I was. They had the idea that the kind of planned and ordered economy that had existed during the war was going to be necessary for some time on into the peacetime period. CLAY: I knew the people that believed that we have to have all of this planning for reconversion. I didn't believe them, and I perhaps persuaded Justice Byrnes that we had enough built-up demand in this country that this reconversion problem was not going to be anywhere nearly the disastrous problem that was being predicted.
Murphy's book and some other things, that you weren't too happy at first when you were appointed as deputy director of the office. CLAY: I think that President Truman would have understood that, because he did his very best to get into active military service. Here I was, a man who had spent my entire life in the Army. The major war of all times comes along, and instead of being a soldier, I'm on a civilian job the whole time. I would have given my eyeteeth to have commanded a division and had an opportunity in combat.
Both my job in production in the Army and with Justice Byrnes ruled that out. When I went to Germany, it ruled out any possibility that I could do it in the war against Japan. I understand that General McNarney had little to do with the actual operations of this. I don't think there was any difference in the relationship between General Eisenhower and myself and between McNarney and myself, inasfar as the official relations were concerned.
They were both the representatives on the Control Council and they would come to Berlin periodically. I would brief them, sit with them and help them with that work. Other than that they gave me a very broad delegation of authority in military government. There is one big difference. General Eisenhower was one of the top two or three who was publicity-minded and regarded by the public as an ideal.
Whatever happened in Germany they. Poor General McNarney didn't have that kind of a chance. The responsibility, then, was pretty much delegated to me. Never was General McNarney not informed and fully advised. He kept informed on what was going on. Should it have existed in the first place? CLAY: It was created in the first place at a period when some of the Allies, and particularly the British, felt that there was a real prospect that the Russians would meet us on the English Channel; that the subdivision of Germany and establishing of boundaries for withdrawal would in effect save Western Europe from being run over by the Russians.
He wanted to come up through the Mediterranean. The result was that he was very desirous of creating these boundaries. It is interesting that in '44 before the European Commission was ever formed, the British already had maps showing the boundary line between East and West Germany. At that stage we were also very much influenced by the fact that we felt we would still be fighting a war against Japan.
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We might have a very real battle to land in and conquer Japan. We didn't realize that the bombing was going to make the Japanese quit. We felt that they would stay until the last Jap. For this reason, we didn't want to get too involved in Europe. I think we were willing to settle for much less than we would have if it hadn't been for this particular factor.
I am sure that at Potsdam. President Truman very definitely made up his mind that there wasn't any hope for a real agreement with Stalin. CLAY: I think it would have been helpful if there had been a specific arrangement in writing as to which roads and railroads going into Berlin were under the control of the Allies, and which were under the control of the Russians. But, remember this, when the war ended and we were sitting over there with the greatest army that had ever been seen, nobody was concerned about anybody blocking us on roads and railroads.
We went through two things: one, we never did have to move these troops to Japan. The Japs surrendered and then the demand for. Within a relatively short period of time our military forces had deteriorated until they were nothing but young high school boys not wanting to be there. It was pretty sad. It was under these conditions that I am sure the Russians made up their mind that it was time to push; that our actions didn't indicate any desire on our part to stay in Europe.
There are those people who say that the Civil Affairs Branch particularly was. CLAY: This depends on your definition. We certainly went in there with a great number of people who were either members of the Communist party or tended in that direction. This was not the. It did create some problems that took a long time to correct. Many of these men had come to us on Treasury teams. We ran into a tremendous opposition on the part of the Treasury if we attempted to change or remove any of these people. How serious it was in the long run, I don't know.
I think it was an inevitable thing that we had to go through. After all, we had spent a couple of years convincing everybody what a wonderful thing it was that we and the Russians were fighting together. How, overnight, could we turn around and convince people that they were a threat to our national security? It was a very difficult thing to do.
If the Russians hadn't taken the steps they did, I don't know that we would have done it at all. If they had been more subtle they might indeed have gained Western Europe before we realized what was happening. We had these treaties pushed through and they were a great achievement. We wanted the treaties at an early date. The terms of the treaties called for coalition governments; governments from those exiles that had gone to the West and those exiles that had gone to Russia.
