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: The military-issued
Pocket Guide to Germany commanded soldiers "There must be no fraternization ! This is absolute !", but the authors—perhaps uncertain of whether their readers would obey—also discussed regulations on
venereal disease and marriages with locals. After the press published in September 1944 photographs of American soldiers fraternizing with German civilians near
Aachen, the Pentagon immediately ordered the army to prevent a recurrence of such events. A new document was drafted in September 1944, the
Joint Chiefs of Staff directive 1067 (JCS 1067), which directed the US 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". Because of fears that soldiers would encounter
Werwolf fanatics willing to die for Nazi ideology, it strictly forbade
fraternization with Germans, including attending church services, visiting homes, playing games, trading gifts, or even shaking hands; violators risked being fined $65 (about one month of pay for a US Army private) and
court-martial. JCS 1067 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 approved by President
Harry Truman on 10 May 1945, then formally issued to Eisenhower, and was the basis for US occupation policy until July 1947. 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 17 October 1945. It was made known to the public two months after the US had succeeded in incorporating much of it into the
Potsdam Agreement. Morgenthau had been able to wield considerable influence over JCS 1067 and, like the Morgenthau Plan, 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. Ignoring the amendments to JCS 1067 that had been inserted by
John J. 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 US Treasury officials whom
Dwight D. Eisenhower had "loaned" to the Army of occupation. These people ensured that 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".
Consequences The problems brought on by the execution of these types of policies were eventually apparent to most American officials in Germany. Germany had long been the industrial giant of Europe, and its poverty held back the general European recovery. Fifteen percent of industry in the US sector was operable in August 1945, and running at about 5% capacity. The continued scarcity in Germany also led to considerable expenses for the occupying powers, which were obligated to try to make up the most important shortfalls through the
GARIOA (Government and Relief in Occupied Areas) program. As early as 7 May 1945, General
Lucius D. Clay asked for flexibility in implementing JCS 1067. As US High Commissioner, he later wrote in his 1950 book
Decision in Germany, "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 Clay, 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, D.C. to revise the directive but was unable to do so. By then, however, the military government was already adjusting to the situation;
SHAEF in April 1945 established the Production Control Agency to restore industrial production for both German and Allied use. While it in theory was supposed to minimize production for German civilian use to as little as possible, in practice that directive was ignored. Coal was vital; as early as May 1945 plans to close German mines were nullified, after the American and British experts of the Potter-Hyndley Mission predicted that "Unless drastic steps are taken, there will occur in Northwest Europe and the Mediterranean next winter a coal famine of such severity as to destroy all semblance of law and order, and thus delay any chance of reasonable stability". Every new industry that restarted increased the demand for coal, and hundreds of tons were stolen during transport. American policy slowly drifted away from "industrial disarmament".
Herbert Hoover's
situation reports from 1947 and "
A Report on Germany" also served to help change occupation policy, among other things, through speaking frankly of the expected consequences: The Potter-Hyndley Mission had contemplated possibly needing "to preserve order by shooting", and in October 1945 the military government warned German officials that they and their areas would be held responsible for any attacks on occupation forces. Although the winter of 1945-1946 was very mild, civilians did not know that the government maintained the 1,550-
kilocalorie ration by drawing on American supplies, not from improving local supply. By March 1946 the imported supply would last another 60 days. The British zone reduced rations to 1,042 calories that month, and the French to 980; the US zone reduced its to 1,275 calories in April, and 1,180 in late May. It improved to 1,330 calories in June only by using Army surplus supplies from around the world, less nutritional than an equal amount of grain. Germans disliked rations' use of
maize corn because they had only used it for
chicken feed. According to Alan S. Milward, in 1946–1947 the average kilocalorie intake per day in Germany 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
Dean Acheson in Washington on May 27, 1947: "Millions of people in the cities are slowly starving." The Western powers' worst fear by now was that the poverty and hunger would drive the Germans to
Communism. Clay stated "There is no choice between being a communist on 1,500 calories a day and a believer in democracy on a thousand". 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. After lobbying by the Joint Chiefs of Staff, and Generals Clay and
George 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. 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". JCS 1067 had then been in effect for over two years. 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 6 September 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. The most notable example of this change of policy was that the
Marshall Plan was extended to
West Germany, although in the form of loans instead of the free aid granted to other countries. It took over two months for General Clay to overcome continued resistance to the new directive JCS 1779, but on 10 July 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". The "Morgenthau boys" resigned
en masse when 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 US 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"). == Actions taken under JCS 1067 ==