Prof.
Anthony Kubek
The Morgenthau Diaries consist of 900 volumes
located at Roosevelt Library in Hyde Park, New York. As a consultant to the
Senate Internal Security Subcommittee, I was assigned to examine all documents
dealing with Germany, particularly ones related to the Morgenthau Plan for the
destruction of Germany following the Second World War. The Subcommittee was
interested in the role of Dr. Harry Dexter White, the main architect of the
Plan.
Secretary of the U.S. Treasury
Henry Morgenthau, Jr. served in President Franklin D. Roosevelt's Cabinet from
January of 1934 to July of 1945. Before Morgenthau was appointed Secretary of
the Treasury, he had lived near Roosevelt's home at Hyde Park, N.Y. for two
decades and could be counted as one of his closest and most trusted friends.
His appointment was clearly the culmination of twenty years of devotion to, and
adoration of, his neighbor on the Hudson. According to his official biographer,
Morgenthau's "first joy in life was to serve Roosevelt, whom he loved and
trusted and admired." /1
The Treasury Department under
Secretary Morgenthau had many functions that went beyond anything in the
Department's history. The Morgenthau Diaries reveal that the Treasury presumed
time and time again to make foreign policy. In his Memoirs Secretary of State Cordell
Hull described it in these terms:
Emotionally upset by Hitler's
rise and his persecution of the Jews, Morgenthau often sought to induce the
President to anticipate the State Department or act contrary to our better
judgment We sometimes found him conducting negotiations with foreign
governments which were the function of the State Department. His work in
drawing up a catastrophic plan for the postwar treatment of Germany and
inducing the President to accept it without consultation with the State Department,
was an outstanding instance of this interference. /2
Actually it was Dr. Harry
Dexter White, Morgenthau's principal adviser on monetary matters and finally
Assistant Secretary of the Treasury, who conducted most of the important
business of the Department. The Diaries reveal that White's influence was
enormous throughout the years of World War II. Shortly after Morgenthau became
Secretary in 1934, White joined his staff as economic analyst on the
recommendation of the noted economist, Prof. Jacob Viner of the University of
Chicago. Then 42 years old, White was about to receive a doctorate in economics
from Harvard University, where he previously had taught as an instructor. He
moved up quickly in the Treasury Department, named in 1938 as Director of
Monetary Research and in the summer of 1941 acquiring an additional title as
"Assistant to the Secretary." Articulate, mustachioed, and nattily
dressed, he was a conspicuous figure in the Treasury but remained unknown to
the public until 1943, when newspaper articles identified him as the actual
architect of Secretary Morgenthau's monetary proposals for the postwar period.
The Diaries reveal White's
technique of dominating over general Treasury affairs by submitting his plans
and ideas to the Secretary, who frequently carried them directly to the
President It is very significant that Morgenthau had access to the President
more readily than any other Cabinet member. He ranked beneath the Secretary of
State in the Cabinet, but Hull complained that he often acted as though
"clothed with authority" to project himself into the field of foreign
affairs. Morgenthau, Hull felt, "did not stop with his work at the
Treasury." /3
Over the years White brought
into the Treasury a number of economic specialists with whom he worked very
closely. White and his colleagues were in a position, therefore, to exercise on
American foreign policy influence which the diaries reveal to have been
profound and unprecedented. They used their power in various ways to design and
promote the so-called Morgenthau Plan for the postwar treatment of Germany.
Their actions were not limited to the authority officially delegated to them:
their power was inherent in their access to, and influence upon, Secretary
Morgenthau and other officials, and in the opportunities they had to present or
withhold information on which the policies of their superiors might be based.
What makes this a unique chapter in American history is that Dr. White and
several of his colleagues, the actual architects of vital national policies
during those crucial years, were subsequently identified in Congressional
hearings as participants in a network of Communist espionage in the very shadow
of the Washington Monument. Two of them worked for the Chinese Communists.
