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minister had informed Noel that, since representations to the British for changes in the dismantlement program had proved useless, he had referred the German plea to Mr. Hoffman. Brigadier Noel was very angry and said: “Mr. Hoffman is nly a private individual ino so far as His Majesty’s Government is concerned, and the British Foreign Office will not consider any proposals brought forward by a private per- son.” Brigadier Noel had gone on to advise Nolting not to rely on any “interferenc e” by Mr. Hoffman.

According to what I was told by one of Minister Nolting’s sub - ordinates, Nolting had been summoned to London a few days later, and urged not to demand a general stoppage of dismantle-

THE MATERIAL COST OF VENGEANCE 69

ment in the Ruhr, because this would not only embarrass the British Labour Government but would cause such a furor in France that De Gaulle might come to power. He had also been assured that if he would cooperate with the British, they would “discuss” with the Germans the elimination from the dismantlement list of certain plants.

This slightly more conciliatory attitude of the British was as- cribed by my informant as due to ECA pressure and the British desire to prevent direct contact between the Germans and the ECA authorities of the United States.

As I hall relate s in a subsequent chapter, the British have taken advantage all along of the German Social Democrats’ tendency to regard the British Labour party as an ally, and to trust it more than “capitalist” America. But the touching faith of the German Socialists in the British Labour Government was now being sorely tried by the fact that the British, in the summer and fall of 1948, were rushing dismantlement in order to present the United States ECA investigators with a fait accompli. Like Nolting, other ocial Democratic ministers in North-Rhine Westphalia, were not yet prepared to reveal to correspondents the secret of their negotiations with the British Labour Government, but some of their subordi- nates were too outraged by the contrast between British Labour’s statements and practices to be discreet.*

It would be unfair to the British to hold them mainly responsible for the dismantlement program, although today, like the French, they are opposing its discontinuance. Originally it was the United States, under Roosevelt’s directives, which joined hands with the Russians to implement the Morgenthau Plan for transforming Germany into a “goat pasture.” The British in 1945 and 1946 were the only Allied Power which opposed this program. They under- stood then hat the destructiont of German industries and mass unemployment and destitution in Germany was hardly conducive to the “democratization” of the German people and would, in any case, prove impossible to carry out once the British and American people came to realize the mass starvation it would entail.

* According to the October 1948 report of the British Control Commission for Germany reports “continued progress” in dismantlement, with 25 plants completely dismantled that month. This made a total of 216 for he year with a further 208 plants in process of being dismantled. The volume of machinery already torn out of German factories was given as 528,000 tons, of which only 270,000 had been shipped to recipient nations.

70 THE HIGH COST OF VENGEANCE

Even if all occupied Germany had been administered as an eco- nomic unit, as promised by the Soviet Government at Potsdam, millions of Germans would have been condemned to die of hunger under the original occupation directives. For the Polish and Rus- sian seizure of Germany’s bread basket east of the Oder and Neisse rivers not only deprived Germany of a quarter of its arable land, it also drove the millions of Germans who had lived in these terri- tories for hundreds of years into the truncated Reich.

If the Soviet Government had not at once proceeded to cut the British, United States, and French zones off from the food supplies of Soviet-occupied Germany, there would still have been no pos- sibility for the Western Germans to obtain enough food to keep alive under the Morgenthau Plan, which incidentally also advo- cated detaching the Saar, the Ruhr, and some slices of German territory next to Holland and Belgium. It is, therefore, no exaggera- tion to say that in comparison with the Morgenthau Plan even the Nazis would have appeared as comparatively humane conquerors. Its recommendation that the Germans should become self-sub- sistent farmers on the already overpopulated German soil is shown to be only a disguised program for genocide by the fact that the average yield per acre in Western Germany is already 50 per cent higher than that in the United States. There is obviously no room for a larger agricultural population in Germany than already exists.

American soldiers were too humane to be capable of watching masses of the defeated enemy people dying before their eyes. More- over, it was recognized even in Washington that the health and safety of Americans would be endangered by widespread “disease and unrest.” So almost from the beginning the United States started importing food into Germany to provide a minimum ration, just sufficient to maintain life and prevent people from dropping dead of hunger in the streets.

Nevertheless, in 1946, a “Level of Industry Plan” was worked out with the Russians which, if carried into effect, would have pre- cluded any possibility of the Germans ever being able to produce enough for their own support, and converted millions of them into paupers.

