Wednesday, 29 April 2015

Germany, Greece and Enlightened Elites. (i)

The treatment Germany received from the Allies after World War II has been the subject of much interest recently. Roughly speaking, the point of those discussions is that Germany was treated with generosity by their far-sighted and magnanimous conquerors, particularly the U.S. and U.K.

In this view, the benevolent handling of Germany by the Allies allowed for the German Wirtschaftswunder. This would support both Keynesian strictly economic views, and Keynes’ beliefs in the positive role of enlightened elites as arbiters’ of human destiny.

In reality, history shows that story -- understandably popular in the Anglo-Saxon world, particularly the English Keynesian side of it -- to be inaccurate. Elites’ enlightenment counted for little.


In many respects Henry Morgenthau, Jr. (1891-1967) seemed an American version of the Keynesian enlightened bourgeois/intelligentsia: an architect by training, Morgenthau came from an influential patrician family of New York real estate moguls, linked to the Democratic Party. His father had been ambassador to Turkey, during the Wilson Administration.

As Secretary of the Treasury in the Roosevelt Administration since 1934, Morgenthau -- although himself sceptical of Keynesian ideas -- had played a pivotal role in shaping the New Deal, and exerted considerable, if informal and contested, authority in the wartime direction of economic effort of the U.S.

With their Soviet “frenemies” bearing the brunt of the cost, human and material, and American capital (in Thomas Piketty’s definition) emerging largely unscathed after 40 years turmoil, by 1944 those efforts started to bear fruit: the tide of history turned decidedly against the Axis. It was time for a resurgent U.S. to decide the world’s future and particularly of what was left of the defeated Nazi Germany.

source: Piketty, Thomas. "Capital in the 21st Century", chapter 4.

source: Piketty, Thomas. "Capital in the 21st Century", chapter 3.

During this time, following Steven (2005), a new lobby formed in the U.S. advocating a “harsh peace” with Germany. After an uncertain start with the wider public, the ostensibly bipartisan, but largely dominated by progressive writers, Society for the Prevention of World War III made inroads within the Administration, including the Justice Department (already concerned with German cartels, like I.G. Farben), the Office of the Attorney General; New-Dealers in Congress, like senator Harley M. Kilgore (D-WV), Army, the Department of Treasury, the then Office of War Information and, more importantly, within the Oval Office.

With that agenda in mind, during the September 1944 Second Quebec Conference, the American delegation released -- in what proved a serious blunder -- the Morgenthau Plan. Professedly to eliminate future German potential to wage war against her neighbours and to pay for war reparations, the Plan called for the forceful de-industrialization of Germany, and its dismemberment into pre-Bismarckian independent small states, mostly agrarian.

Quoted by Moggridge (1995), Morgenthau describes PM Churchill’s initial reaction to a previous private presentation:
"After I finished my piece he turned on the full blood of his rhetoric, sarcasm and violence. He looked on the Treasury plan, he said, as he would on chaining himself to a dead German. 
"He was slumped in his chair, his language biting, his flow incessant, his manner merciless. I have never had such a verbal lashing in my life."
For all that outburst, however, Churchill acquiesced to the plan, as it was supported by Morgenthau’s boss. After all, already in the January 1943 Casablanca Conference Churchill had been forced to accept publicly embarrassing impositions from Roosevelt, of whom Churchill would meekly admit: “I was his [i.e. Roosevelt’s] ardent lieutenant".

Worse was in store for Morgenthau. To his chagrin, the leaked proposal was badly received by most of the press, public opinion, and sectional interests inside the Administration (particularly the Department of War and the State Department, headed by more conservative, pro-business, politicians).

The Nazi propaganda machine, too, was quick to take full advantage of it. Lt. Colonel John Boettiger, Roosevelt's son-in-law, has been quoted to the effect that the propaganda afforded to the Nazis was "worth thirty divisions to the Germans."

Faced with an overwhelmingly adverse reaction, the proposal was swiftly removed from public discussion. In October 1944, Roosevelt personally denied there ever was any such plan, in spite of which, by May 1945 Harry Truman (whom succeeded Roosevelt after the latter’s death in April) accepted the Joint Chiefs of Staff directive 1067.

Morgenthau, whom Truman would sack in July 1945, has been quoted as saying that he hoped "someone doesn't recognize it [i.e. JCS 1067] as the Morgenthau Plan."


After two years occupation, beginning the Cold War, Truman dispatched former U.S. president Herbert C. Hoover to Germany and Austria in a fact-finding mission. Hoover:
“There is the illusion that the new Germany left after the annexations can be reduced to a 'pastoral state'. It cannot be done unless we exterminate or move 25,000,000 people out of it.” (here)
Allen W. Dulles (head of O.S.S. in Switzerland):
"The Marshall Plan … is not a philanthropic enterprise … It is based on our views of the requirements of American security … This is the only peaceful avenue now open to us which may answer the communist challenge to our way of life and our national security." (here)
Perhaps clearer and more to the point were the words of general Lucius D. Clay, head of the Office of Military Government, United States:
"There is no choice between being a communist on 1,500 calories a day and a believer in democracy on a thousand". (here)
(to be continued)

Stuttering George and Amnesia. Feb. 2, 2011.

Casey, S. (2005). The Campaign to Sell a Harsh Peace for Germany to the American Public, 1944-1948. History, 90(297), pp.62-92.
Moggridge, D. (1995). Maynard Keynes. London: Routledge. p. 772.

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