Stated in its simplest terms,
the objective of the Morgenthau Plan was to de-industrialize Germany and
diminish its people to a pastoral existence once the war was won. If this could
be accomplished, the militaristic Germans would never rise again to threaten the
peace of the world. This was the justification for all the planning, but
another motive lurked behind the obvious one. The hidden motive was unmasked in
a syndicated column in the New York Herald Tribune in September 1946, more than
a year after the collapse of the Germans. The real goal of the proposed
condemnation of "all of Germany to a permanent diet of potatoes" was
the communization of the defeated nation. "The best way for the German
people to be driven into the arms of the Soviet Union," it was pointed
out, "was for the United States to stand forth as the champion of
indiscriminate and harsh misery in Germany." /4
Anyone who studies the
Morgenthau Diaries can hardly fail to be deeply impressed by the tremendous
power which accumulated in the grasping hands of Dr. Harry Dexter White, who in
1953 was identified by Edgar Hoover as a Soviet agent. White assumed full
responsibility for "all matters with which the Treasury Department has to
deal having a bearing on foreign relations..." /5 He and his colleagues
had Secretary Morgenthau's complete approval in the formulation of a blueprint
for the permanent elimination of Germany as a world power. The benefits which
might accrue to the Soviet Union as a result of such Treasury planning were
incalculable.
When members of the Senate
Internal Security sub committee asked Elizabeth Bentley, who was a courier
between White and Soviet agents, whether she knew of a similar "Morgenthau
Plan" for the Far East, she gave the following testimony:
Miss Bentley: No. The only Morgenthau Plan
I knew anything about was the German one.
Senator Eastland: Did you know who drew that
plan?
Miss Bentley: [It was] Due to Mr. White's
influence, to push the devastation of Germany because that was what the
Russians wanted.
Senator Ferguson: That was what the Communists
wanted? Miss Bentley: Definitely, Moscow wanted them [German factories]
completely razed because then they would be of no help to the allies.
Mr. Morris: You say that Harry Dexter
White worked on that?
Miss Bentley: And on our instructions he
pushed hard. /6
When J. Edgar Hoover testified
before the Subcommittee on November 17, 1953, he affirmed this testimony:
All information furnished by
Miss Bentley, which was susceptible to check has proven to be correct. She had
been subjected to the most searching of cross-examinations; her testimony has
been evaluated by juries and reviews by the courts and has been found to be
accurate.
Mr. Hoover continued:
Miss Bentley's account of
White's activities was later corroborated by Whittaker Chambers; and the
documents in White's own handwriting, concerning which there can be no dispute,
lend credibility to the information previously reported on White. /7
Morgenthau hit the ceiling
when he got a copy of the Handbook for Military Government in Germany,
which was designed for the guidance of every American and British official upon
entering Germany. The Handbook offered a glimpse of a very different
kind of occupation that Treasury officials were hoping for. Its tone was
moderate and lenient throughout Germany was not only to be self-supporting but
was to retain a relatively high standard of living. Morgenthau wasted no time
in showing the Handbook to President Roosevelt, who immediately rejected
its philosophy as too soft. Impressed by the critical memorandum White had
prepared, the President killed the Handbook and sent a stinging memorandum to
the Secretary of War, Henry L. Stimson, and a copy of which was sent to Hull.
"This so-called Handbook is pretty bad," Roosevelt began, and he
instructed that "all copies" be withdrawn immediately because it gave
him the impression that Germany was to be "restored just as much as The
Netherlands or Belgium, and the people of Germany brought back as quickly as
possible to their pre-war estate." /8
Thus both Hull and Stimson
were put on notice by the President that the State and War Departments must
develop harsher attitudes towards Germany or be bypassed in the formulation of
that policy. According to General Lucius Clay, suppression of the Handbook
eventually had a "devastating effect on the morale of American officials
responsible for disarming Germany." /9
Meanwhile the State Department
and the Joint Chiefs of Staff had earlier completed their own prospectus and
directive for postwar Germany. In the State document there was to be no
"large-scale and permanent impairment of all German industry." /10
ICS 1067, as the military directive was numbered, was unmistakably akin in
spirit to the "soft" State Department prospectus. Moreover, it was in
"harmony" with the Handbook -- that is to say, this draft not only
tolerated but actually encouraged friendly relations between American soldiers
and German civilians. From various inter departmental meetings with State and
War, a new version of JCS 1067 finally emerged. It completely reversed the
spirit of the original draft. It was largely the handiwork of Harry Dexter
White. It is indeed remarkable how the Treasury intervened and eventually got
the State and War Departments to alter their basic policy on postwar Germany.
