joint emergency committees with S.E.D. representatives to undertake common action in helping to solve the crisis. He struck a bargain with the S.E.D. leadership that, in exchange for the joint committees, the S.E.D. would withdraw their men from posts as deputy-burgermeisters, which they held in many of the suburbs.
For these two “crimes” the Social-Democrats, certainly under orders from the Americans, got rid of Ostrowski. They demanded his resignation in party faction meetings, and when Ostrowski refused to resign, the Social-Democrat leaders moved a vote of no-confidence in him at a City Council meeting. After that, of course, he was forced to resign.
The man the Social-Democrats selected to succeed him was Dr. Ernst Reuter. Reuter’s nomination, backed by the Americans and British, was a deliberate insult to the Russians, and could only have been done to provoke a crisis in the city administration. It was a typically crude action of the U.S. cavalry officer from Texas, General Clay, who was U.S. Commandant of Berlin.
For months past, the Russian delegate in the four-power Kommandatura had objected to the appointment of Reuter as chief of the transport administration in the Council. The Kommandatura had unanimously to approve all measures taken by the City Council. The Soviet objection was based on Reuter’s record. He was a renegade Communist, bitterly anti-Russian, and had spent the whole of the war years in Turkey, working for the Turkish Government. His passport had been renewed year by year, by von Papen, German Ambassador to Turkey. It is well known that the Nazis did not renew the passports of Germans abroad if they were political refugees, as Reuter claims he was. In fact, no political refugee or Jew would dare step inside a German Embassy abroad, because he knew quite well he would be in danger of arrest and deportation back to Germany.
It is not likely that in a place like Turkey, with few Germans, that von Papen was not accurately informed about Reuter’s background, beliefs and activities. Reuter spent some years in the Soviet Union after World War 1, and worked among the Volga Germans. Disenchanted with Communism, he became the loudest-mouthed and most objectionable anti-Russian spokesman in Berlin.
By supporting this nomination the Western allies in Berlin showed, once again, they were not interested in good relations with the Russians, despite their pious declarations to the contrary. They were interested only in splitting the City Council and the Kommandatura as quickly as possible. The Social-Democrats, who had at first taken their orders from the British and afterwards gratefully licked the hand the Americans extended to them, could not possibly have nominated Reuter without Anglo-American support.
It was about this time, incidentally, that several British officials resigned and others were dismissed because they reacted against instructions that neither the Americans nor the Social-Democrats were to be opposed on any point, in future Kommandatura or four-power committee meetings.
The nomination of Reuter provoked, as expected, a first-class row in the Kommandatura. The Russians refused to sanction Ostrowski’s resignation. General Kotikov released a statement to the press in which he correctly blamed the whole crisis on the Americans. He charged that “certain American officers ... inspired and helped” the opposition to Ostrowski, and accused the Social-Democrat leaders of having forced Ostrowski out to “cover up their political bankruptcy and their inability to provide Berlin with an efficient administration.”
Kotikov’s analysis was correct so far as it went, but it fell short of disclosing the real aims of the Social-Democrats of the Reuter-Neumann school.
From conversations I had with Reuter himself and several of the American officers concerned, I am convinced that the Ostrowski crisis was just one more step along the road to the shooting war which the neo-Nazi Social-Democrats and certain of the Americans wanted. Berlin was to be the Pearl Harbor, the Bataan, the excuse to shock America into a war. Anything that the group of German-American conspirators could do to further that aim, any split that could be created, any wedge that could be hammered into that split, was a weapon to be used. They planned and schemed night and day to provide new incidents, provoke new crises which would force the east-west split, and out of that split make a war.
Of course the Ostrowski-Reuter crisis was presented to the world as one more example of Russian “bloody-mindedness.” It was used to spread the propaganda that it was impossible to work with the Russians.
If the Americans and British felt they were making use of the Social-Democrats, Reuter, Neumann and Co., for their ends, the Germans were quite sure they were fooling the Anglo-Americans and using them for their ends – to get the war started, to achieve with Anglo-American help what they had failed to do with Italian and Japanese help – to defeat the Soviet Union.
Kotikov, by use of his right to veto, succeeded in blocking Reuter’s appointment, and the senior Social-Democrat among the deputy-burgermeisters, Frau Louise Schroeder, became acting oberburgermeister, the first woman ever to hold such a post in Berlin history. Reuter had to bide his time, until the split between east and west Berlin was complete and a West Berlin City Council was set up in the British sector with Reuter as oberburgermeister.
As Reuter has been built up in American circles as one of the great future leaders of Germany – he has toured the United States, whipping up sympathy for the “oppressed and gallant” Germans in Berlin and hatred against the Russians – it may not be out of place here to describe my impressions of him. They were noted down after I lunched with him at the home of a mutual acquaintance early in 1949. Reuter was still basking in the warmth of having been described in the American press as the “outstanding American ally in the great fight for Berlin.”
Unfortunately for him on this occasion, Reuter was under the impression that it was an all-American luncheon party, so he revealed a side to his nature which was embarrassing to our mutual host and himself, when he discovered I was British.
Early in 1949, German politicians in the Western Zone, were wrangling over the Bonn Constitution. Somebody asked Reuter, over the soup, when Western Germany was going to have a government. He set down his soup spoon.
“It’s all the fault of the British, these delays,” he said. “If it were not for them wanting to tie us down at every hand’s turn, we would have had a constitution by now.”
His loose lips and flabby, pale face became distorted with passion as he began to complain at the increasingly anti-German tone in the British press. A very different Herr Reuter from the servile Social-Democrat who courted British favour in the days when the Americans were backing the Christian-Democrats.
As one who had played no small part in trying to awaken the British public to the dangerous resurgence of German nationalism and neo-Nazism, I was glad to lead Herr Reuter along this interesting path. His line was that of the extreme nationalists, of which Reuter must be regarded as an arrogant and dangerous example. It was the line with which I was familiar from talking to ex-Nazis, or listening to conversations in west-end bars.
“The British were responsible for Nazism. The German people had nothing to do with it at all. The British brought Hitler to power and kept him there. The British were now trying to give the Germans a constitution under which they would have no powers at all. The British were dismantling industries only for fear of German competition. If the British were out of Germany all would be well. The British press was publishing critical articles and trying to make trouble between the Germans and the Americans.”
“As one who has written many such stories for the British press,” I interrupted – and Herr Reuter laid down his soup spoon again and wiped his lips, in embarrassed surprise – “I should like to point out that you can’t expect too much support from the British public, when the best line you offer differs in no way at all from that of Hitler and the Nazis. You plead for a strong Germany as a bulwark against Communism. That line may go down well with our American friends and in certain reactionary circles in England. The Americans are new to the European scene, but you must really think up something more original to appeal to British public opinion.”
Of course, there was much that was correct in what Reuter had said. British industrialists and British politicians did help Hitler to power. Chamberlain certainly saved him from being overthrown in 1938. Some British interests were in favour of dismantlings for reasons of competition. But such criticism came ill from a man who personally and through his Social-Democrat party never gave a sign of opposition to the Nazis. Typical of Reuter, also, was that he should find no hard words for the German industrialists and the spineless German middle-class political parties who really brought Hitler to power. Typical of Reuter’s hypocrisy was that he was appealing in America and England to just that class which had supported Hitler financially before and after his rise to power.
“What do you think are the chances of the Russians withdrawing their troops from Germany, without waiting for the West to move?” I asked Reuter, to break an uncomfortable silence.
“They withdrew from Korea, you know,” I reminded him, “and they are supporting moves for an early peace treaty with Germany and withdrawal of troops, within one year after the signing.”
“The Russians know too well that, if they pulled out, there would not be a Communist left in the whole of Germany within one week.”
“We would hang them from the nearest trees and lamp-posts,” replied the Social-Democrat, the Oberburgermeister of Berlin.
“You would do even better than the Nazis did,” I observed. “But presumably, if the Russians pulled out, they would leave behind a well-organised State, capable of maintaining order. What makes you think you would overthrow that State? Your record during the twelve years of the Nazi regime, and during the last 100 years of German history, would not lead one to think that the German Social-Democrats and middle class could carry out an armed coup.”
As at that time Reuter did not even dare enter the Soviet sector of Berlin, his courage in this comfortable home in the American sector was more than striking.
“I have just come back from a trip in Eastern Europe,” I said. “There, in Bulgaria, in Hungary or Czechoslovakia, one can talk to many people like you, who say that not one person in a hundred supports the Communist government. And yet those governments remain in power – and believe it is because they are supported by the majority of the working class and peasants. What makes you think that you German Social-Democrats could take over here in Germany, when your colleagues in Eastern Europe have either worked together with the Communists or dissolved into nothing?”
“Because there are Russian armies there to support the Communists. Without their support the governments would be quickly overthrown.”
“But there are no Russian armies in Bulgaria or Hungary. There were for some time after the war, but no longer. There were also Russian armies in Finland, but there the people decided for a Social-Democrat government, and it has remained. There were no Russian troops in Czechoslovakia when the workers took over the government in February, 1948.”
Then came one of those astounding statements which could only originate from the arrogant nationalist neo-Nazi type which Reuter personified.
“The only reason the coup carried out in Czechoslovakia was a success was that the Czechs had expelled all the Germans. If the German minority had been intact, such a Communist coup would have been impossible. And don’t forget, when the time comes here it is we who will have the machine-guns.”
It was an interesting luncheon, and Reuter turned to his American host and fellow-guests from time to time, for confirmation of his line. One of the American fellow guests, a Dr. Stern, of the Political Intelligence section, said to me later, over the coffee:
“You know, I don’t quite get the set-up here. I have just come up from the Zone where things were simple. It was just the Germans against us, down there. You could bet that everything they did, wrote and said was directed in some way against the occupation. It was just a matter of checking on how dangerous the various trends were, and then trying to get some action taken to clip them back. But here they’re all for us; fulsomely and servilely so. Now I’ll be hanged if I know which is the real attitude. Here they’re a thousand per cent. behind us in whatever we do, they do what we tell them, and they ask our advice before they do anything themselves. Down in the Zone, they just plainly hate our guts.”
I did not have the advantage of meeting Reuter socially in a purely British gathering, but from my colleagues, I know that on such occasions his attitude was: “The British and Germans understand each other. We are both Europeans. The Americans are well enough in their own way, but are crude and gauche. They can never understand Europeans, know nothing about our real problems. They are interested only in fleecing Germany temporarily, and will lose interest in European affairs when they have milked the Continent dry. The future of Europe depends on the tightest collaboration between Germany and Britain.”
