The Chairman

by Kai Bird

  With this, Stimson and McCloy knew they would have to toughen the initial draft of what now became known as JCS 1067. Simultaneously, Morgenthau and his people, including John Pehle, went to work on their own draft of a plan for Germany’s occupation. On September 4, 1944, Morgenthau had McCloy, Stimson, Harry White, and Harry Hopkins over for an informal dinner. It was a “pleasant dinner,” according to Stimson, “but we were all aware of the feeling that a sharp issue is sure to arise over the question of the treatment of Germany. Morgenthau is, not unnaturally, very bitter. . . .”84

  Morgenthau had quite a different assessment of the dinner. In a phone conversation the next morning with Hopkins, he sarcastically mimicked Stimson’s views: “All you’ve got to do is let kindness and Christianity work on the Germans.”

  Hopkins replied, “Oh, boy . . . But fundamentally, I think it hurts him so to think of the non-use of property [referring to Morgenthau’s desire to shut down the Ruhr Valley industries].. . . He’s grown up in that school so long that property, God, becomes so sacred.”

  At the end of this conversation, Morgenthau proposed that Stimson had another motive: “Of course, what he wants—he didn’t come quite clean—what he wants is a strong Germany as a buffer state [to the U.S.S.R.] and he didn’t have the guts to say that.”85

  Morgenthau didn’t think McCloy was much better. About the same time, he weighed in against a suggestion from Eisenhower that McCloy be named high commissioner of an occupied Germany. He told Hopkins on another occasion, “McCloy isn’t the man to go.. . . After all, his clients are people like General Electric, Westinghouse, General Motors, and Stimson’s are too.”86

  By this time, Roosevelt had appointed Hopkins, Stimson, Morgenthau, and Cordell Hull to a committee to decide the issue of policy toward Germany. By early September, Morgenthau had a draft of his own plan, which envisioned the total destruction of all German heavy industry, specifically any industry related to arms manufacture. It called for the pastoralization of Germany, though light industry would be allowed to produce basic consumer items. The country would be broken into two independent states, and the highly industrialized Ruhr Valley would become an international zone forbidden to trade with the rest of Germany.

  Stimson thought the proposal most unwise, and over the next few weeks he, McCloy, and Morgenthau jockeyed to influence Roosevelt on the issue. Stimson was willing to incorporate some aspects of Morgen-thau’s plan—specifically, the idea of internationalizing the Ruhr Valley. On September 7, he had lunch with McCloy and Jean Monnet to talk over that scheme. Unlike Morgenthau, Monnet had no intention of stripping the Ruhr of its steel industries or flooding its coal mines. Rather, Monnet hoped to have the Ruhr produce for the benefit of all Europe. He was even willing to see the Soviets serve as one of the “trustees” to manage the Ruhr’s factories. On this point Stimson agreed, but, to his surprise, McCloy expressed considerable alarm at “giving this addition to Russia’s power.”87

  By September 9, it was beginning to become clear that Stimson and McCloy would lose the battle. They met that day with Roosevelt, and the president abruptly said he was inclined to let the Germans eat from “soup kitchens.”88 Shortly afterward, Roosevelt left for a conference with Churchill in Quebec. Unknown to either Stimson or McCloy, he allowed Morgenthau to attend the conference. A few days later, when they learned of Morgenthau’s presence in Quebec from the newspapers, McCloy became despondent. “I have never seen him so depressed as this made him,” Stimson recorded for his diary. “It is an outrageous thing. Here the President appoints a committee . . . and, when he goes off to Quebec, he takes the man who really represents the minority and is so biased by his Semitic grievances that he is really a very dangerous advisor to the President at this time.”89

  Two days later, Stimson learned from McCloy that Roosevelt had indeed accepted Morgenthau’s counsel and rejected the War Department’s occupation plans. The decision seemed firm, since not only Roosevelt but also Churchill had endorsed the Morgenthau Plan. Stimson angrily dictated for his diary, “I have yet to meet a man who is not horrified with the ‘Carthaginian’ attitude of the Treasury. It is semitism gone wild for vengeance and, if it is ultimately carried out (I cannot believe that it will be), it as sure as fate will lay the seeds for another war in the next generation.”90 McCloy agreed. Both as a veteran and as a lawyer in Europe during the 1920s, he had long ago concluded that the “tough peace” imposed on Germany at Versailles was a major cause of the next war.

