Morgenthau Plan

The Morgenthau Plan, proposed by United States Secretary of the Treasury Henry Morgenthau, Jr., advocated that the Allied occupation of Germany following World War II include measures to eliminate Germany's ability to wage war and to destroy enough of its industrial capacity to reduce Germany to a mainly agricultural state.

Overview
In the original proposal this was to be achieved in three main steps.
 * Germany was to be partitioned into two independent states.
 * Germany's main centers of mining and industry, including the Saar area, the Ruhr area and Upper Silesia were to be internationalized or annexed by neighboring nations.
 * All heavy industry was to be dismantled or otherwise destroyed.

At the Second Quebec Conference on September 16, 1944, U.S. President Franklin D. Roosevelt and Henry Morgenthau, Jr. persuaded the initially very reluctant British Prime Minister Winston Churchill to agree to the plan, likely using a $6 billion Lend Lease agreement to do so. Churchill chose however to narrow the scope of Morgenthau's proposal by drafting a new version of the memorandum, which ended up being the version signed by the two statesmen.

The plan's program, the memorandum concluded, "is looking forward to converting Germany into a country primarily agricultural and pastoral in its character."

News of the existence of the plan was leaked to the press. President Roosevelt's response to press inquiries was to deny the press reports.

In wartime Germany, Propaganda Minister Joseph Goebbels was able to use the plan to bolster the German resistance on the Western front.

In occupied Germany, the thinking behind the Morgenthau plan was reflected in the U.S. occupation directive JCS 1067 and in the Allied Industrial plans for Germany aimed at "industrial disarmament", designed to reduce German economic might and to destroy Germany's capability to wage war by complete or partial deindustrialization and restrictions imposed on utilization of remaining production capacity. By 1950, after the virtual completion of the by then much watered-down "level of industry" plans, equipment had been removed from 706 manufacturing plants in the west and steel production capacity had been reduced by 6,700,000 tons.

Partly for the sake of lowering German standards, restrictions were also enacted on food relief imports.

According to some historians the U.S. government formally abandoned the Morgenthau plan as promoted occupation-policy in September 1946 with Secretary of State James F. Byrnes' speech Restatement of Policy on Germany.

Unhappy with the Morgenthau-plan consequences, former U.S. President Herbert Hoover remarked in a report dated 18 March 1947: It is argued that it was Hoover's March 1947 statements in his report that led to the end of the Morgenthau plan and to a change in U.S. policy.
 * "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."

In July 1947 with the advent of the initial planning for the Marshall Plan designed to help the now deteriorating European economy recover, the restrictions placed on annual German steel production were lessened. Permitted steel production quotas were raised from 25% of pre-war capacity to 50% of pre-war capacity. The U.S. occupation directive JCS 1067, whose economic section had prohibited "steps looking toward the economic rehabilitation of Germany [or] designed to maintain or strengthen the German economy", was replaced by the new U.S. occupation directive JCS 1779 which instead stated that "an orderly, prosperous Europe requires the economic contributions of a stable and productive Germany."

In early 1947 four million German soldiers were still being used as forced labour in the UK, France, and the Soviet Union.

In 1951 West Germany agreed to join the European Coal and Steel Community (ECSC) the following year. This meant that some of the economic restrictions on production capacity and on actual production that were imposed by the International Authority for the Ruhr were lifted, and that its role was taken over by the ECSC.

Although the dismantling of West German industry ended in 1951, "industrial disarmament" lingered in restrictions on actual German steel production, and production capacity, as well as on restrictions on key industries. All remaining restrictions were rescinded on May 5, 1955. According to Frederick Gareau, noting that although U.S. policy had changed well before that, "the last act of the Morgenthau drama occurred on that date [May 5, 1955] or when the Saar was returned to Germany [January 1, 1957]."

Vladimir Petrov concludes that the Allies "delayed by several years the economic reconstruction of the wartorn continent, a reconstruction which subsequently cost the United States billions of dollars."

Morgenthau's memorandum
The original memorandum, written sometime between January and early September 1944, signed by Morgenthau, and headed "Suggested Post-Surrender Program for Germany" is preserved at the Franklin D. Roosevelt Presidential Library and Museum. The text, and a facsimile image, can be viewed online.

The main provisions can be summarized as follows:
 * "1. Demilitarization of Germany. : It should be the aim of the Allied Forces to accomplish the complete demilitarization of Germany in the shortest possible period of time after surrender.  This means completely disarming the German Army and people (including the removal or destruction of all war material), the total destruction of the whole German armament industry, and the removal or destruction of other key industries which are basic to military strength.
 * 2. Partitioning of Germany. : (a) Poland should get that part of East Prussia which doesn't go to the USSR and the southern portion of Silesia as indicated on the attached map, (Appendix A).
 * (b) France should get the Saar and the adjacent territories bounded by the Rhine and the Moselle rivers.
 * (c) As indicated in part 3 an International zone should be created containing the Ruhr and the surrounding industrial areas.
 * (d) The remaining portion of Germany should be divided into two autonomous, independent states, (1) a South German state comprising Bavaria, Württemberg, Baden and some smaller areas and (2) a North German state comprising a large part of the old state of Prussia, Saxony, Thuringia and several smaller states.
 * There shall be a custom union between the new South German state and Austria, which will be restored to her pre-1938 political borders.


