Chapter Eleven

Germany Safe for Capitalism

After the Kilgore enquiry in 1946 on the reasons for delay in breaking up the German trusts, one would have thought vigorous action would have been taken if only to calm public opinion. Pious statements continued to pour out of London, Washington and Berlin of the intentions once and for all to destroy the great trusts, combines and cartels. Commissions were appointed, laws passed, decrees announced, but as late as 1949 precisely nothing had been done in the western zones of Germany to clip back the trusts. The same personnel mentioned by Nixon as having consciously sabotaged the work were left in their jobs ormoved up to higher positions and replaced by even more forthright defenders of the trusts

Instead of being weakened the trusts were strengthened as U.S. big business got its teeth well into Military Government, determined not to let go until the future of international capitalism was assured in Western Germany. In case the reader ever doubts that this was the one fixed idea of U.S. Military Government from the day it took over, regardless of what was Washington policy at the time, there is an apt quotation from no less an authority than General Clay, mentioned in no less an official document than the Ferguson Report, called for by Secretary to the Army; Kenneth C. Royall on April 15, 1949, on the subject of Decartelisation in Germany. The report goes Exhibit 97b, minutes of a Clay Staff meeting which took place on October 12, 1946, when Clay explained to his Economic Adviser, General Draper, his reasons for pressing for decartelisation at that time.

"I think the ultimate aim is eventually free enterprise in Germany," says Clay, "...I am absolutely convinced that your choice in Germany to-day is between free enterprise... and socialism.... We must have small ventures or we will find our ventures will be affected by influence of Communists and the influence of the British Labour Party in the British Zone. All business in Germany wants to survive. It seems to me that small business in Germany is most likely to decide the issue between free enterprise and socialism. That is my very strong personal view."

At that time there were still some British officials such as Austin Albu, head of the Governmental Sub-Commission, Alan Flanders, in charge of German Affairs, and others who were pressing for socialisation in the British Zone. Their voices were not raised for very long, however. Albu was routed from the field by his rival – Christian Steel – at that time Chief of Political Department and junior to Albu. Pressure from Washington supported by the Steels, Sir Percys and Sir Cecils in Berlin, soon silenced the British demand for socialisation in the Ruhr. Once this danger was over, Clay could switch his position on the trusts and came out in favour of preserving them intact, in the interests of German and international capitalism.

The quotes from Clay in 1946 reveal however the completely cynical and hypocritical approach he had to the German problem. In public utterances, in Control Council meetings, in press conferences he repeatedly stated that U.S. policy was not to influence the Germans in any way. The U.S. Government believed in democracy. Let the people choose. The reasons given for holding up the socialisation of key industries in the Ruhr, were that in the U.S. view, the German people as a whole should decide. When the German people voted for socialisation in Greater Hesse in the American Zone, Clay however vetoed the socialisation laws.

In the minutes published in the Ferguson report, Clay lets drop the mask of democracy and reveals himself as intriguing to frustrate even the modest brand of socialism practised by the British Labour Party. On the surface he pretended the British were his closest allies with no points of disagreement; behind their backs he did his best to thwart their policies, even in their own zone of occupation. His fears were ill-founded however. The industrial knights running economic affairs in the British Control Commission, he found were willing allies in the crusade to save the German trusts.

The Ferguson Committee was appointed by Army Secretary Royall in the face of rising criticism in Congress and certain sections of the press at the failure to take effective action against the German trusts. The three leading members of the Committee could hardly be labelled as radicals or enemies of capitalism. They were not representatives of trade unions or anti-trust societies.

The Chairman, Garland S. Ferguson, was selected by Royall himself. Samuel Isseks was appointed by Tom Clark, U.S. Attorney-General and A. T. Kearney was appointed by Paul Hoffmann, Chief of the Marshall Aid Programme, himself an ardent supporter for retaining intact German industry.

The Committee spent about three weeks in Germany and finished their investigations by the beginning of 1949. Their report covers about thirty thousand words, is cautiously phrased and committee members have leant over backwards to be "fair” to U.S. Military Government officials. Conclusions are produced however which are the more damning against Clay, Draper, Draper's successor Wilkinson, and others, because of the very character of the commission.