This result was in fact recognized by General Draper and his experts in the economics division of the United States Military Government. The Potsdam agreement with Soviet Russia had stip- ulated that the German standard of living was to be no higher than the average in Continental Europe, excluding England and

THE MATERIAL COST OF VENGEANCE 71

the U.S.S.R. The Draper memorandum stated that “the data indi - cates that the German standard in 1932 was near the average for the remainder of the Continent for the years 1930 to 1938. For this reason figures for 1932 consumption in Germany can be used as secondary basis of comparison or guide.”

In Germany the worst year of the Great Depression was 1932, when there were some six million unemployed. Thus, it was the declared aim of the United States in 1946 to reproduce in Germany the conditions which had brought Hitler to power. Since the Level of Industry Plan then drawn up would actually have reduced mil- lions of Germans to far worse destitution than in 1932, the logical result could have been expected to be a bigger and worse Hitler in the future— in a word a German Stalin.

It is not necessary to go into the details of this plan, since it was based on the fictitious assumption that the four zones of Ger- many would be administered as an economic unit, and since the program for the huge destruction and removals of German indus- trial equipment it envisaged, was modified after it became obvious that the Russian zone would continue to be treated as a purely Russian preserve.

In 1947 a “Revised Level of Industry Plan” was worked out by the American and British Occupation authorities on the assump- tion that Western Germany would have to exist without the re- sources of the Soviet zone, as well as without those of the former German territories east of the Oder. A list of plants to be dismantled as “surplus” to German needs at the level of existence to be per - mitted by their conquerors was drawn up on the basis of this plan and published in October 1947.

A cursory examination of the Revised Plan shows unmistakably that it fails to allow Western Germany to retain sufficient produc- tive capacity to pay its own way, even on he assumption that the Germans are to continue indefinitely on their present diet, described by the ECA’s chief representative in Germany as “subnormal both in calories and proteins.”

Western Germany with forty-two millions has more than half of the original Reich’s population, less than half of its arable land, three-quarters of its hard-coal, and about a third of its brown-coal production. According to the evidence given to Congress in February 1949 by Mr. N. H. Collisson, Deputy Chief of the ECA mission to

72 THE HIGH COST OF VENGEANCE

Bizonia, Western Germany can never produce more than 50 per cent of the food it needs to feed its non-self-suppliers within rea- sonable dietary levels. The remaining 50 per cent must therefore be imported, and this can only be done if Germany can “so revive its industries that it may produce cheaply and efficiently and compete on world markets.”*

Mr. Collisson pointed out that production per acre in Germany is already 50 per cent higher than in the United States, so that there is little or no possibility of increasing the yield. He further stated that even the bountiful harvest of 1948 had only increased the aver- age daily diet of the nonfarming population to about 2,400 calories; that the 1949-50 program plans for a still lower ration, and that the goal of the long-term recovery program is only 2,700 calories. By 1952-53 the Germans are expected to be still existing on a diet consisting mainly of potatoes and other carbohydrates, and insuffi- cient for productive efficiency.

Mr. Collisson stated that ven the maintenance of the “sub -nor- mal” diet in Western Germany and the continued denial to the Germans of “desperately needed essential commodities” and ade - quate housing, would require imports of $2,800,000,000 worth of food and raw materials and a correspondingly high level of exports of German manufacturers and coal.

As against these ECA estimates, the 1947 Level of Industry Plan envisages exports amounting to only two billion dollars to pay for Western Germany’s essential imports of food, fertilizer , and raw materials. This figure of two billion dollars, although well below the ECA estimate, requires a 15 per cent increase over the 1936 figure of German exports.

The authors of the plan themselves recognized that this estimate is probably too low, difficult as it is to imagine where in the world such a volume of consumer goods is to be sold. They say that “at least” two billion dollars is the minimum import requirement, but

* In a pamphlet entitled Is There Still a Chance for Germany? (Hinsdale,

Ill., Henry Regnery Company, 1948), Karl Brandt, Professor of Agricultural Economics, Food Research Institute, Stanford University, and an internationally recognized authority in this field, maintains that “doubt is warranted that Western Germany, as presently constituted, will ever be able to attain the de- gree of productivity that will permit her to pay her food bill” (p. 14). Brandt is not alone in this opinion; it is shared by other competent experts. But it is studiously ignored in public discussion, whether unofficial or official, because, if the thesis is true, it takes away all ground from under Allied policies since Potsdam.

