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Gertrude Blackwell & Henry Judd

Post-Stuttgart Germany

Rival Strategies of the Occupying Powers

(February 1947)

From The New International, Vol. XIII No. 2, February 1947, pp. 37–40.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

Yesterday’s partners in war are stalking one another. The enemy’s safe was cracked, the door blasted open and a preliminary division of the vast loot took place. But much remains, including the safe itself. The oaths and promises of bygone days are discarded: pledges of eternal fidelity and friendship dissolve in the acid of distrust and growing hatred. Hitler is gone; his principal associates are gone. The partners in the democratic crusade stand face to face – and how revolting they find each other!

“Mr. Byrnes” speaks “in the role of American protector of Germany,” according to Mr. Zhukov of Russia’s Pravda. Russia refuses to “carry out the Potsdam accord,” is the counter-accusation of Mr. Byrnes. England, most anxious to end the Potsdam accord by any expediency, supports the Byrnes accusation loudest of all. The French, glancing up a moment from their concentrated task of plucking the last shred of meat from the bare bones of their section of Germany, wring their hands and mourn the growing mutual distrust. The partners stalk each other on the soil of Germany, knives sharpened and muscles tensed. The war ended one and a half years ago. The trend in Germany has been reversed, something not difficult to have foretold. The object of this article is to examine that reversal.

Two unheralded announcements indicated how clear had been the reversal in policy, particularly as concerns America and its western zone of Germany. The Army of Occupation announced it is considering the question of turning over surplus military materials (trucks, jeeps, tractors, bridges, steel, rolling stock. etc.) to the German occupation government. The value of this material, announced as one billion dollars, could hardly be paid for by a bankrupt, stagnant Germany. Therefore, it was clear that a possible loan to Germany was being considered, meaning the opening up of a billion dollar credit to Germany’s account. This has now been confirmed. Secondly, the Reconstruction Finance Corporation announced on October 7, its intention to send an economic mission to “study ways of reviving German industry sufficiently to enable the American zone to repay in exports what it is currently receiving in imported goods essential to its survival.” The primary objective of the twelve-man commission will be to “assist in the revival of the zone’s economy.” Quite a different tune from the proud boast of General Eisenhower, in October 1945, that German industry in the American zone had been reduced to “10 per cent of its capacity”! [1]

The Potsdam Agreement had marked the peak and highest possible point of cooperation between the Allies of yesteryear. Behind its imperialist façade, a pseudo-legal basis was provided for a common policy of outright thievery, plundering and pillage. The four conquerors of Germany shared, to the greatest possible extent, in a parcelling out of the greater portion of Germany’s remaining liquid wealth. Each power, of course, sated his lust in his own unique manner, as has already been described in our magazine. (cf. The New International, May and August, 1946.) Once this process had been completed, the appetites of expanding rival systems necessarily took the upper hand and an entirely contrary process began. We are now in the earliest stages of this contrary process.

Opposition to Potsdam Terms

The first rumblings against the Potsdam Agreement to cut down and rigidly control German industry came from the British, who saw the loss of their best Continental customer, as well as an indirect but equally dire effect upon the small nations of Western Europe and France. The more positive aspect of Potsdam, the treatment of Germany as an economic unit by the Four Powers, never went into effect. Practically speaking, this was due to the heavy milking by Russia and France which excluded any fulfillment of the Potsdam terms. The lack of raw materials in the American zone (coal, in particular), and a similar lack in the British zone (due to French insistence upon getting the entire output of the Ruhr mines) made these two Powers especially favor and advocate the carrying out of some form of German economic unification. But, for some time now, it was dear that nothing would come of this, except on an entirely new basis. As long back as 1944, Russia had expressed its negative attitude toward common economic plans by refusing to join the Emergency Economic Committee for Europe, an outfit created by the Allies to organize a clearing house in the British zone for exports and imports to a defeated Germany. Early in 1946, the British discovered they were losing 80,000,000 pounds sterling ($320,000,000) per year, in order to maintain the minimum living standards set for their zone. This was an added compulsion to their desire to liquidate Potsdam and its stagnant consequences, replacing it with a new and more satisfactory accord.

Any effort to draw up plans and carry out the economic clauses of Potsdam led to nothing but wrangling and dispute. For example, General Clay, head of the American lone, insisted that complete free trade exist throughout Germany, and that the proceeds of any exports should go to Germany as a whole. When Russia rejected this proposal, he suspended the shipment of dismantled plants to Russia (as provided in the Potsdam Agreement), announcing that shipment would not be resumed until the Four Powers “agreed to treat Germany as an economic unit.” The breach was widening.