Briefly summed up the commission found that of nearly 500 enterprises which should have been investigated even according to the provisions of the weak decartelisation law introduced in the American Zone in February, 1947, only 61 plants were even checked, From these sixty-one, decartelisation proceedings started against only a handful and from this handful only one case was actually pressed. That was the result of nearly four years' work on decartelisation, of almost two years' operation of General Clay's own decartelisation law taken out of the hands of four power discussion or supervision. Clay this time had no excuse of Russian "obstructionism." He was operating in his own zone, with full powers.

The commission found that in a number of cases, including that of Henschel, one of the greatest armament factories in Germany, proceedings were stopped on direct orders of General Clay on March 11, 1948. The date is important because it is nine days before the alleged crisis in four-power relations when Marshal Sokolovsky withdrew from the Control Council on March 20, 1948.

The Ferguson report, if interpreted correctly, is the greatest single indictment of U.S. and British chicanery and dishonesty in Germany. It reveals facts which fit perfectly into the pattern of the war-provokers, who counted on a Republican victory in the November, 1948, elections, and a quick war in the early summer of 1949. But best let the report tell its own story.

The first result of the weak anti-trust laws adopted in the American and British Zones in February, 1947, was a deep research into the ramifications of German industry; into external assets and cartel arrangements, into structure and “excessive concentrations of economic power." These results were summarised in a three-volume work "Report on German Cartels and Combines" and a fourth volume "Germany's Major Industries." From the lack of use that has been made of these works, one can only suppose their main purpose is to serve as an investors' guide to German industry and perhaps to aid British, French and American competitors to get an inside picture as to the structure of their opponent's concerns.

It took a long time to prepare these reports and time-wasting was an important element in the fight to save the German trusts. The studies embraced 20 major industrial groups, 84 industrial enterprises and more than 1,350 enterprises. They were complete down to biographies of the industrial magnates who built Hitler's war machine. There could be no excuse after the compiling of these volumes, of avoiding action because of lack of information.

Sixty-nine of the enterprises studied were said to represent 70 per cent. of German industry. Of these 61 were marked down for investigation, including 27 with headquarters in the American Zone and 34 in the British Zone. The picture presented in the four volumes was damning enough but could hardly be regarded as a complete accounting of the German trusts, because in many cases the information was submitted "by invitation" by the German concerns themselves. Nevertheless it was sufficient to brand 61 major concerns as targets to be broken up.

Robert Bosch, a firm with a world monopoly in certain electrical equipment, magnetos and. dynamos and in the field of fuel injection apparatus for diesel and aeroplane engines, was one of the first to be examined. With a pay-roll of 30,000 employees, a 50 per cent. to 80 per cent. monopoly in 13 different fields of production, ownership or part ownership in 45 foreign companies, holding 1,100 German patents and a pre-war record of espionage through its agents all over the world, it seemed to present a watertight case for action. During its history it had swallowed up most of its competitors, the largest and last to be absorbed was the firm of Ernst Eisemann and Co.

After consideration of the Bosch case, Decartelisation Branch decided that Bosch should regurgitate Ernst Eisemann and Co., which should be re-established as an independent company; should get rid of part of its foreign holdings; should make patents available to its German competitors.

Bosch protested that these measures were too "severe." An obliging Mr. Bronson, who was then in charge of Decartelisation Branch, deleted the clause regarding foreign holdings; deleted the clause requiring the disgorging of Eisemann and Co., watered down the clause about patents. After a few more months of negotiation, it was agreed that Bosch should make some patents available free to competitors; on others it could charge royalties. Appeals and directives bounced back and forth, until by the time the Ferguson Committee had finished its report, the Bosch case was still in the "air." But this case was the only one in which any action was taken at all and the action itself at most could be an annoyance to Bosch rather than any harm to its vital interests.

"I don't mind you decartelising me," said Bosch in effect, "as long as you don't alter the structure of my enterprise at home or interfere with my arrangements abroad."

A more sinister case is that of Henschel and Son. The Henschel concern like that of Krupp, started life in the early nineteenth century as a gun factory. Its gun helped to crush every liberal movement in Europe in the nineteenth century; later they served every German tyrant from Bismarck to Hitler. They helped defeat the French Army at Sedan in 1870, blasted the heroic Communards in Paris in 1871, pounded French and Belgian cities to dust in the 1914-18 war, and shot down strikers and mutineering German soldiers and sailors in the revolutionary movement of the 1920's. Henschel was ready to serve and profit by every reactionary movement in Europe. Henschel was prominent among the Ruhr industrialists who gave Hitler his start in life. And a grateful Hitler, once in power, poured government money into the Henschel coffers to expand its arms factories and forge the tools for Nazi world conquest.