THE MATERIAL COST OF VENGEANCE 73

they add: “Since trade between the Bizonal area and the rest of Germany is subject to greater uncertainty than former internal trade, the result may be to increase still further the need for trade with other countries.”

In other words, as late as 1947, American authorities, in deciding how much machinery to tear out of the German economy, still re- fused to recognize as the basis of their calculations the fact that the Eastern zone under the Russians is completely severed from the rest of Germany.

Even assuming that two billion dollars is a correct figure for the volume of exports required to meet Western Germany’s minimum needs, the Revised Level of Industry Plan makes it impossible for her ever to export this much, for it drastically limits her production of steel, and thus precludes large exports of the machinery and con- struction materials in greatest demand on the world market, which made up the bulk of Germany’s prewar exports. Instead, Germany is envisaged as having the possibility of exporting unlimited quan- tities of textiles, ceramics, and other products of light industry. The difficulty of finding outlets for the planned uge increase in con- sumer-goods exports is recognized, but not taken into account. The preamble to the plan states:

Before the war, the broad fields of metals, machinery and chemicals accounted for two-thirds of the total exports. Production of textiles, ceramics, and consumer goods can be raised, but the extent to which additional sales above prewar levels can be sold on the export markets is difficult to predict. Exports from the unrestricted industries would need to be increased approximately 90 per cent if the higher export requirements were provided entirely from the unrestricted industries, which is obviously impracticable. Therefore the level of exports from the restricted industries will need to be greater than prewar.

Having cut the ground from under their own feet by this state- ment, the authors of the plan proceed to outline the cuts to be made in the productive capacity of the German steel industry, me- chanical and electrical industries, chemicals and other vital branches of a modern economy. t also expressly statesI that no provision is made in the plan for repayment of the advances made by the occu- pying powers for imports of food, seed and fertilizer. Reparations are thus given priority over Germany’s debt to the United States.

The plan limits Western Germany’s steel production to 10.7 mil -

74 THE HIGH COST OF VENGEANCE

lion tons a year, as against her 1936 production of 17.5 million tons, and the United States estimate of 19.2 million tons as her end of the war capacity. According to the Germans this latter figure takes insufficient account of air-raid damage. They claim therefore that the 6.5 million tons of steel capacity being dismantled will actually reduce Germany’s capacity below the 10.7 million tons allowed in the Revised Level of Industry Plan.

Whichever figures are accepted as correct, there is no doubt that the planned dismantlement must deprive Western Germany of any possibility of becoming self-supporting. It envisages a Germany pro- ducing far less, and exporting more, than before the war. It makes no provision for the rebuilding of Germany’s bombed cities and bridges, the repair of railroads and rolling stock, and the replace- ment of the engines and freight cars looted by the Russians, Poles, and French; nor for the housing of the millions of expellees from the East; nor for the support of the uncounted numbers of disabled men, women, and children; nor for the hospitalization of the many prisoners of war sent home from Russia, France, and Yugoslavia only after they have become too ill and weak to be of any se as slave laborers.

Like the old Level of Industry Plan it provides, even theoretically, for a German income at the lowest level of the Depression years, when Germany had six million unemployed. It is specifically stated that per capita productive capacity is to be reduced to 75 per cent of the 1936 level, which is precisely the 1932 level. In practice, Ger- many’s per capita income would be reduced even lower than this, for the plan gravely underestimates the present and expected popu- lation increase of the Western zones.

The number of expellees from Silesia, the Sudetenland, and other parts of Eastern Europe was about twelve million. Some three mil- lion are estimated to have died of starvation and exposure, and some are in the Soviet zone. But against this reduction of the total figure of those who have to be provided for in Western Germany, there is the constant and increasingly large influx of refugees fleeing to Germany both from the Eastern zone and from all the countries under Communist dictatorship. These refugees include many na- tionalities, even Russians, but are not, for the most part, admitted into the DP camps, and have to be provided for by the German economy (see Chapter 7.)

If all these factors are taken into consideration the envisaged re- duction in the standard of living of the population of Western

THE MATERIAL COST OF VENGEANCE 75

Germany is almost 50 per cent below prewar. Without American subsidies it is bound to be even more miserably inadequate than at present.