In the realm of finance, of
course, the Secretary of Treasury would naturally be involved in the postwar
treatment of Germany. But Morgenthau delved deeply into matters altogether
unrelated to economics. The Germans needed psychiatry, Morgenthau told White.
He said he was interested in "treating the mind rather than the
body," and in planning "how to bring up the next generation of
children." It might be wise to take the whole Nazi SS group out of
Germany, he thought, and deport them to some other part of the world.
"Just taking them bodily," he told White, and he "wouldn't be
afraid to make the suggestion" even though it might be very "ruthless
... to accomplish the act." /11
Regarding the punishment of
Nazi leaders, White suggested that a list of "war criminals" be
prepared and presented to American officers on the spot, who could properly
identify the guilty and shoot them on sight. Morgenthau remarked jokingly that
a good start could be made with Marshal Stalin's "list of 50,000" --
a reference to Stalin's vodka toast to Roosevelt and Churchill at the Teheran
Conference. /12
The disposition of the Ruhr
Valley was one of the main topics discussed in one of the many Treasury
meetings. For many years the coal fields of the Ruhr had been essential to the
German economy. The British economist John Maynard Keynes had said after World
War I that the Kaiser's empire was built "more truly on coal and iron than
on blood and iron." /13 Coal was the backbone of all German industry, vital
to her electric power and to her chemical, synthetic oil, and steel industries.
/14 It was Morgenthau's persistent view, therefore, that the Ruhr should be
"locked up and wiped out," and he was positive that the President was
in "complete accord" on this point.
As the discussion proceeded,
White shrewdly intimated that it might be better to place the Ruhr under
international controls which would "produce reparations for twenty
years." This was a straw proposal that Morgenthau promptly rejected.
"Harry, you can't sell it to me at all," he said, "because it
would be under control only a few years and the Germans will have another
Anschluss!" The only program he would have any part of, Morgenthau
declared, was "the complete shut-down of the Ruhr." When Harold
Gaston, the Treasury public relations officer, interrupted to ask whether this
meant "driving the population out," Morgenthau replied: "I don't
care what happens to the population... I would take every mine, every mill and
factory and wreck it." "Of every kind?" inquired Gaston.
"Steel, coal, everything. Just close it down," Morgenthau said.
"You wouldn't close the mines, would you?" inquired Daniel Bell, one
of the Secretary's assistants. "Sure," replied Morgenthau, and he
reiterated that the only economic activity which should remain intact was
agriculture -- and that could be placed under some type of international
control. He was for destroying Germany's economic power first, he said, and
then "we will worry about the population second."
Morgenthau seemed very
confident that the President would not waver in his support of a punitive
program for postwar Germany. Any effective plan, however, would have to be
executed within the next six months, or otherwise the Allies might suddenly
become ."soft." The best way to begin, Morgenthau advised, was to
have American engineers go to every synthetic gas factory, and dynamite them or
"open the water valves and flood them." Then let the "great
humanitarians" simply sit "back and decide about the population afterwards."
Eventually the Ruhr would resemble "some of the silver mines in
Nevada," Morgenthau said. "You mean like Sherman's march to the
sea?" asked Dan Bell. Morgenthau answered bluntly that he would make the
Ruhr a "ghost area." /15
Such was the character of
Secretary Morgenthau's views on the treatment of Germany. Never in American
history had there been proposed a more vindictive program for a defeated
nation. With the Treasury exerting unprecedented influence in determining
American policy toward Germany, the fallacies of logic, evasion of issues and
deliberate disregard of essential economic relationships manifest in the above
conversation were incorporated in the postwar plan as finally adopted.
Furthermore, no paper of any importance dealing with the occupation of Germany
could be released until approved by the Treasury. The State and War Departments
became virtually subservient to the Treasury in this area, normally their
responsibility. /16
At a meeting in the
President's office, Morgenthau and Stimson presented their opposite views.