The gun factories were added to by others for the production of tanks and aeroplanes. After the war, it was one of the plants specifically marked down for dismantling under the demilitarisation laws – but it was preserved and so came within scope of the Clay decartelisation law.

The Ferguson report points out that during the war Henschel produced Tiger tanks, other heavy and medium tanks, aeroplanes, armored trains, military transport vehicles and all types of guns. Its representatives trailed along like camp followers of old, in the wake of Hitler's armies, grabbing industries in Czechoslovakia, Poland, France and Russia, sometimes working them as subsidiaries, sometimes stripping them of equipment and adding it to their own plants. They swallowed up tens of thousands of slave laborers, replenishing them as they died from starvation at the factory benches. During the war it built additional plant including the tank-producing plant at Hittelfeld, which trebled its pre-war capacity. (The Hittelfeld plant has now been switched to locomotive production put could switch back to producing tanks in a matter of weeks.)

The Ferguson report states "Henschel now possesses, between 70 per cent. and 80 per cent. of Germany's locomotive facilities, between 90 per cent. and 95 per cent. of its trolley-bus manufacturing facilities, and holds a commanding position in other fields of production."

Mr. Hawkins, who replaced James Martin as chief of Decartelisation, and seemed for a time as honest and enthusiastic as was Martin for smashing the German trusts, reported to the Army Secretary in September, 1947:

"This combine cannot be left intact for the reason that its position in the German industrial world was so powerful that it could dictate the terms under which it would do business, that it was beyond the reach of competitive influence; and that its size and influence rendered it impervious to the conditions of free enterprise."

This observation of Hawkins is interesting for two reasons. First of all, in the light of what subsequently occurred, we find the Chief of Decartelisation recommending in the strongest terms possible that Henschel be broken up. Secondly, because it shows that even those officials who were keen on breaking up the trusts had completely lost sight of the original reasons for destroying the great industrial combines. Hawkins sees the trusts as a danger to "competitive influence" and to "free enterprise." General Clay sees them as providing the British Labour Party with ammunition for socialisation laws. These reasons had absolutely nothing in common with the agreement signed at Potsdam nor even with the directives issued to General Clay by the Allied Joint Chiefs of Staff.

In the preamble to that part of the JCS directive No. 1067, issued in April 26, 1945, which dealt with the breaking up of the trusts, it is clearly stated: The principle allied objective is to prevent Germany from ever again becoming a threat to the peace of the world. One essential step in the accomplishment of this objective... "the industrial disarmament... of Germany." The Potsdam agreement reaffirms this basic reason for breaking up the industrial trusts. Destroying the combines and their cartel agreements was to be one important phase in drawing the fangs of German aggression. There is no phrase in either the Potsdam agreement or the JCS directives which preceded the agreement which ordered Military Government officials to make Germany safe for free enterprise or business competition. The whole tone of the Ferguson report incidentally is reproachful to Clay and Co., mainly on the grounds that the rights of free enterprise have been betrayed because of his failure to act against the trusts.

It was agreed on Hawkins’ recommendations to start proceedings against Henschel and that the company, for a start, should be compelled to disgorge some of its subsidiaries. A directive was issued to this effect after which Henschel was given three months to prepare a plan for its own disintegration. The usual ping-pong battle of directives, appeals, recommendations and counter-recommendations started. Commerce Branch cancelled suggestions made by the Decartelisation Branch. General Clay's economic advisers over-rode Commerce Branch. Eventually Mr. Bronson, who replaced Hawkins when the latter was promoted to assistant economic adviser to General Clay, appointed a special committee to enquire into Henschel properties – despite the four volume reports – and to prepare a recommendation on the usefulness or otherwise of breaking them up.

This, as the Ferguson reports points out, was in direct contradiction to established procedure and against Military Government orders. On March 11, as pointed out earlier, nine days before the crisis in the Control Council, General Clay intervened personally and banned any action against the Henschel combine. The reason? The excuse given was that the German economy needed Henschel production because it was the largest supplier of locomotives for the German railways. Decartelisation, or deconcentration as this particular type of case was labelled, would interfere with the production of railway engines. The real reason was that in the event of the war which General Clay seemed anxious to foment over Berlin, it would interfere with the production of Tiger tanks, if Henschel was "deconcentrated."