Since it provides only for minimum German needs, the Revised Level of Industry Plan is also incompatible with the Marshall Plan, which envisages German industries and skills contributing to the rehabilitation of Western Europe. The ceiling placed on German steel production is alone sufficient to preclude any possibility of Germany’s contributing to the reconstruction and defense of West - ern Europe.

As the London Economist pointed out on August 6, 1946, Ger- many used five million tons of steel before the war for the output only of such necessary peacetime requirements as nails, sheet iron, cutlery, stoves, furnaces, pipes, tools, and household utensils. Even in the last year of World War II 40 per cent of Greater Germany’s steel output (8 or 9 million tons out of 22 to 24 million, according to the Economist figures) was used for civilian purposes.

According to the calculations of German economists, Western Germany needs, not 10.7, but at least 14 million tons of ingot steel a year for the next five years for domestic use, even if a very low standard of living is maintained. No one who has seen the havoc wrought by bombing and battle all over the Western zone will quar- rel with this estimate. With rare exceptions every town, large or small, is in ruins. British and French removal of vast quantities of timber from German forests has increased the need of metal in place of wood for rebuilding. Yet Germany’s structural -steel production is being reduced by 40 per cent.

Steel allocations for highway maintenance and repair of the Rhine bridges alone came to 8,000 tons in the first half of 1948. The future need is calculated at 40,000 tons a year for the next seven years. Rail repair requires a minimum of 150,000 tons a year for several years to come.

To anyone not blinded by the desire for revenge, it is obvious that estern W Germany can never support itself unless permitted to produce at least as much steel for its own requirements, and to export even larger quantities of machinery, than before the war. As Mr. Collisson told Congress:

The industries of Western Germany eed steel for the processing and manufacturing of the machinery, apparatus and precision goods which constitute the bulk of its export trade. Into these finished goods

76 THE HIGH COST OF VENGEANCE

go the skills and craftsmanship which represent the ingredient contrib- uting the most to the value of the finished article. . . .

Germany is a country with practically no raw materials except coal; her “riches” consist in the skills and industry of her working population. Unless allowed to use them for her own benefit and that of Europe she cannot support her people. At the same time Europe desperately needs German machinery. Nevertheless ninety- four iron and steel plants were placed on the dismantlement list handed to the Germans in October 1947. The list included Ger- many’s most up -to-date and efficient plants.

As every American iron and steel man will tell you, a blast fur- nace, or melting or annealing furnace, can not be transplanted. It can only be destroyed. Thus a “dismantled” iron and steel works yields as reparations, at most, 20 to 25 per cent of its former pro- duction facilities. Germany’s loss of her capacity to produce steel constitutes a lasting loss to the whole European economy.

The American public has not been permitted to see the Wolf Report on the German iron and steel ndustry. It is, however, no secret that Mr. Wolf reported that even the 10.7 million tons of steel ingots permitted under the Revised Level of Industry Plan would be useless if the machinery necessary to roll it at low cost in labor and materials is not retained in Germany; and that scheduled dismantlements of rolling mills would make this impossible.

Some 80 per cent of German steel production consists of rolled products. According to the German Bizonal Economic Administra- tion the dismantlement of rolling mills being carried out will re- duce productive capacity far below the 10.7 million tons steel level prescribed, and nearer to the 6 million tons level insisted upon by the Russians in 1946.

Since the capacity of the United States to meet even the home demand for sheets and strips is estimated to be insufficient, where is Europe to obtain its basic requirements if the British insist on car- rying through the scheduled dismantlements in the Ruhr? As Mr. Collisson said in his evidence before the Senate Foreign Relations Committee, “The critical shortage of steel in the world today de - mands maximum use of facilities permitted to remain in Germany.”

According to the Herter Committee report, the United States, up to 1951, will not be in a position to supply ither the home market or the European and Near Eastern demand for rolled pipes of large diameter. Yet 46 per cent of Germany’s welded -pipe producing ca-

THE MATERIAL COST OF VENGEANCE 77

pacity is being dismantled, and her large-diameter pipe production entirely destroyed.

Ten per cent of Germany’s rolled milled products consists of steel wire. Thus she should have been left the capacity to produce 800,000 tons, but scheduled dismantlements are reducing it to only 530,000.

In visiting the Ruhr I was made aware of the fact that the man- ner in which dismantlement is carried out also greatly increases Ger- man costs of production, coal consumption, and transport charges. With an eye mainly to the elimination of German competition, the British are crippling a large number of plants instead of com- pletely dismantling only a few. By this method they raise German costs of production to noncompetitive levels, while making it ap- pear that the total reparations removals are comparatively small.