Reuter is probably not as dangerous a figure as the Adenauer type in the Western Zone. He has the limitations of stupidity, arrogance and vanity. It is certain that at one time he saw himself in the role of West German Prime Minister, but is more likely he will be abandoned by both the British and the Americans, after he has served his marionette role in Berlin. Reuter has not the confidence of the Ruhr barons to play the larger role cast for Adenauer.
He played the crude and obvious game for German nationalists: first of all angling for the split between east and west, then splitting the French from the western camp, setting British and Americans against each other, and finally playing off the different factions in the American camp one against the other. Above all, he worked against any solution of the Berlin problem. Any suggestion of a compromise was denounced by Reuter as “treachery.” At all costs Berlin had to be preserved in a state of crisis as the future “casus belli” and in this he was supported to the hilt by the war clique in the American camp.
There were plenty of ways of avoiding the various crises which beset Berlin, but the Social-Democrats were not interested in accepting them. In the days of the acute food shortage in 1947 and early 1948, long before blockade and counter-blockade were started, the S.E.D. deputy chief of Food Administration worked out an excellent scheme whereby food would be made available from Germany’s neighbours and paid for by City of Berlin industrial production.
It was not an abstract idea of what might be done, but a concrete plan worked out to the last comma. The eastern neighbours, Czechoslovakia, Poland, Hungary and Bulgaria, were approached, also Norway, Holland and several other western countries. They agreed to supply specific lists of food and raw materials so that Berlin’s factories could be run at full capacity again. The raw material would be returned as finished goods, and the labour would pay for the food. All of Europe was interested in having Berlin electrical goods, Siemens and Blaupunkt radios, Agfa film and chemical products; but factories had closed down or were working only part-time. The Scandinavian countries promised fish; Poland and other East European countries, grain and fats and meat; the Low Countries, fruit and vegetables.
It was a sound scheme, worked out by competent economists with hard offers and waiting contracts to work on. The Soviet commandant supported it, and offered to make the necessary extra electric power and coal available in his sector. But nothing came of it. Under pressure from the Western Allies, the Social-Democrats turned the scheme down. The crisis had to be maintained at all costs. Much better to lay the blame for those cold homes and empty stomachs on the lands lost east of the Oder-Neisse line.
After the unilateral currency reform in the west – when the transport restrictions to Berlin were imposed, when factories were closing down in the western sectors, when parks and gardens were being robbed of their trees for fuel, when Berliners had two hours gas and electricity per day – Herr Friedrich Ebert, Communist son of former Prime Minister Ebert, and Oberburgermeister of the Soviet sector of Berlin, offered to supply all the food, coal and power that West Berlin needed.
I attended a press conference called by Herr Ebert when he announced that stocks could be had by Herr Reuter’s West City Council without any conditions whatsoever. No question of bargaining with food and coal for recognition of the newly established Soviet City Council. In the Soviet sector they had just introduced the most generous coal ration Berliners had enjoyed since the war. In the Western sector, air-lift planes were bringing coal in sacks from the Ruhr. The beautiful Grunewald park was being completely denuded of its trees. Every second tree in the streets and avenues of West Berlin was being cut down for fuel. The air-lift was costing Berliners thousands of dollars every day.
The total bill for the fifteen months of the air-lift is estimated at 210,000,000 dollars, almost one hundred dollars for every ton of food and coal carried. An expensive lesson for the Berliners in future to disregard the demagogy of their Social-Democrat West Berlin City Council. The bill for the air-lift should be sent to Reuter and his colleagues, who could have forced the Americans to call off the airlift any time they wanted to. Because of the air-lift, West Berlin is a bankrupt city with a quarter of a million unemployed, and is likely to be plunged ever more deeply into debt unless a clean sweep is made of the present administration.
“We have the coal and food stored in our warehouses,” said Mayor Ebert, “They can be had by Herr Reuter for the whole of Berlin without any conditions whatsoever. And if Herr Reuter does not want to accept, individual suburban burgermeisters can have it. They can collect from us or we will deliver it to them.”
Reuter turned down the offer and forbade any of the Western burgermeisters to accept, although some of them made public statements at first, gladly welcoming the generous offer. The crisis had to continue. The air-lift was the best publicity West Berlin and Herr Reuter had, and it offered the best chance for the transformation of the “cold” war into a shooting war.
The Ebert council then offered individual Berliners from the Western sectors the possibility of drawing their food and coal rations in the Soviet sector. Special depots were set up for them. Many thousands accepted this offer despite strong hints of discrimination against them by the West. People who drew their rations in the Soviet sector were told they would never again be able to register in the West. Western industries which took advantage of the Ebert offer of coal supplies were black-listed by the Western Allies. After the first few weeks of hauling their coal rations home from the Soviet sector, West Berliners had their sacks of coal confiscated by the West Berlin police at the sector boundaries.
No solution could be accepted by Reuter and Co. Their camp was heavy with gloom when there seemed any chance of settlement – a gloom reflected in the headquarters of Generals Clay and Howley.
By September, 1949, Reuter was complaining that Western Allied inaction was “bleeding” Berlin. “They send us experts and make nice Sunday speeches,” he said, “but they come to no decision that will save the city from despair.” (The words have a familiar ring. They are faithful echoes of those pronounced by General Kai-shek during the last months preceding his eclipse. Reuter would do well to study the history of American help and promises of help to Chiang and the final results.)
Reuter did as much as any single person to create the situation which he went on to describe as “intolerable.”
“The city is now like a ship without a rudder,” he said, ending his statement with a typical Reuter impertinence: “How can people go on without lapsing into complete despair, while our Allied friends sit and wait for Vishirisky?”
The greater the misery, the colder and hungrier the Berliners became, the more Reuter and his Western advisers hoped to turn them against the Russians. An incessant campaign in the West German press denounced the Russians in most insulting terms as being responsible for the city’s troubles. The Nazis came out of their holes, and it was impossible to distinguish between the West Berlin press of 1948 and that of 1939, for the violence of its polemics against the Soviet Union and the Communists. Leading the campaign was Reuter, late official of the Turkish government, protege of von Papen, Social-Democrat whose declared ambition was to outdo the Nazis and hang all Communists “from the nearest trees and lamp-posts.”
Reuter fancied himself not only as the “saviour” of Berlin but also as the champion of German rights all over Europe. On January 17, 1950, we find Mayor Reuter urging the Western world to restore “liberty” to Poland and Czechoslovakia. It was understood but not expressly stated that this “liberation” would be accomplished by German arms.
“Europe cannot be saved on the Rhine river,” Reuter told 14 visiting American editors. “Europe extends to the Curzon line on the borders of Poland and Russia. We do not fight for the liberty of Germany alone, but for the Poles and Czechs too. We have to fight for their liberty to save the peace of Europe.”
Fortunately the Czechs and Poles have vivid memories of the sort of “liberties” which German armies fought for last time they invaded Eastern Europe, while Reuter was working for Germany’s friendly “neutrals” the Turks. But Reuter never gave up hope of turning Berlin into a “Sarajevo,” as one of his colleagues recently expressed it, which would kindle the sparks of World War III.
It was Reuter who inspired the foolish attempt in January, 1950, by American military government, to seize the headquarters of the Soviet Zone railway administration, which happens to lie a few yards inside the American sector of Berlin. Reuter claimed its six hundred room should be used for office space by the West Berlin Council, although the building contained the entire switchboard not only for railways throughout the Soviet Zone, but also for Berlin as well. The switchboard controlled the food supply route from the Western Zone to Berlin. It was another example of Reuter sabotage and provocation, and it was paralleled by actual sabotage on the railway lines which caused several accidents.
Western police with American support seized the building, but were forced to turn it back again a few days later when the Soviet Zone authorities pointed out that without their headquarters they could not guarantee full operation or the safety of the Berlin and East Zone railways
Reuter wanted this breakdown in order to have the airlift started again and the crisis sharpened. After the Americans withdrew, Reuter complained: “This American retreat has caused the Russians to feel much stronger. Having seized the building, it would appear the only course would have been for the Americans to stick by their positions.”
Reuter’s friend, Erich Reger, editor of the Goebbels-type “Tagesspiegel”, went even further in condemning this American “weakness”: “The American retreat is more dangerous than a new blockade. The population of West Berlin will never understand the tolerance of Soviet enclaves in the Western sectors.”
Reuter and Reger had banked on a new blockade when they provoked the incident. If the Western Powers were not quick enough on their own initiative to provoke anti-Soviet incidents, Reuter and his colleagues were always at hand, intriguing and plotting new and ever more dangerous provocations.
The best-documented example of sabotaging four-power relations and hoodwinking the general public by the British and American representatives on the Control Council, was the handling of the decartelisation project. Fortunately, in this instance, we have a record of exactly what happened from what must be regarded as an impartial source – a United States’ Senate Committee of Investigation and the evidence of a Mr. Russell Nixon, a U.S. official in charge of breaking up the German trusts.
The record states, in the clearest language, that from the earliest days of four-power government it was the aim of some of the most highly-placed American and British officials to betray allied agreements and to preserve as much as possible of the German heavy industry and the great industrial and financial trusts. There were honest men on the American side who tried to carry out agreed policies, but one after another they were either dismissed or they resigned, disgusted and frustrated. The last one to fight for a strong law to break up the German trusts was James Stewart Martin, Chief of the Decartelisation Branch, who threw in his job in 1948.
The Potsdam Agreement laid down a clear directive as to policy on the question of German trusts: “At the earliest practicable date, the German economy shall be decentralised for the purpose of eliminating the present excessive concentration of economic power as exemplified in particular by cartels, syndicates, trusts and other monopolistic arrangements.”
The Potsdam Agreement named German heavy industry as the chief villain in modern German history, the strategic base for German aggression in three major wars. The part played by the top-hatted, frock-coated Ruhr industrialists in financing the Nazis, the rich rewards of plunder they received for their early support of Hitler, were clearly enough revealed at the Nuremberg trials.
The belching chimney-stacks of the Ruhr have spelt more ill than good for Europe over the past 70 years. The monolithic industrial combines fomented crises, directed foreign policies, made and broke governments, not only in Germany, but in neighbouring countries wherever the tentacles of their investments and trusts reached. Through tie-ups with other industrial trusts, they controlled supplies and prices of basic raw materials, of chemicals. They suppressed alternative or cheaper supplies. The German trusts were more than a state within a state, they were a state within the whole European continent, and could make governments jump when the top-hatted directors pulled the strings.