The Ferguson report continues its mournful narrative of obstruction in high places; of intervention for this reason or that to save the German combines. The reasons given were always "admirable" of course. The breaking up of the Kugelfischer ball-bearing works was held up "until we are in a more satisfactory position as regards ball-bearings," although their production by German firms was banned under the four-power Level of Industry Agreement.

The Gutehoffnungshuette steel combine, one of the largest in the country, was saved because it "fell under a new scheme being worked out for Ruhr industry." In fact, except for the very mild reprimand administered to Bosch, absolutely nothing was done to German heavy industry.

By March 11, 1948, General Clay put an end to the farce and called off the whole programme as far as it affected heavy industry. To give some semblance of still carrying out original orders, however, he ordered his staff to switch their attentions from breaking up the heavy industrial trusts to ending the monopolies in the consumer goods industries – a typically cynical interpretation of Potsdam and the JCS directives.

The decision to make this switch, according to the Ferguson report, was taken at a series of meetings on March 6 and 7, 1948, between General Clay, his economic adviser Wilkinson, who replaced Draper, and Messrs. Bronson and Hawkins. The decisions were announced by Bronson on March 11, as reported above. General Clay afterwards tried to deny he had given such instructions, and said Bronson had misinterpreted him, but there seemed little doubt in the minds of the Ferguson committee members, that the decision was in fact, that of Clay. And at least in the nine months that followed, Clay made no attempt to interfere with Bronson's interpretation.

With heavy industry reprieved, one would have thought Clay and Co. would have been content, and would press ahead with the new policy, if only to keep public opinion at home quiet. But public opinion was being fed with Russian "atrocity" stories again; they were much too interested in stories about Soviet Yak fighters "wiggling their wings" at airlift planes to worry about the decartelisation front.

The first combine in the consumer goods' industry, singled out under the new directive, was the Deutsche Linoleumwerke, with a 100 per cent. monopoly in the manufacture of floor coverings, but producing only 3 per cent. of capacity because of alleged shortage of materials. In effect, the Linoleumwerke like many other West German enterprises was waiting for currency reform to switch to high gear. Bronson submitted a report on May 27, to General Clay, pointing out that a precedent should be established in dealing with the Linoleumwerke. This precedent could be applied to all other industries where a monopoly existed due to war damage having eliminated competitors or due to an overall shortage of raw materials.

Bronson suggested three courses of action and asked Clay's advice as to the most suitable:

(1) Start final deconcentration proceedings immediately.

(2) Start proceedings but delay final action until over-all production warranted it.

(3) Delay all proceedings until the German economy was on a better footing.

Bronson, who apparently wanted some activity to justify his position, recommended the first proposal.

The history of Bronson's memorandum is an incredible piece of departmental chicanery which in other circumstances would have brought the authors to trial on grounds of sabotage and obstruction. Despite the fact that it was intended only for Clay, Clay himself never saw it. Hawkins, the deputy economic adviser, sat on it; then decided that he and Wilkinson should write a memo expressing contrary opinions. Finally Hawkins returned the memo to Bronson, advising the latter that it should not be submitted to Clay. And that was the miserable end to attempt decartelisation or deconcentration even in the consumers' goods field. No other case was even 'investigated.'

As the Ferguson report succinctly expresses the situation: "Except for the institution of the case against Bosch and as otherwise hereinafter indicated, no deconcentration proceedings have been instituted in the capital goods, heavy industry or consumers' goods field."

In its researches into the type of consumer goods industries, trade associations, etc., to which Clay; Wilkinson, Hawkins and Co., could usefully have turned their attention, the Ferguson Committee dug up one interesting case which throws a sidelight on German capitalist corruption, aided and abetted by Military Government. Departing from its prim, staid language, the report uses the words, "most flagrant and possibly scandalous violations" to describe the activities of the Imports Handelsgesellschaft, which with the knowledge and support of American officials, made a fine business out of supplying allied food to the starving Ruhr miners. It was one of those classic examples of free enterprise and business initiative, which should have delighted the heart of every advocate of the American way of life. But it seemed a little too much even for the Ferguson Committee to stomach.