 * 3. The Ruhr Area. : (The Ruhr, surrounding industrial areas, as shown on the attached map, including the Rhineland, the Kiel Canal, and all German territory north of the Kiel Canal.)
 * Here lies the heart of German industrial power, the cauldron of wars. This area should not only be stripped of all presently existing industries but so weakened and controlled that it can not in the foreseeable future become an industrial area.  The following steps will accomplish this:
 * (a) Within a short period, if possible not longer than 6 months  after the cessation of hostilities, all industrial plants and equipment not destroyed by military action shall either be completely dismantled and removed from the area or completely destroyed.  All equipment shall be removed from the mines and the mines shall be thoroughly wrecked.
 * It is anticipated that the stripping of this area would be accomplished in three stages:
 * (i) The military forces immediately upon entry into the area shall destroy all plants and equipment which cannot be removed.
 * (ii) Removal of plants and equipment by members of the United Nations as restitution and reparation (Paragraph 4).
 * (iii) All plants and equipment not removed within a stated period of time, say 6 months, will be completely destroyed or reduced to scrap and allocated to the United Nations.
 * (b) All people within the area should be made to understand that this area will not again be allowed to become an industrial area.  Accordingly, all people and their families within the area having special  skills or technical training should be encouraged to migrate permanently from the area and should be as widely dispersed as possible.
 * (c) The area should be made an international zone to be governed by an international security organization to be established by the United Nations.  In governing the area the international organization should be guided by policies designed to further the above stated objectives.


 * 4. Restitution and Reparation. : Reparations, in the form of recurrent payments and deliveries, should not be demanded.  Restitution and reparation shall be effected by the transfer of existing German resources and territories, e.g.
 * (a) by restitution of property looted by the Germans in territories occupied by them;
 * (b) by transfer of German territory and German private rights in industrial property situated in such territory to invaded countries and the international organization under the program of partition;
 * (c) by the removal and distribution among devastated countries of industrial plants and equipment situated within the International Zone and the North and South German states delimited in the section on partition;
 * (d) by forced German labor outside Germany; and
 * (e) by confiscation of all German assets of any character whatsoever outside of Germany."

The Second Quebec Conference (September 1944)
At the Second Quebec Conference, a high-level military conference held in Quebec City, September 12–16, 1944, the British and United States governments, represented by Winston Churchill and Franklin D. Roosevelt, respectively, reached agreement on a number of matters, including a plan for Germany, based on Morgenthau's original proposal. The memorandum drafted by Churchill provided for "eliminating the warmaking industries in the Ruhr and the Saar... looking forward to converting Germany into a country primarily agricultural and pastoral in its character." However, it no longer included a plan to partition the country into several independent states.

This memorandum, together with the later effected "industrial disarmament" plans in occupied Germany, is generally known as the real Morgenthau plan.

(See United States Department of State Foreign relations of the United States, Conference at Quebec, 1944 pp. 466–67 for the full text of the signed memoranda.)

Roosevelt's support for the plan
Secretary of the Treasury Henry J. Morgenthau Jr. convinced Roosevelt to write to Secretary of State Cordell Hull and Secretary of War Henry L. Stimson saying that a US occupation policy which anticipated that "Germany is to be restored just as much as the Netherlands or Belgium" was excessively lenient. A better policy would have the Germans "fed three times a day with soup from Army soup kitchens" so "they will remember that experience the rest of their lives." Morgenthau was the only Cabinet member invited to participate in the Quebec Conference during which the Plan was agreed to.

Roosevelt's motivations for agreeing to Morgenthau's proposal may be attributed to his desire to be on good terms with Joseph Stalin and to a personal conviction that Germany must be treated harshly. In an August 26, 1944 letter to Queen Wilhelmina of the Netherlands, Roosevelt wrote that "There are two schools of thought, those who would be altruistic in regard to the Germans, hoping by loving kindness to make them Christians again — and those who would adopt a much 'tougher' attitude. Most decidedly I belong to the latter school, for though I am not bloodthirsty, I want the Germans to know that this time at least they have definitely lost the war." Roosevelt is also quoted as saying to Morgenthau that "We have got to be tough with Germany and I mean the German people not just the Nazis. We either have to castrate the German people or you have got to treat them in such a manner so they can't just go on reproducing people who want to continue the way they have in the past."