Stimson objected vigorously to the Treasury recommendation for the wrecking of
the Ruhr. "I am unalterably opposed to such a program," he declared,
holding it to be "wholly wrong" to deprive the people of Europe of
the products that the Ruhr could produce. /17 The Treasury Plan, if adopted,
would breed new wars, arouse sympathy for Germans in other countries, and
destroy resources needed for the general reconstruction of ravaged Europe. He
urged the President not to make a hasty decision, and to accept "for the
time being" Hull's suggestion that the controversial economic issue be
left for future discussion. /18
At the Quebec summit
conference between Roosevelt and Churchill in September 1944, Morgenthau was
asked to explain his plan to the British. Churchill was horrified and "in
violent language" called the plan "cruel and un-Christian." But
Morgenthau hammered on the idea that the destruction of the Ruhr would create
new markets for Britain after the war. He also promised Churchill an American
loan of $6.5 billion! Churchill "changed his mind" the next morning.
/19
Although foreign affairs and
military matters were discussed in depth at the Quebec Conference, neither Hull
nor Stimson were in attendance. The Treasury Department took precedence over
State and War in negotiations regarding Germany.
The effects of Morgenthau's
victory at Quebec were quickly felt in Washington. At a luncheon with
Undersecretary of War Robert Patterson, Morgenthau brought up the Quebec agreement.
Patterson said jokingly: "To degrade Europe by making Germany an
agricultural country, isn't that offensive to you?" Morgenthau replied:
"Not in the case of Germany." /20
Hull felt strongly that
Morgenthau should have been kept out of the field of general policy, and so did
Stimson. When Stimson heard of the President's endorsement of the Treasury plan
at Quebec, he quickly drafted another critical memorandum. "If I thought
that the Treasury proposals would accomplish [our agreed objective, continued
peace)," he wrote, "I would not persist in my objections. But I
cannot believe that they will make for a lasting peace. In spirit and in
emphasis they are punitive, not, in my judgment, corrective or
constructive." He continued:
It is not within the realm of
possibility that the whole nation of seventy million people, who have been
outstanding for many years in the arts and the sciences and who through their
efficiency and energy have attained one of the highest industrial levels in
Europe, can by force be required to abandon all their previous methods of life,
be reduced to a level with virtually complete control of industry and science
left to other peoples ... Enforced poverty is even worse, for it destroys the
spirit not only of the victim but debases the victor. It would be just such a
crime as the Germans themselves hoped to perpetrate upon their victims -- it
would be a crime against civilization iLself. /21
Word of "Morgenthau's
coup at Quebec" leaked to the press with two results. One was that Roosevelt,
because of the adverse reaction, evidently concluded that his Treasury
Secretary had made "a serious blunder." The other was to stiffen
German resistance on the Western front. Until then there was a fair chance that
the Germans might discontinue resistance to American and British forces while
holding the Russians at bay in the East in order to avoid the frightful fate of
a Soviet occupation. This could have shortened the war by months and could have
averted the spawning of malignant communism in East Germany.
How the Treasury officials
were able to integrate basic features of their plan into the military
directive, originally prepared by the Joint Chiefs of Staff and known as JCS
1067, is fully disclosed in the Diaries. White saw to it that many elements of
his thinking were embodied in ICS 1067. Previous directives for guidance of
American troops upon entrance into Germany, which already had undergone six or
more revisions of a stylistic nature, were now brought more in line with the
punitive thinking of Morgenthau and White. A new directive, which called for a
more complete de-nazification, was, with some modifications, the spirit and
substance of the Treasury plan. In the two full years that ICS 1067 was the
cornerstone of American policy, Germany was punished and substantially
dismantled in accord with the basic tenets of the Morgenthau Plan. JCS 1067
forbade fraternization by American personnel with the Germans, ordered a very
strict program of de-nazification extending both to public life and to business,
prohibited American aid in any rebuilding of German industry, and emphasized
agricultural rehabilitation only.
Subsequently, JCS 1067 became
a severe handicap to American efforts in Germany. It constituted what may be
called without exaggeration a heavy millstone around the neck of the American
military government. It gave only limited authority to to the United States
military government by specifically prohibiting military officials from taking
any steps to rehabilitate the German economy except to maximize agricultural
production.
Through various channels,
White had gathered information concerning the kind of policy directives other
departments had in preparation. This he was able to achieve through a system of
"trading" which Morgenthau had initiated at his suggestion. As
Elizabeth Bentley told the Internal Security Subcommittee, 'We were so
successful getting information... largely because of Harry White's idea to
persuade Morgenthau to exchange information." Treasury officials, for example,
would send information to the Navy Department, and the Navy would reciprocate.
