Peace This Winter

While a blanket of early snow and the all-embracing fear of winter settled over Germany, in New York the Big Four Foreign Ministers were finally getting ready to tackle the question of peace for the drawn & quartered Reich. By last week it was probable that agreement on Germany--the cardinal issue on which the whole European peace depended--would be reached before the winter's snow melted away. Russia seemed finally ready to draw back the Iron Curtain from her occupation zone and to accept Secretary Byrnes's longstanding invitation for joint administration of Germany.

The Price. In private conversations with the U.S.'s General Lucius D. Clay, Marshal Vassily Sokolovsky had intimated Russia's willingness to 1) treat Germany as the economic unit envisaged in one part of the inconsistent Potsdam Pact and 2) greatly increase the permitted maximum level of German industry, now keyed to a potential annual steel production of 5,800,000 tons. (Wartime peak in 1943: 21,000,000 tons; depression low in 1932: 5,500,000 tons.) For this reversal of their position (previously the Russians had stubbornly pressed for lower industrial output) and for their agreement to unification, the Russians demanded a price-payable in German reparations from current production.

The Russians wanted "delivered as quickly as possible" $2,000,000,000 worth of goods annually. Obviously, this would be impossible unless Ruhr iron and steel production became available for making reparations goods. The U.S. thought Russia's demands too high, was likely to counter with a much lower offer. But most observers believed that the U.S. would eventually pay a reasonable price for Russian agreement.

The Risks. More reparations in consumer goods to Russia would have several important results, some good, some bad from a U.S. viewpoint. The Russian people, who had fought a heroic war, would get a slight and well-deserved increase in their living standard. Germany's neighbors, who could not return to normal economy until Germany revived considerably, would certainly benefit. On the other hand, more consumer goods to Russians would permit the Kremlin's bosses to allocate a greater part of the Russian industrial effort to increasing the U.S.S.R. war potential. And a large flow of German production to Russia might build up a dangerously close relationship between those countries. Certainly the French would view a revived and unified Germany with alarm.

U.S. officials had calculated the risk and were ready to take it. The alternative was former U.S. Treasury Secretary Morgenthau's nightmarish goat-pasture plan to deindustrialize Germany. It was better to give Russia an advantage in reparations than to leave Europe divided and prostrate because Germany was divided and prostrate.

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