The Morgenthau plan faced strong opposition within Roosevelt's government. Henry L. Stimson, Secretary of War, said he had "yet to meet a man who was not horrified at the 'Carthaginian' attitude of the Treasury. It is Semitism gone wild for vengeance and will lay the seeds of another war in the next generation." He further pointed out that the plan violated the Atlantic Charter, which promised equal opportunity for the pursuit of happiness to both victors and vanquished. In a note to the president dated September 5, 1944, Stimson wrote: "We contemplate the transfer from Germany of ownership of East Prussia, Upper Silesia, Alsace and Lorraine (each of them except the first containing raw materials of importance) together with the imposition of general economic controls. We also are considering the wisdom of a possible partition of Germany into north and south sections, as well as the creation of an internationalized State in the Ruhr. With such precautions, or indeed with only some of them, it certainly should not be necessary for us to obliterate all industrial productivity in the Ruhr area, in order to preclude its future misuse. Nor can I agree that it should be one of our purposes to hold the German population "to a subsistence level" if this means the edge of poverty."

Secretary of State Hull was outraged by Morgenthau's "inconceivable intrusion" into foreign policy. Hull told Roosevelt that the plan would inspire last-ditch resistance and cost thousands of American lives. Hull was so upset over the plan that it prompted his resignation from the administration. This assertion of the reason for Hull's resignation is highly debatable; Hull's letter of resignation, makes clear that ill health was the cause, and that Hull wanted to continue in office: "It is with inexpressible disappointment that I find it necessary, for considerations of health, to retire from public service. ...It is a supreme tragedy to me personally that I am unable to continue making my full contribution to such great international undertakings as the creation of the postwar peace organization, the solution of the many other problems involved in the promotion of international cooperation, and the final development of a full and complete structure of a world order under law.  When I recover my strength, I shall individually be always at your service in every possible way."

Churchill's support for the plan
Churchill was not inclined to support the proposal, saying "England would be chained to a dead body." Roosevelt reminded Churchill of Stalin's comments at the Tehran Conference, and asked "Are you going to let Germany produce modern metal furniture? The manufacture of metal furniture can be quickly turned in the manufacture of armament." The meeting broke up on Churchill's disagreement but Roosevelt suggested that Morgenthau and White continue to discuss with Lord Cherwell, Churchill's personal assistant.

Lord Cherwell has been described as having "an almost pathological hatred for Nazi Germany, and an almost medieval desire for revenge was a part of his character". Morgenthau is quoted as saying to his staff that "I can't overemphasize how helpful Lord Cherwell was because he could advise how to handle Churchill". In any case, Cherwell was able to persuade Churchill to change his mind. Churchill later said that "At first I was violently opposed to the idea. But the President and Mr. Morgenthau — from whom we had much to ask — were so insistent that in the end we agreed to consider it".

Some have read into the clause "from whom we had much to ask" that Churchill was bought off, and note a September 15 memo from Roosevelt to Hull stating that "Morgenthau has presented at Quebec, in conjunction with his plan for Germany, a proposal of credits to Britain totalling six and half billion dollars." Hull's comment on this was that "this might suggest to some the quid pro quo with which the Secretary of the Treasury was able to get Mr. Churchill's adherence to his cataclysmic plan for Germany".

Harry Dexter White, regarded by many as the principal author of the plan, was after his death exposed as having passed information on to the Soviets, who were U.S. allies at the time.

At Quebec White made sure that Lord Cherwell understood that economic aid to Britain was dependent on British approval of the plan. During the signing of the plan, which coincided with the signing of a loan agreement, President Roosevelt proposed that they sign the plan first. This prompted Churchill to exclaim: "What do you want me to do? Get on my hind legs and beg like Fala?"

Partial rejection of the plan
Anthony Eden expressed his strong opposition to the plan and, with the support of some others, was able to get the Morgenthau Plan set aside in Britain. In the U.S., Hull argued that nothing would be left to Germany but land, and only 60% of the Germans could live off the land, meaning 40% of the population would die. Stimson expressed his opposition even more forcefully to Roosevelt. According to Stimson, the President said that he just wanted to help Britain get a share of the Ruhr and denied that he intended to fully deindustrialize Germany. Stimson replied, "Mr. President, I don't like you to dissemble to me" and read back to Roosevelt what he had signed. Struck by this, Roosevelt said he had "no idea how he could have initialed this". The theory that Roosevelt was not truly rejecting the plan, just postponing the decision until a more propitious time is supported by Eleanor Roosevelt, who states that she never heard him disagree with the basics of the plan, and who believed that "the repercussions brought about by the press stories made him feel that it was wise to abandon any final solution at that time."

On 10 May 1945 President Truman approved JCS (Joint Chiefs of Staff policy) 1067 which directed the U.S. forces of occupation in Germany to "...take no steps looking toward the economic rehabilitation of Germany [nor steps] designed to maintain or strengthen the German economy".

Dismantling of (West) German industry ended in 1951, but "industrial disarmament" lingered in restrictions on actual German steel production, and production capacity, as well as on restriction on key industries. All remaining restrictions were rescinded on May 5, 1955. "The last act of the Morgenthau drama occurred on that date or when the Saar was returned to Germany."