On July 7, 1946 the British authorities piously announced that their obligations under Potsdam had been met, but that – in accordance with their prior declaration of alarm (June 12, 1946) that their zone was in danger of complete economic collapse – they were in complete agreement with the American zone commander’s statement that removal of all economic assets from Germany, as reparations, must be halted. All this was preliminary to the opening of negotiations for the merger of the British and American zones, an action now officially completed. Within less than one year the Potsdam Agreement was deader than the proverbial dodo. The Molotov speech at the Conference of Foreign Ministers in Paris, followed by Byrnes’ counter-speech delivered at Stuttgart, formalized its interment, and signified that a new stage had been reached one of open tactical and strategic struggle for mass support from the German people, as an essential (even if long-range) step in the preparation of war. Molotov, leader of Stalinist imperialism abroad, publicly vied with Byrnes, leader of the Anglo-American imperialist bloc, for political control over the whole of Germany and for allies. The actions and policies pursued by the new rivals are today mere aspects of this general strategic aim.

The most practical and clearest step forward in the Anglo-American bid for mastery of Greater Germany has been the unification of the British and American zones along economic and now political lines. This unification is based on a decentralized federal scheme, with central controls through top Allied agencies. The apparatus for a thorough coordination of the economic life of Western Germany has been set up with the aim, as expressed by the American general, Draper, of creating u a self-respecting, self-supporting Germany, able to pay for its food imports in spite of the loss of rich agricultural territory. The small French zone, minus the Saar, will undoubtedly be squeezed into joining this American built federation of western Germany. The process of restoring the entire area into a unit of world capitalism, confronting the Russian empire, will proceed apace.

The Capacity of Pre-War Germany

It is often stressed that Germany, lying at the heart of Europe, dominates the Continent and that the direction of its economy and the political action of its people are, in historic terms, decisive for Europe. This is true today as before, when properly understood and qualified. With this basic struggle between Anglo-American imperialism and Russian imperialism now on, it is worth reviewing the economic and social resources of the country as a whole, to obtain a clearer picture of what is at stake.

The population of Germany in 1939 (less Austria and the Czech Sudetenland) was 60,000,000 living in a 181,360 square mile territory, or a density of 382 Germans per square mile. [2] This Germany was a vast empire of modern production, second only to the United States, that determined the direction and trend of European economy. Basing themselves upon rich natural resources and basic materials, powerful industries in chemicals, machine tools, synthetics, metals, building materials, etc., were built up. Complex manufactured products, rivaling those of the United States, were sold on the international market – ball bearings, tractors, cars and trucks, electrical equipment, alloys, etc. Clearly defined areas of industrialization – the Ruhr-Essen valley; the Saarland; the Berlin area; the lower Silesia regions – dominated the country. Food was the one essential item in which national Germany was weak. Although it employed the most advanced agricultural techniques to produce enormous quantities (e.g., five and one-half million metric tons of wheat; fifty-six million tons of potatoes; seventeen million tons of beet sugar in 1939), the country had an annual food shortage of approximately 20 per cent, which it had to import from abroad. Food imports averaged about 33 per cent of total yearly imports.

German economy had, naturally, basic ties with the world market, particularly with the United States, England, Argentina, France and the smaller countries surrounding Germany proper. In 1938 German imports amounted to five and a half billion Reichmarks (two billion dollars, if we accept the forty cents valuation of the RM at that time), as against exports of five and a half billion Reichmarks. Imports included wheat, butter, coffee, fruits, raw cotton, wool, oils, some coal, copper, timber, etc. – material for the German mills. Exports were characteristic of this industrial nation-coal, silks and rayons, woolen and cotton goods, leather, paper, dyes, pharmaceutics, glassware, iron, steel and copperware, electrical equipment, etc. In examining the separate zones we shall detail more about the productive capacity of Germany. A solid floor under this vast productive apparatus was provided by 185 million tons of coal, twenty-three million tons of ingot steel, and ten million tons of iron ore (1939).