There were, according to Miss Bentley, at least "seven or eight
agencies" trading information with Morgenthau. /22
At the Yalta Conference on
February 4, 1945, the question of postwar treatment of Germany was the most
important item on the agenda. The President's conduct suggests the powerful
effect on his thinking of White's masterplan and Morgenthau's salesmanship. On
the major points regarding Germany the President easily capitulated to the
Soviets. Stalin and Roosevelt were in general accord that the defeated Germans
should be stripped of their factories and left to take care of themselves. But
Churchill wished to preserve enough of the existing economic structure of Germany
to permit the defeated nation to recover to some degree.
In his book Beyond
Containment, William H. Chamberlain assesses Yalta as a tragedy of appeasement:
Like Munich, Yalta must be set
down as a dismal failure, practically as well as morally ... The Yalta
Agreement represented, in two of its features, the endorsement by the United
States of the principle of human slavery. One of these features was the
recognition that German labor could be used as a source of reparations ... And
the agreement that Soviet citizens who were found in the Eastern zones of
occupation should be handed over to Soviet authorities amounted, for the many
Soviet refugees who did not wish to return, to the enactment of a fugitive
slave law. /23
After President Roosevelt
returned from Yalta, State Department officials grasped an opportunity to push
through their own program for postwar Germany. On March 10, 1945, Secretary of
State Edward Stettinius submitted for the President's consideration the draft
of a new policy directive for the military occupation of Germany. The prime
movers in this strategy were Leon Henderson, James C. Dunn, and James W.
Riddleberger, the departmental expert on German affairs. They purposely did not
consult with Treasury officials because they knew there would be major
objections from them. The March 10 memorandum was a reasonable substitute for
the rigorous JCS 1067, which was so pleasing to White and Morgenthau. It was
based on the central concept that Germany was important to the economy recovery
of Europe. It provided for joint allied control of defeated Germany,
preservation of a large part of German industry, and a "minimum standard
of living" for the German people. The memorandum had no provision for
dismemberment, and Germany was to begin "paying her own way as soon.. as
possible." /24
When Morgenthau saw a copy of
the State Department memorandum, he became so furious that he immediately
telephoned Assistant Secretary of War John J. McCloy to voice his complaints.
"It's damnable, an outrage!" he exclaimed. "Riddleberger and
these fellows are just putting this thing across ... I'm not going to take it
lying down." The State Department plan, if adopted, would have spelled
complete defeat for Morgenthau and White. "It makes me so mad,"
Morgenthau raged, "I think the President should fire Jimmy Dunn and two or
three other fellows." /25
Several days later, armed with
a memorandum drafted by White, Coe, and Glasser, he hurried to the White House.
He was disturbed to find Roosevelt's daughter, Anna, and her husband, Maj. John
Boettinger, caring for the President, "whose health by that time was
faltering to the point where mental lapses could be expected." Roosevelt
apparently no longer thought that Morgenthau had "pulled a boner"
with his destroy-Germany plan and when Boettinger commented "You don't
want the Germans to starve," the President replied "Why not?"
Morgenthau told White he was worried about Boettinger's attitude. The question
one may ask is did the Soviets know what the American people did not know --
that Roosevelt was close to death and liable to blackouts at any moment?
Morgenthau reported
jubilantly, however, to his "team" that the President had accepted
his plan as "a good tough document." He confided in his diary:
We have a good team, they just
can't break the team... It is very encouraging that we had the President back
us up... they tried to get him to change and they couldn't -- the State
Department crowd. Sooner or later, the President just has to clean his house. I
mean the vicious crowd... They are Fascists at heart... /26
The State Department was
sorely disappointed that the President had rejected their March lath
memorandum. It was a severe defeat for Riddleberger, Dunn, and others who were
advocating a reasonable program for Germany. Morgenthau felt that the new JCS
document should declare unmistakably that the State Department paper of March
10 was officially withdrawn. White asked McCloy and General Hilldring whether
everyone in the War Department would understand that the new document
"superseded" the March 10 memorandum. McCloy assured him that
everyone would be duly notified. White then asked whether it would be perfectly
"clear" in the Army that the Treasury document "took precedence
over and caused the revision of any document contrary to it." General
Hilldring answered there would be no problem here.