Wartime consequences
Drew Pearson publicized the plan on September 21, although Pearson himself was sympathetic to it. More critical stories in the New York Times and The Wall Street Journal quickly followed. Joseph Goebbels used the Morgenthau Plan in his propaganda. Goebbels said that "The Jew Morgenthau" wanted to make Germany into a giant potato patch. The headline of the Völkischer Beobachter stated, “ROOSEVELT AND CHURCHILL AGREE TO JEWISH MURDER PLAN!”

The Washington Post urged a stop to helping Dr. Goebbels: if the Germans suspect that nothing but complete destruction lies ahead, then they will fight on. The Republican presidential candidate Thomas Dewey complained in his campaign that the Germans had been terrified by the plan into fanatical resistance, "Now they are fighting with the frenzy of despair."

General George Marshall complained to Morgenthau that German resistance had strengthened. Hoping to get Morgenthau to relent on his plan for Germany, President Roosevelt's son-in-law Lt. Colonel John Boettiger who worked in the War Department explained to Morgenthau how the American troops who had had to fight for five weeks against fierce German resistance to capture the city of Aachen had complained to him that the Morgenthau Plan was "worth thirty divisions to the Germans." Morgenthau refused to relent.

On December 11, OSS operative William Donovan sent Roosevelt a telegraph message from Bern, warning him of the consequences that the knowledge of the Morgenthau plan had had on German resistance; by showing them that the enemy planned the enslavement of Germany it had welded together ordinary Germans and the regime; the Germans continue to fight because they are convinced that defeat will bring nothing but oppression and exploitation. The message was a translation of a recent article in the Neue Zürcher Zeitung. "So far, the Allies have not offered the opposition any serious encouragement. On the contrary, they have again and again welded together the people and the Nazis by statements published, either out of indifference or with a purpose. To take a recent example, the Morgenthau plan gave Dr. Goebbels the best possible chance. He was able to prove to his countrymen, in black and white, that the enemy planned the enslavement of Germany.  The conviction that Germany had nothing to expect from defeat but oppression and exploitation still prevails, and that accounts for the fact that the Germans continue to fight.  It is not a question of a regime, but of the homeland itself, and to save that, every German is bound to obey the call, whether he be Nazi or member of the opposition."

Influence on policy
Following the negative public reaction to the publishing of the Morgenthau plan President Roosevelt disowned it, saying "About this pastoral, agricultural Germany, that is just nonsense. I have not approved anything like that. I am sure I have not. . . . I have no recollection of this at all." The president died before the end of the war, and the plan never took effect.

In January 1946 the Allied Control Council set the foundation of the future German economy by putting a cap on German steel production, the maximum allowed was set at about 25% of the prewar production level. Steel plants thus made redundant were dismantled.

Also as a consequence of the Potsdam conference, the occupation forces of all nations were obliged to ensure that German standards of living were made equal to the level of its European neighbors with which it had been at war with, France in particular. Germany was to be reduced to the standard of life it had known in 1932.. The first "level of industry" plan, signed in 1946, stated that German heavy industry was to be lowered to 50% of its 1938 levels by the closing of 1,500 manufacturing plants

The problems brought on by the execution of these types of policies were eventually apparent to most U.S. officials in Germany. Germany had long been the industrial giant of Europe, and its poverty held back the general European recovery. The continued scarcity in Germany also led to considerable expenses for the occupying powers, which were obligated to try and make up the most important shortfalls through the GARIOA program (Government and Relief in Occupied Areas). In view of the continued poverty and famine in Europe, and with the onset of the Cold War which made it important not to lose all of Germany to the communists, it was apparent by 1947 that a change of policy was required.

The change was heralded by Restatement of Policy on Germany, a famous speech by James F. Byrnes, then United States Secretary of State, held in Stuttgart on September 6, 1946. Also known as the "Speech of hope" it set the tone of future US policy as it repudiated the Morgenthau Plan economic policies and with its message of change to a policy of economic reconstruction gave the Germans hope for the future. Herbert Hoover's situation reports from 1947, and "A Report on Germany" also served to help change occupation policy. The Western powers' worst fear by now was that the poverty and hunger would drive the Germans to Communism. General Lucius Clay stated "There is no choice between being a communist on 1,500 calories a day and a believer in democracy on a thousand."

After lobbying by the Joint Chiefs of Staff, and Generals Clay and Marshall, the Truman administration realized that economic recovery in Europe could not go forward without the reconstruction of the German industrial base on which it had previously been dependent. In July 1947, President Harry S. Truman rescinded on "national security grounds" the punitive JCS 1067, which had directed the US forces of occupation in Germany to "take no steps looking toward the economic rehabilitation of Germany." It was replaced by JCS 1779, which instead stressed that "[a]n orderly, prosperous Europe requires the economic contributions of a stable and productive Germany."

The most notable example of this change of policy was a plan established by U.S. Secretary of State George Marshall, the "European Recovery Program", better known as the Marshall Plan, which in the form of loans instead of the free aid received by other recipients was extended to also include West Germany.

