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Military government weekly information bulletin
No. 41 (May 1946)

[Highlights of policy],   pp. 5-12 PDF (4.0 MB)

Page 9

German industrial level set by Control Council to eliminate war potential.
culture and peaceful pursuits to be encouraged. No living standard guarantees.
We were twenty five years late in
learning the lesson of modern warfare.
It was a costly lesson. Basically it is a
simple one: The ability of a country to
wage war depends not only upon the
number of its citizens in uniform but also
upon the industrial capacity of the na-
When the leaders of the three great
powers met at Potsdam, they were de-
termined that Germany should not retain
the means to wage modern war. Rather
than have German factories build loco-
motives for France or Holland, and keep
within its borders the industrial capacity
for producing the weapons of war, they
would give the iron .and steel plants to
the Allied nations as reparations. Less
efficient? Perhaps, but very much safer.
The Potsdam Conference left the devel-
opment of the Reparations Plan to be
worked out by the Allied Control Council
on the basis of these guiding principles:
Elimination of the German war poten-
tial and disarmament of Germany indus-
Payment of reparations to the countries
which had suffered from German aggr-es-
Development of agriculture and the
peaceful industries, leaving Germany with
sufficient resources to maintain a stand-
ard of living no higher than the continen-
tal European average, excluding the
USSR and the UK.
It was not easy to translate the broad
principles of Potsdam into concrete terms.
Each of the three nations represented at
Potsdam had its own interpretation of
the. agreement. And France, which was
not represented at Potsdam and therefore
not bound by its principles, was admitted
as an. equal partner in the months of con-
ferences and decisions. Point by point,
industry by industry, the level of post-
war German economy was established.
All four of the occupying powers were
united in desiring the industrial disarma-
ment of Germany. Through cooperation
and compromise, agreement was achieved.
Full accord had not been reached by 2
February, the deadline set -at Potsdam.
It was not until 26 March, after months
of discussion, sometimes lasting all
.through. the night, that the final plan
was released to the world.
. The over-all level of German industry
will be cut to almost half of what it was
-in 1938. The additional capacity is to be
removed as reparations.
That does not mean that every industry
is to be cut an even 50 percent. Fourteen
industries with a high war potential, in-
cluding synthetic gasoline, ball bearings,
primary aluminium and synthetic rubber
are ultimately to be eliminated comple-
tely .

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