Herr Dietz, who ran this fine racket of an import business, managed to channel all imports of food to starving Germany through his firm, with substantial "rake-offs" presumably not only for himself but the military government officials who helped him. A decartelisation officer, Mr. Russel Bartels, made a report on the matter to Bronson as early as February, 1946. Bartels comments were as follows:

"I consider this case to be one of the most flagrant demonstrations of public corruption I have come upon. That a situation so notorious as this one is permitted to go unchecked is a reflection upon the occupation and military government. If the American public were to read this case, they might justifiedly withdraw their support of the program for 'feeding Europe.' How the military governor of Hesse (U.S. official. – Author) could have failed this long to take any action in the matter is incomprehensible. His recent actions and statements make one suspicious that his chief concern at the moment is not in correcting this situation, but in making sure that no unfavourable publicity should attach itself to his name."

It was almost three years after Mr. Bartels put his finger on this fine piece of corruption that the Ferguson committee stumbled upon the matter. Still nothing concrete had been done about it. Dietz continued to draw his dividends from the exploitation of starvation. The Committee however was promised that action would be taken against Dietz.

The conclusion of the Ferguson Committee that "from the evidence we have, it is our opinion that the deconcentration of German industry under Law 56, has not been effectively carried out” is a triumph of under-statement.

They summarise the excuses given by everyone from General Clay down, as a reason for non-decartelisation, as a re-hash of the favourite record: "The Russians are to blame."

Despite the clear record of the Kilgore Commission to the contrary, the Russians are again blamed for the original failure to reach agreement. In the second place they are blamed because the failure to reach over-all agreement with the Russians, made it necessary to save and re-organise German industry because of Russian "belligerency." The Ferguson Committee however completely discards these arguments as so much mumbo-jumbo and nails the Clay, Draper, Wilkinson and Co. tactics for what they were, high-level sabotage.

The report cites a JCS directive as late as July 15, 1947, which states "Pending agreement among the occupying powers, you will, in your zone prohibit all cartels and cartel-like organisations and effect a dispersion of ownership and control of German industry..." Clear enough.

The report has something to say about the personal opinions of some of the men who sabotaged the Potsdam Agreement from the earliest days of occupation. It quotes replies of Mr. Lawrence Wilkinson, at first in charge of Department of Industry, later Clay's Economic Adviser, to questions put by Committee member Isseks, as to whether he had expressed his opposition to Decartelisation Law 56.

Mr. Wilkinson: "Many times..." and he refers to a specific interview with twelve American editors who visited Berlin.

"I explained that the policies of the U.S. Government as set forth in the Potsdam Agreement and in directives from the joint chiefs of staff to Military Government called for important measures on demilitarisation, reparations, restitution, denazification and decartelisation which, in their execution, could not fail to have a most disruptive effect upon other policies of military government which were directed towards the economic reconstruction of Germany."

In other words, Mr. Wilkinson, occupying one of the most important posts of military government, was opposed to and did himself oppose, every important measure to which his government was committed. Nor can Washington escape responsibility by saying: "We were let down by the men in the field." Washington appointed the key men, knew exactly what they were up to over a period of years, and apart from periodic admonitions "for the record," did nothing about it. Indeed in some cases, External Assets for instance, the sabotage was directed on the highest level from Washington itself.

"To hell with disarming Germany," says Wilkinson in. effect, "let's put the German trusts back on their feet, turn industry back to its Nazi owners and directors, let Russia whistle for reparations."

Despite all the commissions of enquiry, Congressional investigations, the Wilkinsons and Drapers have had their way. They saved German industry and put its Nazi owners and directors back in the saddle. Mr. Wilkinson's remarks were of course, "off the record" to the editors. He never expressed such opinions openly, as he explained to Mr. Isseks. He had one tongue for public opinion and another for his executives.

"In numerous conversations with members of the Decartelisation Branch and with other officials of Military Government, and never to the press nor to Germans, I have expressed the fear that the blanket application of the anti-trust doctrines of the U.S. to the German economy, would not only be futile, but would also retard German recovery," confessed Mr. Wilkinson.

So much for Wilkinson. But, of course, he was not alone. Mr. Isseks, who seemed to be the most active member of the Committee with questions which were always pertinent, succeeded in extracting similar statements from General Draper.

Mr. Isseks: "Were your views the same as Mr. Wilkinson's in October, 1946, General Draper?"

Gen. Draper: "That is a good deal of testimony."

Mr. Isseks: "Do you want to read it?"