Capacity of the German Zones

The rush of the Allied forces across the face of Germany when Nazidom fell had other purposes beyond that of sealing the victory over Hitler. Besides assuring against any possible revolutionary efforts, or the emergence of “dual power” tendencies by anti-fascist groups, the victors were anxious to guarantee occupation of territories allotted by long, prior arrangement. So delicate was the balance of forces that those powers that overran their allotted territories (French and Americans) were obliged to withdraw at a later stage. Then was created the sealed zonal system into which Germany is, still, substantially divided. The character of each zone expresses more than the geographic-tactical proximity of its particular occupant; it expresses to a greater degree the economic and social character of the occupant – above all, what that occupant is after.

The zonal territorial and population division is as follows:

American Zone


42,600 sq. miles


17,000,000 Germans

British Zone


37,000 sq. miles

23,000,000 Germans

French Zone


17,000 sq. miles

  6,000,000 Germans

(Western Zone Total)


96,600 sq. miles

46,000,000 Germans

Russian Zone


46,000 sq. miles

20,000,000 Germans

In general, each zone had the following economic capacity and comparative standing before the collapse:

The Russian zone (if we include the areas now occupied also by Poland – a legitimate inclusion since the Russian system merely “farms out” these territories to the equally occupied and equally unhappy Poles), was first among the zones in agriculture, and second in industry. It created one-third of the national income, and its population included 40 per cent of Greater Germany’s agricultural population, and 33 per cent of its workers. In 1936, this area was self-sufficient in food, and produced a 10 per cent surplus for the rest of Germany. It has the greatest proportion of cultivated land and, with the inclusion of Saxony and Thuringia, was a mighty productive industrial unit. Although it was dependent upon the Ruhr for raw materials, it had chemical and light metal industries, iron and steel finishing industries and electrical goods industries. Its total pre-war production was 20 per cent of the German total. Foods grown (in surplus) included rye, wheat, harley, oats and potatoes. There were valuable hard coal resources. Altogether, this zone was rich, productive and well-balanced.

The British zone was first in industrial productivity among the four zones, and third in agricultural production. This zone had 30 per cent of total German resources, and gave forth 30 per cent of total industrial production. It was, as is well known, the industrial heart of Germany, as the following testifies:

Production of mineral ores




60% of total

Production of coal


75% of total

Production of steel


75% of total

This area had the greatest food deficit of all zones.

The American zone was second in agriculture, and a poor third in industry. It produced 20 per cent of the pre-war total, had little heavy industry (virtually no steel or metal fabrication), and was entirely dependent upon the Ruhr for metals and semi-finished goods. Consumers’ and commodity manufacturing (textiles, chinaware, toys, leather goods, novelties, etc.) were the principle manufactures. Agricultural productivity was low and backwards, with an exportable surplus only for dairy products.

The French zone was a dismal fourth in both agriculture and industry. To industry, it contributed a bare 10 per cent of the total production. But it had a significant industrial concentration, in the Saar area, and produced 13 per cent of the total steel made, along with 7 per cent of the hard coal mined. In some pre-war years, the Saarland [800,000 population] yielded fifteen million tons of coal. It was second only to the Ruhr and Silesia as a center of industrial production.

To the above we must add the economic loss that Germany has incurred through the forceful seizure of territories by Poland. First, it has meant the expulsion of no less than six or seven million Germans, and their imposition as a pauperized mass upon the other zones. Primarily agricultural in nature, this zone grew 37 per cent of the rye crops, 31 per cent of the potatoes, 29 per cent of the sugar beets, 25 per cent of the barley, 34 per cent of the oats, 20 per cent of the wheat, etc. It had 13 per cent of the cattle and 20 per cent of the hogs. About 25 per cent of German food production was lost when this territory was handed to the Polish Stalinist government.

To this must be added the approaching outright loss of the Saarland by French economic annexation, an event that can safely be presumed during the course of negotiations for a German treaty. In some pre-war years, the Saar Basin yielded fifteen million tons of coal, and it has an estimated nine billion ton coal reserve at present. This area, a 750-square-mile region, ranked third among the Nazi wartime centers of industrial production, and it adjoins the famous Lorraine iron ore fields.