A cardinal point of dispute
between the Treasury and the Department of War resided in the question of the
treatment of German war criminals. Stimson advised the President to have trials
rather than the "shoot on sight" policy advocated by Morgenthau.
Stimson believed the accused should have a right to be heard and be allowed to
call witnesses to his defense. /27 Another subject of controversy between the
Treasury on the one side and the State and War on the other was the question of
reparations. The Treasury believed that reparations should be limited to
whatever the Allies could wring out of defeated Germany at the end of the war.
Morgenthau and White were dead set against the old concept of long-term
reparations payments, because such annual tribute would necessitate the
re-building of industry on a large scale in Germany. They wished to make the
Germans "pastoral" and then throw upon them the full responsibility
for taking care of themselves. The World War I application of
"reparations" would result in nothing more or less that the
revitalization of German industrial might. In their thinking this specter
loomed large indeed.
White and his colleagues were
careful not to jeopardize postwar relations with the Soviet Union. They
frequently expressed their fears of Western encirclement of Russia. They
thought that those individuals in the American government who wished to restore
Germany were motivated by the idea that a strong Reich was necessary as a
"bulwark against Russia." This attitude was certainly responsible for
many of the current difficulties between Washington and Moscow. At one of the
interdepartmental meetings a dispute developed over the question of compulsory
German labor as restitution for war damages in Russia. Treasury officials were
boldly advocating the creation of a large labor force with no external
controls. This view was challenged by War, State and other departments as
treating 2 or 3 million people as slave labor. Morgenthau reminded his
opponents that the whole issue of compulsory labor had already been decided
upon at Yalta. "We are simply carrying out the Yalta agreement," he
exclaimed, and anyone who is going to protest "... is protesting against
Yalta ..." It is significant that five months previously, President
Roosevelt had sent a memorandum to Morgenthau to the effect that if "they
[Russia] want German labor, there is no reason why they should not get it in
certain circumstances and under certain conditions." /28
White opined that if the
Russians needed two million German laborers to reconstruct their devastated
areas, he saw nothing wrong with it; it was "in the interest" of
Russia and even Germany that the labor force come from the ranks of the Gestapo,
the S.S., and the Nazi party membership. "That's not a punishment for
crime," he stated, "that's merely a part of the reparations problem
in the same way you want certain machines from Germany... /29
As long as Morgenthau was
Secretary of the Treasury, White performed adroitly in his strange Svengali
role. But fundamental changes in the management of American foreign policy
occurred after Harry Truman became President. While the President was still a
Senator, he read in the newspapers about the Morgenthau Plan, and he didn't
like it. Morgenthau wanted to come to Potsdam, threatening to resign if he was
not made a member of the U.S. delegation. Truman promptly accepted his
resignation.
What were the final results of
the Morgenthau Plan? What actual effect did it have on Germany? "While the
policy was never fully adopted," wrote W. Friedmann, "it had a
considerable influence upon American policy in the later stages of the war and
during the first phase of military government." /30 Although President
Roosevelt and Prime Minister Churchill eventually recognized the folly of what
they had approved at Quebec, Morgenthau, White, and the Treasury staff saw to
it that the spirit and substance of their plan prevailed in official policy as
it was finally mirrored in the punitive directive known as JCS 1067.
In a very definite way JCS
1067 determined the main lines of U.S. policy in Germany for fully two years
after the surrender. Beginning in the fall of 1945, to be sure, a new drift in
American policy was evident, and it eventually led to the formal repudiation of
the directive in July of 1947. Until it was officially revoked, however, the
lower administrative echelons had to enforce its harsh provisions. "The
military government officers," writes Prof. Harold Zink, "were unable
to see how Germany could be reorganized without a substantial amount of
industrialization. They tried to fit the Morgenthan dictates into their
economic plans, but they ended up more or less in a state of paralysis."