Public opinion throughout the world demanded that an end be put to the German industrial trusts, and public opinion was given legal sanction in the clauses of the Potsdam Agreement, signed by the chiefs of government of the Soviet Union, Britain and America.
The very names of the great combines were internationally known and detested, so closely were they linked with war and aggression. Krupps, I. G. Farben, Thyssen and Henschel, to mention but a few, are names which have aroused a feeling of horror in at least two generations of Europeans. They were symbols only of the vast complex of undertakings which the signatories to the Potsdam Agreement were pledged to destroy. That some of the highest officials entrusted with carrying out this agreement were pledged to save these great combines is clear from the following testimony of Mr. Nixon before the “Sub-Committee of the Committee of Military Affairs, United States Senate.” The enquiry lasted from February 25 to March 6, 1946.
The date is important. Less than a year after Germany surrendered, and long before there was any talk of Allied disagreement or the possibility of splitting Germany.
I am quoting extensively from Mr. Nixon’s evidence because in this one facet of Control Council activity one has the general pattern of how completely four-power unity was sabotaged. It is a picture presented by a highly-placed official who took an intimate part in day-to-day proceedings. The pattern he discloses in his particular branch applies equally well to every other important phase of fourpower discussions. The first blame in this case is laid at the door of the British, but as the story develops one sees how valiantly the Americans, too, came to the rescue of German heavy industry.
“After months of discussion and negotiations,” stated Nixon, “there is still no law which would diffuse the gigantic concentrations of economic power in Germany, curb their activities or prohibit their multiplication. In fairness to our own representation on the Allied Control Council and that of the Russians and French, it should be stated as of November 21, 1945, the United States, Soviet and French representatives on the Co-ordinating Committee (of the Control Council) did reach agreement on a draft law conforming generally with United States policy and with specific directives received from Washington. The matter was tabled, however, because of British opposition.
“This stalemate cannot be attributed entirely to British resistance. The history of the efforts to draft a law eliminating cartels and excessive concentrations of economic power in Germany indicates that the United States representation on the quadripartite levels in the Directorate of Economics was vacillating and unsympathetic to the basic objectives of the law.”
The U.S. representative was Brigadier-General William H. Draper, Jun., of the investment banking firm of Dillon Read, who, we must never forget, gave the German heavy industrialists their first big start after World War 1, with a hundred million dollar loan to Fritz Thyssen’s United Steel Co.
“Our representatives,” continues Nixon, “by failing to assert the very vigorous and definitive United States policy with respect to cartels and monopolies, encouraged the British predisposition to resist and discourage the proffered Soviet support for a strong law. Instead they followed a policy which was reflected by (1) excessive regard for what would or would not be acceptable to the British rather than the execution of United States policy; (2) refusal to define issues; (3) advocacy of emasculating compromises such as the elimination of mandatory provisions.”
(The term “mandatory” was the purposely vague name given to the very precise and concrete Russian proposals for an exact description of what constituted an “excessive concentration of economic power in terms of personnel employed, annual turnover, etc.”)
Nixon at this stage proceeded to give a short history of the negotiations, to support the general charges he was making.
“Shortly after the organisation of the Control Council, the U.S. representative, at the first meeting of the Council’s Co-ordinating Committee on August 19, 1945, filed a draft law providing for the establishment of a commission to carry out decentralisation of the economy and elimination of cartels and excessive concentrations of economic power. In the Economic Directorate to which this proposal had been referred, the Russians on September 12, 1945, offered a counter-proposal in the form of a simpler law, which defined cartels and excessive concentrations of economic power, prohibited them outright under specified penalties for violations, and provided the Economic Directorate should make specific exemptions, in particular cases. It was agreed unanimously to use the Russian draft as a basis for subsequent discussions.
“At the risk of repetition, I should like to make clear the essential difference between our draft and the Russian draft, because, despite the unanimous agreement to use the Russian draft as a basis for discussion, our draft was continually being projected and it constituted one source of much of the confusion. Under the Russian draft, cartels and excessive concentrations of economic power were explicitly labelled and made illegal. Excessive concentrations of power were defined to be enterprises with more than 3,000 employees or more than 25,000,000 Reichsmarks turnover. In the months following this definition came to be known as the mandatory approach. Our initial proposal provided for the establishment of an administrative agency without setting forth any rules for the guidance of that agency ...” (This was a favourite method used by the Americans and British to gain time, to await the day when world tempers had died down again and the demand for the destruction of the trusts would be forgotten.)
“In the immediate period following,” Nixon continued to testify, “United States representatives, without openly challenging the mandatory approach, continued to press for the adoption of their own views. Major Petroff, a General Motors attorney, reported he had negotiated a compromise version with the Russians. This turned out to be a short version of the original law proposed by the United States representative at the Control Council which at best merely provided for administrative machinery. There were no prohibitions in the law. At the September 27 meeting of the Economic Directorate it was apparent that nobody has agreed to any compromise.
“The British representative was obviously opposed to the law, though he recorded his government’s agreement with the purpose of the law ‘in principle’ and its eagerness to expedite its issuance. As evidence of this desire to expedite matters, he proposed referring the draft to a working group, offering to name his representatives immediately.” (This was a favourite time-wasting trick. Once matters had been passed down the line to working parties, they became bogged down for months and were often never heard of again. It was a method usually adopted when one party or another wanted to avoid passing a law but did not want to take public responsibility for having wrecked the agreement.)
“General Shabalin, the Soviet representative, said there had been sufficient time for technical consideration and that the Directorate members were competent to act in the matter.”
There follows a clear example of how the men on the spot wrecked every possibility of four-power agreement even on those few issues where the governments themselves seemed agreed. Here is the classic example of how highly-placed officials sabotaged their own government’s policy. By repeated cables of explanation of “Soviet difficulties,” by deliberate defeatism, they brought their governments to believe that agreement was impossible; and the wedge between Russia and the West was driven a little deeper. A discussion was forced to a stage where a Russian refusal to go further was inevitable, and this was immediately cabled back as “Soviet lack of co-operation.” The reactionary representative of a British Socialist Government, Sir Percy Mills, representative of British heavy industry, director of W. & T. Avery & Co., president of the Birmingham Chamber of Commerce, set out by his own acts to prove to the British Government that its policy was impossible, due to Soviet “obstructionism,” and gave it the opportunity of taking an even stronger anti-Soviet line. If that is not conspiracy and treachery, what is?
“Sir Percy then stated,” continues Mr. Nixon, “that he could not consider the draft law, because only the Legal Directorate could draft a law. He then proceeded to discuss for ten minutes the exact import of the word ‘stock ownership’ in the draft. General Draper suggested that the same kind of question could be raised over the word ‘concern,’ and Sir Percy observed that was going to be his second point. It developed that the German word ‘concern,’ and the French and Russian as well, means the largest combination possible of business enterprise, that is the largest concentration of economic power situated within a country, such as I. G. Farben. But this term carried no significance for Sir Percy. After much discussion, General Shabalin proposed to substitute our word ‘combination’ and add in parenthesis the equivalent of the German word ‘concern.’ This suggestion, however, was rejected by Sir Percy as meaningless.
“It should be noticed that, in the course of the discussion, General Draper introduced the so-called compromise draft by proposing that one of its sections be substituted for the Soviet section defining excessive concentrations of economic power. The effect of this one substitution, which was promptly rejected by the Russians, would have been to transform the mandatory provisions of the law into mere reporting requirements.
“After hours of discussion of this character, a working party was appointed and instructed to file a draft within five days for consideration by the Economic Directorate. At General Shabalin’s insistence, however, the working party was directed to use the Soviet draft as a basis. At Sir Percy’s insistence, a long list of principles was referred to the working party for consideration. These principles, summarised, were that size alone may carry advantages, and that no elimination should be made because of natural advantage of size. General Draper also submitted his so-called compromise draft, for the consideration of the working party. In other words, everything was thrown into the “hopper” all over again.
“I have described this early meeting in detail, not so much because these details are interesting or even important in themselves, but because that meeting is typical of all subsequent negotiations.”
Mr. Nixon might well have added here, that if his colleagues in other divisions were as honest as himself, they could have told similar stories of chicanery and sabotage in every phase of Control Council activities. The same tactics were applied in discussions on demilitarisation, denazification, coal production, every other important matter that came up. When the British or Americans wanted to sabotage some particular provision of the Potsdam Agreement, they did not oppose it openly because this would have exposed their governments. They always agreed “in principle,” and proceeded mercilessly to drown the proposal in a sea of artificial difficulties. Mr. Nixon follows the intrigues in this case right through to the bitter end.
“At the working party meetings, the British representatives continued to raise technical considerations at every point, and ever the debate over the German word ‘concern’ recurred. The Soviet and British representatives engaged in protracted debate over the objectives of the law. The Soviet representative argued emphatically for a law that would explicitly prohibit specifically defined concentrations of economic power in Germany and German participation in international cartel arrangements. The British representative continued to insist that the working party could not draft a law because that was the function of the Legal Directorate; that only general standards and not specific prohibitions could be considered; that it was impossible to define excessive concentrations of economic power; and that German participation in international cartels could not be prohibited, because Germany had to export to live.
“These debates continued for four of the five days allotted to the working party to finish a draft. Mr. Bell (Draper’s deputy, a Chicago Corporation lawyer and author) saw merit on both sides. Mr. Bell definitely supported the British insistence on including in the final draft the principles that size alone and the natural advantages of size alone should not be prohibitive. When Mr. Bell agreed with the Soviet representative that the working draft must contain specific prohibitions, Colonel Bowrie, of General Clay’s staff, supported the British representative, claiming that he did not know what constituted a cartel, that Potsdam was not clear on this subject. The upshot was a working party draft which merely enumerated a long list of criteria for eliminating excessive concentrations of economic power in Germany, with no mandatory prohibitions, except for outright prohibitions, of cartel agreements.
“On October 15, the document arrived at by the working committee was forwarded by the Economic Directorate to the Co-ordinating Committee, where it was discussed on October 20. The Soviet representative, while approving the principles laid down by the paper, observed that they were too general and should be in a form more easily implementable. He suggested that the advisability of stating in the text the number of employees, the annual turnover and the percentage of an industry that would constitute an excessive concentration of economic power. The British representative said he was not opposed to that in principle, but that it would be difficult to determine the number of workmen an enterprise may employ. General Clay (who in those days had his own reasons for carrying out his government’s directives, as we shall see in the next chapter – Author) proposed the following specific numbers: 3,000 employees, 25,000,000 Reichsmarks annual turnover and 10 per cent. of production or other activity in any one field of enterprise. By agreement the whole record was then referred to the Legal Directorate for embodiment in a law.”