  As was his habit when upset by a turn of events, McCloy had lunch with Harold Ickes the next day. After complaining about Morgenthau’s “back door” tactics, he asked Ickes what he thought should be done with the Germans. Ickes at first jocularly suggested that they “all ought to be sterilized,” but after discussing the matter agreed that, “much as I hate the Germans and mistrust them, I do not believe that a vindictive peace would mean anything but another war. . . .” Both men agreed that “Morgenthau ought not to have anything to do with this matter for the simple reason that he is a Jew and the charge will be made that through him the Jews are dictating peace terms that no one in the end will be willing to accept.”91

  McCloy felt very strongly about this issue. But whether he had anything to do with leaking the terms of the Morgenthau Plan to the press two weeks later is a matter for conjecture. Someone gave The New York Times’ Arthur Krock specific details of both the plan itself and how Morgenthau had pushed it through over the opposition of the president’s other advisers. Morgenthau was furious, and though McCloy was the obvious suspect, he could not bring himself to believe that the assistant secretary was responsible: “I don’t think McCloy would go out and deliberately cut my throat . . . [or] stab me in the back.”92 Krock was one reporter whom McCloy liked and felt willing to talk with during this period of the war. In any event, Krock’s articles, and subsequent revelations by Drew Pearson, created a furor. Most editorialists came out against the president, partly on the argument that a hard peace would encourage Germany to fight to the bitter end. By the end of the month, Roosevelt was wondering whether he had misjudged the political pulse of a hard peace for Germany. He called up Stimson and intimated that he had almost decided that he had made a “false step.”93 He said he really didn’t intend to make Germany a purely agricultural country. Later, over lunch, he grinned broadly at Stimson and confessed, “Henry Morgenthau pulled a boner.”94

  By the end of October, McCloy and Stimson were clearly winning the public-relations battle against Morgenthau’s “Carthaginian” peace. But by then it was also clear that the optimistic talk in August of an early collapse of Germany was misplaced. The Germans had finally dug in on their borders and created a stable front. Eisenhower and Marshall now knew the war would not end in 1944.

  CHAPTER 11

  Victory in Europe

  “There is complete economic, social and political collapse going on in Central Europe. . . . We are going to have to work out a practical relationship with the Russians.”

  JOHN J. MCCLOY TO PRESIDENT HARRY S. TRUMAN APRIL 1945

  The struggles surrounding the Morgenthau Plan, the end of the Japanese American internment, and the question of whether to bomb the Polish death camps were only three of many weighty issues crossing McCloy’s desk in the autumn of 1944. He was also working on proposals for a war-crimes tribunal, and following up on some of the financial initiatives agreed upon at the Dumbarton Oaks conference in August, which created two pillars of the postwar system, the World Bank and the International Monetary Fund. Simultaneously, he was involved in negotiations with the Saudis for use of airfields in the Arabian Peninsula. And he was beginning to turn his attention to Soviet-American relations. One evening in October, over dinner, he and Ellen received a particularly pessimistic briefing from Averell Harriman on secret-police methods in the Soviet Union. In contrast to Marshall, Roosevelt, and many others in the administration, McCloy had always been skeptical of the prospects for maintaining the “Grand Alliance” in the
postwar period. What Harriman had to tell him about Soviet power and intentions greatly worried him.

  On the other hand, these worries did not alter his views on the politically sensitive question of whether members of the Communist Party should be allowed to receive officer commissions. This issue, raised and settled by McCloy earlier in the war, was repeatedly resurrected by Army G-2 types in the summer and autumn of 1944. Exasperated by this pattern of overzealous security investigations, he wrote Marshall in June to complain that G-2’s actions could “result in a War Department ‘red scare’ which would penalize perfectly loyal Americans for honestly held opinions on controversial topics.”1 When Major General Clayton Bissell, G-2’s assistant chief of staff, raised the issue once again late in 1944, McCloy firmly instructed him that past membership in the Communist Party was not evidence of disloyalty.2 A few months later, in February 1945, McCloy was required to testify before a special congressional subcommittee appointed to investigate the appointment of army officers with alleged communist sympathies. Under harsh questioning from congressional conservatives, McCloy refused to change his position. The army, he said, would investigate and dismiss officers found to be disloyal; but left-wing sympathies, or even proof of lapsed membership in the Communist Party, would not constitute grounds for dismissal.3