The first essential for Anglo-American imperialism in car rying on its political, diplomatic and economic war against the Russians was to merge their respective zones. This formality has now been achieved, but its working out lies ahead. In the merged zone, American imperialism will, of course, dominate and upon its actions will depend the extent to which a real economic revival takes place. The first positive action taken by America toward restocking German industry was the shipment of 150,000 bales of raw cotton to textile plants in March 1946. In March it was reported that 5,500 plants were under operation in the American zone (as compared with a January, 1946 low of 1,500), but it must be understood that this figure includes small mills, tiny shops producing luxury-export items (leather goods, chinaware, etc.) and hardly represents a serious economic uplift. The same skepticism must greet the report released (December 3, 1946) by the Director of the Economic Division of the zonal military government which announced that industrial production in the American zone of Germany had doubled in the past twelve months! This gentleman must have studied his statistics in the Stalinist Five-Year Plan reports, where an increase from 2 to 10 is known as a 400 per cent gain in production! The same report admits that the October, 1946, figures must register a gain of 60 per cent still, in order to attain the level agreed upon at the Berlin Central Economic Council for greater Germany. Furthermore, the director announced that:

“Although the level of production has risen every month since January (that is, from zeroH.J.) the coming winter months will undoubtedly bring a seasonal decline. This winter will perhaps be more difficult than the last.”

The intention of the American RFC to help finance a partial revival of German industry must be clearly understood in the context within which it is placed today. The RFC intends to advance funds for the purchase of raw materials and the products manufactured as a result (china, chemicals, light machinery, cameras, optical goods, toys, etc.) will be exported, as a means of reducing the high occupation costs. At present, it is clear this revival is strictly intended to be limited in character, controlled by America and reduced to bare essentials. There are many factors involved that will determine its extent and duration – political relations with Russia, and the extent to which negotiations for a German treaty advance; the needs of American exporters for revived markets in Germany, etc. Nor can it be assumed that the merger with the British zone will proceed without friction. Will America intervene in the announced British intention to nationalize all heavy industry in their zone? How can the American zone answer the real needs of the British, namely, huge quantities of food for its essentially industrial population? The merger is, in effect, a bloc preparatory to a concerted drive to win important concessions from the Russians. The French zone, suffering from the most backward and bureaucratic handling imaginable, plays a negligible role in this issue, although efforts will doubtlessly be made to force the French into the merger, in exchange for the right to outright economic annexation of the Saar.

Trends in the Russian Zone

What are the present trends in the Russian zone? The world is now familiar with the Stalinist technique of plunder, removal and wholesale destruction. But this process is now largely completed – not, to be sure, because of any change in Russian policy but because so little is left in the zone. After the preliminary period of chaotic looting in 1945 came the organized stripping and dismantling in 1946. The removal of plants came in successive waves, the largest being that of March 1946, when 600 plants were shipped to Russia. While production has been higher in the Russian zone than elsewhere (due to the presence of both industry and raw materials), most of what is produced goes to Russia, as “reparations.” The three largest plants in the Russian zone (Carl Zeiss works, Buna works and Leuna works) have about 90 per cent of their products shipped to Russia – the bulk of it as reparations that will be paid for in the future German government; that is, reparations in advance. A sensational report (New York Times, December 5, 1946) described in detail the Russian system of organized companies (or combines) for the systematic looting of their zone. The Russian directors and experts were pictured as “men who could not be deceived; who would not let their plans fail, and who would carry out their orders without worrying very much about the effect on the plant and its workers.” The program of Russian-instituted nationalizations has been completed and behind this façade (a façade, we regret to say, that seems to have particularly deceived the profound thinkers of the English section of the Fourth International – Cf. November and December issues of WIN, their monthly publication), there takes place the open expropriation of the wealth and resources of half of Germany.

“The Russians, according to the report, are gaining vast benefits in that they do not credit Germany for any natural resources absorbed by the combines ... Thus coal, potash and forests and their number taken from nationalized properties go 100 per cent to Russia. Even stocks of coal and potash already produced are not credited, it was said.” (New York Times report, December 5, 1946)

But this fait accomplis by Russian imperialism must now face the test of the approaching Moscow conference for negotiation of German economic unity and a treaty with a future German national government. Can the system created by Russia be made to fit into a unified Germany, or will it disintegrate under the more powerful influences of American and British imperialism? This matter will be discussed in our March issue in connection with the forthcoming Moscow conference.

(A second article follows to complete this study of Germany)


1. The official economic merger of the British and American zones, as of January 1, 1947, has disclosed the extent to which these two powers are prepared to prime German economic life. In 1947, the two powers will make available one billion dollars worth of raw materials and food for purposes of reviving German export trade to German manufacturers. It is estimated that by 1950 three billion dollars will have been invested to place the merged zones on a self-sustaining basis (by Anglo-American imposed standards).

2. Compare with present estimation of 65,900,000 Germans, living in an area of 137,000 square miles or a density of 414 per square mile.

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