"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.' (Allen W. Dulles, The Marshall Plan)"

JCS 1067
A Handbook for Military Government in Germany was ready in August 1944: it advocated a quick restoration of normal life for the German people and reconstruction of Germany. Henry Morgenthau, Jr. brought it to the attention of President Franklin D. Roosevelt who, after reading it, rejected it with the words: "Too many people here and in England hold the view that the German people as a whole are not responsible for what has taken place – that only a few Nazis are responsible. That unfortunately is not based on fact. The German people must have it driven home to them that the whole nation has been engaged in a lawless conspiracy against the decencies of modern civilization."

A new document was drafted, the Joint Chiefs of Staff directive 1067 (JCS 1067). Here the US military government of occupation in Germany was ordered to "…take no steps looking toward the economic rehabilitation of Germany [or] designed to maintain or strengthen the German economy" and it was also ordered that starvation, disease and civil unrest were to be kept below such levels where they would pose a danger to the troops of occupation.

The directive was formally issued to Eisenhower in the spring of 1945, and it applied only to the US zone (although attempts had been made to get the other Allies to accept it). The occupation directive remained secret until October 17, 1945. It was made known to the public two months after the US had succeeded in incorporating much of it into the Potsdam Agreement.

On March 20, 1945 President Roosevelt was warned that the JCS 1067 was not workable: it would let the Germans "stew in their own juice". Roosevelt's response was "Let them have soup kitchens! Let their economy sink!" Asked if he wanted the German people to starve, he replied, "Why not?"

On May 10, 1945 Truman signed the JCS 1067. Ignoring the amendments to JCS 1067 that had been inserted by McCloy of the War Department, Morgenthau told his staff that it was a big day for the Treasury, and that he hoped that "someone doesn't recognize it as the Morgenthau Plan."

In occupied Germany Morgenthau left a direct legacy through what in OMGUS commonly were called "Morgenthau boys". These were U.S. Treasury officials whom Dwight D. Eisenhower has "loaned" in to the Army of occupation. These people ensured that the JCS 1067 was interpreted as strictly as possible. They were most active in the first crucial months of the occupation, but continued their activities for almost two years following the resignation of Morgenthau in mid-1945 and some time later also of their leader Colonel Bernard Bernstein, who was "the repository of the Morgenthau spirit in the army of occupation".

Morgenthau had been able to wield considerable influence over Joint Chiefs of Staff Directive 1067. JCS 1067 was a basis for U.S. occupation policy until July 1947, and like the Morgenthau Plan, was intended to reduce German living standards. The production of oil, rubber, merchant ships, and aircraft were prohibited. Occupation forces were not to assist with economic development apart from the agricultural sector.

In his 1950 book Decision in Germany, Clay wrote, "It seemed obvious to us even then that Germany would starve unless it could produce for export and that immediate steps would have to be taken to revive industrial production". Lewis Douglas, chief adviser to General Lucius Clay, U.S. High Commissioner, denounced JCS Directive 1067 saying, "This thing was assembled by economic idiots. It makes no sense to forbid the most skilled workers in Europe from producing as much as they can in a continent that is desperately short of everything" Douglas went to Washington in the hopes of having the directive revised but was unable to do so.

The U.S. Senate Judiciary Committee asserted: "During the first two years of the Allied occupation the Treasury program of industrial dismantlement was vigorously pursued by American officials."

In July 1947 JCS 1067, which had directed the U.S. forces of occupation in Germany to "...take no steps looking toward the economic rehabilitation of Germany [or] designed to maintain or strengthen the German economy", was replaced by JCS 1779 which instead stated that "An orderly, prosperous Europe requires the economic contributions of a stable and productive Germany."

It took over two months for General Clay to overcome continued resistance to the new directive JCS 1779, but on July 10, 1947, it was approved at a meeting of the SWNCC (State-War-Navy Coordinating Committee). The final version of the document "was purged of the most important elements of the Morgenthau plan."

Vladimir Petrov, an expert on the financial aspects of the occupation, wrote: "By forbidding the American Army to maintain price, wage, and market controls, it (JCS 1067) literally decreed, as a State Department official put it, economic chaos."

In 1947 the U.S. Congress warned that the continuation of the present policies "...can only mean one of two things, (a) That a considerable part of the German population must be "liquidated" through diseases, malnutrition, and slow starvation for a period of years to come, with the resultant dangers to the rest of Europe from pestilence and the spread of plagues that know no boundaries; or (b) the continuation both of large occupying forces to hold down "unrest" and the affording of relief mainly drawn from the United States to prevent actual starvation."

Conditions in Germany reached their lowest point in 1947. Living conditions were considered worse in 1947 than in 1945 or 1946. At an average ration of 1040 calories a day, malnutrition was at its worst stage in post-war Germany. Herbert Hoover asserted that this amount of rations was hardly more than the amount which caused thousands in the Nazi concentration camps to die from starvation.

Vladimir Petrov concluded: "The victorious Allies... delayed by several years the economic reconstruction of the war torn continent, a reconstruction which subsequently cost the U.S. billions of dollars."