On the face of it, it looked as if the matter was settled. In the end, General Clay had come back to the original Soviet proposal – even improved on it by adding the 10 per cent. clause. If the law had been accepted, German heavy industry would have been really broken up into controllable units. I. G. Farben could never have existed again. But it would be underestimating the ingenuity of the wreckers if one thought the matter was settled there. The open representatives of American big business, Draper and Co., then started deliberate trickery. Cables were sent behind the backs of their chiefs, to Washington, seeking to confuse the issue; and by promoting contradictory cables from a completely bewildered Washington, provided themselves with enough ammunition to wreck the law again. In some instances they resorted to deliberate lying.”
“Shortly afterwards,” the melancholy narrative of Nixon continues, “we were advised by Colonel Bernstein (Chief of Decartelisation Branch – Author), who was then in Washington, that the working party report had been unfavorably received in Washington because it fell far short of our established policy. A Washington T.W.X. (teleprint – Author) conference was arranged for October 24, and representatives of D.I.C.E.A. (Decartelisation Branch) were invited to participate in Berlin. As a result of this conference, U.S. representatives in Berlin were instructed to support a draft law which would include mandatory provisions prohibiting domestic monopolies.”
At this stage Washington, in fact, accepted the first Soviet draft as being in line with what they wanted. Washington objected, at this point, to any watering down of the strong law originally provided for in the Potsdam agreement. Subsequently, of course, this view was altered.
“In the Legal Directorate, the new U.S. draft law complying with the instructions received during the T.W.X. conference was accepted on October 30 by all powers. There apparently remained only the need for the Economic Directorate to fill in the blank spaces in the mandatory provisions for (a) the percentage of the industry; (b) the annual turnover, and (c) the number of persons employed. Figures for the last two of these had been in the original Soviet draft, had not been objected to by anybody in any stage of the proceedings, and had been reaffirmed by General Clay when he proposed figures for all three standards on October 20, at the Co-ordinating Committee.
“Despite this, however, our representatives persisted in raising questions about the instructions from Washington. This was done by eliciting alternative instructions from Washington. (My emphasis – Author.)
“For example, on November 1, 1945, a cable came in from the State Department to Ambassador Murphy. It was in answer to a cable Ambassador Murphy had sent to Washington which we had never seen. This cable twice referred to the mandatory provision proposed, and merely offered an alternative mandatory standard, apparently on the premise that the turnover standard would cause difficulties. Despite this, representations were made by people in the Economics Division to the effect that Washington had withdrawn the mandatory approach ...”
Nixon describes more and more confusing cables sent to Washington, meetings and intrigues by Draper & Co. behind the backs of the Decartelisation officials, more and more people becoming involved, and Nixon himself being reprimanded because he sent a cable to his chief in Washington presenting a true picture of the situation. In the end Washington again stuck to the Potsdam position and issued instructions that the original draft should be followed. Once again one would think that nothing could stop the law from going through.
But the wreckers were determined men, fighting for heavy stakes. They were fighting a life and death struggle for German heavy industry, and for present and future American and British investments in that industry. They were not bothered about moral or legal scruples. They were worthy representatives of their masters who traded in death.
“Finally the Economic Directorate submitted the law to the Co-ordinating Committee on November 17, indicating that the Directorate could not arrive at a unanimous decision. Thereafter General Draper reported to General Clay’s meeting of division directors that the vote in the Economic Directorate had been 3 to 1 against the law as approved by the Legal Directorate. It was claimed by the Economic Division that the Russians had changed their position. As a matter of fact the Russians had not changed their position but were confused on our position.
“They were deliberately misled by such people as Major Petroff, who boasted that he had been instrumental in getting the Russians to change their position and that Ambassador Murphy had specifically asked him to do so. When asked how he explained the apparent change in the Soviet position, since they had been the first to propose a mandatory law, he replied, smilingly, that he probably had something to do with that, too. When subsequently we asked a Soviet representative why the Russians no longer took an aggressive position in the Economic Directorate on the issue of a mandatory as opposed to a discretionary law, he replied that if we wanted that kind of a law we could count on their support any time we showed them that we meant business. He made it clear to me that the Russians were led to believe that we were going to throw in the sponge and they had decided they were not going to fight for our law if we ourselves would not. As a matter of fact, General Clay told me he was particularly gratified by General Sokolovsky’s support of our law at the Co-ordinating Committee – he told me this less than 10 minutes after members of the Economics Division had told me that the Russians had opposed the United States position in the Co-ordinating Committee and that we had been outvoted 3 to 1. The Co-ordinating Committee meeting minutes of November 27 clearly show the opposite to be true. The British stood alone in opposing the law. In face of this unilateral opposition the Co-ordinating Committee agreed to drop the matter with leave for anyone to bring it up again.
“On December 8, the State Department informed Berlin that if the British representatives on the Control Council were unwilling to accept a law with mandatory provisions, the State Department would take the matter up at a governmental level. On December 11, General Clay replied that the British were opposed to the law and that he would not bring it up again until he received instructions to do so. There the matter rested, so far as I know, when I left Berlin a month later, and I have heard of nothing since that changes the situation.”
Nixon concludes this first part of his testimony with the following words: “It is my conviction that Germany can never be economically disarmed until her internal monopolies, industrial trusts and her external cartel arrangements are destroyed. A thorough-going program to achieve this must be instituted immediately. And its execution should be entrusted only to officials who are interested in carrying out the Potsdam Agreement and the policy directives of their government rather than in preserving their old business connections and their own economic position.”
Just what the trusts meant to Germany can best be illustrated by a brief review of I. G. Farben (German Dye Co.) and its ramifications. I. G. Farben directors and their associates abroad, including key men in the Standard Oil Co., did their best to cover up the activities of this mammoth combine. At the end of the war some records were destroyed, but many others were hidden away in the homes of I. G. Farben employees, in monasteries, mines, beer halls, caves, anywhere where it was thought the infamous record of I. G. Farben would be buried from the public gaze and the prying eyes of Allied research teams. That most of the records were hidden, rather than destroyed, shows the hopes of I. G. Farben heads that the Allied occupation of Germany would represent only a short armistice, after which the trusts and industrialists could come out of their hide-outs again. Their conjectures were only too well-founded.
With a total value of at least £300,000,000, I. G. Farben represented the greatest chemical combine in the world. Thirteen per cent. of its capital is held in foreign hands, mainly by Du Pont Nemours of America, Imperial Chemical Industries of England, and Francolor of France. Its holdings outside Germany amounted to at least another £50,000,000, representing five hundred firms, totally or partly owned. In Germany, I. G. Farben owned its own mineral deposits, mines, coke-ovens and power-stations, as well as its purely industrial and chemical plants. Abroad it maintained a complex espionage organisation, which was placed 100 per cent. at the service of the Nazis.
Its enormous importance to the German war potential enabled it to have favours in its dealings abroad that no other German firm had. It was kept informed of the time-table for German conquest so that the planners could arrange for the absorption of the chemical industries of Austria, Czechoslovakia, Poland, France, Russia, and eventually England, into the vast combine. And by the attitude of the French directors of Francolor and certain executives of Standard Oil in America, it seems the international industrial fraternity would have been nothing loth to play their parts in helping along the absorption process.
I. G. Farben’s role in the war machine can be gauged from the following percentage figures of I. G. Farben’s production in various important fields:
Synthetic rubber ... 100 per cent.
Methanol ... 100 per cent.
Sera ... 100 per cent.
Lubricating oil ... 100 per cent.
Poisonous gases ... 95 per cent.
Nickel ... 95 per cent.
Plasticisers ... 92 per cent.
Organic intermediates ... 90 per cent.
Plastics ... 90 per cent.
Magnesium ... 88 per cent.
Explosives ... 84 per cent.
Nitrogen ... 75 per cent.
Solvents ... 75 per cent.
Gunpowder ... 70 per cent.
High-octane gasoline ... 46 per cent.
Sulphuric acid ... 35 per cent.
Synthetic gasoline ... 33 per cent. (but 90 per cent. through I. G. Farben patents)
This list includes only a few of the most important products that I. G. Farben dealt in.
A dramatic illustration of how the cartel arrangement with other chemical and industrial groups abroad worked to control prices, divide up markets and exchange trade secrets was provided in the U.S. Department of Justice Enquiry in 1941-2 into the activities of Standard Oil of America with regard to the development of synthetic rubber in the United States. One had thought that, after the scandals of World War 1, such things had come to an end. The enquiry illustrated the big business conception of “patriotism” when national and private business interests collide.
Standard Oil had an arrangement for an exchange of research developments with I. G. Farben. Under this, Standard loyally provided I. G. Farben with the secrets of tetra-ethyl lead, without which the production of modern, high-octane aviation gasoline is impossible. Standard, indeed were so obliging that when Germany’s war preparations were almost complete, after she had swallowed Czechoslovakia and was preparing the blitzkrieg into Poland but was short of the lead from which tetra-ethyl is extracted, Standard shipped in 500 tons of this lead. An I. G. Farben report gratefully acknowledges the help it received from the Standard Oil contributions, which, as the report says, “are just now, during the war, extremely useful to us.”
When it was a question of the United States getting important secrets, however, it was another matter. When the world rubber situation became acute after war broke out in 1939 and Britain no longer had shipping resources to distribute her supplies from Malaya, rubber companies in the United States began to agitate for the production of synthetic rubber. It was known the Germans were producing large quantities of buna rubber. Standard Oil prevented other American companies starting research into means for making buna, by stating that under their cartel agreement with I. G. Farben they already had the secret. When the rubber companies clamoured for the processes to be made known, Standard said they were investigating the best means for licensing the process.
It took a governmental investigation by then Senator Truman, with Senators Kilgore and Bone, to pry out the true facts. Standard did not have the secret process for buna. They deliberately held up American research and war preparations to defend German interests. They deliberately lied to the American rubber companies. Even after the Germans invaded Poland, Standard still held up American research into buna rubber, at the same time assuring the rubber companies that the process would be released to them in good time.
Eventually, in October, 1939, a Standard representative, Mr. Howard, met I. G. Farben representatives in Berne, Switzerland, and told them he could no longer resist the clamor for the processes, and Standard would be glad of some reasonable excuse from Farben to explain away the situation. The Farben representatives agreed to cable New York that the German government would not allow them to divulge the processes. Mr. Howard was most grateful.