  All of these issues, of course, were important and politically sensitive, and therefore justified the personal attention McCloy gave to them. But it was also obvious that he was spread too thin. “He has taken over so much that he can’t do it all,” Stimson recorded in his diary that autumn. By now, Washington society assumed McCloy was running the War Department. One morning he was embarrassed to read a rare front-page editorial in the Washington Post suggesting that he should shove his “Colonel” aside and become secretary of war. He knew that Stimson at the age of seventy-eight was slowing down, and had confided to Ickes that he sometimes had to struggle to keep the secretary awake in late-afternoon meetings. But he still respected the “Colonel’s” judgment, and his loyalty to the man left no room even to consider the idea of replacing him. When the publisher of the Washington Post, Eugene Meyer, wanted to follow up his editorial with an in-depth profile, McCloy refused to see the reporter assigned to the story.4

  Less than three weeks later, Stimson shouldered McCloy with an additional burden by designating him the “recorder” for a revived “Committee of Three,” consisting of Stimson, the newly appointed Secretary of State Edward R. Stettinius, and Secretary of the Navy James V. Forrestal. Both Stettinius, a former General Motors executive, and Forrestal, a Dillon, Read & Co. investment banker, perhaps because they assumed the aging Stimson would not appear at many of its meetings, urged that McCloy attend in order to “formulate” the Committee’s agenda.5 Stimson quickly concurred.

  The Committee of Three rapidly became the venue for the most important decisions in the remainder of the war. Decisions made there were carried out on an administrative level by McCloy, in his capacity as chairman of yet another organization, the State-War-Navy Coordinating Committee. SWNCC, as it was known, was a direct precursor of what later became the National Security Council. Its creation, and the appointment of Stimson’s powerful aide as its chairman, were essentially a ratification of the War Department’s de facto supremacy in foreign affairs. As chairman of SWNCC, McCloy would now devote the remainder of the war to the larger issues of a postwar peace. Much remained to be decided. Would the United States join a postwar United Nations? Would the Manhattan Project produce an atomic weapon and, if so, should it be used to end the war and keep the postwar peace? On what basis would the Allies occupy and govern Germany and Japan? And could the Soviet-American alliance survive the defeat of fascism?

  McCloy’s added responsibilities did not please everyone in Washington. Henry Morgenthau felt Stimson’s aide was monopolizing far too much information, particularly on the sensitive issue of occupation policy for Germany. In early January 1945, he learned from a State Department official that McCloy was excluding Treasury officials from all meetings on the controversial policy directive for Germany—JCS 1067. Not one to be bypassed, the crusty Treasury secretary drafted a tough memo warning the president that it would be very difficult to stamp out German militarism:

  The more I think of this problem and the more I hear and read discussion of it, the clearer it seems to me that the real motive of most of those who oppose a weak Germany . . . is simply an expression of fear of Russia and communism. It is the 20-year-old idea of a “bulwark against Bolshevism”— which was one of the factors that brought this present war down on us. . . . There is nothing that I can think of that can do more at this moment to engender trust or distrust between the United States and Russia than the position this Government takes on the German problem.6

  McCloy disagreed with these sentiments, but recognized Morgenthau’s influence with the president: over the next few months he made an effort to work with the Treasury secretary. The two men agreed that Germany should be politically decentralized, and perhaps even dismembered, and that her heavy industry should be restricted enough to destroy her capacity to make war. McCloy opposed the kind of blanket “pastoralization” favored by Morgenthau, but he did not envision a soft peace. When the State Department, behind McCloy’s back, got Roosevelt to sign off on a “Draft Directive for the Treatment of Germany” that failed even to mention dismemberment, McCloy, in “great excitement,” immediately called up Morgenthau.

  “This business is all pretty delicate,” he told the secretary, “because of the relations with the State Department, but I think that now, in the light of the fact that they went off on a frolic of their own . . . that . . . we’ve got a right to sulk on it.”