/31
As White had certainly
anticipated, the economic condition of Germany was desperate between 1945 and
1948. The cities remained heaps of debris, and shelter was at a premium as a
relentless stream of unskilled refugees poured into the Western zones, where
the food ration of 1,500 calories per day was hardly sufficient to sustain
life. As Stimson, Riddleberger, and others had predicted, the economic
prostration of Germany now resulted in disruption of the continental trade that
was essential to the prosperity of other European nations. As long as German
industrial power was throttled, the economic recovery of Europe was delayed --
and this, in time, led to serious political complications. To nurse Europe back
to health, the Marshall Plan was devised in 1947. It repudiated, at long last,
the philosophy of the White-Morgenthau program.
The currency reforms of June,
1948, changed the situation overnight. These long overdue measures removed the
worst restraints, and thereupon West Germany began its phenomenal economic
revival.
After all this has been said,
an implicit question haunts the historian. It is this: if the Morgenthau Plan
was indeed psychopathically anti-German, was it also consciously and
purposefully pro-Russian? The Secretary of the Treasury never denied that his
plan was anti-German in both its philosophy and its projected effects, but no
one in his department ever admitted that it was also pro-Russian in the same
ways. In his book, And Call It Peace, Marshall Knappen suggested in 1947 that
the Morgenthau Plan "corresponded closely to what might be presumed to be
Russian wishes on the German question. It provided a measure of vengeance and
left no strong state in the Russian orbit." /32
In document after document the
Diaries reveal Harry Dexter White's influence upon both the formative thinking
and the final decisions of Secretary Morgenthau. Innocent of higher economics
and the mysteries of international finance, the Secretary had always leaned
heavily on his team of experts for all manner of general and specific
recommendations. /33 White was the field captain of that team; on the German
question he called all the major plays from the start. As a result of White's
advice, for example, the Bureau of Engraving and Printing was ordered in April,
1944 to deliver to the Soviet government a duplicate set of plates for the
printing of the military occupation marks which were to be the legal currency
of postwar Germany. The ultimate product of this fantastic decision was to
greatly stimulate inflation throughout occupied Germany, and the burden of
redeeming these Soviet-made marks finally fell upon American taxpayers to a
grand total of more than a quarter of a billion dollars. /34 White followed
this recommendation with another, in May of 1944, which again anticipated the
emerging plan. This time he urged a postwar loan of 10 billion dollars to the
Soviet Union. /35
Remember that, in her
testimony before the Senate Internal Security Subcommittee in 1952, the confessed
Communist courier Elizabeth Bentley charged that White was the inside man who
prepared the plan for Secretary Morgenthau, and "on our instruction he
pushed hard." Also, J. Edgar Hoover of the FBI charged that White was an
active agent of Soviet espionage, and despite the fact he had sent five reports
to the White House warning the President of White's activities, Truman promoted
him to a position at the United Nations. When the shocking story of White's
service as a Soviet agent was first revealed by Attorney General Herbert
Brownell in a Chicago speech, it created quite a stir of public charges and
counter-charges by then retired Harry Truman.
The concentration of Communist
sympathizers in the Treasury Department is now a matter of public record. White
eventually became Assistant Secretary. Collaborating with him were Frank Coe,
Harold Glasser, Irving Kaplan and Victor Perlo, all of whom were identified in
sworn testimony as participants in the Communist conspiracy. When questioned by
Congressional investigators, they consistently invoked the Fifth Amendment. In
his one appearance before the House Committee on Un-American Activities in
1948, White emphatically denied participation in any conspiracy. A few days
later he was found dead, the apparent victim of a heart attack (which is
questioned by some investigators). Notes in his handwriting were later found
among the "pumpkin papers" on Whittaker Chambers' farm. /36 In a
statement before the Senate Internal Security Subcommittee in 1953, Attorney
General Brownell declared White guilty of "supplying information
consisting of documents obtained by him in the course of duties as Assistant
Secretary of the U.S. Treasury, to Nathan Gregory Silvermaster..." /37
Silvermaster passed these documents on to Miss Bentley after photographing them
in his basement. When asked before two congressional committees to explain his
activities, Silvermaster invoked the Fifth Amendment.
Never before in American
history had an unelected bureaucracy of faceless, "fourth floor"
officials exercised such arbitrary power over the future of nations as did
Harry Dexter White and his associates in the Department of the Treasury under
Henry Morgenthau, Jr. What they attempted to do in their curious twisting of
American ideals, and how close they came to complete success, is demonstrated
in the Morgenthau Diaries, which I had the privilege of examining and which
were published by the Subcommittee of the Committee on the Judiciary, United
States Senate, in 1967.