There were plenty of other instances in which the American and to a lesser extent the British war effort was weakened by American firms “loyally” abiding by their cartel agreements with I. G. Farben. There was an agreement between the U.S. Aluminium Corp. and I. G. Farben to restrict magnesium production in the United States, and an agreement on smokeless powder between Remington Small Arms and I. G. Farben which held up supplies to Great Britain to as late as 1941.
By some miraculous chance – and one day this may form a profitable theme for an investigation commission – most of I. G. Farben plants were spared during the war.
If one starts with the enormous I. G. Farben headquarters building in Frankfurt – now the headquarters of Anglo-American occupation authorities – one would think a magic circle had been drawn around I. G. Farben establishments to save them from Allied bombers. The I. G. Farben building in Frankfurt, covering several acres of ground, stands out as a flourishing oasis of concrete, steel, marble and glass, in a desert of rubble and destruction. By its size, shape and location on top of a small hill, it stands out as Number 1 target in Frankfurt, whether for high or low level bombing. But it survived without a scratch – a nerve and research centre for the German war effort till the end.
The best information based on Allied economic intelligence reports is that the total damage to I. G. Farben plants at the end of the war was 15 per cent. I. G. Farben technicians estimated that within three months they could have the whole industry working on a 95 per cent. basis again, given raw materials. And they were given the raw materials.
The position of I. G. Farben as of September, 1949, was that no plants had been dismantled or destroyed in the Western Zones. In the American Zone, where Farben had its headquarters and one quarter of all its plants, the enterprises were grouped into seventeen large units and were under the control of German trustees. It represents the only case of an enterprise having been broken up at all in the United States Zone, and action was taken only because I. G. Farben was placed from the beginning under a special fourpower control board. It was the only enterprise handled in this fashion, so it hardly came within the scope of the decartelisation law we have been discussing.
Despite strict allied directives to the contrary, I. G. Farben plants in the American Zone received priorities for supply of raw materials, and are producing more now than before the war. The infamous Gensdorf poison-gas plant, marked down on the list of war plants to be destroyed, is working at full pressure again. The Americans changed its name to Anorgana, and it is operated by the Bavarian government. It is officially manufacturing anti-freeze agents, raw material for lacquers and various other chemicals. It employs 300 persons and production is going up by leaps and bounds.
The British complain that the I. G. Farben plants are tending to coagulate again, and they oppose American proposals to sell the seventeen units to the present trustees.
The British have their own reasons, in that early promises of the elimination of I. G. Farben and Potsdam decisions not to allow the Germans to have a chemical industry had given great hopes to the British chemical industry. Expansion had already started on the basis that I. G. Farben would be eliminated. Now, with American benevolent protection, I. G. Farben under new names is already competing in a big way with the British chemical industry.
It was doubtless with the experience of the I. G. Farben cartel arrangements and their effect on the American war effort fresh in their minds that Washington officials took a strong and clear line in the early phases of decartelisation. The Truman-Kilgore wartime commission had deeply stirred public opinion at the time, and the American man-in-the-street was strongly anti-trust. Roosevelt had done much to expose the machinations of American trusts and to curb their activities. Several of the Roosevelt “trust-busters” still held high jobs in Washington and took a deep interest in the developments in Berlin. Washington, too, in this case was kept informed as to what was going on, by frequent reports from Nixon to his chief, Bernstein. In most cases decisions in Berlin were taken or not taken, and Washington was laconically informed afterwards of another failure due to “Russian obstruction.”
Needless to say, the press was thoroughly hoodwinked over the whole matter. If highest officials lied to each other and to their governments, if departmental chiefs kept back information from their colleagues, one can imagine how much chance the press and public had of learning the truth. My interest in decartelisation led me to interview many British and American officials on the subject. The reply was always a variation of the old familiar theme: “Can’t get anywhere with it, old man. You know what the Russians are!” It was only later, when armed with the report from which I have quoted so extensively above, that I was able to press more searching questions, and eventually got confirmation of the picture as presented by Nixon. By that time excuses given for non-decartelisation had been developed in another direction. But more of that later.
Before leaving Mr. Nixon’s evidence, there are a few more valuable contributions from him when he was being cross questioned by the Chairman of the Committee, Senator Harry Kilgore, from West Virginia. In reply to a question as to who was chiefly responsible for the impasse, Nixon replied:
“Let me say at the outset that it is my judgment that General Clay did agree with the tough policy. (The explanation for this tough line of General Clay becomes clear in the next chapter – Author) ... But below him his officials were sabotaging his policy. How were they doing it? Perhaps I had better say who they were. First of all, of course, is General Draper, the head of the Economics Division, former Dillon Read official; Mr. Laird Bell, a corporation lawyer from Chicago, of the Liberty League (club frequented by wealthy financiers and bankers – Author), who was deputy chief of the Economics Division ... who since he came home has made it very clear that he disagrees with Potsdam ... a Major Petroff, Russian-speaking U.S. Major, former lawyer with General Motors Corp.; Lieut.-Col. Bowie, of General Clay’s staff, and a member of Mr. Murphy’s staff...
“Generally speaking, they took the attitude that to apply the really tough mandatory law was being too tough with Germany ... They misrepresented the U.S. position to other powers and attempted to change the Soviet position of support for the mandatory law. They specifically went to them and indicated: We didn’t really mean it when we referred to our support for the mandatory law ... In addition they created confusion. There were incorrect minutes written ... these same forces attempted to get Washington to relax the policy by expressing excessive defeatism, telling them it was impossible to get a tough law and trying to get them to give permission for a weaker position.”
The position, then, at the end of 1945 was that the British stood out alone against the law banning cartels and trusts, but highly-placed American officials had lent strongest support to the British. This was the position throughout the next 12 months, carefully concealed from the press. Then the British began to develop a diabolically clever line, one sure to bring about a “volte-face” in Washington.
“What’s going to happen to these enterprises if you do decartelise them?” the British began asking. “Of course,” they added, “in our zone we will socialise them.” And the very mention of socialisation sent cold shivers up any good free-enterprise American back. It was a piece of beautifully calculated blackmail. General Clay had anticipated something like this, but not quite in that form. The British government probably did have the intention at one time to socialise part of German heavy industry. In fact, Mr. Bevin had made some very emphatic statements about it, but his men on the spot had no intention of allowing anything like that to happen. The merest mention of the word, however, was enough to make Washington scurry away from putting the final pressure on Britain, at governmental level, to agree to a tough decartelisation project.
Discussions from which, of course, the Russians were excluded, took place to discuss the future of industries once they were broken up. The Americans said they should be put up in small lots and auctioned. The British said they should be socialised. There was the question of compensation for foreign investors – mainly British and American. Their profits had piled up since the Nazis blocked the export of foreign capital in 1933. Much of it had been re-invested in the industries which poured out the tanks and planes, the big guns and submarines, the secret weapons and gas chambers which destroyed millions of Allied lives. One would have thought that foreign investors, having put their money into an enterpise which had gone bankrupt, would not have the nerve to press their claims. But in the Economics Divisions of both American and British military government another view was taken.
One could not trample on the rights of private enterprise and break up vast industrial concerns in which foreign money was invested, without making adequate provision for compensation. Some firms with large amounts of foreign capital were even allowed to draw from their frozen bank-accounts part of their accumulated profits to start rebuilding and re-equipping their plants. The Singer Sewing Machine Company was an early example of this.
The main battle for the German trusts was won. Actually a law on decartelisation was passed for the British and American Zones on February 12, 1947, after Bizonia had been set up. This law, passed more than a year before the alleged crisis when Marshal Sokolovsky withdrew from the Control Council meeting on March 20, 1948, was a typical example of the legislation passed for the two zones behind the back of the Control Council.
The date on which the law was published is important in view of the findings of the Ferguson Commission of enquiry in 1949 – dealt with later in this book – that the law was so complicated that it would take at least two years before it could be implemented. The two years would take General Clay beyond the U.S. elections in November, 1948, when it was certain there would be a change of government in the U.S.A., with a softer attitude on decartelisation. Negotiations were actually in progress between industrialists and republicans on the eve of the elections to “drastically” revise even the modest provisions of the Anglo-American decartelisation law.
Law 56 in the U.S. Zone and Ordinance 78 in the British Zone were almost identical. They start off with a pompous phrase providing for the “prohibition and elimination of restrictive and monopolistic enterprises.” Enterprises employing more than 10,000 people were to be examined as “primae facie” cases of excessive concentrations, and could be dealt with at the discretion of the military governors.
The precise application of the western version of “trustbusting” is dealt with in the chapter which follows.
Having won a breathing spell in the matter of decartelisation, the Control Council wreckers concentrated their activities on the next task of salvaging as much as possible of foreign profits and getting them defrozen for re-investment in the German heavy industry, whose future they had now assured.
To carry out this plan, Germany had to be split in two. Russia must be kept away from the conference tables. Potsdam must be thrown overboard once and for all and the decks cleared for Big Business to have a clear field. The preliminary moves were made almost before Allied blood had dried in German fields, and their results were apparent in the first few months of the Control Council’s activities.
In his evidence on the disposal of Germany’s external assets, before the same Kilgore Committee, Mr. Nixon brings to light some of the behind the scenes skullduggery aimed at ending four-power unity. Treachery is an ugly word, but it seems the only one to apply to the intrigues between Britain and America towards the end of 1945, to ensure that Russia should have no voice in prying out the secrets of German investments in Spain, Switzerland, Sweden and South America.
Marshals Zhukov and Montgomery, Generals Eisenhower and Koenig, signed an Allied Control Council Law, No. 5, on October 30, 1945, setting up a German external property commission composed of representatives of each of the Allied powers. This commission should take over all German property outside the country. Nixon was appointed U.S. representative. He prepared a memorandum to General Clay, setting out his ideas for an immediate four-power approach to the neutral countries for recognition and enforcement of the Commission’s powers.
“It was necessary,” stated Nixon in his evidence, “that a strong and immediate unified approach be made in order to prevent further dissipation of German assets and to overcome the resistance of the neutrals to giving up German assets which legally and morally belong to the Allies.
“However, the idea of a strong four-powered approach was soon discarded by a cable from the State Department to the Division of Investigation of Cartels and External Assets (D.I.C.E.A.) immediately following the first meeting of the German External Property Commission on November 27, 1945. This cable directed that the United States representative make the following proposal to the Control Council:
“(1) The G.E.P.C. should be organised into two separate operating units. In the one unit, the Soviet Union would be the sole voting member and the other three powers would act as observers. This unit would deal with Germany’s external assets in Bulgaria, Hungary Rumania, Finland and Eastern Austria. In the second unit the voting members would be the United States, France, and Great Britain, with the U.S.S.R. represented as an observer. This unit would take care of the German assets in all other countries.