After a very suitable period of time it would have called for constitutional conventions, elections, and so forth. The Russians moved in almost over night to take over those countries and governments. If they had done it over a two or three year period, I don't think we would have realized it was happening until it was too late. MCKINZIE: While all that was going on you were faced with the problem of denazification, and keeping alive a population that was on the verge of starvation, and numerous other problems.
CLAY: We had also a change of administration. The people who had had the greatest influence and developed the occupational powers went out, and Mr. Truman's administration came in with the people that he brought to run the Government. I don't think that the so-called "destroy Germany" policy was ever one that President Truman personally believed in. He had nothing to do with its creation and I don't think he ever believed in it.
On the food proposition he sent former President [Herbert] Hoover over to look at the whole European situation. Hoover came back with the recommendations that we supply food for Western Europe, including West Germany, and Mr. Truman backed him completely. If it.
Truman didn't hesitate one minute in backing Hoover, and I think it was a very wise decision on his part to send him. Not only was Hoover a great expert in this field, after his actions following World War I, but he also had the respect of everybody in the country and was a Republican. This got Republican support for it. Would you talk on that point? I didn't see how he could possibly add to his stature by staying there as Military Governor. I wanted him to get out and I'm glad he did; I think that this was fundamental.
However, there wasn't anybody of requisite size. There wasn't anybody in the State Department that wanted the job. Four years later, when there was reasonable order and the economy was back, they found civilian administrators that were perfectly willing to take it. They got one of the finest. He had turned it down when they first wanted him to go over, before I went. If you followed it literally you couldn't have done anything to restore the German economy. If you couldn't restore the.
German economy you could never hope to get paid for the food that they had to have. By virtue of these sort of things it was modified constantly; not officially, but by allowing this deviation and that deviation, et cetera. We began to slowly wipe out JCS When we were ordered to put in a currency reform this was in direct controvention of a provision of JCS that prohibited us from doing anything to improve the German economy.
It was an unworkable policy and it wasn't changed just without any discussion or anything by those of us who were in Germany. It was done by gradual changes in its provision and changes of cablegrams, conferences, and so on. Byrnes, having worked for him. I could.
Lucius D. Clay: An American Life
Byrnes he was very close to the President , and he would go to the President. We'd get this thing resolved in short order. Byrnes the deteriorating situation with the Soviets before he made his very famous speech, now called the Stuttgart speech, in September of ? I had written him a letter about my own views of the situation and it was that letter which he used as the basis for this speech. He visited me in Berlin and we went over together. He had that passage in there, "as long as any other foreign country's troops are in Germany we're going to be there," which was the most important part of the speech.
He tried all of that morning to get hold of the President by telephone to get his approval, and then left word that he was going to put. I'm sure that whatever he said there he had assurance that President Truman approved. CLAY: Yes. I learned that from the way they were removing equipment, without any kind of accounting, from East Germany where they were in occupation, and still putting in their claims for reparations from West Germany.
They were not abiding by the general rules that all of this would be done by the Reparations Commission, representing all of the countries that had suffered damage from Germany. This was the beginning of my concern. I also realized we couldn't possibly work together on the question of currency reform. They wouldn't even consider.
We had given them the military currency plates, and they just glutted the country with it. The initial effort was to get a common utilization of the food supplies, because East Germany was a surplus food production area. When we couldn't get any food out of East Germany, it was quite obvious that there was nothing else to divide.
I mean that we would have been foolish to open up trade in the things that they wanted when we couldn't get out of them the food that we had to have. We couldn't get any willingness on their part to share in the food production of East Germany. I think this was. At Potsdam I think President Truman began to realize that it was no longer any use of sitting there and negotiating; they weren't getting anywhere.
There wasn't any real way of working out an agreement with Stalin, and the Potsdam Conference resulted in really nothing. Do you recall when you began to think in terms of rebuilding Germany as a part of solving a larger problem? We could use this money as we saw fit; for our own support, but also to aid and help the German economy. When we put. I, of course, saw that that would never be allowed to happen. My interest in having a revived Western Europe came from my realization that we could not have an economic recovery in Germany unless it was done as a part of all of Western Europe.
It was about this time that the congressional committee came over studying the Marshall plan, the Herter Committee. We preached this to this committee all the time. As a matter of fact, one of the members of that committee, who spent a whole month in Germany at that time, was Everett Dirksen. He came back a very strong supporter of an economic program that would apply to all of Western Europe, including West Germany. I began to realize that we couldn't develop Germany faster than Western Europe. On the other hand, if we left an economic vacuum in Germany, Western Europe could never come back.