In a modern iron and steel works the whole process of extracting iron from the ore in a blast furnace, making steel ingots from pig iron or scrap in a furnace, and shaping the red-hot steel into bars, plates, wire, or tubes is carried out in the same plant. This econo- mizes fuel, power, and transport. The British in the Ruhr disrupt the process by removing a part of the equipment.

In one plant they remove the rolling mill, in another the presses, and in others they destroy the furnaces. Thus, in one iron and steel works the steel used can no longer be produced on the premises, while in others it can no longer be rolled or pressed and has to be sent elsewhere for processing.

At the Hörde Works in Dortmund, for instance, I saw the giant 16.5-foot rolling mill, which is the only one of its kind in Europe and has a production capacity of 200,000 tons of rolled steel a year, standing idle by British order. It had been producing some 7,000 tons a month before the British ordered it dismantled in the fall of 1948. The greater part of the steel produced at Hörde’s and for- merly immediately processed, now had to be cooled and sent else- where for use, with consequently greatly increased coal consumption and transport costs. The latter charges were high since there was no water transport and no other rolling mill in the vicinity to make use of the steel produced at Hörde’s.

Not only would the Hörde Works no longer be able to operate profitably. The Dutch, Swedes, and Norwegians had placed orders in the Ruhr for 200,000 tons of wide metal plates for shipbuilding, which England and France could not supply, and which dismantle- ment of the Hörde 16.5-foot rolling mill prevented Germany from

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producing. There was no other rolling mill in Europe making such large plates. The two German plants in existence producing 14.7- and 13.5-foot plates had insufficient capacity to fulfill the whole foreign shipbuilding order in addition to their existing commit- ments, since the demand in Germany for wide steel plates was also very great. The Hörde Works had, for instance, produced the plates for rebuilding the bridge over the Rhine at Cologne, reopened in the fall of 1948, and there were many other destroyed German bridges waiting to be rebuilt.

In February 1949, following the visit of the Norwegian Foreign Minister to Washington to discuss Norway’s adherence to the At - lantic Pact, it was reported in the press that the United States had promised to deliver American steel plates for the reconstruction of Norway’s mercantile marine, in place, presumably, of the German deliveries which had been cut off.

The Germans had offered to deliver a new rolling mill in place of Hörde’s. This new equipment was already half finished and could have been completed in nine months, whereas three and half years would be required to dismantle, pack, and ship the Hörde mill, if it could ever be accomplished, and this was most unlikely in view of its huge size and weight. Nevertheless the offer was re- fused by the British Reparations Office in Düsseldorf.

The Hörde workers, at the time of my visit, had succeeded in preventing dismantlement by forming a picket line and preventing the wrecking crew from entering the plant. The giant mill stood idle, since use of it was forbidden, and no one knew whether the British would use troops to force the workers to give way, and use DP’s to destroy the mill should German workers refuse the task.

The workers had put up notices on blackboards which read:

“Hands off! You are taking away the livelihood of 8.000 workers and their families.”

“Marshall Plan : Reconstruction or Dest ruction?”

“Let us work! We want to help in the rebuilding of Europe!”

I spent several hours at the Hörde Works where thin and under- nourished German workers left their arduous labors in the smelting works to ask me if there was any hope that America would inter- vene to prevent the destruction of their livelihood. I gave them all the encouragement I could, saying that I was sure that in time the American people would stop the senseless and cruel destruction of Germany’s industrial capacity. But not wishing to raise false hopes

THE MATERIAL COST OF VENGEANCE 79

I admitted that America’s awakening might not come in time to save their jobs.

Early in 1949, while writing this book, I received a letter from Herr Wilms, the engineer in charge of the 16.5-foot rolling mill. He wrote to tell me that after stopping dismantlement according to their promises to the ECA the British had removed and shipped to England the turning lathe and grinding machine without which the mill cannot operate. He added:

On November 1, 1948, in “honor of the visit” of Mr. King, the Wolf Commission expert, the first of these machines was removed; and now, on Christmas Eve, the second one has been torn out and both essential machines shipped to England via Hamburg. Yet there is no one in England who wants them. The Thomson ouston Com- pany in Rugby has refused to take them, and Messrs. Francis Shaw in Manchester have accepted delivery with reluctance.