Gen. Draper: "In a general way, I certainly believe that reparations naturally reduced production and reduced economy; and denazification too by taking some of the management away. Even though it was desirable, it certainly took some of the brains away. Decartelisation, if carried to extremes would do the same, and I held these views."

One wonders what "extremes" General Draper had in mind. Such as asking Bosch to get rid of some of its foreign companies, then quickly apologising and asking Bosch to forget the matter, when the firm reacted unfavourably?

General Draper expressed himself more clearly to a group of 13 business men who visited Germany early in 1947. Discussing Law 54, he said: "With no desire to criticise the principle of this law as it has been written, we do however, recommend, if at all possible, that the enforcement of these regulations be postponed, or at least substantially modified, until the industrial economy is in a reasonable state of operation."

General Draper, in other words, was continuing the, work of his employers, Messrs. Dillon Read & Co., helping the German and Nazi industrialists in a sense infinitely more valuable than the hundred million dollar loan Dillon Read gave after World War I.

General Clay, although he was too clever to express his views as openly as Draper and Wilkinson, nevertheless had the same outlook. He directed and supported what can only be regarded as a conspiracy to defeat the avowed aims of the Allies in Germany. The solemn discussions in Control Council meetings on reparations, denazification, decartelisation and demilitarisation could only be farcical and hypocritical, when men at the top of the U.S. military administration held such views and by their own evidence openly sabotaged not only the Potsdam decisions but also directives of their own government.

There is no doubt that similar views were held by most of the top administrators in the British Control Commission, but unfortunately, they were able to avoid royal commissions of enquiry. There was no possibility for any basic divergence of views between knightly Sir Percy and knightly Sir Cecil, representatives of the highest stages of British capitalism in Glasgow and Birmingham, and the Drapers and Wilkinsons. There may have been occasional clashes on spheres of national interests, but none on the fundamental questions of preserving the German trusts.

"The task is stupendous" reported Hawkins to the U.S. Secretary of War, on September 23, 1947, when Hawkins was still interested in carrying out his duties honestly. "Those to do it are few and the weight and the power of the opposition continues to be titanic. Yet in that setting, the Decartelisation program is moving towards its objective of eliminating an economic condition which was recognised throughout the world as having contributed more than any other single factor to the rise of the Nazi state."

The "titanic" opposition that time was Draper and Wilkinson, supported by the British, but there was no doubt in Hawkins’ mind why it was necessary to break up the combines. He did not hold out for breaking up the trusts for very long, however. Once he was moved upstairs as assistant to Wilkinson, he became an enthusiast for preserving them intact.

By 1948, anyone still fighting for decartelisation was regarded as something of a traitor, as is illustrated by the case of Mr. Alexander Sacks, a minor official in Decartelisation Branch. The Ferguson Committee requested he be made available to give evidence. On the basis of the information he gave, he was invited to submit a memorandum setting forth his views as to the reasons for failure to carry out the programme. The memo. was prepared and handed to the Committee. It contained certain criticisms of Messrs. Wilkinson and Bronson. Wilkinson was shown a copy and was not slow to react.

Sacks was immediately dismissed and told he would be court-martialled. Proceedings indeed were started against him. Wilkinson did not base this action on Sacks’ criticism of himself. In a note to the Personnel Officer, recommending disciplinary action and dismissal of Sacks, he said: "It will be noted that the attached memorandum attacks the integrity and good faith of the Under Secretary of the Army... etc." (Sacks had also criticised Draper not as Under-Secretary of the Army but in his former capacity as Economic Adviser.)

After charges were filed against Sacks and he had been dismissed from the Army, the Ferguson Committee went into action, had proceedings stopped and Sacks reinstated, pending at least the publication of the Ferguson report.

Despite the great mass of carefully documented evidence, the "confessions" of the chief culprits, the Ferguson Committee produced very modest conclusions and recommendations. In most cases Mr. Isseks added his separate opinions which were a little stronger than those of the rest of the Committee.

"We have been impressed" states the main body of the report, "by the fact that those with direct responsibility for carrying out the work of the Decartelisation Branch have not had the record of accomplishment in connection with decartelisation and particularly with deconcentration that one would like to see in persons in such positions. There is evidence, furthermore, that some, including those responsible for review of the actions, have not always been in complete sympathy with the program."