“(2) It was requested that the Control Council and the G.E.P.C. should agree to exempt all the Latin-American republics from coverage of the vesting decree ‘upon representations from the United States member that these countries have satisfactorily carried out their replacement and reparations program’.”
Nixon reacted sharply to this, and protested that it would undermine the only effective basis for action on a four-power basis and would put the United States in the position of having initiated the first break in four-power unity. The Soviet representative, Mr. Denisov, meanwhile made it clear that the Soviet Union was interested in the application of Law 5 in all countries, and knew of no agreement under which the Soviet Union had renounced its interest in the full implementation of the Law.
The three Western powers meanwhile had meetings behind the backs of the Russians to work out a policy tender enough not to offend Switzerland and the other neutral countries where the Nazis had salted away most of their assets to finance a future war.
Nixon summarises the Western policy in a specific charge that “The United States State Department together with the British and French Foreign Offices have manoeuvred to split the Quadripartite German External Property Commission into eastern and western units and are proceeding to crystallise this split among the four powers in regard to the external assets problem.
“This unwarranted action in my judgement stems from the concern on the part of certain influential and apparently dominating influences in these offices to avoid having the Soviet Union, through genuine quadripartite actions, involved in the external assets question in countries such as Spain, Portugal, Switzerland and Argentina ... We are applying ineffectually a ‘would you be so kind’ approach in the drive for the camouflaged assets of the Germans in such Fascist countries as Spain, Portugal and Argentina.”
The British were even more concerned than the U.S. State Department to keep the Russians from prying into German assets. They felt the original State Department memo did not go far enough. A week after the U.S. memo, the British cabled that the United States and France “would presumably agree” in the Washington discussions that nothing should be said which “might conceivably lead to a Russian claim to have a say in this particular matter.”
One must remember that this first attempt to split the Control Council was taking place only four months after the end of the war, long before there was any talk of bi-zonal fusion or breakdown of fourpower machinery.
To be sure there was much dust-throwing going on in the Western press at the time about the “merciless” Russian policy of stripping Eastern Germany “bare” of its industry. Whenever the Western powers were putting over some particularly disreputable piece of chicanery, they whipped up an anti-Soviet propaganda campaign to divert attention.
In a teletype conference between General Clay and Nixon on the one hand and Washington on the other, the State Department explained that their desire to avoid four-power operation of Law 5 was due to “the strong feeling in the State Department that complete quadripartite operation of Law 5 in such countries as Spain might breed conflicts with respect to foreign policy which it is strongly desired to avoid.”
Nixon continues, “The French state their position is to prevent the Soviet Union from ‘having an eye into’ certain situations such as Spain and Switzerland. The British most blatantly assert their overwhelming concern to avoid joint operation with the Soviet Union in the neutral countries. This unwarranted and diligent effort to disunify the four powers leads to a profound suspicion that it is being sought by at least some forces in the U.S. State Department and in the British and French Foreign offices who are sympathetic to the creation of a Western block versus the East.” And this, mark you, still in 1945.
Behind the high moral reasons for setting Western Germany “on its feet,” giving “liberty, freedom and real democracy” to the Western Germans, one begins to see the real reasons for excluding Russia from any voice in affairs west of the Elbe. That Russian voice might denounce the intrigues of the agents of international finance, the men who manage the trusts and cartels, and who guard the financial reserves of the Nazis.
Nixon puts his finger on the very heart and soul of this anxiety to shield the Western world from Russian influence when he says: “Furthermore, I charge elements in the United States, British and French Foreign Offices with consciously manoeuvering to prevent all four powers from being involved in the search for external assets in the neutral countries because that would lay bare the Fascist or reactionary regimes in such countries as Spain, Portugal, Switzerland, Sweden and Argentina, and would reveal all the elements of collaboration of certain interests in the Allied countries with these regimes. Such genuine quadripartite action would completely upset the apple-cart for plans of compromise regarding Germany’s external assets in the interests of trade and commercial advantages and in the interest of avoiding the creation of too radical regimes in the future.”
The results of the weak-kneed, cap-in-hand, gentlemanly approach to the neutrals, of course, amounted to nothing. The Swiss shrugged their shoulders but allowed the Western allies to touch neither German State property nor any other assets. In Sweden subsidiaries of German enterprises were allowed to continue operating and pile up funds which could later be made available to the mother-firms.
It was well known that the Nazis had salted away vast sums of gold in Switzerland. A few weeks before the end of the war, a German mission to Switzerland, headed by Emil Puhl, vice-president of the Deutsche Reichsbank, was sent to arrange for the salting away of German assets, including gold looted from the occupied countries. Puhl’s correspondence with war-criminal Walther Funk, Nazi Minister of Economics, showed clearly the collaboration between the German Reichsbank, Swiss bankers and Swiss government officials. Copies of this correspondence were in the hands of the Western Allies. But the guilt of the Swiss government in helping the Nazis to bury their loot – until they had a chance to use it again – must be hidden at all costs from the Soviet Union and world public opinion.
A few extracts from Puhl’s last letters to Funk tell all that is necessary in this respect.
“At my insistence we negotiated until yesterday afternoon,” writes Puhl on March 30, 1945. “I might say that the Swiss did not lack in paying me personal attentions, such as arranging a large breakfast in my honour yesterday. Of course this fact became immediately known to our enemies. It is remarkable further that Swiss bankers and industrialists again and again called on me despite the fact that the enemy observed everything.”
In his final letter, dated April 6, just one month before the German capitulation, Puhl sums up the results of his visit – with justifiable self-satisfaction.
“In the gold question,” he writes, “the National Bank has kept its independence, which is a good thing. I succeeded in concluding a gold deal transaction involving about three tons, in spite of the fact that this is certainly very disagreeable to our opponents ... The results of my drawn-out endeavors can be summarised in stating that it is quite a considerable achievement, which is thought to be impossible by many sides, that under the present general political and military conditions, we have come to a written agreement with a Swiss institution (Swiss National Bank – Author). Herein lies the significance going far beyond the various regulations. It has become possible to avoid a breakdown of the thin thread or German-Swiss economic relations ... Every day, I could say almost every hour, I was able to convince myself of how many Swiss connections exist which will not stop now after it has been possible to find a basis for the continuation of certain payments ... The fact that President Weber (President of Swiss National Bank – Author) repeatedly and strongly advised me to continue my endeavours made a forceful impression. He pointed out that under the present-day conditions an agreement between the National Bank and the Reichsbank would be of far-reaching importance beyond the present day ... Whatever form events will take, such connections will always exist between our countries, and the fact that there exists a contract agreement may be of considerable importance for the future ... In the last analysis I have found much understanding from the Swiss side. The personal relations are now as before of greatest cordiality, and are playing a decisive role in all negotiations ... It is pleasing to note again and again in all these events how strong the cultural ties are that connect our two countries, even if the political opinion of the broad masses is not in our favour to-day.
“For my return trip, the organisation of which is not quite simple, the Swiss Government has obligingly put two seats in their own courier automobile at my disposal.”
It was not only a handful of Swiss Nazis, but leading Swiss bankers, industrialists and government officials, who were helpful in salting away German loot in the very last days of the war. It was not surprising, therefore, that the Western powers – always tender where international finance is concerned – wanted to keep the Soviet Union out of these matters, and to shelter from public opinion the intrigues of Swiss bankers.
By his questioning of witness Nixon, Chairman Senator Harry Kilgore painted in black and white a clear picture of the results of this first split in four-power administration in Germany.
Chairman: “As it now stands we still don’t have Law 5 implemented?”
Nixon: “That is right, sir.”
Chairman: “We are still holding one member of the quadripartite agreement at arm’s length in certain sections and putting him in control in others?”
Nixon: “That is right.”
Chairman: “So the criticism levelled at Russia’s action in certain sections is caused by this action here in which she is put in charge of sections with merely observers from the other three nations; is that right?”
Nixon: “I would say that contributes to it ... Again as recently as at the end of January (1946) the British came in to the German External Property Commission and made the proposal to split the commission which the State Department had originally urged that we make. Curiously enough, the first proposal to this effect was made by the British and they asked that they have U.S. support. Instead of that, the State Department evidently decided to carry the ball itself, and gave us instructions to make the split.”
Chairman: “In effect the whole theory of United Nations is starting to split into two grand subdivisions, Russians and Middle Europe; and the United States, England, France and the rest of the world. In other words, if we exclude Russia as an observer, they have the right to exclude the United States, England and France as observers under this theory that has been approved and then what we have again is a question of balance of power which might lead to another war.”
Nixon: The point is this: we fought the war on a united basis. In one sense, a very important sense, this is still an aspect of fighting the war. We are trying to disarm Germany’s hidden assets. Our top representatives, General Eisenhower and General Clay, for example, felt that we had to do this on a four-power basis, that we had more power if the four of us were united and going in together for these assets ... This operation is now being undermined on a three-power basis by secret cables, by an exchange of plans and schemes to put it on a three-power basis and to exclude the genuine four-power operation.”
Chairman: “No. I disagree with you on that. Isn’t it in the furtherance of that policy which was quite prevalent in Europe immediately after V.E. Day that England and France and the United States would line up against Russia ... ?”
Nixon: “Of course it was.”
Chairman: “That is all one heard, that they must get together. Isn’t that the dividing line, immediately set up in that division of external assets? That is the first division that you get into. The other steps follow on naturally.”
Nixon: “This unwarranted and diligent effort to disunify the four powers leads to a profound suspicion that it is being sought by at least some forces in the United States State Department and in the British and French Foreign Offices who are sympathetic to the creation of a Western bloc versus the East.”
Chairman: “The thing that worries me about this is that you started this on a four-power basis and it looks to me as if this is the first step to divide it into two opposing camps.”
Nixon: “I don’t know whether it is the first step. It certainly is a step.”
Chairman: “It is a step in that direction.”
Nixon: “Yes, sir.”
Chairman: “Which disunites the United Nations.”
Nixon: “That is my judgement,”
Chairman: “It would make the United Nations an impotent organisation.”
Nixon: “It is in that direction; yes, sir.”
If Chairman Kilgore seems to have laboured the point in this investigation about the results of splitting the External Assets organisation, he should at least get full marks for his foresight in judging the trend of events from this one incident. His predictions were one hundred per cent. correct. He has got on the record for all to see (who care to look up these reports in Washington) the genesis of the split in Germany and the disruption within the United Nations as early as 1945.