At one point you argued that what they really were doing was trying to rebuild other nations first, at Germany's expense. CLAY: I put up quite an argument, because the initial reaction of the Americans in charge of the Marshall plan was that they were going to say what Germany could get. Germany was not going to be allowed to express a voice. My contention was that we as military government had to speak as a government, and eventually transfer that right to the Germans. As a matter of fact, as the first European committees were set up, we as military government became members.
They wouldn't let Germans become members, but we went down with our German experts with our own people actually being the delegates. It raises the immediate question of conflict of interest or dual loyalty. CLAY: I don't think so.
It was not too long after that before Europe began to realize that this economic vacuum would have destroyed any hopes of real economic recovery in all of West Europe. You couldn't have the most productive area of Europe out of production and still expect to have prosperity. Were you personally a strong believer in an integrated Europe, economically if not politically? CLAY: I was a strong believer in both a political and economical federation, a setting up of such things as the payments committee and so forth.
They could take into account the differences in exchange and arrange the transfer of funds and all that sort of thing. All of these things were far short of integration, but they provided a sufficient amount of cooperation to prevent conflicts bred in nationalism and competition.
Those might have greatly reduced the effectiveness of the Marshall plan in its early stages. It didn't take the experts on these various and sundry committees too long to be talking directly to their German opposites. Within a very short order they were, even though they didn't recognize them as delegates, talking back and forth with each other. These Germans. CLAY: We were in a difficult position on this, because with the exception of the few notorious leaders, neither the British nor the French cared a thing about denazification. We were pursuing a policy in our zone that was not being pursued anywhere else.
When we joined together into a single economic unit, I couldn't accept some of the officials that had been in their zones and had done very good work. They had been members of the party, although they had not been very active. That was one thing of which our Government was adamant. We never were able to make Herman Epps the financial minister, as we would. We were able finally to put him in charge of Reconstruction Finance Corporation, which was somewhat outside of Government.
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I didn't push it too far, because I wasn't too anxious to use them myself. There were plans devised by an outfit under Leo Pasvolsky to rebuild Germany and slowly integrate it into the family of nations. The Treasury Department had its own ideas about how reform should be pursued, and so did the Commerce Department on some matters. The Army was in a position of having to carry out these plans. We were initiating the things that had to be done, but without Washington approving and supporting them we would not have been able to do them.
He said, "I think that Generals Clay and MacArthur influenced the course of occupation policy and the effects of the occupation. Sometimes in my research on Germany I used to wonder what might. Edgar Hoover or General Hodge. Would that significantly have changed things? He goes on to say in this comment, "I frequently thought that if somebody else but a man of the talent of Clay had been in charge, the result might have been disastrous.
That was the case. Nobody had had any experience in this kind of a job. After all, we hadn't had this kind of occupation of a major country. We may have had it back in the Spanish-American War and the Philippines, but they weren't really an enemy country. We had theoretically given them their liberation. They didn't think they were liberated, but we thought they had been liberated. In Germany we had no background, because after World War I, there was always a German government; occupying troops were there for. We had a very unusual situation; even more so than Japan.
Japan did, at least theoretically, still have the Emperor and some semblance of government. We had nothing. We had to improvise, we had to make decisions on the spot. I think this is the way it should have been. Let me put it another way. I appreciate the references there all right, but the fact remains; what would have happened if somebody had gone in there and messed it up? Byrnes, General Marshall, and Mr. Truman wouldn't have let it happen too long. They would have had them out of there and somebody else in.
CLAY: I didn't pay very much attention to them. They were always coming in, but as suggestions;. At that stage of the game I took my orders from Mr. Royall, Mr. Byrnes, General Marshall, and of course, the President. When we got to the final reconstruction of Germany it was General Marshall that gave me the instructions in London, and also coming back from Moscow as he came through Berlin.
He told me to get busy on the economic reconstruction of Germany. He also said we should push our bizonal effort. We had been working on a joint effort with the British. General Marshall and Ernie [Ernest] Bevin were present, and we drew up a letter right then and there which gave us the authority to go ahead with the unification of the British and American zones. But these were all reasonable men and I had too much respect for the people that I worked for to leave them out on a limb.
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