A very wishy-washy way of saying that the whole programme was being run by a gang of saboteurs and wreckers involved in a highly dangerous conspiracy to restore Nazidom, put the Ruhr magnates back in power and wreck world peace. Mr. Isseks added his opinion that Wilkinson, Hawkins and Bronson should be removed from their jobs. Nobody, however, suggested that they should be impeached as would seem reasonable from the evidence offered, as they had deliberately frustrated and sabotaged what at one period, at least, was United States' policy, not to mention the sabotage of agreements solemnly entered into with the Soviet Union and Great Britain.

Mr. Isseks memorandum attached to the joint report makes a few interesting points:

"I think," he writes, "that the lack of action on the part of representatives of military government cannot be attributed to the failure of multilateral or bilateral negotiations." So much for the excuse that the Russians were to blame.

"It was the clear policy of the United States to carry out the programme unilaterally if it could not be done multilaterally. This was never done."

Isseks then puts the blame squarely on Clay for having stopped the programme of breaking up heavy industry and camouflaging it by advising his staff that "the problem was only that of giving precedence to consumer goods cases."

"The program was completely nullified," continues Isseks’ memo., "at the end of May, 1948, when Mr. Wilkinson, Economic Adviser, and his deputy, Mr. Hawkins, pigeon-holed the only consumer goods case submitted to them. "

Mr. Isseks then puts his finger on the artful methods used to play for time to save the trusts.

"The procedural requirements and complex regulations... rendered it virtually impossible to prosecute the program successfully within any reasonable period of time." He quotes a Mr. Johnston Avery, Chief of Enforcement Section, who resigned in disgust in May, 1948, as saying, "It was a masterpiece of confusion. I complained strongly at the time and the only satisfaction I could get out of Hawkins was 'that's the way General Draper wants it.'I think every member of my staff, five lawyers and three investigators, complained to me that it was impossible ever to break up a German monopoly under that procedure. One member of my staff figured that if the German enterprise took advantage of every step provided it would take more than two years before we reached the point of ordering a dissolution, if indeed we ever reached that point."

The delay of two years was not accidental in Mr. Isseks’ view, but expressly intended to carry the procedure over into 1949, after the November elections, which indeed it did.

"Mr. Avery and Mr. Martin have both testified," continues Isseks, "that subsequent to the November, 1946, elections (in which the Republicans made huge gains which bolstered their hopes for a victory in November, 1948) it was frequently stated by top-ranking persons in Military Government that after the November, 1948, national elections the entire decartelisation program would be changed, because of the prospect of a change in the Executive Branch of the United' States Government."

Isseks then cites a letter dated October 25, 1948, written by an American business man, Kenneth I. Myers, who had interests in Germany. The latter was written to Mr. Spencer, Chief of the U.S. Commerce and Industry Group, and concludes: "There is, I think, a very reasonable expectation that policy and procedure in this matter (i.e., deconcentration of industry. – Author) is headed for a thorough review under the next administration. Consequently it is our hope that precipitous action will not be taken until there has been an opportunity for such a review." And as big business representatives were already running the show, Spencer forwarded the letter to General Adcock of the War Department with the following comment:

"Info. on the fact that decartelisation may be reviewed and with a lot of support from American industry." Mr. Spencer could promise in Washington the same support by American heavy industry for German industry as the latter had been receiving in Germany from Clay, Draper, Wilkinson and Co.

It only remains to add that a profound, death-like gloom settled over American headquarters in Berlin when the elections results were announced in November, 1948. Clay and his colleagues had been so sure of a Republican victory that for several days before the elections the U.S. licensed German press had been ridiculing Truman, Roosevelt, the New and the Fair Dealers. The explosion of an atomic bomb in General Clay's Zehlendorf headquarters could not have produced a greater surprise than the Republican defeat. John Foster Dulles had already been to Berlin and straightened out his quarrels with Clay, in his capacity as the new Secretary of State.

Not that German industrialists had much to fear from the new Truman administration. There was still no danger that their industrial trusts would be taken away or broken up. But the American people had voted against war in November, 1948, and that meant at least a slowing up of the plans to revive the war industries on the scale desired by Clay and Co.

Clay could hand over his job in Germany to the civilian High Commissioner McCloy well satisfied that he had accomplished his aims. He had saved German heavy industry intact – and its Nazi bosses. The Kilgore Commission and the Ferguson Commission could expose his intrigues and sabotage, but they would not have any practical effect of harming the German trusts. High Commissioner McCloy was handed a Western Germany with its heavy industry intact and consolidated as in the Hitler days.

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