In view of increased concerns by General Lucius D. Clay and the Joint Chiefs of Staff over communist influence in Germany, as well as of the failure of the rest of the European economy to recover without the German industrial base on which it was dependent, in the summer of 1947, Secretary of State George Marshall, citing "national security grounds," was able to convince President Harry S. Truman to remove JCS 1067, and replace it with JCS 1779. JCS 1067 had then been in effect for over two years.

The "Morgenthau boys" resigned en masse when the JCS 1779 was approved, but before they went, the Morgenthau followers in the decartelization division of OMGUS accomplished one last task in the spring of 1947: the destruction of the old German banking system. By breaking the relationships between German banks, they cut off the flow of credit between them, limiting them to short-term financing only, thus preventing the rehabilitation of German industry and with immediate adverse effects on the economy in the U.S. occupation zone.

With the change of occupation policy, most significantly thanks to the currency reform of 1948, Germany eventually made an impressive recovery, later known as the Wirtschaftswunder ("economic miracle").

Food policy
Germany was closed to relief shipments until December 1945. The reason given was that they might tend to negate the policy of restricting the German standard of living to the average of the surrounding European nations. CARE package shipments to individuals remained prohibited until 5 June 1946.

In 1945 the German Red Cross, which during the war became thoroughly Nazified, and its head Ernst Grawitz was a major figure in medical experiments on Jews and "enemies of the state", was dissolved, and the International Red Cross and other international relief agencies were kept from helping ethnic Germans through strict controls on supplies and on travel. The few agencies permitted to operate within Germany, such as the indigenous Caritas Verband, were not allowed to use imported supplies. When the Vatican attempted to transmit food supplies from Chile to German infants the U.S. State Department forbade it.

In early October 1945 the UK government privately acknowledged in a cabinet meeting that, German civilian adult death rates had risen to four times the pre-war levels and death rates amongst the German children had risen by 10 times the pre-war levels. In early 1946 U.S. President Harry S. Truman bowed to pressure from Senators, Congress and public to allow foreign relief organization to enter Germany in order to review the food situation. In mid-1946 non-German relief organizations were permitted to help starving German children. During 1946 the average German adult received less than 1,500 calories a day. 2,000 calories was then considered the minimum an individual can endure on for a limited period of time with reasonable health. At this time food rationing was still strict in the UK and France and there were food shortages right across Europe. Bread rationing was first introduced to the UK in 1946 and potato rationing in 1947; these measures had not been in place during the war and partly reflect the need for food to be sent to the British and French zones of occupation. However later research has revealed that the bread rationing in the UK was not necessary, it was in fact "not primarily for economic reasons – in order to save wheat – but for psychological and political reasons" as a political ploy in order to get US support in reconstruction funds and US wheat. Rationing did not reduce the level of food consumption in the UK. In fact, the UK rationing let the UK "retain its privileged position as the only food importing country which did not suffer a significant reduction in calorie consumption." The Germans in the UK zone were receiving half the UK ration.

Implementation
The Morgenthau Plan was implemented, although not in its most extreme version. The Morgenthau Plan spawned the JCS-1067, which contained the ideas of making Germany a "Pastoral State". This concept's name was later changed to become "level of industry", where Germany's production was to be severely limited but not completely eliminated. No new locomotives were to be built until 1949, most industries were to have their production halved. Automobile production was to be set at 10% of its [pre-war] 1936 level, etc.

On February 2, 1946, a dispatch from Berlin reported: "Some progress has been made in converting Germany to an agricultural and light industry economy, said Brigadier General William H. Draper, Jr., chief of the American Economics Division, who emphasized that there was general agreement on that plan. He explained that Germany’s future industrial and economic pattern was being drawn for a population of 66,500,000. On that basis, he said, the nation will need large imports of food and raw materials to maintain a minimum standard of living. General agreement, he continued, had been reached on the types of German exports — coal, coke, electrical equipment, leather goods, beer, wines, spirits, toys, musical instruments, textiles and apparel — to take the place of the heavy industrial products which formed most of Germany's pre-war exports."

Morgenthau had written a book outlining the full Morgenthau Plan, Germany is Our Problem. In November 1945 General Dwight D. Eisenhower, Military Governor of the U.S. Occupation Zone, approved the distribution of one thousand free copies of the book to American military officials in Germany.

By February 28, 1947 it was estimated that 4,160,000 German former prisoners of war, by General Dwight D. Eisenhower relabeled as Disarmed Enemy Forces in order to negate the Geneva Convention, were used as forced labor by the various Allied countries to work in camps outside Germany: 3,000,000 in Russia, 750,000 in France, 400,000 in Britain and 10,000 in Belgium. Meanwhile in Germany large parts of the population were starving at a time when according to a study done by former U.S. President Herbert Hoover the nutritional condition in countries that in Western Europe was nearly pre-war normal". General George S. Patton opposed the forced labor, finding the practice to contravene the ideals the United States fought for in its Revolutionary and Civil wars.  German prisoners engaged in dangerous tasks, such as clearing mine fields.