There were scores of General Drapers and Sir Percy Mills scattered in strategic posts throughout the British and American control commissions. If the disruptive activities were not originated in Washington and London, their every action and interest lay in splitting the Allies and preserving German heavy industry intact as a safe field for international investment and a strategic reserve in a future war against the Soviet Union.
Some day the minutes of Control Council and other four-power meetings will be published, and a shocked world will see how lightly and cynically the hopes for unity and co-operation were destroyed by the industrialists and bankers who were made the guardians of our post-war hopes.
For a socialist English government to place a Birmingham industrialist in charge of a key division to co-operate with the Russians to destroy German trusts, root out their buried gold and carry through the socialisation of key industries in many of which good Birmingham capital was involved – this was a gross betrayal of the British electors. Sir Percy Mills went back to England to become Chairman of the Birmingham Chamber of Commerce.
Sir Percy was succeeded by Sir Cecil Weir, former president of the Glasgow Chamber of Commerce, director of Schroeder, Weir and Co., a firm of Glasgow shipbuilders. He followed faithfully in the paths laid down by his predecessor.
The Dillon Read team of Forrestal and Draper was later removed from influencing German affairs, when Forrestal, as Secretary for Defence, went mad and committed suicide, and his assistant Draper went back to work for his firm in its own offices, instead of acting as its agent in the U.S. War Department.
Forrestal was replaced by Mr. Louis Johnson, who also has interesting commercial ties with Germany. At the time he was appointed Defence Secretary in 1949, Johnson held two directorships in I. G. Farben subsidiaries in the United States, as well as a directorship in the Consolidated Vultee Aircraft company. Vultee produced the billion dollar B.36 super-bomber, designed to deliver atom bombs to Russia from any point in the world. Johnson, in other words, had a direct financial interest in the preservation of the German trusts and a direct financial interest in World War III.
A glance at Johnson’s record shows he did well enough out of World War II. Johnson was involved with the J. Henry Schroeder Banking Corp., the international banking firm which helped finance German heavy industry, particularly the steel industry and I. G. Farben, in the 1920s. The London branch of Schroeders bought into American aviation companies in 1937, through a U.S. finance broker, Henry Emanuel. For some time the Aviation Corp., in which Schroeders invested, showed no dividends, and the London office became impatient.
In 1939, according to correspondence since published, the New York branch of Schroeders sent a comforting report to London, as follows:
“I certainly hope that they (Henry Emanuel – Author) have as good an ‘in’ with Assistant Secretary of War Johnson as they seem to have, because if they do, he will certainly find a means of giving them some share of the armament orders ...”
Emanuel had a good “in” with Johnson, apparently, because the orders soon began to pile up. Vultee, one of the subsidiaries of Aviation Corp., netted eighteen million pounds worth of contracts within 18 months of the New York report to London. The Vultee plant payroll jumped by 600 per cent. in 1940 alone. When Johnson left the War Department in 1943, Emanuel appointed him as director of Consolidated Vultee and helped him to two more directorates in General Aniline and Film and a sister company, both subsidiaries of Germany’s I. G. Farben. A few months after he left the War Department, Johnson in his new job at Consolidated Vultee received the first orders for the billion dollar B.36 from his replacement at the War Department, Patterson. Patterson later had to face a Congressional Committee called to enquire into the scandalous waste of money in building the B.36. He admitted to irregularities and violations of procedures in placing the contract with Consolidated. Patterson was well rewarded, however, by a directorship in the New York branch of Henry Schroeder and Co.'s banking house when he too left the War Department.
Back at the Defence Department again, Johnson now has almost unlimited powers in spending U.S. public moneys, allotting munitions contracts.
It only remains to add that the British economic adviser, Sir Cecil Weir, is a partner and director of Schroeder and Weir’s Glasgow Shipbuilding Co., an affiliate of the Schroeder banking house, which represents German governmental and heavy industry interests in London, to complete the alliance between British, American and German capitalism – an alliance with its agents in key posts in Washington, London, and Berlin. Allen, brother of John Foster Dulles, is also the legal adviser and a director of the New York branch of Schroeder and Co. With John Foster Dulles scheduled to take over as Secretary of State after the expected defeat of the Truman administration, the alliance would continue its activities, to save the German trusts, no matter what administration was in power.
Fortunately for the record, American officials are in the habit of talking much more freely than their British opposite numbers. Much that used to lie within the realms of “secret diplomacy” has come out into the open since the American amateurs have taken to running affairs in Europe. There was a lunatic fringe in both British and American headquarters in Berlin which hoped that the new war would be provoked any day. The British in general kept quiet about their plans, but not so the Americans. After the first couple of martini cocktails, they talked openly – and sometimes in front of German politicians, whom they hoped to impress or correspondents whom they hoped to win over to their side. That wasn’t very wise.
The Germans made the mistake of thinking that this sabre-rattling came straight from the White House; that it was a reflection of American public opinion; that soon their estates, factories, lost jobs and lost territories – not to mention their uniforms – would be restored to them by force of arms. And the correspondents – they sometimes made notes for future reference.
Mr. Richard (Dick) Scammon was one of those who believed in taking everybody into his confidence about the plans of the U.S. War Department – at that time managed by the unfortunate Forrestal, who was soon to lose his reason. Scammon was in charge of Political Parties in the Civil Affairs Administration (approximately Ministry of the Interior) of American Military Government. I have had many conversations with him, sometimes socially, sometimes in his office. The most memorable discussion was at a luncheon attended by Mr. Joseph Alsop, columnist of the New York Herald Tribune, a chief of Administration in the Soviet Zone (since fired) and several other prominent German politicians.
Mr. Alsop was full of strength through joy of the U.S. monopoly of the atom-bomb that day, and predicted cheerfully that Russia would be knocked out in a very short time in the coming war – it was late 1947. I was silenced with the hors d'oeuvres – as the only Britisher present – for offering the view that the English people did not want to get involved in another war for the sake of Germany or Berlin; for suggesting that however much the English liked their American cousins, they did not fancy the idea of an American occupation of England – or the conception of England as a “static aircraft carrier” with the English people having no more independence than natives on the island of Guam. I felt I could even voice the opinion of some British Conservatives that Hitler had promised to destroy Bolshevism in Russia and instead had brought it half-way across Europe, and that American threats to drive it back from the Elbe made honest capitalists shudder lest they should bring Bolshevism to the English channel, if not further.
I was asked with some fierceness if the English had turned “yellow,” if England, was preparing another “Munich.” While I meekly dealt with my soup, Mr. Scammon and Mr. Alsop mapped out the grand strategy, brushing countries and populations aside with a flick of the serviette as if they were crumbs.
“How can the Russians move across Europe when they think of warfare in Napoleonic concepts, with horse and cart transport and logistics reckoned in terms of hay for their horses?” asked pundit Alsop with bitter scorn. “Anyway, we don’t have to worry too much about how the Russians spread themselves over the land-mass of Europe. We have been through all this with the Japanese. There were some pessimists who felt we would be fighting the Japanese for generations, just because they were spread all over Asia. But my point of view – the view that Washington eventually adopted, too – was that you hit them in the home base, right on the island itself. Hit them in the head, stab them in the heart. The limbs and roots will die of their own accord. That’s what we did with Japan. And it worked. That’s what we do with Russia. Drop that bomb on their big cities and how long will they last? What’s the good of their armies in France, Italy or anywhere else in Europe, once their production and nerve centres are knocked out?”
I ventured to suggest that Japan had already been beaten in the Pacific when the bomb was dropped; that the Soviet Army immediately smashed Japan’s elite Kwantung Army in Manchuria; that her industry was conveniently concentrated in a few-score miles, which laid her wide open to bombing of any sort; and that as far as Russia’s Napoleonic concepts went, the Soviet Army made Hitler’s “blitzkreig” look like snail’s progress when they moved more men across Europe than America even sent abroad in World War II. However, I was demolished along with the Soviet Union’s armies, and Messrs. Alsop and Scammon continued to lay down the larger, global strategies. Scammon, who was often a mouthpiece of Military Government, was the U.S. official in closest touch with German political leaders, so there is no doubt they were kept informed of his views.
“The hell of it is,” complained Scammon, “that the State Department is always six months behind us. They have only just now accepted our demand to set up a separate West German state. We have been all set to go on that for more than six months. They keep holding us back on the most stupid technicalities. Now they’ve accepted the idea of a separate state, of course, we’re ready to go ahead with the Peace Statute.”
This discussion took place a few weeks before the decisive Council of Foreign Ministers meeting in London, late November, 1947. Mr. Marshall torpedoed the meeting so that the plans for the separate state could be rushed through without further delay.
“With the Peace Statute signed,” continued Scammon, “we can make Germany an ally. We’ll have a seventeenth nation in the Marshall plan with its heavy industry and 44 million more people on our side.” (The French were still chary of throwing their zone into Bizonia at that time – Author.) “But the State Department’s holding us up. We’re losing precious time. We should be all set to go in another few months.”
“You mean by the time the State Department has accepted the idea of a separate Peace Treaty, you will be all set to ... ?” and I didn’t even finish the sentence.
“Well, of course, we’ll be ready to go.” Scammon, who is an enormous man with a boyish, rosy, fat face, smiled at me as one dealing with a child. “I should say we’ll be ready to go. As a matter of fact, one of my last jobs has been drawing up a paper on our occupation policy for the Soviet Union.” And the self-fancied future Gauleiter Scammon went on to discuss seriously how the collective farms and Industrial complexes would be handled. On the whole, he thought the farms could be left pretty well alone. It was the most economical way of farming, after all, in accordance with modern American methods. But industry? It would have to be – of all words – decartelised.
One could just see Standard Oil, General Motors, Bethlehem Steel, following the Scammons as Krupps and I. G. Farben had followed the armies of Hitler, their appetites whetted by the schemes of somebody in the War Department whose directives Scammon was following. It seems there was more than one certifiable lunatic like Forrestal there at that time. If all this seems fantastic and was fantastic, it is a reflection of something that was real and dangerous. Scammon is a great bullying playboy, in charge of German political parties, an egomaniac who fancied himself as a prime political and military strategist. But the views he was expressing were not his own. They were the views, too, which were being handed down to German politicians to encourage them in their arrogance towards the Russians. Herr Stadtrat Reuter was there that day, drinking in the Scammon poison and already seeing himself re-installed as Gauleiter of the Volga Germans. A discredited Christian-Democrat leader was also there. Small wonder that the German puppet politicians shouted their insults and threats to the Russians.