Notes
1. John Morton Blum, Years of Urgency, 1938-41: From the Morgenthau Diaries
(Boston: Houghton-Mifflin Co., 1965), p. 3.
2. The Memoirs of Cordell Hull (New York: Macmillan Co., 1948), VoL 1, pp.
207-208.
3. Ibid., 1, p. 207
4. Issue of September 5, 1946.
5. December 15, 1941, Interlocking Subversion in Government Departments,
Final Report, July 30, 1953, p. 29.
6. Institute of Pacific Relations, pt 2, pp. 419-420.
7. Interlocking Subversion in Government Departments, pt. 16, p. 1145.
8. August 26, 1944, Book 766, pp. 166-170. Morgenthau Diaries, Hyde Park.
9. Lucius Clay, Decision in Germany (New York, Doubleday and Co.1950), p.
8.
10. Book 777, p. 70 et seq.
11. August 28, 1944, Book 767, p. 1.
12. September 4, 1944, Book 768, p. 104.
13. John Maynard Keynes, The Economic Consequences of the Peace (New York~
Harcourt Brace and Co. 1920), p. 81.
14. B.H. Klein, Germany's Economic Preparations for War (Cambridge: Harvard
University Press, 1959), p. 123. 15.
15. September 4, 1944, Book 768, p. 104.
16. November 21, 1944, Book 797, pp. 256-258.
17. September 9, 1944, Book 771, p. 50.
18. Ibid.; Henry L. Stimson and McGeorge Bundy, On Active Service in Peace
and War (New York, Harper and Row, 1948), pp. 573-574.
19. October 18-19, 1944, Book 783, pp. 23-39.
20. September 27, 1944, Book 776, p. 33.
21. September 15, 1944, Book 772, pp. 4-9. (Italics mine.)
22. Institute of Pacific Relations, Hearings, pt. 2, p. 422.
23. (Chicago: Henry Regnery Co., 1953), pp. 36-46.
24. March 10, 1945, Book 827-1, pp. 1-2.
25. March 19, 1945, Book 828-2, p. 233; March 20, 1945, Book 830, p. 24.
26. March 23, 1945, Book 831-2, p. 205, et seq.
27. September 9, 1944, Book 771, p. 50 et seq.
28. December 9, 1944, Book 802, pp. 241-248.
29. May 18, 1945, Book 847, pp. 293-299.
30. W. Friedmann, The Allied Military Government of Germany (London:
Stevens and Sons, Ltd., 1947), p. 20.
31. Harold Zink, American Military Government in Germany (New York: The
Macmillan Co., 1947), pp. 187-189.
32. Marshall Knappen, And Call It Peace (University of Chicago Press,
1947), pp. 53-56.
33. The Secret Diary of Harold L. Ickes: The First Thousand Days (New York:
Simon and Schuster, 1953), I. 331.
34. For this strange story in detail, see Transfer of Occupation Currency
Plates -- Espionage Phase, Interim Report of the Committee on Government
Operations, December 15, 1953 (Washington: Government Printing Office, 1953).
35. May 16, 1944, Book 732, pp. 97-99.
36. Interlocking Subversion in Government Departments, pt. 16.
Ibid., pt. 16, pp. 1110-1141.
From The Journal of
Historical Review, Fall 1989 (Vol. 9, No. 3), pages 287-303.
This article was presented by
Prof. Kubek at the Ninth IHR Conference, February 1989, in Huntington Beach,
California.
About the Author
Anthony Kubek (1920-2003) was
a nationally prominent authority on American foreign policy, especially US
policy in Asia.
He earned three degrees from
Georgetown University, including a Ph.D. in American Diplomatic History (1956).
During his academic career, he served as the Academic Dean of Frisco College,
in Frisco, Texas, and as a professor at the University of Dallas, where he was
chairman of the Department of History and Political Science. His published
writings included The Amerasian Papers, a two-volume study issued by the
US Senate Committee on the Judiciary, How the Far East was Lost: American
Policy and the Creation of Communist China, 1941- 1949 (published in 1963
and 1972), and The Red China Papers (1975).
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