In Germany shortage of food was an acute problem, according to Alan S. Milward in 1946–47 the average kilocalorie intake per day was only 1,080, an amount insufficient for long-term health. Other sources state that the kilocalorie intake in those years varied between as low as 1,000 and 1,500. William Clayton reported to Washington that "millions of people are slowly starving."

All armaments plants, including some that could have been converted to civilian operation, were dismantled or destroyed. A large proportion of operational civilian plants were dismantled and transported to the victorious nations, mainly France and Russia.

"In addition to the above courses of action, there have been general policies of destruction or limitation of possible peaceful productivity under the headings of "pastoral state" and "war potential." The original of these policies apparently expressed on September 15, 1944, at Quebec, aimed at: "'converting Germany into a country principally agricultural and pastoral,'" and included, "'the industries of the Ruhr and the Saar would therefore be put out of action, closed down...'""

Early U.S. plans for "industrial disarmament" included detaching the Saarland and the Ruhr from Germany in order to remove much of the remaining industrial potential..

As late as March 1947 there were still active plans to let France annex the Ruhr.

"The Ruhr — The Times' article and editorial on the breach in the U.S. ranks on the subject of the Ruhr were accurate, and the latter excellent. I have been disturbed over the arena in which the debate has been carried out. Clay and Draper claim that Germany will go communist shortly after any proposal to infringe on its sovereignty over the Ruhr is carried out"."

The Saar, another important source of coal and industry for Germany, was likewise to be lost by the Germans. It was cut out from Germany and its resources put under French control. In 1955, the French, under pressure from West Germany and her newfound allies, held a plebiscite in the Saar Protectorate on the question of reunification or independence. Reunification won overwhelmingly, and on January 1, 1957, Saarland rejoined West Germany.

As Germany was allowed neither airplane production nor any shipbuilding capacity to supply a merchant navy, all facilities of this type were destroyed over a period of several years. A typical example of this activity by the allies was the Blohm & Voss shipyard in Hamburg, where explosive demolition was still taking place as late as 1949. Everything that could not be dismantled was blown up or otherwise destroyed. A small-scale attempt to revive the company in 1948 ended with the owners and a number of employees being thrown in jail by the British. It was not until 1953 that the situation gradually started to improve for the Blohm & Voss, thanks in part to repeated pleas by German Chancellor Konrad Adenauer to the Allied High Commissioners.

Timber exports from the U.S. occupation zone were particularly heavy. Sources in the U.S. government stated that the purpose of this was the "ultimate destruction of the war potential of German forests." As a consequence of the practiced clear-felling, extensive deforestation resulted which could "be replaced only by long forestry development over perhaps a century.".

Over a period of years, American policy slowly changed away from this policy of "industrial disarmament". The first and main turning point was the speech "Restatement of Policy on Germany" held in Stuttgart by the United States Secretary of State James F. Byrnes on September 6, 1946.

Reports such as this by former U.S. President Herbert Hoover, dated March 1947, also argued for a change of policy, among other things through speaking frankly of the expected consequences.

"There are several illusions in all this "war potential" attitude. 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. This would approximately reduce Germany to the density of the population of France."

In July 1947, President Harry S. Truman rescinded on "national security grounds" JCS 1067, which had directed the U.S. forces of occupation in Germany to "take no steps looking toward the economic rehabilitation of Germany." Three months earlier, the United States and France had agreed upon a German POW release program to begin releasing 20,000 prisoners per month. By July, of the 740,000 German POWs transferred to France, 290,000 had been "stricken from the rolls."

In addition to the physical barriers that had to be overcome, for the German economic recovery there were also intellectual challenges. The Allies confiscated intellectual property of great value, all German patents both in Germany and abroad, and used them to strengthen their own industrial competitiveness by licensing them to Allied companies. Beginning immediately after the German surrender and continuing for the next two years, the U.S. pursued a vigorous program to harvest all technological and scientific know-how as well as all patents in Germany. John Gimbel comes to the conclusion, in his book "Science Technology and Reparations: Exploitation and Plunder in Postwar Germany", that the "intellectual reparations" taken by the U.S. and the UK amounted to close to $10 billion. During the more than two years that this policy was in place, no industrial research in Germany could take place, as any results would have been automatically available to overseas competitors who were encouraged by the occupation authorities to access all records and facilities. Meanwhile thousands of the best German researchers were being put to work in the Soviet Union and in the U.K. and U.S. (see also Operation Paperclip).