  Morgenthau quickly agreed, saying of the State Department plan, “It’s damnable, an outrage.”7

  While Stimson took a vacation in Miami for ten days, McCloy worked with Morgenthau and his aide, Harry Dexter White, on a rebuttal of the State Department’s March 10 memo. The document asserted that the State Department’s position contradicted decisions reached at both the Quebec and Yalta conferences.

  At Yalta in February 1945, Roosevelt had made any number of concessions to the Soviets in recognition of the obvious preponderance of power they possessed in Eastern Europe. Some of these were hedged in vague language that later became the source of much Soviet-American wrangling. But the agreements on Germany were far less ambiguous. Divided into four zones, occupied Germany was to pay reparations on the order of $20 billion, half of which would go to the Soviets. Moreover, it was understood by the Americans that four-power control over the industrial Ruhr valley would be necessary to ensure that these reparations were paid. The $10 billion in reparations that Stalin expected could not all come from the Eastern, less industrialized zone of occupied Germany. This essentially meant a hard peace, in which Germany’s industrial production would be taxed heavily and closely administered by the four occupying powers. As McCloy and White now reminded Roosevelt, at Yalta the Allies had agreed that “we should aim at the greatest possible contraction of German heavy industry as well as the elimination of her war potential. . . . The occupying forces should accept no responsibility for providing the German people with food and supplies beyond preventing starvation, disease, and such unrest as might interfere with the purposes of the occupation.”8 McCloy went along with this language, while reminding Morgenthau that Stimson opposed the stronger language embodied in the Quebec Agreement. He argued that no final decision on German policy should be reached until both State and the War Department had had a chance to discuss the matter. When Morgenthau saw Roosevelt later that afternoon, the president consented to a procedure whereby McCloy, Harry White, Assistant Secretary of State William L. Clayton, and several other officials would jointly work out a new draft directive for Germany.

  Over the next few days, McCloy mediated between the State and Treasury factions in a fashion that led all, including Morgenthau, to believe that deep down he agreed with their position. Despite th
eir disagreements, Morgenthau was not immune to McCloy’s sometimes playful charm. One day, as he was about to leave his office for a particularly difficult meeting with Morgenthau, McCloy was inspired to borrow a miniature spy-camera developed by Donovan’s technicians in the OSS. Morgenthau, he remembered, had placed a hidden microphone in his desk, which many of his visitors knew he used to tape-record their conversations. That day, as the meeting began, McCloy pulled the camera from his pocket and ostentatiously began snapping pictures of everyone in the room. When a startled Morgenthau demanded to know if he was taking photographs without his permission, McCloy grinned and replied, “Well, since you’ve been recording everything without our permission, I thought you wouldn’t mind if I did too.”9 After a moment of embarrassed silence, everyone in the room laughed.

  McCloy gradually persuaded Morgenthau that their positions on postwar Germany were not so far apart. He got the Treasury secretary to admit that “it is one thing to have communications and a railroad, and it is something else to have an OPA [public-works program].” After a crucial March 22 meeting with the president, McCloy made a point of briefing the prickly Treasury secretary: Roosevelt had told him, “I don’t want you to eliminate German industry—not at all. . . . I want you to change the character of it. . . . I’m not for throwing salt into the mines.” Morgenthau took this news with surprising equanimity and told McCloy he actually appreciated his frankness. “It may sound silly,” he said, “to say thank you because when I’m treated squarely it is so unusual that I have to say thank you. . . . It has happened so rarely in Washington. . . . It’s a pleasant surprise.”10

  The next day, McCloy, Morgenthau, and Will Clayton ironed out a final version of a paper entitled “Summary of U.S. Initial Post-Defeat Policy Relating to Germany.” The document had a little bit for everyone concerned. Morgenthau was pleased that it incorporated some strong language from his original plan, providing “programs of industrial disarmament and demilitarization.” The Germans would have to pay reparations, but they would not be allowed to rebuild their heavy industry in order to pay for those reparations. All members of the Nazi Party would be removed from public office or positions of responsibility in private companies. Nazi leaders would be tried, and the army demobilized. These tough peace terms were offset, however, by language that permitted the occupation authorities in each zone to re-establish centralized organs to control such “essential national public services as railroads, communications and power . . . finance and foreign affairs, and . . . production and distribution of essential commodities.” Germany would not be allowed to starve. Morgenthau, McCloy, and Clayton signed the document, and later that afternoon the president himself initialed it.