At the end of his letter Herr Wilms remarks:

The belief in Germany that the American view concerning European rehabilitation would prevail and bring an end to dismantlement, is fading. I myself still hope for the best while preparing for the worst. Can you give us some good advice? Perhaps now that masculine reason is in eclipse, feminine feeling will achieve better results!

Unfortunately for the Hörde workers, the ECA Commission de- ferred to the British, who presumably wish to prevent reconstruc- tion of the Norwegian and Dutch merchant marine. So the giant rolling mill is now being torn down.

In Dortmund I also visited the Dortmund Union Works which after the decartelization operation had been cut off from its coal mines, subsuppliers, and markets. Here again I found that the whole works was not being dismantled, but measures had been taken to ensure that the steel produced in its foundry could no longer be used on the premises in its molten state. A gigantic press, far too big to be moved but nevertheless placed on the reparations list, was being destroyed. The ovens which served it had already been torn down, and the press itself being irremovable would presumably be broken up and converted into scrap. It had originally been con- structed on the premises and was the largest press in Europe. Two other presses and four steam hammers had already been dismantled

80 THE HIGH COST OF VENGEANCE

and 29 ovens destroyed; one crane able to lift a weight of 250 tons had been torn down, and five smaller cranes removed.

This plant had formerly manufactured equipment for the mining and electrical industries, and gears for large sea-going ships, all of which production depended on the presses which were being de- stroyed or dismantled.

The value of the annual output of the Dortmund Union Works prior to dismantlement had been 25,000,000 marks a year. Its resid- ual value on reparations account was only a fraction of this sum. The plant could not be reconstituted because its former affiliated works, the Wagner Company which made presses, had already been dismantled and its equipment shipped to India.

The Germans had offered to supply new machinery to India in- stead, and India would have preferred to receive machinery made to its specifications, but the British had insisted that Wagner’s be dismantled. It could only be presumed that from the British point of view it was better that the Indians should receive factory equip- ment they could make no use of, than machinery with which to compete with the British. Dismantlement both eliminated Ger- man competition and prevented the creation of effective new com- petitors.

Following its dismantlement, the Wagner Company in Dort- mund ad madeh a contract with the British to use its labor force to dismantle other factories. But, faced with the rising tide of Ger- man resentment at the destruction of their country’s assets, the re - luctance of all German workers to dismantle the machinery which their fellow trade-unionists depended upon for their livelihood, and the general opprobrium attached to all Germans who collaborated with the British in destroying Germany’s productive capacity, Wag - ner’s in October 1948 had refused to renew their ontract. As pun- ishment the British, at the time of my visit to Dortmund, had announced their intention of tearing down the empty Wagner buildings which had hitherto been spared and used as a storage depot for the machinery torn out of other factories in the town.

The “captains of industry” I met in Dortmund considered the Revised Level of Industry Plan limiting future German production worse than dismantlement, costly as the latter is. This was also the view of the trade-union representatives with whom I talked in the Ruhr. Executives and workers, indignant as they all were at the senseless destruction of machinery going on, had faith in German capacity to repair the damage if only they were allowed to work.

THE MATERIAL COST OF VENGEANCE 81

The most terrible thing about Allied occupation policies was the setting of limits to man’s endeavor, inventiveness, and willingness to work.

Germany’s coal, iron, and steel industry was formerly the most closely and economically integrated in Europe. Combines used their own locally mined coal to produce steel and roll it immediately into plates or strips or press it into shape while still red hot. In many plants production from blasting to finished products, such as pipes and wire, was all carried out on the same premises, with minimum cost for handling and transport.

Dismantlement, coupled with so-called “decartelization” is wip - ing out these economies and reducing Germany’s coal, iron, and steel industry to a nineteenth century level of efficiency.

“Decartelization” was originally sold to the Ameri can people un- der a false label. It was represented as a method of eliminating “monopoly,” and clearing the ground for free private enterprise. In fact, however, under the influence of Communist fellow travelers in key positions in the economic division f the United States Mili- o tary Government, decartelization became an instrument for under- mining the capitalist system. “Operation Severance,” as it was called, first set 1,000 employees as the maximum for any German enterprise. Later the figure was raised to 10,000, but even this num- ber of permitted workers destroyed the former economic and effi- cient vertical integration of the German coal, iron, and steel in- dustry.

Communist sympathizers, in combination with the disciples of Morgenthau, no longer njoy predominant

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