According to some scholars, the Marshall Plan, which was extended to also include Western Germany after it was realized that the suppression of the Western German economy was holding back the recovery of the rest of Europe, was not the main force behind the Wirtschaftswunder. According to them, the amount of monetary aid (which was in the form of loans) received by Germany through the Marshall Plan (about $1.4 billion in total) was far overshadowed by the amount the Germans had to pay back as war reparations and by the charges the Allies made on the Germans for the ongoing cost of occupation (about $2.4 billion per year). In 1953 it was decided that Germany was to repay $1.1 billion of the aid it had received. The last repayment was made in June 1971. In a largely symbolic 2004 resolution by the lower house of the Polish Parliament reparations of $640 billion were demanded from Germany, mainly as a weapon in an ongoing argument regarding German property claims on formerly German territory. However, at the Potsdam conference the Soviet Union undertook to settle the reparation claims of Poland from its own share of reparations from Germany. In 1953 Poland agreed to forego further reparations claims against Germany. Meanwhile, Poland was now in possession of almost a quarter of pre-war German territory, including the important industrial centers in Silesia and the richest coal fields in Europe. In addition, many ethnic Germans living within the Polish pre-war borders were prior to their expulsion for years used as forced labor in camps such as the camp run by Salomon Morel. For example Central Labour Camp Jaworzno, Central Labour Camp Potulice, Łambinowice, Zgoda labour camp and others

In 1949 West German Chancellor Konrad Adenauer wrote to the Allies requesting that the policy of industrial dismantling end, citing the inherent contradiction between encouraging industrial growth and removing factories and also the unpopularity of the policy.

Contemporary relevance and assessment
The Federal Agency for Civic Education, a German government agency responsible for political education, expresses the view that the Morgenthau Plan was of no significance for later occupation and Germany policy, but that Nazi propaganda on the subject had a lasting effect and that it is still used for propaganda purposes by extreme right-wing organizations.

Document collections

 * Roosevelt Presidential Library collection relating to Germany (Jan. 1944 – Sept. 1944), (Oct. 1944 – Oct. 1945)
 * Marshal Plan Truman Presidential Library scans of documents dated 1946 onwards, most with relevance to the situation in the German zones of occupation.
 * Historical Events : European Union online collection bw the CVCE
 * United States Department of State Foreign relations of the United States, Conference at Quebec, 1944 Contains all documents related to the Second Quebec Conference, including Morgenthau's proposal, various critiques of it, and the approved proposal (the latter located at p. 466).

Documents

 * The original memorandum from 1944, signed by Morgenthau (facsimile).
 * Joint Chiefs of Staff Directive 1067 JCS 1067/6 of 28 April 1945 (The final version, JCS 1067/8 of 10 May 1945, contained an amendment allowing the production of synthetic rubber and oil, aluminum, and magnesium to meet the needs of the occupying forces, where the previous version had ordered the complete destruction of such industries.)
 * United States Secretary of State James F. Byrnes Stuttgart speech, September 6, 1946 The speech was according to General Clay based on the letter Clay had sent Byrnes urging him to come to Stuttgart.
 * James Francis Byrnes and U.S. Policy towards Germany 1945–1947 Deutsch-Amerikanische Zentrum / James-F.-Byrnes-Institut e.V
 * UK Policy towards Germany National Archives excerpts of Cabinet meetings. According to the UK foreign minister Bevin President Truman ended the Morgenthau plan in September 1946.
 * Eleanor Roosevelts correspondence with Truman The former first lady was a strong proponent of the Morgenthau plan.
 * The column of Eleanor Roosevelt

Images

 * Morgenthau Plan Map Good quality but German text
 * Morgenthau Plan Map Poor quality but probably a scan of the original
 * Demonstration against dismantling (7 June 1949) Workers in the Ruhr demonstrate against the dismantling of their factories by the Allied forces of occupation.
 * Dismantling the Iron and Steel Industry ‘We want to work, we will help you to rebuild Europe' Workers at dismantled plant protest.
 * 12,000 factory workers demonstrate against the dismantling of German industry (19 August 1949)

Interviews

 * General William H. Draper Jr. Chief, Economics Division, Control Council for Germany, 1945–46; Military Government Adviser to the Secretary of State, Moscow Conference of Foreign Ministers, 1947; Under Secretary of War, 1947; Under Secretary of the Army, 1947–49;
 * E. Allan Lightner, Jr. Assistant Chief, 1945–47, and Associate Chief, 1947–48, of the Central European Affairs Division, Department of State
 * Gunther Harkort Representative of the Federal Republic of Germany to the Economic Cooperation Administration (ECA), 1949–52.

Time magazine articles

 * "Dismember or Dismantle", February 21, 1944
 * "The Policy of Hate", October 2, 1944
 * "The Battle for Peace Terms", October 9, 1944
 * "The Price to Pay", April 2, 1945
 * "Housekeeping in Hell", May 14, 1945
 * "Take It Away", July 30, 1945
 * "Morgenthau's Hope", October 15, 1945
 * "Journey to Stuttgart", September 16, 1946
 * "Peace This Winter", December 2, 1946
 * "Firing Commences", August 11, 1947
 * "Faceless Crisis", April 4, 1949
 * "Topside Teammates", January 28, 1952
 * "A Spy in the Treasury", November 16, 1953
 * "The Peace Was Lost By Ignoring Justice And the Facts of Life", March 28, 1955
 * "Toward a Lost Peace", January 9, 1956
 * "Vengeance v. Vision", September 22, 1967

Radio

 * BBC Radio 4, History: Things We Forgot to Remember; The Morgenthau plan (Free podcast)