On another occasion, in the presence of a shocked, senior British official, Scammon expressed himself on the manpower necessary to beat the Russians. “Of course, we’ll have to mobilise the Germans,” he said. “We have the nucleus of a very good army in the industrial police in our zone. Best foot-soldiers in the world.” Those were not the sort of things to discuss before a newspaper correspondent – as the scandalised British official knew very well.
Mr. Scammon believed very firmly in the “preventive war.” “I will be in Switzerland myself,” he said, and when the future Mayor of Berlin, Reuter, said he hoped a place would be found for him “on the last train out of Berlin,” Scammon grinned and said, “Maybe, even in the second last train.” After the events in Czechoslovakia in February, 1948, Scammon was chosen by U.S. military government to broadcast to the Czechs to buoy up the hopes of the dispossessed and opposition. He begged them to “hold on a little longer.” The hour of “liberation” from the “Red Nazis” was at hand, he promised.
Mr. Scammon’s views were not a result of his own peculiar mental and political outlook. They were an extreme and energetic but faithful reflection of the views of many of his superiors.
In December, 1948, together with my colleagues Leo Muray of the Manchester Guardian, and Peter Sturzberg of the London Daily Herald, I interviewed some members of the Armed Services Committee of the United States Congress. They arrived in Berlin as part of a protracted European tour. The chief of the Committee, Congressman Short, a Republican, had distinguished himself in Frankfurt by telling correspondents that his solution for the blockade of Berlin would be to send a couple of squadrons of B.29’s loaded with atom bombs and drop them on the Russians to make them “see reason.” This sort of talk was known as “pepping up the morale of the Germans.”
We missed Congressman Short but managed to see two of the committee, Congressman Bridges and Congressman Paul W. Shafer, of Michigan. We buttonholed them as they were going into dinner at Hanag House, the hotel where Very Important Visitors were accommodated in the U.S. sector of Berlin.
“Well, gentlemen,” said Mr. Bridges after introductions had been made and he had satisfied himself that we all worked for respectable newspapers, “I don’t know that there’s very much we can tell you, but shoot away.”
It so happened that at that time there was a great gathering of official bigwigs at U.S. headquarters. It had doubtless been planned some weeks ahead and was meant to have finalised plans for the Republican-led “quick war” which was to have materialised in the summer of 1949. There was General Bedell-Smith, Ambassador to the Soviet Union, who had just arrived from Moscow; Secretary of the Army Royall, from Washington; Secretary for Air Symington, and Clay, both of whom had recently arrived from Washington. The Committee had stopped off in Paris and in Frankfurt. We asked Mr. Bridges if he had seen the generals and “big shots” and what were his impressions.
“There’s gotta be a showdown with these Russians,” he said, “and we’re ready to go right now. Yes, sir, there’s no doubt about it. The longer we wait, the worse things’ll get for us. I don’t mind telling you boys that we were mighty worried when we left the States, but after what we’ve seen and heard over here, we’re not worried any more. We’re ready to go just as soon as they like.”
“Did Ambassador Bedell-Smith think the Russians are getting ready to move?”
“Well, I wouldn’t want to say that. No, sir, he didn’t give that impression, but he thinks there’s gotta be a showdown all right. And better to have it when we’re ready to go, not when they are.”
“But who’s going to do the fighting? Where are you going to get your ground troops from?”
“We’re not too worried about that, not after what we’ve seen down in the Zone.”
“You mean, arm the Germans? You think you can whip the Germans up into an army again?”
Congressman Shafer winked roguishly at his companion. “Now, I don’t think we want to say anything about that, do we?” And he answered his own query. “No, sir, I wouldn’t want to tell you anything about that. Of course, you may be sure that’s one of the problems we’ve discussed out here. When we get back to the States we’ll draft a report and make certain recommendations to Congress, but I wouldn’t want to say what those recommendations would be.”
“General Halder, the former Chief of Staff of the German Army, recently made a statement that he was in touch with former officers, and could get an army together in no time. Do you think that’s correct?”
“Why, certainly. No problem at all. They’ve got the raw material down there all right. But that’s not the important thing right, now. First we’ve got to get German industry going full blast, and it’s well on its way in that direction now.”
“The French have expressed some fears about this revival of German industry; about building up a strong Germany as a base for war. Even General de Gaulle made a pretty strong speech about that a few days ago. He said very plainly that France didn’t want a strong Germany. Did you have a chance to go into that aspect while you were in Paris? Won’t you have to count fairly heavily on France if this ‘showdown’ comes about?”
(De Gaulle made his speech out of chagrin over the results of the U.S. Presidential elections. There seems little doubt that John Foster Dulles, a great admirer and friend of de Gaulle, promised the latter that, in his role of Secretary of State in the new Republican Congress, he would see to it that Germany industry was trimmed back. Dulles was in favour of transferring much of it to France, even to Spain. Correspondents were specially sent to Germany to gather material about the vulnerability of German industry in case of war with the Russians. Long, inspired articles about this began appearing in the Republican press, suggesting that the industrial base for World War III be shifted further west, if possible behind the Pyrenees. It was good propaganda to bring Franco officially back into the fold again, and of course it would have been a trump card for de Gaulle, who Dulles was confident would soon take over in France.)
At this last question the roguish look came back into the face of the Deputy Chief of the Armed Services Committee – a look which said: “If only I could tell you poor dopes what’s actually going on!”
“You boys,” he said, “can be sure we’ve taken all that into consideration. The French are being very awkward, that I won’t deny. But we figure we can do the job without them. Let them stay out of it. As long as they stay neutral. That’s all we ask. Then they can stay right out of it as far as we’re concerned. Won’t make a bit of difference. At the moment they’re making things awkward by saying “No.” Just let them stay neutral. Don’t let them come in with us and not against us. Just stay quiet and we’ll do the job all right.”
It was a front-page story in the French press next day, as the Armed Services Committee were blithely continuing their trip to Rome, to see what contribution the former Fascist armies were prepared to make. There was a mild uproar in the French parliament, but the whole thing was dismissed as the ravings of a garrulous team of Congressmen, talking out of turn. And so they were. One could have dismissed the whole thing as a product of their war-fevered imaginations, had it not been that they were speaking to us just after they had been in conference with top executives of the U.S. Armed Forces, with the C.I.C. Germany and the U.S. Ambassador to Moscow. The views they were expressing could only have been the reflection of the Royalls, Symingtons and Clays.
The congressmen had left the United States before the elections. They were sure of a Republican victory; Republicans were even in a majority on the seven-man committee. They were counting on big business and the generals being even more firmly in the saddle than under Truman. They had not at all reckoned on the electors expressing their will for peace, and returning the less belligerent of the two parties to power. But if leading congressmen barked like that when they came to Germany, one could understand the pro-war, anti-Russian yelpings of the West German politicians.
I tested out the committee members’ views on a French acquaintance of mine who occupied a very high position in the French administration in Germany. He confirmed that the French were asked for a straight “yes” or “no” as to whether or not they would fight for Berlin. He said the French answer was a very definite “no,” and after the French reply there were equally decided “noes” from the Benelux countries. The British reply was a “Yes” with some qualifications.
(This took place in the days when General Clay was floating his proposal to send an armed task force up the Helmstedt road to “bust its way through the Soviet Zone and the blockade to Berlin.” This would have meant at least a shooting incident, if not something graver, with the Western Allies clearly the aggressors. The British were not prepared to support such a project with one armoured division in Germany, which could not have landed one tank in Berlin if the Russians decided to defend their zone only with tank-traps and land-mines. General Clay, according to American reports, was recalled to Washington and reprimanded for his proposal.)
The reasoning which prompted such projects, as explained to me time and again in early 1949 by incautious American officials, was something like this:
“There has got to be a showdown with the Russians. Why let them pick the time and place? Much better that we decide that. We can’t just say we’re going to start a war and run it that way, because Congress won’t let us and Congress has to approve an act of war. In any case we can’t get the other countries in Western Europe to come in on a straight-out preventive war. The last Paris session of the United Nations showed how nervous and scared they all are. But we reckon if we get the thing started, no one will be able to back down. If a shooting war starts right here in Berlin, Congress will have to back us up, and once we get stuck into it, the countries of Western Europe will have to get in too – if only to defend themselves. Are we ready for a war? Hell, that’s not the point. The important thing is to get it started. The Air Force, 15 German divisions, and the atom-bomb can carry the ball long enough for us to get ready. We didn’t get ready last time till we had Pearl Harbour to give us a kick-off – we’re gonna need the same thing this time. That’s the reason we mustn’t fall for any Russian tricks or compromises that might look like liquidating this Berlin situation.”
If one pointed out that there were no signs of Russian preparations for a “show down,” no mobilising of troops, no troop-movements in Eastern Europe, no building of airfields, and above all no psychological preparation in the Russian press, absolutely no war propaganda, the reply was: “All the more reason to hit them now, while they’re unprepared. Why wait until they are ready? Catch them with their pants down, like we were caught in Pearl Harbour.”
I know there are many Americans who believe that the war hysteria of 1948 and 1949 was built up artificially in the United States to increase the allotments of the various branches of the armed services, and not with any real intention of going to war. But the intentions were real enough in Berlin.
The Berlin planners, with strong supporters in Washington, had it calculated very neatly that the shooting war would start in June or July, 1949. The enthusiasm died away after the Republican defeat in the elections, and, one by one, the more rabid of the war enthusiasts were removed from office. It would not have been beyond the imagination and scruples of some of the lunatic fringe of war enthusiasts to have rigged an incident, to have had an air-lift plane or two shot down and blame the Russians. There were enough unemployed former Luftwaffe pilots, or even White Russians, to take up a reconstructed Russian Yak and create a Sarajevo in the Air Corridor to Berlin. I know that such projects were discussed.
Fortunately for the world at large, the Russians kept steady nerves during the crisis period and the months of the air-lift. They kept within their rights, but did not respond to provocations which might easily have started the “hot war.” They warned British and American planes they would be forced down if they strayed away from the Air Corridor across the Soviet Zone, but otherwise they did not interfere.
At one period, the Russians listed a number of flights by military planes, including jet-fighters, over large areas of the Soviet Zone, from the Baltic Sea to the Czech border. They gave the times of the flights and, where they existed, plane-markings and numbers. They issued a warning that planes in these areas in future would be forced down by Soviet air-patrols. The British hastily said: “These are not our plane-markings. In any case, our pilots are good navigators and would not stray so far afield.”
The unauthorised flights ceased, however, as from the day of the Russian warning.